FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION JUNE 30, 2013 AND 2012
TABLE OF CONTENTS Page Independent Auditors Report... 1-2 Financial Statements Statements of Financial Position... 3 Statements of Activities... 4 Statements of Cash Flows... 5 Notes to Financial Statements... 6-9 Supplementary Information Independent Auditors Report on Supplementary Information... 11 Schedules of Functional Expenses... 12
INDEPENDENT AUDITORS REPORT To the Board of Directors of EMpower - The Emerging Markets Foundation We have audited the accompanying financial statements of EMpower - The Emerging Markets Foundation (a nonprofit organization), which comprise the statements of financial position as of June 30, 2013 and 2012, 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. Auditors' 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 of 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 auditors' 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 EMpower - The Emerging Markets Foundation as of June 30, 2013 and 2012, 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. New York, New York January 29, 2014
3 STATEMENTS OF FINANCIAL POSITION JUNE 30, 2013 AND 2012 2013 2012 Assets Cash and cash equivalents (Notes 1b and 3) $1,785,943 $ 678,053 Accounts receivable (Note 1a) 109,341 500,550 Unconditional promises to give (Notes 1c and 4) Unrestricted 85,978 93,825 Restricted to future programs and periods 116,287 1,241,892 Prepaid expenses and other current assets 19,015 41,116 Property and equipment, at cost (net of accumulated depreciation and amortization) (Notes 1d and 5) 25,149 12,308 Security deposit 30,720 7,095 Total Assets $2,172,433 $2,574,839 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 48,550 $ 141,945 Grants payable (Note 1e) 638,000 390,500 Total Liabilities 686,550 532,445 Commitments (Notes 7 and 8) Net Assets Unrestricted Designated for operations 216,563 454,999 Board-designated reserve (Note 2a) 300,000 125,000 Total Unrestricted 516,563 579,999 Temporarily restricted (Note 2b) 969,320 1,462,395 Total Net Assets 1,485,883 2,042,394 Total Liabilities and Net Assets $2,172,433 $2,574,839 See notes to financial statements.
4 STATEMENTS OF ACTIVITIES YEARS ENDED JUNE 30, 2013 AND 2012 2013 2012 Changes in Unrestricted Net Assets Support and Revenue Contributions $ 450,664 $ 598,461 Benefit income 263,950 284,146 Less: Direct benefit expenses (115,619) (96,947) Donated services (Note 6) 44,190 11,126 Grant administrative fee (Note 1a) 734,603 600,550 Other income 4,959 1,310 1,382,747 1,398,646 Net assets released from restrictions 521,075 365,998 Total Support and Revenue 1,903,822 1,764,644 Expenses Program Services 1,662,899 1,279,540 Supporting Services Management and general 170,893 155,567 Fundraising 133,466 98,948 Total Expenses 1,967,258 1,534,055 Increase (Decrease) in Unrestricted Net Assets (63,436) 230,589 Changes in Temporarily Restricted Net Assets Contributions 28,000 328,394 Net assets released from restrictions (521,075) (365,998) Decrease in Temporarily Restricted Net Assets (493,075) (37,604) Increase (decrease) in net assets (556,511) 192,985 Net assets, beginning of year 2,042,394 1,849,409 Net Assets, End of Year $1,485,883 $2,042,394 See notes to financial statements.
5 STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2013 AND 2012 2013 2012 Cash Flows From Operating Activities Increase (decrease) in net assets $ (556,511) $ 192,985 Adjustments to reconcile increase (decrease) in net assets to net cash provided by operating activities: Uncollectable donation 7,000 - Depreciation 6,775 6,586 (Increase) decrease in: Accounts receivable 391,209 (403,726) Unconditional promises to give 1,126,452 262,392 Prepaid expenses and other current assets 22,101 (25,564) Security deposit (23,625) - Increase (decrease) in: Accounts payable and accrued expenses (93,395) 83,118 Grants payable 247,500 7,500 Net Cash Provided By Operating Activities 1,127,506 123,291 Cash Flows From Investing Activities Acquisition of property and equipment (19,616) (4,902) Net increase in cash and cash equivalents 1,107,890 118,389 Cash and cash equivalents, beginning of year 678,053 559,664 Cash and Cash Equivalents, End of Year $1,785,943 $ 678,053 See notes to financial statements.
6 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 1 - Organization and Summary of Significant Accounting Policies a - Organization EMpower - The Emerging Markets Foundation (the "Organization") ties the resources of emerging markets professionals world-wide with the vitality of community-based social sector initiatives in developing countries. EMpower-UK, a nonprofit chapter, was formed under the laws of the United Kingdom to promote the mission of the Organization throughout the United Kingdom. During 2013 and 2012, 100% of the grant administrative fee was earned from Empower-UK, and all of the accounts receivable at June 30, 2013 and 2012 were due from Empower-UK. Empower-HK, a nonprofit chapter, was formed under the laws of the Hong Kong to promote the mission of the Organization throughout Asia. The Organization's mission is to provide disadvantaged young people in emerging market countries with the resources, skills, mentorship and opportunities to improve their lives and in turn help better their families, communities and the world around them. b - Cash and Cash Equivalents The Organization considers all short-term highly-liquid investments, such as money market funds, to be cash equivalents. c - Contributions and Unconditional Promises to Give Contributions are recognized when the donor makes a promise to give to the Organization, that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donorrestricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. d - Property and Equipment Property and equipment acquired are recorded at cost and are being depreciated using the straight-line method over the useful life of the assets. e - Grants Payable Grants are accrued at the time authorized.
7 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 1 - Organization and Summary of Significant Accounting Policies (continued) f - Tax Status The Organization is a not-for-profit organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and has been designated as an organization which is not a private foundation. Management has evaluated all income tax positions and concluded that no disclosures relating to uncertain tax positions are required in the financial statements. The Organization's tax returns are generally subject to examination by taxing authorities for a period of three years from filing. g - Financial Statement Presentation The Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. h - Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. i - Subsequent Events The Organization has evaluated subsequent events through January 29, 2014, the date that the financial statements are considered available to be issued. Note 2 - Restrictions on Net Assets a - The Board has designated $300,000 of the Organization s unrestricted net assets to be held for future operations and used only with the approval of the Board of Directors. b - Temporarily restricted net assets are restricted for future programs and periods. Note 3 - Concentration of Credit Risk The Organization maintains its cash accounts at one financial institution located in New York City. The cash balances, at times, may exceed federally insured limits.
8 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 4 - Unconditional Promises to Give Unconditional promises to give are due within two years. Uncollectible promises are expected to be insignificant. As of June 30, 2013 and 2012, 57% and 93% were due from one foundation. Note 5 - Property and Equipment Property and equipment consist of the following at June 30: Life 2013 2012 Computers and equipment 5 years $23,102 $23,102 Furniture 7 years 34,522 14,906 Website 5 years 12,000 12,000 69,624 50,008 Less: Accumulated depreciation and amortization (44,475) (37,700) Total $25,149 $12,308 Depreciation expense for the years ended June 30, 2013 and 2012 was $6,775 and $6,586, respectively. Note 6 - Donated Services Donated services consist of direct benefit expenses and professional services for the years ended June 30, 2013 and 2012, respectively.
9 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 7 - Office Lease The Organization occupies space under a lease through August 31, 2017. The lease provides for minimum annual rentals as follows: Year Ending June 30, 2014 $58,140 2015 58,140 2016 58,140 2017 58,140 Thereafter, through August 31, 2017 9,690 Rent expense was $44,816 and $39,800 for the years ended June 30, 2013 and 2012, respectively. Note 8 - Retirement Plan The Organization maintains a 403(b) retirement plan for all eligible employees. The Organization contributes 4% after one year of employment of an eligible employee's compensation. In addition, the Organization matches up to an additional 4% of salary bringing the total maximum potential contribution to 8% of eligible employees salaries. Total contributions to the plan for the years ended June 30, 2013 and 2012 was $41,616 and $30,229, respectively. Note 9 - Functional Allocation of Expenses The cost of providing the various program and supporting services has been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services in reasonable ratios determined by management.
SUPPLEMENTARY INFORMATION
INDEPENDENT AUDITORS REPORT ON SUPPLEMENTARY INFORMATION To the Board of Directors of EMpower - The Emerging Markets Foundation We have audited the financial statements of EMpower - The Emerging Markets Foundation as of and for the years ended June 30, 2013 and 2012, and our report thereon dated January 29, 2014, which expressed an unmodified opinion on those financial statements, appears on pages 1 and 2. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedules of Functional Expenses for the years ended June 30, 2013 and 2012 are presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. New York, New York January 29, 2014
12 SCHEDULES OF FUNCTIONAL EXPENSES YEARS ENDED JUNE 30, 2013 AND 2012 2013 2012 Supporting Services Supporting Services Program Management Program Management Services and General Fundraising Total Services and General Fundraising Total Salaries, payroll taxes and employee benefits $ 777,463 $ 83,430 $ 112,821 $ 973,714 $ 693,815 $ 56,192 $ 74,087 $ 824,094 Grant expense 708,000 - - 708,000 419,000 - - 419,000 Professional fees 40,730 37,178 1,812 79,720 35,191 47,956 1,439 84,586 Travel, meeting and conference 46,919 7,994 279 55,192 57,546 10,904 149 68,599 Special event - - 5,949 5,949 - - 13,655 13,655 Office supplies and expenses 19,777 3,788 3,006 26,571 18,188 1,556 1,991 21,735 Occupancy 35,273 9,457 5,454 50,184 35,530 3,040 3,889 42,459 Insurance - 2,985-2,985-2,958-2,958 Bank and credit card fees 543 6,954 565 8,062-5,752 2,723 8,475 Publications 18,445 3,217 2,756 24,418 110 16,675 24 16,809 Uncollectable donation - 7,000-7,000 - - - - Miscellaneous 10,417 8,271-18,688 14,649 10,062 388 25,099 Depreciation 5,332 619 824 6,775 5,511 472 603 6,586 Total Expenses $1,662,899 $ 170,893 $ 133,466 $1,967,258 $1,279,540 $ 155,567 $ 98,948 $1,534,055 See independent auditors' report on supplementary information.