FINANCIAL STATEMENTS AND SUPPLEM.ENTARY INFORMATION JUNE 30, 2015 JMM & ASSOCIAlES CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION JUNE 30, 2015
TABLE OF CONTENTS JUNE 30, 2015 Page Independent Auditor's Report 1-2 Financial Statements: Statement of Financial Position 3-4 Statement of Activities 5 Statement of Functional Expenses 6-7 Statement of Cash Flows. 8-9 Notes to Financial Statements 10-19 Supplementary Information: Schedule of Fiscal Agent Activity 20
vr License #92-0000171 INDEPENDENT AUDITOR s REPORT To the Board of Directors of United Way of Addison County, Inc. Middlebury, Vermont We have audited the accompanying financial statements of United Way of Addison County, Inc. (a nonprofit organization) which comprise the statement of financial position as of June 30, 2015, and the related statements of activities, functional expenses 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 op1mon 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 from 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 ~ignificant 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. JMM & ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS 336 Water Tower Circle, Suite 801 Colchester, vr 05446. 802 655 5665. FAX: 802 655 5666. JMM@JMMCPA.NET
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United Way of Addison County, Inc. as of June 30, 2015, and the changes in its net assets and its cash flows for the year 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 United Way of Addison County, Inc.'s 2014 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated November 17, 2014. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2014 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of fiscal agent activity on page 20 is presented for purposes of additional analysis and is not a required part of the financial statements. Such matter 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 stated fairly in all material aspects in relation to the financial statements as a whole. November 24, 2015
STATEMENT OF FINANCIAL POSITION JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) ASSETS CURRENT ASSETS Cash - operating Cash - fiscal agent funds Pledges receivable - net of allowance Accounts receivable Prepaid expenses $ 2015 283,965 43,672 135,214 7,843 2,833 $ 2014 300,263 42,257 169,901 200 1,760 TOTAL CURRENT ASSETS 473,527 514,381 PROPERTY AND EQUIPMENT Land Building and building improvements Office equipment and furniture Less accumulated depreciation 80,000 177,217 27,748 284,965 (68,545) 80,000 177,217 27,248 284,465 (60, 180) TOTAL PROPERTY AND EQUIPMENT 216,420 224,285 OTHER ASSETS Investments Beneficial interest in Vermont Community Foundation 920,956 177,298 964,357 182,171 TOTAL OTHER ASSETS 1,098,254 1,146,528 TOTAL ASSETS $ 1,788,201 $ 1,885,194 See accompanying notes. -3-
LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable and accrued expenses Accrued payroll and related costs Current portion of long term debt Designated donations payable Allocations and grants payable Fiscal agent funds $ 2015 6,471 16,440 5,000 32,293 233,870 43,672 $ 2014 2,298 7,912 4,700 35,383 270,671 42,257 TOTAL CURRENT LIABILITIES 337,746 363,221 LONG-TERM LIABILITIES Annuity payable Long-term debt, net of current portion 6,486 114,557 6,970 119,393 TOTAL LONG-TERM LIABILITIES 121,043 126,363 TOTAL LIABILITIES 458,789 489,584 NET ASSETS Unrestricted Tern porarily restricted Permanently restricted 969,083 99,922 260,407 1,011,602 126,031 257,977 TOTAL NET ASSETS 1,329,412 1,395,610 TOTAL LIABILITIES AND NET ASSETS $ 1,788,201 $ 1,885,194 See accompanying notes. -4-
UNJTED WAY OF ADDISON COUNTY, INC. STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) Temporarily Permanently Unrestricted Restricted Restricted PUBLIC SUPPORT AND REVENUE Gross campaign results $ 682,297 $ $ Donor designations - others (25,141) Donor designations - partners (40,089) Amounts from other United Ways (55,079) Amounts raised from events (19,947) Provision for uncollectible pledges (31,500} Net campaign results 510,541 Event revenue 26,547 Contributions designated UWAC 74,227 5,222 2,430 Grants 361,834 In-kind contributions 23,802 Recovery of prior year writeoffs 27,641 Program revenue 38,158 Investment income (3,51 0) (16,331) Change in beneficial interest 3,732 Other income 14,113 Subtotal - support and revenue 1,077,085 (11,109) 2,430 Net assets released from restrictions 15,000 (15,000) TOTAL PUBLIC SUPPORT AND REVENUE 1,092,085 (26,109) 2,430 EXPENSES Program services: Funding & agency relations 375,099 Organizational development 346,793 Community leadership & initiatives 178,324 Volunteer programs 38,051 Total program services 938,267 Support services: General and administrative 61,350 Fund raising 134,987 Total support services 196,337 TOTAL EXPENSES 1,134,604 TOTAL CHANGE IN NET ASSETS (42,519) (26,109) 2,430 BEGINNING NET ASSETS 1,011,602 126,031 257,977 ENDING NET ASSETS $ 969,083 $ 99,922 $ 260,407 Total Total 2015 2014 $ 682,297 $ 683,684 (25, 141) (27,905) (40,089) (43,651) (55,079) (58,507) (19,947) (18,063) (31,500} (34,000~ 510,541 501,558 26,547 26,217 81,879 71,652 361,834 351,095 23,802 8,560 27,641 16,837 38,158 18,292 (19,841) 137,765 3,732 22,850 14,113 28,630 1,068,406 1,183,456 1,068,406 1,183,456 375,099 382,546 346,793 335,986 178,324 133,059 38,051 29,927 938,267 881,518 61,350 61,142 134,987 110,480 196,337 171,622 1,134,604 1,053,140 (66,198) 130,316 1,395,610 1,265,294 $ 1,329,412 $ 1,395,610 See accompanying notes. -5-
STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) Funding & Community Agency Organizational Leadership Relations Development & Initiatives Volunteer Programs Total Program Services Salaries and wages $ Payroll taxes and benefits Subtotal - personnel Community investment Advertising and promotion Information technology Office expenses Professional fees Occupancy Travel Depreciation Interest expense Payments to affiliate Investment management fees Conferences and training Insurance Bank charges Program supplies 26,616 $ 7,535 $ 70,740 5,920 1,657 15,345 32,536 9,192 86,085 326,002 332,818 51,896 466 14,331 7,714 956 4,462 641 299 2,330 1,192 557 2,544 1,384 506 2,312 991 517 4,815 972 454 2,075 935 436 1,994 1,157 540 2,468 498 233 1,708 611 285 1,304 $ 6,577 $ 111,468 1,448 24,370 8,025 135,838 13,500 724,216 6,926 21,723 776 13,908 214 3,484 436 4,729 2,860 7,062 232 6,555 2,206 5,707 2,120 5,485 386 4,551 166 2,605 204 2,404 TOTAL EXPENSES $ 375,099 $ 346,793 $ 178,324 $ 38,051 $ 938,267 See accompanying notes. -6-
General Total and Support Total Total Administrative Fund raising Expenses 2015 2014 Salaries and wages $ 36,183 $ 48,332 $ 84,515 $ 195,983 $ 150,880 Payroll taxes and benefits 7,971 10,800 18,771 43,141 30,707 Subtotal- personnel 44,154 59,132 103,286 239,124 181,587 Community investment 724,216 743,069 Advertising and promotion 255 35,695 35,950 57,673 40,784 Information technology 2,867 4,444 7,311 21,219 13,616 Office expenses 1,688 11,800 13,488 16,972 10,816 Professional fees 3,624 4,786 8,410 13,139 8,747 Occupancy 1,517 1,735 3,252 10,314 9,983 Travel 974 1,119 2,093 8,648 3,661 Depreciation 1,361 1,297 2,658 8,365 8,782 Interest expense 1,308 1,246 2,554 8,039 8,329 Payments to affiliate 1,620 1,542 3,162 7,713 4,161 Investment management fees 298 7,200 7,498 7,498 9,188 Conferences and training 698 1,028 1,726 4,331 4,555 Insurance 856 815 1,671 4,075 3,777 Bank charges 130 3,148 3,278 3,278 1,989 Program supplies 96 TOTAL EXPENSES $ 61,350 $ 134,987 $ 196,337 $ 1,134,604 $ 1,053,140 See accompanying notes. -7-
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) 2015 2014 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from grants Cash received from contributions Interest and dividends received Other miscellaneous receipts Cash paid for personnel Cash paid for goods and services Interest paid NET CASH USED BY OPERATING ACTIVITIES $ 361,834 $ 351,095 649,549 563,142 21,778 23,811 72,269 64,029 (230,596) (175,047) (888,975) (861,051) (8,039) (8,329) (22,180) (42,350) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of investments Purchases of investments Purchases of fixed assets NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 197,345 241,912 (186,958) (252,441) (500) (19,136) 9,887 (29,665) CASH FLOWS FROM FINANCING ACTIVITIES Endowment gifts Net change in annuity payable Principal payments on long-term debt NET CASH USED BY FINANCING ACTIVITIES 2,430 3,710 (484) (457) (4,536) (4,246) (2,590) (993) DECREASE IN CASH (14,883) (73,008) BEGINNING CASH 342,520 415,528 ENDING CASH $ 327,637 $ 342,520 See accompanying notes. -8-
STATEMENT OF CASH FLOWS {CONTINUED) FOR THE YEAR ENDED JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) 2015 2014 RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH USED BY OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash used by operating activities: Depreciation Endowment gifts Change in provision for uncollectible pledges Change in beneficial interest Realized gain on investments Unrealized (gain) loss on investments (Increase) decrease in: Pledges receivable Accounts receivable Prepaid expenses Increase (decrease) in: Accounts payable Accrued payroll and related costs Designated donations payable Allocations and grants payable Fiscal agent funds Total adjustments $ (66, 198) $ 130,316 8,365 8,782 (2,430) (3,710) (2,500) 1,000 (3,732) (22,850) (35,797) (86,883) 77,416 (27,071) 37,187 (22,898) (7,643) 270 (1,073) (220) 4,173 (1,795) 8,528 6,540 (3,090) (5,091) (36,801) (13, 154) 1,415 (5,586) 44,018 (172,666) NET CASH USED BY OPERATING ACTIVITIES $ (22, 180} $ (42,350) See accompanying notes. -9-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) 1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Operations United Way of Addison County, Inc. (the Organization) is a nonprofit organization that is supported by contributions from local individuals and businesses. The Organization fulfills its mission "to be a leader and catalyst, mobilizing and supporting the caring power of individuals and organizations to improve lives and strengthen the community'' through the following programs: Funding & Agency Relations, Organizational Development- Assistance, Community Leadership & Initiatives, and Volunteer programs. The Organization focuses its efforts around three community impact areas: health, education and financial stability. In addition to granting funds directly to local health and human service organizations, the Organization also facilitates collaborative efforts and manages specific initiatives. Examples of Community Initiatives related to these impact areas include: Distribution of Familywize discount prescription cards which can help individuals and families save 30% or more on prescription costs. Facilitation of the 5-Town Drug and Safety Alliance which brings together nonprofits, business, medical, and faith communities and individuals to address the issue of addiction in the Bristol area. The Alliance has identified three specific areas of focus: education, preventive treatment and public safety. Education Partnering with Everybody Wins to expand reading mentoring efforts in grades 1-3 in order to support improvements in third-grade reading levels throughout the county by recruiting volunteers to mentor children, one book at a time, during the school year. Programs are currently running in Shoreham, Salisbury, Bridport, and Vergennes. Financial Stability Working with local employers to provide workplace financial literacy programs (EKG - Earn It, Keep It, Grow It Program) to low and moderate wage earners at the workplace to learn about and encourage budgeting skills, financial goal setting, increased savings, proper use of credit, and improve credit score. Partnering with four additional United Ways of Vermont members and the Internal Revenue Service to bring the self-prepared Tax Program to the western half of the State in an effort to provide free tax services, improve the utilization of the Earned Income Tax Credit by working families and to empower low and moderate income earners to learn how to prepare their own returns. The Organization also partners with AARP and RSVP to provide traditional Volunteers in Tax Assistance (VITA) tax preparation to Addison County. Basis of accounting The financial statements of the United Way of Addison County, Inc. have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables and other liabilities. -10-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) 1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued) Financial statement presentation United Way of Addison County, Inc. is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. Cash and cash equivalents For purposes of the Statement of Cash Flows, the Organization considers all highly-liquid investments with an initial maturity of three months or less to be cash equivalents. There were no amounts on deposit in excess of the amount insured by the FDIC ($250,000) at June 30, 2015 or 2014. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair market values in the Statement of Financial Position. Unrealized gain and loss are included in the change in net assets. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the income and gains are recognized. Pledges receivable The Organization uses the allowance method to determine net pledges receivable. The allowance amount for pledges receivable is based on prior years' experience, management's analysis of specific promises to give and currently known economic conditions. The uncollectible rate is applied to the total campaign goal. The campaign and the related allowance for uncollectible pledges are closed two years after the close of the campaign, regardless of collection date. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Advertising and promotion The Organization uses advertising to promote its programs among the audiences it serves. Costs of advertising are expensed as incurred. Total advertising costs were $57,673 and $40,784 for the years ended June 30, 2015 and 2014, respectively. Amounts included in advertising include donated media of $23,505 and $2,965 for the years ended June 30, 2015 and 2014, respectively. Other advertising consists of promotional supplies, food, catering, printing and publications. -11-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) 1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued) Property and equipment Property and equipment is stated at cost. The Organization capitalizes any item with an original va_lue of $500 or more and with a useful life greater than one year. Donations of property and equipment are recorded as support at their estimated marke.t value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding. their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Organization reports the expiration of donor restrictions when donated assets are placed into service as instructed by the donor, and reclassifies temporarily restricted net assets to unrestricted net assets at that time. Depreciation is computed using the straight-line method over the estimated useful lives. Contributed services The Organization receives various types of in-kind support including professional services and unskilled labor. Contributed professional services are recognized at fair market value if the services rendered (a) create or enhance long-lived assets or (b) require specialized skills, and would typically need to be purchased if not provided by donation. Donated services were $23,802 and $8,560 for the years ended June 30, 2015 and 2014, respectively. Contributions The Organization is required to record contributions as unrestricted, temporarily restricted or permanently restricted support depending on the existence and/or nature of any donor restrictions. Contributions are recognized when the donor makes a promise to give to the Organization that is, in substance, unconditional. Contributions that are restricted by the donor are reported as an increase in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Functional expenses The costs of providing various programs and activities have been summarized on a functional basis in the Statement of Activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. -12-
NOTES TO FINANCIAL STATEMENTS JUNE 30,2015 (WITH COMPARATIVE TOTALS FOR 2014) 1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued) Income taxes United Way of Addison County, Inc. is a nonprofit organization as described in Section 501 (c)(3) of the Internal Revenue Code, and is exempt from federal income taxes on income related to its exempt purpose as a public charity pursuant to Section 501 (a) of the Code. The Organization believes that it has appropriate support for any tax positions taken and, as such, does not have any uncertain tax positions that are material to the financial statements. The Organization's information returns for the years ending June 30, 2014, 2013 and 2012 are subject to examination by taxing authorities, generally for three years from the date filed. 2) PLEDGES RECEIVABLE Pledges receivable consist of the following unconditional promises to give at June 30: 2015 2014 Current campaign receivable $ 161,679 $ 185,692 Prior campaign receivable 5,035 18,209 166,714 203,901 Less allowance for uncollectible pledges (31,500) (34,000) All promises to give are due in less than one year. $ 135,214 $ 169,901 3) BENEFICIAL INTEREST WITH VERMONT COMMUNITY FOUNDATION The Vermont Community Foundation (VCF) holds endowment funds for the benefit of the Organization with a fair value totaling $177,298 and $182,171 at June 30, 2015 and 2014, respectively. The Organization received distributions of $8,605 and $8,314 from VCF for the years ended June 30, 2015 and 2014, respectively. The change in beneficial interest was $3,732 and $22,850 for the years ended June 30, 2015 and 2014, respectively. -13-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 {WITH COMPARATIVE TOTALS FOR 2014) 4) INVESTMENTS United Way of Addison County, Inc. values its investments in marketable securities with readily determinable fair values, and all investments in debt securities at fair value. Fair value is determined by "Level 1" inputs by reference to quoted prices. Investments consist of the following at: June 30, 2015 Cost Fair Value Unrealized Appreciation (Depreciation) Money market funds Equity securities Corporate and municipal bonds Other assets $ 73,832 432,422 234,733 104,283 $ 845,270 $ 73,832 $ 498,634 66,212 233,742 (991) 114,748 10,465 $ 920,956 $ 75,686 June 30, 2014 Cost Fair Value Unrealized Appreciation (Depreciation) Money market funds Equity securities Corporate and municipal bonds Other assets $ 161,686 402,264 147,625 99,680 $ 811,255 $ 161,686 $ 539,835 137,571 150,018 2,393 112,818 13,138 $ 964,357 $ 153,102 Investment return was as follows for the years ended June 30: Interest and dividends Realized gains Change in unrealized gains 2015 2014 $ 21,778 $ 23,811 35,797 86,883 (77,416) 27,071 $ (19,841) $ 137,765-14-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) 5) ENDOWMENT FUNDS FASB Staff Position In August 2008, the Financial Accounting Standards Board issued FASB Staff Position "Endowments of Not-for Profit Organizations Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds." The Staff Position provides guidance on the net asset classification of donor-restricted endowment funds for a nonprofit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA). The Staff Position also requires additional disclosures about an organization's endowment funds (both donor-restricted endowment funds and board-designated endowment funds), whether or not the organization is subject to UPMIFA. Interpretation of Relevant Law The State of Vermont enacted UPMIFA effective May 5, 2009, the provisions of which apply to endowment funds existing or established after that date. The Organization adopted the FASB Staff Position for the year ended June 30, 2009. The Board of Directors determined that the Organization's permanently restricted and board-designated net assets meet the definition of endowment funds under UPMIFA. The Board of Directors of the Organization has interpreted State of Vermont law 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 Organization classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, and (b) the original value of subsequent gifts to the permanent endowment. There are no explicit donor stipulations that govern the Organization's permanently restricted endowment funds. Investment losses from these funds decrease unrestricted net assets. The Organization considers the duration and preservation of the fund, general economic conditions, the possible effect of inflation or deflation, the expected total return of the fund, the availability of other resources, and the general investment policies of the Organization when establishing the investment allocation of the fund. Return Objectives and Risk Parameters The Organization 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. Endowment assets include those assets of donor -restricted funds that the Organization must hold in perpetuity or for a donor-specified period, as well as Board-designated funds. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner that is intended to produce sufficient earnings to meet the Organization's current and future operational needs. -15-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 {WITH COMPARATIVE TOTALS FOR 2014) 5) ENDOWMENT FUNDS (continued) Strategies Employed for Achieving Objectives To satisfy its long-term rate of return objectives, the Organization 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 Organization targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. Spending Policy and How the Investment Objectives Relate to Spending Policy The Organization's Investment Committee wants to ensure that the endowment provides sufficient funds to the programs it supports...spending.. has been defined in the spending policy as a percent of market value. The Investment Committee attempts to balance the Endowment's short-term obligations with its long-term goals. The current target spending rate is 3.5% of the prior three-year average of the funds with adjustments made from time to time. From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level the donor or UPMIFA requires the Organization to retain as permanently restricted. Deficiencies of this nature result from unfavorable market fluctuations and would be included in unrestricted net assets. There were no such deficiencies at June 30, 2015 or 2014. Changes in endowment net assets were as follows for the years ended June 30, 2015 and 2014: Temporarily Permanently Unrestricted Restricted Restricted Total BALANCE- July 1, 2013 $ 333,115 $ 57,438 $ 254,267 $ 644,820 Additional contributions 5,250 3,710 8,960 Investment income 53,584 46,475 100,059 Appropriated for operations (9,800) (12,514) (22,314) BALANCE -JUNE 30, 2014 $ 382,149 $ 91,399 $ 257,977 $ 731,525 BALANCE- July 1, 2014 $ 382,149 $ 91,399 $ 257,977 $ 731,525 Additional contributions 1,000 2,430 3,430 Investment income (8,414) 126 (8,288) Appropriated for operations (18,323) (16,458) (34,781) BALANCE- JUNE 30,2015 $ 356,412 $ 75,067 $ 260,407 $ 691,886-16-
NOTES TO FINANCIAL STATEMENTS JUNE 30,2015 (WITH COMPARATIVE TOTALS FOR 2014) 6) LONG-TERM DEBT Long-term debt consists of the following at June 30: National Bank of Middlebury - mortgage note payable in monthly installments of $1,048, including interest at an annual rate of 6.5%, collateralized by the building with a maturity date of June 30, 2030 Less current portion 2015 2014 $ 119,557 $ (5,000) 124,093 (4,700) $ 114,557 $ 119,393 Future maturities of long-term debt for the years ending June 30 are as follows: 2016 2017 2018 2019 2020 Thereafter $ 5,000 5,300 5,700 6,100 6,500 90,957 $ 119,557 7) SPLIT -INTEREST AGREEMENT In 2003, United Way of Addison County, Inc. received a donation to establish a charitable gift annuity. Under the terms of the agreement, the beneficiary is to receive quarterly annuity payments of $222 throughout the beneficiary's life. The net present value of the annuity payable was $6,486 and $6,970 as of June 30, 2015 and 2014, respectively. 8) OPERATING LEASE In May 2012, the Organization entered into a five-year, noncancellable operating lease for a photocopier. The terms of the lease call for monthly payments of $232 through May 2017. The total remaining operating lease payments for the years ending June 30 are as follows: 2016 2017 $ 2,800 2,600 $ 5,400-17-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 (WITH COMPARATIVE TOTALS FOR 2014) 9) NET ASSETS United Way of Addison County, Inc.'s net assets consist of the following at June 30: Unrestricted: Board-designated: Endowment fund Special Operations fund Building reserve Net investment in property and equipment Subtotal - board-designated Undesignated 2015 $ 356,412 $ 254,772 29,211 96,863 737,258 231,825 $ 969,083 $ 2014 382,149 284,504 30,249 100,192 797,094 214,508 1,011,602 Temporarily restricted: Funder's Collaborative Charitable gift annuity Unappropriated endowment earnings Unappropriated endowment earnings - VCF $ 17,093 $ 7,762 32,715 42,352 $ 99,922 $ 26,870 7,762 44,174 47,225 126,031 Permanently restricted: Donor -restricted endowment Beneficial interest in Vermont Community Foundation $ 125,461 $ 134,946 123,031 134,946 $ 260,407 $ 257,977 1 0) EMPLOYEE BENEFIT PLAN United Way of Addison County, Inc. sponsors a SIMPLE retirement plan under which the Organization matches each eligible employee's contributions up to 3% of the employee's salary. Total employer contributions were $3,903 and $3,094 for the years ended June 30, 2015 and 2014, respectively. -18-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 {WITH COMPARATIVE TOTALS FOR 2014) 11) CUSTODIAL ACCOUNTS - FISCAL AGENT FUNDS The Organization is acting as a fiscal agent for four projects.. Balances consist of the following at June 30: 2015 2014 Back to School Shop $ 6,045 $ 6,483 Addison County Readers 34,320 32,588 Addison County Foster Fund 3,307 3,186 Addison County Field Services Fund $ 43,672 $ 42,257 Back to School Shop - a program that provides school supplies to low-income Addison County residents. Addison County Readers - an early literacy program that makes age appropriate books available to all children in Addison County aged 0-5 through the Dolly Parton Imagination Library program. Addison County Foster Fund - a fund for summer camp and extracurricular activities for children and youth in the foster care system. Addison County Field Services Fund - a fund used to meet basic needs of Addison County residents who are working directly with the Agency of Human Services. 12) CHILDCARE CONSORTIUM \ United Way of Addison County, Inc. entered into a Memorandum of Understanding (MOU) on June 22, 2000 between Middlebury College and the Child Care Consortium (Bristol Family Center, Inc., Otter Creek Child Center, Inc., and Mary Johnson Children's Center), wherein the Organization will receive annual grants from Middlebury College on the first business day in July each year, and distribute the funds in equal quarterly installments to the MOU Project Operator. For the period September 1, 2014 through August 31, 2015, the grant amount and distribution was $332,818. For the period September 1, 2013 through August 31, 2014, the grant amount and distribution was $323,124. 13) SUBSEQUENT EVENTS United Way of Addison County, Inc. has evaluated events and transactions for potential recognition or disclosure through November 24, 2015, the date the financial statements were available to be issued. -19-
SUPPLEMENTARY INFORMATION
SCHEDULE OF FISCAL AGENT ACTIVITY FOR THE YEAR ENDED JUNE 30, 2015 Addison Addison Total Back to Addison County County Fiscal School County Field Foster Agent Shop Readers Services Fund Activity SUPPORT AND REVENUE Contributions $ 8,057 $ 21,693 $ $ 10,350 $ 40,100 Events Grants 8,754 12,500 21,254 In-kind donations 740 740 Other income 80 80 TOTAL SUPPORT AND REVENUE 8,057 31 '187 12,500 10,430 62,174 EXPENSES Personnel costs Community investment 11,500 8,942 20,442 Advertising and promotion 7,815 28,758 556 37,129 Information technology Office expenses 430 184 614 Investment management fees Depreciation Interest expense Travel Payments to affiliate Occupancy Professional fees 250 500 1,000 764 2,514 Conferences and training Insurance Bank charges 13 47 60 Program supplies TOTAL EXPENSES 8,495 29,455 12,500 10,309 60,759 NET INCOME (LOSS) $ (438) $ 1,732 $ $ 121 $ 1,415 See accompanying notes. -20-