CENTRAL NEW YORK RONALD MCDONALD HOUSE CHARITIES, INC. (d/b/a THE CENTRAL NEW YORK RONALD MCDONALD HOUSE) SYRACUSE, NEW YORK

Transcription

1 CENTRAL NEW YORK RONALD MCDONALD HOUSE CHARITIES, INC. SYRACUSE, NEW YORK AUDITED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31,2016 AND 2015

2 CONTENTS Pages INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS: Statement of Financial Position Statement of Activities- for the year ended December 31, 2016 Statement of Activities -for the year ended December 31, 2015 Statement of Functional Expenses- for the year ended December 31, 2016 Statement of Functional Expenses - for the year ended December 31, 2015 Statement of Cash Flows Notes to Financial Statements

3 &(J(Ue4 ami ~eh«ett, il'p CERTIFIED PUBLIC ACCOUNTANTS 2112 ERIE BLVD. EAST, SUITE 100 SYRACUSE, N.Y (315) FAX# (315) INDEPENDENT AUDITORS' REPORT To the Board of Directors Central New York Ronald McDonald House Charities, Inc. d/b/a The Central New York Ronald McDonald House Syracuse, New York Report on the Financial Statements We have audited the accompanying financial statements of Central New York Ronald McDonald House Charities, Inc. (d/b/a The Central New York Ronald McDonald House) which comprise the statements of financial position as of December 31, 2016 and 2015, 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 U. S. generally accepted accounting principles; 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 audit. We conducted our audit in accordance with U. S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements

4 INDEPENDENT AUDITORS' REPORT (continued) 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 Central New York Ronald McDonald House Charities, Inc. (d/b/a The Central New York Ronald McDonald House) 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 U.S. generally accepted accounting principles. May 3, 2017 c~~~up Syracuse, NY -2-

5 STATEMENT OF FINANCIAL POSITION DECEMBER 31, ASSETS Cash and cash equivalents Accounts receivable, net Interest receivable Contributions receivable, net Prepaid expenses Investments Property and equipment, net $ 965,374 15,740 8,312 48,369 8,772 3,425,618 7,783,569 $ 530,449 69,369 14, ,656 8,050 3,331,505 8,027,065 Total assets LIABILITIES AND NET ASSETS $12,255,754 $ 12,101,025 Accounts payable and accrued expenses $ 40,620 Due to RMHC Global 7,561 Deferred revenue 400 Note payable 1,121,798 Total Liabilities 1,170,379 Net assets: Unrestricted 10,048,818 Temporarily restricted 378,345 Permanently restricted 658,212 Total net assets 11,085,375 Total liabilities and net assets $12,255,754 $ 33,311 12,010 2,950 1,229,475 1,277,746 9,820, , ,212 10,823,279 $ 12,101,025 The accompanying notes are an integral part of these financial statements -3-

6 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31,2016 Temporarily Permanently Unrestricted Restricted Restricted Revenues and support Special events revenue $ 261,317 $ $ Less direct benefit costs {83,091~ Net revenue from special events 178,226 Contributions 932,977 24,500 Room rental 125,555 Other Income 1,868 Net assets released from restrictions 32,020 {32,020~ Total revenues and other support 1,270,646 {7,520~ Expenses Program Services 761,995 Supporting Services: Management and general administration 228,877 Fundraising 132,781 Unallocated payments to RMHC Global 42,721 Total expenses 1,166,374 Change in net assets from operations 104,272 (7,520) Investment income- net 124,371 40,973 Change in net assets 228,643 33,453 Net assets at beginning of year 9,820, , ,212 Net assets at end of year $ 10,048,818 $ 378,345 $ 658,212 Total $ 261,317 {83,091~ 178, , ,555 1,868 1,263, , , ,781 42,721 1,166,374 96, , ,096 10,823,279 $ 11,085,375 The accompanying notes are an integral part of these financial statements -4-

7 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31,2015 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and support Special events revenue $ 259,510 $ $ $ 259,510 Less direct benefit costs {84,455) {84,455) Net revenue from special events 175, ,055 Contributions 689,573 29, ,273 Room rental 113, ,413 Other Income Net assets released from restrictions 25,438 {25,438) Total revenues and other support 1,003,815 4,262 1,008,077 Expenses Program Services 769, ,174 Supporting Services: Management and general administration 209, ,991 Fundraising 134, ,685 Unallocated payments to RMHC Global 47,270 47,270 Total expenses 1,161,120 1,161,120 Change in net assets from operations (157,305) 4,262 (153,043) Investment income- net 18,620 {58,825) {40,205) Change in net assets (138,685) (54,563) (193,248) Net assets at beginning of year 9,958, , ,212 11,016,527 Net assets at end of year $ 9,820,175 $ 344,892 $ 658,212 $10,823,279 The accompanying notes are an integral part of these financial statements -5-

8 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31,2016 Program Services Su~~ort Services General and Fund House Administrative Raising Total Salaries $ 293,928 $ 55,114 $ 60,878 $ 409,920 Employee benefits 18,202 10,592 8,625 37,419 Payroll taxes 23,913 4,368 4,780 33,061 Total Salaries and related expenses 336,043 70,074 74, ,400 Supplies and expenses 1,746 12,212 13,958 General insurance 30,308 30,308 Telephone and utilities 43,190 43,190 Maintenance and repairs 79,381 79,381 Conferences 3,592 3,592 Fund raising 48,144 48,144 Newsletter 3,809 3,809 Travel Postage 2,802 2,802 Legal, audit and accounting 12,615 12,615 Public relations consultant 20,000 10,000 30,000 Meetings and events Equipment rental Computer and software expense 11,496 11,496 Dues and subscriptions 4,410 4,410 Volunteer recognition 1,255 1,255 Miscellaneous 11,433 11,433 Other contracted services 14,600 14,600 Interest 46,083 46,083 Depreciation 271,327 13, ,527 $ 761,995 $ 228,877 $132,781 $1,123,653 The accompanying notes are an integral part of these financial statements -6-

9 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31,2015 Program Services Su~~ort Services General and Fund House Administrative Raising Total Salaries $ 279,089 $ 53,100 $ 57,139 $ 389,328 Employee benefits 19,043 10,411 8,153 37,607 Payroll taxes 23,444 4,250 4,523 32,217 Total Salaries and related expenses 321,576 67,761 69, ,152 Supplies and expenses 1,182 15,018 16,200 General insurance 30,659 30,659 Telephone and utilities 49,756 49,756 Maintenance and repairs 83,603 83,603 Conferences 10,813 10,813 Fund raising 48,000 48,000 Newsletter 5,524 5,524 11,048 Travel Postage 3,867 3,867 Legal, audit and accounting 11,569 11,569 Public relations consultant 20,300 10,851 31,151 Meetings and events Equipment rental Computer and software expense 4,635 4,635 Dues and subscriptions 3,350 3,350 Volunteer recognition Miscellaneous 12,867 12,867 Interest 41,245 41,245 Depreciation 282,398 11, ,931 $ 769,174 $ 209,991 $134,685 $1,113,850 The accompanying notes are an integral part of these financial statements -7-

10 STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 Cash flows from operating activities: Change in net assets $ 262,096 Adjustments to reconcile change in net assets to net cash provided by (used for) operating activities: Depreciation 284,527 Donated fixed assets (8,544) Net realized and unrealized (gains) losses (118,242) (Increase) Decrease in assets: Accounts receivable 53,629 Interest receivable 6,619 Contributions receivable 71,287 Prepaid expenses (722) Increase (decrease) in liabilities: Accounts payable and accrued expenses 7,309 Due to RMHC Global (4,449) Deferred revenue {2,550~ Net cash provided by operating activities 550,960 Cash flows from investing activities: Proceeds from sales of investments and return of principal 1,945,896 Purchase of investments (1,921,767) Acquisitions of fixed assets {32,487~ Net cash provided by (used for) investing activities (8,358) Cash flows from financing activities: Payments on note payable {107,677~ Net cash used for financing activities {107,677~ Net increase in cash and cash equivalents 434,925 Cash and cash equivalents - beginning 530,449 Cash and cash equivalents - ending $ 965,374 Supplemental cash flow disclosures: Noncash operating and investing activities: Donation of services $ 960 Cash paid during the year: Interest 46, $ (193,248) 293,931 (1,799) 97,338 (57,069) 1,316 99,536 1,069 7,239 (606) 2, , ,714 (608,360) {9,779~ 54,575 {302,929~ {302,929~ 2, ,146 $ 530,449 $ ,970 The accompanying notes are an integral part of these financial statements -8-

11 DECEMBER 31, 2016 Note 1. Summary of Significant Accounting Policies Organization Central New York Ronald McDonald House Charities, Inc. (d/b/a The Central New York Ronald McDonald House) (the Organization) is a New York State nonprofit charitable corporation formed on June 2, The mission of Ronald McDonald House Charities is to create, find and support programs that directly improve the health and well-being of children. Collectively, RMHC and the network of local Chapters ascribe to five core values: we are focused on the critical needs of children, we lead with compassion, we celebrate the diversity of our people and our programs, we value our heritage and we operate with accountability and transparency. We fulfill our mission through operation of sustainable programs that enable family-centered care, bridge access to quality health care, are a vital part of the health care continuum and strengthen families during difficult times. The following program, operated by the Organization, represents the core function of Ronald McDonald House Charities: Ronald McDonald House When children must travel long distances to access top medical care, accommodations and support for families can be expensive or not readily available. The Organization helps families stay close to their ill or injured child through the Ronald McDonald House program located in Syracuse, New York, which provide temporary lodging, meals and other support to children and their families. The program provides families with emotional and physical comfort and increases the caregivers' ability to spend more time with their child, to interact with their clinical care team and to participate in critical medical care decisions. Basis of Presentation The financial statements of the Organization have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and are presented on the basis of unrestricted, temporarily restricted, and permanently restricted net assets. Net assets of the two restricted classes are created only by donor-imposed restrictions on their use. 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. All other net assets, including board designated or appropriated amounts, are unrestricted and are reported as part of the unrestricted class. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management of the Organization to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. -9-

12 DECEMBER 31,2016 Note 1. Summary of Significant Accounting Policies (continued) Cash Equivalents Cash equivalents include all highly liquid investments with a maturity date of less than three months from the date of purchase. The Organization's cash balances that are maintained in bank accounts may exceed Federal Deposit Insurance Corporation limits from time to time. The Organization has not experienced any losses in such accounts and management believes that it is not exposed to any significant credit risk on cash. Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding balances. Accounts receivable are written off when deemed uncollectable. Contributions Receivable Contributions receivable are unconditional promises to give. Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts are computed using riskadjusted interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue. Contributions receivable are written off when deemed uncollectible. The Organization is the beneficiary under various wills and trust agreements of which the total realizable amount is not presently determinable. Such amounts are recorded when a will is declared valid by probate court and the proceeds are measurable. Investments The Organization carries investments in marketable securities with readily determinable fair values and all investments in debt securities at their fair values in the statements of financial position. Realized and unrealized gains and losses and income are included in the statements of activities. Property and Equipment Property and equipment are stated at cost, if purchased, or estimated fair value, if donated, at the date of donation. Additions of $500 or more are capitalized, while maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows (in years): - 10-

13 DECEMBER 31, 2016 Note 1. Summary of Significant Accounting Policies (continued) Property and Equipment (continued) Buildings and improvements Land improvements Office furniture and equipment Furnishings Impairment of Long-Lived Assets The Organization evaluates its long-lived assets for any events or changes in circumstances which indicate that the carrying amount of such assets may not be fully recoverable. The Organization evaluates the recoverability of long-lived assets by measuring the carrying amount of such assets against the estimated undiscounted future cash flows associated with them. At the time such evaluation indicates that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values. Donated Assets. Property and Equipment. and Services Donated marketable securities, property and equipment, and other noncash donations are recorded as contributions at their fair values at the date of donation. Such donations are reported as increases in unrestricted net assets unless the donor has restricted the donated asset for a specific purpose. Assets donated with explicit restrictions regarding their use are reported as restricted contributions. Absent donor stipulations regarding how long those donated assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time. Donated services are recognized as contributions if the services: (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Organization. The Organization also receives donated services from other contributors and volunteers that are not measurable, and therefore, are excluded from the financial statements. Deferred Revenue Income from sponsorships received in advance of future special events is deferred and recognized over the periods to which the sponsorships relate

14 DECEMBER 31, 2016 Note 1. Summary of Significant Accounting Policies (continued) Net Assets The Organization's net assets and changes therein are classified and reported as follows: Unrestricted Net assets that are not subject to donor-imposed restrictions or law. Temporarily Restricted Net assets subject to restrictions imposed by donor or law that may be met either by actions of the Organization or the passage of time. Permanently Restricted Net assets subject to donor-imposed restrictions that the principal be maintained in perpetuity. Generally, the donors of these assets permit the Organization to use all or part of the income earned on related investments for unrestricted purposes. Revenue Recognition Unconditional promises to give are recognized as revenue in the period the promise was made. Conditional promises are recorded as revenue when 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. Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the statements of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Income Tax Status The Organization is exempt from federal income tax under Section 501 (c)(3) of the Internal Revenue Code. However, income, if any, from certain activities not directly related to the Organization's tax-exempt purpose is subject to taxation as unrelated business income. In addition, the Organization qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization other than a private foundation under Section 509(a)(2). -12-

15 DECEMBER 31, 2016 Note 1. Summary of Significant Accounting Policies (continued) Income Tax Status (continued) The Organization believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements. Reclassifications Certain amounts from the prior year have been reclassified to conform to the current year's presentation. Note 2. Contributions Receivable Contributions receivable consist primarily of pledges as of the years ended December 31: Amounts due in: Less than One Year $ 6,251 $ 51,500 One to Five Years 43,750 75,000 More than Five Years Total 50, ,500 Unamortized Discount (1 1143) (2,635) Allowance for Uncollectibles (489) (4,209) Net Contributions Receivable $ 48,369 $ 119,656 The discount rate used for the years ended December 31, 2016 and 2015 was 1.70% and 1.81 A>, respectively. Note 3. Fair Value Measurements In determining fair value, the Organization uses various valuation approaches within the fair value measurement framework. Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Levels within the hierarchy are based on the reliability of inputs as follows: Level 1 - Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets; Level 2 - Valuations based on quoted prices for similar assets or liabilities or identical assets or liabilities in less active markets, such as dealer or broker markets; and - 13-

16 DECEMBER 31, 2016 Note 3. Fair Value Measurements (continued) Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow models, and similar techniques not based on market, exchange, dealer, or broker-traded transactions. The fair values of assets and liabilities measured on a recurring basis as of December 31, 2016 and 2015 are as follows: Fair values for Level 1 investments are determined by reference to quoted market prices and other relevant information generated by market transactions. Fair value of Level 2 investments are determined by reference to quoted prices for similar assets in less active markets. Fair value of Level 3 investments are determined from valuation techniques in which one or more inputs are unobservable

17 DECEMBER 31,2016 Note 3. Fair Value Measurements (continued) The composition of investment income on the Organization's investment portfolio for the years ended December 31, 2016 and 2015 is as follows: Interest and dividend income $ 84,486 Realized and unrealized gains (losses)- net 118,242 Less Investment Expenses (37,384) Investment income- net $ 165,344 =========== Note 4. Property and Equipment $ 98,503 (97,338) (41,370) $ {40,205} Property and equipment consist of the following as of December 31 : Land Land improvements Buildings Furnishings and equipment Total, at cost Accumulated depreciation Property and Equipment - net Note 5. Note Payable $1,873,055 96,985 6,374, ,962 8,964,539 (1 '180,970) $7,783,569 $ 1,873,055 96,985 6,373, ,307 8,923,508 (896,443) $ 8,027,065 Note payable to NBT Bank, original note dated April 20, This note was renegotiated during The current note calls for monthly payments of $12,824 including interest at 3.85% Final payment due July The balance was $1,121,798 and $1,229,475 at December 31, 2016 and 2015, respectively. The Organization has pledged investment accounts held at Wells Fargo Advisors with a December 31, 2016 market value of $2,128,779 as collateral. The note contains a covenant requiring $4 million of unrestricted net assets at all times measured annually at December 31. Management is not aware of any violations of the covenant

18 DECEMBER 31, 2016 Note 5. Note Payable (continued) Principal maturities of note payable are as follows for the year ending December 31, : Thereafter $ 112, , , , , ,929 $1,121,798 Total interest paid during the years ended December 31, 2016 and 2015 was $46,083 and $41,245, respectively Note 6. Endowment Funds The Organization's endowment consists of a donor restricted fund. As required by U.S. GAAP net assets associated with endowment funds, are classified and reported based on the existence of donor-imposed restrictions. Absent explicit donor stipulations to the contrary, the board of directors of the Organization has interpreted the New York Prudent Management of Institutional Funds Act (NYPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds. As a result of this interpretation, the Organization 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 Organization in a manner consistent with the standard of prudence prescribed by that standard. In accordance with that standard, the Organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donor-restricted endowment funds, (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 Organization, and (7) the Organization's investment policies

19 DECEMBER 31,2016 Note 6. Endowment Funds (continued) The Organization has adopted an investment policy, approved by the board of directors, for endowment assets. The investment policy for any and all endowment funds should focus on the need to invest, and reinvest to the extent possible, with a goal of principal growth. As the fund increases, both due to investment returns and new endowment gifts, if any, it is expected that it will begin to generate current income that is significant in relation to the annual operating costs of the Organization. Endowment net asset composition by type of fund as of December 31, 2016 and 2015 is as follows: Unrestricted Donor-Restricted Endowment Funds =$===== Unrestricted Donor-Restricted Endowment Funds $ ========= Temporarily Restricted $ Temporarily Restricted $ 336, Permanently Restricted $ 658,212 Permanently Restricted $ 658,212 Total $ 1,035,815 Total $ 994,842 Changes in endowment net assets as of December 31, 2016 and 2015 are as follows: Temporarily Permanently Unrestricted Restricted Restricted Endowment net assets, 12/31/14 $ $ 395,455 $ 658,212 Investment return: Investment income- net 17,188 Realized and Unrealized ~76,013} Total investment return (58,825} Endowment net assets, 12/31/15 336, ,212 Investment return: Investment income- net 18,184 Realized and Unrealized 22,789 Total investment return 40,973 Endowment net assets, 12/31/16 $ $ 377,603 $ 658,212 Total $ 1,053,667 17,188 ~76,013} (58,825} 994,842 18,184 22,789 40,973 $ 1,035,

20 DECEMBER 31, 2016 Note 7. Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following programs and purposes as directed by donors as of December 31: Unappropriated endowment earnings Ronald McDonald House John Ben Snow Foundation- new technology Reisman Foundation- Smart Goal Defi bri II a tor Total Temporarily Restricted Net Assets $ 377,603 $ 336, , $ 378,345 $ 344,892 Net assets were released from restrictions as follows: Ronald McDonald House High Risk Pregnancy Outreach Program Broome County Residents Reisman Foundation- Smart Goal Ronald McDonald House- new technology John Ben Snow Foundation- new technology $ 4 7,558 17,500 6,958 $ 14,996 4,000 2,000 4,442 Total Released From Restriction Note 8. Permanently Restricted Net Assets $ 32,020 $ 25,438 Permanently restricted net assets are held to generate income to be used for Ronald McDonald House operations and consisted of the following at December 31 : Kroc Endowment $ 658,212 $ 658,212 Note 9. Donated Goods and Services The fair value of donated goods and services included as contributions in the financial statements and the corresponding expense categories for the years ended December 31, 2016 and 2015 are as follows: Repairs and maintenance $ 960 $

21 DECEMBER 31,2016 Note 10. Related Party Transactions Ronald McDonald House Charities (RMHC) is a system of independent, separately registered public benefit organizations, referred to as "Chapters" within the global organization. The Organization is an independent operating Chapter within the RMHC system. Each Chapter is licensed by McDonald's Corporation and Ronald McDonald House Charities, Inc. to use RMHC related trademarks in conjunction with fundraising activities and the operation of its programs; the License Agreement also sets standards of operations for programs, governance, finance, branding and reporting. Ronald McDonald House Charities, Inc. (RMHC Global), a separately registered nonprofit organization, ensures delivery of the mission across the globe. As a center of excellence, RMHC Global builds and sustains a robust infrastructure of support to the network of Chapters, including operations, licensing and compliance, finance, risk management, communications, marketing and development. The Organization remits to RMHC Global 25% of its revenues from all national fund raising efforts facilitated by RMHC Global, as defined by the license agreement. During the years ended December 31, 2016 and 2015, the Organization received $44,662 and $66,074 respectively, from RMHC Global. The Organization has contracted for publicity and marketing services from a company partially owned and managed by a current board member. The Organization paid $43,750 and $46,490 for services during the years ended December 31, 2016 and 2015, respectively. Note 11. Allocation of Joint Costs This statement requires the allocation of joint costs. In 2016 and 2015 the Organization conducted activities that included requests for contributions, as well as program, management and general components. These activities included direct mail campaigns and special events. The costs of conducting these activities included a total of $365,237 and $350,729 of joint costs for 2016 and 2015, respectively, which are not specifically attributable to particular components of the activities. These joint costs were allocated as follows for the year ending December 31: Fund raising $ 74,282 $ 69,815 Program services 220, ,153 General and administrative 70,073 67,761 Total $365,237 $350,

22 DECEMBER 31,2016 Note 12. Commitments and Contingencies The organization has entered into a thee year maintenance agreement for it's information technology system. The agreement calls for monthly payments of $1,000 through May The following is a summary of the remaining commitment for the years ending December 31: $ 12,000 12,000 5,000 $ 29,000 Note 13. Subsequent Events Management evaluated subsequent events through May 3, 2017, the date the financial statements were available to be issued. There were no material subsequent events that required recognition or additional disclosure in the financial statements. -20-