NATIONAL MULTIPLE SCLEROSIS SOCIETY GREATER DELAWARE VALLEY CHAPTER

Transcription

1 FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2014 AND 2013

2 CONTENTS INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS Statements of Financial Position 2 Statements of Activities 3 Statements of Functional Expenses 5 Statements of Cash Flows 7 Notes to Financial Statements 8

3 INDEPENDENT AUDITOR'S REPORT Board of Trustees National Multiple Sclerosis Society Greater Delaware Valley Chapter Philadelphia, Pennsylvania We have audited the accompanying financial statements of National Multiple Sclerosis Society, Greater Delaware Valley Chapter (a nonprofit organization) which comprise the statements of financial position as of September 30, 2014 and 2013, and the related statements of activities, functional expenses 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 audit 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of National Multiple Sclerosis Society, Greater Delaware Valley Chapter as of, 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. Philadelphia, Pennsylvania December 18, 2014

4 STATEMENTS OF FINANCIAL POSITION ASSETS CURRENT ASSETS Cash $ 2,238,453 $ 2,550,003 Contributions and other receivables 594, ,368 Contributions receivable from Home Office 79,941 18,608 Investments 3,691,178 3,630,339 Prepaid expenses and other 26,161 8,406 Total current assets 6,630,215 6,960,724 NONCURRENT ASSETS Deposits 26,401 26,401 Investments 401, ,740 Property and equipment 142, ,108 Due from Home Office - charitable gift annuities 111, ,193 Beneficial interest in perpetual trust 281, ,916 Total noncurrent assets 964, ,358 Total assets $ 7,594,595 $ 7,934,082 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Due to Home Office Remittance due to Home Office $ - $ 225,329 Other payables due to Home Office 38,592 31,954 Accounts payable and accrued expenses 609, ,726 Deferred revenue 308,922 30,877 Total current liabilities 956, ,886 NONCURRENT LIABILITIES Deferred rent 172, ,320 Total liabilities 1,128,974 1,061,206 NET ASSETS Unrestricted 5,621,623 6,085,544 Temporarily restricted 187, ,676 Permanently restricted 656, ,656 Total net assets 6,465,621 6,872,876 Total liabilities and net assets $ 7,594,595 $ 7,934,082 See accompanying notes -2-

5 STATEMENT OF ACTIVITIES Year ended September 30, 2014 with comparative totals for 2013 Temporarily Permanently Totals Unrestricted Restricted Restricted Public support Received directly Special events (includes inkind donations of $ 9,984,503 $ - $ - $ 9,984,503 $ 10,200,535 $636,735 in 2014 and $296,708 in 2013) Less benefit to donor costs (1,327,003) - - (1,327,003) (1,446,224) 8,657, ,657,500 8,754,311 Contributions 1,100,154 36,945-1,137, ,808 Legacies 68,581-4,064 72, ,494 Total received directly and total public support 9,826,235 36,945 4,064 9,867,244 9,803,613 Other revenue Investment income 79,543 26, , ,286 Service program fees 3, ,950 - Miscellaneous income 1, ,610 - Total other revenue 85,103 26, , ,286 Net assets released from restrictions 11,108 (11,108) Total revenue 9,922,446 52,602 4,064 9,979,112 9,950,899 Expenses Program Services Research 3,265, ,265,769 2,745,385 Society activities 1,640, ,640,729 1,684,632 Client programs 1,372, ,372,121 1,387,678 Community programs 915, , ,236 Professional education and training 59, ,450 69,284 Public education 977, , ,647 Total program services 8,231, ,231,681 7,720,862 Supporting services Fundraising 1,687, ,687,608 1,384,159 Management and general 467, , ,574 Total supporting services 2,154, ,154,686 1,895,733 Total expenses 10,386, ,386,367 9,616,595 CHANGE IN NET ASSETS (463,921) 52,602 4,064 (407,255) 334,304 NET ASSETS Beginning of year 6,085, , ,656 6,872,876 6,538,572 End of year $ 5,621,623 $ 187,278 $ 656,720 $ 6,465,621 $ 6,872,876 See accompanying notes -3-

6 STATEMENT OF ACTIVITIES Year ended September 30, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total Public support Received directly Special events (includes inkind donations of $296,708) $ 10,200,535 $ - $ - $ 10,200,535 Less benefit to donor costs (1,446,224) - - (1,446,224) 8,754, ,754,311 Contributions 880,268 8, ,808 Legacies 146,833-13, ,494 Total received directly and total public support 9,781,412 8,540 13,661 9,803,613 Other revenue Investment income (loss) 94,764 (144) 52, ,286 Total other revenue 94,764 (144) 52, ,286 Net assets released from restrictions 29,512 (29,512) - - Total revenue 9,905,688 (21,116) 66,327 9,950,899 Expenses Program Services Research 2,745, ,745,385 Society activities 1,684, ,684,632 Client programs 1,387, ,387,678 Community programs 982, ,236 Professional education and training 69, ,284 Public education 851, ,647 Total program services 7,720, ,720,862 Supporting services Fundraising 1,384, ,384,159 Management and general 511, ,574 Total supporting services 1,895, ,895,733 Total expenses 9,616, ,616,595 CHANGE IN NET ASSETS 289,093 (21,116) 66, ,304 NET ASSETS Beginning of year 5,796, , ,329 6,538,572 End of year $ 6,085,544 $ 134,676 $ 652,656 $ 6,872,876 See accompanying notes -4-

7 STATEMENT OF FUNCTIONAL EXPENSES Year ended September 30, 2014 with comparative totals for 2013 Program Services Supporting Services Total Professional Total Program and Benefit Society Client Community Education Public Program Management Supporting to Donor Totals Research Activities Programs Programs and Training Education Services Fundraising and General Services Costs Salaries $ - $ - $ 525,527 $ 391,053 $ 34,592 $ 528,047 $ 1,479,219 $ 514,531 $ 297,127 $ 2,290,877 $ - $ 2,290,877 $ 2,361,704 Employee benefits ,750 59,343 5,249 80, ,475 78,081 45, , , ,540 Payroll taxes ,516 32,381 2,864 43, ,486 42,605 24, , , ,155 Total salaries and related expenses , ,777 42, ,905 1,826, , ,822 2,828,219-2,828,219 2,886, Printing ,755 2, ,858 47,216 96,238 1, , , ,854 Postage and shipping ,216 7, ,404 40,124 94,043 5, , , ,124 Telephone - - 7,013 4, ,561 18,911 8,920 3,693 31,524-31,524 28,182 Supplies ,251 4, ,156 22,191 8,248 3,339 33,778 77, , ,923 Dues and memberships - - 5,299 3, ,795 13,960 4,973 2,698 21,631-21,631 16,047 Professional and other contract service fees ,095 19,845 6,298 51, , ,778 13, , , ,433 Donated public service announcements and advertising ,253 95, , , ,693 27,500 Travel ,810 14, ,827 42,790 28,370 5,903 77, , , ,015 Meetings ,105 2, ,526 66,594 15,230 2,068 83,892 25, , ,452 Occupancy ,000 55,808 4,937 75, , ,422 42, , , , ,413 Furniture and equipment ,203 9, ,261 34,347 11,947 6,899 53,193-53,193 61,006 Insurance ,351-9,351-9,351 9,351 Funding of other organizations that support individuals with MS , , , , ,990 Direct financial assistance , , , , ,661 Awards and prizes , , ,238 Miscellaneous expense - - 7,400 4, ,274 18, ,424 3, , , , ,839 Depreciation ,328 11,405 1,009 15,401 43,143 15,007 8,666 66,816-66,816 69,375 Restricted contributions to Society research investment (See Note 9 ) 1,000, ,000, ,000,000-1,000, ,309 Chapter support of Society research investment (See Note 9 ) 2,265, ,265, ,265,769-2,265,769 2,144,076 Total expenses before Chapter support of Society activities 3,265,769-1,372, ,989 59, ,623 6,590,952 1,687, ,078 8,745,638 1,327,003 10,072,641 9,378,187 Chapter support of Society activities (See Note 9 ) - 1,640, ,640, ,640,729-1,640,729 1,684,632 Total expenses $ 3,265,769 $ 1,640,729 $ 1,372,121 $ 915,989 $ 59,450 $ 977,623 $ 8,231,681 $ 1,687,608 $ 467,078 $ 10,386,367 $ 1,327,003 11,713,370 11,062,819 Less: Direct benefit to donor costs (1,327,003) (1,446,224) Total expenses as reported on the statement of activities $ 10,386,367 $ 9,616,595 See accompanying notes

8 STATEMENT OF FUNCTIONAL EXPENSES Year ended September 30, 2013 Program Services Supporting Services Total Professional Total Program and Benefit Society Client Community Education Public Program Management Supporting to Donor Research Activities Programs Programs and Training Education Services Fundraising and General Services Costs Total Salaries $ - $ - $ 544,137 $ 459,351 $ 38,496 $ 523,590 $ 1,565,574 $ 461,713 $ 334,417 $ 2,361,704 $ - $ 2,361,704 Employee benefits ,308 65,263 5,469 74, ,429 65,598 47, , ,540 Payroll taxes ,581 36,791 3,083 41, ,391 36,980 26, , ,155 Total salaries and related expenses , ,405 47, ,915 1,913, , ,714 2,886,399-2,886, Printing ,870 5, ,009 55, ,015 1, , ,854 Postage and shipping ,474 3, ,679 24,845 82,691 2, , ,124 Telephone - - 7,199 5, ,534 18,152 6,495 3,535 28,182-28,182 Supplies - - 9,325 5, ,113 21,959 6,371 3,901 32, , ,923 Dues and memberships - - 3,686 3, ,547 10,654 3,128 2,265 16,047-16,047 Professional and other contract service fees ,825 20,598 4,784 49, , ,357 14, , ,433 Donated public service announcements and advertising ,500-27,500-27,500 Travel ,040 10, ,691 33,563 30,359 3,599 67, , ,015 Meetings ,183 5,342 6,382 4,242 78,149 11,622 2,709 92,480 31, ,452 Occupancy ,832 64,860 5,436 73, ,059 65,193 47, , , ,413 Furniture and equipment ,056 11, ,525 40,441 11,926 8,639 61,006-61,006 Insurance ,351-9,351-9,351 Funding of other organizations that support individuals with MS , , , ,990 Direct financial assistance , , , ,661 Awards and prizes , ,238 Miscellaneous expense - - 5,327 3, ,302 13, ,297 2, , , ,839 Depreciation ,984 13,493 1,131 15,380 45,988 13,563 9,824 69,375-69,375 Restricted contributions to Society research investment (See Note 9 ) 601, , , ,309 Chapter support of Society research investment (See Note 9 ) 2,144, ,144, ,144,076-2,144,076 Total expenses before Chapter support of Society activities 2,745,385-1,387, ,236 69, ,647 6,036,230 1,384, ,574 7,931,963 1,446,224 9,378,187 Chapter support of Society activities (See Note 9 ) - 1,684, ,684, ,684,632-1,684,632 Total expenses $ 2,745,385 $ 1,684,632 $ 1,387,678 $ 982,236 $ 69,284 $ 851,647 $ 7,720,862 $ 1,384,159 $ 511,574 $ 9,616,595 $ 1,446,224 11,062,819 Less: Direct benefit to donor costs (1,446,224) Total expenses as reported on the statement of activities $ 9,616,595 See accompanying notes

9 STATEMENTS OF CASH FLOWS Years ended CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (407,255) $ 334,304 Adjustments to reconcile changes in net assets to net cash provided by (used for) operating activities Net realized and unrealized gain on investments (87,219) (126,731) Depreciation 66,816 69,375 Change in value of beneficial interest in perpetual trust (4,064) (13,661) (Increase) decrease in Contributions and other receivables 158,886 (51,601) Contributions receivable from Home Office (61,333) (18,608) Prepaid expenses and other (17,755) 41,049 Due from Home Office - charitable gift annuities (11,540) 2,568 Increase (decrease) in Due to Home Office (218,691) 210,631 Accounts payable and accrued expenses 6, ,867 Deferred revenue 278,045 (373,036) Deferred rent 1,685 7,838 Net cash provided by (used for) operating activities (295,696) 284,995 CASH FLOWS FROM INVESTING ACTIVITIES Net purchase of investments (385) (17,086) Acquisition of property and equipment (15,469) (12,025) Net cash used for investing activities (15,854) (29,111) Net increase (decrease) in cash (311,550) 255,884 CASH Beginning of year 2,550,003 2,294,119 End of year $ 2,238,453 $ 2,550,003 See accompanying notes -7-

10 NOTES TO FINANCIAL STATEMENTS (1) ORGANIZATION National Multiple Sclerosis Society, Greater Delaware Valley Chapter (the "Chapter") is a Pennsylvania nonprofit corporation organized for the purpose of stimulating, coordinating, and supporting the research program of the National Multiple Sclerosis Society (the "Society"); obtaining and disseminating in the Greater Delaware Valley information about the causes, prevention, alleviation, and cure of multiple sclerosis and other diseases of the nervous system; and providing direct assistance, counseling, therapy, equipment, transportation, and information to patients within the Greater Delaware Valley. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables and other liabilities. Financial Statement Presentation The Chapter reports information regarding its financial position and activities according to three classes of net assets as follows: Unrestricted net assets Net assets that are not subject to donor-imposed restrictions and, therefore, are fully available at the discretion of management and the Board of Trustees for the Chapter to utilize in any of its program or supporting services. Temporarily restricted net assets Net assets that are subject to donor-imposed restrictions that will be satisfied by actions of the Chapter and/or the passage of time. When a restriction is satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. Permanently restricted net assets Net assets that are subject to donor-imposed restrictions that such assets be maintained in perpetuity but permit the Chapter to expend all or a portion of the income derived from the donated assets. Accounting Estimates In preparing financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"), management makes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Fair Value Measurements of Assets and Liabilities GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Chapter. Unobservable inputs reflect the Chapter's assumptions about the inputs market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: -8-

11 NOTES TO FINANCIAL STATEMENTS Level 1 Valuations based on quoted prices in active markets for identical assets or liabilities that the Chapter has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these assets and liabilities does not require a significant degree of judgment. Level 2 Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 Valuations based on inputs that are unobservable, that is, inputs that reflect the Chapter's own assumptions. 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 Chapter 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. Cash and Cash Equivalents The Chapter considers highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are reported at fair value with gains and losses included in the statements of activities. Donated securities are recorded as contributions at their fair value at date of receipt. Dividend and interest income is recorded as earned. The Chapter invests in a professionally-managed portfolio that contains various types of securities. Such investments are exposed to market and credit risks. Due to the level of risk associated with such investments, and the level of 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. Property and Equipment Property and equipment are recorded at cost. Donated property and equipment are recorded as contributions at fair value as of the date of receipt. Depreciation is computed on the straight-line basis over estimated useful lives of the assets. The Chapter capitalizes all property and equipment with a cost in excess of $500. Beneficial Interest in Perpetual Trust The beneficial interest in perpetual trust is reported at fair market value and is equal to the Chapter's share of the assets in the trust. Special Event Revenue and Expenses Special event revenue and expenses are recognized during the period in which the related event occurs. Accordingly, revenue received in advance for special events that are held subsequent to year-end is deferred and expenses paid in advance for special events that are held subsequent to year end are included in prepaid expenses. During 2014 and 2013, the Chapter received approximately 76% and 71% of its total public support and revenue in connection with two special events. -9-

12 NOTES TO FINANCIAL STATEMENTS Contributions Contributions received are recorded as unrestricted, temporarily restricted or permanently restricted net assets depending on the absence or existence and nature of any donor restrictions. Donor-restricted contributions whose restrictions are satisfied in the same period are reported as unrestricted support. Unconditional contributions are recognized as revenue when the related promise to give is received. Conditional contributions are recognized as revenue when the conditions are satisfied. Contributions and other receivables consist primarily of public support for special events held before year end and are recorded at their net realizable value. Donated Services and Materials The Chapter recognizes revenue for donated services received when they require specialized skills which would need to be purchased if they were not donated. Donated services are recorded as both revenue and expenses in the accompanying statements of activities and functional expenses at their estimated value at the date of receipt. The Chapter also receives a significant amount of donated time from a substantial number of volunteers without compensation for its various program and supporting services. The financial statements do not reflect the value of these contributed services since they do not meet the criteria for recognition. The Chapter receives donated materials, consisting primarily of food and beverages, in connection with its special events. The donated materials are recorded as both public support and expenses in the accompanying statements of activities and functional expenses at their estimated value on the date of receipt. The Chapter received donated materials of $636,735 in 2014 and $296,708 in Advertising Costs Advertising costs are expensed as incurred. Advertising expense was $402,382 for 2014 and $135,121 for 2013, including $318,693 and $27,500, respectively, in donated advertising and public service announcements. Functional Allocation of Expenses The costs of providing the program and supporting services have been presented on a functional basis in the statements of activities and functional expenses. Accordingly, certain costs have been allocated among the program and supporting services benefited. Income Tax Status The Chapter qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code, and no liability or provision for federal income taxes is included in the accompanying financial statements. Management has analyzed the tax positions taken by the Chapter and concluded that, as of September 30, 2014, there were no uncertain tax positions taken or expected to be taken. Accordingly, no interest or penalties related to uncertain tax positions have been recorded in the accompanying financial statements. The Chapter is subject to audits by various taxing jurisdictions; however, no audit for any tax period is currently in progress. Management believes that the Chapter is no longer subject to such audits for years ended on or prior to September 30, Concentrations of Credit Risk Financial instruments which potentially subject the Chapter to concentration of credit risk are cash and contributions and other receivables. The Chapter maintains its cash in accounts at various banks and financial institutions. At times, these accounts may exceed federally-insured limits. The Chapter has not experienced any losses in its cash accounts and the Chapter believes that it is not exposed to significant credit risk. Contributions and other receivables at September 30, 2014 are expected to be collected in

13 NOTES TO FINANCIAL STATEMENTS Reclassifications Certain items in the 2013 financial statements have been reclassified in order to conform to the 2014 presentation. (3) INVESTMENTS Investments at consisted of the following: Money market funds $ 3,313,457 $ 3,308,177 Common stocks 570, ,980 Equity mutual funds 208, ,922 $ 4,092,683 $ 4,005,079 Investment income for the years ended consisted of the following: Interest and dividends $ 19,089 $ 20,555 Net realized and unrealized gain 87, ,731 $106,308 $ 147,286 The portion of investments that is unrestricted is classified as a current asset in the accompanying statements of financial position. The portion of investments that is temporarily or permanently restricted is classified as a noncurrent asset in the accompanying statements of financial position. (4) PROPERTY AND EQUIPMENT Property and equipment at consisted of the following: Leasehold improvements $ 32,339 $ 32,339 Furniture and equipment 327, , , ,062 Less accumulated depreciation (216,769) (149,954) $ 142,761 $ 194,108 (5) PENSION PLAN The Chapter sponsors a 401(k) Plan (the "Plan"), which covers substantially all of its employees. Under the provisions of the Plan, the employees may defer from federal income tax a percentage of their compensation not to exceed the limitations specified in the applicable section of the Internal Revenue Code. The Chapter makes mandatory contributions equal to 3% of compensation plus matching contributions to a maximum of 2% of compensation. Pension expense, which is included in employee health and retirement benefits in the accompanying statements of functional expenses, was $97,346 for 2014 and $88,916 for

14 NOTES TO FINANCIAL STATEMENTS (6) LEASES The Chapter leases its office facility in Philadelphia, Pennsylvania under a non-cancelable lease agreement that expires December The provisions of the lease (a) allow the Chapter to extend the term of the lease for one additional five-year term, (b) require the Chapter to pay for its share of operating expenses in addition to the base rent, and (c) include scheduled rent increases which are being recognized on a straight line basis over the lease term. As a result, the rent expense exceeded the amount paid by $172,005 at September 30, 2014 and $170,320 at September 30, 2013 and this excess is reported as "deferred rent" in the accompanying statements of financial position. The Chapter also leases warehouse space under a non-cancelable lease that expires August Rent expense for the office and warehouse facilities, inclusive of operating expenses, was $352,737 for 2014 and $333,471 for The Chapter also entered into two non-cancelable leases for office equipment that expire April 2016 and September 2017, respectively. Rent expense for this equipment was $53,280 for both 2014 and The minimum annual lease commitments under all non-cancelable leases with initial or remaining terms in excess of one year are as follows: Year ending September 30, 2015 $ 387, , , , ,827 Thereafter 773,802 $ 2,504,117 (7) TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at are available for the following purposes: 2014 Balance Additions Balance September 30, 2013 (Reductions) Released September 30, 2014 Purpose Restrictions Wellness Program $ 23,375 $ - $ - $ 23,375 Homeable Program - 5,000-5,000 Time Restrictions Contributions receivable 11,108 20,405 (11,108) 20,405 Charitable gift annuities held by Home Office 100,193 11, ,733 Endowment appreciation - 26,765-26,765 $134,676 $ 63,710 $ (11,108) $187,

15 NOTES TO FINANCIAL STATEMENTS 2013 Balance Additions Balance September 30, 2012 (Reductions) Released September 30, 2013 Purpose Restrictions Wellness Program $ 37,202 $ - $(13,827) $ 23,375 Gwen Colton Fund 6,706 (144) (6,562) - Time Restrictions Contributions receivable 9,123 11,108 (9,123) 11,108 Charitable gift annuities held by Home Office 102,761 (2,568) - 100,193 $155,792 $ 8,396 $(29,512) $134,676 (8) PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets at consisted of the following: Endowment $ 374,740 $ 374,740 Beneficial interest in perpetual trust 281, ,916 $ 656,720 $ 652,656 The investment income from the endowment can be used by the Chapter for its general purposes. The Chapter has adopted investment and spending policies for its endowment assets that attempt to provide a predictable stream of funding while seeking to maintain the purchasing power of these endowment assets over the longterm. The investment policy establishes an achievable return objective through diversification of asset classes within prudent risk parameters. As permitted by Pennsylvania statutes, the Chapter has adopted Pennsylvania Act 141 relative to its endowment pursuant to which investment income is defined as a percentage of the three-year average of the fair value of the endowment. According to state law, the percentage must be between 2% and 7%. The percentage determined by the Board of Trustees was 7% for both 2014 and 2013 and the resulting amount of unrestricted investment income was $ 22,601 for 2014 and $21,593 for The changes in the endowment net assets for the years ended were as follows: Temporarily Permanently Restricted Restricted Total Endowment net assets, September 30, 2012 $ - $322,074 $ 322,074 Investment income - 74,259 74,259 Withdrawals - (21,593) (21,593) Endowment net assets, September 30, , ,740 Investment income 26,765 22,601 49,366 Withdrawals - (22,601) (22,601) Endowment net assets, September 30, 2014 $ 26,765 $374,740 $ 401,

16 NOTES TO FINANCIAL STATEMENTS (9) TRANSACTIONS WITH NATIONAL MULTIPLE SCLEROSIS SOCIETY The National Multiple Sclerosis Society (the "Society") calculates the National Programs Expense, which funds research and other Society activities, for each Chapter in advance of the fiscal year after a complete review by the Budget Review Committee and national Board. The Chapter's National Programs Expense is calculated using the average of the previous two years' audited results as the revenue base. The remittance percentage is subject to adjustment each year to ensure that the Society meets its programmatic goals and that all donor restrictions are honored. The Chapter's National Programs Expense under this policy was calculated to be $3,906,498 for 2014 and $3,828,708 for By setting the Chapter's National Programs Expense in advance, the Chapters and the Society are in a better position to control resources through their respective budgeting and planning processes. Beginning in 2013, the National Programs Expense includes costs for services previously incurred by the Chapter, but which have now been centralized. In addition, the Chapter also made a strategic decision to make a discretionary investment in certain specific research projects approved by the Society. The Chapter's remittances to the Society in connection with these activities were $1,000,000 for 2014 and $601,309 for The Chapter participates in the Home Office's gift annuity program. The Chapter is the beneficiary in a number of split-interest agreements with donors, whereby the Society controls and invests the donated assets and shares with the donor or the donor's designee income generated from these assets until such time as stated in the agreement (usually upon the death of the donor or the donor's designee). The amounts due to the Chapter from the Society were $111,733 at September 30, 2014 and $100,193 at September 30, (10) ASSETS MEASURED AT FAIR VALUE The following table presents information about the Chapter's assets that are measured at fair value and the valuation inputs used to value them: 2014 Quoted Prices in Significant Other Significant Active Markets Observable Inputs Unobservable Total (Level 1) (Level 2) Inputs (Level 3) Investments Money market funds $ 3,313,457 $ 3,313,457 $ - $ - Common stocks 570, , Mutual funds 208, , ,092,683 4,092, Contributions receivable 100, ,691 - Charitable gift annuities held by Society 111, ,733 - Beneficial interest in perpetual trust 281, ,980 $ 4,587,087 $ 4,092,683 $ 212,424 $ 281,

17 NOTES TO FINANCIAL STATEMENTS 2013 Quoted Prices in Significant Other Significant Active Markets Observable Inputs Unobservable Total (Level 1) (Level 2) Inputs (Level 3) Investments Money market funds $ 3,308,177 $ 3,308,177 $ - $ - Common stocks 509, , Mutual funds 186, , ,005,079 4,005, Contributions receivable 32,358-32,358 - Charitable gift annuities held by Society 100, ,193 - Beneficial interest in perpetual trust 277, ,916 $ 4,415,546 $ 4,005,079 $ 132,551 $ 277,916 The following table sets forth a summary of changes in the fair value of the Chapter s Level 3 assets for the years ended : Balance at beginning of year $ 277,916 $ 264,255 Change in value 4,064 13,661 Balance at end of year $ 281,980 $ 277,916 (11) SUBSEQUENT EVENTS Management has evaluated subsequent events through December 18, 2014, the date on which the financial statements were available to be issued. Except as described below, no material subsequent events have occurred since September 30, 2014 that require recognition or disclosure in the financial statements. As of December 13, 2014, the Boards of Trustees of both the Greater Delaware Valley Chapter and the Delaware Chapter of the National Multiple Sclerosis Society have voted to approve the alignment of the two separate chapters into one unified chapter effective January 1, The alignment is subject to approval of the Chapter Relations Committee of the National Multiple Sclerosis Society. -15-