VOICES FOR ILLINOIS CHILDREN, INC. FINANCIAL STATEMENTS

Transcription

1 FINANCIAL STATEMENTS For the Year Ended December 31, 2015

2 VOICES FOR ILLINOIS CHILDREN Annual Financial Report Table of Contents Independent Auditor s Report Financial Statements Statement of Financial Position...3 Statement of Activities and changes in net assets...4 Statement of Functional Expenses...5 Statement of Cash Flows...6 Notes to Financial Statements

3 Desmond &Ahern, Ltd. CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS To the Board of Directors Voices for Illinois Children, Inc. Chicago, IL Independent Auditor s Report We have audited the accompanying financial statements of Voices for Illinois Children, Inc. (a nonprofit organization), which comprise the statement of financial position as of December 31, 2015 and the related statements of activities, functional expenses, and cash flows for the year 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 audit. We conducted our audit 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 of 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 S. WESTERN AVENUE, CHICAGO, IL PHONE FAX

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Voices for Illinois Children, Inc. as of December 31, 2015 and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. May 9, 2016 Chicago, IL -2-

5 STATEMENT OF FINANCIAL POSITION As of December 31, 2015 Current Assets Cash and cash equivalents $ 64,475 Cash held for others - restricted 597,542 Investments 562,969 Grants, pledges and accounts receivable 145,572 Prepaid expenses 32,874 Total current assets 1,403,432 Property and equipment Furniture and equipment 69,677 Leasehold improvement 40,383 Total property and equipment 110,060 Less accumulated depreciation (44,814) Net property and equipment 65,246 Total Assets $ 1,468,678 Liabilities and Net Assets Accounts payable and accrued expenses $ 110,651 Amounts held for others 597,542 Deferred rent 62,489 Deferred revenue 2,050 Total current liabilities 772,732 Net Assets Unrestricted - Board designated 443,055 Temporarily restricted 252,891 Total net assets 695,946 Total Liabilities and Net Assets $ 1,468,678 See independent auditor's report and notes to financial statements. -3-

6 STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For the Year Ended December 31, 2015 Revenues and Other Support Contributions Foundations and corporations 302,596 Temporarily Unrestricted Restricted Total $ $ 952,712 $ 1,255,308 Individuals and board members 147, ,763 Special events (net of direct benefit to donors) 79,718-79,718 Interest and investment income 11,696-11,696 Miscellaneous 5,824-5,824 Unrealized loss on investments (4,650) - (4,650) Net assets released from restrictions 1,004,616 (1,004,616) - Total public support and revenue 1,547,563 (51,904) 1,495,659 Expenses Program Services 1,059,027-1,059,027 Administrative 486, ,714 Fundraising 136, ,668 Total expenses 1,682,409-1,682,409 Change in net assets (134,846) (51,904) (186,750) Net assets, beginning of year (restated) 577, , ,696 Net assets, end of year $ 443,055 $ 252,891 $ 695,946 See independent auditor's report and notes to financial statements. -4-

7 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended December 31, 2015 Fiscal Policy Center Program Supporting Services Kids Count Early Childhood Total Administrative Fundraising Total Functional Expenses Salaries $ 184,472 $ 104,754 $ 241,810 $ 531,036 $ 121,090 $ 39,791 $ 691,917 Related benefits 69,324 39,649 34, ,378 26,134 10, ,799 Total salaries and related benefits 253, , , , ,224 50, ,716 Technology expense 8,754 4,656 12,291 25,701 28,075 6,518 60,294 Insurance 1, ,715 3,585 5, ,061 Meeting expense 3,161 3,316 15,447 21,924 5,069 3,521 30,514 Memberships and subscriptions 1,823-2,429 4, ,894 Postage and delivery - 1, , ,348 Professional fees ,300-14,300 Equipment lease and maintenance 2,876 1,488 4,376 8,740 8,969 2,082 19,791 Consultants 28,026 50,510 71, ,323 11,368 34, ,402 Transition costs , ,882 Publications and advertising 2,273 9,036 9,147 20,456 1,726 6,771 28,953 Rent and utilities 33,191 17,656 46,609 97,456 85,886 24, ,059 Supplies 100-1,026 1,126 9,052 1,076 11,254 Telephone 2,546 1,354 3,574 7,474 7,418 1,896 16,788 Travel and conferences 11, ,074 36, ,612 Depreciation 1,330-3,952 5,282 11,690 1,359 18,331 Miscellaneous ,205 1,475 29,210 Total Expenses $ 350,426 $ 234,350 $ 474,251 $ 1,059,027 $ 486,714 $ 136,668 $ 1,682,409 See independent auditor's report and notes to financial statements. -5-

8 STATEMENT OF CASH FLOWS For the Year Ended December 31, 2015 Cash Flows from Operating Activities Decrease in net assets $ (186,750) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 18,331 Unrealized loss on investments 4,650 Changes in operating assets and liabilities Grants, pledges and accounts receivable (108,769) Prepaid expenses 34,554 Deferred revenues (17,950) Accounts payable and accrued expenses (4,417) Amounts held for others (280,344) Deferred rent 8,795 Net cash used by operating activities (531,900) Cash Flows from Investing Activities Purchase of investments (12,219) Purchase of property and equipment (946) Net cash used by investing activities (13,165) Net decrease in cash and cash equivalents (545,065) Cash and cash equivalents, beginning of year 1,207,082 Cash and cash equivalents, end of year $ 662,017 Supplemental Information Cash and cash equivalents $ 64,475 Cash held for others - restricted 597,542 $ 662,017 See independent auditor's report and notes to financial statements. -6-

9 NOTES TO FINANCIAL STATEMENTS December 31, 2015 Note 1 Nature of Operations and Summary of Significant Accounting Policies Organization Voices for Illinois Children, Inc. (the Organization ) was organized to improve the lives of children in Illinois by bringing about significant changes in public policies and programs for children through research, policy analysis and advocacy, public education, and community outreach. The Organization serves the public through three programs: Fiscal Policy Center - The Fiscal Policy Center provides timely, credible, and accessible analyses to 1) improve Illinois tax and budget system so that the state raises adequate and sustainable revenue in an equitable manner to fund essential programs and services, and 2) strengthen economic security and opportunities for low- and moderate-income individuals and families. Kids Count - Since 1992, Voices for Illinois Children has led the Illinois Kids Count project to raise public awareness and accountability for the condition of kids and families by: (1) measuring and reporting on the well-being of children, and (2) using that information creatively to inform public debate and strengthen public action on behalf of children and families within the state. Early Childhood - Early childhood encompasses a wide range of important developmental milestones during which critical physical, cognitive, and social and emotional development takes place. These first years of life serve as a vital foundation for children s success in school and later in work and life. Unfortunately, too many Illinois children don t get off to a strong start, due to economic, language, and other barriers. Research tells us that children who start their formal years of education less prepared than their peers fall further and further behind. Early childhood experiences profoundly influence educational, health, social, and economic outcomes later in life. Basis of Accounting The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities in accordance with the accounting principles generally accepted in the United States of America ( GAAP ). Basis of Presentation As required by generally accepted accounting principles applicable to nonprofit organizations, the Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. As of December 31, 2015, the Organization had no permanently restricted net assets. Grants, Pledges and Accounts Receivable Grants and pledges receivable are recorded at fair value and recognized as revenue in the period in which the grant or pledge is made. The Organization reviews grants and pledges receivables and -7-

10 NOTES TO FINANCIAL STATEMENTS December 31, 2015 Note 1 Nature of Operations and Summary of Significant Accounting Policies (cont.) determines the need for an allowance for doubtful accounts based on management s experience and information. As of December 31, 2015, no allowance for uncollectible accounts was deemed necessary. Property and Equipment All acquisitions of property and equipment in excess of $1,000 and all expenditures for repairs, maintenance, renewals, and betterments that materially extend the useful lives of assets are capitalized. Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight line method over the estimated useful lives. Depreciation expense for the year ended December 31, 2015 amounted to $18,331. Donated Services Contributions of services are required to be recognized if the services received (a) create or enhance non-financial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. For the year ending December 31, 2015, no donated services met the criteria for recognition. However, a number of volunteers, including the Board of Directors, have made significant contributions of time to the Organization's programs and support functions, but the value of this contributed time does not meet the above criteria for recognition of contributed services contained per Generally Accepted Accounting Principles. In-Kind Contributions and Donated Facilities In addition to receiving cash contributions, the Organization may receive in-kind contributions and donated facilities from various donors. It is the policy of the Organization to record the estimated fair market value of certain in-kind donations as an expense in its financial statements, and similarly increase donations by a like amount. For the year ending December 31, 2015, the Organization did not receive any in-kind donations. Income Tax Status The Organization is exempt from federal income taxes under the provision of Section 501(c)(3) of the Internal Revenue Code; thus, no provision for the income tax has been provided for in the financial statements. The Organization s Form 990, Return of Organization Exempt from Income Tax, are subject to examination by the IRS, generally for three years after they have been filed. 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. -8-

11 NOTES TO FINANCIAL STATEMENTS December 31, 2015 Note 1 Nature of Operations and Summary of Significant Accounting Policies (cont.) Cash and Cash Equivalents Cash and cash equivalents consist of bank deposits in federally insured accounts. At December 31, 2015, the Organization's cash accounts exceeded insured limits of the Federal Deposit Insurance Corporation by approximately $290,000. For purposes of the statement of cash flows, the Organization considers all highly liquid debt instruments with an original maturity or anticipated liquidation of three months or less and all certificates of deposit to be cash equivalents. No interest or taxes were paid during the year ended December 31, Functional Allocation of Expenses The costs of providing various programs and other activities has been summarized on a functional basis in the statement of activities and changes in net assets and in the statements of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services Grants and Contributions The Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor 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. Investments Investments consist of a market index funds, and are recorded at the fair market value. The fair market value of investments is based on quoted market prices. Realized and unrealized gains and losses are reflected in the Statement of Activities. Note 2 Fair Value Measurements and Investments Generally Accepted Accounting Principles defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. Generally Accepted Accounting Principles establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. -9-

12 NOTES TO FINANCIAL STATEMENTS December 31, 2015 Note 2 Fair Value Measurements and Investments (cont.) Level 2: Significant other observable inputs other then Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity s own assumptions about the assumptions that market participants would use in pricing an asset or liability. In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The fair value of debt and equity investments that are readily marketable are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or by quoted market prices of similar securities with similar due dates or matrix pricing, This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on securities relationship to other benchmark quoted securities (Level 2 inputs). All investments are considered Level 1 at December 31, Note 3 Fiscal Sponsor and Restricted Cash The Organization acts as fiscal sponsor for several organizations. At December 31, 2015, it held $663,209 in funds for these organizations, reflected in the Statement of Financial Position as cash held for others restricted and as a corresponding liability account titled amount held for others. The Organization paid $116,219 of administrative costs for the Organization s fiscal sponsors. These payments have increased the Organization s administrative costs. Note 4 Office Lease and Rent Deferral The Organization leases space in Chicago, Illinois under an operating lease through June 30, The lease provides for annual base rental of $231,158, increasing annually, as defined. The lease includes rent abatements for July 2013 and August 2013, as well as each July throughout the lease term. Rent, utility and maintenance costs amounted to $228,706 for the year ended December 31,

13 NOTES TO FINANCIAL STATEMENTS December 31, 2015 Note 4 Office Lease and Rent Deferral (cont.) Future base rental minimum lease payments for the next five years are as follows: 2016 $ 223, , , , ,660 1,072,939 The difference between the rent expense using the straight line method over the term of the lease and the actual rent paid is recorded as deferred rent. Note 5 Board Designated Net Assets The Board has designated $422,408 of unrestricted net assets at December 31, 2015 to be used by the board as a contingency fund. No funds were used during Any use of this fund requires Board approval. Note 6 Special Event The Organization hosted its annual event, Voices for Illinois Children Annual Benefit, during A summary of the event is as follows: Contributions, including sponsorships $ 119,215 Special events revenue, ticket portion 44,750 Revenue from special events 163,965 Less direct benefits to donors (84,247) Net revenues from special events $ 79,718 Note 7 Temporarily Restricted Net Assets Temporarily restricted net assets at December 31, 2015 consist of the following: Fiscal Policy Center $ 138,308 Early Childhood 114,583 Total $ 252,891 Note 8 Employee Benefit Plan The Organization maintains a SEP-IRA retirement plan. The Organization contributes 6% of each eligible employee s salary into the plan. For the year ended December 31, 2015, the Organization contributed $55,047 to the plan. $ -11-

14 NOTES TO FINANCIAL STATEMENTS December 31, 2015 Note 9 Concentrations During the year ended December 31, 2015, revenue from the Organization s largest donor amounted to approximately 19% or total revenues. Note 10 Subsequent Events The Organization has evaluated subsequent events through May 9, 2016, the date which the financial statements were available to be issued. No subsequent events have been identified that are required to be disclosed through that date. Note 11 Prior Period Adjustment During the year ended December 31, 2015, the Organization did not record rent expense on the straight line method in accordance with FASB ASC 840. At December 31, 2014, net assets were reduced by $53,694 and an accrued expense was created for the same amount to correctly record this accounting standard. -12-