The NARAS Foundation (dba The GRAMMY Foundation)

Transcription

1 The NARAS Foundation (dba The GRAMMY Foundation) Financial Statements as of and for the Years Ended July 31, 2015 and 2014, and Independent Auditors Report

2 INDEPENDENT AUDITORS REPORT To the Board of Directors of The NARAS Foundation: We have audited the accompanying financial statements of The NARAS Foundation (dba The GRAMMY Foundation) ( The GRAMMY Foundation ), which comprise the statements of financial position as of July 31, 2015 and 2014, and the related statements of activities, cash flows, and functional expenses for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to The GRAMMY Foundation s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of The GRAMMY Foundation s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

3 Opinion In our opinion, such financial statements referred to above present fairly, in all material respects, the financial position of The GRAMMY Foundation as of July 31, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. April 29,

4 THE NARAS FOUNDATION (dba The GRAMMY Foundation) STATEMENTS OF FINANCIAL POSITION AS OF JULY 31, 2015 AND 2014 ASSETS CURRENT ASSETS: Cash and cash equivalents (Note 2) $ 1,797,228 $ 1,514,315 Receivables 197, ,542 Prepaid expenses and other current assets 173, ,385 Total current assets 2,167,731 1,908,242 PROPERTY Net (Note 3) - - BOARD-DESIGNATED INVESTMENTS (Note 4) 4,902,494 4,856,302 DEFERRED COMPENSATION ASSET (Note 8) 88,975 76,404 TOTAL $ 7,159,200 $ 6,840,948 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 182,640 $ 318,089 Payable to The Recording Academy 76,430 96,334 Payable to MusiCares Foundation 319, ,572 Deferred revenue (Note 2) 882, ,062 Total current liabilities 1,461,394 1,383,057 DEFERRED COMPENSATION LIABILITY (Note 8) 88,975 76,404 Total liabilities 1,550,369 1,459,461 NET ASSETS (Note 2): Unrestricted net assets: Board designated (Note 4) 4,902,494 4,856,303 Other unrestricted net assets 438, ,932 Total unrestricted net assets 5,341,002 5,066,235 Temporarily restricted net assets (Note 7) 267, ,252 Total net assets 5,608,831 5,381,487 TOTAL $ 7,159,200 $ 6,840,948 See notes to financial statements

5 THE NARAS FOUNDATION (dba The GRAMMY Foundation) STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JULY 31, 2015 AND 2014 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT AND REVENUES: Entertainment Law Initiative (Note 6) $ 263,950 $ - $ 263,950 $ 238,650 $ - $ 238,650 GRAMMY Career Day - 32,850 32,850-25,000 25,000 GRAMMY Jazz Ensembles - 81,320 81, , ,097 GRAMMY Signature Schools - 278, , , ,000 GRAMMY Camp (Notes 5 and 6) - 720, , , ,102 GRAMMY Foundation Grants (Note 6) - 200, , , ,000 Legacy Concert 113, , , ,596 Living Histories - 37,500 37, Music Educators Award - 263, , , ,776 Contributions from The Recording Academy (Note 6) 2,142,426-2,142,426 1,966,291-1,966,291 Interest and dividend income 231, , , ,461 Unrealized gain (loss) on investments net (260,221) - (260,221) 263, ,068 Realized gain on investments net 114, ,354 22,711-22,711 Other income 1,207,309-1,207,309 1,429,494-1,429,494 Total support and revenues 3,812,991 1,614,071 5,427,062 4,307,271 1,572,975 5,880,246 NET ASSETS RELEASED FROM RESTRICTION Satisfaction of program restrictions 1,661,494 (1,661,494) - 1,776,094 (1,776,094) - PROGRAM SERVICES AND SUPPORTING EXPENSES: Program services: GRAMMY Camp 946, , , ,154 GRAMMY Career Day 118, , , ,380 GRAMMY Foundation Grants 353, , , ,893 GRAMMY Jazz Ensembles 373, , , ,492 Entertainment Law Initiative 225, , , ,892 GRAMMY Signature Schools 364, , , ,561 Legacy Concert 333, , , ,586 GITS.com Website 22,963-22,963 61,714-61,714 GRAMMY Sound Checks Living Histories 106, ,635 66,795-66,795 Music Educators Award 320, , , ,251 Outreach and Other Programs 355, , , ,060 Total program services 3,521,561-3,521,561 3,519,252-3,519,252 Supporting expenses: Fund-raising 891, ,485 1,022,393-1,022,393 Administrative expenses 786, , , ,875 A Starry Night - 45,093-45,093 Total supporting expenses 1,678,157-1,678,157 1,727,361-1,727,361 Total program services and and supporting expenses 5,199,718-5,199,718 5,246,613-5,246,613 INCREASE (DECREASE) IN NET ASSETS 274,767 (47,423) 227, ,752 (203,119) 633,633 NET ASSETS: Beginning of year 5,066, ,252 5,381,487 4,229, ,371 4,747,854 End of year $ 5,341,002 $ 267,829 $ 5,608,831 $ 5,066,235 $ 315,252 $ 5,381,487 See notes to financial statements

6 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JULY 31, 2015 AND 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Increase in net assets $ 227,344 $ 633,633 Adjustments to reconcile increase in net assets to net cash provided by (used in) operating activities: Depreciation Unrealized loss (gain) on investments net 260,221 (263,068) Realized loss (gain) on investments net (114,354) (22,711) Changes in operating assets and liabilities: Receivables (20,951) (22,937) Prepaid expenses and other current assets 44,375 (27,307) Accounts payable and accrued liabilities (135,449) (15,569) Payable to The Recording Academy (19,904) (444,569) Payable to MusiCares Foundation 29,977 50,020 Deferred revenue 203,713 52,856 Net cash provided by (used in) operating activities 474,972 (59,323) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (1,473,704) (738,225) Proceeds from sale of investments 1,281, ,367 Net cash used in investing activities (192,059) (133,858) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 282,913 (193,181) CASH AND CASH EQUIVALENTS Beginning of year 1,514,315 1,707,496 CASH AND CASH EQUIVALENTS End of year $ 1,797,228 $ 1,514,315 See notes to financial statements

7 THE NARAS FOUNDATION (dba The GRAMMY Foundation) STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JULY 31, 2015 GRAMMY GRAMMY GRAMMY Entertainment GRAMMY Music Outreach Total Total GRAMMY Career Foundation Jazz Law Signature Legacy GITS.com Living Educators and Other Program Administrative Supporting Camp Day Grants Ensembles Initiative Schools Concert Website Histories Award Programs Services Fund-Raising Expenses Expenses Total ADMINISTRATION $ 168,211 $ 14,850 $ 13,457 $ 44,522 $ 40,985 $ 19,260 $ 48,281 $ 3,519 $ 8,145 $ 96,752 $ 96,297 $ 554,279 $ 127,313 $ 123,638 $ 250,951 $ 805,230 COMPUTER EXPENSES 8, ,434 1,988 1,330 1,448 1,071 2, ,422 2,787 23,478 9,977 7,789 17,766 41,244 CONTRIBUTIONS/ GRANTS ,746-11, ,500 15, , ,246 10,000 3,250 13, ,496 EVENT EXPENSES 59,747 42,039-38,669 52,042 2, ,658-1,023-15, ,014 3,364 3,016 6, ,394 PROFESSIONAL FEES 202,897 11,457 32,153 61,544 10,985 20,420 40,791 2,760 15,167 66,978 48, , , , , ,604 SALARIES AND BENEFITS 309,723 43, , ,975 51, ,719 97,389 14,232 70,170 98, ,605 1,193, , , ,647 2,098,951 TRAVEL AND ENTERTAINMENT 195,012 6,193 4,802 91,281 56,354 2,245 12,712-1,441 11,532 17, , ,639 29, , ,479 VIDEO SERVICES 2, , ,934 6,060 12,000 33, ,320 TOTAL $ 946,141 $ 118,787 $ 353,545 $ 373,039 $ 225,883 $ 364,358 $ 333,895 $ 22,963 $ 106,635 $ 320,360 $ 355,955 $ 3,521,561 $ 891,485 $ 786,672 $ 1,678,157 $ 5,199,718 See notes to financial statements

8 THE NARAS FOUNDATION (dba The GRAMMY Foundation) STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JULY 31, 2014 GRAMMY GRAMMY GRAMMY Entertainment GRAMMY GRAMMY Music Outreach Total Total GRAMMY Career Foundation Jazz Law Signature Legacy GITS.com Sound Living Educators and Other Program Administrative A Starry Supporting Camp Day Grants Ensembles Initiative Schools Concert Website Checks Histories Award Programs Services Fund-Raising Expenses Night Expenses Total ADMINISTRATION $ 121,155 $ 31,181 $ 17,873 $ 42,052 $ 41,533 $ 18,614 $ 41,932 $ 4,756 $ 75 $ 4,992 $ 120,472 $ 96,631 $ 541,266 $ 150,377 $ 115,626 $ 6,152 $ 272,155 $ 813,421 COMPUTER EXPENSES 7, ,651 1,820 1,567 1,400 1,235 2, ,728 2,753 23,872 7,537 6, ,192 39,064 CONTRIBUTIONS/ GRANTS , , , ,557-2,675-2, ,232 EVENT EXPENSES 106,703 52,180-33,582 69,203 2, , ,158 9, ,612 89,026 5,764-94, ,402 PROFESSIONAL FEES 181,606 15,603 17,276 55,611 9,865 16,317 56,697 31, ,620 38,623 21, , , ,175 3, , ,219 SALARIES AND BENEFITS 335,230 47, , ,431 62,121 94,617 94,489 23, , , ,743 1,192, , ,567 34, ,274 2,003,672 TRAVEL AND ENTERTAINMENT 170,895 8,527 4,385 90,641 45,803 4,732 15, ,692 31,876 12, , ,186 29, , ,680 VIDEO SERVICES 4, ,659 1,355 1, ,850 8,110-28,574 2, ,020 30,594 Subtotal 927, , , , , , ,586 61, , , ,060 3,519,252 1,022, ,546 45,093 1,727,032 5,246,284 DEPRECIATION TOTAL $ 927,154 $ 156,380 $ 368,893 $ 335,492 $ 231,892 $ 381,561 $ 314,586 $ 61,714 $ 474 $ 66,795 $ 373,251 $ 301,060 $ 3,519,252 $ 1,022,393 $ 659,875 $ 45,093 $ 1,727,361 $ 5,246,613 See notes to financial statements

9 THE NARAS FOUNDATION (dba The GRAMMY Foundation) NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JULY 31, 2015 AND ORGANIZATION The NARAS Foundation (dba The GRAMMY Foundation) ( The GRAMMY Foundation ) was incorporated in 1988 to cultivate the understanding, appreciation, and advancement of the contribution of recorded music on American culture from the artistic and technical legends of the past to the still unimagined musical breakthroughs of the future generations of music professionals. The GRAMMY Foundation accomplishes this mission through programs and activities designed to engage the music industry and cultural community, as well as the general public. The GRAMMY Foundation works year-round with National Academy of Recording Arts & Sciences, Inc. ( The Recording Academy ) to bring national attention to important issues, such as the value and impact of music and arts education and the urgency of preserving our rich cultural legacy. The GRAMMY Foundation, along with MusiCares Foundation, Inc. ( MusiCares Foundation ), a related party established to provide financial assistance grants and addiction recovery services to the music community, supports the charitable goals of The Recording Academy. Federal and State Income Taxes The GRAMMY Foundation is generally exempt from federal and state income taxes under Internal Revenue Code (IRC) Section 501(c)(3) and corresponding state provisions, except for unrelated business income, which is subject to tax. The GRAMMY Foundation holds a nonprivate foundation status pursuant to IRC Section 509(a)(1), specifically under IRC Section 170(b)(1)(A)(vi). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and short-term investments with maturities of 90 days or less from the purchase date. Board-Designated Investments Investments are carried at fair value based upon market quotations. Securities transactions are accounted for on trade dates. Dividend income is recorded on the ex-dividend date, and interest income is recorded as earned on the accrual basis. Realized and unrealized gains and losses are determined by comparison of specific cost of acquisition to proceeds at the time of disposal or fair value at the dates of the statements of financial position. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements

10 Depreciation Depreciation of property is provided for over the estimated useful lives of the assets (three to seven years) on the straight-line basis. Deferred Revenue Deferred revenue results from advance payments for The GRAMMY Foundation programs and goods/services that have been sold at auction, but have not yet been provided. Advance payments for events are recognized as revenue when the events take place. Auction revenue is recognized at the time the goods and/or services are provided to the auction winner. Net Assets All revenues and support are included in unrestricted net assets, unless they are specifically restricted by the donor s terms of the gift or require the passage of time. Contributions initially recorded as temporarily restricted net assets are reclassified to unrestricted net assets when restrictions have been met. Contributions whose restrictions are met in the same year as the contribution is made are initially classified as temporarily restricted net assets and reclassified to unrestricted net assets in the same year. The Board of Directors ( Board ) has allocated certain net assets of The GRAMMY Foundation to specific purposes, which are presented as Board-designated in the statements of financial position. In-Kind Donations In-kind donations primarily relate to goods and services that are donated by vendors and are given to The GRAMMY Foundation participants or are used for other fund-raising and program purposes. Donated goods and services received were estimated to have a fair value of $62,546 in 2015 and were included in Legacy Concert and GRAMMY Camp. Donated goods and services received were estimated to have a fair value of $69,130 in 2014 and were included in Legacy Concert, GRAMMY Jazz Ensembles, GRAMMY Camp, and other income. In-kind donations from The Recording Academy relate to discount on rental expenses, and event tickets contributed in the amount of $227,706 and $227,206 for the years ended July 31, 2015 and 2014, respectively (see Note 6). Contributed goods and services are reported as contributions at their fair value if such goods and services create or enhance nonfinancial assets, would have been purchased if not provided by contribution or require specialized skills, and are provided by individuals possessing such specialized skills. Income Taxes The GRAMMY Foundation accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes. FASB ASC 740 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken, or expects to take, on a tax return. During the years ended July 31, 2015 and 2014, The GRAMMY Foundation did not record any liability for unrecognized tax benefits. Financial Instruments Financial instruments consist of cash equivalents, receivables, Board-designated investments, deferred compensation asset and liability, accounts payable and accrued liabilities, and payables to The Recording Academy and MusiCares Foundation. Financial instruments, other than Boarddesignated investments, are stated at cost, which closely approximate their carrying value due to their short-term maturities and as these are the amounts at which they are expected to be realized or liquidated. Refer to Note 4 for information related to the fair value of Board-designated investments. Subsequent Events The GRAMMY Foundation has evaluated subsequent events through April 29, 2016, the date the financial statements were available to be issued, and has determined that there are no subsequent events that require disclosure in these audited financial statements

11 3. PROPERTY Property as of July 31, 2015 and 2014, consists of the following: Office equipment $ 3,142 $ 3,142 Computer equipment and software 56,645 56,645 Furniture and fixtures 11,692 11,692 Total property 71,479 71,479 Accumulated depreciation (71,479) (71,479) Property net $ - $ - Depreciation expense amounted to $0 and $329 in 2015 and 2014, respectively. 4. BOARD-DESIGNATED INVESTMENTS Board-designated investments at July 31, 2015 and 2014, represent funds that are specifically designated by the Board and are maintained in cash equivalents and mutual funds primarily invested in equity securities, fixed-income investments, and broad commodity investments. Cash equivalents included in Board-designated investments represent cash held by The GRAMMY Foundation s investment managers that will be invested based on The GRAMMY Foundation s investment strategy. The GRAMMY Foundation presents its investments in accordance with FASB ASC 820, Investments. FASB ASC 820 requires classifying holdings as Level 1, Level 2, or Level 3 based upon various inputs or methodologies used to value the holdings as summarized below: Level 1 Quoted prices in active markets for identical assets. The GRAMMY Foundation s Level 1 Board-designated investments include cash equivalents and investments registered with the Securities and Exchange Commission as mutual funds under the Investment Company Act of Level 2 Significant observable market-based inputs, other than Level 1 quoted prices, or unobservable inputs that are corroborated by market data. The GRAMMY Foundation does not hold any investments classified as Level 2. Level 3 Significant unobservable inputs that are not corroborated by observable market data. The GRAMMY Foundation does not hold any investments classified as Level 3. The inputs or methodologies used for valuing The GRAMMY Foundation s holdings are not necessarily an indication of the risks associated with investing in those holdings. The estimated fair value amounts have been determined by The GRAMMY Foundation using available market information and appropriate valuation methodologies. Management judgment is required to develop estimates of fair value for certain holdings. Accordingly, the estimates presented below are not necessarily indicative of the amounts The

12 GRAMMY Foundation could have realized in an actual market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Where significant inputs used to measure fair value of any investment fall into different levels of the fair value hierarchy, that investment is included in the lowest level, which relates to any such input. As of July 31, 2015, The GRAMMY Foundation s holdings applying the FASB ASC 820 hierarchy are as follows: Quoted Prices in Active Fair Value Markets for Measurements Identical Assets July 31, 2015 (Level 1) Cash equivalents $ 512 $ 512 Mutual funds: US equity funds 1,679,303 1,679,303 Global equity funds 1,160,074 1,160,074 US fixed-income bond funds 1,738,938 1,738,938 Global fixed-income bond funds 101, ,547 Other 222, ,120 Total Board-designated investments $ 4,902,494 $ 4,902,494 As of July 31, 2014, The GRAMMY Foundation s holdings applying the FASB ASC 820 hierarchy are as follows: Quoted Prices in Active Fair Value Markets for Measurements Identical Assets July 31, 2014 (Level 1) Cash equivalents $ 512 $ 512 Mutual funds: US equity funds 1,754,734 1,754,734 Global equity funds 1,102,531 1,102,531 US fixed-income bond funds 1,639,214 1,639,214 Global fixed-income bond funds 140, ,198 Other 219, ,113 Total Board-designated investments $ 4,856,302 $ 4,856,302 Transfers between levels are recognized based on the beginning fair value of the fiscal year in which they occurred. There were no transfers between levels during 2015 or The fair value of other financial instruments is discussed in Note

13 5. GRANT REVENUE The GRAMMY Foundation was supplemented by charitable grants from unrelated organizations. In 2015 and 2014, grants received totaled $240,000 and $172,994, respectively, representing approximately 4% and 3%, respectively, of total revenues each year. 6. AFFILIATED ENTITY TRANSACTIONS The GRAMMY Foundation received cash and noncash contributions and services from The Recording Academy amounting to $2,463,023 and $2,333,550 in 2015 and 2014, respectively. The details are described below: Cash contributions: General cash contribution: General contribution $ 1,914,720 $ 1,686,245 GRAMMY 401(k) Discretionary Contribution - 52,840 Entertainment Law Initiative (event) 4,545 3,150 GRAMMY Foundation Grants (program) 200, ,000 GRAMMY Camp (program) 17,500 47,000 Music Educator Award (program) 98, ,109 Total cash contributions 2,235,317 2,106,344 Noncash contributions: Discount on rental expenses 197, ,956 GRAMMY Show tickets 28,000 28,000 Special Merit Awards Ceremony 1,750 1,250 Total noncash contributions 227, ,206 Total cash and noncash contributions $ 2,463,023 $ 2,333,550 Total contributions from The Recording Academy provided approximately 45% and 40% of total support and revenues in 2015 and 2014, respectively. Program-related contributions are shown as temporarily restricted revenues for those specific programs in the statements of activities. The Recording Academy has historically made general cash contributions to The GRAMMY Foundation to support ongoing operations. Through The Recording Academy s budgetary process, its board of trustees voted to make the discretionary general cash contribution payment to be $1,778,160 for the fiscal year ending July 31, This contribution is subject to change by the board of trustees of The Recording Academy and will be recorded as contribution revenue at the time it is received

14 The GRAMMY Foundation was billed by The Recording Academy for certain expenses incurred on its behalf amounting to $358,780 and $336,030 in 2015 and 2014, respectively. The details are described below: Salaries and benefits $ 226,811 $ 188,740 Other operating expenses (shared services) 131, ,290 Total expenses billed by The Recording Academy $ 358,780 $ 336,030 As of July 31, 2015 and 2014, The GRAMMY Foundation paid the affiliates face value for event tickets as follows: Tickets purchased from affiliates: The Recording Academy GRAMMY Show and related tickets $ 129,200 $ 110,600 MusiCares Foundation Person of the Year Tribute 22,500 39,000 Total tickets purchased from affiliates $ 151,700 $ 149,600 The GRAMMY Foundation and MusiCares Foundation share some executive staff and events department staff. The salaries and benefits for these shared staff members are either paid in equal parts by respective foundation, or they are paid fully by the foundation for which they predominantly work, and an intercompany allocation is then made to the other foundation commensurate with the percentage of time worked for that foundation. 7. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets as of July 31, 2015 and 2014, are available for the following purposes: GRAMMY Camp $ 156,360 $ 203,208 Signature Schools 111,469 94,419 Living Histories - 17,625 Total $ 267,829 $ 315,

15 Net assets during the years ended July 31, 2015 and 2014, were released from donor restriction by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by the donors: Temporary restrictions accomplished: GRAMMY Camp $ 767,198 $ 705,041 GRAMMY Career Day 32,850 64,801 GRAMMY Foundation Grants 200, ,000 GRAMMY Jazz Ensembles 81, ,097 GRAMMY Signature Schools 261, ,801 Music Educators Award 263, ,776 Living Histories 55,125 26,578 Total net assets released from restriction $ 1,661,494 $ 1,776, BENEFIT PLANS 401(k) Plan Effective August 1, 1997, The Recording Academy established a 401(k) plan covering eligible employees of The GRAMMY Foundation and certain affiliated entities, including The Recording Academy; MusiCares Foundation; Latin Academy of Recording Arts & Sciences, Inc.; and Latin GRAMMY Cultural Foundation. Eligible employees can elect to defer compensation subject to Internal Revenue Service withholding rules. In 2015 and 2014, The GRAMMY Foundation made a contribution match of 50% of its employees elective deferral contributions, which amounted to $50,113 in 2015 and $48,650 in Additionally, for each plan year, The GRAMMY Foundation has the option of making an employer discretionary match. A discretionary match was made in 2015 and 2014 of $65,753 and $52,840, respectively. In 2014, the discretionary match was funded through contributions from The Recording Academy (see Note 6). Executive Compensation Program The GRAMMY Foundation maintains a deferred compensation plan as described under Section 457(b) of the IRC. The 457(b) plan provides eligible executives with the opportunity to make voluntary contributions on a pretax basis. Total compensation deferred as of July 31, 2015 and 2014, was $88,975 and $76,404, respectively. ******