UNITED WAY OF PALM BEACH COUNTY, INC.

Transcription

1 UNITED WAY OF PALM BEACH COUNTY, INC. FINANCIAL STATEMENTS June 30, 2008 and 2007

2 UNITED WAY OF PALM BEACH COUNTY, INC. FINANCIAL STATEMENTS June 30, 2008 and 2007 TABLE OF CONTENTS FINANCIAL STATEMENTS: Independent Auditors Report... 3 Statement of Financial Position... 5 Statement of Activities... 6 Statement of Functional Expenses... 7 Statement of Cash Flows... 8 Notes to Financial Statements... 9

3 FINANCIAL STATEMENTS

4 INDEPENDENT AUDITORS REPORT To the Board of Directors United Way of Palm Beach County, Inc. Boynton Beach, Florida We have audited the accompanying statement of financial position of United Way of Palm Beach County, Inc. as of June 30, 2008, and the related statement of activities, functional expenses, and cash flows for the year then ended. These financial statements are the responsibility of United Way of Palm Beach County, Inc. s management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized information was derived from the financial statements of United Way of Palm Beach County, Inc. as of June 30, 2007, that were audited by other auditors who expressed an unqualified opinion on those financial statements in their report dated January 9, We conducted our audit 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 audit provides 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 United Way of Palm Beach County, Inc. as of June 30, 2008, and the changes in its net assets, functional expenses and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. November 20, 2008

5 UNITED WAY OF PALM BEACH COUNTY, INC. Statement of Financial Position June 30, 2008 and Assets: Current assets: Cash and cash equivalents $ 3,427,534 $ 5,142,923 Receivables: Pledges receivable, net 3,632,435 3,802,762 Bequests 70,000 88,112 Grants 742, ,078 Other 8,765 23,365 Prepaid expenses 82, ,826 Total current assets 7,963,878 9,366,066 Noncurrent assets: Pledges receivable, less current portion 14,143 27,386 Investments 4,971,416 5,109,902 Deposits and other assets - 21,386 Property and equipment, net of accumulated depreciation 2,989,450 3,050,742 Total assets $ 15,938,887 $ 17,575,482 Liabilities and net assets: Liabilities: Current liabilities: Allocations payable $ 4,139,656 $ 4,176,262 Designations payable 2,121,338 1,930,193 Accounts payable and accrued expenses 975,211 1,201,305 Deferred revenue 1,472,018 3,805,528 Current portion of annuity obligations 40,150 40,150 Total current liabilities 8,748,373 11,153,438 Noncurrent liabilities: Note payable 32,310 32,310 Annuity obligations, net of current portion 148, ,210 Total liabilities 8,929,578 11,342,958 Net assets: Unrestricted: Expended for property and equipment 2,989,450 3,050,742 Designated for supported programs 100, ,000 Other 2,324,619 1,093,715 Temporarily restricted 1,595,240 1,988,067 Total net assets 7,009,309 6,232,524 Total liabilities and net assets $ 15,938,887 $ 17,575,482 The accompanying notes are an integral part of these financial statements. 5

6 UNITED WAY OF PALM BEACH COUNTY, INC. Statement of Activities For the Year Ended June 30, 2008 With Comparative Totals For the Year Ended June 30, Temporarily Unrestricted Restricted Total Total Public support and revenues: Campaign contributions $ - $ 12,057,926 $ 12,057,926 $ 10,965,867 Donor advised fund contributions - 352, ,955 1,082,475 Less: Designations to other agencies - (4,126,175) (4,126,175) (3,909,319) Provision for uncollectible pledges - (528,443) (528,443) (417,818) Net campaign contributions - 7,756,263 7,756,263 7,721,205 Other contributions 346, ,345 87,157 In-kind contributions 90,406-90,406 69,138 Legacies and bequests 513, ,624 77,373 Special events 68,136-68,136 78,035 Grants 1,950,898-1,950,898 2,487,147 Investment income 20,543-20, ,782 Designation fees 528, , ,020 Change in value of charitable gift annuities (31,835) - (31,835) (30,562) Gain (loss) on disposal of equipment (683) - (683) 10 Other Net assets released from restrictions 8,149,090 (8,149,090) - - Total public support and revenues 11,635,183 (392,827) 11,242,356 11,955,931 Expenses: Program expenses: Allocations and other programs 8,316,903-8,316,903 9,992,994 Support services: Fund raising 1,537,694-1,537,694 1,346,134 Management and general 610, , ,244 Total expenses 10,465,571-10,465,571 11,893,372 Change in net assets 1,169,612 (392,827) 776,785 62,559 Net assets, beginning of year, as restated 4,244,457 1,988,067 6,232,524 6,169,965 Net assets, end of year $ 5,414,069 $ 1,595,240 $ 7,009,309 $ 6,232,524 The accompanying notes are an integral part of these financial statements. 6

7 UNITED WAY OF PALM BEACH COUNTY, INC. Statement of Functional Expenses For the Year Ended June 30, 2008 With Comparative Totals For the Year Ended June 30, Support Services Allocations and Fund Management Other Programs Raising and General Total Total Allocations and grants: Allocations to agencies $ 4,533,157 $ - $ - $ 4,533,157 $ 5,870,104 Grants to others 1,126, ,126, ,925 Total allocations and grants 5,659, ,659,740 6,815,029 Salaries and related expenses: Salaries 1,517, , ,574 2,601,766 2,760,772 Employee benefits 228, ,801 58, , ,581 Payroll taxes 111,521 55,532 23, , ,449 Total salaries and related expenses 1,857, , ,480 3,201,007 3,371,802 Other expenses: Professional and consulting fees 95,699 63,164 43, , ,406 Occupancy 77,663 45,873 8, , ,910 Sponsored events and meetings 11,909 7, ,734 24,064 Printing and publications 142, ,344 3, , ,643 Conferences 57,393 26,878 11,912 96,183 61,865 National and state affiliation dues 22,887 1,581 76, , ,198 Telephone 27,823 8,545 5,227 41,595 43,150 Supplies 34,578 12,278 2,116 48, ,604 Travel 24,680 21,686 10,428 56,794 62,007 Depreciation and amortization 121,148 58,476 13, , ,408 Insurance 71,565 35,089 8, ,807 91,267 Postage 12,396 54,876 1,130 68,402 42,973 Rental and maintenance of equipment 47,265 36,922 5,978 90,165 93,514 Recognition 10,228 10, ,790 16,047 Staff development 16,300 1,475-17,775 2,602 Subscriptions ,412 Special events 24,826 53, ,617 86,949 Interest - - 2,230 2,230 3,522 Total other expenses 799, , ,494 1,604,824 1,706,541 Total functional expenses $ 8,316,903 $ 1,537,694 $ 610,974 $ 10,465,571 $ 11,893,372 The accompanying notes are an integral part of these financial statements. 7

8 UNITED WAY OF PALM BEACH COUNTY, INC. Statement of Cash Flows For the Years Ended June 30, 2008 and Cash flows from operating activities: Change in net assets $ 776,785 $ 62,559 Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation and amortization 192, ,408 Net realized and unrealized losses (gains) on investments 306,997 (680,658) (Gain) loss on disposal of equipment 683 (10) Contribution of investment securities (302,564) (743,490) Donation of equipment Provision for pledge loss 145, ,818 Change in value of charitable gift annuities 31,835 30,562 Changes in operating assets and liabilities: (Increase) decrease in: Pledges receivable 38,277 (623,783) Bequests receivable 18,112 (12,800) Grants receivable (550,214) 84,141 Other receivables 14,600 (17,540) Prepaid expenses 33,974 (71,881) Increase (decrease) in: Allocations payable (36,606) 7,547 Designations payable 191, ,404 Accounts payable and accrued expenses (226,094) 329,836 Deferred revenue (2,333,510) 561,172 Net cash used in operating activities (1,697,658) (148,715) Cash flows from investing activities: Purchase of investments (863,511) (130,000) Proceeds from sale of investments 997,564 1,092,490 Purchase of property and equpment (113,634) (1,351,897) Change in deposits and other assets 2,000 (1,500) Net cash provided by (used in) investing activities 22,419 (390,907) Cash flows from financing activities: Payments of annuity obligations (40,150) (40,150) Net cash used in financing activities (40,150) (40,150) Net decrease in cash and cash equivalents (1,715,389) (579,772) Cash, beginning of year 5,142,923 5,722,695 Cash, end of year $ 3,427,534 $ 5,142,923 Supplemental schedule of noncash investing and financing activities: In-kind contributions $ 90,406 $ 69,138 Property and equipment acquired through accounts payable - 126,677 Contribution of investment securities 302, ,490 The accompanying notes are an integral part of these financial statements. 8

9 UNITED WAY OF PALM BEACH COUNTY, INC. Notes to Financial Statements June 30, 2008 and 2007 (1) NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Organization United Way of Palm Beach County, Inc. (the Organization ) is a not-for-profit corporation formed to assess the need for human services programs; to seek the root causes of human problems through collaboration; create long-term solutions of human problems; expand and modify existing human services programs; promote preventative activities; and foster a cooperative effort among agencies serving the community. The Organization organizes an annual fund-raising drive for the benefit of funded-partners who especially demonstrate they have emergency needs. The annual campaign, as well as private and public grants, is the Organization s largest sources of support. Basis of Presentation The Organization s financial statements are presented in accordance with Statement of Financial Accounting Standards ( SFAS ) No. 117, Financial Statements of Not-for-Profit Organizations which prescribes standards for external financial statements for all not-for-profit organizations. The Statement requires the classification of an organization s net assets, its revenue and expenses, and gains and losses based on the existence or absence of donor-imposed restrictions. It requires the amounts for each of three classes of net assets (permanently restricted, temporarily restricted and unrestricted) be displayed in a statement of financial position and the amounts of the change in each of the three classes of net assets be displayed in a statement of activities. Net Assets Unrestricted net assets are presently available for use by the Organization at the discretion of the Board of Directors. Temporarily restricted net assets are expendable only for purposes and/or during time periods specified by the donor. The Organization does not have any donor-imposed permanently restricted net assets. Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of public support and revenue, and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition The Organization follows SFAS No. 116, Accounting for Contributions Received and Contributions Made. Contributions received are recognized at fair value, including unconditional promises to give when the promise is made. Contributions that are to be collected more than one year in the future are recorded at their discounted present value. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are restricted for future periods (time restriction) or are restricted by the donor for specific purposes (purpose restriction) are reported as temporarily restricted support. All amounts accounted for as campaign revenue, including donor advisory funds, are considered to be temporarily restricted since amounts are unconditional promises to give with payments due in future periods. 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 are reported in the statement of activities as net assets released from restrictions. The Organization is a beneficiary under various wills and trust agreements. Related amounts are recorded when either a will is declared valid by a probate court, or the Organization is notified as an irrevocable beneficiary of a trust, and the proceeds are measurable. The Organization conducts a donor-advised fund program for large individual contributions. Under this program, contributions are held by the Organization until distributed pursuant to Board approval of staff recommendation. Contributors are permitted to provide recommendations on the use of the funds; however, it is the committee s responsibility to determine how the funds could best supplement the agency allocations process. 9

10 Designation fees are campaign revenues that are maintained by the Organization as administrative fees for processing designated pledges. Designated pledges represent contributions that are not allocated by the contributor to the Organization s affiliated agencies. The Organization receives various grants from state, local and private agencies for program and supporting services. These grants are generally on a cost reimbursement basis. Revenues from grants are recognized in the statement of activities when expenses are made for the purpose specified. Grant funds that have been received but have not yet been expended for the purposes specified are reported as deferred revenue. Special events revenue is recognized when the event occurs. Donated Services The Organization recognizes the fair value of donated services received if such services: (a) create or enhance nonfinancial assets or (b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not contributed. The Organization receives services from a number of volunteers who give significant amounts of their time to the Organization s programs, fund-raising campaigns, and management. Time donated by these volunteers is not recorded in the financial statements, as these services do not require specialized skills. As such, volunteer services do not meet the recognition criteria in accordance with SFAS No Allocations Payable to Agencies The Organization annually allocates funds to its affiliated agencies. The Board of Directors approves the total amount of allocations to be distributed for the next fiscal year. The amounts allocated to the individual agencies are determined by volunteers. Once the Board approves the allocations, agreements are executed with the agencies prior to June 30 of each year. Allocations are recognized when communicated to the agencies. Designations Payable The Organization honors donor designations to other nonprofit agencies. The agency must be an active 501(c)(3) organization and comply with the Patriot Act. The Organization is also an approved Federation with the Combined Federal Campaign ( CFC ). As such, the Organization honors designations made to each member organization of CFC by distributing a proportionate share of receipts based on donor designations to each member. Functional Allocation of Expenses The costs of providing the various programs and other activities of the Organization have been summarized in the accompanying statement of activities on a functional basis. Accordingly, certain costs have been allocated among the program and support services based on time records and estimates made by management. Cash and Cash Equivalents The Organization considers money market funds, repurchase agreements and all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. United Way maintains separate interest bearing bank accounts for its Combined Federal Campaigns, as required by that national program. Concentration of Credit Risk The Organization holds substantially all of its cash and cash equivalents in accounts at one financial institution which, at times, may exceed federallyinsured amounts. At June 30, 2008 and 2007, the Organization s cash balances held at these financial institutions exceeded FDIC insured limits by $3,515,107 and $4,965,667, respectively. The Organization has not experienced any losses on such accounts. However, subsequent to June 30, 2008, the Organization has taken measures to reduce its exposure to deposit risk. The Organization s investments are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with such investments and the uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in the near term would materially affect investment balances and the amounts reported in the financial statements. Fair Value of Financial Instruments SFAS No. 107, Disclosure About Fair Value of Financial Instruments, requires disclosure of an estimate of fair value of certain financial instruments. The Organization s significant financial instruments 10

11 are cash, pledges receivable, equity securities, and other short-term assets and liabilities. For these financial instruments, carrying values approximate fair value. Pledges Receivable Pledges receivable, less a provision for estimated uncollectible amounts, are recorded as revenue when pledges are made. The provision for uncollectible pledges is based, among other things, on the Organization s past collection experience and the impact of changes in the current economic conditions. Pledges receivable with payment terms in excess of one year have been discounted using an interest rate of 3%. Amortization of the discounts related to pledges receivable are recognized over the period of the promise as contribution revenue. Investments Investments are carried at fair market value, determined by quoted market values. Realized and unrealized gains and losses are recognized for changes in fair value between periods or when related securities are sold. Interest and dividend income are recognized when earned. Property and Equipment Property and equipment is stated at cost or, if donated, at fair value at the date of donation. The Organization capitalizes all expenditures for property and equipment whose cost is equal to or in excess of $1,000 and whose useful life is greater than one year. Depreciation is computed by the straight-line method over the following estimated useful lives of the assets: Income Taxes The Organization is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. The Organization has been classified as a publicly supported Organization that is not a private foundation under Section 509 (a)(1) of the Code. Amortization Included in other assets in 2007, are loan costs which are amortized using the straight-line method, which approximates the effective interest method, over the term of the related loan. Fundraising Activities The Organization s financial statements are presented in accordance with Statement of Position 98-2 ( SOP ), Accounting for Costs of Activities for Not-for-Profit Organizations and State and Local Government Entities that Include Fund-Raising. The SOP establishes criteria for accounting and reporting of any activity that solicits contributions. Comparative Information The financial statements include certain summarized comparative information as of or for the year ended June 30, 2007, in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Organization s financial statements as of or for the year ended June 30, 2007, from which the summarized information was derived. Years Building 40 Building improvements 7-30 Furniture and equipment

12 (2) INVESTMENTS Investments, as of June 30, consist of the following: Mutual funds: Large Company Portfolio $ 1,304,877 $ 1,364,335 Global Fixed Income Portfolio 258, ,147 Intermediate Government Fixed Income Portfolio 1,979,519 1,999,911 Large Cap International Portfolio 977,855 1,009,777 U.S. Small Company Portfolio 449, ,732 State of Israel Bonds 1,000 1,000 Total investments $ 4,971,416 $ 5,109,902 The Organization s investment income for the year ended June 30, consists of the following: Interest and dividends $ 162,029 $ 288,124 Net realized and unrealized gain (loss) on investments (141,486) 680,658 Total investment income $ 20,543 $ 968,782 (3) PLEDGES RECEIVABLE Unconditional promises to give as of June 30 consist of the following: Campaign pledges, undesignated $ 2,780,704 $ 2,809,268 Campaign pledges, designated 1,678,550 1,705,020 Amount due within one to five years, undesignated - 30,000 Amount due within one to five years, designated 45,000-4,504,254 4,544,288 Less: allowance for uncollectible pledges 856, ,526 Less: discount on deferred pledges 857 2,614 Pledges receivable, net $ 3,646,578 $ 3,830,148 12

13 (4) PROPERTY AND EQUIPMENT Property and equipment as of June 30 consist of the following: Land $ 298,005 $ 298,005 Building 3,051,996 1,587,710 Building improvements 276, ,415 Furniture and equipment 424, ,210 Construction in progress - 1,396,012 4,051,844 3,948,352 Less: accumulated depreciation 1,062, ,610 Property and equipment, net $ 2,989,450 $ 3,050,742 (5) TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets as of June 30, 2008, consists of unconditional promises to give that have not been allocated or time restriction met and consist of the following: Pledges receivable, less designations payable $ 1,525,240 $ 1,899,955 Bequests receivable 70,000 88,112 Total $ 1,595,240 $ 1,988,067 Net assets were released from donor restrictions for pledges receivable by incurring expenses satisfying the restrictions totaling $8,149,090 during the year ended June 30, (6) CONTINGENCY The Organization receives grants from various sources to supplement its programs. Although grant revenue does not represent a majority of total revenue, any loss of funding could have a negative impact on community services provided by the Organization. These grants require the fulfillment of certain conditions as set forth in the instrument of a grant. Failure to fulfill the conditions, or failure to continue to fulfill them, could result in the return of the funds to grantors. Although this is a possibility, management believes that any potential loss will not have a material adverse effect on the financial statements. 13

14 (7) CONSTRUCTION LOAN The Organization entered into a construction and renovation loan agreement on December 5, 2005, in the amount of $2,000,000, secured by the renovation and expansion of the existing headquarters building located in Boynton Beach, Florida. Borrowings under this agreement bear interest at 6.79%. Under this agreement, the Organization may borrow against this loan until the earlier of: (i) December 5, 2006, or (ii) completion of the project, as defined in the loan agreement to which the note is subject. This note shall be payable in consecutive monthly payments of accrued interest only, commencing on January 5, 2006, and continuing on the same day of each month thereafter. All principal and accrued interest shall be due and payable on December 5, The outstanding amount drawn on this loan as of June 30, 2008, was $32,310, which was paid in full on September 19, Under the terms of the bank note payable, the Organization is subject to a number of affirmative and negative covenants that must be complied with on a continuous basis. These covenants include, but are not limited to: (a) annual financial statements as defined in the loan agreement shall be delivered to bank within 120 days after the close of each fiscal year and (b) financial covenants requiring: (i) debt service coverage ratio of 1.00 to 1.00 at all times and (ii) liquidity requirement to maintain liquid assets of not less than $2,000,000 at all times. (8) ANNUITY OBLIGATIONS The Organization has established a Planned Giving Program whereby donors may set up charitable gift annuities with the Organization. Under this program, donors can contribute cash, securities or property to the Organization and in return receive a guaranteed fixed income for life. Contribution revenue is recognized as the difference between the fair value of the cash or property received and the annuity liability. Liabilities were recognized for the life annuity payments at the present value of the expected future cash payments discounted using current interest rates and actuarial assumptions. The annuity liability is reduced as payments are made by the Organization to the donor. Upon death of the donor, any remaining annuity liability would be recognized as revenue in the current year. The present value of future payment liabilities of charitable gift annuities is $189,045 as of June 30, The annuity obligations are adjusted each year to reflect changes in the life expectancy of the beneficiaries. The Organization is licensed by the State of Florida to enter into annuity agreements with donors. Florida Statutes require entities with such a license to maintain assets equal to the sum of reserves on outstanding agreements and a surplus of 25% of such reserves. Assets shall be invested only in securities permitted under Part II of Chapter 625 of the Florida Statutes. (9) PENSION PLAN The Organization has a 401(k) plan which is available to all non-limited duration employees who have been with the Organization at least three months. After one year of service, the Organization contributes 5% of the employees total compensation and 50% of the employee s contribution up to a limit of 6% of compensation. Contributions totaled $118,542 for the year ended June 30,

15 (10) OPERATING LEASES The Organization leases office equipment and a vehicle under various non-cancelable agreements which expire through May 2012 and which require various minimum annual rentals. The total minimum rental commitment as of June 30, 2008, is due in future years as follows: Years Ending June 30, Amount 2009 $ 23, , , ,433 Rent expense on the leases for June 30, 2008 and 2007, totaled $22,286 and $9,213, respectively. (11) PRIOR PERIOD ADJUSTMENT The Organization annually allocates funds to be distributed to its affiliated agencies for distribution in the next fiscal year. These allocations are recognized as a liability when approved by the Board of Directors. During 2008, the Organization determined that certain Board approved program allocations were not recognized as liabilities in Accordingly, the Organization restated its financial statements for the year ended June 30, 2007, to record a liability and a corresponding expense for these unconditional promises to give. The effect of the correction was to decrease the change in net assets for 2007 by $249,