CAMFED USA FOUNDATION CONTENTS INDEPENDENT AUDITOR'S REPORT 2-3

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2 CAMFED USA FOUNDATION CONTENTS PAGE NO. INDEPENDENT AUDITOR'S REPORT 2-3 EXHIBIT A - Statement of Financial Position, as of December 31, 2012, with Summarized Financial Information for EXHIBIT B - Statement of Activities and Change in Net Assets, for the Year Ended December 31, 2012, with Summarized Financial Information for EXHIBIT C - Statement of Functional Expenses, for the Year Ended December 31, 2012, with Summarized Financial Information for EXHIBIT D - Statement of Cash Flows, for the Year Ended December 31, 2012, with Summarized Financial Information for NOTES TO FINANCIAL STATEMENTS

3 INDEPENDENT AUDITOR'S REPORT To the Board of Directors CAMFED USA Foundation San Francisco, California We have audited the accompanying financial statements of the CAMFED USA Foundation (the Foundation), which comprise the statement of financial position as of December 31, 2012, and the related statements of activities and change in net assets, 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 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Foundation as of December 31, 2012, and the change 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 MONTGOMERY AVENUE SUITE 650 NORTH BETHESDA, MARYLAND (301) FAX (301) MEMBER OF CPAMERICA INTERNATIONAL, AN AFFILIATE OF HORWATH INTERNATIONAL MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS' PRIVATE COMPANIES PRACTICE SECTION 2

4 Report on Summarized Comparative Information We have previously audited the Foundation's 2011 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated September 10, In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2011, is consistent, in all material respects, with the audited financial statements from which it has been derived. Bethesda, Maryland July 25,

5 EXHIBIT A CAMFED USA FOUNDATION STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2012 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2011 ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,432,745 $ 2,731,862 Investments (Note 2) Grants receivable 347, ,807 Due from Affiliates (Note 6) 844, ,203 Prepayments and other current assets 19,084 23,615 FIXED ASSETS Total current assets 2,644,804 3,872,487 Furniture and equipment 42,482 41,541 Less: Accumulated depreciation (36,061) (28,089) Net fixed assets 6,421 13,452 TOTAL ASSETS $ 2,651,225 $ 3,885,939 CURRENT LIABILITIES LIABILITIES AND NET ASSETS Accounts payable and accrued liabilities $ 97,532 $ 83,090 Refundable advance 488, ,550 NET ASSETS Total current liabilities 585, ,640 Unrestricted 609,643 62,737 Temporarily restricted (Note 3) 1,455,636 3,143,562 Total net assets 2,065,279 3,206,299 TOTAL LIABILITIES AND NET ASSETS $ 2,651,225 $ 3,885,939 See accompanying notes to financial statements. 4

6 EXHIBIT B CAMFED USA FOUNDATION STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2012 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2011 REVENUE Unrestricted Temporarily Restricted Total Total Grants and contributions $ 1,836,572 $ 951,971 $ 2,788,543 $ 4,946,843 Government contracts 481, , ,858 Interest income 13,229-13,229 7,439 Realized gain (loss) 1,586-1,586 (52) Unrealized loss (2) - (2) - In-kind contributions 41,533-41,533 62,384 Other revenue 13,035-13,035 1,853 Net assets released from donor restrictions (Note 3) 2,639,897 (2,639,897) - - EXPENSES Total revenue 5,027,212 (1,687,926) 3,339,286 5,280,325 Program Services: Multiplying Girls' Educational Opportunities 2,550,454-2,550,454 2,509,969 Enabling Educated Women to Lead Change 838, ,979 1,408,167 Advocacy 419, , ,056 Research and Development 193, , ,054 Total program services 4,001,899-4,001,899 4,819,246 Supporting Services: Management and General 146, , ,539 Fundraising 332, , ,556 Total supporting services 478, , ,095 Total expenses 4,480,306-4,480,306 5,382,341 Change in net assets 546,906 (1,687,926) (1,141,020) (102,016) Net assets at beginning of year 62,737 3,143,562 3,206,299 3,308,315 NET ASSETS AT END OF YEAR $ 609,643 $ 1,455,636 $ 2,065,279 $ 3,206,299 See accompanying notes to financial statements. 5

7 CAMFED USA FOUNDATION STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2012 WITH SUMMARIZED FINANCIAL INFORMATION FOR Program Services Multiplying Girls' Educational Opportunities Enabling Educated Women to Lead Change Advocacy Grants and other assistance to governments, organizations and individuals outside the U.S. $ 1,286,795 $ 315,226 $ 300 Compensation of current officers, directors, trustees and key employees (Note 5) 14,982 11,986 11,986 Other salaries and wages 50,717 71, ,377 Employers Share Contributions Pension (Note 5) 1,965 3,115 5,386 Other employee benefits 5,851 7,314 16,577 Payroll taxes 5,224 6,694 15,262 Legal fees for services (non-employees) Accounting fees for services (non-employees) Other fees for services (non-employees) ,176 Office expenses 1,760 2,200 6,927 Information technology 2,443 3,054 56,830 Royalties Occupancy (Note 4) 9,006 4,930 11,174 Travel ,603 Conferences, conventions and meetings ,006 Depreciation 957 1,196 2,710 Insurance 818 1,023 2,318 Education costs 1, Young women's leadership costs - 178,545 - Direct program delivery 1,167, , ,116 Miscellaneous expense ,702 TOTAL $ 2,550,454 $ 838,979 $ 419,366 See accompanying notes to financial statements. 6

8 EXHIBIT C Supporting Services 2011 Research and Development Total Program Services Management and General Fundraising Total Supporting Services Total Expenses Total Expenses $ - $ 1,602,321 $ - $ - $ - $ 1,602,321 $ 1,988,889 2,997 41,951 5,993 11,986 17,979 59,930 90,341 21, ,440 45, , , , , ,059 1,688 4,978 6,666 17,725 17,684 2,438 32,180 12,989 12,190 25,179 57,359 56,552 2,019 29,199 4,327 10,981 15,308 44,507 46, ,051-16,051 16,051 80, ,778 31, ,249 34,027 30, ,624 2,626 2,594 5,220 6,844 22, ,621 1, , , , ,619 1,018 63,345 1,832 27,923 29,755 93,100 53, ,643 26,753 2,958 8,216 11,174 37,927 36, ,797 4,937 3,032 7,969 13,766 29, ,473 1,069 2,107 3,176 5, , ,993 2,710 7,972 9, , ,703 2,317 6,817 4,468-1, ,100 11, , ,545 96, ,100 1,663,229 4,854 2,882 7,736 1,670,965 2,172, ,722 7,475 4,451 11,926 15,648 20,551 $ 193,100 $ 4,001,899 $ 146,371 $ 332,036 $ 478,407 $ 4,480,306 $ 5,382,341 See accompanying notes to financial statements. 7

9 EXHIBIT D CAMFED USA FOUNDATION STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2012 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2011 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (1,141,020) $ (102,016) Adjustments to reconcile change in net assets to net cash (used) provided by operating activities: Depreciation 7,972 9,479 Realized (gain) loss (1,586) 52 Unrealized loss 2 - Donated stocks (49,511) - (Increase) decrease in: Grants receivable (175,082) 851,072 Due from Affiliates 99,309 (509,269) Prepayments and other current assets 4,531 (3,145) Increase (decrease) in: Accounts payable and accrued liabilities 14,442 (21,129) Refundable advance (108,136) 572,697 Net cash (used) provided by operating activities (1,349,079) 797,741 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (941) (8,633) Sale of fixed assets - 4,414 Sale of investments 50,903 - Net cash provided (used) by investing activities 49,962 (4,219) Net (decrease) increase in cash and cash equivalents (1,299,117) 793,522 Cash and cash equivalents at beginning of year 2,731,862 1,938,340 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,432,745 $ 2,731,862 See accompanying notes to financial statements. 8

10 CAMFED USA FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION Organization - CAMFED is an international non-governmental organization founded in 1993 in response to the exclusion of girls from education in Africa. CAMFED has six Affiliates: CAMFED International, established in the United Kingdom in 1993 and the headquarters of the organization; CAMFED Zimbabwe, established in 1993; CAMFED USA Foundation, established in 2001; CAMFED Zambia, established in 2002; CAMFED Tanzania, established in 2006; and CAMFED Ghana, established in Each Affiliate is established under the laws of the country in which it is located and conducts its activities in that country. The accompanying financial statements include only the assets, liabilities, net assets, income, gains, expenses and losses of the CAMFED USA Foundation (the Foundation). The Foundation is a charitable non-profit organization, incorporated in the State of Delaware, with CAMFED International as its sole member who appoints the Board of Directors of the Foundation. The purposes of the Foundation are: To provide financial and other assistance for the education of children and young people throughout the less-developed world; To provide financial and other assistance to educational facilities throughout the lessdeveloped world; and To advance the education of the general public in subjects relating to the lives of children and young people in the less-developed world and how these are affected by education and the lack thereof. The Foundation's offices are located in San Francisco, California and its activities are substantially supported by private grants and contributions. Basis of presentation - The accompanying financial statements are presented on the accrual basis of accounting, and in accordance with FASB ASC 958, Not-for-Profit Entities. The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Foundation's financial statements for the year ended December 31, 2011, from which the summarized information was derived. Cash and cash equivalents - The Foundation considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents. 9

11 CAMFED USA FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION (Continued) Cash and cash equivalents (continued) - Through December 31, 2012, the Dodd-Frank Wall Street Reform and Consumer Protection Act ( Dodd-Frank Act ) provided temporary unlimited deposit insurance coverage for non-interest bearing transaction accounts at all Federal Deposit Insurance Corporation (FDIC) insured depository institutions (the Dodd-Frank Deposit Insurance Provision ). The Foundation maintained a portion of its cash balance at a financial institution in a non-interest bearing account; thereby, all of this cash balance was protected by the FDIC under this Act. Beginning January 1, 2013, funds deposited in non-interest bearing accounts will no longer receive unlimited deposit insurance coverage. Bank deposit accounts at one institution will be insured by the FDIC up to a limit of $250,000. Management believes the risk in these situations to be minimal. Investments - Investments are recorded at their readily determinable fair value. Realized and unrealized gains and losses are listed separately in the Statement of Activities and Change in Net Assets. Fixed assets - Fixed assets in excess of $500 are capitalized and stated at cost. Fixed assets are depreciated on a straight-line basis over the estimated useful lives of the related assets, generally three to five years. The cost of maintenance and repairs is recorded as expenses are incurred. Income taxes - The Foundation is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes has been made in the accompanying financial statements. The Foundation is not a private foundation. Uncertain tax positions - For the year ended December 31, 2012, the Foundation has documented its consideration of FASB ASC , Income Taxes, that provides guidance for reporting uncertainty in income taxes and has determined that no material uncertain tax positions qualify for either recognition or disclosure in the financial statements. The Federal Form 990, Return of Organization Exempt from Income Tax, is subject to examination by the Internal Revenue Service, generally for three years after it is filed. Net asset classification - The net assets are reported in two self-balancing groups as follows: Unrestricted net assets include unrestricted revenue and contributions received without donor-imposed restrictions. These net assets are available for the operation of the Foundation and include both internally designated and undesignated resources. 10

12 CAMFED USA FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION (Continued) Net asset classification (continued) - Temporarily restricted net assets include revenue and contributions subject to donorimposed stipulations that will be met by the actions of the Foundation and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities and Change in Net Assets as net assets released from restrictions. Grants and contributions - Unrestricted and temporarily restricted contributions and grants are recorded as revenue in the year notification is received from the donor. Temporarily restricted contributions and grants are recognized as unrestricted support only to the extent of actual expenses incurred in compliance with the donor-imposed restrictions and satisfaction of time restrictions. Temporarily restricted contributions and grants received in excess of expenses incurred are shown as temporarily restricted net assets in the accompanying financial statements. The Foundation receives funding under grants and contracts from the U.S. Government and other grantors for direct and indirect program costs. This funding is subject to contractual restrictions, which must be met through incurring qualifying expenses for particular programs. Accordingly, such grants are considered exchange transactions and are recorded as unrestricted income to the extent that related expenses are incurred in compliance with the criteria stipulated in the grant agreements. Grants receivable represents amounts due from funding organizations for reimbursable expenses incurred in accordance with the grant agreements. Management considers all amounts to be fully collectible. Accordingly, an allowance for doubtful accounts has not been established. Grant funding received in advance of incurring the related expenses is recorded as a refundable advance. In-kind contributions - In-kind contributions consist of donated professional services. In-kind contributions are recorded at their fair market value as of the date the services are provided. Use of estimates - The preparation of the 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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Functional allocation of expenses - The costs of providing the various programs and other activities have been summarized on a functional basis in the Statement of Activities and Change in Net Assets. Accordingly, certain costs have been allocated among the programs and supporting services benefited. 11

13 CAMFED USA FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION (Continued) Reclassification - Certain amounts in the prior year's financial statements have been reclassified to conform to the current year's presentation. These reclassifications had no effect on the previously reported changes in net assets. 2. INVESTMENTS Investments consisted of the following at December 31, 2012: Market Value Common Stocks $ 192 Investments are recorded at their readily determinable fair values. Investments have been identified as Level 1 in the fair value hierarchy as they have values based on quoted prices in active markets for identical assets based on the criteria included in FASB ASC 820, Fair Value Measurement. 3. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consisted of the following at December 31, 2012: Build and Operate Tech Centers in Ghana $ 129,579 CAMA Activities 150,000 Bursary Support for Tanzania 121,227 Support for Zambia 1,043,378 School Fees and Bursary Grants in Zambia 11,452 $ 1,455,636 The following temporarily restricted net assets were released from donor restrictions by incurring expenses (or through the passage of time), which satisfied the restricted purposes specified by the donors: Support for Girls Education in Africa $ 585,660 Build and Operate Tech Centers in Ghana 141,050 Support for Zambia 1,814,539 School Fees and Bursary Grants in Zambia 14,244 Support for Zimbabwe and Tanzania 35,000 Young Women's Leadership and Enterprise in Zambia 41,547 Bursary Support for Tanzania 7,857 $ 2,639,897 12

14 CAMFED USA FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, LEASE COMMITMENTS The Foundation signed an agreement for new space, commencing on August 1, 2010 and expiring on July 31, The following is a schedule of the future minimum lease payments: Year Ending December 31, 2013 $ 22,631 Rent expense for the year ended December 31, 2012 totaled $37,927, including allocations from CAMFED International, CAMFED Tanzania, CAMFED Zambia and CAMFED Zimbabwe. 5. RETIREMENT PLAN The Foundation provides retirement benefits to its employees through a defined contribution plan. The defined contribution retirement plan is available for eligible employees who have completed six months of service. The Foundation contributes 6% percent of gross wages. Contributions to the plan during the year ended December 31, 2012 totaled $21,117 and are included in "Employers Share Contributions Pension" and "Compensation of current officers, directors, trustees, and key employees" in the Statement of Functional Expenses. 6. AFFILIATES The Foundation has six Affiliates, which are noted in Note 1. Inter-company accounts are used during the year to track payments and receipts of cash by one Affiliate on behalf of another. The balances are eliminated at year-end in the consolidated financial statements that are prepared by CAMFED International. The inter-company balances have not been eliminated in the accompanying financial statements. As of December 31, 2012, the Affiliates owed the Foundation $844,894. Substantially all of the program service expenses of the Foundation are incurred in African countries in which CAMFED International operates. Expenses are translated at the rate of exchange in effect at the date that funds are transferred to United Kingdom and African Affiliates during the year. The Statement of Financial Position of the foreign entities are maintained on the books of CAMFED International; therefore, gains and/or losses on currency translation for the foreign Affiliates' assets, liabilities and net assets are reported in the financial statements of CAMFED International. 7. SUBSEQUENT EVENTS In preparing these financial statements, the Foundation has evaluated events and transactions for potential recognition or disclosure through July 25, 2013, the date the financial statements were issued. 13

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