boys & girls clubs of toledo and affiliates · 2017. 6. 20. · boys & girls clubs of...

Boys & Girls Clubs of Toledo

and Affiliates

Years Ended December 31, 2016 and 2015

Combined Financial

Statements and

Supplementary Combining Information

BOYS & GIRLS CLUBS OF TOLEDO AND AFFILIATES TABLE OF CONTENTS PAGE

Independent Auditors’ Report 1 Combined Financial Statements for the Years Ended December 31, 2016 and 2015 Combined Statements of Financial Position 2 Combined Statements of Activities 3-4 Combined Statements of Functional Expenses 5-6 Combined Statements of Cash Flows 7 Notes to Combined Financial Statements 8-18 Independent Auditors’ Report on Supplementary Combining Information 19 Supplementary Combining Information for the Years Ended December 31, 2016 and 2015 Combining Statements of Financial Position 20-21 Combining Statements of Activities 22-23

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INDEPENDENT AUDITORS’ REPORT

June 6, 2017 Board of Trustees Boys & Girls Clubs of Toledo and Affiliates Toledo, Ohio We have audited the accompanying combined financial statements of Boys & Girls Clubs of Toledo and Affiliates (collectively, the “Organization”), a not-for-profit organization, which comprise the combined statements of financial position as of December 31, 2016 and 2015, and the related combined statements of activities, functional expenses and cash flows for the years then ended and the related notes to the combined financial statements. Management’s Responsibility for the Combined Financial Statements Management is responsible for the preparation and fair presentation of these combined 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 combined financial statements that are free from material misstatement, whether due to fraud or error. Independent Auditors’ Responsibility Our responsibility is to express an opinion on these combined 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 audits to obtain reasonable assurance about whether the combined financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on auditor judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization’s preparation and fair presentation of the combined 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 Organization’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 combined 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 combined financial statements referred to above present fairly, in all material respects, the combined financial position of Boys & Girls Clubs of Toledo and Affiliates as of December 31, 2016 and 2015, and the combined changes in their net assets and their cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

BOYS & GIRLS CLUBS OF TOLEDO AND AFFILIATES

COMBINED STATEMENTS OF FINANCIAL POSITION

2016 2015Assets

Cash and cash equivalents 1,399,501$ 1,197,373$ Accounts receivable 97,333 28,899 United Way receivable 150,000 150,000 Prepaid expense 4,041 9,553 Investments 5,894,987 5,752,709 Beneficial interests in perpetual trusts 5,155,337 5,269,772 Net property and equipment 2,280,660 2,421,381

Total assets 14,981,859$ 14,829,687$

LiabilitiesAccounts payable 44,962$ 31,195$ Accrued liabilities 97,169 86,920

Total liabilities 142,131 118,115

Commitments (Note 5)

Net assets Unrestricted

Undesignated 2,595,984 2,732,233 Designated by Board of Trustees 1,691,018 1,421,661 Designated by Board of Trustees - capital campaign 464,806 519,483

Total unrestricted 4,751,808 4,673,377

Temporarily restricted 2,231,822 2,068,162 Permanently restricted 7,856,098 7,970,033

Total net assets 14,839,728 14,711,572

Total liabilities and net assets 14,981,859$ 14,829,687$

December 31

LIABILITIES AND NET ASSETS

ASSETS

The accompanying notes are an integral part of these combined financial statements.

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COMBINED STATEMENT OF ACTIVITIESYear Ended December 31, 2016 (With Comparative Totals)

2015Temporarily Permanently

Unrestricted Restricted Restricted Totals TotalsRevenues and other support

Public supportContributions 438,104$ 138,421$ 500$ 577,025$ 538,172$ United Way 195,509 150,000 - 345,509 357,128 Grants 344,729 - - 344,729 169,268

Camp and membership fees 6,864 - - 6,864 12,547 Event revenue, net of direct expenses:

Barefoot at the Beach (net of expenses of $52,144) 210,763 - - 210,763 215,084 Border Battle Bash (net of expenses of $24,427) 60,743 - - 60,743 56,820 TLC (net of expenses of $7,234) 31,436 - - 31,436 30,430 Other events 28,005 - - 28,005 27,554

Income from beneficial interests in perpetual trusts 379,224 - - 379,224 267,277 Investment income 28,593 79,976 - 108,569 106,522 Other 7,154 - - 7,154 25,359 Net assets released from restrictions

United Way 150,000 (150,000) - - - Other 291,002 (291,002) - - -

Total revenues and other support 2,172,126 (72,605) 500 2,100,021 1,806,161

ExpensesProgram services

Education and career development 595,071 - - 595,071 594,922 Character and leadership development 157,924 - - 157,924 141,992 The Arts 245,913 - - 245,913 304,104 Sports, fitness and recreation 505,527 - - 505,527 377,525 Health and life skills 141,711 - - 141,711 138,130 Camping 55,400 - - 55,400 130,696

Total program services 1,701,546 - - 1,701,546 1,687,369

Supporting servicesFundraising 178,750 - - 178,750 152,371 Management and general 294,311 - - 294,311 290,950

Total expenses 2,174,607 - - 2,174,607 2,130,690

Changes in net assets from operating activities (2,481) (72,605) 500 (74,586) (324,529)

Non-operating activitiesNet realized and unrealized gains (losses) on investments 80,912 236,265 - 317,177 (243,945) Change in fair value of beneficial interests

in perpetual trusts - - (114,435) (114,435) (288,241)

80,912 236,265 (114,435) 202,742 (532,186)

Changes in net assets 78,431 163,660 (113,935) 128,156 (856,715)

Net assets, beginning of year 4,673,377 2,068,162 7,970,033 14,711,572 15,568,287

Net assets, end of year 4,751,808$ 2,231,822$ 7,856,098$ 14,839,728$ 14,711,572$

Changes in net assets from non-operating activities

Year Ended December 312016


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COMBINED STATEMENT OF ACTIVITIESYear Ended December 31, 2015

Temporarily PermanentlyUnrestricted Restricted Restricted Totals

Revenues and other supportPublic support

Contributions 482,510$ 54,412$ 1,250$ 538,172$ United Way 207,128 150,000 - 357,128 Grants 169,268 - - 169,268

Camp and membership fees 12,547 - - 12,547 Event revenue, net of direct expenses:

Barefoot at the Beach (net of expenses of $46,480) 215,084 - - 215,084 Border Battle Bash (net of expenses of $26,386) 56,820 - - 56,820 TLC (net of expenses of $8,045) 30,430 - - 30,430 Other events 27,554 - - 27,554

Income from beneficial interests in perpetual trusts 267,277 - - 267,277 Investment income 27,921 78,601 - 106,522 Other 25,359 - - 25,359 Net assets released from restrictions

United Way 197,643 (197,643) - - Other 304,158 (304,158) - -

Total revenues and other support 2,023,699 (218,788) 1,250 1,806,161


Education and career development 594,922 - - 594,922 Character and leadership development 141,992 - - 141,992 The Arts 304,104 - - 304,104 Sports, fitness and recreation 377,525 - - 377,525 Health and life skills 138,130 - - 138,130 Camping 130,696 - - 130,696

Total program services 1,687,369 - - 1,687,369

Supporting servicesFundraising 152,371 - - 152,371 Management and general 290,950 - - 290,950

Total expenses 2,130,690 - - 2,130,690

Changes in net assets from operating activities (106,991) (218,788) 1,250 (324,529)

Non-operating activitiesNet realized and unrealized losses on investments (61,303) (182,642) - (243,945) Change in fair value of beneficial interests

in perpetual trusts - - (288,241) (288,241)

Changes in net assets from non-operating activities (61,303) (182,642) (288,241) (532,186)

(168,294) (401,430) (286,991) (856,715)

Net assets, beginning of year 4,841,671 2,469,592 8,257,024 15,568,287

Net assets, end of year 4,673,377$ 2,068,162$ 7,970,033$ 14,711,572$

Changes in net assets


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COMBINED STATEMENT OF FUNCTIONAL EXPENSESYear Ended December 31, 2016 (With Comparative Totals)

2015

Character Sports,Education and Fitness Health Totaland Career Leadership and and Program Management Combined Combined

Development Development The Arts Recreation Life Skills Camping Services Fundraising and General Total Total

Salaries and wages 307,414$ 81,584$ 127,039$ 261,156$ 65,116$ -$ 842,309$ 91,571$ 192,249$ 1,126,129$ 1,079,870$ Health and retirement 35,246 9,354 14,565 29,942 7,466 - 96,573 25,859 33,807 156,239 169,557 Payroll taxes 26,118 6,931 10,793 22,188 5,532 596 72,158 7,718 16,401 96,277 88,633

Total salaries and related expenses 368,778 97,869 152,397 313,286 78,114 596 1,011,040 125,148 242,457 1,378,645 1,338,060

Occupancy 64,099 17,011 26,489 54,454 13,577 11,490 187,120 - 2,338 189,458 197,622 Repairs 16,408 4,354 6,781 13,939 3,475 207 45,164 - 548 45,712 38,106 Legal and professional 7,404 1,965 3,060 6,290 1,568 17,508 37,795 2,600 6,572 46,967 27,067 Supplies and food 40,932 10,863 16,915 34,773 24,335 925 128,743 10,745 6,390 145,878 162,213 Insurance 9,082 2,410 3,753 7,716 1,924 846 25,731 2,709 10,426 38,866 35,529 Transportation 2,000 531 827 1,699 424 - 5,481 790 5,749 12,020 12,667 Training 3,934 1,044 1,626 3,342 833 - 10,779 175 5,242 16,196 7,569 National and other organizational dues 5,107 1,355 2,110 4,338 1,082 221 14,213 707 3,272 18,192 14,580 Marketing 1,145 304 473 972 242 - 3,136 26,956 4,024 34,116 27,747 Bad debt - - - - - - - - - - 3,114 Other 203 54 84 172 43 146 702 6,057 2,998 9,757 9,340

Total expenses before depreciation 519,092 137,760 214,515 440,981 125,617 31,939 1,469,904 175,887 290,016 1,935,807 1,873,614

Depreciation 75,979 20,164 31,398 64,546 16,094 23,461 231,642 2,863 4,295 238,800 257,076

Total expenses 595,071$ 157,924$ 245,913$ 505,527$ 141,711$ 55,400$ 1,701,546$ 178,750$ 294,311$ 2,174,607$ 2,130,690$

2016Supporting ServicesProgram Services


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COMBINED STATEMENT OF FUNCTIONAL EXPENSESYear Ended December 31, 2015

Character Sports,Education and Fitness Health Totaland Career Leadership and and Program Management Combined

Development Development The Arts Recreation Life Skills Camping Services Fundraising and General Total

Salaries and wages 295,141$ 70,442$ 150,865$ 187,289$ 61,868$ 44,559$ 810,164$ 82,548$ 187,158$ 1,079,870$ Health and retirement 43,515 10,386 22,243 27,614 9,122 - 112,880 19,606 37,071 169,557 Payroll taxes 23,647 5,644 12,088 15,006 4,957 5,497 66,839 6,583 15,211 88,633

Total salaries and related expenses 362,303 86,472 185,196 229,909 75,947 50,056 989,883 108,737 239,440 1,338,060

Occupancy 68,347 16,313 34,937 43,371 14,327 17,122 194,417 - 3,205 197,622 Repairs 10,638 2,539 5,438 6,751 2,230 9,383 36,979 90 1,037 38,106 Legal and professional 6,815 1,627 3,484 4,325 1,429 2,116 19,796 2,673 4,598 27,067 Supplies and food 45,924 10,961 23,475 29,142 23,047 14,003 146,552 9,277 6,384 162,213 Insurance 8,271 1,974 4,228 5,249 1,734 1,567 23,023 2,543 9,963 35,529 Transportation 2,224 531 1,137 1,412 466 1,412 7,182 630 4,855 12,667 Training 751 179 384 477 157 350 2,298 2,346 2,925 7,569 National and other organizational dues 3,940 940 2,014 2,500 826 613 10,833 613 3,134 14,580 Marketing 1,741 415 890 1,104 365 1,702 6,217 16,964 4,566 27,747 Bad debt - - - - - - - - 3,114 3,114 Other 200 48 102 128 42 245 765 5,437 3,138 9,340

Total expenses before depreciation 511,154 121,999 261,285 324,368 120,570 98,569 1,437,945 149,310 286,359 1,873,614

Depreciation 83,768 19,993 42,819 53,157 17,560 32,127 249,424 3,061 4,591 257,076

Total expenses 594,922$ 141,992$ 304,104$ 377,525$ 138,130$ 130,696$ 1,687,369$ 152,371$ 290,950$ 2,130,690$

Supporting ServicesProgram Services


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COMBINED STATEMENTS OF CASH FLOWS

2016 2015Cash flows from operating activities

Changes in net assets 128,156$ (856,715)$ Adjustments to reconcile changes in net assets to net cash

provided by operating activitiesDepreciation 238,800 257,076 Bad debt - 3,114 Net realized and unrealized (gains) losses on investments (317,177) 243,945 Change in fair value of beneficial interests in perpetual trusts 114,435 288,241 Changes in operating assets and liabilities

which provided (used) cashAccounts and United Way receivables (68,434) 116,141 Prepaid expense 5,512 (3,403) Accounts payable and accrued liabilities 24,016 34,665

Net cash provided by operating activities 125,308 83,064

Cash flows from investing activitiesPurchases of property and equipment (98,079) (27,962) Proceeds from sales of investments 1,523,357 1,798,954 Purchases of investments (1,348,458) (1,681,970)

Net cash provided by investing activities 76,820 89,022

Net increase in cash and cash equivalents 202,128 172,086

Cash and cash equivalents, beginning of year 1,197,373 1,025,287

Cash and cash equivalents, end of year 1,399,501$ 1,197,373$

Supplemental disclosures of cash flows informationNoncash investing and financing activity - net property

and equipment in accounts payable at year-end -$ (4,650)$

Year Ended December 31


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BOYS & GIRLS CLUBS OF TOLEDO AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS

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1. NATURE OF ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES Description of Organization Boys & Girls Clubs of Toledo and Affiliates (collectively, the “Organization”) is committed to enabling all young people, especially those who need us most, to reach their full potential as productive, caring, and responsible citizens. The Organization has established four locations in Toledo, Ohio as well as a resident camp in Pinckney, Michigan. The Organization’s support comes primarily from the United Way of Greater Toledo, donor contributions, grants and fundraising events. Based on the interests and needs of the youth it serves, the Organization offers diverse program activities in six areas:

Education and Career Development – Programs that enable youth to become proficient in basic educational disciplines, set goals, explore careers, prepare for employment and embrace technology to achieve success in a career. Character and Leadership Development – Programs that empower youth to become global citizens who support and influence their club and community, sustain meaningful relationships with others, develop a positive self-image and good character and respect their own and other’s cultural identities. The Arts – Programs that enable youth to develop their creativity and cultural awareness through knowledge and appreciation of the visual arts, crafts, performing arts and creative writing. Sports, Fitness and Recreation – Programs that develop fitness, positive use of leisure time, skills for stress management, appreciation for the environment and social skills. Health and Life Skills – Programs that develop young people’s capacity to engage in positive behaviors that nurture their own well-being, set personal goals and live successfully as self-sufficient adults. Camping – Programs that enable youth to explore their natural environment and develop an appreciation for the outdoors in a hands-on learning environment.

Basis of Presentation The combined financial statements include the accounts of Boys & Girls Clubs of Toledo (legally known as Boys & Girls Clubs of Toledo and The Toledo Newsboys’ Association), Boys Club of Toledo Camp Association (“Camp”) and Friends of Boys & Girls Clubs of Toledo (“Friends”), collectively referred to as the Organization. Although these organizations have separate and distinct boards of trustees, these entities have been combined since they receive support from substantially the same sources and serve the same members.


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Net Asset Classification In accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Organization reports information regarding its financial position and activities according to three classes of net assets:

Unrestricted: These net assets are not restricted by donors, or the donor-imposed restrictions have expired. Unrestricted funds established by the Board of Trustees for specific purposes are classified as designated by the Board of Trustees. Temporarily Restricted: These net assets contain donor-imposed restrictions that permit the Organization to use or expend the assets as specified. The restrictions are satisfied by actions of the Organization or the passage of time. Permanently Restricted: These net assets contain donor-imposed restrictions that require the resources be maintained permanently, but permit the Organization to use or expend part or all of the income derived from the donated assets for either specified or unspecified purposes.

Use of Estimates The preparation of combined financial statements in conformity with GAAP require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. Cash and Cash Equivalents Cash invested in short-term investments having maturities of three months or less when purchased are deemed to be cash and cash equivalents. The Organization maintains cash in deposit accounts at financial institutions and, balances, at times, exceed federally insured limits. Management does not believe the Organization is exposed to any significant interest rate or other financial risk as a result of these deposits. Fair Value Measurements Fair value refers to the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants in the market in which the reporting entity transacts such sales or transfers based on the assumptions market participants would use when pricing an asset or liability. Assumptions are developed based on prioritizing information within a fair value hierarchy that gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). A description of each category in the fair value hierarchy is as follows:

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets.


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Level 2: Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all-significant assumptions are observable in the market.

Level 3: Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect the estimates or assumptions that market participants would use in pricing the asset or liability.

For further discussion of fair value measurement, refer to Note 2 to the combined financial statements. Contributions Contributions are recognized when the donor makes a promise to give to the Organization that is, in substance, unconditional. Unrestricted contributions are reported as increases in unrestricted net assets, and donor-restricted contributions are reported as increases 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. The Organization carries its contributions receivable at cost less an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Organization’s estimate is based on a review of the current status of contributions receivable. It is reasonably possible that the Organization’s estimate of the allowance for doubtful accounts will change. Amounts deemed uncollectible are charged against the allowance for doubtful accounts in the period that such determination is made. Investments and Beneficial Interests in Perpetual Trusts Investments in marketable debt and equity securities are carried at fair value. Donated investments are recorded at fair value at the date of donation. Unrealized gains (losses) on the carrying value of investments are reported as changes in net assets in the combined statements of activities. Realized gains and losses on investments are recorded upon sale and are determined using the specific identification method. Investment income, including realized and unrealized gains and losses, is reflected as an increase or decrease in the unrestricted net asset category except for income on restricted donations that has also been restricted and the income on permanently restricted net assets which is reflected in temporarily restricted net assets until appropriated by the Organization’s Board of Trustees. The Organization is the income beneficiary of certain perpetual trusts held and administered by outside fiscal agents. Under the terms of the trusts, the Organization has the irrevocable right to receive the income earned on the trusts’ assets in perpetuity, but will never receive the assets held in the trusts. The present value of the estimated future cash receipts from the trusts are recognized as assets and permanently restricted contributed support at the dates the trusts are established. Distributions from the trusts are recorded as operating investment income, and the carrying value of the assets is adjusted annually for changes in the estimates of future receipts.


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Property and Equipment and Depreciation Property and equipment are stated at cost if purchased or, if donated, at the fair value at the date of gift. Major improvements and repairs exceeding $5,000 are capitalized while ordinary maintenance and repairs are expensed. Management annually evaluates these assets for impairment. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, or the lease term if shorter, which range from 3 to 40 years. Revenue Recognition The Organization records as revenue the following types of contributions when they are received unconditionally, at their fair value: cash, promises to give, certain donated services and gifts of long-lived and other assets. Conditional contributions are recognized as revenue when the conditions on which they depend have been substantially met. In addition, the Organization records grants and special event revenues on an accrual basis. A portion of the Organization’s grants are considered to be exchange transactions for purposes of applying revenue recognition policies. Functional Allocation of Expenses Expenses are generally allocated between program services and supporting services on the basis of either specific identification or salaries and salary related expenses, whichever is more appropriate. Salaries and salary related expenses are allocated on the basis of estimated time spent for each function. Income Taxes Boys & Girls Clubs of Toledo and its affiliate organizations are not-for-profit organizations exempt from income tax under Section 501(c)(3) of the Internal Revenue Code and from similar state and local taxes. Although each organization was granted income tax exemption by the Internal Revenue Service, such exemption does not apply to “unrelated business taxable income.” Boys & Girls Clubs of Toledo and its affiliate organizations analyze their filing positions in the federal and state jurisdictions where the entities are required to file income tax returns, as well as all open tax years (2013 through 2016) in these jurisdictions. The Organization also treats interest and penalties attributable to income taxes, and reflects any charges for such, to the extent they arise, as a component of its management and general expenses. Subsequent Events In preparation of these combined financial statements, the Organization has evaluated, for potential recognition or disclosure, significant events or transactions that occurred during the period subsequent to December 31, 2016, the most recent combined statement of financial position presented herein, through June 6, 2017, the date these combined financial statements were available to be issued. No significant events or transactions of this nature were identified.


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2. INVESTMENTS AND FAIR VALUE MEASUREMENTS The Organization utilizes fair value measurements to record fair value adjustments to its investment securities and beneficial interests in perpetual trusts and to determine fair value disclosures. These assets are recorded at fair value on a recurring basis. The following is a description of the valuation methodologies and key inputs used to measure financial assets recorded at fair value. The description includes an indication of the level of the fair value hierarchy in which the assets are classified.

Investments Money market funds, mutual funds and exchange traded funds are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices. Level 1 investments include those traded on an active exchange, such as the New York Stock Exchange. Beneficial Interests in Perpetual Trusts The underlying trust assets cannot be liquidated or redeemed by the Organization. As such, no quoted prices or active markets are available for these assets (Level 3). As a practical expedient, the carrying value of these assets are deemed equal to the fair value of the Organization’s proportionate share of the total investment held in the trusts.

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, the Organization 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.


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Assets Recorded at Fair Value on a Recurring Basis The tables below set forth by level, within the fair value hierarchy, the recorded amount of assets measured at fair value on a recurring basis as of December 31: 2016

Assets at Fair Value

Level 1 Level 2 Level 3 Total

Investments Money market $ 133,644 $ - $ - $ 133,644 Mutual funds: Large cap equity 872,985 - - 872,985 Small and mid cap equity 244,091 - - 244,091 Fixed income 747,821 - - 747,821 International equity 342,426 - - 342,426 Other mutual funds 155,098 - - 155,098 Exchange traded funds: Large cap equity 1,485,721 - - 1,485,721 Small and mid cap equity 774,187 - - 774,187 Fixed income 641,931 - - 641,931 International equity 473,323 - - 473,323 Other equity 23,760 - - 23,760 Beneficial interests in perpetual trusts - - 5,155,337 5,155,337 Total assets at fair value $ 5,894,987 $ - $ 5,155,337 $ 11,050,324 2015

Assets at Fair Value

Level 1 Level 2 Level 3 Total Investments Money market $ 93,851 $ - $ - $ 93,851 Mutual funds: Large cap equity 779,965 - - 779,965 Small and mid cap equity 253,407 - - 253,407 Fixed income 857,070 - - 857,070 International equity 357,213 - - 357,213 Other mutual funds 78,000 - - 78,000 Exchange traded funds: Large cap equity 1,370,429 - - 1,370,429 Small and mid cap equity 855,556 - - 855,556 Fixed income 542,460 - - 542,460 International equity 544,718 - - 544,718 Other equity 20,040 - - 20,040 Beneficial interests in perpetual trusts - - 5,269,772 5,269,772 Total assets at fair value $ 5,752,709 $ - $ 5,269,772 $ 11,022,481


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The following table below sets forth a summary of changes in the fair value of the Organization’s Level 3 asset (beneficial interests in perpetual trusts), for the years ended December 31:

2016 2015

Balance, beginning of year $ 5,269,772 $ 5,558,013 Net unrealized losses (114,435) (288,241) Balance, end of year $ 5,155,337 $ 5,269,772

3. PROPERTY AND EQUIPMENT Net property and equipment consists of the following components at December 31:

2016 2015

Property and equipment Land and land improvements $ 254,506 $ 240,651 Buildings and leasehold improvements 5,097,791 5,035,391 Equipment 780,726 758,901

Total 6,133,023 6,034,943 Less accumulated depreciation 3,852,363 3,613,562

Net property and equipment $ 2,280,660 $ 2,421,381

4. TEMPORARILY AND PERMANENTLY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes at December 31:

2016 2015

Capital campaign $ - $ 9,113 Pool maintenance and supplies 463,870 431,963 Scholarships 280,407 275,477 General operations 1,330,095 1,274,856 Programs 157,450 76,753 Total temporarily restricted net assets $ 2,231,822 $ 2,068,162


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Permanently restricted net assets, reflected below, are restricted to investment in perpetuity. The income from these assets is expendable to support the activities within each category.

December 31

2016 2015

Beneficial interests in perpetual trusts $ 5,155,337 $ 5,269,772 Endowment investment assets 2,700,761 2,700,261

Total permanently restricted net assets $ 7,856,098 $ 7,970,033

5. FACILITY LEASES

The Organization leases a portion of three school buildings from the Board of Education of the Toledo Public Schools District (the “District”). As part of the arrangement with the District, the Organization invested approximately $1,050,000 for its club facilities at two of the District school buildings. Such costs have been capitalized by the Organization as net property and equipment in the accompanying combined statements of financial position.

The general terms of all three leases with the District provide for a 40-year lease term, with right of termination by either party with an appropriate notice. For the two building locations that the Organization invested construction costs, the Organization has the right to a buy-out clause which would compensate the Organization for a portion of the original construction costs should the District terminate the leases within the first 25 years of the initial lease terms.

Initial monthly lease terms for each of the three District locations are $1,500 per month, subject to an adjustment for inflation every 5 years.

Rent expense related to these facility leases amounted to $54,000 in both 2016 and 2015.

Minimum annual rental payments required under these leases are as follows for each of the years ending December 31, and thereafter:

Year Amount

2017 $ 54,000 2018 54,000 2019 54,000 2020 54,000 2021 54,000 Thereafter 1,216,500

Total $ 1,486,500


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6. RETIREMENT PLAN The Organization has a noncontributory defined contribution retirement plan which provides retirement benefits to eligible employees. The Organization contributes 10% of eligible participants’ annual salaries. Total retirement plan costs were $72,002 in 2016 and $65,562 in 2015.

7. BOARD-DESIGNATED AND DONOR-RESTRICTED ENDOWMENTS The Organization’s endowment funds consist of several individual funds established for a variety of purposes. They include both donor-restricted funds and funds designated by the Board of Trustees to serve as endowment funds. As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. Investment Return Objectives, Risk Parameters and Strategies The Organization has adopted investment and spending policies, approved by the Board of Trustees, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also maintaining the purchasing power of those endowment assets over the long-term. Accordingly, the investment process seeks to achieve a total rate of return, including investment income as well as capital appreciation, which equals or exceeds the annual distribution with acceptable levels of risk. Endowment assets are invested in a well diversified asset mix, which includes equity and debt securities, that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make an annual distribution of 5%, while growing the funds if possible. Therefore, the Organization expects its endowment assets, over time, to produce a nominal rate of return of approximately 5% annually. Actual returns in any given year may vary from this amount. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk. Spending Policy The Organization has a policy of appropriating for distribution each year 5% of its endowment fund’s average fair value for the prior twelve quarters through the third quarter of the preceding fiscal year in which the distribution is planned. Interpretation of Relevant Law The Organization follows the provisions of the Uniform Prudent Management of Institutional Funds Act as enacted in the State of Ohio effective June 1, 2009 (“UPMIFA”). Accounting standards provide guidance on the net asset classification of donor-restricted endowment funds for not-for-profit organizations that are subject to an enacted version of UPMIFA.


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The Organization’s Board of Trustees has interpreted UPMIFA 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, (b) the original value of the subsequent gifts to the permanent endowments, and (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 donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditures by the Organization’s Board of Trustees in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

1. The duration and preservation of the endowment fund. 2. The purposes of the Organization and the donor-restricted endowment fund. 3. General economic conditions. 4. The possible effect of inflation and deflation. 5. The expected total return from income and appreciation of investments. 6. Other resources of the Organization. 7. The investment policies of the Organization.


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The following is a summary of the Organization’s endowment net assets and changes therein during each of the years ended December 31, 2016 and 2015.

Changes in endowment net assets are as follows for the year ended December 31, 2016:

Board Designated

Donor-Restricted

Total Net Endowment

Assets

Unrestricted Temporarily Restricted

Permanently Restricted

Changes in Endowment Net Assets Investment return: Investment income $ 23,476 $ 79,976 $ - $ 103,452 Net appreciation (realized and unrealized) 69,289 236,265 - 305,554 Net investment return 92,765 316,241 - 409,006 Appropriation of endowment net assets for operating expenditures (52,795) (219,329) - (272,124) Donor contributions received - - 500 500 Changes in endowment net assets 39,970 96,912 500 137,382 Endowment net assets Beginning of year 1,253,691 1,589,743 2,700,261 5,543,695 End of year $ 1,293,661 $ 1,686,655 $ 2,700,761 $ 5,681,077

Changes in endowment net assets are as follows for the year ended December 31, 2015:

Board Designated

Donor-Restricted

Total Net Endowment

Assets

Unrestricted Temporarily Restricted

Permanently Restricted

Changes in Endowment Net Assets Investment return: Investment income $ 22,876 $ 78,601 $ - $ 101,477 Net depreciation (realized and unrealized) (52,444) (182,642) - (235,086) Net investment return (29,568) (104,041) - (133,609) Appropriation of endowment net assets for operating expenditures (46,194) (209,105) - (255,299) Donor contributions received - - 1,250 1,250 Changes in endowment net assets (75,762) (313,146) 1,250 (387,658) Endowment net assets Beginning of year 1,329,453 1,902,889 2,699,011 5,931,353 End of year $ 1,253,691 $ 1,589,743 $ 2,700,261 $ 5,543,695

Rehmann Robson

7124 Central Ave. Toledo, OH 43617 P: 419.865.8118 F: 419.865.3764 rehmann.com

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INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY COMBINING INFORMATION

June 6, 2017

Board of Trustees Boys & Girls Clubs of Toledo and Affiliates Toledo, Ohio We have audited the combined financial statements of Boys & Girls Clubs of Toledo and Affiliates (collectively, the “Organization”) for the years ended December 31, 2016 and 2015, and have issued our report thereon dated June 6, 2017, which expressed an unmodified opinion on those combined financial statements. Our audits were conducted for the purpose of forming an opinion on the combined financial statements as a whole. The combining statements of financial position and activities for the years ended December 31, 2016 and 2015, which are the responsibility of management, are presented for purposes of additional analysis and are not a required part of the combined financial statements. Such information has not been subjected to the auditing procedures applied in our audits of the combined financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

SUPPLEMENTARY COMBINING INFORMATION


COMBINING STATEMENT OF FINANCIAL POSITIONDecember 31, 2016

Boys Club Clubs and Friends of 2016Boys & Girls of Toledo Camp Camp Boys & Girls Combined

Clubs of Toledo Association Subtotal Clubs of Toledo TotalAssets

Cash and cash equivalents 977,979$ 21,673$ 999,652$ 399,849$ 1,399,501$ Accounts receivable 66,313 - 66,313 31,020 97,333 United Way receivable 150,000 - 150,000 - 150,000 Due from (to) affiliates 29,496 (6,968) 22,528 (22,528) - Prepaid expense 3,554 487 4,041 - 4,041 Investments 5,850,639 44,348 5,894,987 - 5,894,987 Beneficial interests in perpetual trusts 5,155,337 - 5,155,337 - 5,155,337 Net property and equipment 2,185,294 95,366 2,280,660 - 2,280,660

Total assets 14,418,612$ 154,906$ 14,573,518$ 408,341$ 14,981,859$

LiabilitiesAccounts payable 35,273$ 1,455$ 36,728$ 8,234$ 44,962$ Accrued liabilities 97,169 - 97,169 - 97,169

Total liabilities 132,442 1,455 133,897 8,234 142,131


Undesignated 2,442,533 153,451 2,595,984 - 2,595,984 Designated by Board of Trustees 1,293,661 - 1,293,661 397,357 1,691,018 Designated by Board of Trustees - capital campaign 464,806 - 464,806 - 464,806

Total unrestricted 4,201,000 153,451 4,354,451 397,357 4,751,808

Temporarily restricted 2,229,072 - 2,229,072 2,750 2,231,822 Permanently restricted 7,856,098 - 7,856,098 - 7,856,098

Total net assets 14,286,170 153,451 14,439,621 400,107 14,839,728

Total liabilities and net assets 14,418,612$ 154,906$ 14,573,518$ 408,341$ 14,981,859$

ASSETS


See independent auditors' report on supplementary combining information.

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COMBINING STATEMENT OF FINANCIAL POSITIONDecember 31, 2015

Boys Club Clubs and Friends of 2015Boys & Girls of Toledo Camp Camp Boys & Girls Combined

Clubs of Toledo Association Subtotal Clubs of Toledo TotalAssets

Cash and cash equivalents 861,387$ 17,492$ 878,879$ 318,494$ 1,197,373$ Accounts receivable 12,751 100 12,851 16,048 28,899 United Way receivable 150,000 - 150,000 - 150,000 Due from (to) affiliates 163,441 (8,108) 155,333 (155,333) - Prepaid expense 9,553 - 9,553 - 9,553 Investments 5,711,463 41,246 5,752,709 - 5,752,709 Beneficial interests in perpetual trusts 5,269,772 - 5,269,772 - 5,269,772 Net property and equipment 2,302,554 118,827 2,421,381 - 2,421,381

Total assets 14,480,921$ 169,557$ 14,650,478$ 179,209$ 14,829,687$

LiabilitiesAccounts payable 24,590$ 2,016$ 26,606$ 4,589$ 31,195$ Accrued liabilities 86,920 - 86,920 - 86,920

Total liabilities 111,510 2,016 113,526 4,589 118,115


Undesignated 2,564,692 167,541 2,732,233 - 2,732,233 Designated by Board of Trustees 1,253,691 - 1,253,691 167,970 1,421,661 Designated by Board of Trustees - capital campaign 519,483 - 519,483 - 519,483

Total unrestricted 4,337,866 167,541 4,505,407 167,970 4,673,377

Temporarily restricted 2,061,512 - 2,061,512 6,650 2,068,162 Permanently restricted 7,970,033 - 7,970,033 - 7,970,033

Total net assets 14,369,411 167,541 14,536,952 174,620 14,711,572

Total liabilities and net assets 14,480,921$ 169,557$ 14,650,478$ 179,209$ 14,829,687$

ASSETS



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COMBINING STATEMENT OF ACTIVITIESYear Ended December 31, 2016

Boys Clubof Toledo

CampBoys & Girls Clubs of Toledo Association Clubs and Boys & Girls Clubs of Toledo 2016

Temporarily Permanently Camp Temporarily CombinedUnrestricted Restricted Restricted Unrestricted Subtotal Unrestricted Restricted Totals


Contributions 138,506$ 135,671$ 500$ 10,875$ 285,552$ 288,723$ 2,750$ 577,025$ United Way 195,509 150,000 - - 345,509 - - 345,509 Grants 343,229 - - 1,500 344,729 - - 344,729

Camp and membership fees 6,864 - - - 6,864 - - 6,864 Event revenue, net of direct expenses:

Barefoot at the Beach - - - - - 210,763 210,763 Border Battle Bash - - - - - 60,743 - 60,743 TLC - - - - - 31,436 - 31,436 Other events - - - - - 28,005 - 28,005

Income from beneficial interests in perpetual trusts 379,224 - - - 379,224 - - 379,224 Investment income 27,805 79,976 - 788 108,569 - - 108,569 Other 3,654 - - 3,500 7,154 - - 7,154 Transfer to Boys & Girls Clubs and Camp from Friends 327,016 - - 17,648 344,664 (344,664) - - Transfer to Camp from Boys & Girls Clubs (4,685) - - 4,685 - - - - Camp management fees to Boys & Girls Clubs - - - - - - - - Net assets released from restrictions

United Way 150,000 (150,000) - - - - - - Other 284,352 (284,352) - - - 6,650 (6,650) -

Total revenues and other support 1,851,474 (68,705) 500 38,996 1,822,265 281,656 (3,900) 2,100,021


Education and career development 595,071 - - - 595,071 - - 595,071 Character and leadership development 157,924 - - - 157,924 - - 157,924 The Arts 245,913 - - - 245,913 - - 245,913 Sports, fitness and recreation 505,527 - - - 505,527 - - 505,527 Health and life skills 126,046 - - - 126,046 15,665 - 141,711 Camping - - - 55,400 55,400 - - 55,400

Total program services 1,630,481 - - 55,400 1,685,881 15,665 - 1,701,546

Supporting servicesFundraising 142,146 - - - 142,146 36,604 - 178,750 Management and general 294,311 - - - 294,311 - - 294,311

Total expenses 2,066,938 - - 55,400 2,122,338 52,269 - 2,174,607

Changes in net assets from operating activities (215,464) (68,705) 500 (16,404) (300,073) 229,387 (3,900) (74,586)

Non-operating activitiesNet realized and unrealized gains on investments 78,598 236,265 - 2,314 317,177 - - 317,177 Change in fair value of beneficial interests in perpetual trusts - - (114,435) - (114,435) - - (114,435)

Changes in net assets from non-operating activities 78,598 236,265 (114,435) 2,314 202,742 - - 202,742

Changes in net assets (136,866) 167,560 (113,935) (14,090) (97,331) 229,387 (3,900) 128,156

Net assets, beginning of year 4,337,866 2,061,512 7,970,033 167,541 14,536,952 167,970 6,650 14,711,572

Net assets, end of year 4,201,000$ 2,229,072$ 7,856,098$ 153,451$ 14,439,621$ 397,357$ 2,750$ 14,839,728$

Friends of


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COMBINING STATEMENT OF ACTIVITIESYear Ended December 31, 2015

Boys Clubof Toledo

Camp Friends ofBoys & Girls Clubs of Toledo Association Clubs and Boys & Girls Clubs of Toledo 2015

Temporarily Permanently Camp Temporarily CombinedUnrestricted Restricted Restricted Unrestricted Subtotal Unrestricted Restricted Totals


Contributions 195,395$ 47,762$ 1,250$ 11,220$ 255,627$ 275,895$ 6,650$ 538,172$ United Way 207,128 150,000 - - 357,128 - - 357,128 Grants 164,000 - - 5,268 169,268 - - 169,268

Camp and membership fees 7,370 - - 5,177 12,547 - - 12,547 Event revenue, net of direct expenses:

Barefoot at the Beach - - - - - 215,084 - 215,084 Border Battle Bash - - - - - 56,820 - 56,820 TLC - - - - - 30,430 - 30,430 Other events - - - - - 27,554 - 27,554

Income from beneficial interests in perpetual trusts 267,277 - - - 267,277 - - 267,277 Investment income 27,182 78,601 - 739 106,522 - - 106,522 Other 24,087 - - 1,272 25,359 - - 25,359 Transfer to Boys & Girls Clubs and Camp from Friends 361,084 - - 101,569 462,653 (462,653) - - Transfer to Camp from Boys & Girls Clubs (4,467) 4,467 Camp management fees to Boys & Girls Clubs 26,458 - - (26,458) - - - - Net assets released from restrictions

United Way 197,643 (197,643) - - - - - - Other 281,658 (281,658) - - - 22,500 (22,500) -

Total revenues and other support 1,754,815 (202,938) 1,250 103,254 1,656,381 165,630 (15,850) 1,806,161


Education and career development 594,922 - - - 594,922 - - 594,922 Character and leadership development 141,992 - - - 141,992 - - 141,992 The Arts 304,104 - - - 304,104 - - 304,104 Sports, fitness and recreation 377,525 - - - 377,525 - - 377,525 Health and life skills 124,710 - - - 124,710 13,420 - 138,130 Camping - - - 130,696 130,696 - - 130,696

Total program services 1,543,253 - - 130,696 1,673,949 13,420 - 1,687,369

Supporting servicesFundraising 124,976 - - - 124,976 27,395 - 152,371 Management and general 290,950 - - - 290,950 - - 290,950

Total expenses 1,959,179 - - 130,696 2,089,875 40,815 - 2,130,690

Changes in net assets from operating activities (204,364) (202,938) 1,250 (27,442) (433,494) 124,815 (15,850) (324,529)

Non-operating activitiesNet realized and unrealized losses on investments (59,613) (182,642) - (1,690) (243,945) - - (243,945) Change in fair value of beneficial interests in perpetual trusts - - (288,241) - (288,241) - - (288,241)

Changes in net assets from non-operating activities (59,613) (182,642) (288,241) (1,690) (532,186) - - (532,186)

Changes in net assets (263,977) (385,580) (286,991) (29,132) (965,680) 124,815 (15,850) (856,715)

Net assets, beginning of year 4,601,843 2,447,092 8,257,024 196,673 15,502,632 43,155 22,500 15,568,287

Net assets, end of year 4,337,866$ 2,061,512$ 7,970,033$ 167,541$ 14,536,952$ 167,970$ 6,650$ 14,711,572$



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