MAKE-A-WISH FOUNDATION OF CENTRAL NEW YORK, INC. FINANCIAL STATEMENTS YEARS ENDED AUGUST 31, 2015 AND 2014

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1 MAKE-A-WISH FOUNDATION OF CENTRAL NEW YORK, INC. FINANCIAL STATEMENTS YEARS ENDED

2 TABLE OF CONTENTS YEARS ENDED Page INDEPENDENT AUDITORS REPORT 1 FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION 3 STATEMENTS OF ACTIVITIES 4 STATEMENTS OF CASH FLOWS 6 STATEMENTS OF FUNCTIONAL EXPENSES 7 9

3 CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS REPORT The Board of Trustees Make-A-Wish Foundation of Central New York, Inc. East Syracuse, NY We have audited the accompanying financial statements of Make-A-Wish Foundation of Central New York, Inc. (the Foundation), which comprise the statements of financial position as of August 31, 2015 and 2014, and the related statements of activities, functional expenses 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 auditors 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. An independent member of Nexia International (1)

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Make-A-Wish Foundation of Central New York, Inc. as of August 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. CliftonLarsonAllen LLP Plymouth Meeting, Pennsylvania December 10, 2015 (2)

5 STATEMENTS OF FINANCIAL POSITION ASSETS Cash and Cash Equivalents $ 113,384 $ 309,595 Investments 387, ,244 Beneficial Interest Held by Others 146,035 - Due from Related Entities 14,404 39,290 Prepaid Expenses 16,073 1,500 Contributions Receivable 139,149 55,023 Other Assets 38,952 30,895 Property and Equipment, Net 430, ,678 Restricted Cash 173, ,485 Total Assets $ 1,459,347 $ 1,571,710 LIABILITIES AND NET ASSETS Accounts Payable and Accrued Expenses $ 56,846 $ 43,426 Line of Credit 95,788 - Accrued Pending Wish Costs 602, ,355 Due to Related Entities 3,709 8,751 Other Liabilities 107,372 79,785 Total Liabilities 866, ,317 Net Assets Unrestricted 203, ,294 Temporarily Restricted 270, ,480 Permanently Restricted 119, ,619 Total Net Assets 593, ,393 Total Liabilities and Net Assets $ 1,459,347 $ 1,571,710 See accompanying Notes to Financial Statements. (3)

6 STATEMENT OF ACTIVITIES YEAR ENDED AUGUST 31, 2015 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUES, GAINS AND OTHER SUPPORT Public Support: Contributions 1,233,933 $ 46,996 $ 7,500 $ 1,288,429 Grants 72,348 19,500-91,848 Total Public Support 1,306,281 66,496 7,500 1,380,277 Special Events 412,699 38, ,651 Less Direct Benefit Costs to Donor (101,091) - - (101,091) Special Events, Net 311,608 38, ,560 Investment Income (Loss), Net (18,667) 364 (3,965) (22,268) Other Income Net Assets Released from Restrictions 66,712 (66,712) - - Total Revenues, Gains, and Other Support 1,666,061 39,100 3,535 1,708,696 EXPENSES Program Services: Wish Granting 1,651, ,651,221 Total Program Services 1,651, ,651,221 Support Services: Fundraising 263, ,629 Management and General 185, ,156 Total Support Services 448, ,785 Total Expenses 2,100, ,100,006 Change in Net Assets (433,945) 39,100 3,535 (391,310) Net Assets, Beginning of Year 637, , , ,393 NET ASSETS, END OF YEAR $ 203,349 $ 270,580 $ 119,154 $ 593,083 See accompanying Notes to Financial Statements. (4)

7 STATEMENT OF ACTIVITIES YEAR ENDED AUGUST 31, 2014 REVENUES, GAINS AND OTHER SUPPORT Public Support: Contributions 1,247,850 Temporarily Permanently Unrestricted Restricted Restricted Total $ $ 35,817 $ 17,304 $ 1,300,971 Grants 76, ,013 Total Public Support 1,323,863 35,817 17,304 1,376,984 Special Events 459,454 30, ,349 Less Direct Benefit Costs to Donor (106,541) - - (106,541) Special Events, Net 352,913 30, ,808 Investment Income, Net 48, ,203 Other Income Net Assets Released from Restrictions 81,413 (81,413) - - Total Revenues, Gains, and Other Support 1,807,503 (14,137) 17,304 1,810,670 EXPENSES Program Services: Wish Granting 1,503, ,503,618 Total Program Services 1,503, ,503,618 Support Services: Fundraising 247, ,401 Management and General 135, ,160 Total Support Services 382, ,561 Total Expenses 1,886, ,886,179 Change in Net Assets (78,676) (14,137) 17,304 (75,509) Net Assets, Beginning of Year 715, ,617 98,315 1,059,902 NET ASSETS, END OF YEAR $ 637,294 $ 231,480 $ 115,619 $ 984,393 See accompanying Notes to Financial Statements. (5)

8 STATEMENTS OF CASH FLOWS YEARS ENDED CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $ (391,310) $ (75,509) Adjustments to Reconcile Change in Net Assets to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 21,401 19,924 Bad Debt Expense - 31,000 Contributions Restricted for Long-Term Investment (7,500) (17,304) Net Realized and Unrealized Losses (Gains) on Investments 34,815 (37,770) Contributed Property and Equipment, Inventory, and Stock - (374) Changes in Assets and Liabilities: Contributions Receivable (84,126) 82,330 Due from Related Entities 24,886 (34,350) Prepaid Expenses (14,573) (1,500) Other Assets (8,057) 27,505 Accounts Payable and Accrued Expenses 13,420 2,009 Line of Credit 95,788 - Accrued Pending Wish Costs 147, ,413 Due to Related Entities (5,042) (24,437) Other Liabilities 27,587 (15,340) Net Cash Provided by (Used in) Operating Activities (145,517) 242,597 CASH FLOWS FROM INVESTING ACTIVITES Purchases of Investments (248,818) (133,195) Proceeds from Sales of Investments 54, ,061 Purchases of Property and Equipment (4,194) (41,410) Net Cash Used in Investing Activities (198,662) (69,544) CASH FLOW FROM FINANCING ACTIVITIES Contributions Restricted for Long-Term Investment 7,500 17,304 Net Cash Provided by Financing Activities 7,500 17,304 Net Increase (Decrease) in Cash and Cash Equivalents (336,679) 190,357 CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED CASH, BEGINNING OF YEAR 623, ,723 CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED CASH, END OF YEAR $ 286,401 $ 623,080 SUPPLEMENTAL CASH FLOW INFORMATION Cash Paid for Interest $ 61 $ - See accompanying Notes to Financial Statements. (6)

9 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED AUGUST 31, 2015 Program services Wish Support services Management Total Support Granting Fundraising and General Services Total Direct Costs of Wishes $ 1,217,976 $ - $ - $ - $ 1,217,976 Salaries, Taxes, and Benefits 209, , , , ,969 Printing, Subscriptions, and Publications 45,773 47, ,140 93,913 Professional Fees 1,457 11,094 5,631 16,725 18,182 Rent and Utilities 19,957 2,934 1,163 4,097 24,054 Postage and Delivery 4,012 7, ,252 12,264 Travel 4,584 4,686 3,297 7,983 12,567 Meetings and Conferences 31,235 10,636 6,957 17,593 48,828 Office Supplies 12,770 5,983 1,461 7,444 20,214 Communications 7,729 1, ,783 9,512 Advertising and Media 16,351 13,085-13,085 29,436 Repairs and Maintenance 16,302 3,157 1,009 4,166 20,468 Membership Dues 1,535 1, ,435 2,970 Volunteer Training 1, ,047 National Partnership Dues 43,118 6,004 5,458 11,462 54,580 Miscellaneous 696 6,468 1,461 7,929 8,625 Depreciation and Amortization 17,121 3,210 1,070 4,280 21,401 $ 1,651,221 $ 263,629 $ 185,156 $ 448,785 $ 2,100,006 See accompanying Notes to Financial Statements. (7)

10 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED AUGUST 31, 2014 Program services Wish Support services Management Total Support Granting Fundraising and General Services Total Direct Costs of Wishes $ 1,119,323 $ - $ - $ - $ 1,119,323 Salaries, Taxes, and Benefits 216,220 99, , , ,779 Printing, Subscriptions, and Publications 22,062 53, ,148 76,210 Professional Fees 1,187 11,424 5,856 17,280 18,467 Rent and Utilities 16,760 2,947 1,132 4,079 20,839 Postage and Delivery 3,364 7, ,046 11,410 Travel 1,995 3,075 2,303 5,378 7,373 Meetings and Conferences 17,916 6,557 4,435 10,992 28,908 Office Supplies 7,162 4, ,278 12,440 Communications 7,750 1, ,837 9,587 Advertising and Media (Cash) 10,965 6,825-6,825 17,790 Repairs and Maintenance 18,478 3,465 1,459 4,924 23,402 Bad Debt Expense - 31,000-31,000 31,000 Membership Dues 1, ,170 2,355 Volunteer Training National Partnership Dues 42,385 6,438 4,829 11,267 53,652 Miscellaneous 323 4, ,769 6,092 Depreciation and Amortization 15,939 2, ,985 19,924 $ 1,503,618 $ 247,401 $ 135,160 $ 382,561 $ 1,886,179 See accompanying Notes to Financial Statements. (8)

11 NOTE 1 NOTE 2 ORGANIZATION Make-A-Wish Foundation of Central New York, Inc. (the Foundation) is a New York State not-for-profit corporation, organized for the purpose of granting wishes to children with life-threatening medical conditions. The Foundation is an independently operating chapter of Make-A-Wish Foundation of America (National Organization), which operates to develop and implement national programs in public relations and fund raising for the benefit of all local chapters. In addition, the local chapter is obligated to comply with a chapter agreement with the National Organization and such guidelines, resolutions, and policies as may be adopted by the National Organization s board of directors. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements of the Foundation are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP). Cash and Cash Equivalents The Foundation considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Included in cash and cash equivalents at August 31, 2015 and 2014 is $89,920 and $122,033, respectively of money market mutual funds. Investments Investments are recorded at fair value. Investment income, including gains and losses on investments, is recorded as increases or decreases in unrestricted net assets unless its use is limited by donor-imposed restrictions or law. Contributions Receivable Contributions receivable are unconditional promises to give. Such promises that are expected to be collected within one year are recorded at expected net realizable value when the promise is received. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of estimated future cash flows. Contributions receivable are discounted using fair value rates. Contributions are written off when deemed uncollectible. Discounts on contributions receivable at August 31, 2015 and 2014 were immaterial to the financial statements as a whole, as the majority of the receivables are due within one year. Property and Equipment, Net Property and equipment having a useful life of more than one year are capitalized at cost when purchased. Donated assets are capitalized at the estimated fair value at the date of receipt and restrictions are released once the asset has been placed into service. Depreciation on property and equipment is provided on a straight-line basis over the estimated useful lives of the assets, generally 3 to 40 years. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its life are expensed as incurred. (9)

12 NOTE 2 SUMMARY OR SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and Equipment, Net (continued) Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances indicate a long-lived asset be tested for possible impairment, the Foundation first compares undiscounted cash flows expected to be generated by that asset to its carrying value. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. Fair Value Measurements Fair value measurements of financial assets and financial liabilities and fair value measurements of nonfinancial items are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Foundation utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Foundation determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. Level 2 Inputs: Prices for similar assets, other than quoted prices included in Level 1 inputs, that are observable for the asset, either directly or indirectly. If the asset has a specified term, a Level 2 input must be observable for substantially the full term of the asset. Level 3 Inputs: Unobservable inputs for the asset used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at measurement date. Net Assets The Foundation s net assets and changes therein are classified and reported as follows: Permanently restricted net assets Net assets subject to donor-imposed restrictions that the principal be maintained in perpetuity. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on related investments for unrestricted purposes. Temporarily restricted net assets Net assets subject to restrictions imposed by donor or law that may be met either by actions of the Foundation or the passage of time. (10)

13 NOTE 2 SUMMARY OR SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Assets (continued) Unrestricted net assets Net assets that are not subject to donor-imposed restrictions or law. Revenue Recognition Unconditional promises to give are recognized initially at fair value as contributions revenue in the period such promises are made by donors. Fair value is estimated giving consideration to anticipated future cash receipts (after allowance is made for uncollectible contributions) and discounting such amounts at a risk-adjusted rate commensurate with the duration of the donor s payment plan. Amortization of the discounts is recorded as additional contribution revenue. Conditional promises are recorded as revenue once the conditions are substantially met. Contributions, grants, and bequests are recognized as either temporarily or permanently restricted if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. When restrictions are met in the same period as the contribution is received, the Foundation records the contribution and the expense as unrestricted. Contributions of assets other than cash are recorded at their estimated fair value. Contributions of services are recognized if the services received (a) create or enhance nonfinancial 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. The Foundation received in-kind contributions of assets and services that are included in the accompanying statements of activities as follows: Contributions: Wish Related $ 384,221 $ 385,740 Advertising and Media - 1,000 Property and Equipment Total $ 384,221 $ 387,114 Special Event Revenue: Internal Special Events $ 39,950 $ 52,827 An internal special event is a fund raising event coordinated and staffed by Foundation personnel rather than a third-party support group or organization. It is designed to attract and involve a large number of people for the purpose of raising mission awareness, additional funding, and cultivating future donors. Internal special event in-kind amounts are donated items recorded at fair value that are used in facilitating the event. Examples of such donated items are generally food, beverage, facility costs, and auction items. Ticket sales and sponsorships received in advance of events that occur subsequent to August 31, are recorded as deferred revenues and included as liabilities in the accompanying statement of financial position. (11)

14 NOTE 2 SUMMARY OR SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue Recognition (continued) Donated program or supporting services expenses were recorded at fair value totaling $384,221 and $387,114 in 2015 and 2014, respectively. Advertising and media is used to help the Foundation communicate its message or mission and includes fund raising materials, informational material, or advertising, and may be in the form of an audio or video tape of a public service announcement, a layout for a newspaper, media time or space for public service announcements, or other purposes. Advertising and media are reported as contribution revenue when received and fund raising or public information expense when received and the reporting of such contributions is unaffected by whether the Foundation could afford to purchase or would have purchased the assets at their fair value. Income Taxes The Foundation is a not-for-profit organization exempt from federal income and New York State taxes under the provisions of Internal Revenue Code Section 501(c)(3) and Section 805 of the New York State Tax Code. However, the Foundation remains subject to income taxes on any net income that is derived from a trade or business, regularly carried on and not in furtherance of the purpose for which it was granted exemption. No income tax provision has been recorded as the net income, if any, from any unrelated trade or business, in the opinion of management, is not material to the financial statements taken as a whole. Management believes that no uncertain tax positions exist for the Foundation at August 31, 2015 or Functional Expenses The Foundation performs three functions: wish granting, fund raising, and management and general. Definitions of these functions are as follows: Wish Granting Activities performed by the Foundation that grant wishes to children with life-threatening medical conditions. Fundraising Activities performed by the Foundation to generate funds and/or resources to support its programs and operations. During the fiscal year ended August 31, 2015 and 2014, the Foundation incurred no significant joint costs for activities that include fund raising appeals. Management and General All costs not identifiable with a single program or fund raising activity, but indispensable to the conduct of such programs and activities and to the Foundation s existence, are included as management and general expenses. This includes expenses for the overall direction of the Foundation, business management, general recordkeeping, budgeting, financial reporting, and activities relating to these functions such as salaries, rent, supplies, equipment, and other expenses. (12)

15 NOTE 2 SUMMARY OR SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Management and General (continued) Expenses that benefit more than one function of the Foundation are allocated among the functions based generally on the amount of time spent by employees on each function. Management Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make a number of 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. Significant items subject to such estimates and assumptions include the useful lives of property and equipment, valuation of investments and contributions receivable, accrued pending wish costs, net of attrition on pending wish costs and whether an allowance for uncollectible contributions receivable is required. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions. NOTE 3 FAIR VALUE MEASUREMENTS Fair Value of Financial Instruments Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of the financial instruments shown in the following tables as of August 31, 2015 and 2014 represent the amounts that would be received from the sale of those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Foundation s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Foundation based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, and available observable and unobservable inputs. The Foundation follows ASC Topic 820 for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. See note 2 to the Financial Statements. (13)

16 NOTE 3 FAIR VALUE MEASUREMENTS (CONTINUED) Fair Value Hierarchy The following table presents the placement in the fair value hierarchy of assets that are measured at fair value on a recurring basis at August 31, 2015 and 2014: Description Investments: Mutual Funds: Fair value measurements at August 31, 2015 using Quoted prices in active Significant markets for other Significant identical observable unobservable August 31, assets inputs inputs 2015 (Level 1) (Level 2) (Level 3) Domestic Equity $ 19,003 $ 19,003 $ - $ - Exchange Traded Funds: Domestic Equity 300, , Debt Securities: Corporate 68,792-68,792 - Total Investments $ 387,862 $ 319,070 $ 68,792 $ - Beneficial Interest in Assets Held By Others 146, ,035 Total $ 533,897 $ 319,070 $ 68,792 $ 146,035 Description Investments: Mutual Funds: Fair value measurements at August 31, 2014 using Quoted prices in active Significant markets for other identical observable August 31, assets inputs 2014 (Level 1) (Level 2) Domestic Equity $ 23,597 $ 23,597 $ - Exchange Traded Funds: Domestic Equity 259, ,938 - Debt Securities: Corporate 90,709-90,709 Total Investments $ 374,244 $ 283,535 $ 90,709 For the valuation of corporate debt securities at August 31, 2015 and 2014, the Foundation used significant other observable inputs, particularly dealer market prices for comparable investments as of the valuation date (Level 2). (14)

17 NOTE 3 FAIR VALUE MEASUREMENTS (CONTINUED) Fair Value Hierarchy (continued) Total investment income, gains, and losses for the years ended August 31, 2015 and 2014 consist of the following: Interest and Dividend Income $ 12,547 $ 11,433 Realized and Unrealized Gains, Net (34,815) 37,770 Investment Income, Net $ (22,268) $ 49,203 NOTE 4 BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS As of August 31, 2015, the Foundation had a beneficial interest in assets held by others of $146,035. This interest consist of funds contributed to the Wishes Forever Endowment Fund at National Organization. An endowment agreement has been signed between the Foundation and National Organization and thus the original corpus and any accumulated earnings are not redeemable by the Foundation at any time. Distributions from earnings will be made by the National Organization to the Foundation according to the National Organization s Endowment Spending Policy. See note 3 for fair value disclosures related to this asset. The following table presents a rollforward of activity for investments measured at fair value using significant unobservable inputs (Level 3) for the year ended August 31, 2015: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beginning Balance $ - Contributions made to National 150,000 Total Gains or Losses (Realized/Unrealized) Included in Changes in Net Assets (3,965) Ending Balance $ 146,035 Change in Unrealized Gains or Losses for the Period Included in the Change in Net Assets Relating to Investments Still Held at End of the Reporting Period $ (3,965) NOTE 5 TRANSACTIONS WITH RELATED ENTITIES The National Organization conducts national fundraising efforts for which cash and in-kind donations are received and shared with the Foundation. These funds represent revenues associated with: distributions from national partners, individual donation amounts collected via online and white mail donations, amounts for internal grants, travel and training scholarships, amounts to fund the Adopt-A-Wish program, and other miscellaneous revenues. During the years ended August 31, 2015 and 2014, the Foundation received $256,544 and $303,028, respectively from these national revenue streams. (15)

18 NOTE 5 TRANSACTIONS WITH RELATED ENTITIES (CONTINUED) Conversely, the chapter pays amounts to the National Organization for annual dues, insurance, and other miscellaneous ancillary expenses that the National Organization pays on behalf of the Foundation. Amounts totaling $54,580 and $53,652 were paid from the Foundation to the National Organization for the years ended August 31, 2015 and 2014, respectively. Chapters who assist with the organization and granting of wishes from other chapters are paid a fee for service called the wish assist fee. Under this program, the Foundation received $600 and $300 in wish assist fee for the years ended August 31, 2015 and 2014, respectively. Amounts due from and to related entities are as follows: Balance at August 31: Due from National Organization $ 14,404 $ 39,290 Due to Other Chapters $ 3,709 $ 8,751 Amounts due from the National Organization represent contributions remitted to the National Organization that are identified for the Foundation s use but were not yet transferred to the Foundation as of year-end. Amounts due to other chapters totaling $3,709 and $8,751 at August 31, 2015 and 2014, respectively represent amounts owed to other chapters who have assisted in the granting of wishes for the Foundation. During 2015 and 2014 the Foundation received contributions, both cash and in-kind, from board members totaling $9,775 and $10,270, respectively. NOTE 6 PROPERTY AND EQUIPMENT, NET Property and equipment as of August 31, 2015 and 2014 consist of the following: Land $ 250,000 $ 250,000 Buildings and Building Improvements 197, ,769 Computer Equipment and Software 134, ,522 Office Furniture 158, , , ,280 Less Accumulated Depreciation and Amortization (310,003) (288,602) Property and Equipment, Net $ 430,471 $ 447,678 Depreciation and amortization expense totaled $21,401 and $19,924 for the years ended August 31, 2015 and 2014, respectively. (16)

19 NOTE 7 ACCRUED PENDING WISH COSTS The Foundation accrues for estimated costs of reportable pending wishes as unconditional promises to give when five certain, measurable wish criteria are met. Prior to meeting these five criteria, the wish is considered a conditional promise to give due to the inherent uncertainties surrounding these criteria and is therefore not accrued as a pending wish liability. Reportable pending wish criteria include: 1. Receiving a referral, 2. Obtaining the required medical eligibility form, 3. Contact with the wish family has occurred to determine the prospective wish, 4. Determination that the wish falls within the National Organization s wish granting policy, and 5. The wish is expected to be granted within the next 12 months. As of August 31, 2015 and 2014, the Foundation had approximately 44 and 35 reportable pending wishes, respectively. NOTE 8 NOTE 9 LINE OF CREDIT The Foundation has an unsecured line of credit with a financial institution totaling $100,000, bearing interest at prime rate (3.25 at August 31, 2015) plus 1.5%. As of August 31, 2015 there is an outstanding balance of $95,788. As of August 31, 2014, there were no outstanding borrowings on this line of credit. ENDOWMENTS The Foundation follows the provisions of ASC 958, Section , Classification of Donor- Restricted Endowment Funds Subject to UPMIFA. These provisions provide guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) and also require disclosures about endowment funds, both donor-restricted endowment funds and board-designated endowment funds. In September 2010, New York State enacted the New York Prudent Management of Institutional Funds Act (NYPMIFA). The Foundation has interpreted NYPMIFA as allowing it to appropriate for expenditure or accumulate so much of the donor-restricted endowment fund as is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established, subject to intent of the donor as expressed in the gift instrument absent explicit donor stipulations to the contrary. Accounting guidance associated with the enactment of NYPMIFA as set forth in ASC 958, Section , Classification of Donor- Restricted Endowment Funds Subject to UPMIFA, required the portion of a donor-restricted that is not classified as permanently restricted to be classified as temporarily restricted net assets until appropriated for expenditure in a manner consistent with the standard of prudence prescribed by NYPMIFA. As of August 31, 2015 the Foundation s endowment consists of four individual donorrestricted funds established to support Wishes. Net assets associated with endowment funds, including funds designated by the board of directors to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. (17)

20 NOTE 9 ENDOWMENTS (CONTINUED) Endowment assets, both donor-restricted and board-designated, are reflected as restricted cash on the statements of financial position. Interpretation of Relevant Law As noted above, the board of trustees of the Foundation has interpreted the NYPMIFA as requiring preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets: (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by NYPMIFA. In accordance with NYPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: 1. The duration and preservation of the fund 2. The purposes of the Foundation and the donor-restricted endowment fund 3. General economic conditions 4. The possible effect of inflation and deflation 5. The expected total return from income and the appreciation of investments 6. Other resources of the Foundation 7. The investment policies of the Foundation Endowment net assets as of August 31, 2015 and 2014 consisted of $122,889 and $118,990, respectively, of permanently restricted donor-restricted endowment funds. These assets are perpetual endowment funds that are required to be retained permanently either by explicit donor stipulation of by NYPMIFA. Changes in endowment net assets for the years ended August 31, 2015 and 2014 are as follows: Temporarily Permanently Temporarily Permanently Restricted Restricted Total Restricted Restricted Total Endowment Net Assets, Beginning of Year $ 3,371 $ 115,619 $ 118,990 $ 2,807 $ 98,315 $ 101,122 Investment Income Loss on National Endowment Fund - (3,965) (3,965) Contributions - 7,500 7,500-17,304 17,304 Endowment Net Assets, End of Year $ 3,735 $ 119,154 $ 122,889 $ 3,371 $ 115,619 $ 118,990 (18)

21 NOTE 9 ENDOWMENTS (CONTINUED) Fund Deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or NYPMIFA requires the Foundation to retain as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature are reported in unrestricted net assets. There were no such deficiencies at August 31, 2015 or Return Objectives and Risk Parameters The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor-specified period as well as board-designated funds. Under this policy, as approved by the board of directors, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of the S&P 500 index while assuming a moderate level of investment risk. The Foundation expects its endowment funds, over time, to provide an average rate of return of approximately 5% annually. Actual returns in any given year may vary from this amount. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent constraints. Spending Policy and How the Investment Objectives Relate to Spending Policy The Foundation has a policy of appropriating for distribution each year 4% of its endowment fund s average fair value over the prior 12 quarters through the calendar year-end preceding the fiscal year in which the distribution is planned. In establishing this policy, the Foundation considered the long-term expected return on its endowment. Accordingly, over the long term, the Foundation expects the current spending policy to allow its endowment to grow at an average of 1% annually. This is consistent with the Foundation s objective to maintain the purchasing power of the endowment assets held in perpetuity or for a specified term as well as to provide additional real growth through new gifts and investment return. During the year ended August 31, 2015, the Foundation liquidated $110,000 from the endowment fund to establish the Beneficial Interest Held by National, which is described in Note 4. (19)

22 NOTE 10 TEMPORARILY AND PERMANENTLY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes for the year ended August 31, 2015 and 2014: Time Restrictions $ 85,948 $ 67,276 Capital Campaigns 165, ,204 Growth and Appreciation Project 2,000 - Capacity Building 17,500 - Total Temporarily Restricted Net Assets $ 270,580 $ 231,480 The capital campaign, which began in 2006, was used for building improvements of a donated building received by the Foundation in The remaining amounts and any future contributions received related to the capital campaign will be used for building renovations and building operational needs and wish granting. For the years ended August 31, 2015 and 2014, permanently restricted net assets of $119,154 and $115,619, respectively, were restricted for investments in perpetuity, the income from which is expendable to support future wishes. NOTE 11 RETIREMENT PLAN The Foundation has a defined contribution retirement plan (the Plan). Employees are eligible for participation in the Plan after reaching 21 years of age and upon completion of 90 days of service. Under the provisions of the Plan, eligible employees may elect to defer a percentage of their salary subject to certain IRC limitations. The Foundation matches employee contributions up to 3% of the employee s salary. Foundation contributions to the Plan for the years ended August 31, 2015 and 2014 were $8,989 and $8,430, respectively. NOTE 12 CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject the Foundation to concentration of credit risk consist principally of cash, cash equivalents, and investments. The Foundation places its cash and investments with high credit quality financial institutions and generally limits the amount of credit exposure not to exceed the FDIC insurance coverage limit of $250,000. From time to time throughout the year, the Foundation s cash balances may exceed the amount of the FDIC insurance coverage. In-kind contributions totaling $164,354 and $124,566, were received from a single donor for the years ended August 31, 2015 and 2014, respectively, which represents 10% and 10% of total public support for each year, respectively. Should these contribution levels decrease, the Foundation may be adversely affected. NOTE 13 SUBSEQUENT EVENTS The Foundation has evaluated subsequent events from the statement of financial position date through December 10, 2015, the date at which the financial statements were available to be issued, and determined that there are no items to disclose. (20)