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THE SHALOM HARTMAN INSTITUTE OF NORTH AMERICA Financial Statements For the Year Ended December 31, 2014 With Summarized Financial Information For the Year Ended December 31, 2013 With Report of Independent Auditors

THE SHALOM HARTMAN INSTITUTE OF NORTH AMERICA Financial Statements

For the Year Ended December 31, 2014 With Summarized Financial Information for the Year Ended December 31, 2013

TABLE OF CONTENTS

Page(s) REPORT OF INDEPENDENT AUDITORS 1−2 FINANCIAL STATEMENTS Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 5 Statements of Functional Expenses 6 Notes to Financial Statements 7−19

A member firm of Ernst & Young Global Limited

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Mitchell & Titus, LLP One Battery Park Plaza New York, NY 10004

Tel: +1 212 709 4500 Fax: +1 212 709 4680 mitchelltitus.com

REPORT OF INDEPENDENT AUDITORS Board of Directors The Shalom Hartman Institute of North America We have audited the accompanying financial statements of The Shalom Hartman Institute of North America (the Institute), which comprise the statement of financial position as of December 31, 2014, and the related statements of activities, cash flows and functional expenses for the year 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 conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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.

A member firm of Ernst & Young Global Limited

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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Shalom Hartman Institute of North America at December 31, 2014, and the changes in its net assets and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. Report on summarized comparative information We have previously audited The Shalom Hartman Institute of North America’s 2013 financial statements, and we expressed an unmodified opinion on those audited financial statements in our report dated September 24, 2014. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2013 is consistent, in all material respects, with the audited financial statements from which it has been derived.

July 20, 2015

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

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THE SHALOM HARTMAN INSTITUTE OF NORTH AMERICA Statements of Financial Position

December 31,

2014 2013 ASSETS Cash and cash equivalents $ 2,049,124 $ 1,701,384 Contributions receivable – unrestricted 125,061 108,560 Contributions receivable – time restricted 1,698,855 863,626 Prepaid expenses and other current assets 6,250 12,008 Investments 6,616,053 6,459,937 Beneficial interest in perpetual trust 2,230,102 2,382,298 Property and equipment, net 190,137 3,847

Total assets $ 12,915,582 $ 11,531,660

LIABILITIES AND NET ASSETS Liabilities

Accounts payable and accrued expenses $ 147,229 $ 189,082 Commitments and contingencies Net assets

Unrestricted 1,397,882 881,779 Temporarily restricted 9,140,369 8,078,501 Permanently restricted 2,230,102 2,382,298

Total net assets 12,768,353 11,342,578

Total liabilities and net assets $ 12,915,582 $ 11,531,660


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THE SHALOM HARTMAN INSTITUTE OF NORTH AMERICA Statement of Activities

Year Ended December 31, 2014 With Summarized Financial Information for the Year Ended December 31, 2013

2014 2013

Unrestricted Temporarily

Restricted Permanently

Restricted

Total

Total OPERATING ACTIVITIES Support

Contributions $ 7,255,018 $ 1,278,647 $ - $ 8,533,665 $ 6,954,538 Time restricted contributions - 1,611,250 - 1,611,250 707,500

Total support 7,255,018 2,889,897 - 10,144,915 7,662,038 Other revenue and gains

Registration fees 687,946 - - 687,946 612,867 Educational materials 64,591 - - 64,591 62,805 Interest and dividend income 179,546 286,126 - 465,672 229,182 Realized gains on investments - 240,298 - 240,298 180,278 Change in unrealized appreciation on investments - (227,599) - (227,599) 715,011 (Loss) gain on beneficial interest in perpetual trust - - (152,196) (152,196) 158,070

Total other revenue and gains 932,083 298,825 (152,196) 1,078,712 1,958,213

Net assets released from restrictions 2,126,854 (2,126,854) - - - Total support, revenue, gains and reclassifications 10,313,955 1,061,868 (152,196) 11,223,627 9,620,251

Expenses

Program services 8,464,899 - - 8,464,899 6,511,383 Fundraising 617,870 - - 617,870 661,278 Management and general 715,083 - - 715,083 710,351

Total expenses 9,797,852 - - 9,797,852 7,883,012 Change in net assets 516,103 1,061,868 (152,196) 1,425,775 1,737,239 Net assets, beginning of year 881,779 8,078,501 2,382,298 11,342,578 9,605,339 Net assets, end of year $ 1,397,882 $ 9,140,369 $ 2,230,102 $ 12,768,353 $ 11,342,578


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THE SHALOM HARTMAN INSTITUTE OF NORTH AMERICA Statements of Cash Flows

Year Ended December 31 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 1,425,775 $ 1,737,239 Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization 35,167 8,613 Bad debt expense - 38,600 Change in unrealized appreciation on investments 227,599 (715,011)Realized gains on investments (240,298) (180,278)Loss (gain) on beneficial interest in perpetual trust 152,196 (158,070)Changes in operating assets and liabilities Contributions receivable (851,730) 262,840 Prepaid expenses and other current assets 5,758 (9,308) Accounts payable and accrued expenses (41,853) 124,533 Net cash provided by operating activities 712,614 1,109,158 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment (221,457) (1,802)Purchases of investments (1,388,666) (918,019)Proceeds from sale of investments 1,245,249 719,428 Net cash used in investing activities (364,874) (200,393) Net increase in cash and equivalents 347,740 908,765 Cash and equivalents, beginning of year 1,701,384 792,619 Cash and equivalents, end of year $ 2,049,124 $ 1,701,384


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THE SHALOM HARTMAN INSTITUTE OF NORTH AMERICA Statement of Functional Expenses Year Ended December 31, 2014

With Summarized Financial Information for the Year Ended December 31, 2013

2014 2013

Program

Fundraising Management

and General

Total

Total

Contributions to the Shalom Hartman Institute $ 5,300,000 $ - $ - $ 5,300,000

$ 3,800,000 Conferences in Israel 71,497 - - 71,497 50,371 Faculty and fellowships 586,489 - - 586,489 540,964 Salaries, payroll taxes and employee benefits 1,491,874 319,340 236,149 2,047,363 2,043,593 Seminars, event venue and catering 348,720 - - 348,720 340,002 Program marketing and graphic design 47,057 24,628 - 71,685 43,099 Professional fees 5,000 - 285,782 290,782 135,840 Educational materials 66,616 - - 66,616 127,598 Office expenses, insurance, occupancy and communications 275,667 58,859 90,795 425,321 260,159 Miscellaneous fundraising - 14,990 - 14,990 54,470 Travel 249,411 194,649 31,783 475,843 360,519 Depreciation and amortization 22,568 5,404 7,195 35,167 8,613 Bad debt expense - - - - 38,600 Investment management fees - - 37,618 37,618 30,675 Board meetings - - 25,761 25,761 48,509

Total expenses $ 8,464,899 $ 617,870 $ 715,083 $ 9,797,852 $ 7,883,012

THE SHALOM HARTMAN INSTITUTE OF NORTH AMERICA Notes to Financial Statements

December 31, 2014

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NOTE 1 ORGANIZATION The Shalom Hartman Institute of North America (the “Institute”) is a pluralistic center of research and education deepening and elevating the quality of Jewish life in Israel and North America. Through our work we are redefining the conversation about Judaism in modernity, religious pluralism, Israeli democracy, Israel and world Jewry, and the relationship with other faith communities. The Institute also supports the Shalom Hartman Institute (SHI), a charitable organization in Israel, by providing financial assistance. Funding is derived primarily from public contributions.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Classification of Net Assets To ensure the observance of restrictions placed on the use of resources, the Institute reports information regarding its financial position and activities according to three net asset classes: unrestricted, temporarily restricted or permanently restricted. Unrestricted net assets are not restricted by donors or the donor-imposed restrictions have expired. Temporarily restricted net assets contain donor-imposed restrictions that permit the Institute to use or expend the assets for particular purposes or in specific time periods. The restrictions are satisfied either by the passage of time or by actions of the Institute. Permanently restricted net assets contain donor-imposed restrictions that stipulate that the principal be invested in perpetuity, but permit the Institute to use all or part of the income earned on these assets for either specified or unspecified purposes. Support and Revenue Revenue for registration fees is recognized in the period in which the related events sponsored by the Institute occur. Revenue for educational materials is recognized when the materials are shipped or otherwise provided to the Institute’s program participants.


December 31, 2014

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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Support and Revenue (continued) The fair value of contributions is recorded as revenue when received or promised to the Institute unconditionally. Conditional contributions are recognized as revenue when the conditions on which they depend have been substantially met. Contributions received with donor stipulations that limit the use of donated assets are reported as either temporarily or permanently restricted support. When a donor-imposed time restriction expires or a purpose restriction is fulfilled, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The Institute accounts for temporarily restricted contributions received, for which the donor restricted purposes are met in the same period, in the unrestricted net asset class. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (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 revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. Cash and Cash Equivalents The Institute considers money market funds and all other highly liquid, short-term investments purchased with a maturity of three months or less, excluding cash equivalents included in the investment portfolio, to be cash equivalents. The Institute maintains its cash balances in financial institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, balances may exceed the insured limit. Investments Investments are stated at fair value in the statement of financial position based on quoted market prices and, for mutual funds, published unit values. The Institute’s investments in partnerships are stated at fair value based on the net asset values reported to the Institute, with consideration of other factors that might affect fair value determination, such as liquidity. There is uncertainty in determining fair value for these investments because of the lack of an active market and transparency into underlying holdings. These investments have a fair value of $13,922 and $23,155 at December 31, 2014 and 2013, respectively.


December 31, 2014

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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments (continued) The change in unrealized appreciation on investments and realized gains and losses are included in the accompanying statement of activities. Beneficial Interest in Perpetual Trust The Institute’s beneficial interest in a perpetual trust is stated at fair value as approximated based on the Institute’s share of the fair value of investment assets held in trust for the Institute. Property and Equipment Property and equipment are stated at cost. The Institute provides for depreciation of furniture and equipment on a straight-line basis over a useful life of five years. Leasehold improvements are amortized on the straight-line basis over the estimated useful lives of the assets or the term of the lease, whichever is shorter. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Reclassifications Certain reclassifications of prior year amounts are reflected in the accompanying statement of functional expenses for the year ended December 31, 2013 to conform to the current year presentation. 2013 Summarized Financial Information The financial statements include certain prior-year summarized comparative information in total, but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with U.S. generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Institute’s financial statements for the year ended December 31, 2013, from which the summarized information was derived.


December 31, 2014

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NOTE 3 RELATED-PARTY TRANSACTIONS During the years ended December 31, 2014 and 2013, the Institute received contributions from members of the Institute’s Board of Directors, officers or entities affiliated with these individuals of $1,513,715 and $2,390,127, respectively. The Institute made contributions of $5,300,000 and $3,800,000 to SHI during the years ended December 31, 2014 and 2013, respectively. The Institute’s investments are managed by an entity partially owned by a member of the Board of Directors. The Institute paid this entity $37,618 and $30,675 for the years ended December 31, 2014 and 2013, respectively. The Institute also holds an investment in a mutual fund operated by this entity. The fair value of the Institute’s investment in this mutual fund was $2,920,574 and $2,751,910 at December 31, 2014 and 2013, respectively. A member of the Institute’s Board of Directors is a member of the Board of Trustees of the Institute’s landlord. See Note 13 for a description of the related lease for office space.

NOTE 4 CONTRIBUTIONS AND CONTRIBUTIONS RECEIVABLE

The Institute’s contributions receivable consisted of unconditional promises to give as follows as of December 31, 2014 and 2013: 2014 2013 Receivable in less than one year $ 1,240,730 $ 881,060 Receivable in one to five years 630,000 95,000

Total future value 1,870,730 976,060 Less: Amount to reduce to fair value (46,814) (3,874)Contributions receivable $ 1,823,916 $ 972,186

During the year ended December 31, 2014, the Institute received significant contributions from two donors amounting to approximately $4,419,000, or approximately 43% of support revenue reflected in the accompanying statement of activities. During the year ended December 31, 2013, the Institute received a significant contribution from a donor amounting to $3,250,000, or approximately 42% of support revenue reflected in the accompanying statements of activities.


December 31, 2014

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NOTE 5 PROPERTY AND EQUIPMENT, NET Property and equipment, net at December 31 consisted of the following: 2014 2013 Furniture and equipment $ 150,953 $ 144,939 Leasehold improvements 70,504 9,340

221,457 154,279 Less: Accumulated depreciation and amortization (31,320) (150,432) $ 190,137 $ 3,847

NOTE 6 INVESTMENTS

The cost and fair value of investments by type of security were as follows at December 31, 2014 and 2013:

2014 2013

Cost Fair

Value

Cost Fair

Value

Cash equivalents $ 311,094 $ 311,094 $ 263,367 $ 263,367

U.S. common stocks 2,575,830 3,370,463 2,520,592 3,421,505

Fixed-income mutual fund 3,023,225 2,920,574 2,736,645 2,751,910

Investment in partnerships 88,490 13,922 94,320 23,155

$ 5,998,639 $ 6,616,053 $ 5,614,924 $ 6,459,937

The fair value of the Institute’s fixed-income mutual fund investment of $2,920,574 and $2,751,910 is held in one fund and represents approximately 44% and 43% of the fair value of the Institute’s total investments at December 31, 2014 and 2013, respectively. This fund has a strategy to invest in high-yield corporate bonds, as well as other fixed-income instruments.


December 31, 2014

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NOTE 7 FAIR VALUE MEASUREMENTS Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices

for identical assets or liabilities in active markets that the Institute has the ability to access.

Level 2: Inputs to the valuation methodology include: quoted prices for

similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Inputs to the valuation methodology are unobservable and

significant to the fair value measurement. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.


December 31, 2014

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NOTE 7 FAIR VALUE MEASUREMENTS (continued) The following table summarizes the valuation of the Institute’s financial instruments within the valuation hierarchy prescribed by ASC 820, as of December 31, 2014 and 2013:

2014 Level 1 Level 2 Level 3 Total

Cash equivalents $ 311,094 $ - $ - $ 311,094 Investments in U.S. common stocks

Consumer discretionary 472,886 - - 472,886 Consumer staples 214,140 - - 214,140 Energy 417,046 - - 417,046 Financials 481,851 - - 481,851 Healthcare 666,696 - - 666,696 Industrials 394,368 - - 394,368 Technology 299,185 - - 299,185 Entertainment 424,291 - - 424,291

Total U.S. common stocks 3,370,463 - - 3,370,463 Fixed-income mutual fund 2,920,574 - - 2,920,574 Investments in partnerships - - 13,922 13,922 Total investments $ 6,602,131 $ - $ 13,922 $ 6,616,053 Beneficial interest in

perpetual trust $ - $ - $ 2,230,102 $ 2,230,102

2013 Level 1 Level 2 Level 3 Total

Cash equivalents $ 263,367 $ - $ - $ 263,367 Investments in U.S. common stocks

Aircraft 229,874 - - 229,874 Consumer staples 307,356 - - 307,356 Energy 587,827 - - 587,827 Financials 358,410 - - 358,410 Healthcare 478,824 - - 478,824 Industrials 527,103 - - 527,103 Technology 621,664 - - 621,664 Entertainment 310,447 - - 310,447

Total U.S. common stocks 3,421,505 - - 3,421,505 Fixed-income mutual fund 2,751,910 - - 2,751,910 Investments in partnerships - - 23,155 23,155 Total investments $ 6,436,782 $ - $ 23,155 $ 6,459,937 Beneficial interest in

perpetual trust $ - $ - $ 2,382,298 $ 2,382,298


December 31, 2014

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NOTE 7 FAIR VALUE MEASUREMENTS (continued) The changes in financial instruments measured at fair value for which the Institute has used Level 3 inputs to determine fair value for the years ended December 31, 2014 and 2013 were as follows: 2014 2013 Balance, at beginning of year $ 2,405,453 $ 2,261,778Distributions from partnership (5,830) - Change in net unrealized appreciation on investments (3,403) (14,395)(Loss) gain on beneficial interest in perpetual trust (152,196) 158,070 Balance, at end of year $ 2,244,024 $ 2,405,453

The change in net unrealized appreciation on investments reported above for securities that continue to be held at December 31, 2014 and 2013 was a loss of $3,403 and $14,395, respectively.

NOTE 8 EMPLOYEE BENEFIT PLAN

The Institute has an employee benefit plan under Section 403(b) of the Internal Revenue Code (the Code). Under the terms of the plan, all regular employees of the Institute are eligible to make tax-deferred contributions to the plan. Additionally, the Institute may make discretionary contributions to the plan; however, employer contributions are not mandatory. Participants are 100% vested in the plan at the time employment commences. Distributions of benefits are allowable upon attainment of age 59½, death, disability, or hardship. Contributions totaled $85,293 and $80,334 for 2014 and 2013, respectively, and are included in the salaries, payroll taxes, and employee benefits on the accompanying statements of functional expenses.

NOTE 9 ENDOWMENT FUND ASC 958.205.45, Not-for-Profit Entities – Other Presentation Matters – Reporting Endowment Funds, provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) and additional disclosures about an organization’s endowment funds. In September 2010, New York State adopted its version of UPMIFA, the New York Prudent Management of Institutional Funds Act.


December 31, 2014

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NOTE 9 ENDOWMENT FUND (continued) The Institute has a donor-restricted term endowment fund. For this term endowment fund, the Institute classifies as temporarily restricted net assets: (a) the original value of the gifts donated to the endowment fund, (b) the original value of subsequent gifts to the endowment fund, and (c) accumulations to the endowment fund made in accordance with the direction of the applicable donor gift instrument at the time the accumulations are added to the fund. In accordance with the terms of the donor gift instrument, the remaining portion of the donor-restricted endowment fund, including investment return, is also classified as temporarily restricted net assets until those amounts are appropriated for expenditure and donor restrictions are also satisfied. The Institute has adopted an investment policy for endowment assets that attempts to provide a predictable stream of funding to the endowment fund, while seeking to maintain the purchasing power of the fund. To satisfy long-term return objectives, the Institute relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Institute targets a diversified asset allocation that includes both equity and fixed-income strategies. The term endowment assets are included in investments in the accompanying statement of financial position as of December 31, 2014 and 2013. Endowment assets for the term endowment fund are appropriated for expenditure by the Institute’s Board of Directors based on program needs and the terms of the gift instrument. Long-term expected returns on endowment assets and the duration of the endowment fund are considered in determining appropriations for expenditure. At December 31, 2014, the endowment net asset composition by type of fund consisted of the following:

2014



Restricted

Total Donor-restricted funds $ - $ 6,616,053 $ - $ 6,616,053


December 31, 2014

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NOTE 9 ENDOWMENT FUND (continued) Changes in endowment net assets for the year ended December 31, 2014 consisted of the following:

2014



Restricted

Total

Endowment net assets, beginning of year $ -

$ 6,459,937 $ -

$ 6,459,937

Contributions - 500,000 - 500,000 Investment return

Investment income - 286,126 - 286,126 Realized gains - 240,298 - 240,298 Change in net appreciation

in investments - (227,599) - (227,599) Total investment return - 298,825 - 298,825 Appropriations 642,709 (642,709) - - Expended and released from

restrictions (642,709) - - (642,709) Endowment net assets,

end of year $ -

$ 6,616,053 $ - $ 6,616,053

At December 31, 2013, the endowment net asset composition by type of fund consisted of the following:

2013



Restricted

Total Donor-restricted funds $ - $ 6,459,937 $ - $ 6,459,937


December 31, 2014

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NOTE 9 ENDOWMENT FUND (continued) Changes in endowment net assets for the year ended December 31, 2013 consisted of the following:

2013



Restricted

Total

Endowment net assets, beginning of year $ -

$ 5,366,057 $ -

$ 5,366,057

Contributions - 500,000 - 500,000 Investment return

Investment income - 229,182 - 229,182 Realized gains - 180,278 - 180,278 Change in net appreciation

in investments - 715,011 - 715,011 Total investment return - 1,124,471 - 1,124,471 Appropriations 530,591 (530,591) - - Expended and released from

restrictions (530,591) - - (530,591) Endowment net assets,

end of year $ -

$ 6,459,937 $ - $ 6,459,937

NOTE 10 TEMPORARIY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes as of December 31, 2014 and 2013:

2014 2013

Time-restricted endowment fund (see Note 9) $ 6,616,053 $ 6,459,937 Other time restricted 1,698,855 863,626 Muslim Leadership Initiative 397,000 127,000 Hartman Fellowship for Campus Professionals 332,110 250,000 Be’eri educational program - 97,838 Other educational programming 96,351 280,100

$ 9,140,369 $ 8,078,501


December 31, 2014

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NOTE 10 TEMPORARIY RESTRICTED NET ASSETS (continued) Temporarily restricted net assets were released from restrictions during the years ended December 31, 2014 and 2013 due to the passage of time or fulfillment of donor-imposed purpose restrictions as follows: 2014 2013 Expiration of time restrictions – term

endowment fund (see Note 9) $ 642,709

$ 530,591 Expiration of time restrictions – other 729,207 335,000 Muslim Leadership Initiative 127,000 - Be’eri and Lev Aharon programs 97,838 50,000 Hartman Fellowship for Campus Professionals 250,000 251,439 Charles E. Smith High School Boys for Israel - 80,000 Interfaith Tolerance and Cross-Cultural Training 280,100 128,981

$ 2,126,854 $ 1,376,011

NOTE 11 PERMANENTLY RESTRICTED NET ASSETS At December 31, 2014 and 2013, permanently restricted net assets are comprised entirely of a beneficial interest in a perpetual trust fund. These funds are held by an outside trustee on behalf of the Institute. The trustee periodically distributes income earned on trust assets to the Institute.

NOTE 12 INCOME TAXES The Institute is a not-for-profit organization as defined in Section 501(c)(3) of the Code and is, therefore, exempt from Federal income taxation under Section 501(a) of the Code. The Institute is also exempt from state and local income taxes. The Institute, therefore, has made no provision for Federal, state or local income taxes in the accompanying financial statements. In addition, the Internal Revenue Service has determined that the Institute should not be considered a private foundation within the meaning of Section 509(a)(1) of the Code. All significant tax positions have been considered by management and it has been determined that all tax positions would be sustained upon examination by taxing authorities. There are no uncertain tax positions that require recognition in the accompanying financial statements or further disclosure in the notes to the financial statements. The Institute is required to file Form 990 (Return of Organization Exempt from Income Tax). The Institute is subject to audits by taxing jurisdictions; however, no audits for any periods are currently in progress.


December 31, 2014

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NOTE 12 INCOME TAXES (continued) Management believes that the Institute is no longer subject to such audits for years prior to 2011 under Federal and state tax jurisdictions.

NOTE 13 COMMITMENTS

In May 2014, the Institute signed an amended lease agreement with its landlord to exit the space formerly occupied by the Institute and lease new office space in the same building under an operating lease arrangement. The new lease period commenced in August 2014 and future lease commitments are approximately as follows: Year Ending December 31, Amount

2015 $ 403,000 2016 412,000 2017 173,000 $ 988,000

Total rent expense for 2014 and 2013 was $277,469 and $168,623, respectively, and is included in office expenses, insurance, occupancy and communications in the accompanying statement of functional expenses.

NOTE 14 SUBSEQUENT EVENTS

The Institute has evaluated events and transactions occurring between January 1, 2015 and July 20, 2015, which is the date that the financial statements were available to be issued, for disclosure and recognition in the financial statements. There were no events or transactions during the subsequent event period requiring disclosure or recognition in the financial statements.

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