HARVARD CLUB OF BOSTON Notes to Financial Statements

The Club’s expenses by nature and function for the year ended August 31, 2022 are as follows:

The Club’s expenses by nature and function for the year ended August 31, 2021 are as follows:

Note 15 – Related parties

Harvard Club of Boston Foundation

The Harvard Club of Boston Foundation ("Foundation") is a trust established by the Club and administered by the trustee in accordance with the Declaration of Trust and the laws of the Commonwealth of Massachusetts. The Foundation is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Club's Board of Governors serves as trustee. The trustee appoints and oversees a committee with responsibility for the Foundation's day-to-day operations. The Foundation fosters scientific, literary and educational interests among members of the Club and advances and promotes the welfare of Harvard University.

The Higginson 1908 Foundation, Inc.

The Higginson 1908 Foundation, Inc. ("Higginson Foundation") was organized as a not-for-profit corporation on November 23, 2015 and is administered by its Board of Directors in accordance with its bylaws and the laws of the Commonwealth of Massachusetts. The Higginson Foundation is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Higginson Foundation's purpose is to preserve and protect old and historic buildings, artwork and other property in Boston, Massachusetts and its surrounding area in order to perpetuate the further education of posterity with regard to the arts and the architectural, historic, and general cultural heritage of the Boston, Massachusetts area. Its further purpose is to encourage education and personal advancement for youth in the Greater Boston area, to foster scientific, literary and educational interests among members of the Club and to advance the interests and promote the welfare of Harvard University.

The Club’s Commonwealth Avenue Clubhouse will be the first historic renovation project. The Foundation will make grants to the Club to restore artwork owned and exhibited by the Club. The officers and directors of the Higginson Foundation are members of the Club and some are current board members of the Club; however, the Higginson Foundation will remain an independent organization dedicated solely to its charitable and educational purposes. It is expected that the Higginson Foundation will take over several charitable programs currently conducted by the Foundation.

The Club provides administrative support staff to the Higginson Foundation, for which the Higginson Foundation reimburses the Club. The Club requests that its members donate funds for students attending Harvard University, Harvard Prize Books, and for the appraisal and cataloguing of the art collection at the Club. Donations collected by the Club are remitted to the Higginson Foundation. As of August 31, 2022 and 2021, the Club owes the Higginson Foundation approximately $1,000 and $-0-, respectively. The Club accounts for the donations as agency transactions and does not reflect them in its financial statements. Donations received for 2022 and 2021 totaled approximately $159,000 and $93,000, respectively.

Note 16 – Employee retention credit

The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, was passed by the U.S. Congress and signed into law by the President on March 27, 2020 in response to the economic fallout of the COVID-19 pandemic in the United States. The Employee Retention Credit is one of the provisions included in the CARES Act. The Employee Retention Credit is a fully refundable tax credit for employers equal to 50 percent of qualified wages (including allocable qualified health plan expenses) that eligible employers pay their employees. The Employee Retention Credit applies to qualified wages paid after March 12, 2020 and before January 1, 2021. The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an eligible employer for qualified wages paid to any employee is $5,000. In order to be eligible for the payroll tax credit, the employer must either have had its operations fully or partially suspended as a result of a COVID-19 related shut down order or have incurred a decline in gross receipts by more than 50 percent when compared to the same quarter in the prior year.

The Consolidated Appropriations Act (CAA) passed in December 2020 included extensions and modifications of many provisions of the CARES Act. Effective January 1, 2021, the Employee Retention Credit is extended for two more calendar quarters, through June 30, 2021. The CAA increases the maximum credit to $7,000 per employee for each of the two quarters in 2021. This is done by providing a $10,000 maximum in each employee’s aggregate qualified wages and qualified health expenses for each quarter and by increasing the credit to 70 percent of the employee’s qualified wage and health expense amounts for that quarter. The CAA also changes one of the eligibility tests so an employer that has had a more than 20 percent decline in gross receipts in 2021, compared to the same quarter in 2019, satisfies the gross receipts test. In addition, the new rule allows an employer to elect to use the gross receipts from the immediately preceding quarter and compare these prior quarter gross receipts to the same quarter in 2019, rather than the current quarter. The American Rescue Plan Act further extended the Employee Retention credit through the end of December 2021.