MISSISSIPPI UNITED METHODIST FOUNDATION, INC. Ridgeland, Mississippi Audited Financial Statements Year Ended December 31, 2015 (With Summarized Financial Information for the Year Ended December 31, 2014)
CONTENTS Independent Auditor's Report 1 2 Financial Statements Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 5 Notes to Financial Statements 6 18
INDEPENDENT AUDITOR'S REPORT Board of Directors Mississippi United Methodist Foundation, Inc. Ridgeland, Mississippi Report on the Financial Statements We have audited the accompanying financial statements of Mississippi United Methodist Foundation, Inc. (the "Foundation"), which comprise the statements of financial position as of December 31, 2015 and the related statements of activities and cash flows for the year 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 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 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 the Foundation as of December 31, 2015 and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited the Foundation's December 31, 2014 financial statements and we expressed an unmodified audit opinion on those audited financial statements in our report dated April 28, 2015. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2014, is consistent, in all material respects, with the audited financial statements from which it has been derived. Ridgeland, Mississippi April 22, 2016 2
Statements of Financial Position December 31, 2015 and 2014 2015 2014 ASSETS Cash and cash equivalents $ 4,220,893 $ 4,284,503 Interest receivable 98,719 195,854 Property and equipment, net of accumulated depreciation 1,929,345 1,984,988 Investments 95,033,396 99,990,130 Total assets $ 101,282,353 $ 106,455,475 LIABILITIES AND NET ASSETS Liabilities Accrued expenses $ 32,707 $ 4,147 Deposits held for others 74,342,005 75,072,452 Total liabilities 74,374,712 75,076,599 Net assets Unrestricted 14,797,463 19,937,515 Temporarily restricted 1,596,066 2,353,781 Permanently restricted 10,514,112 9,087,580 Total net assets 26,907,641 31,378,876 Total liabilities and net assets $ 101,282,353 $ 106,455,475 See accompanying notes. 3
Statements of Activities Year Ended December 31, 2015 (With Summarized Financial Information for the Year Ended December 31, 2014) 2015 Temporarily Permanently Total All Total All Unrestricted Restricted Restricted Net Assets Net Assets 2014 Revenues, gains and other support Management fees $ 134,951 $ - $ - $ 134,951 $ 125,035 Interest income 496,508 94,233 84,656 675,397 769,001 Dividend income 1,278,559 154,741-1,433,300 1,037,780 Contribution income 654,532 151,320 1,341,876 2,147,728 627,331 Net realized and unrealized gains (losses) on investments (5,402,839) (540,187) - (5,943,026) 2,925,307 Net assets released from restriction 617,822 (617,822) - - - Other income 3,049 - - 3,049 694 Total revenues, gains and other support (2,217,418) (757,715) 1,426,532 (1,548,601) 5,485,148 Expenses Interest expense 1,232,306 - - 1,232,306 1,982,148 Salaries and benefits 428,513 - - 428,513 463,147 Management fees 416,363 - - 416,363 341,688 Supplies and expenses 79,213 - - 79,213 90,025 Services 62,078 - - 62,078 59,743 Occupancy 14,173 - - 14,173 13,896 Depreciation 58,313 - - 58,313 58,012 Maintenance 13,853 - - 13,853 19,837 Restricted net asset expenditures 617,822 - - 617,822 474,289 Total expenses 2,922,634 - - 2,922,634 3,502,785 Change in net assets (5,140,052) (757,715) 1,426,532 (4,471,235) 1,982,363 Net assets, beginning of year 19,937,515 2,353,781 9,087,580 31,378,876 29,396,513 Net assets, end of year $ 14,797,463 $ 1,596,066 $ 10,514,112 $ 26,907,641 $ 31,378,876 See accompanying notes. 4
Statements of Cash Flows 2015 2014 Cash flows from operating activities Change in net assets $ (4,471,235) $ 1,982,363 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities Depreciation 58,313 58,012 Contributions restricted for investment (1,341,876) (226,113) Net realized and unrealized (gain) loss on investments 5,943,026 (2,925,307) Change in assets and liabilities Interest receivable 97,135 33,567 Cash surrender value of life insurance - 3,531 Accrued expenses 28,560 (176,192) Deposits held for others (418,602) 204,803 Net cash used in operating activities (104,679) (1,045,336) Cash flows from investing activities Purchase of property and equipment (2,670) (18,109) Purchases of investments (84,014,864) (74,352,739) Proceeds from sale of investments 83,304,721 71,571,312 Proceeds from maturity of investments 981,071 1,488,118 Net change in unitrusts (311,845) (47,290) Net cash used in investing activities (43,587) (1,358,708) Cash flows from financing activities Interest and dividends restricted for reinvestment 84,656 27,747 Net decrease in cash (63,610) (2,376,297) Cash and cash equivalents, beginning of year 4,284,503 6,660,800 Cash and cash equivalents, end of year $ 4,220,893 $ 4,284,503 Supplemental disclosure of cash flow information Interest paid $ 1,232,306 $ 1,982,148 See accompanying notes. 5
Note 1. Nature of Business and Significant Accounting Policies Mississippi United Methodist Foundation, Inc. (the "Foundation") is a nonprofit corporation organized to accept and administer funds for the conferences, local churches and other institutions, agencies and boards of the United Methodist Church, primarily in the State of Mississippi and to provide investment management services for their respective funds. The Foundation also provides management services of charitable remainder trusts for individuals, commonly referred to as "unitrusts". The financial statements are presented in accordance with accounting principles generally accepted in the United States of America for nonprofit organizations. A summary of the significant accounting policies applied in the preparation of the financial statements follows: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of reporting cash flows, cash equivalents include certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. Investments Investments are recorded at fair market value. Investment income or loss, including realized and unrealized gains and losses on investments, interest and dividends, is included in the statement of activities as increases or decreases in unrestricted net assets, unless the income or loss is restricted by donor or by law. Endowment investment income and net appreciation/depreciation not permanently restricted are classified in temporarily restricted net assets until appropriated for expenditure. Interest income is recorded when earned. Dividends are recorded on the ex-dividend date. It is the purpose of the Foundation to acquire, hold and manage investment accounts for the exclusive benefit of individual United Methodist local churches, United Methodist Institutions and associated and related organizations (the "Participants"). The Foundation offers a Short-Term and Long-Term Fund. The principal purpose of the Short-Term Fund is to provide a dependable source of income and liquidity with a time horizon of three to five years. Funds placed on deposit with the Foundation in the Short-Term Fund will earn interest until withdrawn at the current annual rate of 2 percent. Interest is posted to accounts on June 30 and December 31. The principal purpose of the Long-Term Fund is to provide long-term growth of capital through an attractive total return generated through a combination of capital appreciation and income with a time horizon of five years or longer. Funds placed on deposit with The Foundation in the Long-Term Fund will earn interest and dividends as the market dictates and the funds will be revalued at the end of each quarter. The Long-Term Fund return is based on the actual performance of the investments within the Long-Term fund. 6
Note 1. Continued The income (interest, dividends or other income) and net realized capital gains less fees are credited from the Long-Term fund to each Participant account as of the last business day of each quarter. Distributions of income and realized gains from the Participant accounts can be made quarterly, semiannually or annually depending upon the needs of the Participant. Unrealized capital gains or losses are not available for distribution. Each Participant account is revalued at the end of each quarter to reflect these unrealized capital gains or losses. The Foundation's assets are allocated among stocks, fixed income securities, cash reserves and other prudent investments. The Foundation desires to maintain a diversified mix of assets. The percentage allocation to each asset class may depend upon market conditions. When necessary, the Foundation will consider rebalancing the exposures to bring allocations within the acceptable ranges. The Foundation allocates funds within the maximum and minimum ranges below: Short-Term Fund: Asset Minimum Maximum US Equity 10.0% 60.0% International Equity 0.0% 20.0% Fixed Income 25.0% 90.0% Real Assets 0.0% 15.0% Hedged Strategies 0.0% 25.0% Cash & Equivalents 0.0% 100.0% Long-Term Fund: Asset Minimum Maximum US Equity 15.0% 50.0% International Equity 5.0% 20.0% Emerging Markets Equity 0.0% 10.0% Fixed Income 10.0% 80.0% International Fixed Income 0.0% 15.0% Real Assets 0.0% 15.0% Hedged Strategies 0.0% 35.0% Cash & Equivalents 0.0% 10.0% 7
Note 1. Continued Working within these ranges, the Foundation, along with any professional retained to assist the Foundation, will determine the investment allocation that they believe is appropriate under prevailing market conditions. The Foundation's Investment Committee reviews the investment allocations at least quarterly and management monitors on an on-going basis. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated useful lives ranging from five to ten years for equipment and thirty-nine years for buildings. Deposits Held for Others Deposits held for others represent the aggregate balance in deposit accounts that are being managed by the Foundation for local churches, United Methodist Institutions and associated and related organizations. Although the individual agreements vary, these balances are generally subject to the terms of the selected investment funds as described in the Investments section of Note 1. Net Assets Restricted net assets are those subject to donor-imposed restrictions. The restriction may be temporary or permanent, depending upon the terms of the gift. When a donor restriction expires or is met, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. Gifts whose restrictions are met in the same reporting period are reported as unrestricted gifts. Unrestricted net assets represent resources generated from operations or that are not subject to donor restrictions. Income Taxes The Foundation is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Summarized Financial Information The statement of activities includes certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Foundation's financial statements for the year ended December 31, 2014, from which the summarized information was derived. 8
Note 1. Continued Fair Value Measurements As defined in FASB Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, fair value is 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. ASC Topic 820 also establishes a three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices included in Level 1, such as quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability. Level 3 Unobservable inputs reflecting management's own assumptions about the input used in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. Management's assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. Note 2. Investments A summary of investments as of December 31, 2015 and 2014 follows: Net Unrealized Market Gains December 31, 2015 Cost Value (Losses) Real estate $ 77,970 $ 77,970 $ - Hedged strategies, international equities, fixed income 24,682,672 29,974,813 5,292,141 Mutual funds 40,202,845 36,085,398 (4,117,447) Common stocks 5,480,548 5,582,950 102,402 Government debt securities 14,543,688 14,212,058 (331,630) Corporate debt securities 7,397,174 7,678,566 281,392 Mortgage-backed securities 1,415,519 1,421,641 6,122 Total investments $ 93,800,416 $ 95,033,396 $ 1,232,980 9
Note 2. Continued Net Unrealized Market Gains December 31, 2014 Cost Value (Losses) Real estate $ 77,970 $ 77,970 $ - Real estate investment trust 6,762,562 7,956,054 1,193,492 Hedged strategies, international equities, fixed income 22,988,406 29,184,938 6,196,532 Mutual funds 28,019,468 31,315,613 3,296,145 Common stocks 5,189,367 5,789,696 600,329 Government debt securities 14,362,450 14,317,905 (44,545) Corporate debt securities 9,106,930 9,646,284 539,354 Mortgage-backed securities 1,638,109 1,701,670 63,561 Total investments $ 88,476,667 $ 99,990,130 $ 11,844,868 Maturities of the investments in debt securities as of December 31, 2015 are as follows: Cost Market Value Due in one year or less $ 1,063,554 $ 1,092,622 Due after one year through five years 14,151,895 13,918,726 Due after five years through ten years 3,216,703 3,295,862 Due after ten years 3,508,709 3,583,414 Mortgage-backed securities 1,415,519 1,421,641 Total investment in debt securities $ 23,356,380 $ 23,312,265 Because a material amount of the Foundation's investments is exposed to changes in market prices, the Foundation is subject to the possibility that declines in market prices of investments could have a material negative impact on the value of those investments. The Foundation's investment activities for the years ended December 31, 2015 and 2014 resulted in income (loss) of $(3,834,329) and $4,732,088 respectively, including net realized and unrealized gains (losses) of $(5,943,026) and $2,925,307, respectively. 10
Note 2. Continued The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of December 31, 2015: Level 1 Level 2 Level 3 Real estate $ - $ - $ 77,970 Hedged strategies, international equities, fixed income - 14,184,702 15,790,111 Mutual funds 36,085,398 - - Common stocks 5,582,950 - - Government debt securities - 14,212,058 - Corporate debt securities - 7,678,566 - Mortgage-backed securities - 1,421,641 - Total assets at fair value $ 41,668,348 $ 37,496,967 $ 15,868,081 The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of December 31, 2014: Level 1 Level 2 Level 3 Real estate $ - $ - $ 77,970 Real estate investment trust - - 7,956,054 Hedged strategies, international equities, fixed income - 14,867,295 14,317,643 Mutual funds 31,315,613 - - Common stocks 5,789,696 - - Government debt securities - 14,317,905 - Corporate debt securities - 9,646,284 - Mortgage-backed securities - 1,701,670 - Total assets at fair value $ 37,105,309 $ 40,533,154 $ 22,351,667 11
Note 2. Continued The table below summarizes the activity for investments measured at fair value on a recurring basis using significant Level 3 inputs for the year ended December 31, 2015: Hedged Real Estate Strategies/ Real Investment Fixed Estate Trust Income Total January 1, 2015 $ 77,970 $ 7,956,054 $ 14,317,643 $ 22,351,667 Net realized/unrealized gains included in income - 103,426 878,663 982,089 Purchases - - 1,700,000 1,700,000 Sales - (8,059,480) (1,106,195) (9,165,675) December 31, 2015 $ 77,970 $ - $ 15,790,111 $ 15,868,081 The table below summarizes the activity for investments measured at fair value on a recurring basis using significant Level 3 inputs for the year ended December 31, 2014: Hedged Real Estate Strategies/ Real Investment Fixed Estate Trust Income Total January 1, 2014 $ 83,470 $ 7,354,223 $ 11,110,024 $ 18,547,717 Net realized/unrealized gains included in income - 601,831 433,955 1,035,786 Purchases - - 2,777,000 2,777,000 Sales (5,500) - (3,336) (8,836) December 31, 2014 $ 77,970 $ 7,956,054 $ 14,317,643 $ 22,351,667 12
Note 2. Continued Following is a description of the valuation methodologies used for assets measured at fair value. Investments in mutual funds and common stocks: Valued at the closing price reported on the active market on which the individual securities are traded (Level 1). Government debt securities, corporate debt securities and mortgage-backed securities: Valued at quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability (Level 2). Real estate and real estate investment trust: Valued by discount models and third-party appraisals, which approximate fair value (Level 3). Hedged strategies, international equity and fixed income: For hedge funds and limited partnerships, for which there is no active market, the Foundation records these investments at the net asset value ("NAV"). Due to current market conditions as well as the limited trading activity of these securities, the market value of the securities is highly sensitive to assumption changes and market value volatility. Foundation management has reviewed the valuations reported by investment managers and determined that NAV is a reasonable and prudent estimate of fair value. Alternative investments are not readily marketable and their estimated value is subject to uncertainty. Therefore, there may be a material difference between their estimated value and the value that would have been used had a readily determinable fair value for such investments existed (Level 2 and 3). The fixed income fund invests primarily in non-u.s. global bond investments. This value-based strategy maintains a primary focus on sovereign debt with a goal of unlocking the potential performance benefits of mean-reversion tendencies in interest rates and currency valuations. The investment manager takes a benchmarkagnostic approach and limits investment to only the 8-16 countries and currencies it considers attractive investments (Level 3). Level 2 and 3 investments may include equity securities, fixed income securities and other privately issued securities. If the value is based on quoted market prices of comparable assets, the securities are typically classified within level 2. The fair value of some of these investments has been estimated using net asset value per share. When observable prices are not available for these securities, management uses one or more valuation techniques for which sufficient and reliable data is available. The selection of appropriate valuation techniques may be affected by the availability of relevant inputs as well as the relative reliability of the inputs. In some cases, one valuation technique may provide the best indication of fair value while in other circumstances, multiple valuation techniques may be appropriate. The results of the application of the various techniques may not be equally representative of fair value, due to factors such as assumptions made in the valuation. In some situations, management may determine it appropriate to evaluate and weigh the results, as appropriate, to develop a range of possible values, with the fair value based on management's assessment of the most representative point within the range. 13
Note 2. Continued The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although 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. There were no transfers between level 1, 2 and 3 for the years ending December 31, 2015 and 2014. Note 3. Property and Equipment The following is a summary of property and equipment as of December 31, 2015 and 2014: 2015 2014 Land $ 616,122 $ 616,122 Building 1,708,646 1,708,646 Furniture and equipment 235,230 232,560 Vehicles 66,043 66,043 Total property and equipment 2,626,041 2,623,371 Less accumulated depreciation 696,396 638,383 Total property and equipment $ 1,929,345 $ 1,984,988 Note 4. Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following purposes as of December 31, 2015 and 2014: 2015 2014 Cemeteries $ 18,923 $ 22,131 Methodist churches 1,149,106 1,386,117 Scholarships and education 314,303 555,484 Retired ministers assistance 32,258 47,138 Charitable causes 8,199 155,829 Miscellaneous others 73,277 187,082 Total temporarily restricted net assets $ 1,596,066 $ 2,353,781 14
Note 5. Endowment Net Assets The Investment Committee of the Foundation has adopted an investment policy which governs the management and oversight of the Foundation's endowment funds and other investments. The policy sets forth the objectives for the portfolio, the strategies to achieve the objectives, procedures for monitoring and control and the delineation of duties for those responsible for the Foundation's investments. Endowment net assets consist of approximately 200 individual permanently restricted net asset funds established for a variety of purposes. The permanently restricted net assets are comprised of donor restricted funds. Permanently restricted net assets are classified and reported based on the existence or absence of donor-imposed restrictions. The donor may choose to allocate the asset among the short-term or long-term investment options offered by the Foundation. The funds associated with permanently restricted net assets are pooled investments and are subject to the same rate of return as described in Note 1. Interest income is allocated between corpus and amounts available to spend based on donor's explicit intent. Other market returns, such as unrealized and realized gains or losses are recognized in endowment net assets until amounts are appropriated for expenditure. The Foundation is subject to the state of Mississippi's enacted version of the Uniform Prudent Management of Institutional Funds Act ("UPMIFA"). The Foundation interprets UPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund (2) The purposes of the donor-restricted endowment fund (3) General economic conditions (4) The possible effect of inflation and deflation (5) The expected total return from income and the appreciation of investments (6) Other resources of the Foundation (7) The investment policies of the Foundation 15
Note 5. Continued Changes in endowment net assets for the year ended December 31, 2015 include: Temporarily Permanently Restricted Restricted Total Endowment net assets, beginning of year $ 823,985 $ 9,087,580 $ 9,911,565 Interest and dividends 215,441 84,656 300,097 Contributions - 1,341,876 1,341,876 Appropriation for unrestricted purposes (437,335) - (437,335) Net investment depreciation (548,079) - (548,079) Endowment net assets, end of year $ 54,012 $ 10,514,112 $ 10,568,124 Endowment net assets are restricted for the following purpose as of December 31, 2015: Interest Net Net and Assets Investment 2014 Contributions Dividends Released Depreciation 2015 Cemeteries $ 379,472 $ 8,430 $ 8,296 $ (5,243) $ (4,107) $ 386,847 Churches 2,334,923 1,195,435 76,982 (229,439) (92,971) 3,284,927 Scholarships 2,991,866 58,941 94,589 (103,139) (214,124) 2,828,132 Retired ministers 178,968-5,606 (6,836) (13,285) 164,453 Charity 2,749,055 18,350 71,786 (97,692) (120,554) 2,620,946 Board of Pension 764,130 3,710 26,329 (19,659) (67,426) 707,086 Other 513,151 57,013 16,508 24,674 (35,611) 575,733 Total $ 9,911,565 $ 1,341,876 $ 300,097 $ (437,335) $ (548,079) $ 10,568,124 Changes in endowment net assets for the year ended December 31, 2014 include: Temporarily Permanently Restricted Restricted Total Endowment net assets, beginning of year $ 841,883 $ 8,833,720 $ 9,675,603 Interest and dividends 262,912 27,747 290,659 Contributions - 226,113 226,113 Appropriation for unrestricted purposes (291,659) - (291,659) Net investment appreciation 10,849-10,849 Endowment net assets, end of year $ 823,985 $ 9,087,580 $ 9,911,565 16
Note 5. Continued Endowment net assets are restricted for the following purpose as of December 31, 2014: Interest Net Net and Assets Investment 2013 Contributions Dividends Released Appreciation 2014 Cemeteries $ 371,543 $ 5,802 $ 8,280 $ (6,232) $ 79 $ 379,472 Churches 2,326,028 3,567 65,621 (62,528) 2,235 2,334,923 Scholarships 2,945,284 48,217 97,906 (103,278) 3,737 2,991,866 Retired ministers 178,917-5,963 (6,209) 297 178,968 Charity 2,739,505 16,590 74,217 (83,912) 2,655 2,749,055 Board of Pension 749,909 3,168 27,583 (17,967) 1,437 764,130 Other 364,417 148,769 11,089 (11,533) 409 513,151 Total $ 9,675,603 $ 226,113 $ 290,659 $ (291,659) $ 10,849 $ 9,911,565 Note 6. Expenses by Function Expenses are divided by functional class between program and supporting services. Expenses by function for the year ended December 31, 2015 were as follows: Program Supporting Services Services Total Interest expense $ 1,232,306 $ - $ 1,232,306 Salaries and benefits 147,083 281,430 428,513 Supplies and expenses 11,856 67,357 79,213 Management fees 416,363-416,363 Services - 62,078 62,078 Occupancy - 14,173 14,173 Depreciation 14,502 43,811 58,313 Maintenance - 13,853 13,853 Restricted net asset expenditures 617,822-617,822 Total $ 2,439,932 $ 482,702 $ 2,922,634 17
Note 6. Expenses by Function Expenses by function for the year ended December 31, 2014 were as follows: Program Supporting Services Services Total Interest expense $ 1,982,148 $ - $ 1,982,148 Salaries and benefits 244,813 218,334 463,147 Supplies and expenses 20,336 69,689 90,025 Management fees 341,688-341,688 Services - 59,743 59,743 Occupancy - 13,896 13,896 Depreciation 14,201 43,811 58,012 Maintenance - 19,837 19,837 Restricted net asset expenditures 474,289-474,289 Total $ 3,077,475 $ 425,310 $ 3,502,785 Program services are those involved in the management of investments, including investment decisions, purchases and sales, as well as the collection of investment income and allocation of returns to investees. Supporting services include all activities other than program services. Generally, they include management, general and administrative and fund raising activities. Note 7. Concentrations of Credit Risk The Foundation invests in a professionally managed portfolio that contains common shares and bonds of publicly traded companies, U.S. Government obligations, mutual funds and money market funds. Such investments are exposed to various risks such as interest rate, market and credit. 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 risks in the near term would materially affect investment balances and the amounts reported in the financial statements. At times throughout the year, amounts on deposit with financial institutions may exceed the federally insured limits of $250,000. The Foundation considers this risk minimal. At December 31, 2015, balances exceeded these limits by approximately $3,400,000. Note 8. Subsequent Events The Foundation has evaluated subsequent events through April 22, 2016, the date the financial statements were available to be issued. 18