BOYS & GIRLS CLUBS OF NASSAU COUNTY FOUNDATION, INC. AND SUBSIDIARY (A Nonprofit Organization) CONSOLIDATED FINANCIAL STATEMENTS

Transcription

1 BOYS & GIRLS CLUBS OF NASSAU COUNTY FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2017

2 YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS PAGE NO. INDEPENDENT AUDITORS' REPORT CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position... Consolidated Statement of Activities... Consolidated Statement of Cash Flows... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTAL INFORMATION Schedule of Consolidated Functional Expenses... 16

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5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION JUNE 30, 2017 CURRENT ASSETS Cash and cash equivalents $ 520,479 Unconditional promises to give 121,929 Other receivable 13,425 Prepaid expenses 9, ,617 ENDOWMENT ASSETS Cash and cash equivalents 22,846 Investments 2,513,366 Unconditional promises to give 5,000 Long-term unconditional promises to give 15,000 2,556,212 PROPERTY AND EQUIPMENT, net 4,554,615 OTHER ASSETS Long-term unconditional promises to give 157,500 Investments 3,673 Other assets ,996 TOTAL ASSETS $ 7,938,440 CURRENT LIABILITIES Accounts payable and accrued expenses $ 2,014 2,014 COMMITMENTS AND CONTINGENCIES NET ASSETS Unrestricted 5,380,215 Temporarily restricted - Permanently restricted 2,556,211 7,936,426 TOTAL LIABILITIES AND NET ASSETS $ 7,938,440 Page 3

6 CONSOLIDATED STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2017 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and support Contributions $ 544,729 $ - $ 15,000 $ 559,729 Club dues and fees 244, ,151 Special events 367, ,996 Net investment income (loss) (5,046) - 104,649 99,603 Net assets released from restrictions Distribution from endowment 127,595 - (127,595) - TOTAL REVENUES AND SUPPORT 1,279,425 - (7,946) 1,271,479 Expenses and losses Program services 1,184, ,184,298 Supporting services Administration 63,443-5,243 68,686 Fundraising 233, ,799 TOTAL EXPENSES AND LOSSES 1,481,540-5,243 1,486,783 CHANGE IN NET ASSETS (202,115) - (13,189) (215,304) NET ASSETS - BEGINNING OF YEAR 5,582,330-2,569,400 8,151,730 NET ASSETS - END OF YEAR $ 5,380,215 $ - $ 2,556,211 $ 7,936,426 Page 4

7 CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2017 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (215,304) Adjustments to reconcile the change in net assets to net cash used in operating activities: Depreciation 166,170 Non-cash contributions of investments (3,046) Realized gains on sales of investments, net (25,248) Unrealized losses on investments, net (12,945) (Increase) decrease in operating assets and liabilities Unconditional promises to give (17,612) Other receivable 1,961 Prepaid expenses 8,949 Accrued expenses (82,426) Net cash used in operating activities (179,501) CASH FLOWS FROM INVESTING ACTIVITIES Increase in restricted cash (14,356) Purchases of investments (1,242,180) Proceeds from the sale of investments 1,320,809 Purchases of property and equipment (58,655) Net cash provided by investing activities 5,618 CHANGE IN CASH AND CASH EQUIVALENTS (173,883) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 694,362 CASH AND CASH EQUIVALENTS - END OF YEAR $ 520,479 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Non-cash contribution of investments $ 3,046 Page 5

8 1. PURPOSE OF THE ORGANIZATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Boys & Girls Clubs of Nassau County Foundation, Inc. ( Foundation ) was established in 2000 to fund the operations of the Boys & Girls Clubs of Northeast Florida, Inc. s ( NEF ) Nassau County, Florida locations. The Foundation completed construction of the Miller Freedom Club in August of 2007 and the Roberts Learning and Achievement Center in October The clubs provide youth development programs, specifically in the following areas: education and career development; health and life skills; character and leadership development; the arts; and sports, fitness and recreation. The Foundation s endowment will fund ongoing maintenance of the clubs as well as support children s programs. In January 2016, the Foundation formed Boys & Girls Clubs of Nassau County, LLC ( LLC ), a wholly owned limited liability company, to operate the two Nassau County clubs under Promotion A status granted by Boys & Girls Clubs of America. The Foundation notified NEF that it was terminating affiliation with NEF, and it would now operate the Nassau County clubs directly. Immediately thereafter, the LLC hired all of the NEF employees who previously worked at the two Nassau County clubs. In September 2016, the Foundation and the LLC (collectively Nassau ) entered into a consulting agreement with Boys & Girls Clubs of Central Florida ( BGCCF ) whereby BGCCF agreed to provide consulting services to Nassau focused on operational development and staff training for the Nassau County clubs. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements include the accounts of the Foundation and the LLC. The Foundation is the sole equity member of the LLC, which is fully consolidated into the Foundation according to the FASB issued guidance on consolidation. All inter-entity transactions and balances have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared on the accrual basis of accounting. To ensure observance of limitations and restrictions placed on the use of resources available to the Foundation, the accounts of the Foundation are presented in accordance with Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ) 958, Not-For-Profit Entities. ASC 958 requires contributions received to be recorded as unrestricted, temporarily restricted or permanently restricted support depending on the existence and/or nature of any donor-imposed restrictions and requires the Foundation to report information regarding its consolidated financial position and activities according to these same three classes. Page 6

9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Classification of Net Assets The net assets of the Foundation are reported in classes as follows: a. Unrestricted net assets are resources over which the Board has discretionary control, including those unrestricted net assets invested in property and equipment at the direction of the Board. b. Temporarily restricted net assets are from (1 ) contributions and other inflows of assets, the use of which is limited by donor-imposed stipulations that either expire with the passage of time or can be fulfilled and removed by actions of the Foundation pursuant to those stipulations, (2) other asset enhancements and diminishments subject to the same kind of stipulations, and (3) reclassifications to (or from) other classes of net assets as a consequence of donor-imposed stipulations, their expiration by the passage of time, or their fulfillment and removal by actions of the Foundation pursuant to those stipulations. c. Permanently restricted net assets are from (1) contributions and other inflows of assets, the use of which is limited by donor-imposed stipulations that neither expire with the passage of time nor can be fulfilled or otherwise removed by actions of the Foundation, (2) other asset enhancements and diminishments subject to the same kind of stipulations, and (3) reclassifications to (or from) other classes of net assets as a consequence of donor-imposed stipulations. Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles ( GAAP ) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the consolidated statement of cash flows, cash and cash equivalents include time deposits and all highly liquid debt instruments with original maturities of twelve months or less. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at fair value. Other investments are recorded at their appraised value at the date of the gift. Page 7

10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Investments Continued Income and realized and unrealized gains on investments of permanently or temporarily restricted net assets are reported as follows: as increases in permanently restricted net assets if the terms of the gift require that they be added to the principal of a permanent endowment; as increases in temporarily restricted net assets if the terms of the gift impose restrictions on their use; as increases in unrestricted net assets in all other cases. Property and Equipment Acquisitions of property and equipment in excess of $500 are capitalized at cost, if purchased, or at the approximate fair market value at the date of gift, if donated. Assets are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from five to thirty-nine years as follows: Years Building and building improvements 39 Computer equipment 5 Furniture and fixtures 5-7 Land improvements 15 Vehicles 7 Maintenance and repairs are charged to expense as incurred. Betterments and renewals are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in administration expenses. Income Tax Status The Foundation is a nonprofit organization that is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The LLC is a single-member limited liability company and is considered a disregarded entity for federal income tax purposes. As such, all activity is reported directly on the Foundation s federal income tax return. The Foundation s Form 990, Return of Organization Exempt from Income Tax, for the years ended June 30, 2014, 2015 and 2016 are subject to examination by the IRS, generally for three years after they were filed. Page 8

11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Contributions The Foundation reports gifts of cash and other assets as restricted support if they are received with donor stipulations (i.e. capital campaign, endowment, etc.) that limi t the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statement of activities as net assets released from restrictions. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Donated Services The Foundation receives a substantial amount of services donated by unpaid volunteer officers and committees for the purposes of carrying out its functions. GAAP allows recognition of donated services only if (a) the services create or enhance non-financial assets or (b) the services would have been purchased if not provided by contribution, require specialized skills, and are provided by individuals possessing those skills. No amounts have been reflected for these donated services because they do not meet the criteria for inclusion in the consolidated financial statements. However, when professional services (i.e. legal, accounting, etc.) are provided, in-kind values are recorded as contributions. Functional Allocation of Expenses The costs of providing the various program and supporting activities have been summarized on a functional basis in the consolidated statement of activities. Accordingly, certain costs have been allocated among the program and supporting activities benefited. Page 9

12 3. INVESTMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Investments are summarized as follows as of June 30, 2017: Fair Unrealized Cost Value Gain (Loss) Endowment assets Exchange-traded funds $ 2,207,609 $ 2,513,366 $ 305,757 $ 2,207,609 $ 2,513,366 $ 305,757 Other assets Cemetery plots $ 3,673 $ 3,673 $ - $ 3,673 $ 3,673 $ - The following schedule summarizes net investment income (loss) an d its classification in the consolidated statement of activities for the year ended June 30, 2017: Temporarily Permanently Unrestricted Restricted Restricted Total Interest income $ 1,460 $ - $ 11 $ 1,471 Dividend income 15-59,924 59,939 Realized gains, net (6,521) - 31,769 25,248 Change in unrealized losses, net ,945 12,945 $ (5,046) $ - $ 104,649 $ 99, FAIR VALUE MEASUREMENTS FASB ASC 820, Fair Value Measurements and Disclosures, establishes a single definition of fair value and a framework for measuring fair value in U.S. GAAP that is intended to result in increased consistency and comparability in fair value measurements. ASC 820 establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date: Level 1 unadjusted, quoted prices for identical assets or liabilities in active markets; Level 2 quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data by correlation; and Page 10

13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. FAIR VALUE MEASUREMENTS Continued Level 3 unobservable inputs based upon the reporting entity s internally developed assumptions that market participants would use in pricing the asset or liability. The Foundation evaluated its financial assets and liabilities for those that met the criteria of the disclosure requirements and fair value framework of ASC 820, as discussed below. The carrying amounts of promises to give and prepaid expenses approximate fair value because of the relative terms and/or short maturity of these financial instruments. Exchange-Traded Funds The Foundation maintains investments in exchange-traded funds. The Foundation determined that the valuation measurement inputs of the exchange-traded funds represent unadjusted quoted prices in active markets. Accordingly, the Foundation has classified these investments within Level 1 of the ASC 820 hierarchy framework. Cemetery Plots The Foundation maintains investments in cemetery plots in Westland, Michigan. The Foundation determined that the valuation measurement inputs of the cemetery plots represent appraised values as determined by an independent cemetery appraiser. Accordingly, the Foundation has classified these investments within Level 3 of the ASC 820 hierarchy framework. The following is a summary of the levels within the fair value hierarchy for the Foundation s investments as of June 30, 2017: Level 1 Level 2 Level 3 Total Investments - endowment Exchange-traded funds $ 2,513,366 $ - $ - $ 2,513,366 Investments - other Cemetery plots - - 3,673 3,673 Total assets at fair value $ 2,513,366 $ - $ 3,673 $ 2,517,039 Page 11

14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. FAIR VALUE MEASUREMENTS Continued The following table sets forth a summary of changes in the fair value of the Foundation s Level 3 assets shown above for the year ended June 30, Cemetery Plots Balance, as of July 1, 2016 $ 11,018 Purchases - Sales (900) Realized gains (losses) (6,445) Balance, as of June 30, 2017 $ 3, UNCONDITIONAL PROMISES TO GIVE Unconditional promises to give are as follows as of June 30, 2017: Pledges for contributions to operations $ 279,429 Pledges for contributions to the endowment 20,000 Total unconditional promises to give $ 299,429 Receivable in less than one year $ 126,929 Receivable in one to five years 172,500 Total unconditional promises to give $ 299, PROPERTY AND EQUIPMENT The components of property and equipment as of June 30, 2017 are as follows: Buildings $ 5,029,239 Furniture and equipment 218,981 Improvements 186,958 Land 386,979 Vehicles 85,375 5,907,532 Less: accumulated depreciation $ (1,352,917) 4,554,615 Depreciation expense for the year ended June 30, 2017 was $166,170. Page 12

15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. COMMITMENTS AND CONTINGENCIES On October 28, 2011, the Foundation entered into a 99-year lease agreement with the Nassau County School Board for the use of land to construct the Roberts Club. The rent is $1 per year with the Foundation responsible for insurance, utilities, and maintenance costs. 8. RESTRICTIONS ON NET ASSETS There were no temporarily restricted net assets as of June 30, Permanently restricted net assets were $2,556,211 as of June 30, The Foundation utilizes a total return approach regarding the usage of restricted net assets. Typically, only interest and dividend income are considered unrestricted net assets and available for Foundation operations. The total return approach allows the Foundation to convert a fixed percentage of the value of the endowment assets to unrestricted assets on an annual basis. The Foundation has determined that 5% is the maximum that should be withdrawn in a given year; however, the Foundation has the option of converting a lower amount if no additional funds are needed for operations. As part of restricted net assets, the Foundation established a fund known as the Endowment (hereinafter called the Endowment ) of the Foundation, separate and distinct from the Suzanne Marie Desnoyers Endowment Fund ( Desnoyers Endowment ) established and funded by Mr. Albert H. Desnoyers (the Donor ), and further funded by others, which is the balance of restricted net assets. The Desnoyers Endowment is governed by the terms of the Gift Agreement for such fund entered into by and between the Donor and the Foundation and not by the terms of the Foundation board resolution governing the Endowment. On April 16, 2015, the Foundation clarified, modified and amended in its entirety the purpose, policies and plan of operation for the administration and operation of the Endowment as well as approved the written terms of the Gift Agreement with the Donor. The Foundation further authorized the separation of the combined restricted net assets between the Endowment and the Desnoyers Endowment based upon a response to an inquiry made by the Foundation of each donor to the restricted net assets as to which restricted fund they would wish their proportionate share of the contributions allocated, with the share of any donor not responding to be allocated to the Desnoyers Endowment. The provisions of the Desnoyers Endowment are substantially similar to the Endowment except for the addition of a provision allowing for temporary, interest-free loans for extraordinary purposes. These loans cannot exceed twenty-five percent of the value of the Desnoyers Endowment at the time the loan is made. No further loans may be made while any outstanding loan balances equal or exceed twenty-five percent of the current value of the Desnoyers Endowment. If any loans are outstanding, the annual distribution shall be determined based upon the principal value of the Desnoyers Endowment, net of any outstanding loans. There were no loans outstanding from restricted net assets as of June 30, Page 13

16 9. DONATED SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The estimated fair market value of donated services included in the consolidated financial statements for the year ended June 30, 2017 is as follows: Revenues and support: Contributions $ 75,796 Property and equipment: Furniture and fixtures $ 1,025 Expenses and losses: Annual benefit gifts 68,046 Professional fees 3,900 Program supplies 1,975 Repairs and maintenance 850 $ 75, CONCENTRATION OF CREDIT RISK The Foundation maintains its cash balances at several financial institutions, which, at times, may exceed federally insured limits. The Foundation has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash and cash equivalents. 11. EMPLOYEE BENEFIT PLANS Effective May 1, 2016, the LLC adopted a SIMPLE-IRA plan for its employees. The LLC contributes an amount equal to the employee s contribution, limited to 3% of the employee s annual compensation. Expenses associated with this plan for the year ended June 30, 2017 were $6, SUBSEQUENT EVENT Management has evaluated subsequent events through December 22, 2017, the date the consolidated financial statements were available to be issued. The Foundation entered into an agreement, effective July 1, 2017, with BGCCF whereby BGCCF assumed operations of both Nassau County clubs. At that time, all furniture, equipment and vehicles were transferred to BGCCF at no cost. Page 14

17 SUPPLEMENTAL INFORMATION Page 15

18 SCHEDULE OF CONSOLIDATED FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2017 Program Supporting Services Account Description Services Administration Fundraising Total Bank charges $ 173 $ 480 $ 1,268 $ 1,921 Computer software 8,654 2,832-11,486 Conferences and meetings 6, ,561 Contract labor 3,469 8,387 22,141 33,997 Depreciation 166, ,170 Employee benefits 44, ,631 Insurance 45,692 14,384-60,076 Investment management fees - 5,243-5,243 Office expense 12,684 3,292 8,692 24,668 Payroll taxes 45, ,761 Postage 22 1,090 1,002 2,114 Printing - - 5,603 5,603 Professional fees 8,802 31,125 7,000 46,927 Program supplies 23,163-3,663 26,826 Programming consulting 51, ,907 Public awareness Repairs and maintenance 109, ,458 Retirement plan contribution 6, ,989 Salaries and wages 522, ,875 Security 4, ,099 Special events , ,688 Taxes and licenses Telephone 671 1,405 3,710 5,786 Transportation 65, ,370 Travel 1, ,707 Utilities 55, ,330 $ 1,184,298 $ 68,686 $ 233,799 $ 1,486,783 Page 16