Financial Statements. August 31, 2013 and (With Independent Auditors Report Thereon)

Transcription

1 Financial Statements (With Independent Auditors Report Thereon)

2 Table of Contents Page Independent Auditors Report 1 Statements of Financial Position 2 Statement of Activities Year ended August 31, Statement of Activities Year ended August 31, Statements of Cash Flows Years ended 5 Statement of Functional Expenses Year ended August 31, Statement of Functional Expenses Year ended August 31,

3 KPMG LLP Suite Pacifica Irvine, CA Independent Auditors Report The Board of Directors Make-A-Wish Foundation of Arizona, Inc.: We have audited the accompanying financial statements of Make-A-Wish Foundation of Arizona, Inc. (the Foundation), which comprise the statements of financial position as of, and the related statements of activities, cash flows, and functional expenses 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 U.S. generally accepted accounting principles; 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. Auditors 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 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 auditors 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 Make-A-Wish Foundation of Arizona, Inc. as of, and the changes in its net assets and its cash flows for the years then ended, in accordance with U.S. generally accepted accounting principles. Irvine, California January 20, 2014 KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative ( KPMG International ), a Swiss entity.

4 Statements of Financial Position Assets Cash and cash equivalents $ 2,481, ,678 Investments 804, ,949 Due from related entities 182,478 52,871 Contributions receivable, net 194, ,219 Prepaid expenses 32,009 3,482 Other assets 92,731 71,487 Property and equipment, net 315, ,873 Beneficial interest in a perpetual trust 234, ,914 Total assets $ 4,337,775 2,263,473 Liabilities and Net Assets Accounts payable and accrued expenses $ 396, ,127 Accrued pending wish costs 2,091,288 1,646,862 Due to related entities 9,471 9,146 Total liabilities 2,497,209 1,778,135 Commitments and contingencies Net assets: Unrestricted 1,340,067 6,835 Temporarily restricted 266, ,589 Permanently restricted 234, ,914 Total net assets 1,840, ,338 Total liabilities and net assets $ 4,337,775 2,263,473 See accompanying notes to financial statements. 2

5 Statement of Activities Year ended August 31, 2013 Temporarily Permanently Unrestricted restricted restricted Total Revenues, gains, and other support: Public support: Contributions $ 5,094,290 83,922 5,178,212 Grants 742, ,755 Total public support 5,837,045 83,922 5,920,967 Internal Special events 832,251 25, ,251 Less costs of direct benefits to donors (226,339) (226,339) Total special events 605,912 25, ,912 Investment income, net 6,168 17,539 23,707 Other income 14, ,169 Net assets released from restrictions 104,731 (104,731) Total revenues, gains, and other support 6,568,759 4,457 17,539 6,590,755 Expenses: Program services: Wish granting 3,806,112 3,806,112 Program-related support 218, ,097 Public information 120, ,419 Total program services 4,144,628 4,144,628 Support services: Fundraising 629, ,872 Management and general 461, ,027 Total support services 1,090,899 1,090,899 Total expenses 5,235,527 5,235,527 Change in net assets 1,333,232 4,457 17,539 1,355,228 Net assets, beginning of year 6, , , ,338 Net assets, end of year $ 1,340, , ,453 1,840,566 See accompanying notes to financial statements. 3

6 Statement of Activities Year ended August 31, 2012 Temporarily Permanently Unrestricted restricted restricted Total Revenues, gains, and other support: Public support: Contributions $ 2,672,874 76,254 2,749,128 Grants 909,500 2, ,000 Total public support 3,582,374 78,754 3,661,128 Internal Special events 761,925 32, ,945 Less costs of direct benefits to donors (225,776) (225,776) Total special events 536,149 32, ,169 Investment income, net 12, ,565 22,408 Other income 7,800 7,800 Net assets released from restrictions 169,829 (169,829) Total revenues, gains, and other support 4,308,288 (58,348) 9,565 4,259,505 Expenses: Program services: Wish granting 2,795,667 2,795,667 Program-related support 221, ,062 Public information 127, ,097 Total program services 3,143,826 3,143,826 Support services: Fundraising 724, ,154 Management and general 437, ,556 Total support services 1,161,710 1,161,710 Total expenses 4,305,536 4,305,536 Other losses 2,157 2,157 Total expenses and losses 4,307,693 4,307,693 Change in net assets 595 (58,348) 9,565 (48,188) Net assets, beginning of year 6, , , ,526 Net assets, end of year $ 6, , , ,338 See accompanying notes to financial statements. 4

7 Statements of Cash Flows Years ended Cash flows from operating activities: Change in net assets $ 1,355,228 (48,188) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 49,695 51,993 Loss on disposal of property and equipment 750 2,157 Bad debt expense 7,494 Net realized and unrealized gain on investments (19,039) (9,565) Contributed property and equipment, inventory, and stock (1,200) (62,445) Change in discount to present value of contributions receivable (3,310) Changes in assets and liabilities: Contributions receivable (7,173) 29,136 Due from related entities (129,607) 71,854 Prepaid expenses (28,527) 24,271 Other assets (21,244) (58,162) Accounts payable and accrued expenses 274,323 (54,873) Accrued pending wish costs 444,426 57,648 Due to related entities 325 4,977 Net cash provided by operating activities 1,917,957 12,987 Cash flows from investing activities: Purchases of investments (46,827) (1,058,644) Proceeds from sales of investments 143, ,163 Purchases of property and equipment (26,772) (27,246) Net cash provided by (used in) investing activities 70,232 (529,727) Cash flows from financing activity: Principal payments on capital lease obligations (2,877) Net cash used in financing activity (2,877) Net increase (decrease) in cash and cash equivalents 1,988,189 (519,617) Cash, beginning of year 493,678 1,013,295 Cash, end of year $ 2,481, ,678 Supplemental cash flow information: Cash paid for interest $ 29 Donated property and equipment and other assets 1,200 62,445 Contributed services 45,344 32,908 In-kind contributions 1,314,739 1,097,437 See accompanying notes to financial statements. 5

8 Statement of Functional Expenses Year ended August 31, 2013 Program services Support services Wish Program-related Public Total program Management Total support granting support information services Fundraising and general services Total Direct costs of wishes $ 3,320,989 3,320,989 3,320,989 Salaries, taxes, and benefits 343, ,632 54, , , , ,635 1,389,476 Printing, subscriptions, and publications 1,589 2,624 17,719 21,932 18,704 1,496 20,200 42,132 Professional fees 252 2,498 2,923 5,673 68,122 5,461 73,583 79,256 Rent and utilities 11,951 9,555 3,206 24,712 3,914 4,291 8,205 32,917 Postage and delivery 2, ,659 5,960 12, ,650 19,610 Travel 3,814 2, ,315 7,971 7,504 15,475 21,790 Meetings and conferences 1,451 30, ,466 10,079 4,644 14,723 47,189 Office supplies 7,671 3,373 1,073 12,117 8,773 4,575 13,348 25,465 Communications 4,294 1, ,754 3,678 2,987 6,665 12,419 Advertising and media (cash) 1,401 1, ,619 Advertising and media (in-kind) 29,816 29, ,478 Repairs and maintenance 15,112 5,060 2,454 22,626 10,674 11,782 22,456 45,082 Membership dues , ,144 2,448 National partnership dues 75,890 75,890 11,528 8,646 20,174 96,064 Miscellaneous ,128 3,791 13,979 17,770 18,898 Depreciation and amortization 16,158 11,359 3,187 30,704 10,119 8,872 18,991 49,695 $ 3,806, , ,419 4,144, , ,027 1,090,899 5,235,527 See accompanying notes to financial statements. 6

9 Statement of Functional Expenses Year ended August 31, 2012 Program services Support services Wish Program-related Public Total program Management Total support granting support information services Fundraising and general services Total Direct costs of wishes $ 2,464,550 2,464,550 2,464,550 Salaries, taxes, and benefits 219, ,275 77, , , , ,647 1,149,926 Printing, subscriptions, and publications 1,526 3,704 10,737 15, ,775 2, , ,916 Professional fees 1,463 3,982 8,913 14,358 78,748 24, , ,120 Rent and utilities 14,040 13,156 3,125 30,321 3,181 4,423 7,604 37,925 Postage and delivery 2, ,914 4,783 33, ,806 39,589 Travel ,425 5,062 2,162 7,224 8,649 Meetings and conferences 2,809 25, ,221 7,971 4,487 12,458 41,679 Office supplies 4,393 1,933 1,421 7,747 6,237 4,806 11,043 18,790 Communications 3,186 1,431 1,082 5,699 4,392 3,596 7,988 13,687 Advertising and media (cash) 2,134 2,134 3,730 3,730 5,864 Advertising and media (in-kind) 12,577 12,577 46,083 46,083 58,660 Repairs and maintenance 7,917 4,436 2,450 14,803 9,469 9,265 18,734 33,537 Bad debt expense 7,494 7,494 7,494 Membership dues ,391 1,437 National partnership dues 57,721 57,721 9,745 7,496 17,241 74,962 Miscellaneous ,779 21,103 27,882 28,758 Depreciation and amortization 15,087 12,219 4,013 31,319 10,701 9,973 20,674 51,993 $ 2,795, , ,097 3,143, , ,556 1,161,710 4,305,536 See accompanying notes to financial statements. 7

10 (1) Organization Make-A-Wish Foundation of Arizona, Inc. (the Foundation) is an Arizona not-for-profit corporation, organized for the purpose of granting wishes to children with life-threatening medical conditions. The Foundation is an independently operating chapter of Make-A-Wish Foundation of America (National Organization), which operates to develop and implement national programs in public relations and fundraising for the benefit of all local chapters. In addition, the local chapter is obligated to comply with a chapter agreement with the National Organization and such guidelines, resolutions, and policies as may be adopted by the National Organization s board of directors. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The financial statements of the Foundation are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP). (b) (c) (d) (e) Cash and Cash Equivalents The Foundation considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Investments Investments are recorded at fair value. Investment income, including gains and losses on investments, is recorded as increases or decreases in unrestricted net assets unless its use is limited by donor-imposed restrictions or law. Contributions Receivable Contributions receivable are unconditional promises to give. Such promises that are expected to be collected within one year are recorded at expected net realizable value when the promise is received. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of estimated future cash flows. Contributions receivable are discounted using fair value rates. Contributions are written off when deemed uncollectible. Property and Equipment, Net Property and equipment having a useful life of more than one year are capitalized at cost when purchased. Donated assets are capitalized at the estimated fair value at the date of receipt. Property and equipment under capital leases are stated at the present value of future minimum lease payments at the time of acquisition. Depreciation on property and equipment is provided on a straight-line basis over the estimated useful lives of the assets, generally 5 to 30 years. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the remaining terms of the leases. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its life are expensed as incurred. Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If 8 (Continued)

11 circumstances indicate a long-lived asset may be impaired, the asset value will be reduced to fair value. Fair value is determined through various valuation techniques including quoted market values and third-party independent appraisals, as considered necessary. (f) Fair Value Measurements The Foundation follows the provisions of Accounting Standards Codification (ASC) Topic 820, Fair Value Measurement, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. ASC Topic 820 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. ASC Topic 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Foundation utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Foundation determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. Level 2 Inputs: Prices for a similar asset, other than quoted prices included in Level 1 inputs, that are observable for the asset, either directly or indirectly. If the asset has a specified term, a Level 2 input must be observable for substantially the full term of the asset. Level 3 Inputs: Unobservable inputs for the asset used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date. See note 3 to the financial statements. (g) Net Assets The Foundation s net assets and changes therein are classified and reported as follows: Permanently restricted net assets Net assets subject to donor-imposed restriction that the principal be maintained in perpetuity. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on related investments for unrestricted purposes. Temporarily restricted net assets Net assets subject to restrictions imposed by donor or law that may be met either by actions of the Foundation or the passage of time. Unrestricted net assets Net assets that are not subject to donor-imposed restrictions or law. 9 (Continued)

12 (h) Revenue Recognition Unconditional promises to give are recorded as contributions revenue when the promise is received. Conditional promises are recorded as revenue once the conditions are substantially met. Contributions, grants, and bequests are recognized as either temporarily or permanently restricted if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. When restrictions are met in the same period as the contribution is received, the Foundation records the contribution and the expense as unrestricted. Contributions of assets other than cash are recorded at their estimated fair value. Contributions of services are recognized if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. The Foundation received in-kind contributions of assets and services that are included in the accompanying statements of activities. Such in-kind contributions were reported as follows: Contributions: Wish related $ 1,197, ,288 Advertising and media 30,478 58,660 Professional services 5,591 32,908 Property and equipment 1,200 62,445 Other 107,698 65,246 Total $ 1,342,901 1,178,547 Special events revenue: Internal special events $ 18,382 14,243 An internal special event is a fundraising event coordinated and staffed by Chapter personnel rather than a separate support group or organization. It is designed to attract and involve a large number of people for the purpose of raising awareness, additional funding, and cultivating future donors. Internal special event in-kind amounts are donated items recorded at fair market value that are used in facilitating the event. Examples of such donated items are generally food, beverage, facility costs, and auction items. Program or supporting services expenses are recorded at fair value totaling $1,341,701 and $1,097,207 in 2013 and 2012, respectively, with the difference recorded as receivable for pledged facilities, donated property and equipment, other assets representing inventory, and auction items received and not yet sold or used. Advertising and media are used to help the Foundation communicate its message or mission and includes fundraising materials, informational material, or advertising, and may be in the form of an audio or video tape of a public service announcement, a layout for a newspaper, media time or space for public service announcements, or other purposes. Advertising and media are reported as 10 (Continued)

13 contribution revenue when received and fundraising or public information if allocated as a joint cost expense when received. Reporting of such contributions is unaffected by whether the Foundation could afford to purchase or would have purchased the assets at their fair value. Wish-related in-kind contributions consisted of the following: Lodging $ 477, ,065 Transportation 170, ,682 Theme parks 175, ,335 Computer equipment, games, and toys 31,862 35,908 Cruises 46,586 34,801 Other wish-related donations 296, ,497 Total $ 1,197, ,288 (i) Income Taxes The Foundation is a not-for-profit organization exempt from federal income and Arizona taxes under the provisions of Internal Revenue Code (IRC) Section 501(c)(3) and Arizona Revised Statutes (4). However, the Foundation remains subject to income taxes on any net income that is derived from a trade or business, regularly carried on and not in furtherance of the purpose for which it was granted exemption. No income tax provision has been recorded as the net income, if any, from any unrelated trade or business, in the opinion of management, is not material to the financial statements taken as a whole. The Foundation has adopted ASC Topic 740, Income Taxes (ASC 740), which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, disclosure, and transition. Management believes that there are no uncertain tax positions for the Foundation at August 31, 2013 or (j) Functional Expenses The Foundation performs five functions: wish granting, program-related support, public information, fundraising, and management and general. Definitions of these functions are as follows: Wish Granting Activities performed by the Foundation that grant wishes to children with life-threatening medical conditions. Program-Related Support Activities performed by the Foundation related to the wish program including the identification of wish candidates and the determination and delivery of each wish. Specific activities include, but are not limited to, the development of wish resources, handling of wish referrals, and administration of the wish program. 11 (Continued)

14 Public Information Activities performed by the Foundation communicating the purpose and services of the Foundation to all potential sources of wish referrals. Fundraising Activities performed by the Foundation to generate funds and/or resources to support its programs and operations. During the fiscal years ended, the Foundation incurred joint costs for its newsletter that include fundraising appeals, which have been allocated as follows: Public information $ 4,033 7,753 Fundraising 7,058 2,584 Total $ 11,091 10,337 Management and General All costs not identifiable with a single program or fundraising activity, but indispensable to the conduct of such programs and activities and to the Foundation s existence, are included as management and general expenses. This includes expenses for the overall direction of the Foundation, business management, general record-keeping, budgeting, financial reporting, and activities relating to these functions such as salaries, rent, supplies, equipment, and other expenses. Expenses that benefit more than one function of the Foundation are allocated among the functions based generally on the amount of time spent by employees on each function. (k) Management Estimates The preparation of financial statements in conformity with U.S. GAAP 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. Significant items subject to such estimates and assumptions include the useful lives of property and equipment, investments, valuation of contributions receivable, property and equipment, and accrued pending wish costs. (3) Fair Value Measurements (a) Fair Value of Financial Instruments Fair value is defined as the amount 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. The fair values of the financial instruments shown in the following tables as of August 31, 2013 and 2012 represent the amounts that would be received to sell those assets in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of 12 (Continued)

15 observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Foundation s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Foundation based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, and available observable and unobservable inputs. The Foundation has adopted ASC Topic 820 for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. (b) Fair Value Hierarchy The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at : Fair value measurements at August 31, 2013 using Quoted prices in active Significant for markets other Significant identical observable unobservable August 31, assets inputs inputs Description 2013 (Level 1) (Level 2) (Level 3) Assets: Recurring: Investments: Certificate of deposits $ 804, ,445 Beneficial interest in a perpetual trust 234, ,453 Total recurring 1,038, , ,453 Nonrecurring: Contributions receivable 194, ,392 Total $ 1,233, , , (Continued)

16 Fair value measurements at August 31, 2012 using Quoted prices in active Significant for markets other Significant identical observable unobservable August 31, assets inputs inputs Description 2012 (Level 1) (Level 2) (Level 3) Assets: Recurring: Investments: Certificates of deposit $ 899, ,949 Beneficial interest in a perpetual trust 216, ,914 Total recurring 1,116, , ,914 Nonrecurring: Contributions receivable 187, ,219 Total $ 1,304, , ,133 For the valuation of investments categorized as Level 1 at, the Foundation used unadjusted market prices for identical assets. For the valuation of certificates of deposit at, the Foundation used significant other observable inputs, particularly market prices for comparable investments as of the valuation date (Level 2). Contributions receivable are recognized initially at fair value as contributions revenue in the period such promises are made by donors. Fair value is estimated giving consideration to anticipated future cash receipts (after allowance is made for uncollectible contributions) and discounting such amounts at a risk-adjusted rate commensurate with the duration of the donor s payment plan. These inputs to the fair value estimate are considered Level 3 in the fair value hierarchy. In subsequent periods, the discount rate is unchanged and the allowance for uncollectible contributions is reassessed and adjusted if necessary. Amortization of the discounts is recorded as additional contribution revenue. For the valuation of beneficial interest in a perpetual trust at, the Foundation considered the perpetual nature of the trust and the fair value of the trust s assets to determine the fair value of its beneficial interest (Level 3). 14 (Continued)

17 Total investment income, gains, and losses for the years ended consist of the following: Interest and dividend income $ 9,068 12,843 Net realized and unrealized gains 19,039 9,565 Less investment fees (4,400) Investment income, net $ 23,707 22,408 (4) Contributions Receivable Contributions receivable includes a single multiyear pledge that has been discounted at a rate of 0.7% at, as well as various other single-year pledges and in-kind receivables on wishes. The following is a summary of the Foundation s contributions receivable at : Total amounts due in: One year $ 155, ,252 Two to five years 40,000 50,000 More than five years Gross contributions receivable 195, ,252 Less discount to present value (1,033) (1,033) Contributions receivable, net $ 194, ,219 (5) Beneficial Interest in a Perpetual Trust The Foundation is named income beneficiary on a perpetual trust, the corpus of which is not controlled by the management of the Foundation. Under this arrangement, the Foundation has the irrevocable right to receive income earned on the underlying assets held in perpetuity as determined on a quarterly basis by the trustee. Accordingly, permanently restricted contribution revenue and the related assets were recognized at fair value in the period in which the Foundation received notice that the trust agreement conveys an unconditional right to receive benefits. Subsequent changes in the value of the underlying assets have been recorded in the accompanying statements of activities as permanently restricted investment income until income is distributed and made available by the trustee. Distributions from the trust are recorded as unrestricted investment income. The Foundation s beneficial interest in the trust is $234,453 and $216,914 as of, respectively. The Foundation considered the perpetual nature of the trust and the fair value of the trust s underlying assets to determine the fair value of its beneficial interest (Level 3). 15 (Continued)

18 The following tables present a rollforward of activity for the beneficial interest in perpetual trust measured at fair value using significant unobservable inputs (Level 3) for the years ended : 2013 Fair value measurements using significant unobservable inputs (Level 3) Beginning balance $ 216,914 Total gains and losses (realized/unrealized) included in changes in net assets 23,707 Distributions (6,168) Ending balance $ 234,453 The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date $ (33) 2012 Fair value measurements using significant unobservable inputs (Level 3) Beginning balance $ 207,349 Total gains and losses (realized/unrealized) included in changes in net assets 9,565 Ending balance $ 216,914 The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date $ 9, (Continued)

19 (6) Transactions with Related Entities The Foundation received the following distributions from the National Organization for the years ended August 31: Corporate, online, whit , and general contributions $ 884, ,271 Grants 154, ,000 Wish fulfillment 460,000 Adopt-A-Wish 13,763 20,121 Scholarships 4, Gifts and travel reimbursements 95 Other 4,754 6,576 Total distributions received $ 1,521,984 1,254,268 These amounts are recorded in the statements of activities as public support revenue. The Foundation paid to the National Organization the following amounts for the years ended August 31: Partnership dues $ 96,064 74,962 Other 10,820 92,077 Total amounts paid $ 106, ,039 Chapters that assist with the organization and granting of wishes from other chapters are paid a fee for service called the wish assist fee. Under this program, the Foundation received $6,560 and $7,150 for the years ended, respectively, which is recorded in the accompanying statements of activities as other income. Amounts due from and to related entities are as follows: Balance at August 31: Due from National Organization $ 180,986 45,040 Due from other chapters 1,492 7,831 Total due from related entities $ 182,478 52,871 Due to other chapters $ 9,471 9,146 Amounts due from the National Organization represent pledged Wish Fulfillment Fund grants and contributions remitted to the National Organization that are identified for the Foundation s use but were not yet transferred to the Foundation as of year-end. Amounts due from other chapters represent amounts 17 (Continued)

20 owed for assisting other chapters with their wish granting. Amounts due to other chapters represent amounts owed to other chapters who have assisted in the granting of wishes for the Foundation. During 2013 and 2012, the Foundation received contributions, both cash and in-kind, from board members totaling $1,582,779 and $152,559, respectively. In 2013 and 2012, amounts due from board members totaled $11,950 and $13,545, respectively, and are included in contributions receivable in the accompanying statements of financial position. (7) Property and Equipment, Net Property and equipment as of consist of the following: Land $ 79,367 79,367 Buildings and building improvements 538, ,489 Computer equipment and software 152, ,534 Office furniture 35,308 36, , ,449 Less accumulated depreciation and amortization (490,271) (440,576) Property and equipment, net $ 315, ,873 Depreciation and amortization expense totaled $49,695 and $51,993 for the years ended August 31, 2013 and 2012, respectively. (8) Accrued Pending Wish Costs The Foundation accrues for estimated costs of reportable pending wishes as unconditional promises to give when five certain, measurable wish criteria are met. Prior to meeting these five criteria, the wish is considered a conditional promise to give due to the inherent uncertainties surrounding these criteria and is, therefore, not accrued as a pending wish liability. Reportable pending wish criteria include: Receiving a referral, Obtaining the required medical eligibility form, Contact with the wish family has occurred to determine the prospective wish, Determination that the wish falls within the National Organization s wish granting policy, and The wish is expected to be granted within the next 12 months. The Foundation, as part of its estimate of accrued pending wish costs, also considers attrition on pending wish costs. An attrition rate is calculated by the Foundation by analyzing the trend of wishes that have been accrued for using the five criteria discussed above that have not been able to be completed within the past twelve months due to factors outside of the control of the Chapter, such as the death of a child, the move of the family out of the Chapter s territory, or loss of contact with the family. As of August 31, 2013 and 2012, the Foundation had approximately 262 and 202 reportable pending wishes, respectively. 18 (Continued)

21 (9) Temporarily and Permanently Restricted Net Assets Temporarily restricted net assets are available for the following purposes for the years ended August 31, 2013 and 2012: Time restrictions $ 157, ,431 Wish granting 108, ,158 Total temporarily restricted net assets $ 266, ,589 For the years ended, permanently restricted net assets represent a beneficial interest in a perpetual trust that totaled $234,453 and $216,914 at, respectively. (10) Retirement Plan The Foundation has a defined-contribution retirement plan (the Plan). Employees are eligible for participation in the Plan after completion of 1,000 hours of work. Under the provisions of the Plan, eligible employees may elect to defer a percentage of their salary subject to certain IRC limitations. The Foundation matches employee contributions up to 6% of the employee s salary for those employees who are 18 years of age and have worked 1,000 hours or more. Foundation contributions to the Plan for the years ended were $29,283 and $24,800, respectively. (11) Concentrations of Credit Risk Financial instruments that potentially subject the Foundation to concentration of credit risk consist principally of cash and investments. The Foundation places its cash and investments with high-credit quality financial institutions and generally limits the amount of credit exposure not to exceed the Federal Deposit Insurance Corporation (FDIC) insurance coverage limit of $250,000. From time to time throughout the year, the Foundation s cash balances may exceed the amount of the FDIC insurance coverage. At August 31, 2013, certain balances exceeded the amount of the FDIC insurance coverage. In-kind contributions totaling $298,764 and $350,102 were received from a single donor for the years ended, respectively, which represents 5% and 10%, respectively, of total public support. Cash contributions in the amount of $1,420,350 were received from a single donor for the year ended August 31, 2013 and represents 22% of total public support. Should these contribution levels decrease, the Foundation may be adversely affected. (12) Subsequent Events The Foundation has evaluated subsequent events from the statements of financial position date through January 20, 2014, the date at which the financial statements were available to be issued. 19