FORT WAYNE, INDIANA Financial Statements as of December 31, 2014 and 2013
TABLE OF CONTENTS December 31, 2014 PAGE Independent Auditor s Report 1 2 Statements of Financial Position 3 Statements of Activities 4 5 Statements of Cash Flows 6 Notes to Financial Statements 7 15 Supplementary Information: Independent Auditor s Report on Supplementary Information 16 Statements of Functional Expenses 17 18
Statements of Financial Position December 31, 2014 and 2013 ASSETS CURRENT ASSETS: 2014 2013 Cash and cash equivalents unrestricted $ 74,193 $ 33,490 Cash and cash equivalents restricted 27,777 49,122 Receivables: Grants receivable net 27,000 47,000 Fees - Adult guardianship services 19,221 25,262 Medicaid guardianship fees net of allowance for doubtful accounts of $0 and $9,825 for 2014 and 2013, respectively - 1,365 Hospital contracts 30,000 30,000 Prepaid expenses 5,215 6,172 Investments 12,880 11,957 Total Current Assets 196,286 204,368 PROPERTY AND EQUIPMENT NET 6,025 8,971 BENEFICIAL INTEREST IN COMMUNITY FOUNDATION OF GREATER FORT WAYNE 72,643 74,247 TOTAL ASSETS $ 274,954 $ 287,586 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable $ 1,165 $ 266 Accrued payroll and withholdings 15,122 19,793 Total Current Liabilities 16,287 20,059 NET ASSETS: Unrestricted 205,890 208,405 Temporarily restricted 52,777 59,122 Total Net Assets 258,667 267,527 TOTAL LIABILITIES AND NET ASSETS $ 274,954 $ 287,586 See Notes to Financial Statements. 3
Statement of Activities for the year ended December 31, 2014 Temporarily SUPPORT AND REVENUE: Unrestricted Restricted Total % Grants and contributions $ 118,325 $ 52,777 $ 171,102 38.1% Adult guardianship fees 119,638-119,638 26.7% Hospital contracts 45,000-45,000 10.0% Medicaid guardianship fees 22,271-22,271 5.0% United Way 2,667-2,667 0.6% In-kind contributions 19,620-19,620 4.4% Special events: Proceeds 30,514-30,514 6.8% Less: Cost of direct benefit to donors (14,854) - (14,854) -3.3% Investment revenue 2,713-2,713 0.6% Gain (loss) on investments 98-98 0.0% Other income Cedars Hope 45,641-45,641 10.2% Miscellaneous 4,166-4,166 0.9% Net assets released from restriction 59,122 (59,122) - 0.0% Total Support and Revenue 454,921 (6,345) 448,576 100.0% EXPENSES: Adult guardianship services 184,538-184,538 40.4% Adult advocacy 75,042-75,042 16.4% Kids on the Block 41,345-41,345 9.0% Education 27,133-27,133 5.9% Cedar's hope 45,641-45,641 10.0% Total Program Expenses 373,699-373,699 81.7% Management and general 50,751-50,751 11.1% Fundraising 32,986-32,986 7.2% Total Expenses 457,436-457,436 100.0% CHANGE IN NET ASSETS (2,515) (6,345) (8,860) NET ASSETS BEGINNING OF YEAR 208,405 59,122 267,527 NET ASSETS END OF YEAR $ 205,890 $ 52,777 $ 258,667 See Notes to Financial Statements. 4
Statement of Activities for the year ended December 31, 2013 Temporarily SUPPORT AND REVENUE: Unrestricted Restricted Total % Grants and contributions $ 92,472 $ 90,000 $ 182,472 45.7% Adult guardianship fees 107,308-107,308 26.8% Hospital contracts 45,000-45,000 11.3% Medicaid guardianship fees 28,945-28,945 7.2% United Way 1,217-1,217 0.3% In-kind contributions 4,203-4,203 1.1% Special events: Proceeds 19,764-19,764 4.9% Less: Cost of direct benefit to donors (4,081) - (4,081) -1.0% Investment revenue 3,381-3,381 0.8% Gain (loss) on investments 9,610-9,610 2.4% Other income reimbursed expenses 0.0% Miscellaneous 2,148-2,148 0.5% Net assets released from restriction 52,182 (52,182) - 0.0% Total Support and Revenue 362,149 37,818 399,967 100.0% EXPENSES: Adult guardianship services 160,361-160,361 43.0% Adult advocacy 66,103-66,103 17.8% Kids on the Block 37,793-37,793 10.2% Education 23,737-23,737 6.4% Cedar's hope - - - 0.0% Total Program Expenses 287,994-287,994 77.4% Management and general 53,013-53,013 14.3% Fundraising 30,852-30,852 8.3% Total Expenses 371,859-371,859 100.0% CHANGE IN NET ASSETS (9,710) 37,818 28,108 NET ASSETS BEGINNING OF YEAR 218,115 21,304 239,419 NET ASSETS END OF YEAR $ 208,405 $ 59,122 $ 267,527 See Notes to Financial Statements. 5
Statements of Cash Flows for the years ended December 31, 2014 and 2013 CASH FLOWS FROM OPERATING ACTIVITIES: 2014 2013 Change in net assets $ (8,860) $ 28,108 Adjustments to Reconcile Change in Net Assets to Net Cash Flows From Operating Activities: Depreciation 2,946 2,944 Provision for bad debts - 3,890 (Gain) loss on investment (98) (9,610) Change in beneficial interest (2,006) (2,760) Changes in Operating Assets and Liabilities: Receivables 27,406 (72,396) Prepaid expenses 957 (1,300) Accounts payable 899 (3,508) Accrued payroll and withholdings (4,671) 1,374 Net Cash Flows From Operating Activities 16,573 (53,258) CASH FLOWS FROM INVESTING ACTIVITIES: Reinvestment of investment income (254) (223) Proceeds from distributions of beneficial interest 3,039 2,540 Net Cash Flows From Investing Activities 2,785 2,317 Net change in cash and cash equivalents 19,358 (50,941) Cash and cash equivalents beginning of year 82,612 133,553 CASH AND CASH EQUIVALENTS END OF YEAR $ 101,970 $ 82,612 See Notes to Financial Statements. 6
Notes to Financial Statements NOTE 1. NATURE OF ORGANIZATION Mental Health America in Allen County, Inc. ( Organization ) is dedicated to providing essential information, resources, advocacy and education to help individuals and families better gain access to the prevention, treatment and recovery programs they need to be successful. The Organization exists to speak on behalf of those suffering from mental illness, developmental disabilities, chemical dependency, and adults in danger of neglect, abuse, or exploitation in Allen County, Indiana. The Organization provides education for the community and information to consumers and their families. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES FINANCIAL REPORTING: Method of Accounting: The financial statements of the Organization have been prepared on the accrual basis. The financial statements have been prepared in accordance with Financial Accounting Standards Board (FASB) ASC 958-210, Financial Statements of Not-for-Profit Organizations. FASB ASC 958-210 requires, among other things, the Organization to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. In addition, the Organization is required to present a statement of cash flows. Contributions: The Organization accounts for contributions in accordance with FASB ASC 958-360, Accounting for Contributions Received and Contributions Made. In accordance with FASB ASC 958-360, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the time or purpose of restrictions. Contributions that are restricted or temporarily 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. 7
Notes to Financial Statements (Continued) NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) FINANCIAL REPORTING: (Continued) Donated Services, Goods and Space Rental: Donated services, goods and space rental are reflected as contributions at their estimated fair value at date of donation and are reported as unrestricted support unless explicit donor stipulations specify how donated assets must be used. These amounts have been reported as both donated contribution revenue and expenses on the statement of activities. The Organization recognizes the fair value of contributed services received if such services a) create or enhance non-financial assets or b) requires specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not contributed. The Organization receives services from a large number of volunteers who give significant amounts of their time to the Organization s programs and fund-raising campaigns but which do not meet the criteria for financial statement recognition. Unrestricted Net Assets: Unrestricted net assets include the balance of resources over which the Board of Directors has discretionary control. Temporarily Restricted Net Assets: Temporarily restricted net assets include contributions that are restricted by donors for a specific purpose. The restricted contributions are reported as temporarily restricted net assets in the period in which the contributions are received and transferred to unrestricted net assets when the restrictions have been met. Permanently Restricted Net Assets: The Organization had no permanently restricted net assets as of December 31, 2014 and 2013. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 8
Notes to Financial Statements (Continued) NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) FINANCIAL REPORTING: (Continued) Pledges and Grants Receivable: Donor-restricted pledges and grants are recorded as contributions to temporarily restricted net assets. Pledges and grants receivable over a period of years are valued at the discounted value of future cash flows using the Organization s latest borrowing rate. The difference between the full amount and the discounted value of the pledge or grant is recognized as an additional contribution over the life of the pledge or grant. The Organization considers pledges and grants receivable to be fully collectible; accordingly, no allowance for doubtful pledges and grants is provided. If amounts become uncollectible, they are charged to operations when that determination is made. Any difference between this method and the allowance method required under generally accepted accounting principles would be immaterial. Property and Equipment: The Organization records property and equipment at cost, if purchased, or at estimated fair market value, if donated, and provides for depreciation over the estimated useful life of the asset using the straight-line method. Estimated useful lives range from five to thirty-one years. Costs and related accumulated depreciation are removed from the accounts for assets retired from service and a gain or a loss on disposition is recorded when realized. Expenditures for normal repairs and maintenance are charged to expense as incurred. Income Tax Status and Uncertainty in Income Taxes: The Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Consequently, there is no provision for federal or state taxes. However, the Organization may be subject to federal and state income taxes on unrelated business income as defined in the Internal Revenue Code. 9
Notes to Financial Statements (Continued) NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) FINANCIAL REPORTING: (Continued) Income Tax Status and Uncertainty in Income Taxes: (Continued) The Organization follows the provisions of Financial Accounting Standards Board ASC 740, Accounting for Uncertainty in Income Taxes (FASB ASC 740-10) which requires the Organization to recognize a tax liability only if it is more likely than not the tax position would not be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax liability that is greater than 50% likely of being realized on examination. For tax positions not meeting the more likely than not test, no tax liability is recorded. The Organization has examined this issue and has determined that there are no material contingent tax liabilities or questionable tax positions as of December 31, 2014. The Organization files income tax returns in the U.S. federal jurisdiction and the State of Indiana. The Organization is no longer subject to U.S. federal and state income tax examinations by tax authorities for tax years ending before 2011. Cash Equivalents: The Organization considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents. Concentration of Credit Risk: The Organization s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. The Organization maintains cash and cash equivalents with highly rated institutions. At times, interest bearing deposits may be in excess of the FDIC insured limit. Investments: Investments are carried at fair value. Substantially all of the investments have readily determinable values. Fair value is determined by brokerage statements received from reputable brokerage firms. Functional Expenses: Operating expenses directly identifiable with a functional area are charged to that area and, where expenses affect more than one area, they are allocated on the basis of ratios determined by management. 10
Notes to Financial Statements (Continued) NOTE 3. INVESTMENTS Investments consisted of stocks in the amount of $12,880 and $11,957 for the years ended December 31, 2014 and 2013, respectively. NOTE 4. BENEFICIAL INTEREST The beneficial interest consists of funds held by the Community Foundation of Greater Fort Wayne (Foundation) which are the result of an agreement whereby the Organization has transferred assets to the Foundation and has specified itself as the beneficiary of the assets. The Organization may draw up to a certain percent of the value each year, but may only obtain a return of the full value of the assets upon consent of the Foundation. Additionally, the Foundation holds investment assets, with a value of $26,772 and $25,989, as of December 31, 2014 and 2013, respectively, for the benefit of the Organization for which the Foundation has retained variance power. These assets are not recorded as assets of the Organization. NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS Mental Health America in Allen County, Inc. follows Financial Accounting Standards Board (FASB) ASC 820-10, Fair Value Measurements. FASB ASC 820-10 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC 820-10 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. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level l Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated statement of financial position, as well as the general classification of such assets pursuant to the valuation hierarchy. Mental Health America in Allen County, Inc. has no liabilities measured at fair value on a recurring basis. 11
Notes to Financial Statements (Continued) NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) INVESTMENTS: Where quoted market prices are available in an active market, securities are classified within Level l of the valuation hierarchy. Level 1 securities include common stocks, exchange-traded mutual funds and money market mutual funds. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Government securities, corporate bonds and bond funds. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Organization has securities classified as Level 1. BENEFICIAL INTEREST: Value based upon the Organization s proportionate share of the Community Foundation of Greater Fort Wayne s pooled investment portfolio. The following table presents the fair value measurement of assets recognized in the accompanying consolidated statement of financial position measured at fair value on a recurring basis and the level within the FASB ASC 820-10 fair value hierarchy in which the fair value measurements fall at December 31, 2014 and 2013: Quoted Prices in Active Markets for Unobservable Identical Assets Inputs Fair Value (Level 1) (Level 3) December 31, 2014: Equities $ 12,880 $ 12,880 $ - Beneficial interest 72,643-72,643 Total $ 85,523 $ 12,880 $ 72,643 December 31, 2013: Money market $ 2,425 $ 2,425 $ - Equities 9,532 9,532 - Beneficial interest 74,247-74,247 Total $ 86,204 $ 11,957 $ 74,247 12
Notes to Financial Statements (Continued) NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) Following is a reconciliation of activity for assets measured on significant unobservable inputs for the years ending December 31, 2014 and 2013: 2014 2013 Beginning Balance January 1 $ 74,247 $ 66,781 Total gains and losses included in earnings: Interest and dividends 2,415 3,121 Unrealized gain (loss) (1,586) 1,547 Realized gain 1,015 5,699 Investment fees (409) (361) Distributions (3,039) (2,540) Ending Balance December 31 $ 72,643 $ 74,247 NOTE 6. FIXED ASSETS The components of fixed assets as of December 31, 2014 and 2013 are as follows: 2014 2013 Equipment $ 25,733 $ 25,734 Less: Accumulated depreciation (19,708) (16,763) $ 6,025 $ 8,971 NOTE 7. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets were released from restriction for the following purposes for the years ended December 31: 2014 2013 Client advocacy $ 37,000 $ - Kids on the Block 12,122 - Strategic restructuring 10,000 - Satisfaction of program requirements - 41,651 Satisfaction of purchase requirements - 531 Satisfaction of time requirements - 10,000 $ 59,122 $ 52,182 13
Notes to Financial Statements (Continued) NOTE 7. TEMPORARILY RESTRICTED NET ASSETS (Continued) Temporarily restricted net assets are available for the following purposes at December 31: 2014 2013 Administration $ 40,000 $ - Client advocacy - 37,000 Kids on the Block 12,777 12,122 Strategic restructuring - 10,000 $ 52,777 $ 59,122 NOTE 8. RETIREMENT PLAN The Organization sponsors a tax deferred annuity plan under Section 403(b) of the Internal Revenue Code. Employees working more than 1,000 hours per year are eligible to participate in the plan. The Organization matches up to 3% of the employee s contribution. There was no match paid to eligible participants in 2014 and 2013. NOTE 9. CONCENTRATIONS The Organization receives a substantial amount of support from the government. A substantial reduction in support from this source may have a significant impact on the Organization s programs and operations. NOTE 10. OPERATING LEASES The Organization leases its operating facilities under an operating lease expiring in 2017. Total rental expense under the non-cancelable lease was $14,427 and $14,676 for 2014 and 2013, respectively. In addition, the organization leases office equipment under an operating lease expiring in 2015. The total rental expense under this lease was $1,339 and $2,083 for 2014 and 2013, respectively. Minimum future rental payments under non-cancelable operating leases as of December 31, 2014 for each of the next four years and in the aggregate are as follows: 2015 $ 15,919 2016 15,096 2017 15,096 2018 and thereafter - Total lease commitments $ 46,111 14
Notes to Financial Statements (Continued) NOTE 11. SUBSEQUENT EVENTS In preparing these financial statements, the Organization has evaluated events and transactions for potential recognition or disclosure through July 14, 2015, the date the financial statements were available to be issued. 15
Statement of Functional Expenses for the year ended December 31, 2014 Adult Guardianship Adult Kids on Cedar's Total Management Services Advocacy the Block Education Hope Program and General Fundraising Total Salaries $ 111,886 $ 46,030 $ 6,795 $ 20,336 $ 39,726 $ 224,773 $ 14,283 $ 18,674 $ 257,730 Payroll taxes 8,328 3,270 461 1,357 2,683 16,099 1,205 1,395 18,699 Employee benefits 10,705 5,015 834 2,286 3,232 22,072 1,067 2,508 25,647 Total Salaries and Related Expenses 130,919 54,315 8,090 23,979 45,641 262,944-16,555 22,577 302,076 Contract labor - 4,030 31,313 - - 35,343 - - 35,343 Professional fees 25,321 2,767-917 - 29,005 15,592 1,384 45,981 Rent 5,749 3,691 106 642-10,188 2,725 1,514 14,427 Travel 5,969 2,393 654 387-9,403 1,832 47 11,282 Telephone 3,538 901-131 - 4,570 1,117 240 5,927 Office expenses 1,638 1,239 930 233-4,040 5,245 1,255 10,540 Education and training 352 951 245 289-1,837 250 60 2,147 Insurance 3,170 1,409-352 - 4,931 854 704 6,489 Bad debts 4,090 - - - - 4,090 - - 4,090 Marketing - 300 - - - 300-2,400 2,700 Information technology 774 2,087-77 - 2,938 366 663 3,967 Equipment 542 233 7 58-840 1,010 89 1,939 Dues and subscriptions 550 295 - - - 845 545-1,390 Postage 709 169-52 - 930 814 656 2,400 Printing 129 147-10 - 286 157 1,369 1,812 Miscellaneous 1,088 115-6 - 1,209 543 28 1,780 Awards - - - - - - 200-200 Total Expenses Before Depreciation 184,538 75,042 41,345 27,133 45,641 373,699 47,805 32,986 454,490 Depreciation - - - - - - 2,946-2,946 TOTAL EXPENSES $ 184,538 $ 75,042 $ 41,345 $ 27,133 $ 45,641 $ 373,699 $ 50,751 $ 32,986 $ 457,436 See Independent Auditor s Report on Supplementary Information. 17
Statement of Functional Expenses for the year ended December 31, 2013 Adult Guardianship Adult Kids on Total Management Services Advocacy the Block Education Program and General Fundraising Total Salaries $ 107,378 $ 43,936 $ 6,061 $ 16,697 $ 174,072 $ 17,859 $ 18,299 $ 210,230 Payroll taxes 12,067 6,300 1,041 2,307 21,715 3,254 2,478 27,447 Employee benefits 8,650 3,440 543 1,253 13,886 661 1,343 15,890 Total Salaries and Related Expenses 128,095 53,676 7,645 20,257 209,673 21,774 22,120 253,567 Contract labor - 1,885 27,579-29,464 225-29,689 Professional fees 4,203 - - - 4,203 13,367-17,570 Rent 5,621 3,688-664 9,973 3,085 1,618 14,676 Travel 5,884 2,162 1,239 20 9,305 202 147 9,654 Telephone 4,551 1,227-206 5,984 656 317 6,957 Office expenses 1,496 1,180-113 2,789 1,792 2,180 6,761 Special events 70 - - - 70 1,508 1,045 2,623 Education and training 1,104 366 1,330 2,134 4,934 46 58 5,038 Insurance 1,830 814-203 2,847 2,224 407 5,478 Bad debts 3,890 - - - 3,890 - - 3,890 Information technology 1,064 799-126 1,989 505 1,113 3,607 Equipment 95 (480) - 9 (376) 2,980 73 2,677 Dues and subscriptions 668 525 - - 1,193 775-1,968 Postage 542 41 - - 583 527 756 1,866 Printing 131 190 - - 321 393 1,018 1,732 Miscellaneous 1,117 30-5 1,152 (190) - 962 Awards - - - - - 200-200 Total Expenses Before Depreciation 160,361 66,103 37,793 23,737 287,994 50,069 30,852 368,915 Depreciation - - - - - 2,944-2,944 TOTAL EXPENSES $ 160,361 $ 66,103 $ 37,793 $ 23,737 $ 287,994 $ 53,013 $ 30,852 $ 371,859 See Independent Auditor s Report on Supplementary Information. 18