Pennsylvania Bar Foundation. Financial Statements and Supplementary Information

Transcription

1 Pennsylvania Bar Foundation Financial Statements and Supplementary Information Years Ended December 31, 2013 and 2012 with Independent Auditor s Report

2 TABLE OF CONTENTS Independent Auditor's Report Financial Statements: Statements of Financial Position 1 Statement of Activities Year Ended December 31, Statement of Activities Year Ended December 31, Statements of Cash Flows 4 Notes to Financial Statements 5 Supplementary Information: Schedule of Functional Expenses - Year Ended December 31, Schedule of Functional Expenses - Year Ended December 31,

3 Independent Auditor s Report Board of Directors Pennsylvania Bar Foundation We have audited the accompanying financial statements of the Pennsylvania Bar Foundation (Foundation) (a nonprofit organization), which comprise the statements of financial position as of December 31, 2013 and 2012, and the related statements of activities and cash flows 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. Auditor s 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 audits 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 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 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.

4 Board of Directors Pennsylvania Bar Foundation Independent Auditor s Report Page 2 of 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Foundation as of December 31, 2013 and 2012, 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. Other Matter Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Maher Duessel Harrisburg, Pennsylvania April 21, 2014

5 STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2013 AND 2012 Assets (Restated) Cash and cash equivalents $ 487,554 $ 392,500 Investments 525, ,118 Accounts receivable: Due from Pennsylvania Bar Associaton 23,636 12,958 Other 4, LRAP loans receivable 95,926 88,146 Pledges receivable, net 49,209 61,583 Prepaid expenses 3,595 3,938 Fixed assets, net 175, ,373 Total Assets $ 1,364,451 $ 1,198,719 Liabilities and Net Assets Liabilities: Accounts payable $ 10,193 $ 461 Due to Pennsylvania Bar Institute - 2,055 Due to Pennsylvania Bar Association 22,210 10,815 Due to IOLTA 202,340 - Escrow liability (Pennsylvania Futures Commission) 32,010 32,010 Deferred revenue 194, ,107 Security deposits Total Liabilities 461, ,291 Net Assets: Unrestricted 422, ,649 Board-Designated - Fixed Asset Fund 175, ,373 Board-Designated - Keystone Funds 46,813 19,311 Total unrestricted 644, ,333 Temporarily restricted 106,134 94,102 Permanently restricted 152, ,993 Total Net Assets 902, ,428 Total Liabilities and Net Assets $ 1,364,451 $ 1,198,719 The accompanying notes are an integral part of these financial statements. 1

6 STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and Other Support: Contributions $ 35,398 $ 46,121 $ 1,000 $ 82,519 Programs 336, ,679 Rents 27, ,816 Fundraising income 31, ,142 Interest income 9, ,187 Miscellaneous Realized gain on investments 12,028 1,560-13,588 Unrealized gain on investments 40,625 5,267-45,892 Net assets released from restrictions 50,134 (41,329) (8,805) - Total revenues and other support 543,826 12,032 (7,805) 548,053 Expenses: Program services 380, ,334 Supporting services: Management and general 94, ,732 Fundraising 14, ,887 Total expenses 489, ,953 Change in Net Assets 53,873 12,032 (7,805) 58,100 Net Assets: Beginning of year 590,333 94, , ,428 End of year $ 644,206 $ 106,134 $ 152,188 $ 902,528 The accompanying notes are an integral part of these financial statements. 2

7 STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total (Restated) (Restated) Revenues and Other Support: Contributions $ 29,603 $ 28,070 $ 8,500 $ 66,173 Programs 306, ,010 Rents 27, ,617 Fundraising income 33, ,977 Interest income 8, ,411 Miscellaneous Realized gain on investments 3, ,390 5,379 Unrealized gain on investments 19,262 3,218 7,832 30,312 Net assets released from restrictions 29,335 (28,918) (417) - Total revenues and other support 457,922 3,922 17, ,149 Expenses: Program services 333, ,218 Supporting services: Management and general 75, ,578 Fundraising 10, ,496 Total expenses 419, ,292 Change in Net Assets 38,630 3,922 17,305 59,857 Net Assets: Beginning of year, restated 551,703 90, , ,571 End of year $ 590,333 $ 94,102 $ 159,993 $ 844,428 The accompanying notes are an integral part of these financial statements. 3

8 STATEMENTS OF CASH FLOWS Cash Flows From Operating Activities: Change in net assets $ 58,100 $ 59,857 Adjustments to reconcile change in net assets to net cash and cash equivalents provided by operating activities: Depreciation 3,206 3,206 Unrealized gain on investments (45,892) (30,312) Realized gain on investments (13,588) (5,379) (Increase) decrease in: Accounts receivable (22,493) (3,487) Pledges receivable 12,374 (1,827) Prepaid expenses Increase (decrease) in: Accounts payable 9,732 (14,402) Due to Pennsylvania Bar Institute (2,055) 593 Due to Pennsylvania Bar Association 11,395 (369) Due to IOLTA 202,340 - Escrow liability (Pennsylvania Futures Commission) - (16) Deferred revenue (113,780) 101,142 Security deposits - 39 Net cash and cash equivalents provided by operating activities 99, ,171 Cash Flows From Investing Activities: Purchases of investments (194,126) (445,930) Proceeds from sale of investments 189, ,012 Net cash and cash equivalents used in investing activities (4,628) (22,918) Net Increase in Cash and Cash Equivalents 95,054 86,253 Cash and Cash Equivalents: Beginning of year 392, ,247 End of year $ 487,554 $ 392,500 The accompanying notes are an integral part of these financial statements. 4

9 1. ORGANIZATION Reporting Entity The Pennsylvania Bar Foundation (Foundation) is a nonprofit foundation established on May 15, 1984 to expand the public service role of the organized Pennsylvania Bar Association by financing programs designed to improve the quality of legal services, the public s understanding of the law, and the administration of justice in Pennsylvania. In working toward these goals, the Foundation directs its support to three basic areas: public education programs, improving access to justice initiatives, and programs that improve the administration of justice. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Foundation prepares its financial statements on the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when incurred. Basis of Presentation Net assets, revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Foundation and changes therein are classified and reported as follows: Unrestricted Net assets that are not subject to donor-imposed stipulations. Temporarily restricted Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Foundation and/or the passage of time. Permanently restricted Net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. 5

10 The following funds of the Foundation are reported in the three classes of net assets: Unrestricted Funds Operating Fund The operating fund represents resources over which the Board of Directors has discretionary control and is used to carry out the operations of the Foundation in accordance with bylaws. Fixed Assets Fund The fixed assets fund is designed by the Board of Directors to account for funds to be utilized for land, building, and improvement acquisitions and funds expended for fixed assets. Keystone Funds These funds contain income earned from the Permanent Keystone Fund to be spent for the benefit of the Foundation s charitable purposes. Temporarily Restricted Funds Temporarily restricted funds consist of contributions and/or grants that are restricted by the donor as to the use of the funds, or are restricted by availability. Temporarily restricted funds at December 31, 2013 and 2012 consist of the following: Goffman Award Fund This fund is restricted for awards for outstanding Pro Bono services. Pro Bono Fund This fund contains donations that have been specifically designated to support the efforts of the Foundation in the area of Pro Bono services and programs. Member s Pledge Fund This fund consists of amounts that have been pledged by members over the course of a designated term and consist of Keystone Contributions, Commonwealth Contributions, Life Fellow Contributions, and Fellow Contributions. Dean Edward Sell Memorial Fund This donor-advised fund was established in 2005 for the purpose of endowing a speaker for the Annual Business Law Institute sponsored by the Pennsylvania Bar Institute. MCLE Scholarship Funds This fund is specifically designated to help lawyers of limited means meet their annual MCLE requirements by providing tuition assistance. 6

11 100 th Anniversary of Workers Compensation Fund This donor-advised fund was established in 2013 to support educational efforts to promote awareness of the 100 th anniversary of the Workers Compensation Act in Pennsylvania; to reacquaint the Workers Compensation Bar with the philosophy and history associated with the development of the Pennsylvania Workers Compensation Act; to commemorate the event; and to procure the involvement of all the key groups that participate in the administration of the Workers Compensation Act in the Commonwealth of Pennsylvania. Wayne County Bar Association Fund - This donor-advised fund was established in 2013 to help the Wayne County Bar Association pursue charitable projects and programs by making distributions to qualified tax-exempt organizations. Named Scholarship Funds (McDonald Scholarship Fund and Hoffmeyer Scholarship Fund) - These various funds are established by any person, law firm, county bar association or foundation, committee, or section of the Pennsylvania Bar Association, or law-related entity with its primary place of business in the State of Pennsylvania to provide scholarships to law students based on donoradvised criteria. Permanently Restricted Funds Endowment Funds Endowment funds represent the principal amount of gifts accepted with the donor stipulation that the principal be maintained intact in perpetuity and that only income from the investments be used. Revenue Recognition Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction is met in the same period. Restrictions not met in the same period are reported as temporarily restricted net assets or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires, that is when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statements of activities. Investment income, including realized and unrealized gains restricted by donors, is reported as an increase in unrestricted net assets if the restrictions are met (either a stipulated time period or a purpose restriction is accomplished) in the reporting period in which the income and gains are recognized. 7

12 Management s 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, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statements of cash flows, the Foundation considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. Fair Value Measurements Investments are valued at their fair values in the statements of financial position with gains and losses included in the statements of activities. Valuation techniques and inputs used to develop fair value measurements are based on a fair value hierarchy. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows: Level 1 Quoted prices are available in active markets for identical assets or liabilities as of the report date. A quoted price for an identical asset or liability in an active market provides the most reliable fair value measurement because it is directly observable to the market. Level 2 Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable, as of the report date. The nature of these securities include investments for which quoted prices are available but traded less frequently and investments that are fair valued using other securities, the parameters of which can be directly observed. Level 3 Securities that have little to no pricing observability as of the report date. These securities are measured using management s best estimate of fair 8

13 value, where the inputs into the determination of fair value are not observable and require significant management judgment or estimation. Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes observable requires significant judgment by the Foundation. The Foundation considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Foundation s perceived risk of that instrument. Valuation of Investments Investments whose values are based on quoted market prices in active markets and are, therefore, classified within level 1, include fixed income mutual funds, equity mutual funds, and money market funds. The Foundation does not adjust the quoted price for such instruments, even in situations where the Foundation holds a large position and a sale could reasonably impact the quoted price. The Foundation does not have Level 2 or 3 investments. Pledges Receivable Pledges receivable that are expected to be collected within one year are recorded at net realizable value. Pledges receivable that are expected to be collected in future years are recorded at the present value of their net realizable value. The discount on these amounts was computed using a risk-free rate adjusted for a risk premium (total rate of 22% for 2013 and 2012), which represents the rate associated with probabilityweighted cash flows. Amortization of the discount is included in contribution revenue. 9

14 Fixed Assets It is the policy of the Foundation to record purchased fixed assets at cost and donated assets at their fair value at the date of donation. Depreciation is provided on the straight-line method over the estimated useful lives of the assets. New acquisitions of fixed assets having a low acquisition cost, or which are not expected to last for more than a year, are expended in the year of acquisition. Repairs and maintenance charges are capitalized and depreciated when they materially extend the useful life of the related asset. Taxation The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Service Code and from Commonwealth of Pennsylvania corporate taxes. In addition, the Foundation qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization that is not a private foundation under Section 509(a)(2). The Foundation annually files a Form 990. The filed Form 990 is subject to examination by the Internal Revenue Service generally for three years after it is filed. Subsequent Events Subsequent events have been evaluated through the Independent Auditor's Report date, which is the date the financial statements were available to be issued. 10

15 3. CASH AND INVESTMENTS The cash and cash equivalents balance as of December 31, 2013 and 2012 consisted of the following: Operating $ 85,103 $ 62,214 Memorial 2, Pennsylvania Futures Commission 32,010 32,010 Board Discretionary Fund - Belden 3,900 3,900 Commonwealth Funds 19,296 31,085 Child Advocate Groups 2,475 2,475 National Mock Trial PA IOLTA LRAP 287, ,986 Art Birdsall Impact Grant Fund 8,312 8,562 Keystone Funds - Board Designated 29,760 19,311 Dean Edward Sell Memorial Fund - 2,055 Permanently restricted: Keystone Funds - 4,571 Temporarily restricted: Goffman Fund 1,718 1,025 Pro Bono 22 1,075 McDonald Scholarship Fund 2,500 - Hoffmeyer Scholarship Fund 5, th Anniversary of Workers' Compensation Act Fund 3,231 - Wayne County Bar Association Fund MCLE Scholarships 1,669 1,669 Dean Edward Sell Memorial Fund 1, Total Cash and Cash Equivalents $ 487,554 $ 392,500 11

16 The investment balance as of December 31, 2013 and 2012 consisted of the following: Operating $ 312,862 $ 277,776 Keystone Funds - Board Designated 17,053 - Permanently restricted: Goffman Fund 25,000 25,000 Keystone Funds 127, ,422 Temporarily restricted: Dean Edward Sell Memorial Fund 26,480 23,671 Wayne County Bar Association Fund 9,399 - Goffman Fund 7,244 4,249 Total investments $ 525,226 $ 461,118 The fair value of investments as of December 31, 2013 and 2012 consisted of the following: Equity mutual funds: Emerging markets $ 40,440 $ 20,705 International 46,558 26,057 Large cap 121,046 99,819 Mid cap 64,860 48,591 Small cap 53,557 47,458 Fixed mutual funds: World bond 35,238 23,522 Short term bond 35,482 45,191 Intermediate term bond 80, ,327 Non traditional bond - 22,448 Corporate bonds 47,891 - Total investments $ 525,226 $ 461,118 12

17 Fair Value of Financial Instruments As of December 31, 2013 and 2012, all of the Foundation s investments were classified as Level 1 investments. 4. PLEDGES RECEIVABLE - NET Pledges receivable as of December 31, 2013 and 2012 consisted of the following: Pledges receivable before discount $ 62,622 $ 78,420 Less: Discount 13,413 16,837 Pledges Receivable, Net $ 49,209 $ 61,583 Amounts due in: Less than one year $ 18,156 $ 20,779 One to five years 38,958 51,829 More than five years 5,508 5,812 Total $ 62,622 $ 78, FIXED ASSETS Fixed assets as of December 31, 2013 and 2012 consisted of the following: Useful Lives Land $ 120,000 $ 120,000 Building and improvements 39 Years 122, , , ,903 Less: accumulated depreciation (67,736) (64,530) Fixed Assets, Net $ 175,167 $ 178,373 Depreciation was $3,206 for both the years ended December 31, 2013 and

18 6. BOARD-DESIGNATED NET ASSETS Board-designated net assets as of December 31, 2013 and 2012 consisted of the following: Keystone Funds $ 46,813 $ 19,311 Fixed Assets Fund 175, ,373 Total Board-Designated Net Assets $ 221,980 $ 197, TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets as of December 31, 2013 and 2012 consisted of the following: Purpose - restricted: Goffman Award Fund $ 8,962 $ 5,274 Pro Bono Fund 22 1,075 Dean Edward Sell Memorial Fund 27,891 24,501 Worker's Comp Fund 3,231 - Wayne County Bar Association Fund 9,900 - Hoffmeyer Scholarship 5,250 - MCLE Scholarship Funds 1,669 1,669 Total purpose-restricted net assets 56,925 32,519 Time - restricted: Member's Pledge Fund 62,622 78,420 Discount (13,413) (16,837) Total time-restricted net assets 49,209 61,583 Total Temporarily Restricted Net Assets $ 106,134 $ 94,102 14

19 8. PERMANENTLY RESTRICTED NET ASSETS Interpretation of Relevant Law The Foundation s Keystone Endowment Funds and the Louis J. Goffman Endowment Fund are classified as permanently restricted net assets. These funds are invested in perpetuity for which only income is expendable to support the donor-stipulated program. Investment Management Policy Gifts to Keystone Endowment Funds and the Louis J. Goffman Endowment Fund are generally given with the donors expectations that the funds will stay intact and will grow from earnings, which can then be used for current or long-term needs of the Foundation. Therefore, the funds should be invested in accordance with these general policies: 1. Preservation to Capital Both with respect to the overall Fund and to the assets assigned to the investment manager the Foundation s Board of Directors should make conscious efforts to preserve capital, understanding that losses may occur in individual securities. 2. Risk Aversion Understanding that risk is present in all types of securities and investment styles, the Foundation s Board of Directors recognizes that some risk is necessary to produce long-term investment results sufficient to meet the Foundation s objectives. However, the main goal is generation of growth of principal within prudent guidelines for preservation of asset value. Credit quality, potential for long-term growth and generation of future income are primary consideration in asset selection. 3. Adherence to Investment Discipline The investment manager is expected to only invest in approved investments designated in the Foundation s investment policy. All assets shall be of investment grade. Investment Objectives Specifically, the primary objective in the investment management of fund assets shall be: 1. To preserve purchasing power after spending 15

20 2. To achieve returns that are no less than the rate of inflation plus spending over the investment horizon in order to preserve purchasing power of fund assets 3. To control risk in the investment of fund assets Handling of Income from Endowment Fund Investments All income earned, on the Keystone Funds, whether interest income, dividend income, or unrealized and realized gains, will be available for charitable purposes of the Foundation. There are no restrictions of the use of the income other than it must be used for benefit of the Foundation s charitable purposes. All income earned, on the Goffman Funds, whether interest income, dividend income, or unrealized and realized gains, will be used to fund the annual Louis J. Goffman cash award. The income is temporarily restricted and must be used toward the annual Louis J. Goffman award, which seeks to recognize and honor an individual and an organization whose commitments to pro bono have enhanced the delivery of legal services to Pennsylvania s poor or disadvantaged, making a critical difference in the lives of those in need of legal representation. Changes in endowment net assets for the year ended December 31, 2013 are as follows: Goffman Keystone Funds Funds Total Endowment Net Assets, Beginning of Year $ 25,000 $ 134,993 $ 159,993 Contributions - 1,000 1,000 Release from restrictions - (8,805) (8,805) Endowment Net Assets, End of Year $ 25,000 $ 127,188 $ 152,188 16

21 Changes in endowment net assets for the year ended December 31, 2012 are as follows: Goffman Keystone Funds Funds Total Endowment Net Assets, Beginning of Year $ 25,000 $ 117,688 $ 142,688 Contributions - 8,500 8,500 Realized gains - 1,390 1,390 Unrealized gains 7,832 7,832 Investment fees - (417) (417) Endowment Net Assets, End of Year $ 25,000 $ 134,993 $ 159, RELATED PARTY TRANSACTIONS The Foundation and the Pennsylvania Bar Association (Association) have certain common board members. Pursuant to the Foundation s By-Laws, the president of the Association and the Chair of the Association s Young Lawyer Division are designated members of the Board of Directors. Further, the Association president appoints two additional members to the Foundation s Board. The remaining voting members of the Board of Directors include the president of the Pennsylvania Bar Institute or his/her designee, a director appointed by the Foundation president who need not be a lawyer, the president, vice president, treasurer, and secretary of the Foundation, the immediate past president of the Foundation, and one director from each of the twelve zones elected by the Foundation members. All living past presidents are non-voting members. The Foundation and the Association jointly own rental property in Harrisburg with leased offices. The organizations renting the property pay the Association who then distributes the Foundation s share of the rent. Rental income under these leases was $10,121 and $9,922 for the years ended December 31, 2013 and 2012, respectively. During the year ended December 31, 2013, the property leases were extended on a month-to-month basis for $843 per month. The Foundation also leases parking spaces to the Association on a month-to-month basis for $1,475 per month. Total parking paid was $17,695 for the years ended December 31, 2013 and The directors of the Foundation approved reimbursement to the Association in the amount of $36,000 for administrative fees for the years ended December 31, 2013 and The amount of the administrative fee paid by the Foundation is subject to change on an annual basis. The Foundation also reimburses the Association for 17

22 various costs incurred and paid on behalf of the Foundation. For the years ended December 31, 2013 and 2012, these reimbursements were $56,099 and $62,620, respectively. Reimbursements due to the Association at December 31, 2013 and 2012 for such costs were $22,210 and $10,815, respectively. The Association also reimburses the Foundation for various costs incurred and paid on behalf of the Association. There were no costs incurred and paid on behalf of the Association for the years ended December 31, 2013 and The Association also collects contributions on behalf of the Foundation. The amount owed to the Foundation from the Association for the reimbursements due and collected contributions were $23,636 and $12,958 for the years ended December 31, 2013 and 2012, respectively. The Foundation awarded grants to the Association that were budgeted and awarded in the Foundation s calendar year ended December 31, 2013 and These grants totaled $26,050 and $26,500, respectively. The Association s fiscal year ends December 31, 2013 and 2012, and the balance of these grants has not yet been disbursed. The amount of temporarily restricted funds was $22 and $1,075 at December 31, 2013 and 2012, respectively, and is presented in the financial statements as a designation of unrestricted net assets. 10. PENNSYLVANIA FUTURES COMMISSION The Pennsylvania Futures Commission (Commission) is a separate and unrelated non-profit organization for which the Foundation performs administrative services. These services involve the custody of one of the Commission s accounts and disbursements there from. These funds are property of the Commission and, as such, are not available to pay expenses of the Foundation. The balance held in this account appears as an escrow liability on the Foundation s statements of financial position. 11. CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Foundation to concentration of credit risk consist principally of cash and cash equivalents held with financial institutions. Accounts at financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per institution for the years ended December 31, 2013 and The Foundation s total uninsured cash balance was $282,084 and $198,377 at December 31, 2013 and 2012, respectively. The Foundation also maintains cash balances in money market accounts which are not insured by the FDIC. The uninsured amount totaled $27,980 and $16,160 as of December 31, 2013 and 2012, respectively. 18

23 12. RESTATEMENT OF NET ASSETS The beginning balances for unrestricted and temporarily restricted net assets have been restated as of December 31, 2011 to reflect a change in presentation of the endowment funds of the Foundation. As all income earned, whether income or dividend income, will be available for charitable purposes of the Foundation, such income is classified as unrestricted net assets. Accordingly, all net assets and related activity over which the management of the Foundation exercises direct control are classified as unrestricted net assets in the accompanying financial statements. Temporarily Permanently Unrestricted Restricted Restricted Total Net Assets Net Assets Net Assets Net Assets Net assets at December 31, as originally stated $ 534,794 $ 107,089 $ 142,688 $ 784,571 Restatement 16,909 (16,909) - - Net assets at December 31, as restated $ 551,703 $ 90,180 $ 142,688 $ 784,571 19

24 Supplementary Information

25 SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2013 Program Management Fund- Services and General raising Total Accounting $ - $ 4,300 $ - $ 4,300 Administrative fees - 36,000-36,000 Depreciation - 3,206-3,206 Event expense ,586 11,586 Grant projects 25, ,119 Insurance - 2,981-2,981 Maintenance - 3,991-3,991 Meetings - 2,440-2,440 Miscellaneous expense - 24,984-24,984 Office supplies Postage - 1,047-1,047 Promotion - - 3,301 3,301 Real estate taxes - 9,700-9,700 Scholarships and awards 355, ,215 Supplies Telephone - 1,345-1,345 Water, sewer, refuse, and electric - 4,318-4,318 $ 380,334 $ 94,732 $ 14,887 $ 489,953 20

26 SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2012 Program Management Fund- Services and General raising Total Accounting $ - $ 4,500 $ - $ 4,500 Administrative fees - 36,000-36,000 Depreciation - 3,206-3,206 Event expense 1,330-8,201 9,531 Grant projects 26, ,251 Insurance - 2,888-2,888 Maintenance - 3,713-3,713 Meetings - 7,424-7,424 Miscellaneous expense - 1,984-1,984 Office supplies Postage Promotion - - 2,295 2,295 Real estate taxes - 9,567-9,567 Scholarships and awards 305, ,637 Supplies Telephone - 1,078-1,078 Water, sewer, refuse, and electric - 3,808-3,808 $ 333,218 $ 75,578 $ 10,496 $ 419,292 21