DANIEL MURPHY SCHOLARSHIP FUND YEARS ENDED AUGUST 31, 2012 AND 2011

Transcription

1 DANIEL MURPHY SCHOLARSHIP FUND YEARS ENDED AUGUST 31, 2012 AND 2011

2 YEARS ENDED AUGUST 31,2012 AND 2011 CONTENTS Page Independent auditors' report 1 Financial statements: Statement of financial position Statement of activities Statement of cash flows Notes to financial statements Additional information: Schedule of functional expenses 20-21

3 ORBA OSTROW REISIN BERK& ABRAMS LTD. C E R T I FIE 0 PUB LI CAe C 0 U N TAN T S* Independent Auditors' Report Board of Directors Daniel Murphy Scholarship Fund Chicago, Illinois We have audited the accompanying statement of financial position of the Daniel Murphy Scholarship Fund (the Fund) as of August 31, 2012 and 2011 and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Daniel Murphy Scholarship Fund as of August 31, 2012 and 2011 and the changes in its net assets and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The additional information included on pages 20 and 21 is presented for purposes of additional analysis and is not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. January 10,2013 o~l/~ -1.LA i 4~ L-7/). NBC Tower - Suite 1500 I 455 N. Cityfront Plaza Dr. I Chicago, IL I P: I F: I INDEPENDENT AFFILIATE OF BKR INTERNATIONAL "Also licensed to practice by the State of Florida 1

4 STATEMENT OF FINANCIAL POSITION August 31, ASSETS Cash and cash equivalents $ 910,415 $ 1,121,930 Receivables: Accrued investment income 6,784 10,075 Accounts receivable 55,250 Contributions receivable, net: Scholarship 179, ,326 Endowment 327, ,257 Total receivables 514,056 1,295,908 Investments: Investment cash and money market funds 160, ,939 Corporate stock 3,006,323 2,460,351 Corporate bonds 359, ,091 Mutual funds 1,786, ,836 U.S. Government and Government Agency obligations 415, ,302 Total investments 5,728,871 4,359,519 Prepaid expenses 62,641 7,628 Security deposit 16,482 16,482 Property and equipment, net 16,300 24,420 Total assets $ 7,248,765 $ 6,825,887 See notes to financial statements. 2

5 STATEMENT OF FINANCIAL POSITION (CONTINUED) August 31, LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses $ 76,686 $ 164,456 Accrued tuition and travel costs 1,313,400 1,264,800 Deferred revenue 83,700 Deferred rent 45,756 44,167 Total liabilities 1,519,542 1,473,423 Net assets: Unrestricted 3,434,900 2,952,297 Temporarily restricted 2,294,323 2,400,167 Total net assets 5,729,223 5,352,464 T otalliabilities and net assets $ 7,248,765 $ 6,825,887 See notes to financial statements. 3

6 STATEMENT OF ACTIVITIES Years ended August 31, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Revenue: Grants and contributions: Scholarship and education $ 1,131,065 $ 100,000 $ 1,231,065 $ 1,171,659 $ 128,000 $ 1,299,659 Endowment 507,592 4, ,092 35, , ,158 Caddie 58,284 58,284 85,678 85,678 Contributed goods and services 13,285 13,285 6,880 6,880 Fundraising events, net 776, , ,061 50, ,061 Gain on investments held and sold 167, , , , , ,896 Interest 34, ,963 36, ,939 Dividends 65,408 15,083 80,491 43,877 6,820 50,697 Investment fees and expenses (32,393) (11,192) (43,585) (33,373) (7) (33,380) Net assets released from restrictions: Satisfaction of E!!! ose or time restrictions 416,866 {416,866) 454,871 (454,871) Total revenue 3,139,572 {105,844) 3,033,728 2,840, ,915 3,257,588 Expenses: Program services 2,158,375 2,158,375 2,149,817 2,149,817 Supporting services: Management and general 140, , , ,360 Fundraisin~ 357, , , ,611 Total exeenses 2,656,969 2,656,969 2,697,788 2,697,788 Change in net assets 482,603 (105,844) 376, , , ,800 Net assets: Beginnin~ of lear 2,952,297 2,400,167 5,352,464 2,809,412 1,983,252 4,792,664 End of year $ 3,434,900 $ 2,294,323 $ 5,729,223 $ 2,952,297 $ 2,400,167 $ 5,352,464 See notes to financial statements. 4

7 STATEMENT OF CASH FLOWS Years ended August 31, Cash flows from operating activities: Change in net assets $ 376,759 $ 559,800 Adjustments to reconcile change in net assets to cash provided by operating activities: Depreciation and amortization 7,941 10,131 Loss on disposal of property and equipment 180 Gain on investments held and sold (370,319) (466,896) Contribution of corporate stock (116,554) (158,551) (Increase) decrease in operating assets: Accrued investment income 3,291 (1,070) Accounts receivable 55,250 47,050 Contributions receivable 723,311 (55,428) Prepaid expenses (55,013) 5,578 Security deposit 4,994 Increase (decrease) in operating liabilities: Accounts payable and accrued expenses (87,770) 46,979 Accrued tuition and travel costs 48,600 70,116 Deferred revenue 83,700 Deferred rent 1,589 44,167 Cash provided by operating activities 670, ,870 Cash flows from investing activities: Purchase of investments (1,223,145) (341,599) Proceeds from sale of investments 340, ,701 Cash used in investing activities (882,480) (147,898) Decrease in cash and cash equivalents (211,515) (41,028) Cash and cash equivalents, beginning of year 1,121,930 1,162,958 Cash and cash equivalents, end of year $ 910,415 $ 1,121,930 See notes to financial statements. 5

8 NOTES TO FINANCIAL STATEMENTS 1. Organization and purpose The Daniel Murphy Scholarship Fund (the Fund) was formed in 1989 to give high school scholarship assistance and educational support to Chicago students from economically disadvantaged backgrounds. The Fund seeks to make a life-altering difference in the lives of its scholars by providing them with the best opportunity to succeed in high school and college. The following describes the Fund's major programs: Financial Assistance - The Fund provides scholarships and other financial support to economically disadvantaged Chicago area students, allowing them to attend leading private and parochial high schools in the Chicago area and top boarding schools across the country. During the and 2010/2011 school years, the Fund served 328 and 330 scholars, respectively. The Fund has committed to supporting 330 scholars in the 2012/2013 school year. College Counseling - The Fund works with scholars throughout their four years in high school and most intensively in their junior and senior years, assisting the scholars as they search for an appropriate college and for funding to help pay for that college. During 2012 and 2011, 100% of the scholars who graduated high school enrolled in college. Bridge to Excellence - The Fund works with LEAP! Learning Systems and Educational Endeavors to provide two weeks of mandatory classes for all incoming freshman scholars, focusing on language skills, time management, study skills and critical thinking. Mentoring - Scholars who wish to participate are matched with an adult mentor for their four years in high school. The Fund also operates an affinity program, in which ten to fifteen students meet every other week with an adult facilitator to discuss issues common to many of the scholars. Tutoring - The Fund helps find and fund tutors for scholars whose GP As fall below 3.0 or who seek additional help. Summer Opportunities, including the Caddie Program - The objective of the summer opportunities program is to present scholars with summer job opportunities, internships, cultural and study abroad programs, sports programs and community service programs. As part of the summer opportunities program, the Fund provides summer golf caddie employment opportunities for scholars. Scholars live in college dorms and caddie at nearby country clubs, earning income, gaining work experience and developing life skills. 6

9 2. Summary of significant accounting policies The significant accounting policies of the Fund are summarized below: Basis of accounting: The Fund's financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Basis of presentation: The financial statement presentation follows the Financial Accounting Standards Board (F ASB) Accounting Standards Codification (the Codification) for Financial Statements of Not-for-Profit Organizations. Under the Codification, the Fund is required to report information regarding its financial position and activities in three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. Unrestricted - Unrestricted net assets are available to finance the general operations of the Fund. The only limits on the use of unrestricted net assets are the broad limits resulting from the nature of the Fund, the environment in which it operates and the purposes specified in its articles of incorporation. Voluntary resolutions by the Board of Directors (the Board) andlor Executive Committee to designate a portion of the Fund's unrestricted net assets for specified purposes do not result in restricted funds. Since designations are voluntary and may be reversed by the Board andl or Executive Committee at any time, designated net assets are included under the caption "unrestricted net assets." Board-designated andlor Executive Committee-designated net assets include assets over which the Board andlor Executive Committee retains control and may, at their discretion, subsequently be used for other purposes. See Note 6. Temporarily restricted - Temporarily restricted net assets result (a) from contributions and other inflows of assets, the use of which by the Fund is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by action of the Fund pursuant to those stipulations, (b) from other asset enhancements and diminishments subject to the same kinds of stipulations and ( c) from reclassifications to (or from) other classes of net assets as a consequence of donor-imposed stipulations, their expiration by passage of time or their fulfillment and removal by actions of the Fund pursuant to those stipulations. See Notes 6 and 13. 7

10 2. Summary of significant accounting policies (continued) Basis of presentation: (continued) Permanently restricted - Permanently restricted net assets are assets that have donorimposed restrictions that stipulate that the contributed resources be maintained permanently but permit the Fund to utilize or expend part or all of the income or other economic benefits derived from the donated assets. As of August 31, 2012 and 2011, there were no permanently restricted net assets. Unrestricted and restricted revenue and support: The financial statement presentation follows the Codification for Accounting for Contributions Received and Contributions Made. Under the Codification, contributions received are recorded as unrestricted, temporarily restricted or permanently restricted support depending on the existence and/or nature of any donor restrictions. Donor-restricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accompiished), temporariiy restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The Fund reports donor-restricted contributions and donor-restricted investment gains and income for which restrictions are met in the same reporting period as unrestricted support. Cash and cash equivalents: For purposes of the statement of cash flows, cash and cash equivalents includes cash accounts and money market funds readily available for operating activities. Contributions receivable: Unconditional promises to give that are expected to be collected within one year are recorded as contributions receivable 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. Conditional promises to give are not included as support until the conditions are substantially met. The Fund provides an allowance, as needed, for estimated uncollectible contributions. 8

11 2. Summary of significant accounting policies (continued) Investments: Investments are held for Executive Committee-designated and donor-restricted endowment purposes. Investment cash and money market funds are carried at cost, which approximates fair value. All other investments are stated at fair value based on quoted prices in active markets (all Levell measurements under the fair value hierarchy). The Fund records donated securities at fair value at the date of donation. Realized and unrealized investment gains and losses and other investment income on Executive Committee-designated endowment investments are reflected in the statement of activities as changes in unrestricted net assets. Investment income and realized and unrealized gains on donor-restricted endowment investments are reflected in the statement of activities as changes in temporarily restricted net assets. Realized and unrealized losses on donor-restricted endowment investments first reduce any realized and unrealized gains reported in temporarily restricted net assets and then are reflected as changes in unrestricted net assets. Property and equipment and related depreciation and amortization: Property and equipment are stated at cost or, if donated, at the approximate fair vaiue at date of donation. Depreciation of property and equipment is provided over the estimated lives of the assets using the straight-line method (computer software - three years, computer equipment - five years, van - three years, office equipment - four years and other furniture and fixtures - three to ten years). Additions over $1,000 are capitalized while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed currently. Deferred revenue: Proceeds related to special events and other fundraisers that are received by August 31 that will not be earned until after August 31 are recognized as deferred revenue. Deferred rent: In accordance with generally accepted accounting principles, the Fund records monthly rent expense equal to total minimum payments due over the lease term, divided by the number of months in the lease term. The difference between rent expense recorded and the amount paid is charged (credited) to deferred rent reported in the statement of financial position. 9

12 2. Summary of significant accounting policies (continued) Contributed goods and services: The Codification requires the Fund to recognize as revenue the fair value of contributed (donated) goods and services. During 2012, the Fund was the recipient of donated language skills and speech therapy services related to LEAP!, donated test preparation services related to college counseling, donated legal services and donated special event expenses related to the golf outing. During 2011, the Fund was the recipient of donated language skills and speech therapy services related to LEAP!, donated test preparation services related to college counseling and donated special event expenses related to the golf outing. Expense allocation: The costs of providing various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Scholar tuition and travel and transportation: Tuition distribution and scholar travel and transportation expenses are recognized when the number of scholars has been approved by the Fund and when scholarship terms have been met. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures in the financial statements. Accordingly, actual results could differ from those estimates. Reclassifications: Certain amounts reported in the prior year have been reclassified in order to conform to the current year's presentation. 3. Tax status The Fund is a tax-exempt organization as described in Section 501(c)(3) of the Internal Revenue Code (the Code) and is exempt from federal income taxes on related income pursuant to Section 501(a) of the Code. In addition, the Internal Revenue Service has determined that the Fund is not a private foundation within the meaning of Section 509(a) ofthe Code. 10

13 4. Cash and cash equivalents The Fund maintains its cash and cash equivalents in bank accounts and brokerage accounts which, at times, may exceed Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC) insured limits. There have been no losses in these accounts. Management believes that the Fund is not exposed to any significant credit risk on cash and cash equivalents. 5. Contributions receivable Unconditional promises to give are as follows: August 31, Scholarship, other programs and general operations $ 189,028 $ 335,525 Executive Committee-designated endowment (Note 6) 344, ,300 Donor-restricted endowment (Note 6) 500,000 Total unconditional promises to give $ 533,628 $ 1,289,825 Receivable in less than one year $ 451,628 $ 1,207,825 Receivable in one to three years 82,000 82,000 Total unconditional promises to give 533,628 1,289,825 Less allowance for uncollectible accounts (26,000) (59,000) Less discounts to net present value (356) (242) Net unconditional promises to give $ 507,272 $ 1,230,583 Unconditional promises to give and receivable in more than one year were discounted at an average rate of 0.2% in 2012 and 0.3% in DMSF Endowment Fund The Fund's endowment consists of three individual funds established to support operations and programs. The Fund's endowment fund includes a fund designated by the Executive Committee to function as an endowment and two donor-restricted funds. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Executive Committee to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. 11

14 6. DMSF Endowment Fund (continued) The Uniform Prudent Management ofinstitutional Funds Act (UPMIF A) was signed into law in the state of Illinois in UPMIF A differs from laws previously in place in a few key areas. UPMIF A eliminates the historical dollar value rule with respect to endowment fund spending, updates the prudence standard for the management and investment of charitable funds and amends the provisions governing the release and modification on charitable funds. The Executive Committee of the Fund has interpreted UPMIF A as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. The remaining portion of the donor-restricted endowment funds that are not classified in permanently restricted net assets are classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Fund in a manner consistent with the standard of prudence prescribed by UPMIF A. In accordance with UPMIF A, the Fund considers the following factors in making a determination to appropriate or accumulate donorrestricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes ofthe 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 Fund and (7) the Fund's investment policies. Executive Committee-designated endowment: Investment funds identified by the Executive Committee to grow in perpetuity while generating annual spending allowances to support Fund operations and programs have been designated as an Executive Committee-designated endowment (unrestricted net assets). Investment of endowment funds must follow the Fund's investment policy. Under this policy, the Fund will be entitled to expend an amount that is equal to no more than 5% of the average market value of the Executive Committee-designated endowment over the most recent eight fiscal quarters. In the event that the Fund experiences a deficit in a fiscal year, the Fund can borrow funds from the Executive Committee-designated endowment so long as the amount borrowed never exceeds more than 5% of the average market value of the Executive Committee-designated endowment over the most recent eight fiscal quarters. In such an event, the Fund will be obligated to repay the amount borrowed within three years of the date borrowed. All investment income, including gains on investments, will be reinvested in the Executive Committee-designated endowment. 12

15 6. DMSF Endowment Fund (continued) Executive Committee-designated endowment: (continued) Composition of and changes in Executive Committee-designated endowment net assets for the years ended August 31, 2012 and 2011 were as follows: Years ended August 31, Executive Committee-designated endowment net assets, beginning of year Contributions Distributions Net gain on investments held and sold Interest Dividends Investment fees and expenses 2012 $ 3,236,975 $ 619,579 (111,000) 167,584 38,152 65,408 (32,393) ,859, ,700 (52,000) 279,643 35,725 43,864 (33,373) Executive Committee-designated endowment net assets, end of year $ 3,984,305 $ 3,236,975 Donor-restricted endowments: Donor-restricted endowment #1: During the year ended August 31, 2008, the Fund received a $1,000,000 pledge to create a named donor-restricted endowment (temporarily restricted net assets). The pledge is payable over four consecutive years with final payment due and received in the year ended August 31, All investment income, including gains on investments, will be reinvested in the donor-restricted endowment. On an annual basis, the Fund can expend this endowment fund to cover a fixed number of scholarships. Donor-restricted endowment #2: During the year ended August 31, 2011, the Fund received a $500,000 pledge to create a named donor-restricted endowment (temporarily restricted net assets). The Fund received payment ofthe pledge in full in the year ended August 31, All investment income, including gains on investments, will be reinvested in the donor-restricted endowment. On an annual basis, the Fund can expend this endowment fund to cover a fixed number of scholarships. 13

16 6. DMSF Endowment Fund (continued) Donor-restricted endowments: (continued) Composition of and changes in donor-restricted endowment net assets for the years ended August 31, 2012 and 2011 were as follows: Year ended August 31,2012 Donor-restricted endowment net assets, beginning of year Contributions Distributions Net gain on investments held and sold Interest Dividends Investment fees and expenses Donor-restricted endowment #1 #2 $ 1,122,544 $ 504,500 (64,000) (25,000) 163,659 38, ,472 10,611 (6,856) (4,336) Total $ 1,122, ,500 (89,000) 202, ,083 (11,192) Donor-restricted endowment net assets, end of year $ 1,219,820 $ 524,746 $ 1,744,566 Year ended August 31, 2011 Donor-restricted endowment #1 #2 Total Donor-restricted endowment net assets, beginning of year Contributions Distributions Net gain on investments held and sold Interest Dividends Investment fees and expenses $ 726, ,000 (48,000) 186, ,820 (7) $ 726, ,000 (48,000) 186, ,820 (7) Donor-restricted endowment net assets, end of year $ 1,122,544 $ 1,122,544 From time to time, the fair value of assets associated with donor-restricted endowment funds may fall below the level that the donor or UPMIF A requires the Fund to retain. There are no deficiencies of this nature as of August 31, 2012 and

17 7. Property and equipment The components of property and equipment are as follows: August 31, Computer software Computer equipment Van Furniture and equipment $ 25,000 9,453 14,985 30,350 $ 42,905 14,194 14,985 35,337 Less accumulated depreciation and amortization 79,788 (63,488) 107,421 (83,001) Property and equipment, net $ 16,300 $ 24, Retirement plan The Fund has a SIMPLE-IRA retirement plan (the Plan) covering all employees who meet the eligibility requirements. The Fund makes matching contributions to the Plan equal to 100% of employee deferrals, up to a maximum of 3% of employee compensation for a calendar year. Contributions to the Plan were $10,229 and $11,723 for the years ended August 31, 2012 and 2011, respectively. 9. Donated services The Fund receives a significant amount of donated services from unpaid volunteers who assist in interviewing, mentoring, fundraising and special projects. No amounts have been recognized in the statement of activities for services of the unpaid volunteers because the criteria for recognition under the Codification have not been satisfied. 10. Leases The Fund leases its office space under an operating lease. The lease term began on March 1, 2006 and expired in February The lease called for monthly base rent of $4,896 with an annual increase of.75 cents per square foot ($3,525 per year). Each month in addition to monthly base rent, the Fund paid an amount equal to its proportional share of common area expenses and real estate taxes. 15

18 10. Leases (continued) During the year ended August 31, 2010, the Fund entered into an agreement to lease office space at another location. The lease term is from September 1, 2010 through January 31, After a partial abatement of rent in the first year, the agreement calls for monthly payments of base rent (increasing annually) and a proportional share of common area expenses and real estate taxes for the remainder of the lease term. Future minimum rental payments for both leases are as follows: Year ending August 31 : Amount 2013 $ 104, , , , ,374 Thereafter 48,073 Total $ 597,467 Rental expense including common area expenses and real estate taxes for the years ended August 31, 2012 and 2011 was $106,606 and $149,925, respectively. 11. Conditional scholarship commitment Annually, the Fund provides up to $5,000 of tuition for each scholar and in some situations up to $2,150 of travel expense for scholars attending a boarding school. Although the Fund awards a fouryear scholarship, the Fund's Education Committee reviews each scholar's status at the end of each grading period. The Fund reserves the right to terminate a scholarship for any of the following reasons: Grades falling below a 3.0 on a 4.0 scale Failure to pay (the scholar family's portion of) tuition and supplementary fees Failure to comply with a partnership school's rules and regulations Failure to communicate with the Fund's staff on a regular basis Family income exceeding the Fund's guidelines of an economically-disadvantaged family Transferring to any other school without the permission ofthe Fund Failing to attend mandatory events or fulfill mandatory obligations 16

19 11. Conditional scholarship commitment (continued) Since the Fund reviews each scholar's status at least annually, the Fund is only committed to funding scholarships for the ensuing school year. The Fund's portion of tuition for the 2012/2013 school year has been accrued as a liability at August 31, If all scholars as of August 31, 2012 were to remain in the program, scholarship tuition and travel grants approved and committed for future payment payable in the following school years are as follows: Year ending August 31 : Tuition Travel Total $ 1,058,000 $ 41,900 $ 1,099, / ,500 32, , ,500 13, ,850 Total $ 2,211,000 $ 87,500 $ 2,298, Fundraising events The Fund held the following fundraising events during the years ended August 31, 2012 and 2011 : Year ended August 31,2012 Associate Board Golf Outing Total Revenue Expenses Net income $ 24,535 $ 12,263 $ 12,272 $ 1,077,548 $ 1,102, , , ,542 $ 776,814 Year ended August 31, 2011 Associate Board Golf Outing Total Revenue Expenses Net income $ 17,540 $ 12,980 $ 4,560 $ 1,095,242 $ 1,112, , , ,501 $ 809,061 During the years ended August 31, 2012 and 2011, the Fund was the recipient of contributed goods and services for the golf outing totaling $55,000 and $32,000, respectively, which is included in both fundraising event revenue and expenses noted above. 17

20 12. Fundraising events (continued) During the year ended August 31, 2011, the Fund received a $1 00,000 pledge from a corporate donor to sponsor the golf outing for two years. In accordance with the Codification for Accounting for Contributions Received and Contributions Made, the entire amount of the pledge was recorded as revenue during the year ended August 31, The pledge was paid in full with a payment of $50,000 received during the year ended August 31,2011 and a paymentof$50,000 received during the year ended August 31, Temporarily restricted net assets Temporarily restricted net assets were available for the following purposes or periods: August 31, Purpose-restricted funds: Bridge to Excellence Donor-restricted endowments Scholarships Time-restricted funds: Contributions receivable Scholarships $ 1,744,566 14, ,272 28,000 $ 11,040 1,122,544 1,230,583 36,000 Total temporarily restricted net assets $ 2,294,323 $ 2,400,167 Net assets were released from donor restrictions by incurring expenses satisfying the following restrictions specified by donors: Years ended August 31, Purpose-restricted funds: Bridge to Excellence Donor-restricted endowments Scholarships Time-restricted funds: Contributions receivable Scholarships $ 11,040 89,000 5, ,311 8,000 $ 82,299 48, ,572 8,000 Total net assets released from restrictions $ 416,866 $ 454,871 18

21 14. Financial aid In addition to the grants and contributions reported in the statement of activities, the Fund has assisted the Fund's scholars and their families in securing additional financial aid directly from the partnering schools of approximately $4,200,000 and $4,525,000 for the and 2011/2012 school years, respectively. 15. Related party transactions One of the Fund's Board of Directors works for LEAP! Learning Systems with which the Fund conducts business. During the years ended August 31, 2012 and 2011, the Fund incurred expenses of approximately $44,000 for each year, which included $2,500 of contributed language skills and speech therapy services for each year. 16. Subsequent events Management of the Fund has reviewed and evaluated subsequent events from August 31, 2012, the financial statement date, through January 10,2013, the date the financial statements were available to be issued. No events have occurred in this period that would be required to be recognized and/or disclosed in these financial statements as required by generally accepted accounting principles. 19

22 SCHEDULE OF FUNCTIONAL EXPENSES Year ended August 31, 2012 Pro![am Services SUEE0rtin~ Services Financial College Bridge to Summer Management Assistance Counselin~ Excellence Mentoring Tutoring E12ortunities Total and ~enera1 Fundraisinl!; Total Activities $ 3,263 $ 466 $ 3,729 $ 304 $ 4,033 Awards $ Background checks 42 1,060 1,102 1,102 College fairs and trips $ Dues and membership fees ,115 $ ,163 Employee benefits 20,998 7,456 $ 3,172 4,647 5,289 41,562 6,015 23,699 71,276 Equipment and office supplies 5,386 1, ,192 1,357 10,661 1,542 6,079 18,282 Insurance 4,554 1, ,008 1,147 9,014 1,306 5,140 15,460 Meals and entertainment 1,007 4,452 5, ,541 7,654 Meeting and conference ,015 1,273 4,042 6,330 Miscellaneous 6,752 2,091 1,296 4,578 10,299 25,016 5,972 15,821 46,809 Payroll taxes 15,085 5,356 2,279 3,338 3,799 29,857 4,319 17,025 51,201 Postage and shipping , ,689 4,152 Printing and duplication ,386 6,899 Professional fees 93,298 93,298 43,580 11, ,942 Provision for doubtful accounts 7,847 7,847 Recruit and interview scholars 13,013 13,013 13,013 Rent and utilities 31,441 11,151 13,244 6,951 7,910 70,697 8,997 35, ,141 Room and board 85,385 85,385 85,385 Salaries 197,573 70,159 29,881 43,768 49, ,187 56, , ,838 Staff development and training Telephone 2, , ,903 8,732 Test preparation 1,650 10,695 12,345 12,345 Travel and transportation: Scholars 49,806 13,321 63,127 63,127 Staff 1,991 7, , ,158 Tuition 1,262,912 1,262,912 1,262,912 Tutoring $ 14,992 14,992 14,992 Total expenses before depreciation and amortization 1,619, , ,169 73,109 14, ,620 2,153, , ,284 2,649,028 DeEreciation and amortization 2, , ,640 7,941 Total expenses $ 1,621,697 $ 122,328 $ 145,522 $ 73,627 $ 14,992 $ 180,209 $ 2,158,375 $ 140,670 $ 357,924 $ 2,656,969 20

23 SCHEDULE OF FUNCTIONAL EXPENSES (CONTINUED) Year ended August 31, 2011 Program Services Supporting Services Financial College Bridge to Summer Management Assistance Counselin~ Excellence Mentoring Tutoring ee rtunitites Total and ~eneral Fundraisin!1; Total Activities $ 1,665 $ 4,462 $ 6,127 $ 564 $ 6,691 Awards $ Background checks 1,524 1,524 1,524 College fairs and trips 1,540 1,540 1,540 Dues and membership fees $ ,400 $ ,911 Employee benefits 19,572 6,022 $ 165 2,196 $ 2,538 4,832 35,325 5,290 20,396 61,011 Equipment and office supplies 7,924 2, ,027 1,956 14,301 2,141 8,258 24,700 Insurance 6,309 1, ,558 11,387 1,706 6,575 19,668 Meals and entertainment 1,867 2,201 4,068 2,161 1,779 8,008 Meeting and conference 779 1,590 2, ,174 Miscellaneous 9,133 1,748 1,370 10,283 7,115 29,649 2,451 13,857 45,957 Payroll taxes 19,113 5, ,145 2,479 4,719 34,498 5,166 19,918 59,582 Postage and shipping ,286 3,284 Printing and duplication 744 5,733 6,477 Professional fees 81,035 81,035 43,007 7, ,944 Provision for doubtful accounts 41,495 41,495 Recruit and interview scholars 11,083 11,083 11,083 Rent and utilities 48,096 14,798 6,405 5,397 6,237 11,874 92,807 12,998 50, ,925 Room and board 108, , ,293 Salaries 216,144 66,483 1,815 24,230 28,041 53, ,140 58, , ,695 Staff development and training , ,213 Telephone 2, , ,166 6,476 Test preparation 10,273 10,273 10,273 Travel and transportation: Scholars 53,799 15,241 69,040 69,040 Staff 2,383 4, , ,408 Tuition 1,203,587 1,203,587 1,203,587 Tutorin~ 22,298 22,298 22,298 Total expenses before depreciation and amortization 1,602, ,603 91,092 55,642 63, ,047 2,143, , ,224 2,687,657 Deereciation and amortization 3,251 1, , ,387 10,131 Total expenses $ 1,606,049 $ 121,603 $ 91,119 $ 56,007 $ 64,190 $ 210,849 $ 2,149,817 $ 178,360 $ 369,611 $ 2,697,788 21