Pennsylvania Bar Foundation. Financial Statements and Supplementary Information

Transcription

1 Pennsylvania Bar Foundation Financial Statements and Supplementary Information Years Ended December 31, 2016 and 2015 with Independent Auditor s Report

2 TABLE OF CONTENTS Independent Auditor's Report Financial Statements: Statements of Financial Position 1 Statement of Activities Year Ended December 31, Statement of Activities Year Ended December 31, Statements of Cash Flows 4 Notes to Financial Statements 5 Supplementary Information: Schedule of Functional Expenses - Year Ended December 31, Schedule of Functional Expenses - Year Ended December 31,

3 Independent Auditor s Report Board of Directors Pennsylvania Bar Foundation We have audited the accompanying financial statements of the Pennsylvania Bar Foundation (Foundation) (a nonprofit organization), which comprise the statements of financial position as of December 31, 2016 and 2015, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Board of Directors Pennsylvania Bar Foundation Independent Auditor s Report Page 2 of 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Foundation as of December 31, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Report on Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses, as listed in the table of contents, are presented for purposes of additional analysis and are 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 audit 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. Maher Duessel Harrisburg, Pennsylvania April 26, 2017

5 STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2016 AND 2015 Assets Cash and cash equivalents $ 382,379 $ 285,968 Investments 700, ,716 Accounts receivable: Due from Pennsylvania Bar Associaton 22,649 22,866 Other 3,971 1,280 LRAP loans receivable 122,979 88,590 Pledges receivable, net 77,647 68,715 Prepaid expenses 1,663 1,686 Fixed assets, net 128, ,516 Total Assets $ 1,441,031 $ 1,258,337 Liabilities and Net Assets Liabilities: Accounts payable $ 11,211 $ 3,640 Due to Pennsylvania Bar Association 22,613 24,147 Due to PA IOLTA 51,056 - Escrow liability (Pennsylvania Futures Commission) 32,010 32,010 Deferred revenue 285, ,589 Total Liabilities 402, ,386 Net Assets: Unrestricted 520, ,116 Board-designated - Fixed Asset Fund 128, ,516 Board-designated - Keystone Funds 62,665 52,355 Total unrestricted 711, ,987 Temporarily restricted 165, ,163 Permanently restricted 161, ,801 Total Net Assets 1,038, ,951 Total Liabilities and Net Assets $ 1,441,031 $ 1,258,337 The accompanying notes are an integral part of these financial statements. 1

6 STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and Other Support: Contributions $ 53,967 $ 35,888 $ 4,481 $ 94,336 Programs 322, ,489 Rents 17, ,695 Fundraising income 61,862 1,233-63,095 Interest income 10,303 1,625-11,928 Miscellaneous Realized gain on investments 10,441 1,695-12,136 Unrealized gain on investments 20,725 3,364-24,089 Gain on sale of assets Net assets released from restrictions 32,744 (32,744) - - Total revenues and other support 530,512 11,061 4, ,054 Expenses: Program services 376, ,575 Supporting services: Management and general 74, ,846 Fundraising 44, ,405 Total expenses 495, ,826 Change in Net Assets 34,686 11,061 4,481 50,228 Net Assets: Beginning of year 676, , , ,951 End of year $ 711,673 $ 165,224 $ 161,282 $ 1,038,179 The accompanying notes are an integral part of these financial statements. 2

7 STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2015 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and Other Support: Contributions $ 52,194 $ 53,874 $ 1,613 $ 107,681 Programs 309, ,418 Rents 23, ,680 Fundraising income 24, ,973 Interest income 9,091 1,565-10,656 Miscellaneous Realized gain on investments 11,798 2,085-13,883 Unrealized loss on investments (23,524) (4,157) - (27,681) Gain on sale of assets 28, ,015 Net assets released from restrictions 59,894 (59,894) - - Total revenues and other support 495,619 (6,527) 1, ,705 Expenses: Program services 355, ,853 Supporting services: Management and general 114, ,301 Fundraising 10, ,137 Total expenses 480, ,291 Change in Net Assets 15,328 (6,527) 1,613 10,414 Net Assets: Beginning of year 661, , , ,537 End of year $ 676,987 $ 154,163 $ 156,801 $ 987,951 The accompanying notes are an integral part of these financial statements. 3

8 STATEMENTS OF CASH FLOWS Cash Flows From Operating Activities: Change in net assets $ 50,228 $ 10,414 Adjustments to reconcile change in net assets to net cash and cash equivalents provided by operating activities: Depreciation 626 2,149 Gain on sale of assets - (28,015) Unrealized loss (gain) on investments (24,089) 27,681 Realized gain on investments (12,136) (13,883) (Increase) decrease in: Accounts receivable (36,863) (4,237) Pledges receivable (8,932) (15,043) Prepaid expenses 23 1,960 Increase (decrease) in: Accounts payable 7,571 1,022 Due to Pennsylvania Bar Institute - (1,892) Due to Pennsylvania Bar Association (1,534) 10,597 Due to PA IOLTA 51,056 - Deferred revenue 75,373 28,518 Security deposits - (843) Net cash and cash equivalents provided by operating activities 101,323 18,428 Cash Flows From Investing Activities: Purchases of investments (169,798) (146,312) Proceeds from sale of investments 164,886 59,975 Proceeds from sale of property - 68,311 Net cash and cash equivalents used in investing activities (4,912) (18,026) Net Increase in Cash and Cash Equivalents 96, Cash and Cash Equivalents: Beginning of year 285, ,566 End of year $ 382,379 $ 285,968 The accompanying notes are an integral part of these financial statements. 4

9 1. ORGANIZATION Reporting Entity The Pennsylvania Bar Foundation (Foundation) is a nonprofit foundation established on May 15, 1984 to expand the public service role of the organized Pennsylvania Bar Association by financing programs designed to improve the quality of legal services, the public s understanding of the law, and the administration of justice in Pennsylvania. In working toward these goals, the Foundation directs its support to three basic areas: public education programs, improving access to justice initiatives, and programs that improve the administration of justice. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Foundation prepares its financial statements on the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when incurred. Basis of Presentation Net assets, revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Foundation and changes therein are classified and reported as follows: Unrestricted Net assets that are not subject to donor-imposed stipulations. Temporarily restricted Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Foundation and/or the passage of time. Permanently restricted Net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. 5

10 The following funds of the Foundation are reported in the three classes of net assets: Unrestricted Funds Operating Fund The operating fund represents resources over which the Board of Directors has discretionary control and is used to carry out the operations of the Foundation in accordance with bylaws. Fixed Assets Fund The fixed assets fund is designed by the Board of Directors to account for funds to be utilized for land, building, and improvement acquisitions and funds expended for fixed assets. Keystone Funds These funds contain income earned from the Permanent Keystone Fund to be spent for the benefit of the Foundation s charitable purposes. Temporarily Restricted Funds Temporarily restricted funds consist of contributions and/or grants that are restricted by the donor as to the use of the funds, or are restricted by availability. Temporarily restricted funds at December 31, 2016 and 2015 consist of the following: Goffman Award Fund This fund is restricted for awards for outstanding pro bono services. Pro Bono Fund This fund contains donations that have been specifically designated to support the efforts of the Foundation in the area of pro bono services and programs. Member s Pledge Fund This fund consists of amounts that have been pledged by members or firms over the course of a designated term and consist of Keystone Contributions, Commonwealth Contributions, Life Fellow Contributions, and Fellow Contributions. Dean Edward Sell Memorial Fund This donor-advised fund was established in 2005 for the purpose of endowing a speaker for the Annual Business Law Institute sponsored by the Pennsylvania Bar Institute. MCLE Scholarship Funds This fund is specifically designated to help lawyers of limited means meet their annual MCLE requirements by providing tuition assistance. 6

11 Wayne County Bar Association Fund - This donor-advised fund was established in 2013 to help the Wayne County Bar Association pursue charitable projects and programs by making distributions to qualified tax-exempt organizations. Named Scholarship Funds (McDonald Scholarship Fund and Hoffmeyer- Overmiller Scholarship Fund) - These various funds are established by any person, law firm, county bar association or foundation, committee, or section of the Pennsylvania Bar Association, or law-related entity with its primary place of business in the State of Pennsylvania to provide scholarships to law students based on donor-advised criteria. Patti Rose Scheimer Bednarik Memorial Scholarship Fund This donor-advised fund was established in 2014 to support the award of an annual scholarship to a law school student or grant to a lawyer, in practice for less than three years, who demonstrates an outstanding commitment to animal law/animal welfare. PBA Civil and Equal Rights Committee Fund This donor-advised fund was established in 2014 to support an annual essay and video documentary contest for Pennsylvania college students, designed to demonstrate the importance that state and local policies have on the protection of civil and equal rights. Pennsylvania Service-Learning Alliance Fund This fund was established in 2014 to promote, enhance, and sustain service-learning practice as a key strategy in preparing students to be global citizens ready to meet the challenges of the 21 st century. Permanently Restricted Funds Endowment Funds Endowment funds represent the principal amount of gifts accepted with the donor stipulation that the principal be maintained intact in perpetuity and that only income from the investments be used. Revenue Recognition Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction is met in the same period. Restrictions not met in the same period are reported as temporarily restricted net assets or permanently restricted net assets, depending on the nature of the restriction. 7

12 When a restriction expires, that is when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statements of activities. Investment income, including realized and unrealized gains restricted by donors, is reported as an increase in unrestricted net assets if the restrictions are met (either a stipulated time period or a purpose restriction is accomplished) in the reporting period in which the income and gains are recognized. Management s Use of 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, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statements of cash flows, the Foundation considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. Fair Value Measurements Investments are valued at their fair values in the statements of financial position with gains and losses included in the statements of activities. Valuation techniques and inputs used to develop fair value measurements are based on a fair value hierarchy. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows: Level 1 Quoted prices are available in active markets for identical assets or liabilities as of the report date. A quoted price for an identical asset or liability in an active market provides the most reliable fair value measurement because it is directly observable to the market. 8

13 Level 2 Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable, as of the report date. The nature of these securities include investments for which quoted prices are available but traded less frequently and investments that are fair valued using other securities, the parameters of which can be directly observed. Level 3 Securities that have little to no pricing observability as of the report date. These securities are measured using management s best estimate of fair value, where the inputs into the determination of fair value are not observable and require significant management judgment or estimation. Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes observable requires significant judgment by the Foundation. The Foundation considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Foundation s perceived risk of that instrument. Valuation of Investments Investments whose values are based on quoted market prices in active markets and are, therefore, classified within level 1, include fixed income mutual funds, fixed income exchange traded funds, equity mutual funds, and equity exchange traded funds. The Foundation does not adjust the quoted price for such instruments, even in situations where the Foundation holds a large position and a sale could reasonably impact the quoted price. The Foundation does not have Level 2 or 3 investments. LRAP Loans Receivable, Deferred Revenue, and Due to PA IOLTA The Foundation receives funding from the Pennsylvania Interest on Lawyers Trust Account Board (PA IOLTA) under the Loan Repayment Assistance Program (LRAP) to provide forgivable loans to qualified attorneys. Loans are forgiven at year-end and 9

14 written off as program expense when the recipients have met the required criteria. The amount included in LRAP loans receivable as of December 31, 2016 represents payments made to recipients in December 2016 for the first quarter of 2017 and deferred revenue as of December 31, 2016 represents the funding received from PA IOLTA, but not yet earned. The amount due to PA IOLTA as of December 31, 2016 represents the unspent portion of the three-year LRAP funding grant period. Pledges Receivable Pledges receivable that are expected to be collected within one year are recorded at net realizable value. Pledges receivable that are expected to be collected in future years are recorded at the present value of their net realizable value. The discount on these amounts was computed using a risk-free rate adjusted for a risk premium (total rate of 22% for 2016 and 2015), which represents the rate associated with probabilityweighted cash flows. Amortization of the discount is included in contribution revenue. Fixed Assets It is the policy of the Foundation to record purchased fixed assets at cost and donated assets at their fair value at the date of donation. Depreciation is provided on the straight-line method over the estimated useful lives of the assets. New acquisitions of fixed assets having a low acquisition cost, or which are not expected to last for more than a year, are expended in the year of acquisition. Repairs and maintenance charges are capitalized and depreciated when they materially extend the useful life of the related asset. Taxation The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Service Code and from Commonwealth of Pennsylvania corporate taxes. In addition, the Foundation qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization that is not a private foundation under Section 509(a)(2). The Foundation annually files a Form

15 Subsequent Events Subsequent events have been evaluated through the Independent Auditor's Report date, which is the date the financial statements were available to be issued. Pending Standards Update ASU , Revenue from Contracts with Customers, is effective for the Foundation s financial statements for the year ending December 31, 2019 (as amended by ASU ). This amendment provides guidance for revenue recognition related to contracts with transfer of promised goods or services to customers and related disclosures. ASU , Leases (Topic 842), effective for the Foundation s financial statements for the year ending December 31, This amendment will require lessees to recognize assets and liabilities on the statement of financial position for the rights and obligations created by all leases with terms of more than twelve months. Disclosures also will be required by lessees to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU , Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, is effective for the Foundation s financial statements for the year ending June 30, This amendment aims to improve how a nonprofit organization classifies its net assets and provides information in its financial statements and notes about its financial performance, cash flow, and liquidity. The ASU changes the net asset classification, requires presentation of expenses both by nature and function, requires investment return reported net of investment expenses, requires placed-in-service approach for gifts of/for long-lived assets and provides enhanced disclosures for: governing body restrictions; composition of net assets with donor restrictions; qualitative and quantitative information on liquidity; methods to allocate costs among program and support functions; and underwater donor-restricted endowment. Management has not yet determined the impact of these amendments on the Foundation s financial statements. 11

16 3. CASH AND INVESTMENTS The cash and cash equivalents balance as of December 31, 2016 and 2015 consisted of the following: Operating $ 68,987 $ 71,262 Memorial 6,905 5,309 Pennsylvania Futures Commission 32,010 32,010 Board Discretionary Fund - Belden 3,900 3,900 Child Advocate Groups 2,475 2,475 PA IOLTA LRAP 197, ,723 Million Mile Raffle 7,845 6,200 Art Birdsall Impact Grant Fund 8,012 8,012 Keystone Funds - Board-Designated 35,062 29,890 Temporarily restricted: Goffman Fund Pro Bono 4,167 1,265 McDonald Scholarship Fund 2,500 2,500 Hoffmeyer-Overmiller Scholarship Fund 5,259 5,259 Patti Rose Scheimer Bednarik Memorial Scholarship Fund 2,555 3,982 PBA Civil and Equal Rights Committee Fund 2,651 2,678 PA Service Learning Alliance Fund - 3,202 Wayne County Bar Association Fund MCLE Scholarships 1,669 1,669 Dean Edward Sell Memorial Fund Total Cash and Cash Equivalents $ 382,379 $ 285,968 12

17 The investment balance as of December 31, 2016 and 2015 consisted of the following: Operating $ 443,071 $ 413,332 Keystone Funds - Board-Designated 27,603 22,465 Permanently restricted: Goffman Fund 25,000 25,000 Keystone Funds 136, ,801 Temporarily restricted: Dean Edward Sell Memorial Fund 22,629 24,131 Patti Rose Scheimer Bednarik Memorial Scholarship Fund 25,295 24,148 Wayne County Bar Association Fund 10,476 9,961 Goffman Fund 10,497 8,878 Total investments $ 700,853 $ 659,716 13

18 The fair value of investments as of December 31, 2016 and 2015 consisted of the following: Equity exchange traded funds: Emerging markets $ 8,337 $ 7,621 Large cap 98,577 74,005 Mid cap 8,598 34,133 Small cap 28,604 22,903 Equity mutual funds: Emerging markets 19,467 18,261 International 59,939 42,760 Large cap 132, ,867 Mid cap 52,776 49,832 Small cap 26,256 42,531 Fixed exchange traded funds - large cap - 14,646 Fixed income mutual funds: World bond 36,118 34,820 Short term bond 115, ,507 Intermediate term bond 73,265 89,830 Intermediate government bond 40,842 - Total investments $ 700,853 $ 659,716 Fair Value of Financial Instruments As of December 31, 2016 and 2015, all of the Foundation s investments were classified as Level 1 investments. 14

19 4. PLEDGES RECEIVABLE - NET Pledges receivable as of December 31, 2016 and 2015 consisted of the following: Pledges receivable before discount $ 98,895 $ 87,508 Less: Discount 21,248 18,793 Pledges Receivable, Net $ 77,647 $ 68,715 Amounts due in: Less than one year $ 25,428 $ 22,955 One to five years 61,288 56,373 More than five years 12,179 8,180 Total $ 98,895 $ 87, FIXED ASSETS Fixed assets as of December 31, 2016 and 2015 consisted of the following: Useful Lives Land $ 120,000 $ 120,000 Building and improvements 39 Years 24,422 24, , ,422 Less: accumulated depreciation (15,532) (14,906) Fixed Assets, Net $ 128,890 $ 129,516 Depreciation expense was $626 and $2,149 for the years ended December 31, 2016 and 2015, respectively. 15

20 6. BOARD-DESIGNATED NET ASSETS Board-designated net assets as of December 31, 2016 and 2015 consisted of: Keystone Funds $ 62,665 $ 52,355 Fixed Assets Fund 128, ,516 Total Board-Designated Net Assets $ 191,555 $ 181, TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets as of December 31, 2016 and 2015 consisted of: Purpose-restricted: Goffman Award Fund $ 10,951 $ 9,193 Pro Bono Fund 5,667 1,251 Dean Edward Sell Memorial Fund 22,919 24,356 Wayne County Bar Association Fund 10,610 10,053 Hoffmeyer-Overmiller Scholarship 5,259 5,259 Patti Rose Scheimer Bednarik Memorial Scholarship Fund 27,851 28,130 PBA Civil and Equal Rights Committee Fund 2,651 2,678 Pennsylvania Service Learning Alliance Fund - 2,859 MCLE Scholarship Funds 1,669 1,669 Total purpose-restricted net assets 87,577 85,448 Time-restricted: Member's Pledge Fund 98,895 87,508 Discount (21,248) (18,793) Total time-restricted net assets 77,647 68,715 Total Temporarily Restricted Net Assets $ 165,224 $ 154,163 16

21 8. PERMANENTLY RESTRICTED NET ASSETS Interpretation of Relevant Law The Foundation s Keystone Endowment Funds and the Louis J. Goffman Endowment Fund are classified as permanently restricted net assets. These funds are invested in perpetuity for which only income is expendable to support the donor-stipulated program. Investment Management Policy Gifts to Keystone Endowment Funds and the Louis J. Goffman Endowment Fund are generally given with the donors expectations that the funds will stay intact and will grow from earnings, which can then be used for current or long-term needs of the Foundation. Therefore, the funds should be invested in accordance with these general policies: 1. Preservation to Capital Both with respect to the overall Fund and to the assets assigned to the investment manager the Foundation s Board of Directors should make conscious efforts to preserve capital, understanding that losses may occur in individual securities. 2. Risk Aversion Understanding that risk is present in all types of securities and investment styles, the Foundation s Board of Directors recognizes that some risk is necessary to produce long-term investment results sufficient to meet the Foundation s objectives. However, the main goal is generation of growth of principal within prudent guidelines for preservation of asset value. Credit quality, potential for long-term growth and generation of future income are primary consideration in asset selection. 3. Adherence to Investment Discipline The investment manager is expected to only invest in approved investments designated in the Foundation s investment policy. All assets shall be of investment grade. Investment Objectives Specifically, the primary objective in the investment management of fund assets shall be: 1. To preserve purchasing power after spending 17

22 2. To achieve returns that are no less than the rate of inflation plus spending over the investment horizon in order to preserve purchasing power of fund assets 3. To control risk in the investment of fund assets Handling of Income from Endowment Fund Investments All income earned on the Keystone Funds, whether interest income, dividend income, or unrealized and realized gains, will be available for charitable purposes of the Foundation. There are no restrictions of the use of the income other than it must be used for benefit of the Foundation s charitable purposes. All income earned on the Goffman Funds, whether interest income, dividend income, or unrealized and realized gains, will be used to fund the annual Louis J. Goffman cash award. The income is temporarily restricted and must be used toward the annual Louis J. Goffman award, which seeks to recognize and honor an individual and an organization whose commitments to pro bono have enhanced the delivery of legal services to Pennsylvania s poor or disadvantaged, making a critical difference in the lives of those in need of legal representation. Changes in endowment net assets for the year ended December 31, 2016 are as follows: Goffman Keystone Funds Funds Total Endowment Net Assets, Beginning of Year $ 25,000 $ 131,801 $ 156,801 Contributions - 4,481 4,481 Release from restrictions Endowment Net Assets, End of Year $ 25,000 $ 136,282 $ 161,282 Changes in endowment net assets for the year ended December 31, 2015 are as follows: Goffman Keystone Funds Funds Total Endowment Net Assets, Beginning of Year $ 25,000 $ 130,188 $ 155,188 Contributions - 1,613 1,613 Release from restrictions Endowment Net Assets, End of Year $ 25,000 $ 131,801 $ 156,801 18

23 9. RELATED PARTY TRANSACTIONS The Foundation and the Pennsylvania Bar Association (Association) have certain common board members. Pursuant to the Foundation s By-Laws, the president of the Association and the chair of the Association s Young Lawyer Division are designated members of the Board of Directors. Further, the Association president appoints two additional members to the Foundation s Board. The remaining voting members of the Board of Directors include the president of the Pennsylvania Bar Institute or his/her designee, a director appointed by the Foundation president who need not be a lawyer, the president, vice president, treasurer, secretary, and assistant secretary of the Foundation, the immediate past president of the Foundation, and one director from each of the twelve zones elected by the Foundation members. All living past presidents are non-voting members. The Foundation and the Association jointly owned rental property in Harrisburg with leased offices. The organizations renting the property paid the Association who then distributed the Foundation s share of the rent. Rental income under these leases was $5,985 for the year ended December 31, The property was sold in August of The Foundation also leases parking spaces to the Association on a month-tomonth basis for $1,475 per month. Total parking paid was $17,695 for the years ended December 31, 2016 and The Directors of the Foundation approved reimbursement to the Association in the amount of $37,800 and $36,000 for administrative fees for the years ended December 31, 2016 and 2015, respectively. The amount of the administrative fee paid by the Foundation is subject to change on an annual basis. The Foundation also reimburses the Association for various costs incurred and paid on behalf of the Foundation. For the years ended December 31, 2016 and 2015, these reimbursements were $61,020 and $73,673, respectively. Reimbursements due to the Association at December 31, 2016 and 2015 for such costs were $22,613 and $24,147, respectively. The Association also reimburses the Foundation for various costs incurred and paid on behalf of the Association. There were no costs incurred and paid on behalf of the Association for the years ended December 31, 2016 and The Association also collects contributions on behalf of the Foundation. The amount owed to the Foundation from the Association for the reimbursements due and collected contributions were $22,649 and $22,866 for the years ended December 31, 2016 and 2015, respectively. The Foundation awarded grants to the Association that were budgeted and awarded in the Foundation s calendar year ended December 31, 2016 and These grants totaled $32,500 for the years ended December 31, 2016 and The Association s 19

24 fiscal year ends December 31, 2016 and 2015, and the balance of these grants has not yet been disbursed. 10. PENNSYLVANIA FUTURES COMMISSION The Pennsylvania Futures Commission (Commission) is a separate and unrelated non-profit organization for which the Foundation performs administrative services. These services involve the custody of one of the Commission s accounts and disbursements there from. These funds are property of the Commission and, as such, are not available to pay expenses of the Foundation. The balance held in this account appears as an escrow liability on the Foundation s statements of financial position. 11. CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Foundation to concentration of credit risk consist principally of cash and cash equivalents held with financial institutions. Accounts at financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per institution for the years ended December 31, 2016 and The Foundation s total uninsured cash balance was $223,659 and $38,481 at December 31, 2016 and 2015, respectively. The Foundation also maintains cash balances in money market accounts which are not insured by the FDIC. The uninsured amount totaled $8,956 and $6,142 as of December 31, 2016 and 2015, respectively. 20

25 Supplementary Information

26 SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2016 Program Management Fund- Services and General raising Total Accounting $ - $ 4,600 $ - $ 4,600 Administrative fees - 37,800-37,800 Depreciation Event expense ,624 41,624 Grant projects 38, ,092 Insurance - 1,002-1,002 Maintenance - 3,061-3,061 Meetings - 2,478-2,478 Miscellaneous expense - 15,821-15,821 Office supplies Postage - 1,268-1,268 Promotion - - 2,781 2,781 Real estate taxes - 5,195-5,195 Scholarships and awards 338, ,483 Telephone - 1,534-1,534 Water, sewer, and refuse $ 376,575 $ 74,846 $ 44,405 $ 495,826 21

27 SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2015 Program Management Fund- Services and General raising Total Accounting $ - $ 4,500 $ - $ 4,500 Administrative fees - 36,000-36,000 Depreciation - 2,149-2,149 Event expense - - 7,541 7,541 Grant projects 33, ,891 Insurance - 2,122-2,122 Maintenance - 4,448-4,448 Meetings - 2,667-2,667 Miscellaneous expense - 46,732-46,732 Office supplies Postage - 1,241-1,241 Promotion - - 2,596 2,596 Real estate taxes - 8,071-8,071 Scholarships and awards 321, ,962 Supplies Telephone - 1,383-1,383 Water, sewer, refuse, and electric - 4,407-4,407 $ 355,853 $ 114,301 $ 10,137 $ 480,291 22