2015 Audit Report, Historic Macon

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT FOR THE YEAR ENDED APRIL 30, 2015

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT

3

CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF ACTIVITIES

4-5 6

CONSOLIDATED STATEMENT OF CASH FLOWS

7-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9-27

SUPPLEMENTARY INFORMATION INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION CONSOLIDATED SCHEDULE OF FUNCTIONAL EXPENSES

2

29 30-31

S.W. Hall & Associates, LLC Certified Public Accountants 1291 Jefferson Terrace Macon, GA 31201

Independent Auditor's Report To the Board of Directors of Historic Macon Foundation, Inc. and Subsidiaries 935 High St Macon, GA 31201 We have audited the accompanying consolidated financial statements of Historic Macon Foundation, Inc. and Subsidiaries, (a nonprofit organization), which comprise the consolidated statement of financial position as of April 30, 2015, and the related consolidated statement of activities and consolidated statement of cash flows for the year then ended, and the related notes to the consolidated 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 audit. We conducted our audit 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 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.

Opinion In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Historic Macon Foundation, Inc. and Subsidiaries as of April 30, 2015, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

December 7, 2015

Telephone: (478) 741-9966

Email:cpa@swhallcpa.com 3

Fax: (478) 741-1483

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION APRIL 30, 2015

ASSETS

CURRENT ASSETS Cash on hand Cash in bank Total Cash & Cash Equivalents

$

Investments Escrow deposit Materials in inventory, stated at cost Accounts receivable Notes receivable-current portion Prepaid expenses Total Current Assets

790 1,228,300 1,229,090 990,315 250,000 958 17,765 56,591 1,532 2,546,252

PROPERTY AND EQUIPMENT Land and buildings-Preservation Projects, net Property and equipment, net Total Property and Equipment

1,470,363 428,361 1,898,725

OTHER ASSETS Beneficial interest in assets held by others Notes receivable Cash restricted for long term purposes Utility deposits Collections(Note 1) Total Other Assets TOTAL ASSETS

275,054 129,771 5,111 240 410,176 $

See Auditor's Report And Notes To Financial Statements 4

4,855,153

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION APRIL 30, 2015 LIABILITIES AND NET ASSETS

CURRENT LIABILITIES Deferred rental income Accrued interest Accounts payable Assets held for other organizations Accrued vacation pay Accrued payroll liabilities Rental deposits

$

Total Current Liabilities

8,245 2,559 12,710 42,683 7,878 11,599 1,850 87,523

LONG TERM LIABILITIES Notes payable Total Long Term Liabilities

1,333,429 1,333,429

Total Liabilities

1,420,952

NET ASSETS Unrestricted Undesignated Board designated Total Unrestricted Net Assets Temporarily Restricted Permanently Restricted Total Net Assets

2,153,952 966,024 3,119,976 234,720 79,505 3,434,201

TOTAL LIABILITIES AND NET ASSETS

$

See Auditor's Report And Notes To Financial Statements 5

4,855,153

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED APRIL 30, 2015 Unrestricted Revenues, gains and other support Contributions $ In-kind contributions Membership dues Program service revenue Special events Interest income Net investment income Change in beneficial interest in assets held by others Rental income Gain on sales of restored properties

51,050 113,460 141,112 199,502 145,756

Temporarily Permanently Restricted Restricted $

429,325

$

1,200

4,482 61,391

Total $ 481,575 113,460 141,112 199,502 145,756 4,482 61,391 7,191 15,434 31,898

5,951

1,240

2,440

1,201,802

2,440

1,201,802

15,434 31,898

Total revenues, gains and other support

759,604

439,759

Total net assets released from restriction Total support, revenue and net assets released from restriction

798,288

(798,288)

1,557,892

(358,530)

Expenses Program services Preservation and restoration Sidney Lanier Cottage Education Total program services expenses

330,015 132,394 14,453 476,862

330,015 132,394 14,453 476,862

Support services Management and general Fundraising Membership Development Total support services expenses

69,549 145,724 53,044 268,317

69,549 145,724 53,044 268,317

745,179

745,179

Total Expenses Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year

812,713

(358,530)

2,440

456,623

2,307,263

593,249

77,066

2,977,578

79,505

$ 3,434,201

$ 3,119,976

See Auditor's Report And Notes To Financial Statements 6

$

234,720

$

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED APRIL 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets Adjustments to reconcile change in Net Assets to net Cash provided by (used in) operating activities: Depreciation Unrealized gains on investments Contributions restricted for long term purposes Net change in beneficial interest in other assets Unrealized and realized gains on investments Loss on sales of restored properties (Increase) Decrease in Operating Assets: Accounts receivable Escrow deposit receivable Prepaid expenses

$ 456,623

21,974 (26,116) (1,200) (7,191) (22,998) (31,898) 2,876 (250,000) 2,149

(Decrease) Increase in Operating Liabilities: Deferred revenue Accounts payable Facade loan disbursement payable Payroll liabilities Accrued expenses Rental Deposits Assets held for other organizations Total Adjustments Net Cash Provided By Operating Activities

836 (4,591) 14,436 6,708 5,871 200 10,628 (278,316) 178,307

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments Purchases of investments Property improvements-Preservation Projects Cash restricted for long term purposes Disbursements for facade loans Principal repayments from facade loans Proceeds from sales of restored properties Purchases of furniture and equipment Net Cash Used In Investing Activities

21,826 (10,971) (793,746) 20 (75,000) 67,230 247,300 (1,495) (544,836)

See Auditor's Report And Notes To Financial Statements 7

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED APRIL 30, 2015 CASH FLOWS FROM FINANCING ACTIVITIES Contributions restricted for long term purposes Proceeds from Notes Payable Notes Payable repayment of principal Net Cash Provided By Financing Activities

1,200 965,000 (99,651) 866,549

NET INCREASE IN CASH AND CASH EQUIVALENTS

500,020

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

729,070

CASH AND CASH EQUIVALENTS AT END OF YEAR

SCHEDULE OF SUPPLEMENTAL DISCLOSURES Noncash Investing transactions: During the year the Organization transferred its net equity of $98,304 in a preservation project known as Jordan Apartments into Historic Tattnall Apartments, LLC in exchange for a 1% ownership interest.

See Auditor's Report And Notes To Financial Statements 8

$1,229,090

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Note

1 Nature of Activities and Significant Accounting Policies Nature of Activities The Historic Macon Foundation, Inc. and Subsidiaries is a private, nonprofit organization.

The Organization's mission is to "revitalize our community by preserving architecture and sharing history", according to the organization’s most recent strategic plan. Its current programs include:

Preservation and Restoration: - Educating the public and public officials about revitalization and preservation - Revitalizing entire historic neighborhoods - Operating historic commercial rental property (1083 Washington Ave.) - Restoration of Other Historic District Buildings (Restoration) - Consultation services regarding historic certification of buildings and housing - Operation of revolving loan fund for low interest restoration loans.

Education: - Conducting interpretive tours of historic sites - Sponsoring guest lectures with presentations related to literature, preservation and restoration - Publishing digital and print newsletters updating its membership and local officials of preservation efforts, including low-income housing and economic development Sidney Lanier Cottage - Tours - Rentals - Museum Store - Historically-related events

9

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Basis of Presentation: The consolidated financial statements of the Organization have been prepared on the accrual basis of accounting, in conformity with generally accepted accounting principles.

Net assets are reported in each of the following three classes: unrestricted net assets, temporarily restricted net asses, and permanently restricted net assets.

Unrestricted Net Assets - Net assets that are not subject to donor-imposed restrictions.

Temporarily Restricted Net Assets - Net assets subject to donor-imposed stipulations that may or will be met, either by actions of the Organization and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from donor restrictions.

Permanently Restricted Net Assets - Net assets subject to donor-imposed stipulations that must be maintained permanently by the Organization. The investment return is available to support operations and preservation projects.

Contributions and Grants: Contributions, including unconditional promises to give, are recorded as made. All contributions are available for unrestricted use unless specifically restricted by the donor.

Conditional promises to give are recognized when the conditions on which they depend are substantially met.

Investments The Organization reports investments in marketable securities with readily determinable fair values and all investments in debt securities are valued at their fair values in the statement of financial position. Unrealized gains and losses are included in the change in net assets. Real estate investments and non-controlling interest in Historic Tattnall Apartments, LLC are stated at cost.

10

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Accounting for Wholly-Owned Subsidiaries The consolidated financial statements of the Organization include Historic Macon Foundation, Inc. and three wholly owned subsidiaries: Historic Macon Properties, LLC, Historic Macon Profits, LLC and Historic Macon Community Investments, LLC. The Limited Liability Companies (LLCs) were formed to acquire and manage preservation projects until they are sold or while they are being rented. The activities of the subsidiaries are consolidated into the Organization's financial statements. All significant balances and transactions between the entities have been eliminated in the consolidation.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Income tax status The Organization is a not-for-profit organization that is exempt from federal and state income tax under Section 501(c)(3) of the Internal Revenue Code. The Organization has also been classified as an entity that is not a private foundation within meaning of Section 509(a) and qualifies for deductible contributions as provided in Section 170(b)(1)(A)(vi). The Organization has evaluated the effect of generally accepted accounting principles for Uncertainty in Income Taxes. The Organization is subject to federal income tax on unrelated business income. Management believes that the Organization continues to satisfy the requirements of tax-exempt organization and therefore had no uncertain income tax positions at April 30, 2015. The Organizations federal returns, form 990, are subject to examination by the IRS, generally for three years after the date they were filed.

The Organization has income items that are subject to unrelated business income tax; however, these items when netted with the directly attributable business expenses, resulted in a net loss for the year ended June 30, 2015. As a result, no provision or liability for income taxes has been included in the financial statements.

11

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Cash and Cash Equivalents For the purposes of the statement of cash flows, the Organization considers all unrestricted, highly liquid investments with an initial maturity of three months or less to be cash equivalents.

Promises To Give Contributions are recognized when the donor makes a promise to give to the Foundation that is, in substance, unconditional. All donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restriction.

When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported on the statement of activities as net assets released from restrictions Contributions that are determined to be conditional promises to give are not recognized in the financial statements until the conditions are substantially met.

Fair Value Measurements The Organization measures and discloses fair value measurements in accordance with authoritative literature. Fair value is 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. Additionally, the inputs used to measure fair value are prioritized based on a three level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are a follows: Level 1 - These inputs are based on unadjusted quoted market prices for identical assets or liabilities in an active market the Organization has the ability to access. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 - These inputs relate to adjusting information from similar items that are traded in active markets or from identical or similar items in markets that are not active.

Level 3 - These are unobservable inputs for the asset or liability, which are typically based on the Organization’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

12

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Property, Plant, and Equipment and Depreciation Property, plant, and equipment assets are stated at cost for purchased items and at fair market value for donated items. Depreciation expense is computed on the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Years 40 7-8 15 4-10

Buildings Leasehold improvements Land improvements Furniture, Fixtures, and Equipment Vehicles

5

No depreciation is recognized on the Sidney Lanier Cottage building, as it is considered a historical treasure, with an extraordinary useful life. All costs associated with the properties of neighborhood revitalization projects were capitalized, with the exception of expenses related to properties currently being held for rent. Preservation projects are not depreciated unless they are placed into service as rental property until sold.

Advertising Costs Advertising costs are expensed when incurred. Total advertising costs incurred for the year was $33,689 and is recorded on the schedule of functional expenses.

In-Kind Donations and Contributed Services Material gifts in-kind items used in the Organization are recorded as support and expense at the time the items are placed into service or distributed. The Organization records various types of in kind support including contributed services. Contributed services are recognized if the services create or enhance non-financial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donations. Also, many individuals volunteer their time and perform a variety of tasks that assists the Organization with specific programs and various committee assignments throughout the year. Those contributed services do not meet the recognition criteria under generally accepted accounting principles.

13

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Assets Held for Other Organizations The Organization's administers a grant for the College Hill Corridor Alliance. The name of the grant is the Macon Music Ambassadors Program. The Organization disburses payments as requested to the College Hill Corridor Alliance for reimbursement of expenses incurred for the program. The balance of the grant is carried on the statement of financial position as a liability. Support and expenses of the program are not recognized in the Consolidated Statement of Activities.

Collections The Organization's collections consists of letters and personal memorabilia of Sidney Lanier, and various antiques and artwork contributed by Middle Georgians. Each of the items is cataloged, preserved, and cared for, and activities verifying their existence and assessing their condition are performed periodically. The collection items are not capitalized. Purchases of collection items are recorded as decreases in unrestricted or permanently restricted net assets if purchased with donor-restricted assets. Contributions of collection items are not recognized in the Statement of Activities.

Expense Allocation Directly identifiable expenses are charged to programs and supporting services. Expenses related to more than one function are charged to programs and supporting services on the basis of periodic time and expense studies. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Organization.

14

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

2 Concentrations of Credit Risk The Organization maintains cash balances at several financial institutions located in Macon, Georgia. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. At April 30, 2015, the Organization’s uninsured cash balances total $597,659.

Note

3 Notes Receivable Notes receivable consisted of the following at year end: The Organization administers a revolving loan fund that was established from various grant funds. Loans in the amounts of $5,000 and $10,000 are made to eligible participants for the restoration and preservation of historic properties. The loans are repayable in monthly installments over five years at an interest rate of 2% per annum. Interest is recognized over the term of the loan and is calculated using the simple interest method. The notes are carried at unpaid principal balances. The Organization has experienced no losses on the loans since the inception of the program in 2010. Therefore no allowance has been established for losses. The loans are secured by the preservation property of the loan recipients.

Note

Notes Receivable Current Portion

$ 129,771 56,591

Total

$ 186,362

4 Beneficial interest in other assets Beneficial interests in assets held by others consisted of the following at year end: The Organization is the beneficiary of an endowment fund for the Sidney Lanier Cottage with the Community Foundation of Central Georgia. The Organization has specified that the investment income from the funds be used for the repairs and maintenance of the Sidney Lanier Cottage. The funds are invested in an investment pool consisting of cash and long term securities. Changes in the these assets are reflected in the statement of activities.

15

$ 119,953

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Note

4 Beneficial interest in other assets (continued) The Organization is the beneficiary an endowment fund for the Macon Dog Park with the Community Foundation of Central Georgia. The Organization has specified that the investment income from the funds be used for the repairs and maintenance of the Macon Dog Park. The funds are invested in an investment pool consisting of cash and long term securities. Changes in these assets are reflected in the statement of activities.

20,822

The Organization is the beneficiary of an endowment fund established for the Rose Hill Cemetery with the Community Foundation of Central Georgia. The funds are to be used for the repairs and maintenance of the Rose Hill Cemetery. The funds are invested in an investment pool consisting of cash and long term securities. Changes in these assets are reflected in the statement of activities.

Total Note

134,279 $ 275,054

5 Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following purposes: Preservation and Restoration Projects Macon Dog Park Facade Loans Education Legal Defense fund Rose Hill Cemetery Sidney Lanier Cottage Garden Sidney Lanier Cottage Total

$

8,112 22,280 24,755 15,735 6,599 137,740 3,999 15,500 $ 234,720

16

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Note

6 Net assets released from restriction Net assets were released from donor restrictions by incurring expenses satisfying the restricted purpose or by occurrence of other events specified by donors.

Purpose restrictions accomplished for the following: Preservation and Restoration Projects Facade Loans Education Rose Hill Cemetery Other Total

Note

$ 774,389 7,278 13,297 2,824 500 $ 798,288

7 Permanently Restricted Net Assets Permanently restricted net assets were held for the following endowment purposes: Sidney Lanier Cottage Endowment Preservation Endowment

$ $

Note

75,912 3,593 79,505

8 Investments Capital City Trust Company manages a portfolio of investment securities through a trust arrangement. These funds represent board-designated amounts set aside in prior years for the purpose of providing an income stream for annual operations. These funds are stated at fair values as determined by public stock market quotations.

Other investments consist of an interest in a Limited Liability Company engaged in real estate development and rental and is carried at cost.

Investments consisted of the following at April 30, 2015: Cost Cash and Cash Equivalents Mutual Funds Stock & Equity Funds Fixed Income Securities Investments Carried at Fair Value 1% Interest in LLC, at cost Total investments

$

$

18,542 29,624 336,461 246,389 631,016 98,304 729,320

17

Carrying Value $

$

18,542 47,492 582,244 243,733 892,011 98,304 990,315

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Note

8 Investments (continued) Investment return from all sources is summarized as follows: Interest Dividends Net Realized Gains and (Losses) Net Unrealized Gains and (Losses)

$

Less Management Fees Net Investment Income Note

$

1,696 17,209 22,998 26,116 68,019 (6,628) 61,391

9 Land and Buildings-Preservation Projects, Net Land and buildings-preservation projects, net consisted of the following April 30, 2015: Neighborhood Properties Downtown Lofts Total

Note

$

838,196 632,167 $ 1,470,363

10 Land, Property, and Equipment Land, property, and equipment consisted of the following at April 30, 2015: 1083 Washington Avenue Sidney Lanier Cottage Land Improvements Furniture, Fixtures, and Equipment Leasehold Improvements Vehicle Less Accumulated Depreciation Total

$

$

18

240,872 240,057 29,501 71,870 8,732 11,100 (173,771) 428,361

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

11 Endowment Funds The Organizations endowment fund consists of individual donor restricted endowment funds and funds designated by the Board of Trustees (“Board”) to function as endowments. The net assets associated with endowment funds, including those funds designated by the Board to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.

The Organization has interpreted the State of Georgia’s enacted version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as imposing a duty on the Organization to use good faith and prudent care in adopting investment and spending policies to preserve endowment assets while providing income and appreciation to meet the donors’ intention in perpetuity. As a result of this interpretation, the Organization classifies as permanently restricted net assets, (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund.

The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence prescribed by UPMIFA. The Organization made a decision to allow spending from endowment funds based on the current spending policy and limited the spending, where applicable, to available cash balances and investment return. In accordance with UPMIFA, the Organization considered the following factors in making their determination to appropriate or accumulate endowment funds: 1) The duration and preservation of the fund, 2) The purposes of the Organization and the donor restricted endowment fund, 3) General economic conditions, 4) The possible effect of inflation and deflation, 5) The expected total return from income and appreciation of investments, 6) Other resources of the Organization, and 7) The investment policies of the Organization.

Where the Board designates unrestricted funds as endowments, they are classified as unrestricted net assets.

19

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

11 Endowment Funds (continued) Investment Return Objectives, Risk Parameters and Strategies. The Organization has adopted investment and spending policies, approved by the Board of Trustees, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also maintaining the purchasing power of those endowment assets over the long-term. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, which exceeds the annual distribution with acceptable levels of risk. Endowment assets are invested in a well diversified asset mix, which includes equity and debt securities, that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make an annual distribution of 4.75%, while growing the funds if possible. Therefore, the Organization expects its endowment assets, over time, to produce an average rate of return of approximately 8% annually. Actual returns in any given year may vary from this amount.

Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk.

Endowment funds with deficiencies. From time to time, the fair value of assets associated with individual donor endowment funds may fall below the value of the initial and subsequent donor gift amounts (deficit). When donor endowment deficits exist, they are classified as a reduction of unrestricted net assets. No deficits of this nature were reported in unrestricted net assets as of April 30, 2015.

Endowment net asset composition by type of fund as of April 30, 2015 is as follows:

Donor-restricted endowment funds Board-designated endowment funds Total Funds

Unrestricted $ 966,024 $ 966,024

20

Permanently Restricted $ 79,505 $

79,505

$ $

Total 79,505 966,024 1,045,529

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

11 Endowment Funds (continued) Changes in endowment net assets as of April 30, 2015 is as follows:

Unrestricted Endowment net assets, beginning of the year $ Contributions Interest Investment income Market valuation adjustments Amounts appropriated for expenditure Endowment Net Assets April 30, 2015

$

934,703

Total Net Endowment Assets

Permanently Restricted $

1,697 33,579 26,116

77,066 1,200

$

1,239

(30,071) 966,024

21

1,011,769 1,200 1,697 34,818 26,116 30,071

$

79,505

$

1,045,529

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

12 Notes Payable Notes payable consisted of the following at April 30, 2015: Historic Tattnall Apartments, LLC The Organization has a promissory note payable to Historic Tattnall Apartments, LLC with an interest rate of 1.70% compounded annually.

Proceeds from the loan are being used for acquisition, building, rehabilitation and sale of buildings in the area. The note originated April 4, 2015 and matures April 4, 2021 with principal and interest being due at that time. The note is unsecured.

$ 100,000

Historic Hills and Heights Development Corporation The Organization has a promissory note payable to Historic Hills and Heights Development Corporation. Principal and interest is payable upon the sale of the property located at 1029, 1035 and 1065 Oglethorge St. Proceeds from the loan are being used to construct single family dwellings at the properties. There is a fixed loan fee payable at the time of the sale of each property. The loan fee will be assessed at $2.00 per square foot of the property sold. The promissory note is secured by the above referenced real estate. Construction of the property has been completed and it is available for sale.

22

368,429

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

12 Notes Payable (continued) John S. and James L. Knight Foundation, Inc. The Organization has a promissory note payable to the Knight Foundation.

Proceeds from the loan are being used for acquisition, building, rehabilitation and sale of buildings in the area. The note originated November 7, 2014 and matures November 2021 with principal and any unpaid interest (1%) due at that time. The note is secured by all Historic Macon Foundations property held by in its subsidiary Historic Macon Properties, LLC.

565,000

John S. and James L. Knight Foundation, Inc. The Organization has a promissory note to the Knight Foundation.

Proceeds from the loan are to make loans to residents in the area to renovate the facades of, and upgrade the energy efficiency of homes. The loan origination date is November 7, 2014 and matures in November 2023.

Payments in the amount of $40,625 are due beginning October 2018 on a quarterly basis. The note is secured by Historic Macon Foundations facade notes receivable.

Total Notes Payable

300,000 $

Future scheduled maturities of long-term debt are as follows: Years Ending April 30: 2016 2017 2018 2019 2020 Thereafter

1,333,429

$ 368,429 284,375 15,625 665,000 $ 1,333,429

The Organization expects the short term obligations to be refinanced upon their maturity and has demonstrated the ability to obtain long term financing based on historical information.

Therefore all debt obligations have been classified as long term liabilities.

23

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Note

13 Program Service Fees and Income Program service fees and income consisted of the following activities during the year: Sidney Lanier Cottage Tours Gift Shop Sales Rental Income Total Sidney Lanier Cottage

$

1,452 8,261 4,732 14,445

$

1,750 4,076 85,020 94,211 185,057 199,502

Other Program Services Publications and Calendar Sales Educational Programs Revitalization project fees Other fees for restoration services Total-Other Total Program Service Fees and Income Note

$

14 Special Events Special events consisted of the following activities during the year: Flea Market Design, Wine & Dine Sidney Lanier Cottage Events Other Events Total

$

$

24

43,071 97,813 3,046 1,826 145,756

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

15 Interest Expense Interest expense incurred and capitalized for the year are summarized as follows:

Note

Interest paid-current year Accrued interest - current year Total interest expense incurred Less interest expensed currently Total interest capitalized current year

$

$

4,746 (2,559) 2,187 (809) 1,378

Capitalized interest-beginning of year Capitalized interest-end of year

$ $

21,486 22,864

16 Gain (Loss) on Sales of Restored Properties The following is the detail of sales of restored properties during the year ended April 30, 2015: Restoration Costs Property Location Contract Price & Selling Expenses Gain/(Loss) 881 Orange St. 1282 Calhoun St. Total

$ $

80,000 167,300 247,300

25

$ $

(67,835) $ (147,567) (215,402) $

12,165 19,733 31,898

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015 Note

17 Fair Value Measurement The following table represents the assets and liabilities that were measured on a recurring basis as of April 30, 2015.

Investments Beneficial interest in assets

$

Total

$

Level 1 892,011 892,011

Level 2 $ $

Level 3 $

275,054 275,054

$

The following methods and assumptions were used to determine the fair value of each class of the financial instruments: Investments - Fair values are determined based on the quoted market prices found on the national market or exchanges. (Note 8) Beneficial interest in assets held by others - Valued at the Organization's pro-rata share of the community foundation's investment pools. (Note 4) Note

18 In-Kind Contributions The value of donated materials and services included in the financial statements and the corresponding expenses for the year ended April 30, 2015 are as follows.

In-kind Support: Donated Advertising Donated items for Flea Market Donated construction Donated rent

$

Total

$

19,000 32,217 46,243 16,000 113,460

Expenses Advertising expense Rent expense Donated supplies for Flea Market

$

Total

$

19,000 16,000 32,217 67,217

Donated construction services and materials totaling $ 46,243 were capitalized as preservation project costs.

26

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED APRIL 30, 2015

Note

19 Conditional Promises to Give The Organization has a conditional promise to give at April 30, 2015, representing a grant from the Knight Foundation for revitalization of the historic Beall's Hill neighborhood and the establishment of a downpayment assistance fund. Funding is scheduled to be provided over the next five years subject to conditions being met and matching contributions being received from other local organizations.

Note

Conditional promises to give consists of the following: Preservation projects in Beall's Hill Downpayment assistance fund

$

Total

$

467,500 800,000 1,267,500

20 Escrow Deposit The escrow deposit receivable represents grant funds, approved by a donor and held in escrow by an attorney's office, that had not been sent to the Organization as of April 30, 2015.

Note

21 Evaluation of Subsequent Events Management has evaluated subsequent events through December 7, 2015, the date the financial statements were available to be issued.

27

SUPPLEMENTARY INFORMATION

S.W. Hall & Associates, LLC Certified Public Accountants 1291 Jefferson Terrace Macon, GA 31201

Independent Auditor's Report On Supplementary Information

To the Board of Directors of Historic Macon Foundation, Inc. and Subsidiaries 935 High St Macon, GA 31201 We have audited the consolidated financial statements of Historic Macon Foundation, Inc. as of and for the year ended April 30, 2015, and have issued our report thereon dated December 7, 2015, which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole.

December 7, 2015

Telephone: (478) 741-9966

Email:cpa@swhallcpa.com 29

Fax: (478) 741-1483

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED APRIL 30, 2015 Program Services Sidney Lanier Cottage Education

Preservation and Restoration Payroll Expenses Salaries and wages Payroll taxes Employee benefits

$

Total payroll expenses Other Expenses Advertising and marketing Computer expenses Conferences, workshops and meetings Contract Services Dues and subscriptions Insurance Interest Miscellaneous Museum store purchases Payment processing fees Professional fees Rent Repairs & Maintenance Supplies Sales Tax Travel Truck expense Utilities

162,434 13,646 1,273

$

83,611 4,068 379

$ 11,641 908 85

177,352

88,058

12,633

14,244 4,063 35,777

445

Total Program Services

$

278,044 14,689 4,063 35,777 211

211 3,365 809 5,120

1,776

14,493 809 5,120 1,776

23,812

1,047

24,859

58,457 850 167 1,121 358 1,666

16,132 459

5,125

384

74,588 1,308 167 1,121 358 7,175

149,806

35,546

1,161

186,513

Total expenses before depreciation

327,158

123,605

13,794

464,557

Depreciation expense Total expenses

2,857 330,015

8,790 132,394

659 $ 14,453

12,306 476,862

Total other expenses

$

10,352

257,685 18,621 1,737

$

See Auditor's Report And Notes To Financial Statements 30

776

$

HISTORIC MACON FOUNDATION, INC. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED APRIL 30, 2015 Supporting Services Management and General Payroll Expenses Salaries and wages Payroll taxes Employee benefits

$

Total payroll expenses

12,774 2,628 245

Fundraising

$

15,648

Other Expenses Advertising and marketing Computer expenses Conferences, workshops and meeting Contract Services Dues and subscriptions Insurance Interest Miscellaneous Museum store purchases Payment processing fees Professional fees Rent Repairs & Maintenance Supplies Sales Tax Travel Truck expense Utilities

21,886 1,892 177

Membership Development

$

23,955

42,669 1,721 161

Total Expenses

$

44,550

335,015 24,862 2,319 362,197

19,000

5,363 21,732

80,267

2,691

1,153

1,794

33,689 4,063 35,777 211 2,375 25,881 809 5,120 1,776 1,042 36,550 16,000 79,951 103,307 167 1,121 358 12,812

49,287

119,791

5,417

361,008

Total expenses before depreciation

64,934

143,746

49,967

723,205

Depreciation expense Total expenses

4,615 69,549

1,978 145,724

3,076 53,044

21,974 745,179

2,375 5,435

2,329

3,623

1,042 11,692 16,000

Total other expenses

$

$

See Auditor's Report And Notes To Financial Statements 31

$

$