FINANCIAL STATEMENTS With Independent Auditors' Report. June 30, 2013 and 2012

Transcription

1 FINANCIAL STATEMENTS With Independent Auditors' Report June 30, 2013 and 2012

2 Table of Contents Independent Auditors' Report 1 Financial Statements Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 6 Notes to Financial Statements 7 Supplementary Schedule Independent Auditors' Report on Supplementary Schedule 14 Schedule of Operating Functional Expenses 15 Page

3 INDEPENDENT AUDITORS' REPORT Board of Directors Denver Rescue Mission Denver, Colorado We have audited the accompanying financial statements of the Denver Rescue Mission, which comprise the statements of financial position as of June 30, 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. 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 entity'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 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 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 Denver Rescue Mission Denver, Colorado Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Denver Rescue Mission as of June 30, 2013 and 2012, and the changes in its net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Littleton, Colorado August 21,

5 Statements of Financial Position June 30, ASSETS: Cash and cash equivalents $ 1,854,685 $ 6,035,147 Investments 3,235, ,158 Contributions receivable net - 383,528 Prepaid expenses and other assets 363, ,026 Gift-in-kind inventory 670, ,555 Bond origination fees net 148,669 - Land, buildings, and equipment net 15,839,635 12,609,484 Total Assets $ 22,112,438 $ 20,613,898 LIABILITIES AND NET ASSETS: Liabilities: Accounts payable $ 659,973 $ 441,790 Accrued expenses 533, ,419 Deferred revenue and other liabilities 63,511 62,954 Bonds payable 232,771-1,490, ,163 Net assets: Unrestricted: Operating 4,866,832 6,640,265 Equity in land, buildings, and equipment net 15,755,533 12,609,484 20,622,365 19,249,749 Temporarily restricted: Time restriction contributions receivable - 383,528 Projects - 1, ,986 20,622,365 19,634,735 Total Liabilities and Net Assets $ 22,112,438 $ 20,613,898 See notes to financial statements -3-

6 Statements of Activities Year Ended June 30, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total OPERATING: SUPPORT AND REVENUE: Contributions: Individuals, businesses and others $ 13,480,046 $ 3,966,730 $ 17,446,776 $ 12,040,668 $ 3,591,289 $ 15,631,957 Gift-in-kind inventory 8,591,817-8,591,817 8,560,596-8,560,596 22,071,863 3,966,730 26,038,593 20,601,264 3,591,289 24,192,553 Program service revenue and other 1,154,316-1,154,316 1,337,991-1,337,991 Total Support and Revenue 23,226,179 3,966,730 27,192,909 21,939,255 3,591,289 25,530,544 NET ASSETS RELEASED: Purpose restrictions 3,968,188 (3,968,188) - 3,732,056 (3,732,056) - EXPENSES: Program services: Ministry Outreach Center 6,911,383-6,911,383 7,006,955-7,006,955 The Crossing 6,206,005-6,206,005 6,157,279-6,157,279 Lawrence Street 3,474,112-3,474,112 3,365,274-3,365,274 Harvest Farm 2,235,501-2,235,501 2,240,539-2,240,539 Champa House 679, , , ,418 Fort Collins 439, , ,945,850-19,945,850 19,408,465-19,408,465 (continued) See notes to financial statements -4-

7 Statements of Activities (continued) Year Ended June 30, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total OPERATING, continued: EXPENSES, continued: Supporting activities: General and administrative 1,044,494-1,044,494 1,092,446-1,092,446 Fund-raising 4,348,225-4,348,225 4,178,917-4,178,917 5,392,719-5,392,719 5,271,363-5,271,363 Total Expenses 25,338,569-25,338,569 24,679,828-24,679,828 Change in Net Assets From Operations 1,855,798 (1,458) 1,854, ,483 (140,767) 850,716 NON-OPERATING: Loss on impairment of asset (866,710) - (866,710) Loss on disposal of land, buildings and equipment (12,494) - (12,494) Net assets released from time restrictions 383,528 (383,528) - 183,830 (183,830) - Change in Net Assets From Non-Operating Activities (483,182) (383,528) (866,710) 171,336 (183,830) (12,494) Change in Net Assets 1,372,616 (384,986) 987,630 1,162,819 (324,597) 838,222 Net Assets, Beginning of Year 19,249, ,986 19,634,735 18,086, ,583 18,796,513 Net Assets, End of Year $ 20,622,365 $ - $ 20,622,365 $ 19,249,749 $ 384,986 $ 19,634,735 See notes to financial statements -5-

8 Statements of Cash Flows Year Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 987,630 $ 838,222 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 1,002, ,729 Amortization of prepaid expenses 456, ,654 Accretion of contributions receivable (16,472) (16,170) Non-cash contributions of fixed assets (290,944) (27,075) Loss on disposal of land, buildings, and equipment - 12,494 Loss on impairment of asset 866,710 - Receipt of gift-in-kind inventory (8,591,817) (8,560,596) Distribution of gift-in-kind inventory 8,500,689 8,656,861 Changes in operating assets and liabilities: Prepaid expenses and other assets (295,895) (531,843) Accounts payable 218, ,777 Accrued expenses 59,399 32,671 Deferred revenue and other liabilities 557 (10,572) Net Cash Provided by Operating Activities 2,897,237 1,803,152 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of land, buildings, and equipment - 39,000 Purchases of land, buildings, and equipment (4,808,353) (833,314) Proceeds from sale of investments 7,760,937 2,721,882 Purchases of investments (10,514,385) (1,004,676) Net Cash Provided (Used) by Investing Activities (7,561,801) 922,892 CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of bonds payable 132,771 - Bond origination fees paid (48,669) - Collections on contributions receivable 400, ,000 Net Cash Provided by Financing Activities 484, ,000 Change in Cash and Cash Equivalents (4,180,462) 2,926,044 Cash and Cash Equivalents, Beginning of Year 6,035,147 3,109,103 Cash and Cash Equivalents, End of Year $ 1,854,685 $ 6,035,147 NON-CASH TRANSACTION: Bond origination fees financed with bond payable $ 100,000 $ - See notes to financial statements -6-

9 Notes to Financial Statements June 30, 2013 and NATURE OF ORGANIZATION: The Denver Rescue Mission (the Mission), founded in 1892, is a Colorado corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (the Code) and is not a private foundation under Section 509(a) of the Code. The purpose of the Mission is to meet people at their physical and spiritual points of need. Through practical programs of education and life skills, shelter, food, and clothing distribution, and through Christian teaching and work disciplining, the Mission aims to return the poor, needy and homeless to society as productive selfsufficient citizens. The Mission s shelter at Lawrence and Park Avenue West sleeps 200 men, with the potential for sleeping 100 additional men during cold-weather or other emergency conditions. Up to 31 single women and children live at the Mission s transitional housing facility, Champa House, yearly. At Harvest Farm in rural Wellington, Colorado, up to 72 men participate in the long-term residential New Life Rehabilitation Program (NLP) and raise crops and livestock for the Mission's facilities. The Ministry Outreach Center in industrial Denver warehouses and distributes thousands of pounds of food, clothing, and furniture to the needy throughout the area. Family Services assists homeless families in transitioning to self-sufficiency. Approximately 130 men are housed at The Crossing and participate in NLP. In addition, The Crossing provides temporary living accommodations for families, seniors, and single men and women, with capacity for 342 people, and 28 others needing respite care. During the year ended June 30, 2013, the Mission acquired the assets of Open Door Ministry in Fort Collins, Colorado, which now operates as the Fort Collins Rescue Mission (FCRM). FCRM provides emergency services to the homeless, meals for the hungry, food boxes, clothing, and hygiene items for those in need, and includes a shelter for 75 men and women. FCRM also offers a "Steps to Success" program that helps people become productive, self-sufficient members of the community. The Mission receives the majority of its support from individuals, businesses, churches, and others within the Denver metropolitan area. 2. SIGNIFICANT ACCOUNTING POLICIES: The Mission maintains its accounts and prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. 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, disclosures of any contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could differ from the estimates. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader. -7-

10 Notes to Financial Statements June 30, 2013 and SIGNIFICANT ACCOUNTING POLICIES, continued: CASH AND CASH EQUIVALENTS Cash and cash equivalents include checking, savings, money market accounts, and certificates of deposit with original maturities of three months or less that are not held for long-term purposes. These accounts from time to time exceed federally insured (FDIC) limits; however, the Mission has not experienced any losses on these accounts and does not believe it is exposed to any significant risk. Management has established an operating reserve at June 30, 2013 and 2012 in the amount of $3,750,000; these amounts are at the discretion of management and are not designated by the board of directors. INVESTMENTS Investments consist of certificates of deposit with original maturities of longer than three months and are carried at fair value based on quoted prices in active markets for identical assets, which is Level 1 of the fair value hierarchy established under the Fair Value Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Investments received by gift are carried at market value on the date of donation, and, thereafter, reported in accordance with the above provisions. Unrealized gains or losses in fair value, interest, and dividends are recognized in program service revenue and other on the statements of activities in the year in which they occur. CONTRIBUTIONS RECEIVABLE Unconditional promises are recorded at net realizable value if, at the time the promise is received, the Mission expects to receive payment in one year or less. Unconditional promises that the Mission expects to receive in more than one year are recorded at fair value initially and discounted using present value techniques subsequent to initial recognition. Allowances are recorded for estimated uncollectible promises. During the year ended June 30, 2013, contributions receivable was collected in full. GIFT-IN-KIND INVENTORY Gift-in-kind inventory consists of donated merchandise, such as food, clothing, and miscellaneous items, used in the operation of the Mission's programs. All such inventory is recorded at its estimated fair value at the date of donation and reported at its carrying amount thereafter. The Mission updates its inventory pricing every few years. BOND ORIGINATION FEES Bond issuance costs are recorded at cost and are amortized over the term of the bond agreement using the straight-line method which approximates the effective-interest method. Accumulated amortization for the year ended June 30, 2013 was $0. -8-

11 Notes to Financial Statements June 30, 2013 and SIGNIFICANT ACCOUNTING POLICIES, continued: LAND, BUILDINGS, AND EQUIPMENT Land, buildings, and equipment are recorded at cost, or if donated, at estimated fair value at the date of receipt. The Mission capitalizes fixed assets with a cost greater than $4,000. Depreciation is calculated based on the straight-line method over the following estimated useful lives: Land improvements Buildings and improvements Furniture and fixtures Machinery and equipment Vehicles 20 years years 5-10 years 3-10 years 3-5 years DEFERRED REVENUE Deferred revenue consists of prepaid rental income at The Crossing, sponsorship, and other revenue received for special events scheduled to be held in the next fiscal year. NET ASSETS Net assets include the following two classes: Unrestricted net assets include resources that are available to support operations and provide for the long-term needs of the organization. Temporarily restricted net assets include gifts which are restricted by the donor for various projects and contributions receivable which are time-period restricted. FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing various program services and supporting activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs, such as depreciation and salaries, have been allocated among the program services and supporting activities benefited. SUPPORT AND REVENUE Contributions and grants are recorded when made, which may be when cash or other assets are received or unconditionally promised. Contributions restricted by the donor for specified purposes are recorded as support in the temporarily restricted class of net assets until the funds have been expended for the purposes specified. Donated materials, including gifts-in-kind, are recorded at estimated fair value. The Mission records income and expense for contributed professional services valued at the providers' industry average hourly rates for the number of hours contributed to the Mission's program. Clothing contributed to the Mission in excess of requirements for the Mission's internal programs is distributed to other relief organizations and Indian reservations. -9-

12 Notes to Financial Statements June 30, 2013 and SIGNIFICANT ACCOUNTING POLICIES, continued: SUPPORT AND REVENUE, continued Program service revenue and other income primarily consists of corn maze admissions income and product sales. Corn maze income is recognized when the tickets are sold at the maze. Product sales are recorded as income when the products are given or shipped to the customers. All other income is recognized when earned. ADVERTISING The Mission uses advertising to promote its programs among the audiences it serves and to raise funds. Advertising costs are expensed as incurred. Advertising expense for the years ended June 30, 2013 and 2012, was $364,667 and $281,608, respectively. UNCERTAIN TAX POSITIONS The financial statement effects of a tax position taken or expected to be taken are recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Interest and penalties, if any, are included in expenses in the statements of activities. As of June 30, 2013, the Mission had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. The Mission's federal Return of Organization Exempt from Income Tax Form 990 for the years ended June 30, 2010, 2011, and 2012 are subject to examination by the IRS, generally for three years after they were filed. RECLASSIFICATION Certain prior year amounts have been reclassified in order to conform to current year presentation. 3. CONTRIBUTIONS RECEIVABLE NET: Contributions receivable net as of June 30, 2012 consist of: Due in less than one year $ 400,000 Due in one to five years - 400,000 Unamortized discount (16,472) $ 383,528 Contributions receivable were received in full during the year ended June 30,

13 Notes to Financial Statements June 30, 2013 and GIFT-IN-KIND PROGRAM: The Mission's gift-in-kind activity is summarized: Year Ended June 30, 2013 Beginning Ending Inventory Contributions Distributions Inventory Food $ 237,534 $ 3,610,180 $ 3,619,295 $ 228,419 Furniture and equipment 321,701 1,151,571 1,240, ,923 Clothing 20,320 3,830,066 3,641, ,341 $ 579,555 $ 8,591,817 $ 8,500,689 $ 670,683 Year Ended June 30, 2012 Beginning Ending Inventory Contributions Distributions Inventory Food $ 253,115 $ 4,228,018 $ 4,243,599 $ 237,534 Furniture and equipment 397,209 1,235,060 1,310, ,701 Clothing 25,496 3,097,518 3,102,694 20, LAND, BUILDINGS, AND EQUIPMENT NET: Land, buildings, and equipment net consists of: $ 675,820 $ 8,560,596 $ 8,656,861 $ 579,555 June 30, Land $ 3,101,686 $ 2,471,482 Land improvements 429, ,175 Buildings and improvements 15,542,526 12,451,944 Furniture and fixtures 314, ,271 Machinery and equipment 2,444,880 2,440,612 Vehicles 619, ,844 22,452,821 18,755,328 Accumulated depreciation (6,613,186) (6,145,844) $ 15,839,635 $ 12,609,

14 Notes to Financial Statements June 30, 2013 and LAND, BUILDINGS, AND EQUIPMENT NET, continued: Equity in land, buildings, and equipment consists of: June 30, Land, buildings, and equipment net $ 15,839,635 $ 12,609,484 Bond origination fees net 148,669 - Less bonds payable (232,771) - $ 15,755,533 $ 12,609, BONDS PAYABLE: On April 26, 2013, DRM issued Colorado Educational and Cultural Facilities Authority Revenue Bond Series 2013 Bonds (the bonds), which are adjustable-rate revenue bonds. The lender loaned the proceeds to DRM pursuant to a financing agreement dated April 1, 2013, and a promissory note dated April 26, The promissory note provides for monthly principal and interest payments to begin May 1, At this time, a payment schedule will be determined. The bonds will mature on May 1, 2023, at which time a balloon payment will be necessary. The bonds may also be prepaid in whole or in part at any time subject to the prepayment provisions set forth in the financing agreement. The bonds bear interest at 2.94%. As of June 30, 2013, DRM had withdrawn $232,771 for the construction of a new building. The bonds are collateralized by property and equipment. DRM is also required to meet certain covenants. DRM was in compliance with the covenants as of June 30, LINE OF CREDIT: The Mission has access to a revolving line of credit, maturing November 1, 2013, in the amount of $600,000. The line of credit has a variable interest rate and is for seasonal cash flow management. The Mission made no draws during the years ended June 30, 2013 and CONTRIBUTED SERVICES: The Mission operates a medical clinic at its main facility in downtown Denver, Colorado. Local doctors, dentists, and chiropractors volunteer their time servicing patients. Other professionals also provided services to the Mission's clients. Contributed services recognized in the financial statements totaled $466,800 and $521,429, for the years ended June 30, 2013 and 2012, respectively. The Mission also has a number of unpaid volunteers who have made contributions of their time performing various assignments. These contributed services have not been recognized, as they do not meet the requirements under current accounting standards. -12-

15 Notes to Financial Statements June 30, 2013 and RETIREMENT PLAN: The Mission has a defined contribution plan covering substantially all employees. To encourage employee retention, the Mission makes contributions to the plan based on employee length of service and also matches employee contributions dollar for dollar up to 5% of eligible compensation. Employees vest immediately in employer contributions. Employer contributions to the plan for the years ended June 30, 2013 and 2012, were $528,375 and $485,535, respectively. 10. SUBSEQUENT EVENTS: Subsequent events have been evaluated through the report date, which represents the date the financial statements were available to be issued. Subsequent events after that date have not been evaluated. -13-

16 SUPPLEMENTARY SCHEDULE

17 INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY SCHEDULE Board of Directors Denver Rescue Mission Denver, Colorado We have audited the financial statements of Denver Rescue Mission (the Mission) as of and for the year ended June 30, 2013, and have issued our report thereon dated August 21, 2013, which contained an unqualified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses is presented for the purposes of additional analysis and is 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. The prior year summarized comparative information on page 15 has been derived from the Mission's 2012 financial statements and, in our report dated September 6, 2012, we expressed an unqualified opinion on those financial statements. Littleton, Colorado August 21, 2013

18 Schedule of Operating Functional Expenses Year Ended June 30, 2013 (with comparative information for the year ended June 30, 2012) Program Services Supporting Activities Ministry Program General and Supporting Outreach The Lawrence Harvest Champa Fort Services Adminis- Fund- Activities Center Crossing Street Farm House Collins Total trative Raising Total Total 2012 Salaries, wages and benefits $ 793,836 $ 3,328,979 $ 1,022,256 $ 1,255,635 $ 515,906 $ 182,576 $ 7,099,188 $ 558,500 $ 1,223,643 $ 1,782,143 $ 8,881,331 $ 8,291,016 Gift-in-kind 5,487, ,418 1,553, ,093 35, ,598 8,494,598 2,609 3,482 6,091 8,500,689 8,656,861 Printing and postage 1,354 13,359 1,639 8, ,526 26,919 4,256 2,254,671 2,258,927 2,285,846 2,235,739 Ministry to clients and others 106, , ,305 57,384 12,628 4,048 1,232,299 7,930 4,404 12,334 1,244,633 1,353,773 Facility operations 187, , , ,874 48,176 24, , ,228 62, ,641 1,174,623 1,043,054 Depreciation 150, ,309 98, ,427 37,658 20, ,732 42,634 53,070 95,704 1,002, ,729 Utilities 107, ,996 86, ,530 25,291 18, ,144 29,190 36,916 66, , ,570 Office and miscellaneous 31, ,668 15,025 41,569 3,186 9, , , , , , ,598 Media and marketing 42,293 12, , ,198 85,639 12, , , , ,084 Professional services 2,813 63, ,062-1,500 82, , , , , ,404 Total Expenses $ 6,911,383 $ 6,206,005 $ 3,474,112 $ 2,235,501 $ 679,816 $ 439,033 $ 19,945,850 $ 1,044,494 $ 4,348,225 $ 5,392,719 $ 25,338,569 Percent of Total Expenses 27% 24% 14% 9% 3% 2% 79% 4% 17% 21% 100% 2012: Total Expenses $ 7,006,955 $ 6,157,279 $ 3,365,274 $ 2,240,539 $ 638,418 $ - $ 19,408,465 $ 1,092,446 $ 4,178,917 $ 5,271,363 $ 24,679,828 Percent of Total Expenses 28% 25% 14% 9% 3% 0% 79% 4% 17% 21% 100% -15-