FINANCIAL STATEMENTS FOR THE YEARS ENDED
CONTENTS INDEPENDENT AUDITOR S REPORT 1 Page FINANCIAL STATEMENTS Consolidated Statements of Financial Position 2 Consolidated Statements of Activities 3-4 Consolidated Statements of Functional Expenses 5 Consolidated Statements of Cash Flows 6-7 Notes to Consolidated Financial Statements 8-19
(This Page Intentionally Left Blank)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2017 2016 ASSETS: Cash and cash equivalents $ 3,690,856 $ 3,155,248 Accounts receivable 69,064 94,507 Other receivables 798,681 756,672 Unconditional promises to give 32,983 30,773 Prepaid expenses 43,283 41,422 Investments 111,314,135 96,878,009 Irrevocable trust investments 8,730,460 8,588,486 Property and equipment, net 606,347 611,463 Other assets 2,503,226 2,879,667 TOTAL ASSETS $ 127,789,035 $ 113,036,247 LIABILITIES: Accounts payable $ 103,246 $ 116,188 Accrued expenses 83,721 84,055 Grant awards payable 164,390 175,000 Due on investment - 50,000 Notes payable 407,443 488,051 Agency funds 22,931,996 21,159,573 Deferred gift liabilities for split-interest agreements 3,749,325 4,215,716 TOTAL LIABILITIES $ 27,440,121 $ 26,288,583 NET ASSETS: Unrestricted $ 80,866,049 $ 69,798,750 Temporarily restricted 3,619,751 3,203,869 Permanently restricted 15,863,114 13,745,045 TOTAL NET ASSETS $ 100,348,914 $ 86,747,664 TOTAL LIABILITIES AND NET ASSETS $ 127,789,035 $ 113,036,247 See accompanying notes to financial statement. -2-
CONSOLIDATED STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2017 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUE AND SUPPORT: Contributions, net $ 10,576,784 $ - $ 955,871 $ 11,532,655 Interest and dividend earnings 1,832,829 132,756-1,965,585 Investment earnings, realized and unrealized gains 7,418,755 (129,764) 971,717 8,260,708 Rental/Building income 49,620 - - 49,620 Other income, special events 39,899 - - 39,899 Change in value of trusts 27,801 412,890 190,481 631,172 Net change in value of life insurance (109,946) - - (109,946) Total revenue and support $ 19,835,742 $ 415,882 $ 2,118,069 $ 22,369,693 GRANTS AND EXPENSES: Grants and program expenditures $ 7,483,971 $ - $ - $ 7,483,971 Administrative expenses 588,642 - - 588,642 Fundraising and development 695,830 - - 695,830 Total grants and expenses $ 8,768,443 $ - $ - $ 8,768,443 Change in net assets $ 11,067,299 $ 415,882 $ 2,118,069 $ 13,601,250 Net assets as of beginning of year 69,798,750 3,203,869 13,745,045 86,747,664 Net assets as of end of year $ 80,866,049 $ 3,619,751 $ 15,863,114 $ 100,348,914 See accompanying notes to financial statements. -3-
CONSOLIDATED STATEMENTS OF ACTIVITIES (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2016 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUE AND SUPPORT: Contributions, net $ 8,304,901 $ - $ 314,342 $ 8,619,243 Interest and dividend earnings 1,738,396 131,840-1,870,236 Investment earnings, realized and unrealized gains (losses) (486,322) (130,079) (602,446) (1,218,847) Rental/Building income 49,047 - - 49,047 Other income, special events 65,134 - - 65,134 Change in value of trusts 1,929 240,044 11,680 253,653 Net change in value of life insurance (133,536) - - (133,536) Total revenue and support $ 9,539,549 $ 241,805 $ (276,424) $ 9,504,930 GRANTS AND EXPENSES: Grants and program expenditures $ 6,039,947 $ - $ - $ 6,039,947 Administrative expenses 352,553 - - 352,553 Fundraising and development 689,593 - - 689,593 Total grants and expenses $ 7,082,093 $ - $ - $ 7,082,093 Change in net assets $ 2,457,456 $ 241,805 $ (276,424) $ 2,422,837 Net assets as of beginning of year 67,341,294 2,962,064 14,021,469 84,324,827 Net assets as of end of year $ 69,798,750 $ 3,203,869 $ 13,745,045 $ 86,747,664 See accompanying notes to financial statements. -4-
(This Page Intentionally Left Blank)
CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED Grants & Program Administrative Fundraising Expenditures Expenses & Development Total Grants $ 6,680,561 $ - $ - $ 6,680,561 Other expenses 365,131 - - 365,131 Payroll costs 282,139 397,499 468,462 1,148,100 Office expenses 28,020 37,732 44,468 110,220 Building expenses 25,843 36,077 42,517 104,437 Administrative expenses 32,083 43,480 53,347 128,910 Depreciation 8,096 11,178 13,173 32,447 Professional fees 7,029 9,769 11,512 28,310 Dues & subscriptions 7,560 10,422 12,282 30,264 Advertising 6,651 9,201 10,843 26,695 Development & marketing 19,727 28,767 33,902 82,396 Insurance 2,909 3,894 4,589 11,392 Interest expense 18,222 623 735 19,580 2017 Totals $ 7,483,971 $ 588,642 $ 695,830 $ 8,768,443 Grants & Program Administrative Fundraising Expenditures Expenses & Development Total Grants $ 5,383,599 $ - $ - $ 5,383,599 Other expenses 114,000 - - 114,000 Payroll costs 319,930 217,373 444,998 982,301 Office expenses 41,643 27,804 56,918 126,365 Building expenses 31,929 21,535 44,086 97,550 Administrative expenses 45,940 30,453 30,200 106,593 Depreciation 10,067 6,756 13,831 30,654 Professional fees 11,983 7,985 16,347 36,315 Dues & subscriptions 6,556 4,353 8,911 19,820 Advertising 11,794 7,974 16,324 36,092 Development & marketing 37,192 25,689 52,590 115,471 Insurance 3,325 2,184 4,472 9,981 Interest expense 21,989 447 916 23,352 2016 Totals $ 6,039,947 $ 352,553 $ 689,593 $ 7,082,093 See accompanying notes to financial statements. -5-
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 13,601,250 $ 2,422,837 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 32,447 30,654 Net realized (gain) loss on investments (1,727,393) (1,742,624) Net unrealized (gain) loss on investments (6,576,214) 2,937,379 Adjustment of liability for split-interest agreements (466,391) (375,721) (Increase) decrease in: Accounts receivable 25,443 (5,701) Other receivables (42,009) (1,729) Unconditional promises to give (2,210) (2,061) Prepaid expenses (1,861) (2,428) Increase (decrease) in: Accounts payable (12,942) 6,555 Accrued expenses (334) (16,840) Grant awards payable (10,610) (31,300) Due on investment (50,000) (100,000) Agency funds 1,772,423 (947,214) Net cash provided (used) by operating activities $ 6,541,599 $ 2,171,807 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of investments $ 9,917,986 $ 9,829,098 Purchase of investments (16,050,505) (10,423,375) Net change in notes receivable - 31,493 Purchase of property and equipment (27,331) (44,583) (Increase) decrease in other assets 376,441 29,087 Net cash provided (used) by investing activities $ (5,783,409) $ (578,280) See accompanying notes to financial statements. -6-
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED 2017 2016 CASH FLOWS FROM FINANCING ACTIVITIES: Change in irrevocable trust investments $ (141,974) $ 67,412 Payments on notes payable (80,608) (76,764) Net cash provided (used) by financing activities $ (222,582) $ (9,352) CHANGE IN CASH AND CASH EQUIVALENTS $ 535,608 $ 1,584,175 BEGINNING CASH AND CASH EQUIVALENTS 3,155,248 1,571,073 ENDING CASH AND CASH EQUIVALENTS $ 3,690,856 $ 3,155,248 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: During the years ended June 30, 2017 and 2016 the Foundation entered into the following non-cash investing and financing transactions. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: 2017 2016 Cash paid during the year for interest $ 23,978 $ 25,548 SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS: Noncash change in investments $ - $ - See accompanying notes to financial statements. -7-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Nature of Activities CommunityGiving (the Foundation) is a non-private foundation, tax exempt corporation under Section 501(c)(3) of the Internal Revenue Code. It is a publicly supported philanthropic institution governed by a board of private citizens chosen to be representatives of the public interest and for their knowledge of the community. It administers individual funds contributed or bequeathed to it by individuals, families, other agencies, corporations and other organizations in the Central Minnesota area, which includes the operating divisions of Alexandria Area Community Foundation, Brainerd Lakes Area Community Foundation, Central Minnesota Community Foundation, and Willmar Area Community Foundation. B. Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Foundation and changes therein are classified and reported as follows: Unrestricted net assets - Net assets 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. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. In addition, if the temporary restriction is accomplished in the same period as it is received, the contribution is reported as unrestricted. Permanently restricted net assets - Net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on any related investments for general or specific purposes. C. Principles of Consolidation The consolidated financial statements include the accounts of the Foundation, CMCF Properties I, LLC, and Minnesota Real Estate Foundation, LLC. All significant intercompany accounts and transfers have been eliminated in consolidation. -8-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): D. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. E. Cash and Cash Equivalents The Foundation considers checking accounts to be cash equivalents. The Foundation maintains cash in bank deposit accounts at high credit quality financial institutions. Money market funds held with brokerage firms are included in investments. F. Accounts Receivable Accounts receivable, which are generally unsecured, include only those accounts considered by management to be collectible. Management determines the likelihood of collectability of receivables on an individual customer basis, based on length outstanding, likelihood of collecting, and customer s current economic status. Balances which are still outstanding after management has used reasonable collection efforts are written off. No allowance for bad debts is considered necessary for the years ending June 30, 2017 and 2016. G. Other Receivables Other receivables consist of beneficial interests in charitable trusts of which the Foundation is not trustee. The beneficial interests in charitable lead trusts are valued at the present value of future benefits to be received. The beneficial interests in charitable remainder trusts are valued at the present value of the expected future benefit. H. Unconditional Promises to Give Unconditional promises to give the Foundation cash or other assets in the future are recorded as contribution revenue and contributions receivable. If management expects the cash from the contribution receivable to be received more than one year in the future, the contributions revenue and receivable are discounted for the time value of money (i.e., net present value). -9-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): I. Investments The Foundation carries its investments at fair value in accordance with generally accepted accounting principles for not-for-profit organizations. Investments consist primarily of money market funds, bonds, stocks, and mutual funds. Investments with readily determinable fair values are reported at fair value. Investments with no readily determinable fair value are carried at cost or estimated fair value, if lower. The Investment Committee of the Foundation has the primary responsibility for directing and monitoring the investment of the Foundation s funds in accordance with the Foundation s investment policy. J. Fair Value Reporting The Foundation has adopted FASB ASC 820, Fair Value Measurements and Disclosures, which provides clarification and guidance regarding reporting of financial instruments at fair value. In accordance with FASB ASC 820, fair value is defined as the price that the Foundation would receive to sell an asset or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. FASB ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Foundation s investments. The inputs are summarized in the three broad levels listed below: Level 1 valuations based on quoted prices in active markets for identical assets or liabilities. Level 2 valuations based on quoted prices in markets that are not active or for which all significant inputs are observable. Level 3 valuations based on inputs that are unobservable and include situations where there is little, if any, market activity. The inputs into the determination of fair value require significant management judgment or estimation. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls into is based on the lowest level input that is significant to the fair value measurement. -10-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): J. Fair Value Reporting (Continued) Fair values of assets and liabilities of the Foundation measured on a recurring basis at June 30, 2017 are as follows: Quoted Prices in Significant Active Markets Other For Identical Observable Significant Assets/Liabilities Inputs Unobservable Fair Value (Level 1) (Level 2) Inputs (Level 3) Corporate stocks $ 11,968,503 $ 11,968,503 $ - $ - Corporate bonds 4,396,788 4,396,788 - - Gov t obligations 2,674,947 2,674,947 - - Mutual funds 88,083,721 88,083,721 - - Money markets 3,081,702 3,081,702 - - Other investments 1,108,474 43,123-1,065,351 Total investments $ 111,314,135 $ 110,248,784 $ - $ 1,065,351 Assets held in charitable trusts and gift annuities $ 8,847,700 $ 8,730,460 $ - $ 117,240 Beneficial interests in charitable trusts $ 798,681 $ - $ - $ 798,681 Liabilities under split- Interest agreements $ 3,749,325 $ - $ - $ 3,749,325-11-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): J. Fair Value Reporting (Continued) Fair values of assets and liabilities of the Foundation measured on a recurring basis at June 30, 2016 are as follows: Quoted Prices in Significant Active Markets Other For Identical Observable Significant Assets/Liabilities Inputs Unobservable Fair Value (Level 1) (Level 2) Inputs (Level 3) Corporate stocks $ 13,608,560 $ 13,608,560 $ - $ - Corporate bonds 5,132,976 5,132,976 - - Gov t obligations 2,491,777 2,491,777 - - Mutual funds 72,641,765 72,641,765 - - Money markets 2,343,530 2,343,530 - - Other investments 659,401 39,390-620,011 Total investments $ 96,878,009 $ 96,257,998 $ - $ 620,011 Assets held in charitable trusts and gift annuities $ 8,779,845 $ 8,588,486 $ - $ 191,359 Beneficial interests in charitable trusts $ 756,672 $ - $ - $ 756,672 Liabilities under split- Interest agreements $ 4,215,716 $ - $ - $ 4,215,716 K. Property and Equipment Land, building and equipment are carried at cost or appraised value for donated assets. Depreciation is computed using the straight line method over a useful life period of 5-39 years. Repairs and maintenance are charged to expense as incurred. Renewals and improvements, which extend the useful life of assets, are capitalized and depreciated over future periods. -12-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): L. Other Assets Other assets are recorded at cost or donated fair market value adjusted to net present value or fair value. Other assets consist of several items, including other assets of trusts, cash surrender value of life insurance, purchased annuities, real estate holdings, interest in closely held companies, and donations of securities that intend to be liquidated immediately. M. Due on Investment The Foundation acquired an investment in an investment partnership, for money down and for an irrevocable commitment. Under this agreement the Foundation owed the investment partnership $0 and $50,000 at June 30, 2017 and 2016, respectively. N. Agency Funds FASB ASC 958-605, formerly FASB 136, requires the Foundation, which accepts cash or other financial assets from a donor and agrees to use those assets on behalf of the donor, to recognize the fair value of those assets as a liability. O. Split-Interest Agreements Split-interest agreements are agreements between the Foundation and donors in which the donors make gifts to the Foundation, but the Foundation is not the sole beneficiary. The Foundation receives either a lead interest (distributions during the term of the agreement with any remaining assets going to an individual or individuals designated by the donor) or a remainder interest (distribution of assets remaining at the end of the agreement with distributions going to an individual or individuals designated by the donor during the term of the agreement). Assets held in charitable trusts, assets held in charitable gift annuities, or beneficial interests in charitable trusts qualify as split-interest agreements. P. Deferred Gift Liabilities for Split-Interest Agreements When the Foundation is the trustee of charitable gift annuities and charitable remainder trusts (split-interest agreements) in which the Foundation has a future interest, the full market value of the trusts assets are shown as an asset of the Foundation with an offsetting liability (deferred gift liabilities for split-interest agreements) for the net present value of the expected payments to be made to the income beneficiary. The present value of the estimated future payments to be distributed during the beneficiary s expected life is calculated using a discount rate between 7% and 9% based on the year the gift was received. -13-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Q. Net Asset Classifications The State of Minnesota adopted UPMIFA effective August 1, 2008. The Foundation has adopted FASB ASC 958-205-45 starting with the fiscal year ending June 30, 2009. The Board of Directors, on the advice of legal counsel, has determined that the majority of the Foundation s net assets do not meet the definition of endowment under UPMIFA. The Foundation is governed subject to the governing documents for CommunityGiving and most contributions are subject to the terms of the governing documents. Certain contributions are received subject to other gift instruments, or are subject to specific agreements with the Foundation. Under the terms of the governing documents, the Board of Directors has the ability to distribute so much of the corpus of any trust or separate gift, devise, bequest, or fund as the board in its sole discretion shall determine. As a result of the ability to distribute corpus, all contributions not classified as temporarily restricted or permanently restricted are classified as unrestricted net assets for financial statement purposes. Temporarily restricted net assets consist of irrevocable charitable trusts, lead trusts, restricted contributions receivable, and the remaining portion of donor-restricted endowment funds that are not classified as permanently restricted net assets. When donor restrictions expire, that is, when a stipulated time restriction ends or a purpose restriction is fulfilled, 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 represent the fair value of the original gift as of the gift date and the original value of subsequent gifts to donor-restricted endowment funds. R. Noncash Donations Noncash donations are recorded as contributions at their estimated market value at the date of donation. S. Advertising Advertising costs are expensed when incurred. Advertising costs for the years ended June 30, 2017 and 2016 were $26,695 and $36,092 respectively. T. Functional Allocation of Expenses The costs of providing the Foundation s various programs have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited. -14-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): U. Endowment Investment and Spending Policies The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. The Foundation s spending and investment policies work together to achieve this objective. The investment policy establishes an achievable return objective through diversification of asset classes. The current long-term return objective is to return 7%, net of investment fees. Actual returns in any given year may vary from this amount. To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk parameters. The spending policy calculates the amount of money annually distributed from the Foundation s various endowed funds, for grant making and administration. The current spending policy is to distribute an amount equal to 4% of a moving five-year average but not less than 3% or greater than 5% of current market value. Accordingly, over the long term, the Foundation expects current spending policy to allow its endowment assets to grow at an average rate of 3% annually. V. Uncertainty for Income Taxes The Foundation is subject to the accounting standard on accounting for uncertainty in income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this guidance, the Foundation may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods. Management evaluated the tax positions for the Foundation and each of the consolidated entities and concluded that the Foundation had taken no uncertain income tax positions that require adjustments to the consolidated financial statements to comply with the provisions of this guidance. The Foundation s income tax returns are subject to examination by taxing authorities for a period of three years from the date they are filed. W. Reclassifications Certain reclassifications have been made to the prior year consolidated financial statements to conform to the current year presentation. -15-
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): X. Subsequent Events In preparing these financial statements, the Foundation has evaluated events and transactions for potential recognition or disclosure through October 13, 2017 the date the financial statements were available to be issued. NOTE 2 OTHER RECEIVABLES: The following is a summary of other receivables as of June 30, 2017 and 2016: 2017 2016 Charitable remainder trusts $ 798,681 $ 756,672 NOTE 3 UNCONDITIONAL PROMISES TO GIVE: Unconditional promises to give at June 30, 2017 and 2016 are as follows: 2017 2016 Receivable more than five years $ 50,000 $ 50,000 Allowance for doubtful receivables - - Total unconditional promises to give $ 50,000 $ 50,000 Less discounts to net present value (17,017) (19,227) Net unconditional promises to give $ 32,983 $ 30,773 Discount rate used on the long-term promise to give was 7.18%. NOTE 4 PROPERTY AND EQUIPMENT: The following is a summary of property and equipment as of June 30, 2017 and 2016: 2017 2016 Land $ 109,941 $ 109,941 Building and improvements 684,762 668,669 Office equipment 197,028 185,790 $ 991,731 $ 964,400 Less: Accumulated depreciation (385,384) (352,937) Net property and equipment $ 606,347 $ 611,463 Depreciation expense for the years ended June 30, 2017 and 2016 amounted to $32,447 and $30,654, respectively. -16-
NOTE 5 OTHER ASSETS: The following is a summary of other assets as of June 30, 2017 and 2016: 2017 2016 Other assets and gift annuities $ 163,552 $ 191,359 Real estate 1,772,063 2,193,062 Unamortized annuities 46,643 56,620 Cash surrender value of life insurance 510,923 437,551 Other 10,045 1,075 $ 2,503,226 $ 2,879,667 NOTE 6 GRANT AWARDS PAYABLE: Grants payable consists of amounts awarded, but not paid. NOTE 7 NOTES PAYABLE: The following is a summary of notes payable as of June 30, 2017 and 2016: 2017 2016 Note payable to Minnesota Real Estate Foundation, 5.0% interest, payable in annual payments of principal and interest through November 2020, secured by real estate. $ 339,622 $ 418,687 Note payable to Bank, 4.75% interest, interest only monthly payments through December 2018, secured by real estate. 67,821 69,364 Total notes payable $ 407,443 $ 488,051 Maturity of notes are as follows: For the year ending June 30, Amount 2018 $ 83,019 2019 154,991 2020 91,528 2021 77,905 2022 - Thereafter - $ 407,443-17-
NOTE 8 RETIREMENT PLAN: The Foundation has a SEP plan covering all employees who qualify as to age and length of service. The plan is a defined contribution plan, with all contribution amounts (if any) determined by management. The contributions to the plan were $43,930 and $38,820 for the years ended June 30, 2017 and 2016, respectively. Subsequent to year end, the retirement plan was changed to a 403b Thrift plan. NOTE 9 DEFICIENCIES IN DONOR-RESTRICTED ENDOWMENT FUNDS: FASB ASC 958-605 requires the Foundation to disclose the total amount of deficiencies for donor-restricted endowments funds, when the fair value of the endowments assets falls below the amount the donor requires to be maintained in perpetuity. At June 30, 2017 the total of these deficiencies was $0. NOTE 10 CHANGES IN ENDOWMENT NET ASSETS: The following is a summary of the changes in endowment net assets as of June 30, 2017: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment Net Assets, Beginning of Year $ 15,381,358 $ 3,203,869 $ 13,745,045 $ 32,330,272 Contributions, net 878,418-955,871 1,834,289 Interest and dividends 353,952 132,756 353,561 840,269 Investment earnings, realized and unrealized 1,764,200 (84,593) 1,424,905 3,104,512 Amounts appropriated for expenditures (658,481) (45,171) (813,731) (1,517,383) Other changes - 412,890 197,463 610,353 Endowment Net Assets, End of Year $ 17,719,447 $ 3,619,751 $ 15,863,114 $ 37,202,312-18-
NOTE 10 CHANGES IN ENDOWMENT NET ASSETS (CONTINUED): The following is a summary of the changes in endowment net assets as of June 30, 2016: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment Net Assets, Beginning of Year $ 17,044,273 $ 2,962,064 $ 14,021,469 $ 34,027,806 Contributions, net 338,211-314,342 652,553 Interest and dividends 351,253 131,840 352,199 835,292 Investment earnings, realized and unrealized (118,058) 268,481 (183,271) (32,848) Amounts appropriated for expenditures (2,234,321) (438,082) (1,022,272) (3,694,675) Other changes - 279,566 262,578 542,144 Endowment Net Assets, End of Year $ 15,381,358 $ 3,203,869 $ 13,745,045 $ 32,330,272 NOTE 11 RELATED PARTY TRANSACTIONS: The Foundation had the following transactions with related parties: The Foundation owes $339,622 and $418,687 to Minnesota Real Estate Foundation as of June 30, 2017 and 2016. See Note 7 for details. The Foundation also has $9,906 and $14,304 of accrued interest payable related to this loan at June 30, 2017 and 2016, respectively. The Foundation has entered into a Supporting Organization agreement with Minnesota Real Estate Foundation for staff and other overhead expenses. Payments from Minnesota Real Estate Foundation for the years ended June 30, 2017 and 2016 amounted to $0. The amount due of $69,065 from Minnesota Real Estate Foundation under this agreement was included in accounts receivable at June 30, 2017 and 2016. NOTE 12 CONCENTRATION OF CREDIT RISK: The Foundation places it cash with a financial institution. At times the amount on deposit exceeds the insured limit of the institution and exposes the Foundation to a credit risk. -19-