AMERICAN FOREST FOUNDATION FINANCIAL STATEMENTS DECEMBER 31, 2015

Transcription

1 AMERICAN FOREST FOUNDATION FINANCIAL STATEMENTS DECEMBER 31, 2015

2 AMERICAN FOREST FOUNDATION FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014 CONTENTS Report of Independent Auditors 1 Financial Statements Statements of Financial Position 3 Statements of Activities 4 Statements of Functional Expenses 5 Statements of Cash Flows 7 Notes to Financial Statements 8 PAGE

3 Bethesda, MD REPORT OF INDEPENDENT AUDITORS Board of Trustees American Forest Foundation We have audited the accompanying financial statements of the American Forest Foundation, which comprise the statements of financial position as of December 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. Auditor s 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 audits 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 Wisconsin Avenue Suite 1200 West Bethesda, MD T: F: calibrecpa.com

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the American Forest Foundation as of December 31, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Bethesda, MD May 20,

5 American Forest Foundation Statements of Financial Position December 31, 2015 and 2014 Assets Current assets Cash and cash equivalents $ 660,764 $ 492,617 Grants receivable 735, ,741 Accounts receivable 65, ,578 Inventory 123,984 78,202 Prepaid expenses 161, ,141 Total current assets 1,746,696 1,273,279 Investments 151,238, ,145,942 Property and equipment, net 1,121,371 1,292,379 Security deposit 36,385 36,385 Total assets $ 154,142,851 $ 162,747,985 Liabilities and Net Assets Current liabilities Accounts payable $ 497,749 $ 378,423 Deferred revenue 39,753 59,312 Total current liabilities 537, ,735 Deferred lease incentives 1,066,989 1,085,154 Total liabilities 1,604,491 1,522,889 Net assets Unrestricted 152,506, ,225,096 Temporarily restricted 31,383 - Total net assets 152,538, ,225,096 Total liabilities and net assets $ 154,142,851 $ 162,747,985 See accompanying notes to financial statements

6 American Forest Foundation Statements of Activities Years Ended December 31, 2015 and 2014 Support and revenue Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Contributions and sponsorships $ 883,933 $ 349,829 $ 1,233,762 $ 897,085 $ 420,054 $ 1,317,139 Federal grants and contracts - 2,017,163 2,017,163-1,168,830 1,168,830 Investment income (loss) (2,055,747) - (2,055,747) 9,459,754-9,459,754 Sales of educational materials 519, , , ,294 Meetings and other revenue 121, , , ,593 Net assets released from restriction 2,335,609 (2,335,609) - 1,638,884 (1,638,884) - Total support and revenue 1,805,244 31,383 1,836,627 12,812,610 (50,000) 12,762,610 Expenses Program services 8,879,797-8,879,797 8,761,367-8,761,367 Management and general 959, , , ,014 Fundraising 684, , , ,933 Total expenses 10,523,363-10,523,363 10,329,314-10,329,314 Change in net assets (8,718,119) 31,383 (8,686,736) 2,483,296 (50,000) 2,433,296 Net assets Beginning of year 161,225, ,225, ,741,800 50, ,791,800 End of year $ 152,506,977 $ 31,383 $ 152,538,360 $ 161,225,096 $ - $ 161,225,096 See accompanying notes to financial statements

7 American Forest Foundation Statement of Functional Expenses Year Ended December 31, 2015 (With comparative totals for year ended December 31, 2014) Program Services Management Woodlands Education Total and General Fundraising Total Total Salaries $ 1,715,420 $ 749,407 $ 2,464,827 $ 467,886 $ 250,481 $ 3,183,194 $ 3,040,493 Retirement 148,257 77, ,461 47,589 25, , ,304 Other employee benefits 187,748 65, ,969 55,440 36, , ,547 Payroll taxes 117,430 52, ,324 32,162 18, , ,977 Accounting ,900-30,900 28,044 Legal 21,782 4,752 26,534 22,106-48,640 60,196 Postage and shipping 54,704 17,508 72,212 7,536 56, , ,866 Rent , , ,817 Printing and publications 110,538 77, ,036 4,466 70, , ,737 Travel 328,293 86, ,120 90,514 34, , ,375 Meetings 112,306 59, ,566 27,436 5, , ,607 Office expense 74,179 32, ,726 54,765 1, , ,421 Depreciation and amortization , , ,613 Design/production 72,573 92, , , , ,109 Research/evaluation 101,138 12, , ,424 89,341 Consultants 1,496, ,439 1,996, ,841 95,044 2,398,935 2,499,592 Promotion 53,162 69, , , ,178 Grants 912, ,327 1,181, ,181, ,321 Materials 96,125 3,557 99, ,682 46,335 Insurance ,627-98,627 87,755 Information technology , , ,262 Miscellaneous 6,143 1,126 7, ,286 12,424 Allocation of indirect costs 792, ,534 1,100,703 (1,183,876) 83, Total expenses $ 6,400,601 $ 2,479,196 $ 8,879,797 $ 959,318 $ 684,248 $ 10,523, expenses $ 6,028,957 $ 2,732,410 $ 8,761,367 $ 870,014 $ 697,933 $ 10,329,314 See accompanying notes to financial statements

8 American Forest Foundation Statement of Functional Expenses Year Ended December 31, 2014 (With comparative totals for year ended December 31, 2013) Program Services Management Woodlands Education Total and General Fundraising Total Total Salaries $ 1,615,931 $ 770,821 $ 2,386,752 $ 391,930 $ 261,811 $ 3,040,493 $ 2,991,751 Retirement 138,415 66, ,736 42,888 21, , ,340 Other employee benefits 170,890 62, ,286 38,554 38, , ,408 Payroll taxes 112,055 52, ,013 25,999 17, , ,371 Accounting ,044-28,044 30,887 Legal 13,356 1,747 15,103 45,093-60,196 48,182 Postage and shipping 38,965 18,582 57,547 3,498 51, , ,707 Rent , , ,086 Printing and publications 96,180 68, ,286 19, , , ,916 Travel 258,695 90, , ,819 28, , ,568 Meetings 175,282 55, ,043 41,786 5, , ,368 Office expense 53,440 39,662 93,102 41, , ,036 Depreciation and amortization , , ,891 Design/production 108, , , , , ,609 Research/evaluation - 86,065 86,065-3,276 89,341 66,614 Consultants 1,772, ,043 2,143, ,737 69,930 2,499,592 2,205,100 Promotion 29,929 95, , , ,686 Grants 627, , , ,321 1,336,582 Materials 38,988 7,270 46, ,335 31,032 Insurance ,755-87,755 94,332 Information technology , , ,950 Miscellaneous 11, , ,424 47,885 Allocation of indirect costs 765, ,619 1,115,301 (1,202,658) 87, Total expenses $ 6,028,957 $ 2,732,410 $ 8,761,367 $ 870,014 $ 697,933 $ 10,329, expenses $ 6,200,177 $ 2,297,546 $ 8,497,723 $ 933,161 $ 734,417 $ 10,165,301 See accompanying notes to financial statements

9 American Forest Foundation Statements of Cash Flows Years Ended December 31, 2015 and Cash flows from operating activities Change in net assets $ (8,686,736) $ 2,433,296 Adjustments to reconcile change in net assets to net cash used for operating activities Depreciation and amortization 175, ,613 Realized and unrealized gains 7,602,973 (3,987,659) Changes in assets and liabilities Grants receivable (420,609) 88,665 Account receivable 180,432 (17,495) Inventory (45,782) 128,181 Prepaid expenses (19,311) (45,136) Account payable 119,326 (666,444) Refundable advances - (200) Deferred revenue (19,559) (3,440) Deferred lease incentives (18,165) 247,464 Net cash used for operating activities (1,131,545) (1,643,155) Cash flows from investing activities Purchases of investments (31,245,438) (155,055,144) Proceeds from sales of investments 32,550, ,833,911 Purchases of property and equipment (4,877) (31,641) Net cash provided by investing activities 1,299,692 1,747,126 Net change in cash and cash equivalents 168, ,971 Cash and cash equivalents Beginning of year 492, ,646 End of year $ 660,764 $ 492,617 See accompanying notes to financial statements

10 AMERICAN FOREST FOUNDATION NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014 NOTE 1. ORGANIZATION AND TAX STATUS The American Forest Foundation (AFF) is a publicly supported not-for-profit organization established to conduct charitable, educational, research and scientific programs aimed at the responsible use and conservation of renewable resources. AFF is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC), except on net income, if any, generated by unrelated business activities. AFF is similarly exempt from District of Columbia franchise taxes and qualifies as a publicly-supported organization. AFF accounts for income taxes in accordance with the Accounting Standards Codification (ASC) Topic Income Taxes. These provisions provide consistent guidance for the accounting for uncertainty in income taxes recognized in an entity s financial statements and prescribe a threshold of more likely than not for recognition and derecognition of tax positions taken or expected to be taken in a tax return. AFF performed an evaluation of uncertain tax positions for the years ended December 31, 2015 and 2014, and determined that there were no matters that would require recognition in the financial statements or that may have an effect on its tax-exempt status. As of December 31, 2015, the statute of limitations for tax years 2012 through 2014 remains open with the U.S. federal jurisdiction and the District of Columbia. It is AFF s policy to recognize interest and/or penalties related to uncertain tax positions, if any, in unrelated business income tax expense. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The financial statements of AFF have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. Use of Estimates - The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents - Cash consists of amounts on deposit in bank checking accounts. Cash equivalents include amounts on deposit in bank money market accounts and securities with initial maturities of three months or less, unless held as part of AFF s long-term investment portfolio

11 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Promises to Give - Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional. Accounts Receivable - Accounts receivable are carried at their net realizable value. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts. As of December 31, 2015 and 2014, there was no balance in the allowance for uncollectible accounts as management determined that all amounts are fully collectible. All accounts receivable are due within one year from the statement of financial position date. Inventory - Inventory consists of various publications and merchandise that are used to educate AFF s stakeholders and the general public on environmental and other mission-related issues. The inventory is stated at the lower of cost or market value determined using the first-in, first-out method. Investments - Investments consist entirely of amounts held in publicly-traded mutual funds and are carried at fair value as determined by published market prices. Investment income includes interest and dividends, realized gains or losses on investments sold during the year, and unrealized gains or losses on investments held at year-end. Property and Equipment - Office furniture, equipment and leasehold improvements are reported at cost less accumulated depreciation and amortization. Individual items with an acquisition cost exceeding $2,500 and having an estimated useful life of more than one year are capitalized, while maintenance, repairs and purchases below the capitalization threshold are expensed in the year incurred. Office furniture and equipment are depreciated over seven years; computer equipment and software are depreciated over three years; and leasehold improvements are amortized over the lesser of the lease terms or their estimated useful lives. Net Assets - Net assets, revenue, gains and losses are classified based on the existence or absence of donor imposed restrictions. Accordingly, the net assets of AFF and changes therein are classified and reported as follows: Unrestricted net assets - Temporarily restricted net assets - Unrestricted net assets result from revenues and other inflows of assets whose use by AFF is not limited by donor-imposed restrictions. Temporarily restricted net assets result from contributions and other inflows of assets whose use by AFF is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of AFF pursuant to those stipulations

12 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Functional Expenses - The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. NOTE 3. INVESTMENTS AND FAIR VALUE MEASUREMENTS At December 31, investments consist of the following: Cost Market Cost Market Cash $ 28,611 $ 28,611 $ 97,301 $ 97,301 Mutual funds Fixed Income 39,137,489 37,614,888 38,593,036 38,228,394 Equity - Domestic 69,700,835 78,355,433 77,604,705 90,293,599 Equity - International 39,289,866 35,239,467 33,109,422 31,526,648 Total $ 148,156,801 $ 151,238,399 $ 149,404,464 $ 160,145,942 Investment income for the years ended December 31, 2015 and 2014 consisted of the following: Interest and dividends $ 5,547,226 $ 5,472,095 Realized gains 56,906 20,768,423 Unrealized gains (losses) (7,659,879) (16,780,764) $ (2,055,747) $ 9,459,754 AFF reports fair value measurements of financial assets and liabilities using a hierarchy for observable independent market inputs and unobservable market assumptions. Considerable judgments are required in interpreting market data used to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The three levels of the fair value hierarchy are described below: Level 1 - Quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than Level 1 inputs that are directly or indirectly observable in the marketplace;

13 NOTE 3. INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED) Level 3 - Unobservable inputs which reflect the reporting entity s assessment of the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk such as bid/ask spread and liquidity discounts. Fair values of assets and liabilities measured on a recurring basis at December 31, 2015 and 2014 are limited to investments. All of AFF s investments are in publicly-traded mutual funds and, accordingly, their fair values are based on quoted market prices, which are considered Level 1 inputs. The following summary presents the fair value for each of the investment categories. Fair Values - Level 1 Inputs Mutual funds - fixed income Vanguard Shortterm Inv Grade $ 7,761,326 $ - Other mutual funds 29,852,018 38,228,394 Mutual funds - U.S. equities DFA U.S. Targeted Value 3,130,589 3,320,561 Vanguard Explorer Admiral 3,256,191 3,249,500 Vanguard Institutional Index 37,421,205 44,045,064 Vanguard Midcap Index Admiral 7,322,137 7,917,632 Vanguard REIT Index Admiral 3,596,108 4,007,415 Vanguard U.S. Growth Fund Admiral 10,022,647 8,295,732 Vanguard Windsor II Fund Admiral 8,051,797 8,177,534 Wells Fargo Advantage Absoulute Return 5,404,131 11,280,161 Mututal funds - international equities DFA Emerging Markets 5,348,074 6,352,389 Dodge & Cox International Stock Fund 9,395,738 8,642,428 John Hancock Global Absolute Return 6,189,388 - Harbor International Fund Institutional Shares 9,564,667 8,091,476 Vanguard Developed Markets Institutional Shares 4,893,773 8,440,355 Vanguard International Growth Fund Admiral - - Vanguard International Value Fund - - Vanguard Total International Stock Index Institutional - - Cash 28,610 97,301 $ 151,238,399 $ 160,145,

14 NOTE 4. PROPERTY AND EQUIPMENT At December 31, property and equipment consisted of the following: Furniture, equipment and software $ 613,103 $ 608,226 Leasehold improvements 925, ,237 1,538,340 1,533,463 Accumulated depreciation and amortization (416,969) (241,084) Net property and equipment $ 1,121,371 $ 1,292,379 NOTE 5. RETIREMENT PLAN AFF maintains a defined contribution retirement plan under IRC Section 401(k) that covers substantially all employees. Contributions are generally made at 7% of eligible compensation and covered employees are 50% vested in AFF contributions until completing three years of eligible service, after which vesting increases to 100%. Contributions to the plan were $298,665 in 2015 and $269,303 in NOTE 6. COMMITMENTS AFF entered into a new lease agreement for office space that commenced on December 1, 2013 and expires July 31, The lease requires a security deposit of $36,385 and provides for fixed, scheduled increases in the base rent of 2.5% per year, except for the sixth year of the agreement, for which the increase will be $2.25 per square foot instead. Rent is also abated for the first eight months of the lease term. The total rent payable over the lease term is recognized on a straight-line basis in the financial statements. In connection with AFF s occupancy of the new space, the landlord provided a tenant improvement allowance of $801,832, of which AFF was able to apply up to $200,458 toward the cost of wiring, cabling, furnishings and moverelated expenses

15 NOTE 6. COMMITMENTS (CONTINUED) Total amounts due under the lease agreement are payable as follows: Year ending December 31, 2016 $ 459, , , , ,223 Thereafter 3,172,202 $ 5,620,952 Total rent expense was $430,296 and $433,817 for the years ended December 31, 2015 and 2014, respectively. NOTE 7. CONCENTRATIONS AFF maintains its cash in one financial institution in Washington D.C. Account balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At various times during the year ended December 31, 2015, amounts on deposit exceeded FDIC insurance limit. Manage believes this credit risk to be minimal at this time. NOTE 8. SUBSEQUENT EVENTS Subsequent events have been evaluated through May 20, 2016, which is the date the financial statements were available to be issued. The review and evaluation revealed no new material event or transaction which would require an additional adjustment to or disclosure in the accompanying statements