THE NEW YORK COMMUNITY TRUST AND COMMUNITY FUNDS, INC.

(Including Its Long Island and Westchester Divisions)

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

(3) Liquidity and Availability of Financial Assets

Resources available to The Trust to fund general expenditures, such as operating expenses and grants, have seasonal variations related to the timing of spending plan distributions and receipt of gifts. The Trust actively manages its resources, utilizing a combination of short, medium, and long-term operating investment strategies to align its cash inflows with anticipated outflows Furthermore, there are likely to be additional components of The Trust’s investments that may be available and liquid within one year. These components include certain portions of marketable alternatives, as well as return of capital from private equity. At December 31, 2022 and 2021, financial assets available within one year to fund general expenditures were as follows:

(4) Investments and Fair Value Measurements

Investments with readily determinable fair values are reported at fair value based upon quoted market prices or published net asset values (NAV) for investments in funds with characteristics similar to a mutual fund. The estimated fair value of hedge funds, and private market funds is reported at estimated fair value based on, as a practical expedient, NAV provided by investment managers. These values are reviewed and evaluated by management for reasonableness. The reported values may differ from the values that would have been reported had a ready market for these investments existed.

Purchases and sales are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Realized gains and losses and changes in unrealized gains and losses in investments are included in investment return in the statement of activities.

Fair value is defined as the exchange price that would be received to sell an asset, or paid to transfer a liability (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy requires The Trust to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are:

• Level 1 inputs are quoted or published prices in active markets for identical assets or liabilities.

• Level 2 inputs are inputs other than prices included within Level 1 that are observable for the asset, such as quoted prices for similar assets or liabilities.

• Level 3 inputs are unobservable inputs for the asset or liability.

ASC 820, Fair Value Measurement, allows The Trust, as a practical expedient, to estimate the fair value using net asset value (NAV) for commingled investments that do not have a readily determinable fair value.

THE NEW YORK COMMUNITY TRUST AND COMMUNITY FUNDS, INC.

(Including Its Long Island and Westchester Divisions)

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

Most of The Trust’s investments are in publicly traded securities or in commingled funds that invest in publicly traded securities. Fair value for these investments is based on quoted market prices or published prices. The Trust also invests in hedge funds and private equity investments, including private real estate investments. The fair value of these investments has been determined primarily through the net asset values provided by the fund managers utilizing quoted market prices for underlying securities, market values for comparable companies, an income-based approach, or discounted cash flow projections. The Trust received a gift of interest in a limited liability company (LLC), which is carried at fair value based on The Trust’s interest in the net assets of the LLC. The valuation is reviewed for reasonableness by the management of The Trust.

The Trust invests for long-term growth in real terms, consistent with a reasonable degree of risk. Donor advised funds that require a high degree of liquidity are invested in cash equivalents. The investments of NYCT are held in individual trusts at the bank designated by the donor in the instrument of gift.

The following tables present The Trust’s investments at December 31, 2022 and 2021, respectively:

THE NEW YORK COMMUNITY TRUST AND COMMUNITY FUNDS, INC.

(Including Its Long Island and Westchester Divisions)

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

The Trust’s investments valued at NAV include:

Hedge Funds – Consist mainly of multi-strategy funds that attempt to generate consistent positive returns by focusing on opportunities that are not correlated with the overall markets. This category also includes two funds that seek to achieve equity-like returns with lower volatility than the equity markets. These funds may be redeemed at net asset value at least annually and in most cases more frequently. Advance notice of 30-90 days is required to redeem these investments.

Private Equity – These funds focus on investments in growth companies and buyouts – primarily in the small cap and midcap portions of the market. Certain funds of funds also have a small allocation to venture capital. As the underlying investments are liquidated, assets are distributed. Funds are expected to be fully liquidated over the next 10 years. Certain of The Trust’s investments in private equity involve future cash commitments, which amounted to approximately $52 million at December 31, 2022

The following table presents a reconciliation for all Level 3 assets measured at fair value for the period from January 1 to December 31:

THE NEW YORK COMMUNITY TRUST AND COMMUNITY FUNDS, INC.

(Including Its Long Island and Westchester Divisions)

Notes to Consolidated Financial Statements

(5) Functional Expenses

Salaries and benefits, occupancy, and office expenses are attributable to grantmaking, administrative, or development functions, and are allocated consistently based on estimates of time and effort. The following tables illustrate the functional expenses for the years ended December 31, 2022 and 2021, respectively:

THE NEW YORK COMMUNITY TRUST AND COMMUNITY FUNDS, INC.

(Including Its Long Island and Westchester Divisions)

Notes to Consolidated Financial Statements

(6) Leases

Leases result in the recognition of ROU asset and lease liability on the statements of financial position. ROU assets represent the right to use an underlying asset for the lease term and are recognized in an amount equal to the lease liability adjusted for any initial direct costs, prepaid or deferred rent, and lease incentives. Lease liabilities represent the present value of the future lease payments over the expected lease term. The present value of the lease liability is determined using the risk-free discount rate at lease inception for operating leases. Operating lease expense is recognized on a straight-line basis over the lease term.

The Trust determines whether to account for its leases as operating, capital or financing leases depending on the underlying terms of the lease agreement. The Trust elected the package of practical expedients under the new standard, which permits entities not to reassess lease classifications, lease identifications or initial direct costs for existing or expired leases prior to the effective date. The Trust also elected the practical expedient to utilize the risk-free rate for all operating leases. The Trust elected the practical expedient to account for non-lease components and the lease components to which they relate as a single component for all operating leases.

The Trust leases office space under a non-cancelable operating lease that expires on August 31, 2030. The lease contains no significant restrictions. The lease provides for a step up in rent on September 1, 2025. In the year ended December 31, 2022, the Trust adopted FASB Accounting Standards Update (ASU) N0. 2016-02. ASC 842 Leases, which requires the recognition of ROU asset and a lease liability based on the present value of the remaining lease payments. The risk-free rate of 1.55% was used as the discount rate to determine present value. Total operating lease expense for the year ended December 31, 2022 was $2,042,376.

For the year ended December 31, 2021, rent expense under the previous lease standard was $2,027,724.