financial and supplementary information · financial statements and supplementary information ......

ELECTRONIC FRONTIER FOUIIDATION, INC.(A Nonprofit Public Benefit Corporation)

FINANCIAL STATEMENTS ANDSUPPLEMENTARY INFORMATION

For Year Ended June 30.2010and the Six Months Ended

June 30. 2009

CONTENTS

Page

II ndependent A uditor's Report

Financial Statements

Statements of Financial Position

Statements of Activities

Statements of Cash Flows

Notes to Financial Statements

Supplementary Information

Schedules of Functional Expenses

2

3-4

5

6 - r8

20-21

)* Donnu T ASSoCIATES55 i\,f rrchell Blvd., Suite i

San Rafael, CA 9190i

Phone (415) 491-l I30 ¡, Fax (415) i24-41ó7

un u.DoranAsociates,net

INDEPENDENT AUDITOR'S REPORT

To the Board of DirectorsElectronic Frontier Foundation, lnc.San Francisco. California

We have audited the accompanying staternents of financial position of Electronic Frontier Foundation, lnc. (anonprofit pLrblic benefit corporation), as of June 30,2010 and 2009, and the related statements of activities andcaslr flows for the year ended June 30,2010 and the six month period ended June 30,2009. These financialstatements are the responsibility of the Corporation's rnanagement. Our responsibility is to express an opinion onthese financial statements based on our audits

We conducted our audits in accordance with auditing standards generally accepted in the United States ofArnerica.Tlrose standards require that we plan and perforrn the audits to obtain reasonable assurance about whether thefìnancial statements are free of material misstatement. An audit includes exarnining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluatingthe overall financial statementpresentation. We believe that our audits provide a reasonable basis for our.opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financialposition ofElectronic Frontier Foundation, Inc. as ofJune 30, 20 I 0 and 2009, and the changes in its net assets andits cash flows for the year ended June 30, 2010 and the six month period ended June 30,2009,in conforrnity withaccounting principles generally accepted in the united states of America.

Our audits were conducted for the purpose of forrning an opinion on the basic financial state¡nents taken as awhole. The accompanying schedules oifunctional expenses are presented for the purposes of additional analysisand are not a required part of the basic financial statetnents of Electronic Frontier Foundation, Inc. Suchinformation has been subjected to the auditing procedures applied in the audits of the basic financial statementsand, in our opinion, is fairly stated in all material respects in relation to the basic fìnancial statements taken as awhole.

May 17,20llÐ..-r--^-- + 4--L--- c-,^t"r-*:

I

Member CaICPA and AICPA

ELECTRONIC FRONTIER FOUNDATION, INC.(A Nonprofit Public Benefït Corporation)

STATEMENTS OF FINANCIAL POSITIONJune 30, 2010 and 2009

20 r0 2009

Current assets:Cash and cash equivalents (Note l)Prepaid expensesGrants receivable (Note l)Litigation settlement receivablelnventory (Note 2)

Total current assets

Marketable equity securities (Note 3)DepositsEquipment and leasehold improvements, net ofaccumulated depreciation of 5226,619 at2Ol0and $197,488 ar2009 (Notes I and 4)

Total assets

ASSETS

s 4s3,923. 8,163290,000

31,45130.239

813,116

4,3t6,56714,300

417.568

$__l-6222J1

LIABILITIES AND NET ASSETS

s 24,64299.891

t24.533

590,5574.16t.6994,742,256

755.422s.497.678

g__5@2U_

integral part of these financial statements.

¿

Cunent liabilities:Accounts payable and accrued expensesAccrued vacation liability (Note 5)

Total liabilities

Net assets:Unrestricted net assets:

UndesignatedBoard-designated endownent (Note 6)Total unrestrictqd net assets

Temporarily restricted net assets (Note 7)Total net assets

Total liabilities and net assets

$ 1,088,3566,450

845,000

31.794r,9? tó00

3,435,57213,000

497.997

$_1,9_l3Jét

s 25,504l08.0ll133.515

54) \\'73^833.3424,375,9991.408.7555.784.6s4

$ 5.9r8.t69

The accompanying notes are an

ELECTRONIC FRONTIER FOUNDATION, INC.(A Nonprofit Public Benefit Corporation)

STATEMENTS OF ACTIVITIESFor the year ended June 30, 2010

UnrestrictedTemporarily

Restricted Total

SUPPORT, REVENUE AND TRANSFERSPublic support:

Foundation and corporation grantsDonations and contributions

Total public support

Revenue:MenrbershipsInvestment income (loss) (Note 3)Litigation settlementEvent income, net of expenses (Note 8)Loss on disposal of fixed assets, net (Note 4)Miscellaneous

Total revenue

Net assets released from restrictions (Note 9)

Total support. revenue and transfers

EXPENSESPrograrn servicesCeneral and administrativeFundraising

Total expenses

Change in net assets

Net assets, beginning of year

Net assets, end ofyear

$ 683,2ss706.020

1.389"2'75

959,201363,759109,24859,933

(68e)3.348

t.493.100

986.634

3.869.609

2,792,275259,09645 t.881

3.s03.2s2

366,351

4.31s.899

s 4.142.256

$ 3 r 7,30116.000

333.301

086.634\

t65? î??\

(653,333)

1.408.755

Î '755 4))

s r,000,556722.020

1.122.576

959,201363,159t09,24858,833

(68e)3.348

1.493.700

3.2t6.276

2.792,275259,096451.88 |

3.503.252

(286,e76)

5.784.6s4

s__5A91.6t8

integral parl of these financial statements.

J

The accompanying notes are an


STATEMENTS OF ACTIVITIES (CONTINUED)For the six months ended June 30. 2009

UnrestrictedTemporarily

Restricted Total

SUPPORT, REVENUE AND TRANSFERSPublic support:

Foundation and corporation grantsDonations and contributions

Total public support

Revenue:MembershipsInvestment income (loss) (Note 3)Litigation settlementEvent income, net of expenses (Note 8)Loss on disposalof fìxed assets, net (Note 4)Miscellaneous

Total revenue

Net assets released from restrictions (Note 9)

Total support, revenue and transfers

EXPENSESProgram servicesGeneral and administrativeFundraising

Total expenses

Change in net assets

Net assets, December 31, 2008

Net assets, June 30, 2009

9t,832299.490

397.322

352,16927 |,678

25,000r9,087(e.416)2.871

661.395

369.748

1.428.465

|,34t,736205,707184.052

1.731.495

(303,030)

4.618.929

$ 4.375.899

140,7l7

140.717

(369.748\

(229.031\

(229,031)

1.637.786

$___I-408Jss_

$ 238,549299.490

538.039

352,169271,67925,00019,087(9,416)2"877

661.39s

1.199.434

1,341,736205,707184.052

1.731.495

(s32,061)

6.316.7 t5

$ 5.784.654

The accompanying notes are an integral part of these

+

fìnancial statements.

ELECTRONIC FRONTIBR FOUNDATION, INC.(A Nonprofit Public Benefit Corporatión)

STATEMENTS OF CASH FLOWSFor the year ended June 30, 2010 and the six months ended June 30. 2009

2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES:Change in net assets

Adjustments to reconcile change in net assets to netcash used by operating activities:

DepreciationUnrealized (gain) loss on investmentsRealized gain on investmentsRealized Ioss on disposal of fixed assetsContribLltion of marketable equity securities

Changes in assets and Iiabilities:Prepaid expensesGrants receivableInventoryDepositsAccounts payable and accrued expensesAccrued vacation IiabilityTotal adjustnrentsNet cash used by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of investmentsSales of investmentsPurchase of equipment and leasehold improvements

Net cash (used) provided by investing activities

Net decrease in cash and cash equivalentsCash and cash equivalents, beginning ofyear

Cash and cash equivalents, end ofyear

Supplernentary information :

Non-cash transactions :

Contribution of rnarketable equity securities

$ (286.976) s (532.06 r)

30,215(284,313)(7s,4s8)

689(94,829)

( 1,7 r3)5)7 \49

1,555( 1,300)

(862)(8. r 20)89.413

/L97.s63)

(878,0 | s)45t,620( t0.475)

(436.870\

(634,433)t.088.3s6

s 453.923

16,405(211,3t7)

9,416( r 80,373)

21,988136,483( r s,344)

( 16,814)3 t.208

(268.348\(800.409)

367,241(6.666\

360.s75

(43e,834)1.s28.190

$ r.088.3s6

$ 94.829 $___l8oiu_

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

ELECTRONIC FRONTIBR FOUNDATION, INC.(A Nonprofit Public Benefit Corporation)

NOTES TO FINANCIAL STATEMENTSFor the year ended June 30, 2010 and the six months ended June 30. 2009

NOTE I ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - The Electronic Frontier Foundation, Inc., a Massachusetts nonprofit public benefircorporation, was founded in July 1990 to work in the public interest to promote online privacy,freedom of expression, and social responsibility. The Corporation's primary sources of revenue aregrants and contributions from foundations, corporations and individuals.

Effective January l, 2009 the Corporation changed the fiscal year end from December 3 I to June 30.As a result, these financial statements reflect the operations of the six month period ended June 30.2009.

Basis of Presentation - Resources are classífied for accounting and reporting purposes into threeclasses of net assets, according to externally irnposed restrictions:

UnrestricÍed net assets - Net assets that are not subject to any donor-imposed restrictions. This classalso includes restricted gifts whose donor-imposed restrictions were met during the fiscal year.

Temporarily restricted net assets - Net assets resulting (a) from contributions and other inflows ofassets whose use by the Corporation is limited by donor-imposed stipulations that either expire bypassage of time or can be fulfilled and removed by actions of the Corporation pursuant to thosestipulations, (b) from other asset enhancements and diminishments that are subject to the same kindofstipulations, and (c) from reclassification from (or to) otlrer classes ofnet assets as a consequenceof donor-imposed stipulations, their expiration by passage of time, or their fulfillment and removalby actions of the Corporation pursuant to those stipulations.

Permanently restricted net assets - Net assets resLrlting (a) from contributions and other inflows ofassets whose use by the Corporation is Iimited by donor-imposed stipulations that neither expire bypassage of time nor can be fulfilled or otherwise removed by actions of the Corporation, (U) fromother asset enhancements and diminishments that are subject to the same kinds of stipulations, and(c) from reclassification from (or to) other classes ofnet assets as a consequence ofdonor-imposedstipulations.

There were no perrnanently restricted net assets as of June 30,2010 and 2009.

Method of Accounting - The fìnancial statements of the Corporation are prepared using the accrualbasis of accounting, which reflects revenue when eamed and expenses as incurred.

Cash and Cash Equivalents - For purposes of the statement of cash flows, cash is defìned as cash indemand deposit accounts as well as cash on hand. Cash equivalents are short term. highly liquidinvestments that are readily converlible to known amounts of cash and investments so near theirmaturity thatthe risk of changes in value dueto changes in interest rates is negligible. These aregenerally investments with maturity dates within three months of the acquisition date.

ELECTRONIC FRONTIER FOUNDATION(A Nonprofit Public Benefit Corporation)

NOTES TO FINANCIAL STATEMENTSFor the year ended June 30, 2010 and the six months ended June 30, 2009

NOTE I ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Grants and Accounts Receivable - lt is the practice of the Corporation to expense uncollectibles onlyafter exhausting all efforts to collect the amounts due. There is no allowance for doubtful accountsand management believes all amounts will be collected in full.

Contributions - Contributions are recognized when the donor makes a promise to give to theCorporation that is, in substance, unconditional. Donor-restricted contributions are reported asincreases in temporarily or pennanently restricted net assets depending on the nature of therestrictions. When a restriction expires, temporarily restricted net assets are reclassified tounrestricted net assets.

Equioment and Leasehold Improvements - The Corporation records equipment and leaseholdimprovements of S I ,000 or more at historical cost or, if donated, at fair market value at the date ofdonation. Depreciation is determined on the straight-line method over the estimated useful livesranging from 5 to 39 years.

Income Taxes - The Corporation is exempt from income taxes under Intemal Revenue Code Section501(cX3), Section 23701(d) of the California Revenue and Taxation Code, and the MassachusensGeneral Law Chapter 180, Section 4, and is considered by the IRS to be an organizaÍion other thana private foundation. In the opinion of management, there is no unrelated business income.

Estimates - The preparation of financial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affect certain reportedamounts and disclosures. Accordingly, actual results could differ from those estimates.

Recent Account Pronouncement - Accounting Standards Codification - In June 2009, the FinancialAccounting Standards Board ("FASB") issued the Accounting Standards Codification("Codification"). Effective July 1,2009, the Codification is the single source of authoritativeaccounting principles recognized by the FASB to be applied by non-governmental entities in thepreparation of financial statements in conformity with U.S. generally accepted accounting principles("GAAP"). The Codification is intended to reorganize, rather than change, existing GAAP.Accordingly, all references to currently existing GAAP have been removed and have been replacedwith plain English explanations of the Corporation's accounting policies. The adoption of theCodification did not have a material impact on the Corporation's financial position or results ofactivities.

New Accountins.Pronouncement. ASC820-10. Fair Value Measurements - In September 2006, theFinancial Accounting Standards Board issued Accounting Standards Codification 820- I 0 (formerlyStatementofFinancialAccountingStandardsNo. 157(FAS-157)),FairValueMeasurements. ASC820-10 defines fair value, establishes a framework for measuring fäir value in accordance withGAAP, and expands disclosures about fairvalue measurements. The provisions of ASC 820-10 areeffective for the Corporation for fiscal years beginning January l, 2008. The adoption of ASC 820-l0 did not have a material impact on the Corporation's financial statements.



NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Subsequent Events - Subsequent events have been evaluated through May 17,2011, which is the datethe financial statements were available to be issued.

New Accounting Principles. ASC 740-10. Accountins .for Uncertainty in Income Taxes - Thepreparation offinancial statements in conformity with accounting principles generally accepted in theUnited St¿rtes of America requires the Corporation to report information regarding its exposure tovarious tax positions taken by the Corporation. The Corporation has determined whether any taxpositions have met the recognition threshold and have measured the Corporation's exposure to thosetax positions. Management believes that the Corporation has adequately addressed all relevant taxpositions and that there are no unrecorded tax liabilities. Federal and state tax authorities generallyhave the right to examine and audit the previous three years bf tax retums fìled. Any interest orpenalties assessed to the Corporation are recorded in operating expenses. No interest or penaltiesfrom federal or state tax authorities were recorded in the accompanying financial statements.

New Accounting Pronouncement. Uniform Prudent Manasement of Institutional Funds Act(LIPMIFA and California's State Prudent Management of Institutional Funds Act (SPMIFA) - ln2008, S81329 was adopted, changing the rules governing the investment of funds by a nonprofitpublic benefit corporation. The new legislation applies to newly created investment funds, as wellas existing funds held as ofJanuary 1,2009.

Advertising - The Corporation expenses advertising costs as incurred. Advertising expense totaled96,445 for the year ended June 30, 2010.

Reclassifications - Certain balances at, and for the year ended June 30, 2009, were reclassified toconform with June 30.2010. balances.

NOTE 2 INVENTORY

Inventory items are held for resale and promotion, are stated at the lower of cost or market value, andare determined on a first-in, first-out basis. Inventory at June 30, 2010 and 2009, consisted of thefollowing:

20rc 2oo9T-shirtsCards, stickers, and other clothing items

$ 18,429 $ 2s.99011.810 s.804

$______30.23e_ $_____IJ%


NOTES TO FINANCIAL STATEMENTSFor the year ended June 30, 2010 and the six months ended June J0, 2009

NOTE 3 MARKETA BLE EQU ITY SECURITIES

The following are the Inajor categories of marketable equity securities measured at fair value on arecurring basis dLrring the year ended JLrne 30, 2010 and the six months ended June 30, 2009, usingquoted prices in active markets for identified assets (Level l); significant other observable inputs(Level 2); and significant unobservable inputs (Level 3):

Fair Value Measurements at June 30. 20 10. UsinqQuoted Price in SignificantActive Markets Other

for ldentical ObservableAssets lnputs

(Level l) (Level2)DescriptionMutual fundsFixed incomeEquities

DescriptionMutual fundsFixed incomeStocks

$ 398,487 $1.418,645) 47q 47\

$___4iléJéz

Fair Value Measurements at June 30. 2009. UsingQuoted Price in SignifìcantActive Markets Other

for ldentical ObservableAssets Inputs

(Level l) (Level 2)$ 2,206,s43 $

1.044.629

SignificantUnobservable

Inputs(Level 3)s- Total

s 398,4871.478.645) diq /11,\

$ 4.3 r6.s67

Total$ 2,206,543

t,044,629t 84.400

SignificantUnobservable

Inputs(Level 3)

$-184.400

L__L4jlJt¿ $__3A35éJZThe following summarizes the investment incorne (loss) during the year ended June 30, 2010 and thesix montlrs ended June 30. 2009:

2010 2009s 284,3 l3 S 271,311

7 5,4583.988

Unrealized gain on investlnentsRealized gain on investmentsInterest and dividend income 36r

s____jéu59_ s____271Élt


NOTES TO FTNANCIAL STATEMENTSFor the year ended June 30, 2010 and the six months ended June 30. 2009

NOTE 4

NOTE 5

EQUI PMENT AND LEASEHOLD IMPROVEMENTS

Equiprnent and leasehold improvements consisted of the following:

Equiprnent and leaseholdimprovements- at cosl

Balance, December 31, 2008AdditionsDisposals

Balance. June 30, 2009AdditionsDisposals

Balance, June 30,2010

Accumulated depreciationBalance, December 31, 2008Depreciation expenseDisposals

Balance, June 30, 2009Depreciation expenseDisposals

Balance, June 30,2010

Equiprnent and leaseholdimprovements, net

LeaseholdImprovementss s44,699

1,190

546,489

Furniture andEquipment

$ 164,t524,876

708,85 r

6.666

Total

(20.032\ (20.032\

148,99610.47 50.475)

69s,48s10,475il.475\

s46.489 t57.996 104.485

92,9056,937

98,7949,468

97,64616,341

191,69916,40s

197,48830,215

0 0.6 r 6) 0 0.616)

99,84213.874

(786) (786\

il3.716 ll3.20l 226.911

s___ß2JJ3_ S____!!f,es s____4u_5þt

ACCRUED VACATION LIABILITY

Accumulated unpaid ernployee vacation benefits are recognized as liabilities ofthe Corporation. Thevalue of accumulated vacation at June 30,2010 and 2009 , was $99,891 and $ 108,01 I , respectively.

NOTE 6 ENDOV/MENT

EFF's endowment consists of two investment accounts consisting of mutual funds, fixed incomeinstruments, and cash and caslr equivalents. EFF's endowment was established to further thecharitable purposes ofthe organization by providing general support in meeting the operating needsof tlre organization, as determined by the EFF Board of Directors.

l0



NOTE 6 ENDOWMENT (Continued)

Interpretation of Law - The California State Prudent Management of lnstitutional Funds Act(UPMIFA) regulates all donor-created endowment funds held by charitable institutions in the State.EFF's endowment is a "board-designated endowment fund" and not a "donor restricted endowmentfund," and is therefore not subject to California's enactment of UPMIFA. However, the Board ofDirectors of EFF have interpreted CAAP to require disclosure of the followíng inforrnation in orderto enable users of EFF's financial statements to understand the net asset classification, net assetcomposition, changes in net asset composition, spending policies, and related investlnent policies ofEFF's board-designated endowment funds.

IF EFF were to receive any contributions to the endowment that included donor restrictions, the Boardof Directors of EFF understands that those contributions would be subject to California's enactlnentof UPMIFA with regard to classification of net assets and all other factors considered in makingdeterminations as to appropriate or accunrulated donor-restricted funds.

Endowment Net Asset Composition by Tvpe of Fund as of:

June 30.2010

Board-designatedendowment funds

Total funds

June 30. 2009Board-designatedendowment funds

Total funds

TemporarilyUniestricted Restrícted

$ 4. r6 r.699

!___4_lf_! j91

$ 4.161.699

PermanentlyRestricted Total

$ 3.833.342 S 3.833.342

$__i,E3iJ4a

ll




Chanees in Endowment Net Assets for the Six Months Ended June 30. 2009 and the vear ended June30.2010

Temporarily PermanentlyUnrestricted Restricted Restricted Total

Endowment net assets,December 31, 2008 S 3.5'75.297 S 3.575.291

lnvestrnent return:Interest and dividends -Realized and

unrealized gainInvestment fees

258,045 - 2s8,04s

Total investment return 258.045

Contributions

Appropriation of endowmentassets for expenditure:

Spending rule

Endowment net assets,June 30,2009 3.833.342

Addition to Board-designatedamounts

Investrnent return:Interest and dividends -Realized and

unrealized gainInvestment fees ( 18.530)Total investment return 328"357

346,887 346,887

328.357

l2




Changes in Endowment Net Assets for the Six Months Ended June 30. 2009 and the vear ended June30.20r0

Temporarily PermanentlyUnrestricted Restricted Restricted Total

Contributions -

A ppropriation of endowmentassets for expend iture :

Spending rule

Endowment net assets.June 30,2010 $__4Jq.691 $ 4.16t.699

Description ofAmounts Classified as Pennanentlv Restricted Net Assets and Temporaril)¡ RestrictedNet Assets (Endowment Onlv) for the vear ended June 30. 2010 and the Six Months Ended June 30.2009

Permanently Reslricted Net Assets

June 30.2010The porlion of perpetualendowlnent funds that is reqLrired to be retained

Permanently either by explicit donor stipulation of SPMIFA S

Total endowment funds classified as permanentlyrestricted net assets S -

June 30. 2009The portion of perpetualendowment funds that is required to be retained

Permanently either by explicit donor stipulation of SPMIFA

Total endowment funds classified as permanentlyrestricted net assets

l3



NOTE 6 EN DOWIIENT (Continued)

Description of Arnounts Classified as Permanently Restricted Net Assets and Temporarily RestrictedNet Assets (Endowment Only) for the year ended June 30. 2010 and the Six Months Ended June 30.2009 (Continued)

Temnorarilv Res¡ricted Net Assets

JLrne 30.2010Term endowment fundsThe porlion of perpetr,ral endowment funds subject to atime restriction under SPMIFA:

WithoLrt purpose restrictionsWitlr purpose restrictions

Total endowment funds classified as temporarilyrestricted net assets

June 30. 2009Term endowment fundsThe portion of perpetual endowtnent funds subject to atime restriction under SPMIFA:

Without purpose restrictionsWith purpose restrictions

Total endowment funds classified as temporarilyrestricted net assets

Funds with Deficiencies

From time to time, the fair value of assets associated with individual donor-restricted endowmentftrnds may fall below the level tlrat the donor or SPMIFA requires tlre organization to retain as a fundofperpetual duration. There were no such deficiencies as ofJune 30.2010 and 2009.

Return Objectives and Risk Paralneters

EFF has adopted investrnent and spending policies for endowment assets that attempt to provide apredictable streatn of investlnent returns that treats equitably inflation, adj usted terms, and tlre presentand future needs of EFF while seeking to maintain the purchasing power of the endowlnent assets.Endowment assets consist of board-designated funds. Under this policy, as approved by the Boardof Directors, the endowment assets are invested using an allocation model ofno more than 75%o ofthe funds in equities and no less than 25o/oin fixed-íncome. Additional investment suidelines aredetailed in the EFF Endowment Fund for Digital Civil Libefties Investment and Spendiñg Guidelines.Actual returns in any given year may vary.

l4



NOTE 6

NOTE 7

ENDOWMENT (Continued)

Strateeies Employed for Achieving Obiectives

To satisfy its long{erm rate-of-return, EFF relies on a total return objective consisting of the sum ofthe budgetary reliance on the endowment and the rate of inflation.

Spendine Policy and How the Investment Obiectives Relate to Spendine Policy

Withdrawals from the endowrnent account shall be limited to no more than 6Vo of the three-yearrolling average of funds under investrTlent at December 3 I, or the average annual total return for threeyears, whichever is less.

TEMPORARILY RESTRICTED NET ASSETS

Ternporarily restricted net assets are contributions which were received with donor stipulations thatIimit the use of the assets for specific purposes and/or for specific time períods. Temporarilyrestricted net assets at June 30,2010 and June 30,2009, are designated for the following uses:

Endowment CampaignPrime Number ContestFOIA / FLAGInternational Advocacy and Policy DevelopmenlCopyright watchLegal AdviceCivil Liberties ProgramTime-RestrictedIntel lectual Property ProgramPublic Interest AdvocateEducational WorkConsumer rights related to cell-phone useOutplacement attorney program

2010s 250,000'

381.18645,000

Work 40,000t'7,63615,000

s____l_55-4n

2009s 500,000

481,186

17,636

JJ,JJJ25,000

200,00075,00025,0001s,00030.000

$___l-4aEJ5i

l5



NOTE 8 EVENT INCOME

Event income consists of special events held by the Corporation, as well as events held by otherswhich resulted in contributions for the Corporation as follows for the year ended June 30, 2010, andthe six months ended June 30. 2009:

2010EFF Events:

Pioneer Award20'h Birthday Party

2009EFF Events:

Legal bootcampEFF Birthday Party

GrossIncome

s 17,2608.690

$ 25.9s0

GrossExpense

$ I r,5742.953

s 14.521

GrossExpense

ù J/)2.141

$__i-ur

NetIncome/(Loss)$ 5,686

s.737

11.423

4'7.410

$_____r&Er

NetIncome/(Loss)$ 9,662

2.894

12.556

6.53 r

$___l_g-a87_

Outside events held by others resulting in contributions

GrossIncome

$ 10,0375.635

g____15-672

Outside events held by others resulting in contributions

16


NOTES TO FINANCIAL STATEMENTSFor the year ended June 30, 20I0 and the six months ended June 30. 2009

NOTE 9 NET ASSETS RELEASED FROM RESTRICTION

During the year ended June 30, 2010 and the six months ended June 30,2009, temporarily restrictedfunds were used for their restricted purposes or were held for specific time periods, and they werereleased to unrestricted net assets:

2010Endowment campaign $ 250,000Intellectual Properly Program 200,000E-Voting (EVN) I 10,000Prime Nurnber Contest 100,000Public Interest Advocate 75,000Time-restricted 70,000International Advocacy and Policy Development Work 39,973Civil Liberties Program 33,333FOIA / FLAG Project 30,000Educational Work 25,000Summer Intern Program 16,000Legal Advice 15,000European Digital Rights 12,329Membership 10,000Outplacement attorney programCopyright watchConsumer rights related to cellphone LrseEFF legal bootcanrp

2009$-

ss,000

25,00025,000

166,667

25,000

30.000I 8,08115,000r0.000

$__3é9J4&$----_28é-634

NOTE IO LEASES

The Corporation leases its offices in San Francisco, California under two non-cancelable operatingleases that originally expired August 31,2010 and were extended to expire July 31, ZOil. fnãCorporation also occupies offices in Washington, DC under a short-tenn lease. EFÈ had also enteredinto a lease agreement to expand its San Francisco office. The lease had a term of two yearscommencing July 1,2008, and required monthly rental payments of S1,500. The Corporationdetermined that this additional office space was not needed and on May 27,2009, the iandlordreleased EFF from the new lease obligation.

In November 2009, the Corporation entered into a lease for office space in Washington, DC, underan operatìng lease that matures November 14,201l. The lease.calls for base monthl-y rent payrnentsof $1,300, increasing to $1,365 on the lease anniversary.

t7



NOTE l0 LEASES (Continued)

Rent expense for the leases for the year ended June 30,2010 was $146,723 and for the six monthsended June 30, 2009 was $7 l, | 62.

The estimated future minimum payments for the long-term leases for the current and succeeding yearare as follows:

Year endingJune 30.

20tl20122013

s 146,123151,203

17.402

$_1UJ2&

NOTE I I

NOTE 12

NOTE I3

TAX SHELTERED ANNUITY

TheCorporationhasestablisheda403(b)deferredincomeplanforalleligibleemployees. Voluntarycontributions are made by employees who choose to participate to thJextent permissible by law.During the year ended June 30, 2010 and the six months ended June 30, 2009, the Corporationmatched up to l0% of employee contributions to the plan, for a total of $19.308 and d10.07j.respectively.

RISKS, UNCERTAINTIES AND CONCENTRATIONS

The Corporation relies on a significant amount of funding received in the form of donations andgrants from individuals and foundations as well as investment income to support its operations. Thecurrent global fìnancial markets and discussions of a U.S. economic downiurn rnay haue an impacton the level of funding provided by these funding sources and the market value of marketable eqiitysecurities held by the Corporation. While it is impracticable to determine the impact ofthese events,management is taking steps to address potential changes in funding levéls and reduce theCorporation's exposure to impact from these events.

SUBSEQUENT EVENTS

On December29,20l0, the Board of Directors passed a resolution authorizing management staff toexecute a contract for the purclrase of real estate located in the city of San Frãnciscol Califomia, toserve as corporate headquarters for the Corporation and offices for the EFF staff. The resolutionallowed for funds to be withdrawn from the Board-designated Endowment (see Note 6) and to beretumed to the Endowment in monthly installments ofSll,500, commencìng immedíately aftervacating the leased office space currently occupied EFF.

On January 12,201l, theCorporation signed an agreement to purchase a building for $1,675,000.Escrow closed on March 9.201 | .

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SUPPLEMENTARY INFORMATION

t9

ELECTRONIC FRONTIBR FOUNDATION, INC.(A Nonprofit Public Benefit Corporation)

SCHEDULES OF FUNCTIONAL EXPENSESFor the year ended June 30, 2010

ProgramServices

General andAdministrative Fundraising Total

Salaries and benefitsBuilding expensesProgram expensesand special projects

Prime Number awardOffìce expensesTravel and meetingsG rassroots campaign i ngConsultantsCorporate insuranceBank and merchant feesDepreciationOther expenses

Total expenses

s 2,144,822148,496

149,528r00,00083,2 | 823,10853,09 r

13,87239,705

24,534I | .901

ç. 1 1A1 11<y L.t tL.LrJ

s r80,89812,618

< 111J,I I I

1.9644 5l l

44,3913,3742,5212,08sl.0l I

s 2s9.096

$ 307,5042t.762

9,80 r

54, r 83'7,781

s,6005,8l9

34.091? sqÁ1.144

$____l5Lg8r

s 2,633.224182,876

l49,52g100,00098,736'79 )\S65,38363,86348,89836,61830,21514.656

$ 3.503.252

)o


SCHEDULES OF FUNCTIONAL EXPENSES (CONTINUED)For the six-months ended June 30. 2009

ProgramServices

General andAdministrative Fundraising Total

Salaries and benefitsProgram expensesBuilding expensesOffice expensesGrassroots carnpaign i ngCorporate insuranceMernbership expensesBank and merchant feesConsultantsTravel and meetingsOther expenses

Total expenses

$ r,066,601109,92382,12936.094

lq 505

1,09514,9221,2464.221

$__j,34LTó_

$ 1,333,251109,923102,66250,83731,82424,392)? 1)A21,99218,422ro ?s?4-221

119,813

7,70010,616

l,g2g

2,1893,s00

86,837

12,8334,067

31,8243,048

)7 1)Ar8,608

3,r06

g_____20sJgl_ $__!84-a5¿ $___UX.4gr

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