The Arc Tampa Bay Foundation, Inc.

Transcription

1 FINANCIAL STATEMENTS For the Years Ended September 30, 2015 and 2014

2 Table of Contents September 30, 2015 TAB: REPORT Independent Auditors Report 1 TAB: FINANCIAL STATEMENTS Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 6 7 ADDITIONAL INFORMATION Thomas Endowment Statements of Assets and Net Assets 25 Thomas Endowment Statements of Endowment Activity 26 Thomas Endowment Most Current Five-Year 27

3 REPORT

4 INDEPENDENT AUDITORS REPORT The Board of Directors The Arc Tampa Bay Foundation, Inc. Clearwater, Florida Report on the Financial Statements We have audited the accompanying financial statements of The Arc Tampa Bay Foundation, Inc. (a nonprofit Foundation) which comprise the statement of financial position as of September 30, 2015 and September 30, 2014 and 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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

5 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Arc Tampa Bay Foundation, Inc. as of September 30, 2015 and September 30, 2014, 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. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Thomas Endowment-Statement of Assets and Net Assets, Thomas Endowment- Statements of Endowment Activity, and Thomas Endowment-Most Current Five-Year Rolling Average Surplus Tracking Statement on pages 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. CARR, RIGGS & INGRAM, LLC Clearwater, Florida January 27,

6 FINANCIAL STATEMENTS

7 Statement of Financial Position September 30, ASSETS Cash and cash equivalents $ 171,055 $ 118,334 Contributions receivable, net 103, ,198 Prepaid expenses 7,650 16,643 Investments 9,949,871 10,050,539 Receivable under remainder trust 2,030,916 2,201,215 Office furniture and equipment, net 32,998 26,490 Endowment assets - third-party trustee 561, ,691 Total assets $ 12,857,659 $ 13,185,110 LIABILITIES AND NET ASSETS Liabilities Deferred revenue $ 111,736 $ 163,448 Gift annuity obligation 2,545 2,515 Total liabilities 114, ,963 Net assets Unrestricted net assets 1,486,544 1,385,411 Temporarily restricted net assets 2,044,323 2,340,104 Permanently restricted net assets 9,212,511 9,293,632 Total net assets 12,743,378 13,019,147 Total liabilities and net assets $ 12,857,659 $ 13,185,110 The accompanying notes are an integral part of these financial statements

8 Statement of Activities Year ended September 30, 2015 Unrestricted Temporarily Restricted Permanently Restricted Total Operating Support and Revenue Special events revenue $ 850,985 $ - $ - $ 850,985 Special events expenses (333,341) - - (333,341) Net revenue from special events 517, ,644 Contributions and bequests 438, , ,080 Investment income designated for current operations 505,583 50, ,241 Release from restriction: Expiration of time restrictions 457,839 (457,839) - - Total operating support and revenue 1,919,746 (295,781) - 1,623,965 Operating Expenses and Distributions Personnel 308, ,099 Office expenses 38, ,005 Postage and printing 4, ,998 Insurance 4, ,666 Professional fees 20, ,374 Public relations 14, ,294 Bad debt 6, ,724 Investment management fees 97, ,497 Miscellaneous 11, ,733 Total expenses 506, ,390 Distributions to Arc Tampa Bay, Inc. 988, ,932 Total operating expenses and distributions 1,495, ,495,322 Change in net assets from operations 424,424 (295,781) - 128,643 Other Changes: Investment return in excess of amounts designated for current operations (320,711) - 28,015 (292,696) Change in split interest (2,580) - (109,136) (111,716) Change in net assets 101,133 (295,781) (81,121) (275,769) Net assets, beginning of year 1,385,411 2,340,104 9,293,632 13,019,147 Net assets, end of year $ 1,486,544 $ 2,044,323 $ 9,212,511 $ 12,743,378 The accompanying notes are an integral part of these financial statements

9 Statement of Activities (Continued) Year ended September 30, 2014 Unrestricted Temporarily Restricted Permanently Restricted Total Operating support and Revenue: Special events revenue $ 696,420 $ - $ - $ 696,420 Special events expenses (287,800) - - (287,800) Net Revenue from special events 408, ,620 Contributions and bequests 235, , ,168 Investment income designated for current operations 243, , ,302 Release from restriction: Expiration of time restriction 224,849 (224,849) - - Total operating support and revenue 1,112, ,725-1,530,090 Operating Expenses and Distributions: Employee leaseing and salary costs 334, ,056 Office expenses 23, ,948 Postage and printing 3, ,337 Insurance 3, ,504 Professional fees 13, ,600 Public relations 32, ,618 Depreciation 4, ,461 Investment management fees 75, ,351 Miscellaneous 14, ,513 Total expenses 505, ,388 Distributions to UPARC 789, ,897 Total operating expenses and distributions 1,295, ,295,285 Change in net assets from operations (182,920) 417, ,805 Other Changes: Investment return in excess of amounts designated for current operations 66,986-82, ,775 Change in split interest (78) - 171, ,308 Change in net assets (116,012) 417, , ,888 Net assets, beginning of year 1,501,423 1,922,379 9,039,457 12,463,259 Net assets, end of year $ 1,385,411 $ 2,340,104 $ 9,293,632 $ 13,019,147 The accompanying notes are an integral part of these financial statements

10 Statement of Cash Flows Years ended September 30, Operating Activities Change in net assets $ (275,769) $ 555,888 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation - 4,461 Bad debt recovery (6,724) (888) Change in split interest agreements 111,716 (171,308) Realized and unrealized gain on investments (88,350) (727,436) Change in assets and liabilities: Contributions receivable 89,265 78,806 Prepaid expenses 8,993 (920) Remainder interest in trust and estates 85,342 (53,345) Deferred revenue (51,712) 86,978 Net cash used by operating activities (127,239) (227,764) Investing Activities Fixed asset additions (6,508) (25,581) Net sales (purchases) of marketable securities 189,018 (96,094) Net cash provided (used) by investing activities 182,510 (121,675) Financing Activities Principal payments on annuitites payable (2,550) (2,550) Payments of capital lease payables - (6,432) Net cash used by financing activities (2,550) (8,982) Net increase (decrease) in cash 52,721 (358,421) Cash and cash equivalents, beginning of year 118, ,755 Cash and cash equivalents, end of year $ 171,055 $ 118,334 The accompanying notes are an integral part of these financial statements

11 NOTE 1: DESCRIPTION OF FOUNDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Purpose The Arc Tampa Bay Foundation, Inc. ( Foundation ) is a Florida not-for-profit corporation. The Foundation s mission is to provide financial support to The Arc Tampa Bay, Inc. The Arc Tampa Bay, Inc. was founded in 1963 to serve children and adults with developmental disabilities and special challenges. The Foundation receives support from individuals, corporations and fund-raising events. On January 4, 2015, the Foundation legally changed its name to The Arc Tampa Bay Foundation, Inc. Basis of Accounting The financial statements of the Foundation are prepared in accordance with Financial Accounting Standards Board Accounting Standards Codification ( ASC ) 958, Not-for-Profit Entities. Fair Value Measures The financial statements are prepared in accordance with ASC 820, Fair Value Measures, for all financial assets and liabilities and for nonfinancial assets and liabilities recognized or disclosed at fair value in the financial statements or on a recurring basis (at least annually). ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value. Level 1 Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets. Level 2 Inputs other than quoted prices within Level 1 that are observable for the asset, either directly or indirectly. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs

12 NOTE 1: DESCRITPION OF FOUNDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In-kind donations Contributed use of facilities (if any) is recorded as support at its fair rental value during the period of use. Other tangible donations are recorded as support at their fair market value during the period of use. Contributed services that require specialized skill (attorneys, computer consultants, etc.) are recorded in the Statement of Activities as unrestricted support at their fair value. A number of unpaid volunteers, including board members, have made significant contributions of their time to develop the Foundation s programs and special events. The value of this contributed time is not reflected in the Statement of Activities since it is not susceptible to objective measurement or valuation. Remainder Interests in Irrevocable Trusts, Estates, and Pooled Income Funds The Foundation recognizes an asset and revenue on estates in probate, pooled income funds, and charitable remainder trusts when they receive notification of an irrevocable interest in one of those types of contributions and when an estimated value of the assets can be obtained. When management expects the cash from these contributions to be received more than one year in the future, the asset and revenue are discounted for the time value of money (net present value) based on the Internal Revenue Service life expectancy rate at the time of the gift. The underlying investments for these assets are in debt and equity securities, mutual funds, and are stated a fair market value in accordance with ASC 820. Contributions Receivable Unconditional promises to give the Foundation cash or other assets in the future are recorded as promises to give revenue (temporarily restricted) and contributions receivable. If management expects the cash from the contribution receivable to be received more than one year in the future, the promises to give revenue and receivable are discounted for the time value of money (i.e., net present value) at a discount rate equal to a nominal rate of return. Management estimates the allowance for uncollectible promises based on historical write-offs. Management writes off contributions receivable as identified against the allowance amount. Marketable Securities and Investments Investments in debt and equity securities, mutual funds, and certificates of deposit are stated at fair market value in accordance with ASC

13 NOTE 1: DESCRIPTION OF FOUNDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Depreciation Property and equipment greater than $500 is recorded at cost. Depreciation is computed on an accelerated method over the estimated useful lives of the assets, which range as follows: Office furniture and equipment 5 10 years Gift Annuities Gift annuity contracts, issued by the Foundation, guarantee that a donor will receive a fixed amount of money every year for the rest of their life in exchange for a donation. The assets received by the Foundation are recorded at fair market value at the date of the donation. The liability to the donor is computed using the Internal Revenue Service s actuarial model at the date of the gift. The interest rates used in the model are those prescribed by the IRS as of the date of the gift and are held constant subsequent to that date. The excess of the annuity gift asset received over the recorded liability is recorded as support in the year of receipt. Upon the donor s death, the excess of the gift received from the donor and revenues realized over the distributions paid to the donor is spent on restricted or unrestricted purposes, as specified by the gift annuity contract. The Foundation will annually revalue the gift annuity liability for each donor, based on the donor s life expectancy. The resulting change in the liability will be recorded as a change in split interest agreements in the statement of activities. In addition to the income usage restriction placed on the Foundation by donors, the State of Florida Department of Insurance imposes certain gift annuity asset retainage restrictions. The State of Florida requires the Foundation to maintain (reserve) specific types of assets in excess of the gift annuity liability. The total asset reserve as of September 30, 2015 and 2014 was ample to cover its gift annuity obligations. Deferred revenue The Foundation records revenues received in advance for special events as deferred revenue until such time as the event has taken place. Contribution Revenue Cash or other assets contributed in which the Foundation received notification and the asset within the current year

14 NOTE 1: DESCRIPTION OF FOUNDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Liability Under Trust Agreements When the Foundation is the trustee of charitable remainder trusts in which the Foundation has a future interest, the full market value of the trusts assets are shown as an asset of the Foundation with an offsetting liability (liabilities under trust agreements) for the net present value of the expected payments to be made to the income beneficiary in accordance with ASC 820. Net Assets and Revenue Recognition Net assets, revenues, expenses, gains and losses are classified based on the existence or absence of donor imposed restrictions. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Accordingly, net assets of the Foundation and changes therein are classified and reported as follows: Unrestricted net assets include net assets that are not subject to donor imposed restrictions. Temporarily restricted net assets include gifts for which donor imposed restrictions have not been met, and trust activities and pledges receivable for which the ultimate purpose of the proceeds is not permanently restricted. All donor-restricted support is reported as an increase in temporarily restricted net assets, depending on the nature of the restriction. When a restriction expires (that is when a stipulated time restriction ends or purpose restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently restricted net assets include gifts for which the corpus is permanently endowed

15 NOTE 1: DESCRIPTION OF FOUNDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Federal Income Taxes The Foundation is exempt from federal income taxes under Internal Revenue Code Section 501(c)(3). The Foundation utilizes the provisions of ASC 740, Accounting for Uncertainty in Income Taxes. As a result, the Foundation has not recognized any respective liability for unrecognized tax benefits as it has no known tax positions that would subject the Foundation to any material income tax exposure. A reconciliation of the beginning and ending amount of unrecognized tax benefits in interest expense and penalties in operating expenses is not included as there are no unrecognized tax benefits. Cash and Cash Equivalents For the purposes of the statement of cash flows, the Foundation considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents for purposes of the statement of cash flows exclude cash and cash equivalents and money markets related to permanently restricted net assets. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Management s Review The Foundation applies the provision of ASC 855, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued. See Note 14, Subsequent Events

16 NOTE 2: CONTRIBUTIONS RECEIVABLE Contributions receivable are summarized as follows: September 30, Expected receipt of contribution in: One year $ 33,450 $ 95,019 Two years 21,550 30,710 Three years 14,225 22,410 Four years 11,400 15,180 Five years 10,000 10,100 Thereafter 25,000 30,100 Gross contributions receivable 115, ,519 Less: discount for present value at 1.37% (2015) and 1.78% (2014) 4,568 7,821 Less: allowance for uncollectible accounts 7,400 9,500 Net contributions receivable $ 103,657 $ 186,198 Contributions receivable consist primarily of promises from individuals and corporations within the Tampa Bay area. NOTE 3: FAIR VALUE MEASUREMENTS The Foundation s valuation methodologies used for assets and liabilities measured at fair value are described below. There have been no changes in the methodology used at September 30, Money Markets: Valued at the net asset value (NAV) of shares held by the Foundation at year end. Equities: Comprised of common stock valued at the closing price reported in the active market in which the individual securities are traded. Fixed Income Funds: Valued at the net asset value (NAV) of shares held by the Foundation at year end. There are no unfunded commitments within the fixed income funds and in addition there are no significant restrictions on the Foundations ability to sell investments. Remainder Interest Trusts and Endowments: Valued using the income approach based on the present value of the future distributions expected to be received, using published life expectancy tables and the discount rate based on IRS regulations

17 NOTE 3: FAIR VALUE MEASUREMENTS (Continued) Gift Annuity Obligations and Liability Under Trust Agreements: These liabilities are not actively traded and significant other observable inputs are not available. The calculations of these liabilities include the use of discount rates and life expectancy tables. See Note 1 for the respective valuation methods. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although management believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The Foundation s assets and liabilities are reported at fair value in the accompanying statements of financial position. September 30, 2015 Fair Value Measurements at Reporting Date Using: Quoted Prices in Significant Significant Active Markets Other Observable Unobservable for Identical Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Assets Investments: Money markets $ 1,032,537 $ 1,032,537 $ - $ - Equities: Common stocks 5,642,136 5,642, Fixed income: US government obligations 1,937,669-1,937,669 - Corporate bonds 1,337,529-1,337,529 - Total investments 9,949,871 6,674,673 3,275,198 - Endowment assets - third-party trustee (a) 561, ,512 Remainder interest trust (a) 2,030, ,030,916 Total assets $ 12,542,299 $ 6,674,673 $ 3,275,198 $ 2,592,428 Liabilities Gift annuity obligation $ 2,545 $ - $ - $ 2,545 Total liabilities $ 2,545 $ - $ - $ 2,545 (a) based on additional analysis and nature and risk of these investments, the Foundation has determined that presenting them as a single class is appropriate

18 NOTE 3: FAIR VALUE MEASUREMENTS (Continued) September 30, 2014 Fair Value Measurements at Reporting Date Using: Quoted Prices in Significant Significant Active Markets Other Observable Unobservable for Identical Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Assets Investments: Money markets $ 1,016,832 $ 1,016,832 $ - $ - Equities: Common stocks 5,648,638 5,648, Fixed income: US government obligations 1,699,083-1,699,083 - Corporate bonds 1,685,986-1,685,986 - Total investments 10,050,539 6,665,470 3,385,069 - Endowment assets - third-party trustee (a) 585, ,691 Remainder interest trust (a) 2,201, ,201,215 Total assets $ 12,837,445 $ 6,665,470 $ 3,385,069 $ 2,786,906 Liabilities Gift annuity obligation $ 2,515 $ - $ - $ 2,515 Total liabilities $ 2,515 $ - $ - $ 2,515 (a) based on additional analysis and nature and risk of these investments, the Foundation has determined that presenting them as a single class is appropriate

19 NOTE 3: FAIR VALUE MEASUREMENTS (Continued) The following tables provide further details of the Level 3 fair value measurements: Endowment assets third-party trustees: Years ended September 30, Beginning balance $ 585,691 $ 557,344 Change in split interest agreements (24,179) 28,347 Ending balance $ 561,512 $ 585,691 Remainder interest trusts: Years ended September 30, Beginning balance $ 2,201,215 $ 2,004,831 New trusts 93, ,439 Distributions (178,938) (53,094) Change in split interest agreements (84,957) 143,039 Ending balance $ 2,030,916 $ 2,201,215 Gift annuity obligations: Years ended September 30, Beginning balance $ 2,515 $ 4,987 Change in split interest agreements 2, Settlements (2,550) (2,550) Ending balance $ 2,545 $ 2,

20 NOTE 4: REMAINDER INTEREST IN IRREVOCABLE TRUSTS, ESTATES AND POOLED INCOME FUNDS The remainder interest in irrevocable trusts, estates and pooled income funds are summarized as follows: September 30, Remainder interest in trusts and estates $ 1,930,242 $ 2,099,201 Remainder interest in irrevocable pooled income funds 100, ,014 Total $ 2,030,916 $ 2,201,215 Due to the Foundation not having access to the assets until they are released from probate or after the donor s death, the assets whose use is not restricted for a particular purpose are recorded as part of temporarily restricted net assets until the proceeds are received. These assets include cash, bonds, marketable securities and ownership interest in life estates that include real estate. The proceeds from the remainder interest in irrevocable trusts, estates and pooled income funds have the following restrictions: September 30, Endowed $ 1,517,791 $ 1,602,748 Unrestricted 513, ,467 Total $ 2,030,916 $ 2,201,215 The trust activity is summarized as follow: Years ended September 30, Beginning balance $ 2,201,215 $ 2,004,831 Contributions 93, ,439 Distributions (178,938) (53,094) Change in value (84,957) 143,039 Ending balance $ 2,030,916 $ 2,201,

21 NOTE 5: INVESTMENTS Investments are summarized as follows: September 30, Cost Market Cost Market Money market funds $ 1,099,202 $ 1,032,537 $ 1,084,962 $ 1,016,832 Bonds 1,337,377 1,337,529 1,682,193 1,685,986 US Treasury obligations 1,918,629 1,937,669 1,698,072 1,699,083 Equities 5,066,130 5,642,136 4,772,820 5,648,638 Total $ 9,421,338 $ 9,949,871 $ 9,238,047 $ 10,050,539 Investments are restricted as follows September 30, Unrestricted General Investments $ 1,234,210 $ 1,236,943 Board Designated - Thomas Family Endowment 150, ,000 Gift annuity investments 4,913 2,963 1,389,123 1,389,906 Temporarily restricted Unappropriated earnings 890,820 1,018,720 Benefit of minor children 536, ,720 1,427,540 1,555,440 Permanently Restricted Thomas Family Endowment 5,187,773 5,159,758 UPARC Foundation Endowment 1,945,435 1,945,435 7,133,208 7,105,193 Total $ 9,949,871 $ 10,050,

22 NOTE 5: INVESTMENTS (Continued) Investment income is summarized as follows: Years ended September 30, Dividends and interest $ 175,195 $ 182,641 Unrealized gains/(losses) 88, ,436 Total investment return $ 263,545 $ 910,077 Temporarily restricted investment return $ 50,658 $ 517,299 Permanently restricted investment return 28,015 82,789 Investment return designated for current operations 505, ,003 Investment return in excess of amounts designated for current operations $ (320,711) $ 66,986 NOTE 6: DEFERRED REVENUE The Foundation has received revenues in advance of the following special events that have been classified as deferred revenues: September 30, Golf Classic $ 43,000 $ 62,842 Fashion Show 1, Festival of Trees 67,736 99,974 Unspecified special events - - $ 111,736 $ 163,448 NOTE 7: CONCENTRATIONS The Foundation maintains cash and cash equivalent balances in a bank, which at times throughout the year may have exceeded FDIC insured limits. The Foundation has not experienced any losses in such accounts and management believes it is not exposed to any significant risk on cash

23 NOTE 8: TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are summarized as follows: September 30, Benefit of minor children $ 536,720 $ 536,720 Unappropriated earnings from endowment 890,820 1,018,720 Contributions receivable 103, ,197 Trust and estates not yet received 513, ,467 Total $ 2,044,323 $ 2,340,104 NOTE 9: PERMANENTLY RESTRICTED NET ASSETS The Foundation s permanently restricted net assets consist of the following at September 30, 2015 and 2014: September 30, General endowment $ 1,945,435 $ 1,945,435 Thomas Family endowment 5,187,773 5,159,758 Total internally controlled endowments 7,133,208 7,105,193 Third-party endowment 561, ,691 Receivable under charitable remainder trust 1,517,791 1,602,748 Total externally controlled endowments 2,079,303 2,188,439 Total permanently restricted net assets $ 9,212,511 9,293,632 The general endowment is a donor-restricted endowment that generates unrestricted income to be used for the general operating income of the Foundation and The Arc Tampa Bay, Inc

24 NOTE 9: PERMANENTLY RESTRICTED NET ASSETS (Continued) The Arc Tampa Bay Foundation, Inc. The Thomas Family Endowment was established in 1998 by the Thomas Family. Under the terms of the endowment agreement, the Thomas Family contributed $1,000,000 from 1998 through 2004, and the Foundation raised matching contributions totaling $2,294,485. From 2006 to 2009, the Foundation raised additional endowment contributions of $441,789 for a total endowment of $3,736,274. Under the terms of the Thomas Family Endowment, the Foundation is required to maintain the purchasing power of the endowment and since inception reinvested earnings of $1,451,499 have been classified as permanently restricted support to maintain the purchasing power of the endowment. In addition, the Foundation is required to appropriate for expenditure all earnings in excess of the CPI restricted amount within five years of earning the income. The Board of Directors of the Foundation has interpreted the Florida Uniform Prudent Management of Institutional Funds Act (FUPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donorrestricted endowment fund not classified as permanently restricted is classified as temporarily restricted until those amounts are appropriated for expenditure by the Foundation s Board of Directors. Investment Return Objectives, Risk Parameters and Strategies. The Foundation has adopted investment policies, approved by the Board of Directors. The policies stipulate that the endowment investments should be managed as a long-term goal designed to maximize the returns without exposure to undue risk, as defined herein. Whereas it is understood that fluctuating rates of return are characteristic of the securities markets, the greatest concern should be long-term appreciation of the assets and consistency of total portfolio returns. Recognizing that short-term market fluctuations may cause variations in the account performance, the Foundation will pursue a strategy seeking to exceed a benchmark return of a target portfolio consisting of the following: Asset Class Minimum Maximum % % US Equities Large/Mid Cap Small Cap 0 15 International Equities 5 20 Fixed Income Cash & Equivalents

25 NOTE 9: PERMANENTLY RESTRICTED NET ASSETS (Continued) The Arc Tampa Bay Foundation, Inc. Spending Policy. The Foundation has a policy of appropriating for distribution actual earnings as defined under the Thomas Family Endowment plus an amount to be distributed from the general endowment based on the operating needs of The Arc Tampa Bay, Inc. In considering the amount to distribute to The Arc Tampa Bay, Inc., the Foundation considers the long-term expected returns on its endowment investments. Accordingly, over the long term, the Foundation expects the current spending policy will allow its endowment to retain the original fair value of the gifts received. Internally controlled endowment net asset composition by type of fund as of September 30, 2015 and 2014 are as follows: Unrestricted Temporarily Restricted Permanently Restricted Total 2014: General endowment $ - $ 615,372 $ 1,945,435 $ 2,560,807 Thomas Family endowment 403,348 5,159,758 5,563,106 $ - $ 1,018,720 $ 7,105,193 $ 8,123, : General endowment $ - $ 488,138 $ 1,945,436 $ 2,433,574 Thomas Family endowment 402,682 5,187,773 5,590,455 $ - $ 890,820 $ 7,133,209 $ 8,024,029 Changes in internally controlled endowment net assets for the years ended September 30, 2015 and 2014 are as follows: Unrestricted Temporarily Restricted Permanently Restricted Total Balances, September 30, 2013 $ - $ 576,421 $ 7,022,404 $ 7,598,825 Net investment income 13,075 85,497-98,572 Net appreciation 80, ,802 82, ,906 Transfers (93,390) (75,000) - (168,390) Balances, September 30, ,018,720 7,105,193 8,123,913 Net investment income 63,801 26,264 15, ,695 Net appreciation 51,569 24,394 12,386 88,349 Transfers (115,370) (178,558) - (293,928) Balances, September 30, 2015 $ - $ 890,820 $ 7,133,209 $ 8,024,

26 NOTE 9: PERMANENTLY RESTRICTED NET ASSETS (Continued) The Arc Tampa Bay Foundation, Inc. The Thomas Family Endowment assets are included in investments (net of any cash surplus and shortfall) with a value of $5,590,455 and $5,563,106 at September 30, 2015 and 2014, respectively. At September 30, 2015 and 2014, the market value of the Thomas Family Endowment assets is greater than (below) the permanently restricted net assets by $402,682 and $403,348, respectively. Any income and excess net appreciation not distributed within each five-year measurement period will accumulate and become part of the principal of the endowment. The amount is calculated as follows: Prior Five-Year Rolling Average Period ( ) Beginning deficit $ (249,734) Undistributed interest and dividend income 119,497 Capital gains 45,079 CPI adjustments to corpus (421,562) (506,720) Current Five-Year Rolling Average Period ( ) Undistributed interest and dividend income 98,221 Capital gain/(loss) 1,251,417 CPI adjustments to corpus (440,236) 909,402 Total surplus $ 402,682 NOTE 10: IN-KIND REVENUE AND EXPENSES Included as unrestricted support and expense for special event revenue and special event expense are the following in-kind contributions: Years ended September 30, Donated services $ 125,800 $ 104,000 Donated equipment and supplies 4,671 6,200 Total in-kind revenue and expense $ 130,471 $ 110,200 As discussed in Note 1, contributed services and tangible donations are recorded at their estimated fair values

27 NOTE 11: RELATED PARTY TRANSACTIONS The Foundation leases office space from The Arc Tampa Bay, Inc. on a month-to-month operating lease with monthly payments of $325 for 2015 and The Arc Tampa Bay, Inc. reserves the right to adjust the monthly rental payments on an annual basis. Rent paid to The Arc Tampa Bay, Inc. was $3,900 in 2015 and The Foundation made grants to The Arc Tampa Bay, Inc. in total for $988,932 and $789,897 for 2015 and 2014, respectively. The Foundation received a gift from a board member that amounted to $193,000. NOTE 12: FUNCTIONAL EXPENSES Expenses were allocated along functional lines as follows: Years ended September 30, Program expenses $ 1,212,334 $ 1,001,271 Management and administrative expenses 149, ,174 Fundraising expenses 133, ,840 Total $ 1,495,322 $ 1,295,285 NOTE 13: LEASE COMMITMENTS In May, 2014, the Foundation entered into a non-cancellable lease for office equipment. Rent expense under the lease totaled $4,788 and $2,793 for the year ended September 30, 2015 and 2014, respectively. Future minimum lease payments were as follows: Year ended September 30, $ 4, , , and thereafter 3,192 $ 17,

28 NOTE 14: SUBSEQUENT EVENTS Management of the Foundation evaluated all events or transactions that occurred after September 30, 2015 through January 27, 2016, the date the financial statements were available to be issued

29 ADDITIONAL INFORMATION

30 Thomas Endowment Statements of Assets and Net Assets September 30, Assets Investments - at market $ 5,590,455 $ 5,563,106 $ 5,186,567 Total assets $ 5,590,455 $ 5,563,106 $ 5,186,567 Net Assets Permanently restricted net assets $ 5,187,774 $ 5,159,758 $ 5,076,969 Temporarily restricted net assets 402, , , Unrestricted net assets Total net assets $ 5,590,455 $ 5,563,106 $ 5,186,

31 Thomas Endowment Statements of Endowment Activity Years ended September 30, Interest and dividends $ 96,907 $ 100,932 $ 87,006 Less investment fees (39,347) (40,154) (31,523) Net distributable income 57,560 60,778 55,483 Less distributions (75,823) (93,390) (75,600) Capital gains (losses) 45, , ,615 Increase in assets 27, , ,498 Assets at beginning of year 5,563,106 5,186,567 4,948,069 Assets at end of year $ 5,590,455 $ 5,563,106 $ 5,186,

32 Thomas Endowment Most Current Five-Year Rolling Average Surplus Tracking Statements FYE 9/30/11 Year 1 FYE 9/30/12 Year 2 FYE 9/30/13 Year 3 FYE 9/30/14 Year 4 FYE 9/30/15 Year 5 Summary of Activity Beginning balance $ 4,240,817 $ 4,435,113 $ 4,948,069 $ 5,186,567 $ 5,563,106 Contributions Total Investment account activity: Interest and dividends 126, ,063 87, ,932 96,907 Management fees (33,240) (33,240) (31,523) (40,154) (39,347) Net investment activity 93,391 75,823 55,483 60,778 57,560 Distributions - - (75,600) (93,390) (75,823) Unrealized and realized gains 100, , , ,151 45,612 Net investment activity 194, , , ,539 27,349 Ending balance $ 4,435,113 $ 4,948,069 $ 5,186,567 $ 5,563,106 $ 5,590,455 Principal balance contribution Beginning balance $ 4,747,537 $ 4,931,189 $ 5,021,163 $ 5,076,969 $ 5,159,758 Contributions Total 4,747,537 4,931,189 5,021,163 5,076,969 5,159,758 CPI adjustment 183,652 89,974 55,806 82,789 28,015 Required ending balance 4,931,189 5,021,163 5,076,969 5,159,758 5,187,773 Actual balance 4,435,113 4,948,069 5,186,567 5,563,106 5,590,455 Surplus/(shortfall) $ (496,076) $ (73,094) $ 109,598 $ 403,348 $ 402,682 Surplus tracking Beginning surplus/(deficit) $ (506,720) $ (496,076) $ (73,094) $ 109,598 $ 403,348 Current year surplus/(deficit) 10, , , ,750 (666) Ending surplus/(deficit) $ (496,076) $ (73,094) $ 109,598 $ 403,348 $ 402,