METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE

Transcription

1 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2014 AND 2013 AND INDEPENDENT AUDITORS REPORT

2 INDEPENDENT AUDITORS REPORT To the Board of Directors of Metropolitan Lutheran Ministry Kansas City, Missouri We have audited the accompanying consolidated financial statements of Metropolitan Lutheran Ministry and affiliate (the Organization ), which comprise the consolidated statements of financial position as of June 30, 2014 and 2013, and the related consolidated statements of activities and changes in net assets, functional expenses, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 the consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated 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 entity 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Metropolitan Lutheran Ministry and affiliate as of June 30, 2014 and 2013, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Overland Park, Kansas December 18,

3 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE Consolidated Statements of Financial Position June 30, 2014 and ASSETS CURRENT ASSETS: Cash and cash equivalents $ 250,335 $ 284,077 Investments 1,009, ,369 Accounts receivable, net 401, ,264 Inventory 84,585 68,520 Prepaid expenses and other 68,808 57,703 Total current assets 1,815,032 1,256,933 PROPERTY AND EQUIPMENT, NET 216, ,780 Total assets $ 2,031,646 $ 1,481,713 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable $ 34,241 $ 29,050 Accrued expenses 29,042 23,999 Refundable advances on government grants and contracts ,486 Other current liabilities 9,820 9,165 Total current liabilities 73, ,700 COMMITMENTS AND CONTINGENCIES NET ASSETS: Unrestricted 1,253,157 1,135,507 Board designated 133,621 Total unrestricted net assets 1,386,778 1,135,507 Temporarily restricted 571, ,506 Total net assets 1,958,116 1,376,013 Total liabilities and net assets $ 2,031,646 $ 1,481,713 See notes to financial statements. 2

4 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE Consolidated Statement of Activities and Changes in Net Assets Year Ended June 30, 2014 Temporarily Unrestricted Restricted Total REVENUES, GAINS AND OTHER SUPPORT: Contributions and grants: Foundations $ 103,324 $ 630,742 $ 734,066 Individuals 471,013 72, ,565 Member congregations 183,904 8, ,528 Other congregations 3,415 17,835 21,250 United Way 75, , ,583 Corporations 106, ,896 Other organizations 16,067 23,561 39,628 Special events 47,415 47,415 In-kind contributions 1,386,008 1,386,008 Special event revenue 31,655 31,655 Government grants and contracts 832, ,178 Program fees 48,174 48,174 Investment income, net and other 68,447 68,447 Net assets released from restrictions 549,162 (549,162) Total revenues, gains and other support 3,923, ,832 4,254,393 EXPENSES: Program services: Service centers 2,328,975 2,328,975 Minor home repair 29,366 29,366 Christmas store 134, ,680 Learning to earning 98,420 98,420 Supported housing 554, ,502 Total program services 3,145,943 3,145,943 Supporting services: Administration 271, ,326 Fundraising 217, ,529 Direct benefit to donors 37,492 37,492 Total supporting services 526, ,347 Total expenses 3,672,290 3,672,290 CHANGE IN NET ASSETS 251, , ,103 NET ASSETS, BEGINNING OF YEAR 1,135, ,506 1,376,013 NET ASSETS, END OF YEAR $ 1,386,778 $ 571,338 $ 1,958,116 See notes to financial statements. 3

5 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE Consolidated Statement of Activities and Changes in Net Assets Year Ended June 30, 2013 Temporarily Unrestricted Restricted Total REVENUES, GAINS AND OTHER SUPPORT: Contributions and grants: Foundations $ 114,357 $ 250,213 $ 364,570 Individuals 323,365 62, ,044 Member congregations 123,173 18, ,986 Other congregations 4,713 15,091 19,804 United Way 101,955 53, ,260 Corporations 105,406 2, ,256 Other organizations 19,306 13,236 32,542 Special events 43,445 43,445 In-kind contributions 1,422,877 1,422,877 Special event revenue 31,088 31,088 Government grants and contracts 440, ,503 Program fees 35,555 35,555 Investment income, net and other 18,230 18,230 Net assets released from restrictions 377,111 (377,111) Total revenues, gains and other support 3,161,084 39,076 3,200,160 EXPENSES: Program services: Service centers 1,864,175 1,864,175 Minor home repair 24,868 24,868 Christmas store 144, ,886 Learning to earning 40,978 40,978 Supported housing 386, ,604 Total program services 2,461,511 2,461,511 Supporting services: Administration 262, ,305 Fundraising 189, ,407 Direct benefit to donors 32,869 32,869 Total supporting services 484, ,581 Total expenses 2,946,092 2,946,092 CHANGE IN NET ASSETS 214,992 39, ,068 NET ASSETS, BEGINNING OF YEAR 920, ,430 1,121,945 NET ASSETS, END OF YEAR $ 1,135,507 $ 240,506 $ 1,376,013 See notes to financial statements. 4

6 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE Consolidated Statement of Functional Expenses Year Ended June 30, 2014 Community Support Services Minor Service Home Christmas Learning to Supported Program Centers Repair Store Earning Housing Total Administration Fundraising Total Salaries and wages $ 201,881 $ 1,934 $ 8,556 $ 45,548 $ 159,227 $ 417,146 $ 127,998 $ 101,196 $ 646,340 Employee benefits 29, ,605 29,164 63,196 28,549 11, ,484 Payroll taxes 18, ,970 13,130 36,224 10,986 9,059 56,269 Client assistance 1,974,145 26, ,530 32, ,567 2,412,540 2,412,540 Telephone 5, ,298 14,813 4,808 1,555 21,176 Postage and shipping ,559 1,550 3,355 6,464 Supplies 6, ,510 14,640 2,866 3,527 21,033 Professional fees ,286 8,734 24, ,017 Contracted services 25, ,574 41,993 23,551 31,525 97,069 Equipment rental and maintenance 2, ,274 3,927 3, ,633 Insurance 5, ,236 6,797 13,990 5,332 2,777 22,099 Printing and publications 1,296 1,296 1,737 10,379 13,412 Occupancy 22, ,388 23,150 48,322 9,883 4,292 62,497 Depreciation and amortization 20, ,469 16,642 42,658 13,823 10,043 66,524 Travel 3, ,942 7,324 3,693 2,412 13,429 Special events ,245 15,562 Other expenses 10, , ,591 17,264 8,439 9,547 35,250 TOTAL FUNCTIONAL EXPENSES $ 2,328,975 $ 29,366 $ 134,680 $ 98,420 $ 554,502 $ 3,145,943 $ 271,326 $ 217,529 3,634,798 Direct benefit to donors 37,492 TOTAL EXPENSES $ 3,672,290 See notes to financial statements. 5

7 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE Consolidated Statement of Functional Expenses Year Ended June 30, 2013 Community Support Services Minor Service Home Christmas Learning to Supported Program Centers Repair Store Earning Housing Total Administration Fundraising Total Salaries and wages $ 140,590 $ 3,492 $ 6,968 $ 21,336 $ 119,920 $ 292,306 $ 132,006 $ 85,645 $ 509,957 Employee benefits 26, ,736 22,806 51,687 21,346 10,075 83,108 Payroll taxes 14, ,125 9,399 26,608 11,470 7,530 45,608 Client assistance 1,567,788 18, ,760 6, ,567 1,890,067 1,890,067 Telephone 5, ,821 11,643 5,176 1,635 18,454 Postage and shipping ,475 1,459 2,957 5,891 Supplies 5, ,986 15,611 23,253 1,507 1,910 26,670 Professional fees ,081 2,235 17, ,675 Contracted services 15, ,626 22,503 12,200 30,971 65,674 Equipment rental and maintenance 3, ,361 5,492 6,424 4,631 16,547 Insurance 5, ,626 11,276 6,603 3,304 21,183 Printing and publications ,071 8,233 11,190 Occupancy 27,568 1, ,322 17,606 48,078 9,885 4,774 62,737 Depreciation and amortization 15, ,323 13,054 31,819 14,370 9,323 55,512 Travel 1, ,282 4,778 4,178 2,424 11,380 Special events ,861 10,269 Other expenses 33, ,563 36,997 16,247 6,057 59,301 TOTAL FUNCTIONAL EXPENSES $ 1,864,175 $ 24,868 $ 144,886 $ 40,978 $ 386,604 $ 2,461,511 $ 262,305 $ 189,407 2,913,223 Direct benefit to donors 32,869 TOTAL EXPENSES $ 2,946,092 See notes to financial statements. 6

8 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE Consolidated Statements of Cash Flows Years Ended June 30, 2014 and CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 582,103 $ 254,068 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 66,524 55,513 Contribution of investment securities (18,048) (6,965) Net unrealized and realized investment (losses) gains (40,403) 11,600 Changes in operating assets and liabilities: Accounts receivable (254,104) 7,218 Inventory (16,065) (31,754) Prepaid expenses and other (11,105) (30,022) Accounts payable 5,191 22,360 Accrued expenses 5,043 (11,989) Refundable advances on government contracts (43,059) 42,671 Other current liabilities 655 3,810 Net cash provided by operating activities 276, ,510 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (58,358) (47,931) Purchase of investments (273,169) (270,800) Proceeds from sale of investments 21,053 1,257 Net cash used in investing activities (310,474) (317,474) NET DECREASE IN CASH (33,742) (964) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 284, ,041 CASH AND CASH EQUIVALENTS, END OF YEAR $ 250,335 $ 284,077 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for interest and taxes $ - $ - See notes to financial statements. 7

9 METROPOLITAN LUTHERAN MINISTRY AND AFFILIATE Notes to Consolidated Financial Statements Years Ended June 30, 2014 and NATURE OF ACTIVITIES AND PROGRAM DESCRIPTIONS Principles of Consolidation The accompanying consolidated financial statements include the accounts of Metropolitan Lutheran Ministries and the MLM Foundation ( MLM or the Organization ). All significant intercompany transactions and balances have been eliminated. Nature of Activities Metropolitan Lutheran Ministry affirms the right of all people to food, clothing and shelter, while promoting self-sufficiency and hope through direct services and advocacy. MLM serves residents in the Kansas City, Missouri metropolitan area. The MLM Foundation s exclusive purpose is to aid and assist the Organization in carrying out its purpose and functions. MLM Foundation s assistance is provided through soliciting, accepting and receiving gifts, grants, and legacies on behalf of the Organization. MLM programs holistically address the immediate need for food, clothing, shelter, utilities and transportation. Strengths and outcomes-based counseling and case management services guide clients in stabilizing their life circumstances and developing self-sufficiency. Services are provided at three Community Support Service Centers and at three supported housing locations. MLM is supported primarily through donor contributions, grants, and the United Way. The following program and supporting services are included in the accompanying consolidated financial statements: Community Support Services: Service Centers Provides food, clothing, blankets, household items, fans, school supplies, case management and financial assistance for rent/deposits, mortgage payments and utilities to client families and individuals in urgent need of assistance from three agency locations. Case management helps to address the underlying problems of poverty. MLM is very responsive to the needs of older adults in the community. In addition to emergency assistance services, our Service Centers help seniors with Senior Companions, telephone reassurance calls and holiday baskets. Minor Home Repair Provides assistance to low income, elderly and disabled home owners who need repairs and upgrades so they can continue living in their homes. Often safety and disability upgrades to homes make the difference between aging in place vs. having to move to a nursing home. Christmas Store In cooperation with a volunteer base of 500 people, MLM operates a Christmas Store in Kansas City. The store serves approximately 1,000 families annually with food vouchers and a self-shop store with gifts for every member of the family. Learning to Earning In 2013, MLM opened a center dedicated to assisting individuals with job search and educational opportunities. The center provides access to computers and the internet, education toward the attainment of a GED, support in resume writing and other job search activities and limited financial support to those enrolled in the program. 8

10 Other Programs: Supported Housing MLM operates three permanent supportive housing projects in the Kansas City metropolitan area, housing thirty-two chronically homeless persons who have disabilities. Residents live in a safe and nurturing setting with a full time staff member present to coordinate their services and activities. Homeless Services This program provided case management, job referrals, telephone usage, emergency assistance, individual and group counseling, assistance with locating housing and placement, rent/deposit assistance, and transportation assistance to the homeless of the metropolitan area. Due to funding changes, this program has been terminated, and certain services combined with other programs. Administration and Fundraising Provides oversight of programs, business management, record keeping, and budgeting, financing and other administrative and fundraising activities for the entire Organization. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting and Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Organization is required to report information regarding its financial position and activities according to the three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Cash and Cash Equivalents For the purposes of the Statement of Cash Flows, the Organization considers highly liquid investments with an initial maturity of three months or less to be cash equivalents. The Organization maintains cash balances at a bank located in Kansas City, Kansas. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Organization occasionally maintains cash balances in excess of federally insured limits. Accounts Receivable Accounts receivable are stated at outstanding balances, less an allowance for doubtful accounts. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts. Inventory The inventory is stated at the lower of cost or estimated fair value and consists of contributed and purchased goods to be used to help clients with basic needs and supplies. The inventory consists of the following at June 30: Food $ 44,953 $ 48,496 Supplies 38,680 20,024 Other 952 $ 84,585 $ 68,520 The goods contributed during the years ended June 30, 2014 and 2013, were valued at approximately $1,320,000 and $1,360,000, respectively, and are recorded as in-kind contributions and expenses of direct client assistance. The value was based on the estimated average unit value of such items. 9

11 Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Major additions and improvements are capitalized, and maintenance and repairs that do not improve or extend the life of the respective assets are charged against net assets in the current period. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from 3 to 20 years. Contributions Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Promises to Give Unconditional promises to give are recorded as revenues or gains in the period received and as assets or a decrease of liabilities, depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. As of June 30, 2014, the Organization had received a conditional promise to give of $145,000 related to an expected capital campaign starting subsequent to year end. Donated Assets Donated marketable securities and other noncash donations are recorded as contributions at their estimated fair values at the date of donation. Donations of property and equipment are recorded as support at their estimated fair value at the date of donation. Such donations are reported as unrestricted support unless the donor has restricted the donated assets to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time. Grant Revenues The Organization receives a significant amount of revenue in the form of grants. The Organization recognizes grant funds received or receivable as revenue to the extent that related program expenses have been incurred. Grant funds received in excess of expenses incurred are recognized as refundable advances in the Statement of Financial Position. Contributed Services Contributed services are recognized as contributions if the services (a) create or enhance nonfinancial assets or (b) require specialized skills which are performed by individuals possessing those skills, and (c) would otherwise be purchased by the Organization if not donated. During the years ended June 30, 2014 and 2013, no such services have been received. Many individuals volunteered their time and performed a variety of tasks that assisted the Organization with specific assistance programs, campaign solicitations, and various committee assignments. The Organization received approximately 17,000 and 21,000 volunteer hours during the years ended June 30, 2014 and 2013, respectively. Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the statement of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Income Taxes MLM is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. In addition, MLM 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)(1). MLM Foundation is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. In addition, MLM Foundation qualifies for the charitable 10

12 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)(1). As a result, no provision for income taxes has been recorded. The Organizations account for uncertain tax positions in accordance with the provisions of Financial Accounting Standards Board ( FASB ) Codification topic 740 Income Taxes. Income Taxes clarifies the accounting for uncertainty in income taxes and requires the Organization to recognize in their financial statements the impact of a tax position taken or expected to be taken in a tax return, if that position is more likely than not to be sustained under audit, based on the technical merits of the position. Management has assessed the tax positions of the Organizations and determined that no positions exist that require adjustment or disclosure in the financial statements. The Organizations are subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Organizations believe they are no longer subject to income tax examinations for years prior to 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 and 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. Date of Management s Review Subsequent events have been evaluated through December 18, 2014, the date that these consolidated financial statements were available to be issued, and there were no material events requiring recognition or disclosure. 3. BOARD DESIGNATED NET ASSETS During 2014, MLM Board of Directors designated a portion of the prior year s unrestricted revenues over expenses as a discretionary fund to be used by staff for additional program expenses. The amount of the discretionary fund is designated by the Board during the annual budgeting process. 4. INVESTMENTS FASB ASC 820, Fair Value Measurements, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: Level 1 Inputs consist of unadjusted quoted prices for identical assets in active markets that the plan has the ability to access. Level 2 Inputs consist of 1) quoted prices for similar assets in active markets, 2) quoted prices for identical or similar assets in inactive markets, 3) inputs other than quoted prices that are observable, and 4) inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset has a specified (contractual) term, the level 2 input must be observable for substantially the full term. Level 3 Inputs consist of unobservable inputs where there is little or no market activity, and the reporting entity makes estimates and assumptions related to the pricing of the asset including assumptions regarding risk. The assets fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. 11

13 The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, 2014 and 2013: Mutual funds and money market accounts Stated at the net asset value (NAV) of shares held at year end based on published quoted prices. Pooled separate accounts The Organization has an investment fund at the Greater Kansas City Community Foundation. The investments held in this fund are invested in investment pools. The Organization does not own the individual securities of the investment pool, but rather owns a proportional share of the total investment pool. The value of a separate account is the sum of the fair value of the underlying securities, based on quoted market prices. The pooled separate accounts hold primarily fixed income securities, common stocks and money market instruments. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Organization believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Investments are reported at fair value as follows: Fair Value Measurements Using: Fair Value Level 1 Level 2 Level 3 June 30, 2014: Mutual Funds - Bond / fixed income $ 284,418 $ 284,418 Money markey funds 11,849 11,849 Equity fund 361, ,004 Pooled Separate Accounts: (a) Money market fund 52,226 $ 52,226 Fixed income fund 157, ,338 Equity fund 143, ,101 $ 1,009,936 $ 657,271 $ 352,665 $ - June 30, 2013: Mutual Funds - Bond / fixed income $ 611,362 $ 611,362 Pooled Separate Accounts: (a) Money market fund 13,468 $ 13,468 Fixed income fund 39,508 39,508 Equity fund 35,031 35,031 $ 699,369 $ 611,362 $ 88,007 $ - (a) The pooled separate accounts are measured at fair value based on net asset value ( NAV ) per share at June 30, 2014 and They are valued daily, may be redeemed daily without restrictions, and with no notice requirements. 12

14 Realized and unrealized gains and losses are reflected in the statement of activities as changes in unrestricted net assets. The following summarizes the investment return, which is included in Investment income, net and other in the statement of activities for the year ended June 30: Interest and dividend income $ 23,169 $ 20,741 Realized and unrealized gain (loss), net 40,403 (11,600) 5. ACCOUNTS RECEIVABLE $ 63,572 $ 9,141 Contribution, grant and contract receivables consist of the following as of June 30, all of which are due within the next year United Way $ 146,581 $ 69,777 Foundations 45,650 1,200 Individuals 14,190 23,773 Other 11,255 8,915 Allowance for uncollectible pledges (4,841) (8,456) Contributions receivable 212,835 95,209 Government contracts 188,533 52,055 Total receivables $ 401,368 $ 147,264 The allowance for uncollectible pledges is an estimate of United Way pledge receivables, as well as other contributions receivable, that may not be collected. This occurs when donors who pledge support to the Organization through the United Way do not fulfill their pledges. 6. PROPERTY AND EQUIPMENT Property and equipment consist of the following at June 30: Land $ 5,000 $ 5,000 Buildings and improvements 467, ,080 Equipment 176, ,398 Vehicles 35,872 16,000 Software 15,124 15, , ,602 Less accumulated depreciation (483,346) (416,822) $ 216,614 $ 224,780 During the year ended June 30, 2014 and 2013, depreciation and amortization expense of $66,524 and $55,513, respectively, is included in the statement of activities. 13

15 7. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes or periods as of June 30: Emergency assistance $ 341,270 $ 157,947 Christmas Store 24,854 25,702 Minor home repair 36,977 9,951 Lecture series 1,205 3,541 Personnel costs 7,630 3,189 Professional services 16,083 12,699 Learning to earning 74,108 10,853 Orchard 9,450 10,567 Capital projects 12,500 General operations - time restricted 33,374 Supported housing 13,887 Other 6,057 $ 571,338 $ 240,506 Net assets of $549,162 and $377,111, respectively, were released from donor restrictions by incurring expenses satisfying the restricted purposes specified by the donors, or by the passage of time Emergency assistance $ 309,493 $ 247,153 Personnel costs 8,109 Professional services 29,316 24,651 Christmas Store 40,249 30,181 Minor home repair 28,144 18,545 General operations - time restricted 16,915 8,876 Learning to earning 57,703 34,146 Orchard 16,117 5,450 Supported housing 48,560 Lecture series 2,665 $ 549,162 $ 377, COMMITMENTS AND CONTINGENCIES As of June 30, 2014, the Organization is operating 3 supported housing programs. For each of the programs, the Organization has entered into an operating lease agreement with an apartment complex. These leases generally run for 1 or 2 years, with options for annual renewal. The Organization also leases certain copiers and other office equipment under non-cancelable operating lease agreements. Rental expense was approximately $265,000 and $202,000 in 2014 and 2013, respectively. Future minimum lease payments under these operating leases as of June 30, 2014, are as follows: Year Ending June 30, 2015 $ 108,700 Year Ending June 30, ,956 Year Ending June 30, ,428 Thereafter $ 1, ,869 14

16 9. RETIREMENT PLAN The Organization sponsors a 403(b) retirement plan under which eligible employees may choose to defer a percent of their salary on a pre-tax basis, subject to certain IRC limits. The plan covers employees who meet the eligibility requirements as stated in the plan document. Employees may contribute any amount of their respective wages as long as they do not exceed the IRC limitation. The Organization matches an amount equal to 100% of each participant s contribution up to 3% of the participant s respective wages. The Organization contributed $5,433 and $8,210 for the years ended June 30, 2014 and 2013, respectively. 10. MAJOR CONCENTRATIONS Revenues The Organization received approximately $564,000 and $348,000 of direct and passthrough funds from the Department of Housing and Urban Development for the years ended June 30, 2014 and 2013, respectively. This funding represented approximately 13% and 11% of the Organization s revenues for the years ended June 30, 2014 and 2013, respectively. In addition, the Organization received approximately $203,000 and $155,000 in allocation and donor designated contributions from the United Way, which represents approximately 5% of the Organization s support for the years ended June 30, 2014 and Federal Awards The Organization has received financial assistance from the U.S. Department of Housing and Urban Development, U.S. Department of Homeland Security and U.S. Department of Agriculture, through direct grants and various pass-through grantors, in the form of contracts, grants and awards to fund its activities. These activities are subject to audit by agents of the granting authority, and by independent public accountants, under the Single Audit Act, the purpose of which is to ensure compliance with the terms and conditions specified in these agreements. Such audits could result in claims against the Organization for disallowed costs or noncompliance with grantor restrictions. No provision has been made for any liabilities that may arise from such audits since the amounts, if any, cannot be determined at this date. ******* 15