Download - FRANKIE LEMMON FOUNDATION, INC. Raleigh, North …...Frankie Lemmon Foundation, Inc. Raleigh, North Carolina We have audited the accompanying financial statements of Frankie Lemmon

FRANKIE LEMMON FOUNDATION, INC.

Raleigh, North Carolina

AUDITED FINANCIAL STATEMENTS

FOR THE YEARS ENDEDJUNE 30, 2019 AND 2018

CONTENTS

PAGES

Independent Auditor’s Report 2-3

Exhibits:

“A” Statements of Financial Position 4

“B” Statements of Activities and Changes in Net Assets 5-6

“C” Statements of Cash Flows 7

“D” Statements of Functional Expenses 8-9

Notes to Financial Statements 10-18

INDEPENDENT AUDITOR’S REPORT

Page 1 of 2

To the Board of Directors ofFrankie Lemmon Foundation, Inc.Raleigh, North Carolina

We have audited the accompanying financial statements of Frankie Lemmon Foundation, Inc.,(a nonprofit organization), which comprise the statements of financial position as of June 30, 2019 and 2018, and the related statements of activities and changes in net assets, cash flows, and functional expenses for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with 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.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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.

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Page 2 of 2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Frankie Lemmon Foundation, Inc., as of June 30, 2019 and 2018, and the changes in its net assets and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

Chapel Hill, North CarolinaFebruary 10, 2020

4

EXHIBIT A

2019 2018CURRENT ASSETS:

Cash and cash equivalents 1,044,713$ 888,308$ Investments 3,725,415 3,470,348 Accounts receivable 81,243 119,154 Due from School - 487 Promises to give, net 91,697 158,651 Inventory 14,455 468 Prepaid expenses 3,374 3,763

TOTAL CURRENT ASSETS 4,960,897 4,641,179

PROPERTY AND EQUIPMENT:Land - 5,800 Furniture and fixtures 5,885 5,885 Office equipment 5,577 11,090 Less: accumulated depreciation (11,419) (16,077)

NET PROPERTY AND EQUIPMENT 43 6,698

OTHER ASSETS:Restricted cash and cash equivalents 13,824 13,824 Security deposit 4,172 4,172

TOTAL OTHER ASSETS 17,996 17,996

TOTAL ASSETS 4,978,936$ 4,665,873$

CURRENT LIABILITIES:Accounts payable and accrued expenses 21,706$ 146,374$ Deferred rent, current portion 1,539 -

TOTAL CURRENT LIABILITIES 23,245 146,374

LONG-TERM LIABILITIES:Deferred rent 8,304 9,839

TOTAL LIABILITIES 31,549 156,213

NET ASSETS:Without donor restrictions 4,887,925 4,319,752 With donor restrictions 59,462 189,908

TOTAL NET ASSETS 4,947,387 4,509,660

TOTAL LIABILITIES AND NET ASSETS 4,978,936$ 4,665,873$


STATEMENTS OF FINANCIAL POSITION

June 30, 2019 and 2018

ASSETS

LIABILITIES AND NET ASSETS

The accompanying Notes to Financial Statements are an integral part of these financial statements.

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EXHIBIT B

Page 1 of 2

2018

Total Total

SUPPORT AND REVENUE:

Contributions 386,168$ 25,103$ 411,271$ 1,444,572$

In-Kind Contributions - - - 5,800

Special events, net 1,763,848 - 1,763,848 1,774,611

Net investment return 367,959 - 367,959 193,396

Other expense 386 - 386 (384)

2,518,361 25,103 2,543,464 3,417,995

Net assets released from restrictions 155,549 (155,549) - -

TOTAL SUPPORT AND REVENUE 2,673,910 (130,446) 2,543,464 3,417,995

EXPENSES:

Program 1,472,842 - 1,472,842 1,495,782

Management and general 165,574 - 165,574 225,326

Fundraising 369,633 - 369,633 424,506

TOTAL FUNCTIONAL EXPENSES 2,008,049 - 2,008,049 2,145,614

Bad debt expense 97,688 - 97,688 3,559

TOTAL EXPENSES 2,105,737 - 2,105,737 2,149,173

CHANGES IN NET ASSETS 568,173 (130,446) 437,727 1,268,822

NET ASSETS - BEGINNING OF PERIOD 4,319,752 189,908 4,509,660 3,240,838

NET ASSETS - END OF PERIOD 4,887,925$ 59,462$ 4,947,387$ 4,509,660$

2019

Without

Donor

Restrictions

With Donor

Restrictions


STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS

For the Years Ending June 30, 2019 and 2018


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EXHIBIT B

Page 2 of 2

Without With

Donor Donor

Restrictions Restrictions Total

SUPPORT AND REVENUE:

Contributions 1,274,989$ 169,583$ 1,444,572$

In-kind contributions 5,800 - 5,800

Special events, net 1,774,611 - 1,774,611

Net investment return 193,396 - 193,396

Other expense (384) - (384)

3,248,412 169,583 3,417,995

Net assets released from restrictions 92,714 (92,714) -

TOTAL SUPPORT AND REVENUE 3,341,126 76,869 3,417,995

EXPENSES:

Program 1,495,782 - 1,495,782

Management and general 225,326 - 225,326

Fundraising 424,506 - 424,506

TOTAL FUNCTIONAL EXPENSES 2,145,614 - 2,145,614

Bad debt recovery 3,559 - 3,559

TOTAL EXPENSES 2,149,173 - 2,149,173

CHANGES IN NET ASSETS 1,191,953 76,869 1,268,822

NET ASSETS - BEGINNING OF PERIOD 3,127,799 113,039 3,240,838

NET ASSETS - END OF PERIOD 4,319,752$ 189,908$ 4,509,660$


STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS


2018


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EXHIBIT C

2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES:

Changes in net assets 437,727$ 1,268,822$

Adjustments to reconcile changes in net assets to net cash

used in operating activities:

Donated land - (5,800)

Depreciation 855 1,099

Realized and unrealized gain on investments (326,334) (69,167)

Changes in assets and liabilities:

Accounts receivable 37,911 (83,975)

Due from School 487 (487)

Promises to give, net 66,954 43,343

Inventory (13,987) 2,080

Prepaid expenses 389 10,359

Accounts payable and accrued expenses (123,129) 102,355

Due to School - (52,323)

Deferred rent (1,535) 5,552

NET CASH PROVIDED BY OPERATING ACTIVITIES 79,338 1,221,858

CASH FLOWS FROM INVESTING ACTIVITIES:

Sale of property and equipment 5,800 -

Sale of investments 3,477,629 335,294

Purchases of investments (3,406,362) (476,262)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 77,067 (140,968)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net repayments of line of credit - (452,664)

NET INCREASE IN CASH AND CASH EQUIVALENTS 156,405 628,226

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 902,132 273,906

CASH AND CASH EQUIVALENTS - END OF YEAR 1,058,537$ 902,132$

RECONCILIATION OF CASH AND CASH EQUIVALENTS:

Cash and cash equivalents 1,044,713$ 888,308$

Restricted cash and cash equivalents 13,824 13,824

TOTAL CASH AND CASH EQUIVALENTS 1,058,537$ 902,132$

Supplemental Disclosures:

Donated land -$ 5,800$

Interest paid -$ 21,622$


STATEMENTS OF CASH FLOWS



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EXHIBIT D

Page 1 of 2

2018

Program Management

Services and General Fundraising Total Total

Transfers to School 1,240,000$ -$ -$ 1,240,000$ 1,175,000$

Special event expenses - - 522,166 522,166 416,673

Salaries 101,177 87,053 178,240 366,470 352,547

Bad debt expense - 97,688 - 97,688 3,559

Subcontractors 49,195 16,456 16,628 82,279 116,082

Rent 15,826 13,616 27,879 57,321 56,746

Bank fees - 768 49,769 50,537 41,876

Office expenses 9,471 8,149 23,972 41,592 54,173

Travel 5,431 4,673 25,472 35,576 38,693

Employee benefits 9,117 7,844 16,061 33,022 31,695

Payroll taxes 7,903 6,801 13,925 28,629 26,752

Miscellaneous 21,284 1,644 3,367 26,295 14,048

Supplies - 3,559 9,853 13,412 17,327

Grants 10,904 - - 10,904 168,706

Professional fees - 10,875 - 10,875 12,300

Training 1,697 1,461 2,991 6,149 11,142

Insurance 601 2,472 1,060 4,133 5,806

Depreciation 236 203 416 855 1,099

Interest - - - - 21,622

Total expenses 1,472,842 263,262 891,799 2,627,903 2,565,846

Less expense included with revenues

on the statements of activities - - (522,166) (522,166) (416,673)

Less bad debt expense - (97,688) - (97,688) (3,559)

Total functional expenses 1,472,842$ 165,574$ 369,633$ 2,008,049$ 2,145,614$

2019


STATEMENTS OF FUNCTIONAL EXPENSES



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EXHIBIT D

Page 2 of 2

Program Management

Services and General Fundraising Total

Transfers to School 1,175,000$ -$ -$ 1,175,000$

Special event expenses - - 416,673 416,673

Salaries 81,365 100,577 170,605 352,547

Bad debt expense - 3,559 - 3,559

Subcontractors 24,460 30,236 61,386 116,082

Rent 13,096 16,189 27,461 56,746

Bank fees - 784 41,092 41,876

Office expenses 7,048 8,712 38,413 54,173

Travel 5,797 7,167 25,729 38,693

Employee benefits 7,315 9,042 15,338 31,695

Payroll taxes 6,174 7,632 12,946 26,752

Miscellaneous 3,242 4,008 6,798 14,048

Supplies - 95 17,232 17,327

Grants 168,706 - - 168,706

Professional fees - 12,300 - 12,300

Training 2,571 3,179 5,392 11,142

Insurance 755 3,469 1,582 5,806

Depreciation 253 314 532 1,099

Interest - 21,622 - 21,622

Total expenses 1,495,782 228,885 841,179 2,565,846

Less expense included with revenues

on the statements of activities - - (416,673) (416,673)

Less bad debt recovery - (3,559) - (3,559)

Total functional expenses 1,495,782$ 225,326$ 424,506$ 2,145,614$



STATEMENTS OF FUNCTIONAL EXPENSES

2018


10


NOTES TO FINANCIAL STATEMENTS

Page 1 of 9

NATURE OF ACTIVITIES

Frankie Lemmon Foundation, Inc. (the “Foundation”) is a nonprofit corporation organized to provide support to Frankie Lemmon School and Developmental Center, Inc. (the “School”).

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Accounting.

The Foundation’s financial statements are presented on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which require the use of certain estimates made by the Foundation’s management. Accordingly, revenues are recognized when earned, and expenses are recognized when the obligation is incurred.

The Foundation reports gifts of cash and other assets as support with donor restrictions if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the statements of activities and changes in net assets as net assets released from restrictions. Some contributions are restricted in perpetuity, which represent only those contributions restricted by the donor to be invested for the purpose of providing a permanent source of income. The accumulated earnings are reflected in net assets with donor restrictions until appropriated.

Consolidated financial statements have been separately issued and are the general-purpose financial statements of the School and Foundation.

B. Cash and Cash Equivalents.

Cash and cash equivalents consist of monies on deposit at financial institutions, and other highly liquid investments with maturities of three months or less, which are neither held for nor restricted by donors for long-term purposes. Cash and cash equivalents that are perpetual in nature are excluded from this definition. At times, the Foundation places deposits with high-quality financial institutions that may be in excess of federally insured amounts. The Foundationhas not experienced any financial loss related to such deposits.

C. Investments.

Investments are stated at fair value and include marketable securities, mutual funds, bonds, and pooled investment funds. Donated securities are initially recorded at their fair value at the date of the gift. Net investment return (loss) is reported in the statements of activities and changes in net assets and consists of interest and dividend income, realized and unrealized capital gains and losses, less external investment expenses.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Accounts Receivable.

Accounts receivable are recorded at net realizable value. The Foundation provides an allowance for doubtful accounts equal to the estimated losses that are expected to be incurred in collection. The allowance is based on historical collection experience and a review by management of the current status of the existing receivables. As of June 30, 2019 and 2018, all receivables were deemed collectible by management.

E. Promises to Give.

Unconditional promises to give are recognized as support and assets in the period received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows.

The Foundation provides an allowance for uncollectible accounts equal to the estimated losses that are expected to be incurred in collection. The allowance is based on historical collection experience and a review by management of the current status of the existing promises to give. The allowance totaled $7,200 as of June 30, 2019 and 2018.

F. Inventory.

Inventory is stated at the lower of cost or market, determined by the first-in, first-out method. Inventory consists of various items such as wine and glassware.

G. Property and Equipment.

Property and equipment are stated at cost for purchased assets and at fair value on the date of the gift for donated assets. Property and equipment are capitalized if the life is expected to be greater than one year and if the cost exceeds $1,000. Depreciation is calculated using the straight-line method over estimated lives of 5 to 7 years.

The Foundation reports gifts of land, buildings, and equipment as support without donor restrictions unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as support with donor restrictions.

H. Revenue Recognition.

Revenue from grants which are deemed to be unconditional contributions is recognized when the grantor makes a promise to give to the Foundation. Contributions that are restricted by the grantor are reported as increases in net assets with donor restrictions. Conditional grant revenues are recognized when the conditions upon which they depend are substantially met.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I. Net Assets.

Net assets and support and revenue are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows:

Net Assets Without Donor Restrictions - Net assets available for use in general operations and not subject to donor (or certain grantor) restrictions. These resources include amounts generated from operations, undesignated gifts, and investments in property and equipment.

Net Assets With Donor Restrictions - Net assets subject to donor (or certain grantor) imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both.

J. Income Taxes.

The Foundation is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and has been classified as other than a private foundation. If applicable, the Foundation reports any interest and penalties for uncertain tax positions as miscellaneous expense.

K. Estimates.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

L. New Accounting Pronouncements.

In August 2016, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-14, Not-for-Profit Entities (Topic 958) – Presentation of Financial Statements of Not-for-Profit Entities. The update addresses the complexity and understandability of net asset classification, deficiencies in information about liquidity and availability of resources, and the lack of consistency in the type of information provided about expenses and investment return. The Foundation has implemented ASU 2016-14 and adjusted the presentation of the accompanying financial statements accordingly. The ASU has been applied retrospectively to all periods presented.

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LIQUIDITY AND AVAILABILITY

Financial assets available for general expenditure that is without donor or other restrictions limiting

their use, within one year of the statement of financial position date comprise the following:

Cash and cash equivalents 1,044,713$

Investments 3,725,415

Accounts receivable 81,243

Promises to give, net 91,697

Inventory 14,455

4,957,523

Less amounts unavailable for general expenditures

within one year, due to:

Restrictions by donors (45,638)

Board designations (1,500,000)

Financial assets available to meet cash needs for

general expenditures within one year 3,411,885$

As part of the Foundation’s liquidity management, it structures its financial assets to be available as its general expenditures, liabilities, and other obligations come due. Management believes financial assets available to meet cash needs for general expenditures within one year to be sufficient. However, the board designation of $1,500,000 noted above would be released if considered necessary. Additionally, the Foundation holds a $1,000,000 line of credit which could be drawn upon if needed.

FAIR VALUE OF ASSETS

U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Foundation. Unobservable inputs reflect the Foundation’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

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FAIR VALUE OF ASSETS (CONTINUED)

The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 - Quoted prices are available in active markets for identical assets as of the reporting date.

Level 2 - Valuations based on inputs other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, are valued at prices for similar assets or liabilities in markets that are not active, or determined through the use of models or other valuation methodologies.

Level 3 - Pricing inputs are unobservable and include situations where there is little, if any, market activity for the asset. Fair value for these assets is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the asset was acquired, the nature of the asset, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the asset. The inputs into the determination of fair value require significant management judgment. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these assets existed.

There were no changes during the years ending June 30, 2019 and 2018, to the Foundation’s valuation techniques used to measure asset values on a recurring basis.

The Foundation’s investments are classified as Level 1 and Level 2. No assets or liabilities were classified as Level 3.

The following table summarizes the assets of the Foundation for which fair value is determined on a recurring basis as of June 30, 2019. As required by U.S. GAAP, the assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Level 1 Level 2 Level 3 Total

Mutual Funds 43,112$ -$ -$ 43,112$

Exchange Traded Funds 2,638,201 - - 2,638,201

Bonds 902,372 - - 902,372

Alternative - 141,730 - 141,730

3,583,685$ 141,730$ -$ 3,725,415$

The following table summarizes the assets of the Foundation for which fair value is determined on a recurring basis as of June 30, 2018. As required by U.S. GAAP, the assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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FAIR VALUE OF ASSETS (CONTINUED)

Level 1 Level 2 Level 3 Total

Mutual Funds 2,339,298$ -$ -$ 2,339,298$

Exchange Traded Funds 993,889 - - 993,889

Alternative - 137,161 - 137,161

3,333,187$ 137,161$ -$ 3,470,348$

RETIREMENT PLAN

The Foundation has a SIMPLE IRA retirement plan which allows employees to defer a portion of their gross income annually. Employees must have worked 60 days prior to enrollment on either January 1 or July 1 to be eligible to participate in the plan. The Foundation makes a non-elective contribution of 2% of the employees’ salary. The Foundation contributed $6,861 and $6,884, to employee accounts for the years ended June 30, 2019 and 2018, respectively.

LINE OF CREDIT

In September 2015, the Foundation obtained a $1,000,000 line of credit collateralized by investments maintained with a financial institution. Interest accrued monthly on the outstanding balance at a rate equal to LIBOR. In June 2017, the Foundation transferred the $1,000,000 line of credit to a different financial institution. The collateral remained the same, but interest accrues daily on the outstanding balance at a rate equal to LIBOR plus 1.65%. There was no outstanding balance on the line of credit for the years ended June 30, 2019 and 2018.

BOARD DESIGNATED NET ASSETS

The Foundation has designated net assets for future operating expenses in the amount of $1,500,000as of June 30, 2019 and 2018.

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NET ASSETS WITH DONOR RESTRICTIONS

Net assets with donor restrictions for the years ended June 30, 2019 and 2018, consist of:

2019 2018

Purpose restricted:

Playground 42,738$ 51,103$

Other 2,900 25,198

Cue for Cali Wildfire Relief - 99,783

45,638 176,084

Restricted in perpetuity 13,824 13,824

59,462$ 189,908$

Net assets maintained for perpetuity consists of cash endowments maintained in investments for the purposes of student activities.

SPECIAL EVENTS

Special events consists of the following at June 30:

2019 2018

Contributions 1,989,750$ 1,881,092$

Event income 296,265 310,192

Less: direct expenses (522,167) (416,673)

Special events, net 1,763,848$ 1,774,611$

OPERATING LEASE COMMITMENTS

The Foundation entered into a 62-month lease for office space beginning June 2017. Monthly payments total $4,172, with 3% increases effective annually. Rent expense under the office space lease agreement for the years ended June 30, 2019 and 2018, totaled $52,981 and $51,441, respectively.

The Foundation leases office equipment and a postage meter under non-cancelable operating leases with monthly payments of $283 expiring May 2020 and quarterly payments of $115 and expiring August 2018, respectively. The postage meter lease was not renewed. Rent expense for the office equipment totaled $3,531 and $3,546, for the years ended June 30, 2019 and 2018, respectively.

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OPERATING LEASE COMMITMENTS (CONTINUED)

Minimum lease payments under the lease agreements are as follows:

Year Ending June 30

2020 57,680$

2021 56,207

2022 4,695

Total minimum lease payments 118,582$

DONATED SERVICES

The Foundation recognizes donated services that create or enhance nonfinancial assets or that require specialized skills, and would typically need to be purchased if not provided by donation. No services meeting these requirements for recognition in the financial statements were received during the years ended June 30, 2019 and 2018. However, numerous volunteers have donated significant amounts of their time and services to the Foundation for program and supporting activities.

FUNCTIONAL ALLOCATION OF EXPENSES

The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities and changes in net assets and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited based on management’s estimates.

The expenses that are allocated include the following:

Expense Method of Allocation

Depreciation Square footage

Employee benefits Time and effort

Insurance Time and effort

Miscellaneous Time and effort

Office expenses Time and effort

Payroll taxes Time and effort

Rent Square footage

Salaries Time and effort

Subcontractors Time and effort

Training Time and effort

Travel Time and effort

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RELATED ORGANIZATIONS

The Foundation was formed to provide support for the School in accomplishing its purpose and mission. The Foundation provided support totaling $1,240,000 and $1,175,000, for the years ended June 30, 2019 and 2018, respectively.

The School owed the Foundation $487 at June 30, 2018. The School did not owe the Foundation at June 30, 2019.

CONCENTRATIONS

Five donors represent approximately 72% of outstanding accounts receivable and promises to give at June 30, 2019. Three donors represent approximately 62% of outstanding accounts receivable and promises to give at June 30, 2018.

One special event provided 98% and 95% of net proceeds of the Foundation’s total special events income for the years ended June 30, 2019 and 2018.

RECLASSIFICATIONS

Certain reclassifications have been made to the 2018 financial statements in order to conform to the 2019 presentation. Such reclassifications had no effect on net assets.

COMMITMENTS

The Foundation is the guarantor of debt associated with the School building. The note is secured by the building and is due June 2028. The balance of the loan as of June 30, 2019 and 2018, was $3,710,458 and $3,825,000, respectively.

SUBSEQUENT EVENTS

Management has evaluated subsequent events for recognition or disclosure through February 10, 2020, which was the date that the financial statements were available to be issued. Management did not identify events that occurred subsequent to year-end that require disclosure in the financial statements.

Download - FRANKIE LEMMON FOUNDATION, INC. Raleigh, North …...Frankie Lemmon Foundation, Inc. Raleigh, North Carolina We have audited the accompanying financial statements of Frankie Lemmon

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