Foundation for Muskegon Community College

Transcription

1 Foundation for Muskegon Community College FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR S REPORT Year ended

2 C O N T E N T S FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT... 3 STATEMENT OF FINANCIAL POSITION... 4 STATEMENT OF ACTIVITIES... 5 STATEMENT OF CASH FLOWS... 6 NOTES TO FINANCIAL STATEMENTS... 7

3 BRICKLEY DELONG CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT November 22, 2011 Foundation Board Foundation for Muskegon Community College Muskegon, Michigan We have audited the accompanying statement of financial position of the Foundation for Muskegon Community College (a Michigan nonprofit corporation) as of and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the Foundation for Muskegon Community College's management. Our responsibility is to express an opinion on these financial statements based on our audit. 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 the Foundation for Muskegon Community College as of, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America Front Ave., NW Suite Morris Ave., Suite 500, P.O. Box S. State St., P.O. Box 331 Grand Rapids, MI Muskegon, MI Hart, MI PHONE (616) PHONE (231) PHONE (231) FAX (616) FAX (231) FAX (231)

4 STATEMENT OF FINANCIAL POSITION ASSETS CURRENT ASSETS Cash $ 109,632 BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS 241,066 $ 350,698 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Due to Muskegon Community College $ 85,493 NET ASSETS Unrestricted 253,227 Temporarily restricted 11,978 $ 265, ,698 The accompanying notes are an integral part of this statement. 4

5 STATEMENT OF ACTIVITIES Year ended Temporarily Unrestricted Restricted Total Revenues and support Contributions Cash $ 16,453 $ 110,445 $ 126,898 In-kind - 132, ,565 Income from beneficial interest in assets held by others 42,724-42,724 Net assets released from restrictions Satisfaction of purpose restrictions 231,032 (231,032) - Total revenues and support 290,209 11, ,187 Expenses Distributions to Muskegon Community College 163, ,489 Management and general 34,424-34,424 Fundraising 37,411-37,411 Total expenses 235, ,324 Change in net assets 54,885 11,978 66,863 Net assets at beginning of year 198, ,342 Net assets at end of year $ 253,227 $ 11,978 $ 265,205 The accompanying notes are an integral part of this statement. 5

6 STATEMENT OF CASH FLOWS Year ended Cash flows provided by operating activities Change in net assets $ 66,863 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Income from beneficial interest in assets held by others (42,724) 24,139 Increase in operating liabilities Increase in due to Muskegon Community College 85,493 NET INCREASE IN CASH 109,632 Cash at beginning of year - Cash at end of year $ 109,632 The accompanying notes are an integral part of this statement. 6

7 NOTES TO FINANCIAL STATEMENTS NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Foundation for Muskegon Community College (Foundation) was established in 1981 for the following purposes: a. To provide financial support to and for the benefit of Muskegon Community College; b. To carry out such of the purposes of Muskegon Community College as are not prohibited by statute or regulation; c. To provide services and facilities for the use of the individual members of the charitable class that Muskegon Community College benefits; d. To pursue independent activities and programs that support or benefit Muskegon Community College; e. To solicit, receive and administer funds exclusively to support Muskegon Community College and its educational programs; f. To actively engage in donor stewardship and facilitate fostering long-term relationships between community members and the College; and g. To meet fundraising goals defined by the President and the Cabinet, as permitted for an organization described in Section 509(a)(3) of the Internal Revenue Code. The Muskegon Community College (College) is the primary beneficiary of any donations to, or funds raised by, the Foundation. Basis of Presentation The Foundation is required to report information regarding its financial position and activities according to three classes of assets: unrestricted, temporarily restricted, and permanently restricted net assets. As of June 30, 2011, all of the net assets of the Foundation were unrestricted or temporarily restricted. Unrestricted net assets. Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets. 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. Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donorimposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets. These financial statements are discretely presented in the financial statements of Muskegon Community College. Revenue Recognition The Foundation records appropriations, grants, and earned revenues on an accrual basis. The Foundation records as revenue in the period received the following types of contributions, when they are received unconditionally, at their fair value: cash, promises to give (pledges), certain contributed services and gifts of long-lived and other assets. Conditional contributions are recognized as revenue when the conditions on which they depend have been substantially met. Substantially all of the Foundation s appropriations and grants are considered to be contributions for purposes of applying revenue recognition policies. Contributions are recorded net of estimated uncollectible amounts. 7

8 NOTES TO FINANCIAL STATEMENTS NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Volunteers A number of volunteers, including the members of the Board of Directors, have made significant contributions of time to the Organization s policy-making, program, and support functions. The value of this contributed time does not meet the criteria for recognition of contributed services and, accordingly, is not reflected in the accompanying financial statements. Other Donated Services Donated services are recognized in the financial statements at their fair market value if the following criteria are met: The services require specialized skills and the services are provided by individuals possessing those skills. The services would typically need to be purchased if not donated. Donated services provided to the Foundation include time from consultants for the Achieving the Dream program and had an estimated value of approximately $50,000 for the year ended. Non-monetary Transactions Non-monetary transactions are recorded on the basis of the market value of services provided or assets transferred. Tax Status The Foundation is exempt from federal income tax under Internal Revenue Code Section 501(c)(3). In preparation of tax returns, tax positions are taken based on interpretation of federal, state and local income tax laws. Management periodically reviews and evaluates the status of uncertain tax positions and makes estimates of amounts, including interest and penalties, ultimately due or owed. No amounts have been identified, or recorded, as uncertain tax positions. Federal, state and local tax returns generally remain open for examination by the various taxing authorities for a period of three or four years. 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. Date of Management's Review Subsequent events have been evaluated through November 22, 2011, which is the date the financial statements were available to be issued. NOTE B FAIR VALUE MEASUREMENTS Financial standards establish a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below: 8

9 NOTES TO FINANCIAL STATEMENTS NOTE B FAIR VALUE MEASUREMENTS Continued Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Foundation has the ability to access. Level 2 Inputs to the valuation methodology include - Quoted prices for similar assets or liabilities in active markets; - Quoted prices for identical or similar assets or liabilities in inactive markets; - Inputs other than quoted prices that are observable for the asset or liability; - Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset s or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. Beneficial interest in assets held by others: The fair value of the Foundation s interest in the assets held at the Community Foundation for Muskegon County (Community Foundation) is based on a percentage interest of those asset s fair value as represented by the Community Foundation s management. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Foundation believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table sets forth by level, within the fair value hierarchy, the Foundation s assets at fair value as of : Level 1 Level 2 Level 3 Total Beneficial interest in assets held by others $ - $ 214,549 $ 26,517 $ 241,066 9

10 NOTES TO FINANCIAL STATEMENTS NOTE B FAIR VALUE MEASUREMENTS Continued Changes in Fair Value Levels The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. We evaluated the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits. For the year ended, there were no significant transfers in or out of levels 1, 2 or 3. Level 3 Gains and Losses The following table sets forth a summary of changes in the fair value of the Foundation's level 3 assets for the year ended : Balance, beginning of year $ 21,818 Realized and unrealized gains 4,253 Purchases, sales, issuances and settlements (net) 446 Balance, end of year $ 26,517 NOTE C BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS The Funds The Foundation has multiple funds with the Community Foundation for Muskegon County (Community Foundation). The Foundation for Muskegon Community College Endowment Fund (General Endowment Fund) was established in 1996 to provide financial support to Muskegon Community College in pursuing excellence in education. The fund agreement allows the use of the Fund s income only in accordance with the Community Foundation s spending policy. The Foundation for Muskegon Community College Special Needs Fund (Special Needs Fund) was established in 1996 to provide financial support to Muskegon Community College in pursuing excellence in education. The fund agreement allows the use of both the Fund s principal and income in accordance with the Community Foundation s spending policy. The Foundation also has approximately twenty separate Scholarship Funds (Scholarship Funds) established to provide financial support to Muskegon Community College Students. The fund agreements generally allow the use of the Funds interest only in accordance with the Community Foundation s spending policy. The Community Foundation invests the contributions to the funds in various types of marketable equity and debt securities, U.S. Treasuries, commercial paper, and certificates of deposit. The majority of investments are uninsured and uncollateralized. 10

11 NOTES TO FINANCIAL STATEMENTS NOTE C BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS Continued Reporting of the Assets of the Funds The investments held at the Community Foundation, which were contributed by the Foundation along with the earnings on these investments, are reported at fair value as unrestricted assets of the Foundation. The contributions to this fund made by third party donors directly to the Community Foundation have been excluded from the net assets of the Foundation. Summary of Foundation Funds A summary of revenues, expenses, and changes in the net assets at fair value of the funds, inclusive of the unrestricted and permanently restricted assets in the financial statements for the year ended follows: Special General Needs Endowment Scholarship Fund Fund Funds Totals Revenues Contributions $ 400 $ 2,265 $ 18,918 $ 21,583 Organization contributions Dividends and interest 5,835 7,433 16,835 30,103 Realized and unrealized gains (losses) on investments 44,278 56, , ,849 50,513 66, , ,535 Expenses Disbursements ,959 26,959 Investment fees 1,267 1,346 7,209 9,822 1,267 1,346 34,168 36,781 Change in net assets 49,246 64, , ,754 Net assets at beginning of year 226, , ,162 1,177,825 Net assets at end of year $ 275,365 $ 352,272 $ 793,942 $ 1,421,579 The Board of Trustees of the Foundation has the power to modify any restriction or condition on the distribution of funds for any specified charitable purpose or to a specified organization if, in the sole judgment of the Board, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community served. The authority to modify restrictions is sometimes referred to as variance power and is a legal standard imposed on all community foundations. 11

12 NOTES TO FINANCIAL STATEMENTS NOTE D TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes at : Planetarium $ 4,557 Student services 206 Scholarships 6,715 Community events 500 $ 11,978 NOTE E TRANSACTIONS WITH MUKEGON COMMUNITY COLLEGE Distributions to the College by the Foundation during the year are summarized as follows: Academics $ 59,313 Planetarium 84,365 Student services 7,975 Alumni association 5,025 Scholarships 3,355 Community events 3,453 Other 3 $ 163,489 The College also provided $70,101 in in-kind contributions to the Foundation by providing personnel support, supplies and equipment to the Foundation. 12