FINANCIAL STATEMENTS With Independent Auditors' Report June 30, 2012 and 2011
DENVER RESCUE MISSION Table of Contents
Page Independent Auditors' Report
1
Financial Statements Statements of Financial Position Statements of Activities Statements of Cash Flows
2 3 5
Notes to Financial Statements
6
Supplementary Schedule Independent Auditors' Report on Supplementary Schedule Schedule of Operating Functional Expenses
12 13
www.capincrouse.com
2630 West Belleview Avenue, Suite 270
Littleton, CO 80123
720.283.7326
INDEPENDENT AUDITORS' REPORT
Board of Directors Denver Rescue Mission Denver, Colorado
We have audited the accompanying statements of financial position of the Denver Rescue Mission as of June 30, 2012 and 2011, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the organization's management. 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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the organization's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 financial position of the Denver Rescue Mission as of June 30, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Littleton, Colorado September 6, 2012
DENVER RESCUE MISSION Statements of Financial Position
June 30, 2012 ASSETS: Cash and cash equivalents Investments Contributions receivable–net Prepaid expenses and other assets Gift-in-kind inventory Land, buildings, and equipment–net Total Assets LIABILITIES AND NET ASSETS: Liabilities: Accounts payable and accrued expenses Deferred revenue and other liabilities
$
6,035,147 482,158 383,528 524,026 579,555 12,609,484
$
3,109,103 2,199,364 567,358 364,837 675,820 12,655,318
$
20,613,898
$
19,571,800
$
916,209 62,954 979,163
$
701,761 73,526 775,287
Net assets: Unrestricted: Operating Equity in land, buildings, and equipment
Temporarily restricted: Time restriction–contributions receivable Projects
Total Liabilities and Net Assets
$
See notes to financial statements -2-
2011
6,640,265 12,609,484 19,249,749
5,431,612 12,655,318 18,086,930
383,528 1,458 384,986
567,358 142,225 709,583
19,634,735
18,796,513
20,613,898
$
19,571,800
DENVER RESCUE MISSION Statements of Activities
Year Ended June 30, 2012 Temporarily Restricted
Unrestricted OPERATING: SUPPORT AND REVENUE: Contributions: Individuals, businesses and others Gift-in-kind inventory Investment income Rent income Program service revenue and other
$
12,040,668 8,560,596 20,601,264 14,498 390,897 932,596
$
Total
3,591,289 3,591,289 -
Total Support and Revenue
21,939,255
3,591,289
NET ASSETS RELEASED: Purpose restrictions
3,732,056
(3,732,056)
EXPENSES: Program services: Gift-in-kind inventory The Crossing Harvest Farm Lawrence Street Ministry Outreach Center Champa House
8,656,861 5,167,049 1,990,928 1,865,695 1,106,786 621,146 19,408,465
$
Unrestricted
15,631,957 8,560,596 24,192,553 14,498 390,897 932,596
$
10,999,005 7,931,696 18,930,701 7,613 572,017 772,289
$
Total
3,317,768 3,317,768 -
$
14,316,773 7,931,696 22,248,469 7,613 572,017 772,289
25,530,544
20,282,620
3,317,768
-
3,381,034
(3,381,034)
-
8,656,861 5,167,049 1,990,928 1,865,695 1,106,786 621,146
7,785,745 5,019,724 1,996,560 1,688,418 835,060 623,489
-
7,785,745 5,019,724 1,996,560 1,688,418 835,060 623,489
-
19,408,465
17,948,996
-
17,948,996
(continued) See notes to financial statements -3-
2011 Temporarily Restricted
23,600,388
-
DENVER RESCUE MISSION Statements of Activities (continued) Year Ended June 30, 2012 Temporarily Restricted
Unrestricted EXPENSES, continued: Supporting activities: General and administrative Fund-raising
Total Expenses Change in Net Assets From Operations NON-OPERATING: Gain (loss) on disposal of land, buildings and equipment Net assets released from time restrictions Change in Net Assets From Non-Operating Activities Change in Net Assets Net Assets, Beginning of Year Net Assets, End of Year
$
Total
2011 Temporarily Restricted
Unrestricted
Total
1,092,446 4,178,917 5,271,363
-
1,092,446 4,178,917 5,271,363
1,081,108 4,063,779 5,144,887
-
1,081,108 4,063,779 5,144,887
24,679,828
-
24,679,828
23,093,883
-
23,093,883
991,483
(140,767)
850,716
569,771
(63,266)
506,505
(12,494) 183,830
(183,830)
(12,494) -
4,835 276,740
(276,740)
4,835 -
171,336
(183,830)
(12,494)
281,575
(276,740)
4,835
1,162,819
(324,597)
838,222
851,346
(340,006)
511,340
18,086,930
709,583
18,796,513
17,235,584
19,249,749
$
384,986
$
19,634,735
See notes to financial statements -4-
$
18,086,930
1,049,589 $
709,583
18,285,173 $
18,796,513
DENVER RESCUE MISSION Statements of Cash Flows
Year Ended June 30, 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation Amortization of prepaid expenses Accretion of contributions receivable Non-cash contribution of fixed assets (Gain) loss on disposal of land, buildings, and equipment Receipt of gift-in-kind inventory, net of distributions Donated stocks Changes in operating assets and liabilities: Prepaid expenses and other assets Accounts payable and accrued expenses Deferred revenue and other liabilities Net Cash Provided by Operating Activities
$
CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of land, buildings, and equipment Purchases of land, buildings, and equipment Proceeds from sale of investments Purchases of investments Net Cash Provided (Used) by Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Payments on notes payable Collections on contributions receivable Net Cash Provided (Used) by Financing Activities
838,222
$
511,340
854,729 372,654 (16,170) (27,075) 12,494 96,265 (29,676)
832,286 391,312 (19,237) (4,835) (145,955) (226,806)
(531,843) 214,448 (10,572) 1,773,476
(354,043) (254,222) (13,636) 716,204
39,000 (833,314) 2,721,882 (975,000) 952,568
7,530 (863,740) 4,330,336 (4,650,014) (1,175,888)
200,000 200,000
(705,381) 296,949 (408,432)
Change in Cash and Cash Equivalents
2,926,044
(868,116)
Cash and Cash Equivalents, Beginning of Year
3,109,103
3,977,219
Cash and Cash Equivalents, End of Year
$
6,035,147
$
3,109,103
SUPPLEMENTAL DISCLOSURE: Cash paid for interest (none capitalized)
$
-
$
30,143
See notes to financial statements -5-
DENVER RESCUE MISSION Notes to Financial Statements June 30, 2012 and 2011
1. NATURE OF ORGANIZATION: The Denver Rescue Mission (the Mission), founded in 1892, is a Colorado corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (the "Code") and is not a private foundation under Section 509(a) of the Code. The purpose of the Mission is to meet people at their point of need: physical and spiritual. Through practical programs of public awareness and education, shelter, food, and clothing distribution and through Christian teaching and work disciplining, the Mission aims to return the poor, needy, and homeless to society as productive self-sufficient citizens. The Mission’s shelter at Lawrence and Park Avenue West sleeps approximately 200 men, with the potential for sleeping 100 additional men during cold-weather or other emergency conditions. Up to 31 single women and children live at the Mission’s transitional housing facility, Champa House. At Harvest Farm in rural Wellington, Colorado, approximately 72 men participate in the longterm residential New Life Rehabilitation Program and raise crops and livestock for the Mission facilities. The Ministry Outreach Center in industrial Denver warehouses and distributes thousands of pounds of food, clothing, and furniture to the needy throughout the area. Family Services assists homeless families in transitioning to self-sufficiency. Approximately 131 men are housed at the Crossing and participate in the Mission’s long-term, residential New Life Rehabilitation Program. In addition, the Crossing provides transitional housing for families, seniors, single men and women, with capacity for 342 people, and up to 28 other people participating in a housing for respite care program. The Mission receives the majority of its support from individuals, businesses, churches, and others within the Denver Metropolitan area. 2. SIGNIFICANT ACCOUNTING POLICIES: The Mission uses estimates and assumptions in preparing the financial statements in accordance with accounting principles generally accepted in the United States of America. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of any contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader. CASH AND CASH EQUIVALENTS Cash and cash equivalents include checking, savings, money market accounts, and certificates of deposit with original maturities of three months or less that are not held for long-term purposes. These accounts from time to time exceed federally insured (FDIC) limits; however, the Mission has not experienced any losses on these accounts and does not believe it is exposed to any significant risk. Management has established an operating reserve at June 30, 2012 and 2011, in the amount of $3,750,000 and $3,500,000, respectively; these amounts are at the discretion of management and are not designated by the board of directors.
-6-
DENVER RESCUE MISSION Notes to Financial Statements June 30, 2012 and 2011
2. SIGNIFICANT ACCOUNTING POLICIES, continued: INVESTMENTS Investments consist of certificates of deposit with original maturities of longer than three months and are carried at fair value based on quoted prices in active markets for identical assets, which is Level 1 of the fair value hierarchy established under the Fair Value Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Investments received by gift are carried at market value on the date of donation, and, thereafter, reported in accordance with the above provisions. Unrealized gains or losses in fair value are recognized on the statements of activities in the year in which they occur. CONTRIBUTIONS RECEIVABLE Unconditional promises are recorded at net realizable value if, at the time the promise is received, the Mission expects to receive payment in one year or less. Unconditional promises that the Mission expects to receive in more than one year are recorded at fair value initially and discounted using present value techniques subsequent to initial recognition. Allowances are recorded for estimated uncollectible promises. GIFT-IN-KIND INVENTORY Gift-in-kind inventory consists of donated merchandise, such as food, clothing, and miscellaneous items, used in the operation of the Mission's programs. All such inventory is recorded at its estimated fair value at the date of donation and reported at its carrying amount thereafter. The Mission updates its inventory pricing every few years. LAND, BUILDINGS, AND EQUIPMENT Land, buildings, and equipment are recorded at cost, or if donated, at estimated fair value at the date of receipt. The Mission capitalizes fixed assets with a cost greater than $4,000. Depreciation is calculated based on the straight-line method over the following estimated useful lives: Land improvements Buildings and improvements Furniture and fixtures Machinery and equipment Vehicles
20 years 10-30 years 5-10 years 3-10 years 3-5 years
DEFERRED REVENUE Deferred revenue consists of prepaid rental income at the Crossing, sponsorship, and other revenue received for special events scheduled to be held in the next fiscal year.
-7-
DENVER RESCUE MISSION Notes to Financial Statements June 30, 2012 and 2011
2. SIGNIFICANT ACCOUNTING POLICIES, continued: NET ASSETS Net assets include the following two classes: Unrestricted net assets include resources that are used to support current operations and provide for the longterm needs of the organization. Temporarily restricted net assets include gifts which are restricted by the donor for various projects and contributions receivable which are time-period restricted. FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing various program services and supporting activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs, such as depreciation and salaries, have been allocated among the program services and supporting activities benefited. SUPPORT AND REVENUE Contributions and grants are recorded when made, which may be when cash or other assets are received or unconditionally promised. Contributions restricted by the donor for specified purposes are recorded as support in the temporarily restricted class of net assets until the funds have been expended for the purposes specified. Donated materials, including gifts-in-kind, are recorded at estimated fair value. The Mission records income and expense for contributed professional services valued at the providers' industry average hourly rates for the number of hours contributed to the Mission's program. Clothing contributed to the Mission in excess of requirements for the Mission's internal programs is distributed to other relief organizations and Indian reservations. Rent income is received primarily from tenants at the Crossing. Rent income is recognized as income when earned by the Mission. Program service revenue and other income primarily consists of corn maze admissions income and product sales. Corn maze income is recognized when the tickets are sold at the maze. Product sales are recorded as income when the products are given or shipped to the customers. ADVERTISING The Mission uses advertising to promote its programs among the audiences it serves and to raise funds. Advertising costs are expensed as incurred. Advertising expense for the years ended June 30, 2012 and 2011, was $281,608 and $229,967, respectively.
-8-
DENVER RESCUE MISSION Notes to Financial Statements June 30, 2012 and 2011
2. SIGNIFICANT ACCOUNTING POLICIES, continued: UNCERTAIN TAX POSITIONS The financial statement effects of a tax position taken or expected to be taken are recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Interest and penalties, if any, are included in expenses in the statements of activities. As of June 30, 2012, the Mission had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. RECLASSIFICATION Certain prior year amounts have been reclassified in order to conform to current year presentation. 3. INVESTMENT INCOME: Investment income consists of: Year Ended June 30, 2012 2011 Interest and dividends Net realized and unrealized gains (losses)
$
14,259 239
$
11,826 (4,213)
$
14,498
$
7,613
4. CONTRIBUTIONS RECEIVABLE–NET: Contributions receivable–net consist of: June 30, 2012 Due in less than one year Due in one to five years
$
400,000 400,000 (16,472)
$
389,069 210,931 600,000 (32,642)
$
383,528
$
567,358
Unamortized discount
-9-
2011
DENVER RESCUE MISSION Notes to Financial Statements June 30, 2012 and 2011
5. GIFT-IN-KIND PROGRAM: The Mission's gift-in-kind activity is summarized: Year Ended June 30, 2012 Beginning Inventory Food Furniture and equipment Clothing
Contributions
Ending Inventory
Distributions
$
253,115 397,209 25,496
$
4,228,018 1,235,060 3,097,518
$
4,243,599 1,310,568 3,102,694
$
237,534 321,701 20,320
$
675,820
$
8,560,596
$
8,656,861
$
579,555
Year Ended June 30, 2011 Beginning Inventory Food Furniture and equipment Clothing
Contributions
Ending Inventory
Distributions
$
256,446 215,951 57,468
$
2,979,525 1,252,491 3,699,680
$
2,982,856 1,071,233 3,731,652
$
253,115 397,209 25,496
$
529,865
$
7,931,696
$
7,785,741
$
675,820
6. LAND, BUILDINGS, AND EQUIPMENT–NET: Land, buildings, and equipment–net consists of: June 30, 2012 Land Land improvements Buildings and improvements Furniture and fixtures Machinery and equipment Vehicles
$
Accumulated depreciation
2,471,482 429,175 12,451,944 282,271 2,440,612 679,844 18,755,328 (6,145,844)
$ 12,609,484
-10-
2011 $
2,471,482 429,175 12,361,038 355,767 2,303,627 668,269 18,589,358 (5,934,040)
$ 12,655,318
DENVER RESCUE MISSION Notes to Financial Statements June 30, 2012 and 2011
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES: Accounts payable and accrued expenses consist of: June 30, 2012 Trade accounts payable Accrued employee compensation and other
2011
$
432,412 483,797
$
253,581 448,180
$
916,209
$
701,761
8. LINE OF CREDIT: The Mission has access to a revolving line of credit, maturing November 1, 2012, in the amount of $600,000. The line of credit has variable interest rate and is for seasonal cash flow management. The Mission made no draws during the years ended June 30, 2012 and 2011. 9. CONTRIBUTED SERVICES: The Mission operates a medical clinic at its main facility in downtown Denver, Colorado. Local doctors, dentists, and chiropractors volunteer their time servicing patients. Other professionals also provided services to the Mission's clients. Contributed services recognized in the financial statements totaled $521,429 and $448,142, for the years ended June 30, 2012 and 2011, respectively. The Mission also has a number of unpaid volunteers who have made contributions of their time performing various assignments. These contributed services have not been recognized, as they do not meet the requirements under current accounting standards. 10. RETIREMENT PLAN: The Mission has a defined contribution plan covering substantially all employees. To encourage employee retention, the Mission makes contributions to the plan based on employee length of service and also matches employee contributions dollar for dollar up to 5% of eligible compensation. Employees vest immediately in employer contributions. Employer contributions to the plan for the years ended June 30, 2012 and 2011, were $485,535 and $448,142, respectively. 11. SUBSEQUENT EVENTS: Subsequent to June 30, 2012, the Mission entered into negotiations to purchase property for $825,000. Subsequent events have been evaluated through the report date, which represents the date the financial statements were available to be issued. Subsequent events after that date have not been evaluated.
-11-
SUPPLEMENTARY SCHEDULE
www.capincrouse.com
2630 West Belleview Avenue, Suite 270
Littleton, CO 80123
720.283.7326
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY SCHEDULE
Board of Directors Denver Rescue Mission Denver, Colorado
We have audited the financial statements of Denver Rescue Mission (the Mission) as of and for the year ended June 30, 2012, and have issued our report thereon dated September 6, 2012, which contained an unqualified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses is presented for the purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The prior year summarized comparative information on page 13 has been derived from the Mission's 2011 financial statements and, in our report dated August 18, 2011, we expressed an unqualified opinion on those financial statements.
Littleton, Colorado September 6, 2012
DENVER RESCUE MISSION Schedule of Operating Functional Expenses Year Ended June 30, 2012 (with comparative information for the year ended June 30, 2011)
Supporting Activities
Program Services Food, Clothing, and Other Distribution
The Crossing
Harvest Farm
Ministry Outreach Center
Lawrence Street
General and Administrative
Program Services Total
Champa House
Supporting Activities Total
FundRaising
Total
Gift-in-kind Salaries, wages and other Printed material & postage Ministry to clients & others Repairs & maintenance Depreciation Office & miscellaneous Telephone and utilities Professional services Media and marketing Cost of goods sold
$
8,656,861 -
$
3,218,808 14,697 438,010 360,561 416,325 222,702 306,313 164,946 10,566 14,121
$
1,277,561 1,737 117,340 251,583 132,915 23,214 105,573 4,020 45,535 31,450
$
921,158 1,667 598,563 142,209 96,495 7,703 94,063 3,715 122
$
653,393 496 129,486 143,890 81,445 17,429 44,320 2,957 32,317 1,053
$
507,355 419 8,432 49,789 36,004 3,771 15,146 230 -
$
8,656,861 6,578,275 19,016 1,291,831 948,032 763,184 274,819 565,415 175,638 88,648 46,746
$
562,911 7,721 10,970 67,892 43,945 194,044 35,216 154,629 12,085 3,033
$
1,149,830 2,209,002 50,972 27,130 47,600 277,707 38,188 143,137 235,351 -
$
1,712,741 2,216,723 61,942 95,022 91,545 471,751 73,404 297,766 247,436 3,033
$
Total Expenses
$
8,656,861
$
5,167,049
$
1,990,928
$
1,865,695
$
1,106,786
$
621,146
$ 19,408,465
$
1,092,446
$
4,178,917
$
5,271,363
$ 24,679,828
Percent of Total Expenses 2011: Total Expenses Percent of Total Expenses
35%
$
7,785,745 34%
21%
$
1,688,418 7%
8%
$
5,019,724 22%
8%
$
1,996,560 9%
4%
$
623,489
3%
$
3%
835,060 3%
-13-
79%
$ 17,948,996 78%
4%
$
1,081,108 5%
17%
$
4,063,779 17%
21%
$
5,144,887 22%
8,656,861 8,291,016 2,235,739 1,353,773 1,043,054 854,729 746,570 638,819 473,404 336,084 49,779
2011 $
7,785,745 7,909,401 2,194,354 1,234,586 973,771 860,535 661,513 651,026 452,801 305,787 64,364
100%
$ 23,093,883 100%