Financial Statements and Independent Auditors Report
Financial Statements Contents Independent Auditors Report... 1-2 Financial Statements Statements of Financial Position... 3 Statements of Activities... 4-5 Statements of Cash Flows... 6 Notes to Financial Statements... 7-12 Supplementary Information Schedules of Functional Expenses... 13-14
Rogers & Company PLLC Certified Public Accountants 8300 Boone Boulevard Suite 600 Vienna, Virginia 22182 703.893.0300 voice 703.893.4070 facsimile www.rogerspllc.com INDEPENDENT AUDITORS REPORT To the Board of Directors Youth Service America, Inc. We have audited the accompanying financial statements of Youth Service America, Inc. (YSA) as of, 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. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform an 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. 1
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of YSA as of, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information included on pages 13-14 is 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 audit 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. Vienna, Virginia December 4, 2015 2
Statements of Financial Position 2015 2014 Assets Cash and cash equivalents $ 1,337,342 $ 1,522,531 Grants receivable 43,200 48,837 Deposits 11,740 11,740 Property and equipment, net 2,141 4,246 Total assets $ 1,394,423 $ 1,587,354 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 25,546 $ 42,218 Deferred rent liability 83,972 105,441 Deferred revenue 757,500 900,299 Total liabilities 867,018 1,047,958 Net Assets Unrestricted 493,405 505,551 Temporarily restricted 34,000 33,845 Total net assets 527,405 539,396 Total liabilities and net assets $ 1,394,423 $ 1,587,354 See accompanying notes. 3
Statement of Activities For the Year Ended June 30, 2015 Temporarily Unrestricted Restricted Total Revenue and Support Grants and contracts $ 33,087 $ 2,467,146 $ 2,500,233 Contributions 66,963-66,963 Other income 41,209-41,209 Interest income 540-540 Released from restrictions 2,466,991 (2,466,991) - Total revenue and support 2,608,790 155 2,608,945 Expenses Program services: Grants 950,197-950,197 Global Youth Service Day 411,186-411,186 Outreach and communication 530,753-530,753 Youth Service Institute 190,862-190,862 Semester of Service 65,556-65,556 Total program services 2,148,554-2,148,554 Supporting services: Management and general 281,894-281,894 Other program support 80,568-80,568 Fundraising 109,920-109,920 Total supporting services 472,382-472,382 Total expenses 2,620,936-2,620,936 Change in Net Assets (12,146) 155 (11,991) Net Assets, beginning of year 505,551 33,845 539,396 Net Assets, end of year $ 493,405 $ 34,000 $ 527,405 See accompanying notes. 4
Statement of Activities For the Year Ended June 30, 2014 Temporarily Unrestricted Restricted Total Revenue and Support Grants and contracts $ 68,222 $ 2,811,804 $ 2,880,026 Contributions 50,333-50,333 Other income 2,609-2,609 Interest income 544-544 Released from restrictions 3,009,551 (3,009,551) - Total revenue and support 3,131,259 (197,747) 2,933,512 Expenses Program services: Grants 1,079,732-1,079,732 Global Youth Service Day 523,422-523,422 Outreach and communication 667,768-667,768 Youth Service Institute 130,810-130,810 Semester of Service 86,508-86,508 Total program services 2,488,240-2,488,240 Supporting services: Management and general 338,975-338,975 Other program support 103,152-103,152 Fundraising 134,536-134,536 Total supporting services 576,663-576,663 Total expenses 3,064,903-3,064,903 Change in Net Assets 66,356 (197,747) (131,391) Net Assets, beginning of year 439,195 231,592 670,787 Net Assets, end of year $ 505,551 $ 33,845 $ 539,396 See accompanying notes. 5
Statements of Cash Flows For the Years Ended 2015 2014 Cash Flows from Operating Activities Change in net assets $ (11,991) $ (131,391) Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation and amortization 2,105 2,105 Change in operating assets and liabilities: Decrease in: Grants receivable 5,637 52,774 Decrease in: Accounts payable and accrued expenses (16,672) (48,838) Deferred rent liability (21,469) (12,821) Deferred revenue (142,799) (737) Net cash used in operating activities (185,189) (138,908) Net Decrease in Cash and Cash Equivalents (185,189) (138,908) Cash and Cash Equivalents, beginning of year 1,522,531 1,661,439 Cash and Cash Equivalents, end of year $ 1,337,342 $ 1,522,531 See accompanying notes. 6
Notes to Financial Statements 1. Nature of Operations Youth Service America, Inc. (YSA) is a nonprofit organization, incorporated and located in the District of Columbia. YSA is a resource center that partners with thousands of organizations committed to increasing the quality and quantity of volunteer opportunities for young people, ages 5 25, to serve locally, nationally, and globally. Founded in 1986, YSA s mission is to strengthen the effectiveness, sustainability, and scale of the youth service and service-learning fields. A strong youth service movement will create healthy communities and foster citizenship, knowledge, and the personal development of young people. YSA envisions a powerful network of organizations committed to making service and service-learning the common expectation and common experience of all young people. 2. Summary of Significant Accounting Policies Basis of Accounting and Presentation These financial statements are prepared on the accrual basis of accounting. Net assets are reported based on the presence or absence of donor-imposed restrictions as follows: Unrestricted net assets represent funds that are not subject to donor-imposed stipulations and are available for support of YSA s operations. Temporarily restricted net assets represent funds subject to donor-imposed restrictions that are met either by actions of YSA or the passage of time. Temporarily restricted net assets as of were $34,000 and $33,845, respectively. Cash Equivalents For the purpose of the statements of cash flows, YSA considers as cash equivalents all highly liquid investments that can be converted into known amounts of cash and have a maturity period of ninety days or less at the time of purchase. Grants Receivable Grants receivable represent amounts that have been promised but not yet received. At, grants receivable totaled $43,200 and $48,837, respectively, and are included in the accompanying statements of financial position. The entire amount of the grants receivable is expected to be collected within one year, and is recorded at net realizable value at June 30, 2015. No allowance for doubtful accounts is recorded as management believes that all amounts are fully collectible. 7
Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) Property and Equipment Property and equipment purchased at a cost of $500 or more are capitalized and recorded at acquisition cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are stated at cost and are amortized using the straightline method over the shorter of their estimated useful lives or the lease term. Expenditures for maintenance and repairs are charged to expenses as incurred. Revenue Recognition Grants and contributions are recorded as revenue and are considered to be available for unrestricted use unless specifically restricted by the donor. YSA reports contributions and sponsorships as temporarily restricted support if they are received with donor or grantor stipulations that limit the use of the donated assets. When a donor restriction expires, 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 statements of activities as net assets released from restrictions. Conditional promises to give are not included as support until the conditions are substantially met. Conditional grants received in advance are not recognized as revenue until the conditions have been substantially met. At, YSA had $757,500 and $900,299, respectively, of deferred revenue relating to conditional grants that will not be earned until conditions have been met. These amounts are included in the accompanying statements of financial position. Revenue from all other sources is recognized when earned. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the accompanying statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. 8
Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) 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. Subsequent Events In preparing these financial statements, YSA has evaluated events any transactions for potential recognition or disclosure through December 4, 2015, the date the financial statements were available to be issued. 3. Concentrations Credit Risk Financial instruments that potentially subject YSA to significant concentrations of credit risk consist of cash and cash equivalents. YSA maintains cash deposit and transaction accounts with various financial institutions and these values, from time to time, may exceed insurable limits under the Federal Depository Insurance Corporation (FDIC). YSA has not experienced any credit losses on its cash and cash equivalents to date as it relates to FDIC insurance limits. Management periodically assesses the financial condition of these financial institutions and believes that the risk of any credit loss is minimal. Revenue Risk During the years ended, a substantial portion of YSA s revenue was generated through large grant donations from several corporations, which are recognized in the accompanying statements of activities in the amount of $2,044,299 and $2,051,276, respectively. These grants approximate 78% and 70% of YSA s total revenue and support for the years ended, respectively. A potential reduction in funding from the grants in the future could significantly impact YSA s ability to carry out its current program activities. However, management of YSA does not consider this a significant risk in the near term. 9
Notes to Financial Statements 4. Property and Equipment YSA held the following property and equipment at June 30: Computer equipment $ 211,651 $ 211,651 Furniture 70,247 70,247 Leasehold improvements 4,669 4,669 Total property and equipment 286,567 286,567 Less: accumulated depreciation and amortization (284,426) (282,321) Property and equipment, net $ 2,141 $ 4,246 5. Temporarily Restricted Net Assets 2015 2014 Temporarily restricted net assets totaled $34,000 and $33,845 at, respectively, and were all held for the Festival of Children Foundation. 6. Retirement Plan YSA sponsors a defined contribution plan ( the Plan ) under Section 403(b) of the Internal Revenue Code (IRC) covering eligible employees after three months of service. YSA matches employee contributions up to 3% of the participant s eligible compensation. After three years of employment, YSA matches employee contributions up to 5% of the participant s eligible compensation. YSA s contributions to the Plan were $50,085 and $65,901 for the years ended, respectively. 7. Commitments and Contingencies Line of Credit YSA maintained a revolving line of credit with a financial institution in the amount of $300,000 until August 31, 2014, the date the line of credit was closed. The line of credit was secured by general assets of YSA. There was no outstanding balance on the line of credit at June 30, 2014. 10
Notes to Financial Statements 7. Commitments and Contingencies (continued) Operating Lease Commencing on November 1, 2007, YSA entered into a ten year operating lease for office space. The lease contains various incentives and scheduled rent increases, which are recognized on a straight-line basis ratably over the term of the lease. The difference between this expense and the required lease payments is reflected as deferred rent liability in the accompanying statements of financial position. Rent and utilities expense was $337,816 and $334,100 for the years ended June 30, 2015 and 2014, respectively. In July of 2014, YSA entered into a sublease agreement with a subtenant to lease a portion of its office space. The lease commenced on July 25, 2014 and expires on July 31, 2017. The terms of the lease contain a fixed rent payment during the first year of the lease agreement, and future rent increases of 4% annually in subsequent years. During 2012, YSA began leasing certain office equipment under an operating lease. The lease requires fixed monthly payments of $414 over five years, expiring in 2017. Future minimum lease payments and rentals for all leases are as follows for the years ending June 30: 2016 $ 368,723 $ 60,039 $ 308,684 2017 376,565 62,440 314,125 2018 125,295 5,220 120,075 Meetings Payments Receipts Net Total $ 870,583 $ 127,699 $ 742,884 Meetings are held by YSA at various hotels throughout the United States. These events are contracted with the hotels in advance. In the event that YSA cancels its agreements with the hotels, it can be held liable for liquidated damages up to the amount of lost profit less the hotel s mitigation, depending upon the date of cancellation. 11
Notes to Financial Statements 8. Income Taxes YSA is recognized as a tax-exempt organization under IRC Section 501(c)(3) and is exempt from income taxes except for taxes on unrelated business activities. No provision for income taxes has been made as there was no net income earned from unrelated business activities for the years ended. Contributions to YSA are deductible as provided in IRC Section 170(b)(1)(A)(vi). Management evaluated YSA s tax positions and concluded that YSA s financial statements do not include any uncertain tax positions. 12
SUPPLEMENTARY INFORMATION
Schedule of Functional Expenses For the Year Ended June 30, 2015 Grants Program Services Global Outreach and Youth Youth Communi- Service Service Day cation Institute Semester of Service Total Program Services Supporting Services Other Management Program and General Support Fundraising Total Salaries and payroll taxes $ 119,368 $ 276,853 $ 275,850 $ 31,096 $ 39,120 $ 742,287 $ 150,309 $ 50,154 $ 60,340 $ 1,003,090 Employee benefits 13,436 31,163 31,050 3,500 4,404 83,553 11,291 5,646 12,420 112,910 Rent and utilities 40,200 93,237 92,899 10,472 13,175 249,983 33,782 16,891 37,160 337,816 Education - - 13,450 - - 13,450 - - - 13,450 Public relations - 1,340 1,340 - - 2,680 - - - 2,680 Accounting fees - - - - - - 17,106 - - 17,106 Technology 7,877 7,877 13,128 7,877 7,877 44,636-7,877-52,513 Meetings and travel - - 101,834 136,937-238,771 4,399 - - 243,170 Postage - - 264 264 264 792 264 - - 1,056 Office expenses 716 716 716 716 716 3,580 26,688 - - 30,268 Insurance - - - - - - 16,872 - - 16,872 Professional development - - - - - - 168 - - 168 Grants 759,236 - - - - 759,236 - - - 759,236 Miscellaneous 9,364-222 - - 9,586 18,910 - - 28,496 Depreciation and amortization - - - - - - 2,105 - - 2,105 Total Expenses $ 950,197 $ 411,186 $ 530,753 $ 190,862 $ 65,556 $ 2,148,554 $ 281,894 $ 80,568 $ 109,920 $ 2,620,936 13
Schedule of Functional Expenses For the Year Ended June 30, 2014 Program Services Global Outreach and Youth Semester Total Youth Communi- Service of Program Grants Service Day cation Institute Service Services Supporting Services Other Management Program and General Support Fundraising Total Salaries and payroll taxes $ 149,400 $ 346,507 $ 345,251 $ 38,919 $ 48,963 $ 929,040 $ 175,546 $ 62,773 $ 88,100 $ 1,255,459 Employee benefits 10,477 24,300 24,212 2,729 3,434 65,152 8,804 4,402 9,685 88,043 Rent and utilities 39,758 92,212 91,878 10,357 13,030 247,235 84,730 16,705 36,751 385,421 Education - - 26,619 - - 26,619 - - - 26,619 Public relations - 40,196 40,196 - - 80,392 - - - 80,392 Accounting fees - - - - - - 17,616 - - 17,616 Technology 19,272 19,272 32,119 19,272 19,272 109,207-19,272-128,479 Meetings and travel - - 105,256 57,724-162,980 9,028 - - 172,008 Postage - - 874 874 874 2,622 874 - - 3,496 Office expenses 935 935 935 935 935 4,675 14,027 - - 18,702 Insurance - - - - - - 20,324 - - 20,324 Memberships - - - - - - 1,321 - - 1,321 Professional development - - - - - - 254 - - 254 Grants 859,520 - - - - 859,520 - - - 859,520 Miscellaneous 370-428 - - 798 4,346 - - 5,144 Depreciation and amortization - - - - - - 2,105 - - 2,105 Total Expenses $ 1,079,732 $ 523,422 $ 667,768 $ 130,810 $ 86,508 $ 2,488,240 $ 338,975 $ 103,152 $ 134,536 $ 3,064,903 14