BOYS AND GIRLS CLUB OF GREATER KINGSPORT, INC. AND AFFILIATE. Combined Financial Statements. December 31, 2016 and 2015

Transcription

1 Combined Financial Statements December 31, 2016 and 2015

2 Combined Financial Statements December 31, 2016 and 2015 Table of Contents Page Independent Auditors Report 1 Financial Statements Combined Statements of Financial Position 2 Combined Statements of Activities and Changes in Net Assets 3 Combined Statements of Functional Expenses 5 Combined Statements of Cash Flows 6 Notes to Combined Financial Statements 8

3 Certified Public Accountants Business Advisors p: f: w: rodefermoss.com 433 E. Center Street, P.O. Box 1818 Kingsport, TN Independent Auditors Report To the Board of Directors Boys and Girls Club of Greater Kingsport, Inc. and Affiliate We have audited the accompanying financial statements of Boys and Girls Club of Greater Kingsport, Inc. and Affiliate (Tennessee nonprofit organizations), which comprise the combined statements of financial position as of December 31, 2016 and 2015, and the related combined statements of activities and changes in net assets, functional expenses and cash flows for the years then ended, and the related notes to the combined financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these combined 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 combined 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 combined financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the combined 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 combined 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 combined 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 combined financial statements referred to above present fairly, in all material respects, the financial position of Boys and Girls Club of Greater Kingsport, Inc. and Affiliate as of December 31, 2016 and 2015, 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. Kingsport, Tennessee October 5, 2017 Tennessee Kentucky Indiana

4 Combined Statements of Financial Position December 31, 2016 and ASSETS Current Assets Unrestricted cash and cash equivalents $ 165,916 $ 222,060 Restricted cash and cash equivalents 67,457 72,193 Accounts receivable 8,500 3,100 Promises to give due within one year - 56,688 Total current assets 241, ,041 Property and Equipment Land 1,108,954 1,108,954 Land improvements 510, ,718 Building 5,791,565 5,788,322 Equipment 524, ,629 7,935,946 7,931,623 Less accumulated depreciation 1,965,339 1,749,890 Total property and equipment, net 5,970,607 6,181,733 Other Assets Investments 1,110,853 1,086,753 Total assets $ 7,323,333 $ 7,622,527 LIABILITIES AND NET ASSETS Current Liabilities Building loan $ 40,000 $ 40,000 Accounts payable 18,871 20,147 Accrued payroll deductions Deferred rent 63, ,333 Total current liabilities 122, ,247 Long-Term Liabilities Building loan 58, ,989 Total liabilities 181, ,236 Net Assets Unrestricted 6,503,153 6,554,937 Unrestricted - board designated 331, ,986 Temporarily restricted 185, ,585 Permanently restricted 121, ,783 Total net assets 7,141,833 7,292,291 Total liabilities and net assets $ 7,323,333 $ 7,622,527 See notes to financial statements. 2

5 Combined Statement of Activities and Changes in Net Assets Year Ended December 31, 2016 Unrestricted Unrestricted Net Assets Revenues and support Contributions, in-kind and other 165,764 Temporarily Restricted Permanently Restricted $ $ 10,350 $ - $ 176,114 Contributions, United Way/Community Chest 234, ,475 Special events 196, ,665 State and federal funds and grant funds 268, ,533 Dues/memberships 13, ,853 Investment income, net 85, ,663 Rental income 49, ,076 Canteen and vending 1, ,205 Program fees 109, ,025 Total revenues and support 1,124,259 10,350-1,134,609 Expenses Program services 858, ,728 Supporting services General and administrative 219, ,601 Fundraising 206, ,738 Total expenses 1,285, ,285,067 Total Decrease in unrestricted net assets (160,808) 10,350 - (150,458) Net assets released from restriction Restrictions satisfied by payments 111,858 (61,858) (50,000) - Decrease in net assets (48,950) (51,508) (50,000) (150,458) Net assets, beginning of year 6,883, , ,783 7,292,291 Net assets, end of year $ 6,834,973 $ 185,077 $ 121,783 $ 7,141,833 See notes to financial statements. 3

6 Combined Statement of Activities and Changes in Net Assets Year Ended December 31, 2015 Unrestricted Unrestricted Net Assets Revenues and support Contributions, in-kind and other 177,360 Temporarily Restricted Permanently Restricted $ $ - $ - $ 177,360 Contributions, United Way/Community Chest 234, ,475 Special events 234, ,697 State and federal funds and grant funds 298, ,273 Dues/memberships 15, ,187 Investment income 10, ,830 Rental income 50, ,626 Canteen and vending 1, ,557 Program fees 88, ,025 Total revenues and support 1,111, ,111,030 Expenses Program services 856, ,153 Supporting services General and administrative 183, ,408 Fundraising 198, ,170 Total expenses 1,237, ,237,731 Decrease in unrestricted net assets (126,701) - - (126,701) Total Net assets released from restriction Restrictions satisfied by payments 58,597 (8,597) (50,000) - Decrease in net assets (68,104) (8,597) (50,000) (126,701) Net assets, beginning of year 6,952, , ,783 7,418,992 Net assets, end of year $ 6,883,923 $ 236,585 $ 171,783 $ 7,292,291 See notes to financial statements. 4

7 Combined Statements of Functional Expenses Years Ended December 31, 2016 and General and General and Program Administrative Fundraising Total Program Administrative Fundraising Total Salaries $ 298,962 $ 86,374 $ 77,140 $ 462,476 $ 298,981 $ 52,364 $ 76,354 $ 427,699 Fringe benefits 51,539 27,499 22, ,735 46,433 24,423 22,326 93,182 Brochures and publicity 3, ,889 1, ,757 Dues and subscriptions - 1,626-1,626-1,244-1,244 Facility costs 119,571 14, , ,400 14, ,750 Insurance 35,725 2,165-37,890 32,904 1,994-34,898 Interest 4, ,177 7,526 1,085-8,611 Materials and supplies 97, , ,564 86,370-96, ,864 Miscellaneous expenses , ,067 Office expenses 4,891 17,045-21,936 3,664 15,277-18,941 Professional services - 11,950-11,950-11,987-11,987 Repairs and maintenance 19,694 1,194-20,888 27,145 1,645-28,790 Scholarships 5, ,000 3, ,000 Taxes and licenses ,107-15, ,022-16,896 Training and conferences 4,346 4,346-8,692 6,754 6,754-13,508 Travel 30,095 3,605 3,605 37,305 40,557 2,996 2,996 46,549 Total expenses before depreciation 676, , ,738 1,069, , , ,170 1,020,743 Depreciation 182,256 33, , ,721 33, ,988 Total expenses $ 858,728 $ 219,601 $ 206,738 $ 1,285,067 $ 856,153 $ 183,408 $ 198,170 $ 1,237,731 5 See notes to financial statements.

8 Combined Statements of Cash Flows Years Ended December 31, 2016 and Cash Flows From Operating Activities Cash received for support and revenues $ 1,040,664 $ 1,075,811 Cash paid for program services (301,876) (301,238) Cash paid for wages and benefits (564,671) (520,815) Cash paid for administrative expenses (73,159) (67,903) Cash paid for fundraising expenses (106,901) (99,490) Net cash from operating activities (5,943) 86,365 Cash Flows From Investing Activities Proceeds from sale of investments 128, ,928 Purchases of investments (98,441) (158,948) Interest and dividends received 36,216 46,049 Investment expenses paid (4,610) (6,176) Purchases of property and equipment (4,323) (7,041) Net cash from investing activities 57,239 63,812 Cash Flows From Financing Activities Cash released from donor restrictions 4,736 8,545 Interest paid (5,177) (8,611) Payments on building loan (106,999) (50,000) Net cash from financing activities (107,440) (50,066) Net increase (decrease) in cash and cash equivalents (56,144) 100,111 Cash and cash equivalents, beginning of year 222, ,949 Cash and cash equivalents, end of year $ 165,916 $ 222,060 See notes to financial statements. 6

9 Combined Statements of Cash Flows (Continued) Years Ended December 31, 2016 and Reconciliation of decrease in net assets to net cash from operating activities: Decrease in net assets $ (150,458) $ (126,701) Adjustments to reconcile decrease in net assets to net cash from operating activities: Depreciation 215, ,988 Investment income, net (85,663) (10,830) Financing expenses 5,177 8,611 (Increase) decrease in: Accounts receivable (5,400) 33,865 Prepaid insurance Unconditional promises to give 56,688 - Increase (decrease) in: Accounts payable (1,276) 3,685 Accrued payroll and payroll liabilities (460) 66 Deferred rent (40,000) (40,000) Net cash from operating activities $ (5,943) $ 86,365 See notes to financial statements. 7

10 Notes to Combined Financial Statements December 31, 2016 and 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Boys and Girls Club of Greater Kingsport, Inc. (the Club ) and Affiliate (collectively the Organization ) is presented to assist in understanding the Organization s combined financial statements. The combined financial statements and notes are representations of the Organization s management, who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the combined financial statements. The affiliate, Greater Kingsport Boys and Girls Club Foundation (the Foundation) invests its funds to generate investment income to contribute to the Club to provide operational funding. Organizational Activity - The mission of the Organization is to enhance the quality of life and to promote the health, social, educational, vocational, and character development of youth through wholesome, constructive activities under professional trained staff and volunteers. The Organization strives to reinforce emotional behavior, attitudes and development of boys and girls. The Organization s revenues that are used to support program expenses consist of contributions (both individual and from federated campaigns), fundraising events, and grants. Grants consist principally of federal pass-through grants for child care and nutrition programs. Basis of Accounting - The Organization maintains its financial records on the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recognized when incurred. Basis of Combination - The combined financial statements include the accounts of the Club and the Foundation. All material inter-organization accounts and transactions have been eliminated in combination. Cash and Cash Equivalents - The Organization considers all highly liquid deposit instruments with original maturities of three months or less to be cash equivalents for purposes of the combined statements of cash flows. Accounts Receivable - Accounts receivable originate from awarded grant contracts, program fees and membership dues. Bad debt is recognized when an account receivable is determined to be uncollectible. In the opinion of management, substantially all of the accounts receivable are considered to be realizable. Promises to Give - The Organization recognizes in its combined financial statements unconditional promises to give that have verifiable documentation. These are measured at fair value and reported as an increase in net assets immediately (see Note 3). Unconditional promises to give without verifiable documentation and conditional promises to give are not recognized in the financial statements. Investments - Investments in marketable equity and debt securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the combined statements of financial position. Unrealized gains and losses are included in the combined statements of activities and changes in net assets. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets when restrictions are met (either by the passage of time or by accomplishment of the purpose restriction) in the reporting period in which the income and gains are recognized. Property and Equipment - It is the Organization s policy to capitalize property and equipment over $500. Lesser amounts are expensed. Property and equipment are stated at cost, net of accumulated depreciation and amortization. Donated assets are recorded at estimated fair value at the date of donation. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets, as follows: Land improvements Building Equipment years 5-50 years 5-15 years 8

11 Notes to Combined Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences - It is the Organization s policy not to accrue compensated absences because the amount cannot be reasonably estimated. Restricted and Unrestricted Revenue and Support - Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily 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 purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the combined statement of activities as net assets released from restrictions. None of the interest and dividend income earned on board-designated or temporarily restricted and permanently restricted investments is restricted as to purpose. Grants and Federal/State Funds - The Organization receives grants from various local and national organizations. These are recorded as revenue when the grant is pledged or received. Resources from federal/state grants and funds are recorded as revenue when the related costs are incurred. Income Taxes - The Club and the Foundation are nonprofit organizations and are exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. The Organization evaluates its tax positions in accordance with applicable standards. Management has evaluated the Organization s tax positions and believes that the Organization has none which are uncertain. The current and previous three years tax returns remain available for possible examination by the Internal Revenue Service at December 31, Use of Estimates - The Organization uses estimates and assumptions in preparation of the combined financial statements in conformity with generally accepted accounting principles. The estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Significant estimates used in preparing these combined financial statements include those assumed in estimating the useful lives of property and equipment, the allocation of expenses by function, and the collection of promises to give. It is at least reasonably possible that the significant estimates used will change within the next year. Date of Management s Review - Management has evaluated events and transactions occurring subsequent to the statement of financial position date for items that should potentially be recognized or disclosed in these financial statements. The evaluation was conducted through the date of the report, the date these financial statements were available to be issued. 9

12 Notes to Combined Financial Statements (Continued) NOTE 2 - RESTRICTED CASH The Organization maintains cash restricted for designated purposes in separate bank accounts. Restricted funds amounted to $67,457 and $72,193 at December 31, 2016 and 2015, respectively. NOTE 3 - UNCONDITIONAL PROMISES TO GIVE Unconditional promises to give for the purpose of paying construction costs of the agency s building as of December 31, 2015 were $56,688. This remaining balance was paid in 2016 and there were no promises to give receivable at December 31, NOTE 4 - INVESTMENTS The Organization has various financial assets that are measured at fair value in the statements of financial position using inputs from the three levels of the fair value hierarchy. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organization has the ability to access. Level 2 - Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specific (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future 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. The following table sets forth by level, within the fair value hierarchy, the Organization s assets at fair value as of December 31, Level 1 Level 2 Level 3 Fixed income securities $ 118,435 $ - $ - Fixed income mutual funds 360, Equity mutual funds 631, Total $ 1,110,853 $ - $ - 10

13 Notes to Combined Financial Statements (Continued) NOTE 4 - INVESTMENTS (Continued) The following table sets forth by level, within the fair value hierarchy, the Organization s assets at fair value as of December 31, Level 1 Level 2 Level 3 Fixed income securities $ 118,609 $ - $ - Fixed income mutual funds 356, Equity mutual funds 612, Total $ 1,086,753 $ - $ - Investment income for the year ended December 31, 2016, was $90,273 of which income of $87,122 was unrestricted and $3,151 represents interest, dividends, and unrealized gains and losses earned on assets held to produce scholarship income which increased board-designated net assets. In the prior year, investment income was $17,006 of which $15,416 was unrestricted and $1,590 represented interest, dividends, and unrealized gains and losses earned on assets held to produce scholarship income which increased board-designated net assets. Investment income is presented in the combined statements of activities and changes in net assets net of expenses of $4,610 and $6,176 for the years ended December and 2015, respectively Interest income $ 5,837 $ 5,967 Dividend income 32,275 42,765 Realized gains 3,194 12,302 Fees (4,610) (6,176) Unrealized gains (losses) 48,967 (44,028) Total investment income $ 85,663 $ 10,830 All investments are considered available for sale. NOTE 5 - ENDOWMENT FUNDS The Club established the endowment fund in 1975 as a self-imposed investment vehicle used to accumulate funds over time with a long-term goal of providing operational funding for the Club s activities. The original endowment resolution (which is missing a critical page) stated that the initial amount deposited in trust with a local financial institution was $63,666 and that the Trustee shall pay on or before the 30 th day of January and July of each year, pay to the Board of Directors of the First Party, the amount of net income accumulated by said Trustee from and since the last payment, together with the principal amount of any gifts that are to be distributed and expended under specific direction of the donor thereof. For several years the Club did not require the income from the endowment for operational purposes and the endowment continued to grow. 11

14 Notes to Combined Financial Statements (Continued) NOTE 5 - ENDOWMENT FUNDS (Continued) Since then, there have been additional pools of money added to the endowment account. In 1989, monies from the Robinson estate that had named the Club as beneficiary were received. The bequest allows for up to $50,000 per year to be utilized to pay for capital projects. The Foundation was formed in 1997 and took over responsibility for the endowment when the Foundation was formed. In 2010, the Club was the beneficiary of the Taff estate that restricted the monies from the bequest to be used in the Club s golf program. The monies from this bequest were contributed to the Foundation by the Club. The Club contributed all of the monies that had previously been contributed to the Club for scholarship purposes to the Foundation in Substantially all of the scholarship monies were memorials from three families to provide scholarship assistance to graduates of the Club. There is also a small amount of money earned by the Foundation during the Club s building campaign that was the result of investing pledges received on a short-term basis and the accumulated earnings thereon that have not been remitted to the Club. At December 31, 2016 and 2015 the endowment consisted of: Original endowment $ 676,351 $ 623,873 Robinson estate 251, ,685 Taff estate 155, ,895 Scholarships 67,698 64,690 Other 15,874 14,643 Total endowment funds $ 1,167,057 $ 1,125,786 Activity in the endowment for the year ended December 31, 2016 is a follows: Original endowment Robinson Taff (board estate estate Scholarships Other designated) (restricted) (restricted) (restricted) Unresticted Total Balance, beginning of year $ 623,873 $ 278,685 $ 143,895 $ 64,690 $ 14,643 $ 1,125,786 Investment income (net of fees) 23,731 9,460 5,474 1, ,462 Unrealized gains (losses) 28,747 12,990 6, ,055 Contributions ,754-6,754 Contribution to Club - (50,000) (50,000) Scholarships awarded (5,000) - (5,000) Balance, end of year $ 676,351 $ 251,135 $ 155,999 $ 67,698 $ 15,874 $ 1,167,057 12

15 Notes to Combined Financial Statements (Continued) NOTE 5 - ENDOWMENT FUNDS (Continued) The following summarizes the activity in the endowment for the year ended December 31, 2015: Original endowment Robinson Taff (board estate estate Scholarships Other designated) (restricted) (restricted) (restricted) Unresticted Total Balance, beginning of year $ 617,172 $ 324,756 $ 142,349 $ 68,183 $ 14,486 $ 1,166,946 Investment income (net of fees) 22,677 10,500 5,230 1, ,284 Unrealized gains (losses) (15,976) (6,571) (3,684) (2,436) (377) (29,044) Contributions Contribution to Club - (50,000) (50,000) Scholarships awarded (3,000) - (3,000) Balance, end of year $ 623,873 $ 278,685 $ 143,895 $ 64,690 $ 14,643 $ 1,125,786 The board of directors of the Foundation has not implemented or adopted the Uniform Prudent Management of Institutional Funds Act. NOTE 6 - BUILDING LOAN The building loan was refinanced during 2013 at a fixed interest rate of 3.65% with monthly payments of interest, required annual principal payments of $40,000 during the first four years and an anticipated balloon payment of approximately $135,989 on December 9, The loan is unsecured but subject to a negative pledge agreement that prohibits the Organization from using the building and land to secure any other indebtedness. Future payments of principal on this loan are anticipated to be as follows for the years ending December 31: 2017 $ 40, ,989 Total building loan liability $ 98,989 NOTE 7 - DEFERRED RENT The Organization entered into a lease contract with the City of Kingsport under which the City rents certain of the Club s facilities over a 10 year period. The City paid the Club $400,000 over a four year period to rent these facilities for a period of 10 years. Consequently, deferred rental income was recorded in the early years of the contract and then recognized as rental income on a ratable basis over the remaining term of the lease. At December 31, 2016, $63,333 of deferred rent remains on the Organization s books to be amortized into income at the rate of $40,000 per year compared to $103,333 as of December 31,

16 Notes to Combined Financial Statements (Continued) NOTE 8 - NET ASSETS On August 10, 1991 the board of directors entered into an agreement with United Way of Greater Kingsport in which $218,793 of monies accumulated by the Organization was set aside in reserve funds. Subsequent bequests received by the organization were designated as reserve funds by the board of directors and resulted in this amount increasing to $263,863. This amount is presented on the combined statement of net assets as board designated for general reserves of $163,863 and capital reserves of $100,000. Additionally, all memorial contributions have been designated by the board of directors to provide scholarships to Club members. This amounted to $67,698 and $64,690, respectively at December 31, 2016 and In addition there were miscellaneous board designated net assets totaling $533 as of December 31, 2016 and The Organization s temporarily restricted net assets consisted of the following at December 31, 2016 and 2015: Assets restricted to investment in property and equipment Building fund cash $ 10,434 $ 15,604 Promises to give - 56,688 Total assets restricted to investment in property and equipment 10,434 72,292 Assets restricted to support golf program 164, ,293 Assets restricted to support Scott County Startup $ 350 $ - Assets restricted to purcahse football equipent $ 10,000 $ - Total temporarily restricted net assets $ 185,077 $ 236,585 Permanently restricted net assets of $121,783 and $171,783 as of December 31, 2016 and 2015, respectively consisted of a bequest received in the early 1990s. The amount of the donor s original gift is permanently restricted, with the exception that up to $50,000 per year can be used for capital expenditures but the dividend and interest income from the investments is unrestricted. During 2016 and 2015, the board of the foundation elected to contribute $50,000 to the Club under the provisions of the donor s will. NOTE 9 - FUNDRAISING The Organization derived $196,665 and $234,697 in special event fundraising revenues and incurred $103,296 and $96,494 in direct fundraising expenses for the years ended December 31, 2016 and 2015, respectively. NOTE 10 - RETIREMENT PLAN The Organization participates in a money purchase pension plan maintained by Boys & Girls Clubs of America. The plan covers all employees after age 21 and two years of employment each with 1,000 hours of service. The plan requires that each local club contribute 10% of annual compensation to the accounts of eligible participants. Participants have the option of receiving a lump-sum payment of their account balance or a monthly annuity payment at retirement. The Organization contributed $25,638 and $23,107, to this plan for the years ended December 31, 2016 and 2015, respectively. NOTE 11 - IN-KIND CONTRIBUTIONS The Organization receives a significant amount of donated services from unpaid volunteers who assist in fundraising, program services and special projects. No amounts have been recognized for these services in the statement of activities because the criteria for recognition under ASC No. 958 have not been satisfied. The Organization recorded in-kind revenues for facilities use of $59,570 and $58,254 for the years ended December 31, 2016 and 2015, respectively. The Organization uses property that is owned by other entities, which are not related parties to the Organization. 14

17 Notes to Combined Financial Statements (Continued) NOTE 12 - SUPPORT CONCENTRATION The Organization receives a substantial amount of support from government funds and grant funds. Approximately 22% and 26% of the total revenues and support were received from these sources for the years ended December 31, 2016 and 2015, respectively. NOTE 13 - RELATED PARTY TRANSACTIONS The Foundation contributed $50,000 to the Club in The amount that the Foundation owed to the Club as of December 31, 2016 was $38,617 which consisted of accumulated income earned on monies that the Foundation invested on behalf of the club. The Foundation contributed $50,000 to the Club in The following condensed financial statements show the financial position and results of operations of the Foundation as of and for the years ended December 31, 2016 and 2015: ASSETS Cash $ 56,204 $ - Investments 1,110,853 1,125,786 Total assets $ 1,167,057 $ 1,125,786 LIABILITIES AND NET ASSETS Checks in excess of bank balance $ 439 $ 104 Due to club 38,615 13,617 Net assets 1,128,003 1,112,065 Total liabilities and net assets $ 1,167,057 $ 1,125,786 Income Contributions $ 10,600 $ 600 Investment income 89,947 16,656 Fundraising income (loss) - (300) Total income 100,547 16,956 Expenses Contribution to club 75,000 50,000 Investment fees 4,609 6,176 Fundraising - - Other 5,000 3,000 Total expenses 84,609 59,176 Increase (decrease) in net assets $ 15,938 $ (42,220) The Foundation manages the cash and securities owned by the Foundation to create income and gains to provide funding to the Club. 15

18 Notes to Combined Financial Statements (Continued) NOTE 13 - RELATED PARTY TRANSACTIONS (Continued) Part of the Foundation s assets consist of monies transferred to the Foundation by the Club so that the Foundation can invest these monies as well as the Foundation s assets. These monies are the results of bequests which impose temporary or permanent restrictions. The Club retains discretionary power over how these monies are used subject to any restrictions imposed by the controlling document. The Foundation has invested $263,863 of monies that the Club transferred to it several years ago as a result of an agreement with United Way of Greater Kingsport. These monies were invested by the Foundation to provide an investment income stream that can be contributed by the Foundation to the Club to provide operational support. This is the result of the board of directors making a designation to comply with the agreement with United Way of Greater Kingsport. This amount was the same at December 31, 2016 and Club assets that are temporarily restricted in the amount $108,289 represent monies received from a bequest that is to be used in supporting the Club s golf program. This amount was the same at December 31, 2016 and Additionally, the Foundation has invested $121,783 received in a bequest that is permanently restricted to provide an investment income stream to provide operational support. There is an exception that allows the Club to use up to $50,000 per year of this bequest for capital expenditures. The amount of permanently restricted assets from this bequest at December 31, 2015 was $171,783. During 2016, the Foundation contributed $50,000 of these monies to the Club (see Note 7). The remaining $634,068 of Foundation assets as of December 31, 2016 consists of unrestricted contributions that together with the accumulated earnings thereon can be contributed to the Club to support current operating budget requirements or to make capital expenditures. This amount as of December 31, 2015 was $568,