Pike Place Market Foundation Presentation of the March 31, 2017, - PowerPoint PPT Presentation

Pike Place Market Foundation Presentation of the March 31, 2017, Audited Financial Statements Ray Holmdahl, CPA, Partner Veronica Cook, CPA, Senior Manager Amy Hernandez, CPA, Manager CONFIDENTIAL

Nonprofit Experience We have a dedicated nonprofit niche. • We provide services to 350+ nonprofit organizations located in the Pike Place Market, including the PDA, the • Preschool, the Senior Center and Food Bank, and LaSalle. We also audit the Friends of the Waterfront. In addition, we work with numerous foundations: Seattle Police Foundation, Medic One Foundation, Friends of Youth Foundation, Legal Foundation of Washington, King County Bar Foundation, Bellevue Schools Foundation, Foundation for Seattle Colleges, and Employee Community Fund of Boeing. We volunteer with more than 40 organizations. • We serve on the boards or committees at more than 20 organizations. • We have six staff on the Washington Society of CPA’s Not-for-Profit Committee. • 2 CONFIDENTIAL

Summary of Deliverables Financial Statement Audit • − Unmodified opinion – this is a “clean” opinion Management Letter (none) • Recommendations • − We would encourage a direct review of general journal entries − Regular communication of Board Designations for financial statement presentation Form 990 Tax Return • − We prepare based on information provided by Kay and Lillian − Currently being prepared by us. − Due August 15 th – the first extension will be taken. 3 CONFIDENTIAL

Required Communications Our responsibility under generally accepted auditing Passed adjustments • • standards − Accrued vacation ($23k) Significant accounting policies (and the quality of Disagreements or difficulties with management • • those policies) (none) − Revenue recognition − Temporarily and permanently restricted net Independence • assets − Investments at fair value Management representations • − Grants payable Management’s judgments and accounting estimates Steps left to complete: • − Functional allocation of expenses Board approval • − Grant payable to PDA Signed representation letter from management • Final quality control process (including updating • Audit adjustments subsequent events) • − Grant payable to PDA ($2.9 million) 4 CONFIDENTIAL

Initial Pre-Audit Discussion Follow Up Started fieldwork on schedule (June 12 th ) • No changes to our risk assessments made during planning • As part of our pre-audit conversation with Nicole, we discussed the following: • − Additional revenues from hoofprint or charm sales (FY18 and beyond) − The Neighborhood Center Grant from WA State − In-kind contributions from the PDA (including Market Commons rent) − The remaining grant payable to the PDA ($2.9 million) We also review the current investment allocations and compare those to the investment policy and noted that • they were consistent 5 CONFIDENTIAL

Trends and Ratios 6 CONFIDENTIAL

Liquidity Ratios Working Capital $4,000,000 $3,709,090 $3,500,000 $3,000,000 $2,665,716 $2,247,995 $2,500,000 $2,019,742 $2,000,000 $1,742,994 $1,500,000 $1,000,000 $500,000 $‐ 2013 2014 2015 2016 2017 Working capital represents current assets less current liabilities. • Working capital decreased due to over $5.5 million that has been distributed to the PDA in 2016 and 2017. • 2013 2014 2015 2016 2017 Current Ratio 3.16 3.80 4.91 3.83 1.52 • Current ratio represents current assets divided by current liabilities. • A benchmark for current ratio is 2-3. 7 CONFIDENTIAL

Months of Expenses in Working Capital 30.00 24.21 25.00 20.55 20.00 16.72 15.00 10.00 7.52 4.58 5.00 0.00 2013 2014 2015 2016 2017 Months' of expenses in working capital is working capital divided by average monthly expenditures. This represents an organizations’ length of time they could continue to operate without changing spending if they were to get no additional revenues (received in cash) in the door after year-end. An ideal range of months’ expenses in working capital for a nonprofit is 3-6 months. In-kind expenditures have been removed from this calculation. 8 CONFIDENTIAL

Changes in Net Assets & Cash Flows from Operations Cash Flows from Operations Change in Net Assets $800,000 $2,000,000 $715,152 $1,635,898 $700,000 $1,500,000 $600,000 $1,000,000 $451,442 $755,042 $500,000 $500,000 $400,000 $316,210 $298,502 $300,000 $‐ 2013 2014 2015 2016 2017 $200,000 $(205,791) $(500,000) $89,794 $100,000 $(1,000,000) $‐ $(982,145) 2013 2014 2015 2016 2017 $(100,000) $(1,500,000) $(32,388) The above charts shows the comparison between "accrual" net income (change in net assets) and "cash" net income (cash flows from operations). 9 CONFIDENTIAL

Functional Expenses 2013 2014 2015 2016 2017 Programs Supported 52% 44% 45% 25% 20% MarketFront Campaign 59% 66% Fundraising-Special Events 30% 34% 13% 9% 7% Other Fundraising 11% 16% 36% 4% 4% Total Fundraising 41% 50% 49% 13% 11% Administrative 7% 6% 6% 3% 3% Functional expenses represent the allocation of expenses according to their purpose. This information helps third parties determine how effectively the nonprofit is fulfilling its mission and using its resources. Note that the MarketFront Campaign significantly impacted the percentages of other expenditures. 10 CONFIDENTIAL

Grant Expenditures – by grant 2017 2016 Pike Market Medical Clinic $116,780 $34,123 $91,666 $53,102 Pike Market Senior Center $22,500 $26,000 Pike Market Child Care and $80,000 $85,000 $370,000 Preschool $371,675 Downtown Food Bank $205,000 $206,395 Heritage House $258,310 Safety Net $262,772 Other 2015 2014 2013 $8,934 $25,000 $25,000 $43,505 $21,000 $13,146 $2,489 $16,000 $‐ $70,000 $65,000 $80,000 $183,916 $312,168 $295,120 $370,856 $184,770 $205,3 66 $241,876 $225,423 $255,500 11 CONFIDENTIAL

Grant Expenditures – in total $1,200,000 $1,114,192 $1,069,131 $1,030,111 $990,227 $1,000,000 $847,602 $820,247 $800,000 $600,000 $400,000 $200,000 $‐ $‐ $‐ 2013 2014 2015 2016 2017 Total Total (without PDA) 12 CONFIDENTIAL

Comparative Statements of Financial Position ASSETS 2013 2014 2015 2016 2017 Current Assets Cash and cash equivalents $ 286,126 $ 398,171 $ 563,363 $ 358,723 $ 577,048 Designated cash and cash equivalents - MarketFront 216,434 602,998 168,945 2,169,504 Investments, unrestricted 2,188,642 2,313,500 2,491,126 2,416,175 2,576,502 Pledges receivable - MarketFront 32,250 877,029 483,485 452,201 Pledge receivable - use of facilities 22,624 22,624 22,624 22,624 16,968 Pledges receivable - other 52,243 56,622 93,970 148,084 85,663 Prepaid expenses and other current assets 1,988 10,957 6,235 8,991 1,615 Total current assets 2,551,623 3,050,558 4,657,345 3,607,027 5,879,501 Long-Term Assets Pledges receivable - MarketFront, net of current portion 30,166 85,222 42,986 30,211 Pledge receivable - use of facilities, net of current portion 84,840 62,216 39,592 16,968 Endowment investments 962,403 1,204,902 1,340,129 1,317,515 1,523,360 Investments, held as collateral 496,000 496,000 496,000 496,000 496,000 Property and equipment, net 7,144 155,847 419,928 Total long-term assets 1,543,243 1,793,284 1,968,087 2,029,316 2,469,499 Total assets $ 4,094,866 $ 4,843,842 $ 6,625,432 $ 5,636,343 $ 8,349,000 LIABILITIES AND NET ASSETS Current Liabilities Grants payable - PDA $ - $ - $ - $ - $ 2,890,000 Accounts payable - PDA 26,881 29,265 45,050 44,881 69,686 Grants payable to agencies 728,000 735,000 820,000 827,500 861,000 Accounts payable - other 21,498 26,798 58,205 60,080 13,223 Unearned special event revenue 32,250 11,500 25,000 8,850 25,850 Total current liabilities 808,629 802,563 948,255 941,311 3,859,759 Net Assets Unrestricted 2,009,037 2,533,087 2,689,962 3,033,525 2,825,675 Temporarily restricted 487,771 718,763 2,147,786 822,078 824,137 Permanently restricted 789,429 789,429 839,429 839,429 839,429 Total net assets 3,286,237 4,041,279 5,677,177 4,695,032 4,489,241 Total liabilities and net assets $ 4,094,866 $ 4,843,842 $ 6,625,432 $ 5,636,343 $ 8,349,000 13 CONFIDENTIAL