ACLU of Texas, Inc. and ACLU Foundation of Texas, Inc.

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1 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION March 31, 2015 and 2014

2 Table of Contents March 31, 2015 and 2014 REPORT Independent Auditor s Report 1 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statements of Financial Position as of March 31, 2015 and Consolidated Statements of Activities and Changes in Net Assets for the years ended March 31, 2015 and Consolidated Statements of Functional Expenses for the years ended March 31, 2015 and Consolidated Statements of Cash Flows for the years ended March 31, 2015 and Notes to Consolidated Financial Statements 9 SUPPLEMENTARY INFORMATION Consolidating Statements of Financial Position as of March 31, 2015 and Consolidating Statements of Activities and Changes in Net Assets for the years ended March 31, 2015 and

3 INDEPENDENT AUDITOR'S REPORT To the Board of Directors ACLU of Texas, Inc. Houston, Texas We have audited the accompanying consolidated financial statements of ACLU of Texas, Inc. and ACLU Foundation of Texas, Inc. (collectively, ACLU ), which comprise the consolidated statements of financial position as of March 31, 2015 and 2014, and the related consolidated statements of activities and changes in net assets, functional expenses, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the ACLU s preparation and fair presentation of the consolidated 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 ACLU 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ACLU of Texas, Inc. and as of March 31, 2015 and 2014, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 2 to the consolidated financial statements, ACLU of Texas, Inc. and ACLU Foundation of Texas, Inc. are related organizations. The organizations share the same board members, but function as two distinct boards as each organization s business is deliberated in the specific interest of that organization. Under generally accepted accounting principles in the United States of America, there is a presumption that consolidated financial statements provide more meaningful results of operations and financial position. Our opinion is not modified with respect to that matter. Report on Supplementary Information Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating information on pages 18 to 21 respectively, is presented for the purpose of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, such information is fairly stated in all material respects in relation to the consolidated financial statements as a whole. Houston, Texas June 24,

5 Consolidated Statements of Financial Position March 31, Assets Current assets Cash and cash equivalents $ 1,318,515 $ 730,591 Unconditional promises to give 368,624 10,749 Receivable from ACLU National Office 25,266 25,474 Prepaid expenses 31,491 26,471 Total current assets 1,743, ,285 Fixed assets, net 17,263 7,090 Other assets Unconditional promises to give 367,000 Held for investment land 5,000 5,000 Other assets 10,805 9,679 Total other assets 382,805 14,679 Total assets $ 2,143,964 $ 815,054 Liabilities and net assets Current liabilities Accounts payable $ 58,610 $ 20,320 Accrued liabilities 80,015 79,732 Long term debt current portion 150,000 75,000 Total current liabilities 288, ,052 Long term debt, net of current portion 150,000 Total liabilities 288, ,052 Commitments and contingencies Net assets Unrestricted Undesignated 486, ,622 Board designated 101,891 Total Unrestricted 588, ,622 Temporarily restricted 1,266,691 63,380 Total net assets 1,855, ,002 Total liabilities and net assets $ 2,143,964 $ 815,054 The accompanying notes are an integral part of these consolidated financial statements. 3

6 Consolidated Statement of Activities and Changes in Net Assets For the year ended March 31, 2015 Unrestricted Temporarily Restricted Total Revenue and other support Contributions $ 1,558,178 $ 1,250,525 $ 2,808,703 Grants and contract 160, , ,150 Allocation from national membership 371, ,583 Special events 15,150 15,150 Other revenue 4,823 4,823 Net assets released from restrictions 172,214 (172,214) Total revenue and other support 2,282,098 1,203,311 3,485,409 Expenses Program services 1,654,806 1,654,806 Support services Management and general 179, ,645 Fundraising 285, ,621 Total support services 465, ,266 Total expenses 2,120,072 2,120,072 Change in net assets 162,026 1,203,311 1,365,337 Net assets, beginning of year 426,622 63, ,002 Net assets, end of year $ 588,648 $ 1,266,691 $ 1,855,339 The accompanying notes are an integral part of these consolidated financial statements. 4

7 Consolidated Statement of Activities and Changes in Net Assets For the year ended March 31, 2014 Temporarily Unrestricted Restricted Total Revenue and other support Contributions $ 1,592,229 $ $ 1,592,229 Grants and contract 145,355 50, ,355 Allocation from national membership 352, ,993 Special events 13,810 13,810 Other revenue Net assets released from restrictions 48,583 (48,583) Total revenue and other support 2,153,302 1,417 2,154,719 Expenses Program services 1,316,097 1,316,097 Support services Management and general 142, ,826 Fundraising 227, ,689 Total Support Services 370, ,515 Total expenses 1,686,612 1,686,612 Change in net assets 466,690 1, ,107 Net assets, beginning of year (40,068) 61,963 21,895 Net assets, end of year $ 426,622 $ 63,380 $ 490,002 The accompanying notes are an integral part of these consolidated financial statements. 5

8 Consolidated Statement of Functional Expenses For the year ended March 31, 2015 Programs Management and General Fundraising Total Salaries and benefits $ 1,116,240 $ 148,832 $ 223,248 $ 1,488,320 Rent 133,986 7,444 7, ,874 Professional fees 81,599 1,813 7,253 90,665 Travel and conferences 112,863 2,565 12, ,253 Dues and subscriptions 24, ,749 27,491 Printing and copying 11, ,028 12,852 IT support 3, ,486 Telecommunications 21,740 1,359 4,076 27,175 Office equipment 41,153 5,487 8,231 54,871 Postage and shipping 12, ,075 13,434 Insurance 19, ,746 21,825 Interest 3, ,731 Other 72,821 9,711 14,563 97,095 Total $ 1,654,806 $ 179,645 $ 285,621 $ 2,120,072 The accompanying notes are an integral part of these consolidated financial statements. 6

9 Consolidated Statement of Functional Expenses For the year ended March 31, 2014 Programs Management and General Fundraising Total Salaries and benefits $ 858,619 $ 114,483 $ 171,724 $ 1,144,826 Rent 102,060 5,670 5, ,400 Professional fees 75,673 1,682 6,726 84,081 Travel and conferences 77,273 1,756 8,781 87,810 Dues and subscriptions 35, ,090 40,898 Printing and copying 10, ,189 IT support 8,840 1,179 1,768 11,787 Telecommunications 20,369 1,273 3,819 25,461 Office equipment 23,791 3,172 4,758 31,721 Postage and shipping 4, ,328 Insurance 6, ,892 Interest 7, ,462 9,749 Other 85,102 11,349 17, ,470 Total $ 1,316,097 $ 142,826 $ 227,689 $ 1,686,612 The accompanying notes are an integral part of these consolidated financial statements. 7

10 ACLU Of Texas, Inc. and Consolidated Statements of Cash Flows For the years ended March 31, Operating activities Change in net assets $ 1,365,337 $ 468,107 Adjustment to reconcile change in net assets to net assets provided by operating activities: Depreciation 1,480 1,480 Changes in operating assets and liabilities: Receivables 1,168 Unconditional promises to give (724,875) 23,000 Receivable from ACLU National Office 208 (4,239) Prepaid expenses (5,020) (20,145) Other assets (1,126) 7,500 Accounts payable 38,290 (17,238) Accrued liabilities ,542 Net cash provided by operating activities 674, ,175 Investing activities Purchase of fixed assets (11,653) (2,227) Financing activities Repayments on long term debt (75,000) (75,000) Net increase in cash and cash equivalents 587, ,948 Cash and cash equivalents, beginning of year 730, ,643 Cash and cash equivalents, end of year $ 1,318,515 $ 730,591 Supplemental Disclosure of Cash Flow Information Cash paid during the year for interest $ 4,731 $ 9,749 The accompanying notes are an integral part of these consolidated financial statements. 8

11 Notes to Consolidated Financial Statements NOTE 1: ORGANIZATIONS ACLU of Texas, Inc. and (the Foundation), collectively, the ACLU, are nonprofit organizations each established on July 12, 1991, under the laws of the State of Texas. ACLU operates under the provisions and within the territory covered by a charter granted by the national American Civil Liberties Union (National ACLU), which has developed a strategic plan to fulfill their national purpose, which is: To be the nation s foremost champion of individual rights litigating, legislating, and educating the public on a broad array of issues affecting individual freedom in the United States. ACLU of Texas, Inc. programs operate to identify threats to and to defend the civil liberties of Texans. These programs include protecting civil rights and civil liberties in the courtrooms of Texas, at the Texas Legislature, and in large and small communities throughout the Lone Star State. ACLU of Texas, Inc. is supported by annual dues and contributions. The Foundation was organized (1) to encourage, sponsor and facilitate the cultivation and diffusion of knowledge and understanding of various civil liberties and laws of the United States or of the State of Texas, (2) to make inquiry into the extent and adequacy of the protection of civil liberties and civil rights in the United States and in the State of Texas, and to publish the results of any such inquiry, (3) to supply legal counsel to persons involved in activities wherein their civil liberties are threatened or infringed upon, and (4) to engage in litigation that will have a positive impact on the civil liberties of a substantial number of individuals. The Foundation is supported by contributions and grants. The programs of the Foundation are: Legal Program The Legal Program s principal role is to litigate cases concerning civil rights and civil liberties in Texas. In addition, the Foundation files letter briefs to the Attorney General on constitutional issues and frequently resolves numerous civil rights violations without litigation after bringing the violation to the attention of the relevant government body and cooperating to identify a remedy. The Legal Program also conducts continuing legal education presentations. Public Education Program The Public Education Program supports the legal, policy and advocacy work of the Foundation through the creation and development of educational materials, organizing community forums, making public presentations, teaching Know Your Rights seminars and other programs that strive to enlighten Texans about their civil liberties. Communications Responsible for media relations, publications and printed materials designed for programmatic as well as fundraising work. Collaborates with programmatic departments to use digital communications to reach out to donors, members and activists. 9

12 Notes to Consolidated Financial Statements NOTE 1: ORGANIZATIONS (Continued) Public Policy Program The Public Policy Program develops policy papers for use in the Foundation s education programs and as research for litigation efforts. It determines the appropriate application of the Foundation policy to specific issues in Texas. Immigrant Rights The Foundation is identifying appropriate targets for litigation, including sexual assault, the mistreatment and denial of adequate medical care to immigrant detainees and prisoners, and the use of racial profiling and other inappropriate and potentially unconstitutional law enforcement tactics by local police departments in the border region. Religious Freedom Project The program seeks to clarify current Texas law, including the Texas Religious Freedom Restoration Act, which guarantees strong religious protections for sincere religious beliefs. This project frequently works with school districts to help them better shape policies that ensure school students are free from schoolimposed religion. Criminal Law Reform Project The project works to end excessively harsh criminal justice policies that result in mass incarceration and stand in the way of a just and equal society. Project goals are: ending over incarceration in Texas, with an emphasis on eliminating racial disproportionality; ending the privatization of prisons and jails in Texas; and ending the use of the death penalty in our state. Other goals include sealing the school to prison pipeline and ending the use of solitary confinement of children in Texas prisons and jails. Abortion Rights Project Protect women s rights and access to a safe, legal abortion. The work includes protecting and expanding legal safeguards of women s reproductive autonomy through litigation and public policy. Continue to litigate the constitutionality of Texas overly restrictive abortion law known as HB2 and continue to develop state law theories for future litigation. Other goals include defending against criminalization of pregnant women; defending against expansion of fetal rights. Promote policy reforms that enhance reproductive and parental autonomy generally, resituating abortion in that broader framework. 10

13 Notes to Consolidated Financial Statements NOTE 1: ORGANIZATIONS (Continued) LGBT Rights Win legal equality for LGBT people so every person can openly parent, work, live, and love. LGBT Texans lack the most basic protections against discrimination because of their sexual orientation. Neither federal nor state law bars discrimination on the basis of sexual orientation or gender identity, and as a result, an LGBT Texan has no recourse if an employer, landlord, or shopkeeper discriminates. Ensure equality and dignity for all students in Texas schools. Repeal policies that force children raised by same sex couples to be denied legally recognized relationships with both of their parents, leaving them vulnerable to the loss of the relationship with and support of a parent. Our ultimate goal is to obtain full recognition of samesex relationships through marriage in this state. Other programs Other work has focused on conditions on death row, fusion centers, and the Banned Book Project, one of the affiliate s high profile efforts throughout the state. This 16 year old project exposes censorship and attempts at thought control taking place in our schools, publishes an annual report citing all books challenged or banned by Texas 1,260 independent school districts, as well as hosts public readings and events in partnership with bookstores and library groups dedicated to raising awareness about censorship in classrooms and school libraries. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidated Financial Statement Presentation ACLU s consolidated financial statements are maintained on the accrual basis of accounting in accordance with generally accepted accounting principles. ACLU s reports information regarding its consolidated financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted, based on the existence or absence of donor imposed restrictions. ACLU has no permanently restricted net assets as of March 31, 2015 and Principles of Consolidation ACLU of Texas, Inc. and are related organizations. The organizations share the same board members, but function as two distinct boards as each organization s business is deliberated in the specific interest of that organization. Consolidated financial statements are presumed more meaningful than separate statements and are usually necessary for a fair presentation in conformity with generally accepted accounting principles. The accompanying consolidated financial statements include the accounts and activities of ACLU of Texas, Inc. and All significant interorganizational accounts and transactions have been eliminated in consolidation. 11

14 Notes to Consolidated Financial Statements NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and Cash Equivalents For the purposes of the statements of cash flows, ACLU considers all unrestricted highly liquid investments with initial maturities of three months or less to be cash equivalents. Receivables and Unconditional Promises to Give Receivables and unconditional promises to give are recorded when ACLU receives notification of the grant, contribution or promise to give. Amounts that are expected to be collected within one year are recorded at net realizable value. Amounts that are expected to be collected in future years are discounted to estimate the present value of future cash flows, if material. Management evaluates receivables on an ongoing basis by analyzing relationships and previous payment histories. An allowance for doubtful accounts is established when a receivable is considered uncollectible. No allowance for doubtful accounts was considered necessary as of March 31, 2015 and Fixed Assets Fixed assets, which consist primarily of furniture and equipment, are recorded at cost or, in the case of donated assets, the estimated fair value at the date of the gift. ACLU capitalizes all expenses for furniture and equipment in excess of $2,500. Depreciation of the furniture and equipment is based on the straight line method over three to five years. Routine maintenance, repair, renewal and replacement costs are charged against operations in the year incurred. Expenditures, which materially increase values or extend useful lives of property and equipment, are capitalized. Revenue Recognition Membership revenue is generally collected by the National ACLU, which determines ACLU of Texas, Inc. s share based on an agreed upon formula and is recorded as received. Contributions are collected by both the National ACLU and ACLU. ACLU s share of the National ACLU s contributions is based on an agreed upon formula. ACLU accrues the revenue due from National ACLU. Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions. Support that is restricted by the donor and is to be used in future periods or for specific purposes is reported as an increase in temporarily restricted or permanently restricted net assets. When a restriction expires, temporarily restricted net assets are released to unrestricted net assets and reported in the consolidated statements of activities and changes in net assets as net assets released from restrictions. 12

15 Notes to Consolidated Financial Statements NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes ACLU of Texas, Inc. is exempt from income taxes under Section 501(c)(4) of the Internal Revenue Code and a similar provision of state law, and is further qualified as a public charity. The Foundation is a not for profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Therefore, no provision for federal income tax has been made in these consolidated financial statements. ACLU of Texas, Inc. and the Foundation have determined there are no uncertain tax positions that require recognition or disclosure in the accompanying consolidated financial statements. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the consolidated statements of activities and changes in net assets and the consolidated statements of functional expenses. The majority of expenses can be directly identified with the program or supporting services to which they relate and are charged accordingly. Other expenses have been allocated to the individual programs or supporting services based on salaries and other bases determined by ACLU s management. Use of Estimates ACLU uses estimates and assumptions in preparing these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, the reported revenues and expenses, and the allocation of expenses among various functions. Actual results could vary from the estimates that were used. Estimates that have the most impact on consolidated financial position and results of operations primarily relate to collectability of receivables and the allocation of expenses among functional areas. Management believes these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements. Fair Value Considerations ACLU uses fair value to measure monetary and certain nonmonetary financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy established and prioritized fair value measurements into three levels based on the nature of the inputs. The hierarchy gives the highest priority to inputs based on market data from independent sources (observable inputs Level 1) and the lowest priority to a reporting entity s internal assumptions based upon the best information available when external market data is limited or unavailable (unobservable inputs Level 3). 13

16 Notes to Consolidated Financial Statements NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value Considerations (Continued) The fair value option allows entities to choose, at specified election dates, to measure eligible consolidated financial assets and financial liabilities at fair value that are not otherwise required to be measured at fair value. If an organization elects the fair value option for an eligible item, changes in that item s fair value in subsequent reporting periods must be recognized in current earnings. ACLU did not elect the fair value option for the measurement of any eligible assets or liabilities. ACLU s consolidated financial instruments (primarily cash and cash equivalents, receivables, payables and borrowings) are carried in the accompanying consolidated statements of financial position at amounts which reasonably approximate fair value. Subsequent Events ACLU has evaluated subsequent events through the date the consolidated financial statements were available for issuance on June 24, No matters were identified affecting the accompanying consolidated financial statements or related disclosures. NOTE 3: CONCENTRATION OF CREDIT RISK ACLU maintains cash accounts at a bank, which at times, may exceed the Federal Deposit Insurance Corporation s limit. ACLU has not experienced any losses from maintaining cash accounts in excess of the federally insured limit. Management believes that it is not exposed to any significant credit risk on cash accounts, due to the financial strength of the financial institutions where deposits are held. Funds received through National ACLU grants are a significant source of revenue upon which ACLU depends to carry out its operations. A decrease in such funding would have a direct effect on program services provided by ACLU. For the year ended March 31, 2015, 53% of contributions were from two donors. For the year ended March 31, 2014, 35% of contributions were from two donors. NOTE 4: PROMISES TO GIVE Unconditional promises to give are as follows: March 31, Receivable in less than one year $ 368,624 $ 9,749 Receivable in one to five years 367,000 1,000 Total unconditional promises to give $ 735,624 $ 10,749 14

17 Notes to Consolidated Financial Statements NOTE 5: FIXED ASSETS Fixed assets consist of the following: March 31, Furniture, fixtures and equipment $ 90,649 $ 78,996 Leasehold improvements 1,893 1,893 Less: accumulated depreciation (75,279) (73,799) Net fixed assets $ 17,263 $ 7,090 Depreciation expense totaled $1,480 for the years ended March 31, 2015 and NOTE 6: LONG TERM DEBT On May 1, 2012, the Foundation signed a $300,000 note with National ACLU, which was amended on March 30, The interest rate in effect during each calendar quarter shall be the prime rate published in the Wall Street Journal for the first day of that quarter. The note is unsecured. During 2015, in accordance with the terms of the agreements, interest payments were made each quarter and a principal payment of $75,000 was made on March 31, At March 31, 2015, the outstanding balance totaled $150,000. For fiscal year 2016, interest accrued will be due on a quarterly basis and on March 31, 2016, the remaining principal outstanding at that time will be due. NOTE 7: TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes: March 31, Reproductive rights $ 1,080,480 $ Civil marriage 75,000 Immigrant rights 60,331 50,000 Nondiscrimination public education 37,500 Capital punishment 9,880 9,880 Racial justice 3,500 3,500 Total $ 1,266,691 $ 63,380 15

18 Notes to Consolidated Financial Statements NOTE 8: BOARD DESIGNATED UNRESTRICTED NET ASSETS The Board of Directors has designated $101,891 held in unrestricted net assets as reserve for future legal expenses. NOTE 9: RELATED PARTY TRANSACTIONS The Foundation has an affiliation with, and receives grants from, the National ACLU. During fiscal year 2015 and 2014, the Foundation was awarded $276,116 and $435,047, respectively. No amounts were due at March 31, 2015 and ACLU of Texas, Inc. has an affiliation, with and receives revenue sharing, from the National ACLU. During 2015 and 2014, ACLU of Texas, Inc. recognized $319,706 and $336,190 in membership revenues from the National ACLU, of which $25,266 and $25,474 were receivables at March 31, 2015 and 2014, respectively. NOTE 10: OPERATING LEASES ACLU leases office space in Houston and Austin and a copier under operating leases expiring at various dates through April Future minimum rental payments for the noncancelable copier and office space leases are as follows: Year Ending March 31, 2016 $ 186, , , ,056 Total $ 469,942 During the years ended March 31, 2015 and 2014, ACLU s rent expense totaled $173,772 and $125,022, respectively. NOTE 11: DEFINED BENEFIT PLAN ACLU participates in The American Civil Liberties Union Retirement Plan (the Plan), which includes the National ACLU and all of its affiliates (the participating employers). The Plan is a multiple employer defined benefit plan. The Plan year is the calendar year. 16

19 Notes to Consolidated Financial Statements NOTE 11: DEFINED BENEFIT PLAN (Continued) All ACLU employees hired prior to April 1, 2009 are eligible to participate in the Plan after completion of one year of service and reaching 21 years of age. Entry dates are the first day of January and July. Employees are fully vested in the Plan after seven years of service and may retire upon attainment of age 65, or the fifth anniversary of plan participation. Employees may take early retirement at age 55, with 10 years of service. Benefits under the Plan are determined based on years of service and compensation. The entire cost of the Plan is paid by ACLU. Contributions to the Plan are based upon total compensation of participants, excluding bonuses and totaled $81,892 and $81,721 for the years ended March 31, 2015 and 2014, respectively. NOTE 12: DEFINED CONTRIBUTION PLAN ACLU began a 401(k) profit sharing plan under Section 401(a) of the Internal Revenue Code. All employees are eligible to participate upon the attainment of age 21 and 30 days of service. Entry dates are the first business day of each quarter. Under the plan, eligible employees may contribute up to the statutory Federal limitation. Employees hired after April 1, 2009 are eligible for a match of up to 3.5% of their wages. Employer contributions totaled $36,542 and $9,115 for the years ended March 31, 2015 and 2014, respectively. NOTE 13: COMMITMENTS AND CONTINGENCIES Effective July 1, 2011, the Foundation entered into an employment agreement with the executive director. The agreement will end on June 30, 2016 unless the executive director notifies the board on or before January 1, 2016 her intention to continue as executive director beyond the term of the agreement. The employment agreement guarantees base salary, reimbursement for reasonable expenses, participation in the employee benefits plans, paid time off based on ACLU policies, and an annual allowance for professional development and training, as defined in the agreement. The agreement will be terminated prior to the end date if the executive director resigns or is terminated by the board. 17

20 SUPPLEMENTARY INFORMATION

21 Consolidating Statements of Financial Position March 31, 2015 ACLU Foundation of Texas, Inc. ACLU of Texas, Inc. Eliminations Consolidated Assets Current assets Cash and cash equivalents $ 1,245,597 $ 72,918 $ $ 1,318,515 Unconditional promises to give 368, ,624 Receivable from ACLU National Office 25,266 25,266 Prepaid expenses 25,855 5,636 31,491 Total current assets 1,640, ,820 1,743,896 Fixed assets, net 17,263 17,263 Other assets Unconditional promises to give 367, ,000 Receivable from ACLU Foundation of Texas, Inc. 21,310 (21,310) Held for investment land 5,000 5,000 Other assets 6,710 4,095 10,805 Total other assets 378,710 25,405 (21,310) 382,805 Total assets $ 2,036,049 $ 129,225 $ (21,310) $ 2,143,964 Liabilities and net assets Current liabilities Accounts payable $ 30,405 $ 28,205 $ $ 58,610 Accrued liabilities 64,725 15,290 80,015 Payable due to ACLU of Texas, Inc. 21,310 (21,310) Long term debt current portion 150, ,000 Total liabilities 266,440 43,495 (21,310) 288,625 Commitments and contingencies Net assets Unrestricted Undesignated 401,027 85, ,757 Board Designated 101, ,891 Total Unrestricted 502,918 85, ,648 Temporarily restricted 1,266,691 1,266,691 Total net assets 1,769,609 85,730 1,855,339 Total liabilities and net assets $ 2,036,049 $ 129,225 $ (21,310) $ 2,143,964 See independent auditor s report. 18

22 Consolidating Statements of Financial Position March 31, 2014 ACLU Foundation of Texas, Inc. ACLU of Texas, Inc. Eliminations Consolidated Assets Current assets Cash and cash equivalents $ 689,649 $ 40,942 $ $ 730,591 Unconditional promises to give 10,749 10,749 Receivable from ACLU National Office 25,474 25,474 Prepaid expenses 17,632 8,839 26,471 Total current assets 718,030 75, ,285 Fixed assets, net 7,090 7,090 Other assets Receivable from ACLU of Texas, Inc. 4,909 (4,909) Held for investment land 5,000 5,000 Other assets 5,584 4,095 9,679 Total other assets 15,493 4,095 (4,909) 14,679 Total assets $ 740,613 $ 79,350 $ (4,909) $ 815,054 Liabilities and net assets Current liabilities Accounts payable $ 18,450 $ 1,870 $ $ 20,320 Accrued liabilities 64,442 15,290 79,732 Payable due to ACLU Foundation of Texas, Inc. 4,909 (4,909) Long term debt current portion 75,000 75,000 Total current liabilities 157,892 22,069 (4,909) 175,052 Long term debt, net of current portion 150, ,000 Total liabilities 307,892 22,069 (4,909) 325,052 Commitments and contingencies Net assets Unrestricted 369,341 57, ,622 Temporarily restricted 63,380 63,380 Total net assets 432,721 57, ,002 Total liabilities and net assets $ 740,613 $ 79,350 $ (4,909) $ 815,054 See independent auditor s report. 19

23 Consolidating Statements of Activities and Changes in Net Assets For the year ended March 31, 2015 ACLU of Texas, Inc. Consolidated Temporarily Temporarily Unrestricted Restricted Total Unrestricted Eliminations Unrestricted Restricted Total Revenue and other support Contributions $ 1,558,178 $ 1,250,525 $ 2,808,703 $ $ $ 1,558,178 $ 1,250,525 $ 2,808,703 Grants and contract 150, , ,000 10, , , ,150 Allocation from national membership 371, , ,583 Special events 15,150 15,150 15,150 15,150 Other revenue 4,823 4,823 4,823 4,823 Net assets released from restrictions 172,214 (172,214) 172,214 (172,214) Total revenue and other support 1,900,365 1,203,311 3,103, ,733 2,282,098 1,203,311 3,485,409 Expenses Program services 1,372,626 1,372, ,180 1,654,806 1,654,806 Support services Management and general 153, ,107 26, , ,645 Fundraising 241, ,055 44, , ,621 Total support services 394, ,162 71, , ,266 Total expenses 1,766,788 1,766, ,284 2,120,072 2,120,072 Change in net assets 133,577 1,203,311 1,336,888 28, ,026 1,203,311 1,365,337 Net assets, beginning of year 369,341 63, ,721 57, ,622 63, ,002 Net assets, end of year $ 502,918 $ 1,266,691 $ 1,769,609 $ 85,730 $ $ 588,648 $ 1,266,691 $ 1,855,339 See independent auditor s report. 20

24 Consolidating Statements of Activities and Changes in Net Assets For the year ended March 31, 2014 ACLU of Texas, Inc. Consolidated Temporarily Temporarily Unrestricted Restricted Total Unrestricted Eliminations Unrestricted Restricted Total Revenue and other support Contributions $ 1,592,229 $ $ 1,592,229 $ $ $ 1,592,229 $ $ 1,592,229 Grants and contract 102,355 50, ,355 43, ,355 50, ,355 Allocation from national membership 352, , ,993 Special events 13,810 13,810 13,810 13,810 Other revenue Net assets released from restrictions 48,583 (48,583) 48,583 (48,583) Total revenue and other support 1,757,309 1,417 1,758, ,993 2,153,302 1,417 2,154,719 Expenses Program services 1,058,043 1,058, ,054 1,316,097 1,316,097 Support services Management and general 112, ,306 30, , ,826 Fundraising 180, ,403 47, , ,689 Total support services 292, ,709 77, , ,515 Total expenses 1,350,752 1,350, ,860 1,686,612 1,686,612 Change in net assets 406,557 1, ,974 60, ,690 1, ,107 Net assets, beginning of year (37,216) 61,963 24,747 (2,852) (40,068) 61,963 21,895 Net assets, end of year $ 369,341 $ 63,380 $ 432,721 $ 57,281 $ $ 426,622 $ 63,380 $ 490,002 See independent auditor s report. 21