SEEDS OF PEACE, INC. FINANCIAL STATEMENTS AND AUDITORS' REPORT
DECEMBER 31, 2020 AND 2019
SEEDS OF PEACE, INC. TABLE OF CONTENTS
PAGE INDEPENDENT AUDITORS' REPORT
1
FINANCIAL STATEMENTS Statements of financial position as of December 31, 2020 and 2019
2
Statements of activities for the years ended December 31, 2020 and 2019
3
Statement of expenses by function and natural classification for the year ended December 31, 2020
4
Statement of expenses by function and natural classification for the year ended December 31, 2019
5
Statements of cash flows for the years ended December 31, 2020 and 2019
6
Notes to financial statements
7 - 18
INDEPENDENT AUDITORS’ REPORT To:
The Board of Directors of Seeds of Peace, Inc.
We have audited the accompanying financial statements of Seeds of Peace, Inc. (a nonprofit organization), which comprise the statements of financial position as of December 31, 2020 and 2019, and the related statements of activities, expenses by function and natural classification, and cash flows for the years 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 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 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 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 Seeds of Peace, Inc. as of December 31, 2020 and 2019, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Skody Scot & Company, CPAS, P.C. New York, NY June 9, 2021
-1-
SEEDS OF PEACE, INC. STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2020 AND 2019
2020
2019
$ 2,564,530 64,801 696,912 21,989 14,265 15,124 202,789 141,677 81,545 20,000 725
$ 2,218,287 64,736 1,378,441 26,497 13,608 15,124 234,529 5,150 188,510 48,465 47,351 3,593
15,516 383,800
362,069
$ 4,223,673
$ 4,606,360
ASSETS Cash and cash equivalents: Unrestricted Restricted for compensating balance Contributions receivable, net Grants receivable Other receivables Inventory Prepaid expenses Investments Property and equipment, net Intangible assets, net Construction in progress Security deposits Endowment: Cash equivalents Investments Total assets
LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses Total liabilities
$
267,733
$
579,403
267,733
579,403
Net Assets: Without donor restrictions With donor restrictions
2,023,571 1,932,369
1,960,617 2,066,340
Total net assets
3,955,940
4,026,957
$ 4,223,673
$ 4,606,360
Commitments and contingencies (see notes)
Total liabilities and net assets
See accompanying notes to financial statements. -2-
SEEDS OF PEACE, INC. STATEMENTS OF ACTIVITIES YEARS ENDED DECEMBER 31, 2020 AND 2019
Support and Revenues: Contributions (non-event) Camp fees and misc. program services Government grants Contributions in-kind Investment and other income
Without Donor Restrictions
2020 With Donor Restrictions
$
$
Special events: Event related revenue and support Less: related costs Net special event income and support Net assets released from restriction: Satisfaction of purpose restrictions Expiration of time restrictions Total support and revenues
4,011,207 4,538 700,146 25,507
Total program expenses
$
4,320,270 4,538 700,146 62,754
2019 With Donor Restrictions
$
$
3,741,856 1,293,978 131,997 14,500 37,125
1,184,870 7,513
Total $
4,926,726 1,293,978 131,997 14,500 44,638
-
-
-
2,035,904 (582,809)
-
2,035,904 (582,809)
-
-
-
1,453,095
-
1,453,095
5,087,708
865,569 344,000 7,882,120
341,281 139,000 5,221,679
Expenses: Program Expenses: Seeds of Peace Camp Middle East Multi-regional US programs South Asia (SA) Program administration
309,063 37,247
Total
Without Donor Restrictions
(341,281) (139,000) (133,971)
(865,569) (344,000) (17,186)
7,864,934
478,518 693,233 813,749 249,968 157,945 705,433
-
478,518 693,233 813,749 249,968 157,945 705,433
2,131,151 942,718 1,219,781 311,113 170,423 838,877
-
2,131,151 942,718 1,219,781 311,113 170,423 838,877
3,098,846
-
3,098,846
5,614,063
-
5,614,063
Supporting Services: Management and general Fundraising
1,443,845 616,034
-
1,443,845 616,034
1,442,257 641,342
-
1,442,257 641,342
Total expenses
5,158,725
-
5,158,725
7,697,662
-
7,697,662
Increase/(Decrease) In Net Assets
62,954
Net assets, beginning of year Net assets, end of year
(133,971)
1,960,617 $
2,023,571
(71,017)
2,066,340 $
1,932,369
4,026,957 $
3,955,940
See accompanying notes to financial statements. -3-
184,458
(17,186)
1,776,159 $
1,960,617
167,272
2,083,526 $
2,066,340
3,859,685 $
4,026,957
SEEDS OF PEACE, INC. STATEMENT OF EXPENSES BY FUNCTION AND NATURAL CLASSIFICATION YEAR ENDED DECEMBER 31, 2020
Seeds of Peace Camp Compensation and related expenses: Salaries Payroll taxes Employee benefits & pension
$
Total Direct expenses: Awards Bad debts Credit card fees Currency translation costs Depreciation and amortization Dues, books and subscriptions Equipment and vehicle rentals Field trips Insurance License, fees and permits Meals, entertainment and hospitality Medical supplies and expenses Miscellaneous Office expenses Outside consultants Postage and delivery Printing, photos & publications Professional fees Promotion Property taxes Rent Repairs and maintenance - facilities Repairs and maintenance - other Scholarships and education Security Sports, games and other activities Supplies Telephone & communications Travel, hotels and conferences Utilities and trash removal Website Total direct expenses Total expenses
$
205,904 16,611 24,246
Middle East $
382,479 27,374 54,895
MultiRegional $
Program Expenses US South Programs Asia (SA)
437,610 33,463 55,796
$
187,634 14,163 46,232
$
14,392 1,061 3,184
Program Admin. $
Total
390,601 29,497 34,021
$ 1,618,620 122,169 218,374
Supporting Services Management & General Fundraising $
784,654 61,185 94,293
$
Total Expenses
424,253 31,570 68,872
$ 2,827,527 214,924 381,539
246,761
464,748
526,869
248,029
18,637
454,119
1,959,163
940,132
524,695
3,423,990
50 32,543 5,338 155 112,619 1,240 1,731 4,276 1,900 173 555 33,334 16,056 199 3,427 58 4,229 3,647 10,227 -
11,883 1,393 300 994 398 1,528 483 4,131 6,080 2,407 56,060 22 112 56,286 190 6,846 51,891 302 1,736 560 470 13,048 9,290 2,075 -
21,040 103 10,145 4,444 9,331 1,032 1,653 347 22,374 156,021 2,235 8,800 362 15 21,657 314 713 4,070 15,066 7,158
469 231 77 181 12 95 839 35 -
1,500 107 50 2,173 72 1,465 10,128 200 2,432 72 83,701 14 151 159 600 4,190 1,034 1,320 29,913 27
50 5,220 19,030 851 4,336 724 28,165 93,985 283 70 1,429 190 107 54,986 707 533 761 39,887 -
22,540 203 11,990 44,081 15,821 1,149 2,571 142,811 5,148 20,429 200 11,314 57,306 391,667 2,727 9,133 57,874 1,992 40,302 132,724 16,056 1,522 1,736 560 3,427 2,808 24,267 97,838 12,302 7,185
6,487 86 16,790 10,803 5,826 43,284 17,164 708 7,945 63,855 33,737 1,063 17 37,250 108 510 238,794 708 290 15,408 2,880 -
11,780 1,792 233 1,669 1,400 595 2,015 22,824 7,481 15,644 3,006 37 16,328 2,274 566 3,695 -
22,540 6,487 12,069 13,782 61,104 28,293 6,975 2,571 186,095 23,712 21,732 200 21,274 143,985 425,404 11,271 24,794 98,130 2,100 40,849 387,846 16,056 4,504 1,736 560 3,427 3,098 40,241 104,413 12,302 7,185
231,757
228,485
286,880
1,939
139,308
251,314
1,139,683
503,713
91,339
1,734,735
705,433
$ 3,098,846
$ 1,443,845
616,034
$ 5,158,725
478,518
$
693,233
$
813,749
$
249,968
$
157,945
$
See accompanying notes to financial statements. -4-
$
SEEDS OF PEACE, INC. STATEMENT OF EXPENSES BY FUNCTION AND NATURAL CLASSIFICATION YEAR ENDED DECEMBER 31, 2019
Seeds of Peace Camp Compensation and related expenses: Salaries Payroll taxes Employee benefits & pension Total Direct expenses: Awards Bad debts Camp apparel Credit card fees Currency translation costs Depreciation and amortization Design fee Dues, books and subscriptions Equipment and vehicle rentals Field trips Insurance Kitchen food and supplies Laundry License, fees and permits Meals, entertainment and hospitality Medical supplies and expenses Miscellaneous Office expenses Outside consultants Postage and delivery Printing, photos & publications Professional fees Promotion Property taxes Rent Repairs and maintenance - facilities Repairs and maintenance - other Scholarships and education Security Sports, games and other activities Supplies Telephone & communications Travel, hotels and conferences Utilities and trash removal Website Total direct expenses Total expenses
$
460,460 34,851 47,963
Middle East $
393,254 28,561 64,736
MultiRegional $
Program Expenses US South Programs Asia (SA)
556,363 43,490 66,752
$
168,720 12,184 44,674
$
30,848 2,300 5,303
Program Admin. $
Total
443,351 32,341 56,523
$ 2,052,996 153,727 285,951
Supporting Services Management & General Fundraising $
726,868 53,906 86,266
$
Total Expenses
435,599 32,149 47,463
$ 3,215,463 239,782 419,680
543,274
486,551
666,605
225,578
38,451
532,215
2,492,674
867,040
515,211
3,874,925
8,250 3,300 26,865 24 2 31,474 6,008 8,283 20,000 148,934 134,868 26,499 11,295 1,992 1,127 11,604 6,303 71,422 1,363 48 14,500 900 32,552 500 83,292 2,567 338,470 103,645 81,685 3,922 8,220 350,348 47,615 -
9,065 1,393 1,581 1,442 2,135 1,884 5,512 47,036 10 5,242 2,020 74,878 21 1,432 51,665 11,432 70,288 783 5,900 3,523 1,865 20,430 131,269 5,361 -
20,000 578 428 32 6,145 7,207 472 360 2,929 3,341 37,020 29 954 4,187 262,111 3,019 16,096 14,666 3,322 28,567 493 1,125 3,488 3,677 126,483 194 6,253
17 356 233 2,008 837 10,428 17 621 29 12,200 38 13 4,738 6,950 792 1,041 45,217 -
514 775 5 280 1,113 300 8 1,560 2,263 38 2,370 17 95,204 330 163 95 4,386 142 500 484 529 20,896 -
6,989 73,710 4,095 952 6,012 33,268 3,899 41,844 1,605 5,624 11,072 855 51,717 1,267 4,371 344 1,005 58,020 13
28,250 3,300 27,957 469 10,230 39,012 5 22,298 10,197 99,326 158,142 134,876 26,499 23,497 104,751 1,221 54,059 16,455 557,659 6,046 23,543 92,066 5,172 43,984 160,196 83,292 5,252 351,320 111,539 83,310 10,895 34,902 732,233 53,170 6,266
82 12,898 9,529 5,248 46,423 24,524 4,563 4,780 88,427 73,791 1,530 1,202 32,000 237,088 4,984 704 23,847 3,581 16
16 16,462 1,644 233 307 1,159 1,896 3,819 17,352 3,055 6,131 22,799 95 21,965 2,449 322 1,367 25,060 -
28,250 3,316 27,957 17,013 11,874 52,143 5 32,134 15,445 99,326 204,565 134,876 26,499 49,180 111,210 1,221 62,658 122,234 634,505 13,707 47,544 124,066 5,267 43,984 419,249 83,292 12,685 351,320 111,539 83,310 11,921 60,116 760,874 53,170 6,282
1,587,877
456,167
553,176
85,535
131,972
306,662
3,121,389
575,217
126,131
3,822,737
838,877
$ 5,614,063
$ 1,442,257
641,342
$ 7,697,662
$ 2,131,151
$
942,718
$
1,219,781
$
311,113
$
170,423
$
See accompanying notes to financial statements. -5-
$
SEEDS OF PEACE, INC. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 2020
2019
Cash flows from operating activities: Increase/(decrease) in net assets
$
(71,017)
$
167,272
Adjustments for non-cash items included in operating activities: Depreciation and amortization Loss/(gain) on investments Donation of investments Bad debts Amortization of pledge discount Discount on pledges Changes in assets and liabilities: Contributions receivable Grants receivable Other receivables Inventory Prepaid expenses Security deposits Accounts payable & accrued expenses Deferred income and refundable advances Net cash provided/(used) by operating activities Cash flows from investing activities: Sale of investments Purchase of investments Purchase of property, equipment and intangibles Net cash provided/(used) by investing activities
61,104 (32,564) (425,280) 6,487 (8,978) -
52,143 721 (258,922) 3,316 27,916
684,020 4,508 (657) 31,740 2,868 (311,670) -
(515,270) (11,147) 18,431 1,653 35,147 15,754 53,918 (13,720)
(59,439)
(422,788)
441,742 (479) (20,000)
253,340 (362,069) (60,891)
421,263
(169,620)
Cash flows from financing activities
-
Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year
361,824
(592,408)
2,283,023
2,875,431
$ 2,644,847
$ 2,283,023
See accompanying notes to the financial statements. -6-
-
SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS
1.
Nature of Activities and Summary of Significant Accounting Policies Organization: Seeds of Peace, Inc., (hereafter referred to as the Organization) is a not-for-profit corporation, incorporated in the State of Delaware on March 8, 1993. The primary purpose of the Organization is to empower young leaders from regions of conflict with the leadership skills required to advance reconciliation and coexistence. As young teens, they live together in a summer camp for three weeks to learn conflict management skills. After attending camp, the Organization provides participants with follow-up leadership training and dialogue through their college years, and after college, a graduate program to maintain cross-border network and dialogue. Tax exempt status: The Organization has been granted tax-exempt status by the Internal Revenue Service under Internal Revenue Code Section 501(c)(3) on July 2, 1993. Accordingly, no provision for federal, state or local income taxes has been recorded. The Organization does not believe its financial statements include any uncertain tax positions. Programs and services provided: The Organization’s six major program areas include the following: Seeds of Peace Camp – Summer leadership development program in Maine for teenagers and educators from communities divided by conflict; Middle East – Local initiatives for Camp alumni from Egypt, Israel, Jordan, and Palestine designed to reinforce relationships and build leadership skills; MultiRegional – Convening’s and fellowship programs in the Middle East, South Asia, and the United States for Camp alumni and other change-makers designed to accelerate their impact as they work to transform conflict; US Programs – Local initiatives for Camp alumni from the United States designed to reinforce relationships and build leadership skills; South Asia (SA) – Local initiatives for Camp alumni from Afghanistan, India, and Pakistan designed to reinforce relationships and build leadership skills; and Program Administration – Provides program administration and review of all program activities. Major source of income: The Organization derives most of its income from contributions from individuals, corporations, foundations, government grants, program service revenue and special events. Basis of accounting: The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. Estimates and assumptions: Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.
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SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS
1.
Nature of Activities and Summary of Significant Accounting Policies (continued) Change in accounting principle: In 2020, the Organization adopted FASB ASU 2014-09 Revenue from Contracts with Customers using the full retrospective approach. Analysis of various provisions of the standards resulted in no significant changes in the way the Organization recognizes revenue, and therefore no changes to the previously issued audited financial statements were required on a retrospective basis. The presentation and disclosures of revenue have been enhanced in accordance with the standard. Net assets: Net assets, revenues, gains and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets available for use in general operations and not subject to donor (or certain grantor) restrictions. This classification includes net assets designated by the board or management for a specified purpose. Net Assets With Donor Restrictions - Net assets subject to donor (or certain grantor) imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature (endowment), where the donor stipulates that resources be maintained in perpetuity. Cash equivalents: For purposes of the statements of financial position and the statements of cash flows, the Organization considers as cash equivalents money market funds and all highly liquid resources, such as certificates of deposit with an original maturity of three months or less. Inventory: Inventory of merchandise purchased by, or donated to, the Organization for sale at the camp store, or auction at one of its special events, is valued at the lower of cost or market. Property, equipment and intangibles: The Organization capitalizes certain property, equipment and intangibles with estimated lives of three years or more. Property, equipment and intangibles are stated at cost or donated value, less accumulated depreciation. Depreciation and amortization is computed on the straight-line and accelerated basis over the respective assets’ estimated useful lives of five to ten years. Expenditures for maintenance and repairs are charged to current operations.
-8-
SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS
1.
Nature of Activities and Summary of Significant Accounting Policies (continued) Revenue recognition: The Organization recognizes contributions when cash, noncash assets, or unconditional promises to give are received. Conditional promises to give, which have a measurable performance or other barrier and a right of return, are not recognized until the conditions on which they depend have been met. Amounts received prior to the meeting of these conditions are reported as deferred income or refundable advances in the statements of financial position. At December 31, 2020 and 2019, the Organization did not have any conditional pledges that were not recognized. All contributions are considered available for the Organization’s general programs unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor are reported as support with donor restrictions and increases in net assets with donor restrictions. Contributions received with restrictions that are met in the same reporting period are reported as support without donor restrictions and increases in net assets without donor restrictions. Investment income and gains restricted by donors are reported as increases in net assets without donor restrictions if the restrictions are met (either a stipulated time period ends or a purpose restriction is accomplished) in the reporting period in which the income and gains are recognized. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions. The Organization receives grants from governmental agencies. Depending upon the terms of the grant, it can be either an exchange transaction or a contribution. In accordance with grant provisions, the grant can be an expense reimbursement grant which requires that approved expenses be incurred prior to reimbursement by the grantor. Other grants permit advances of grant funds or full payment of grant funds at the start of the grant. If the grant is an exchange type grant, all unreimbursed expenses, for approved purposes, as of year-end are recorded as receivables and any unexpended advances are recorded as either refundable advances or deferred income. If the grant is a contribution, it is recognized in accordance with the contribution recognition policy described above. During the year ended December 31, 2020, the Organization received $597,333 of Paycheck Protection Program funds from the U.S. Small Business Administration. Management has determined that the correct model to follow is the grant model and that the purpose-related conditions imposed on the grant were met by year-end. Therefore, the full amount has been recognized as revenue. The amount is included with government grants in the statement of activities for the year ended December 31, 2020.
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SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS
1.
Nature of Activities and Summary of Significant Accounting Policies (continued) Revenue recognition (continued): Camp fees and program service revenue relate to fees received in exchange for program services. Revenue is recognized when the program service is provided. Any revenue received which has not been earned is recorded as deferred income. The Organization receives special events revenue which contains both an exchange component and a conditional contribution component. Both components are recognized when the event takes place. Any event revenue received in advance of the event is recorded as deferred income. Receivables: Receivables that are expected to be collected within one year are recorded at their net realizable value. Receivables that are expected to be collected in future years are recorded at the present value of estimated future cash flows. Receivables are written-off as bad debts in the year deemed uncollectible and are reported as such in the statements of expenses by function and natural classification. Investments: All marketable debt and equity securities and mutual funds are measured at fair value on a recurring basis and are reported at their fair market values as of December 31, 2020 and 2019 in the statements of financial position. The Organization initially records the investments it receives as a donation at the fair value as of the dates the investments are donated to the Organization and thereafter carries such investments at current fair values. Investment income (interest and dividends) is recognized as revenue in the period earned, and gains and losses (realized and unrealized) are recognized in the period they occur. Donated services and facilities: Services and facilities are donated to the Organization by various individuals and organizations. Only those items whose value can be objectively determined or meet the criteria for being recognized as contributions in accordance with GAAP, are included in the accompanied financial statements. For the years ended December 31, 2020 and 2019, $0 and $14,500, respectfully, was respectively, and reported as contributions in-kind on the accompanying statements of activities and consisted of donated labor for camp security, consulting, medical services, and independent impact evaluation. Functional expense allocation: The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities and in the statements of expenses by function and natural classification. Accordingly, certain costs have been allocated among the programs and supporting services benefited. The expenses that are allocated include salaries and related expenses and consultants and outside contractors based on estimated time and effort and all other expenses based on usage. The Organization classifies expenses, which are not directly related to a specific program, as Management and General expenses. - 10 -
SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS
2.
Fair Value Measurement of Investments The Financial Accounting Standards Board (FASB) requires enhanced disclosures about investments that are measured and reported at fair value. FASB establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1: Investments falling within Level 1 of the fair value hierarchy are valued using inputs based upon quoted prices in active markets for identical investments. Investments that are typically included in Level 1 are listed equity securities, publicly traded mutual funds, and exchange traded funds. Level 2: Investments falling within Level 2 of the fair value hierarchy are valued using significant observable inputs other than prices quoted in active markets. Examples of Level 2 inputs are model-driven prices, quoted prices for similar investments in active markets, and quoted prices for identical or similar investments in inactive markets. Investments that are typically included in Level 2 are municipal bonds, corporate bonds, and government debt securities Level 3: Investments falling within Level 3 of the fair value hierarchy are valued using methodology that is unobservable and significant to the fair value measurement. Level 3 inputs require significant management judgment or estimation. Investments that are typically included in this category are investments in limited partnerships, and investments in private companies or unregistered securities. The investment’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. During the years ended December 31, 2020 and 2019, all of the Organization’s investments were Level 1 investments.
- 11 -
SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS
3.
Cash and Cash Equivalents Cash and cash equivalents include cash that is reserved as a compensating balance for a line of credit as part of a lease stipulation as well as cash that is restricted for an endowment. As of December 31, 2020 and 2019, the components of cash and cash equivalents are as follows: Unrestricted cash Money market funds: Unrestricted Restricted for endowment Restricted for compensating balance Total
4.
2020
2019
$ 1,773,418
$ 1,751,558
791,112 15,516 64,801 $ 2,644,847
466,729 64,736 $ 2,283,023
Contributions Receivable Long term pledges are discounted as of December 31, 2020 and 2019. As of December 31, 2020 and 2019, pledges are expected to be realized in the following periods: 2020
5.
In one year or less Between one to two years Between two to three years Between three to four years
$
Less: unamortized discount
( $
2019
586,455 $ 1,143,289 164,000 158,673 20,000 139,000 20,000 770,455 1,460,962 73,543) ( 82,521) 696,912 $ 1,378,441
Property, Equipment and Intangibles Property, equipment and intangibles by major class consisted of the following at December 31, 2020 and 2019: 2020 2019 Depreciable: Furniture and fixtures $ 39,540 $ 39,540 Equipment & software 240,102 240,102 Leasehold improvements 777,959 777,959 Website design 143,029 95,678 Less: accumulated depreciation and amortization Non-Depreciable: Construction in Progress
( 977,408) ( 916,304) $ 223,222 $ 236,975 $
20,000
$
47,351
Depreciation and amortization expense amounted to $61,104 and $52,143 in 2020 and 2019, respectively. - 12 -
SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS 6.
Investments and Related Income The Organization’s investments are stated at fair values, based on quoted prices in active markets (all Level 1 Measurements), and consist of marketable securities and mutual funds. Fair values and unrealized appreciation/(depreciation) at December 31, 2020 and 2019 are summarized as follows: 2020 2019 Fair market values $ 383,800 $ 367,219 Less: Cost ( 362,835) ( 362,356) Unrealized appreciation/ (depreciation) $ 20,965 $ 4,863 The statements of activities summarize the investment return for the years ended December 31, 2020 and 2019, as follows: 2020 2019 Without Donor Restrictions: Interest/dividend income (*) $ 2,025 $ 5,595 Gains/(losses) 11,973 ( 721) With Donor Restrictions: Dividend income (*) 16,656 7,513 Gains/(losses) 20,591 Total investment income $ 51,245 $ 12,387 * Includes income earned from money market funds
7.
Endowment The Organization’s endowment is comprised of funds for future program support. Its endowment includes only donor-restricted funds. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. The Board of Directors of the Organization has interpreted the New York Prudent Management of Institutional Funds Act (NYPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Organization classifies as net assets with donor restrictions (a) the original value of gifts donated to the donor-restricted endowment, (b) the original value of subsequent gifts to the donor-restricted endowment, and (c) accumulations to the donor-restricted endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. When amounts are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence prescribed by NYPMIFA, the Organization reclassifies net assets with donor restrictions to net assets without donor restrictions. In accordance with NYPMIFA, the Organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donor-restricted endowment funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of the investments, (6) other resources of the Organization, and (7) the Organization’s investment policies. - 13 -
SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS 7.
Endowment (continued) Investment Return Objectives, Risk Parameters and Strategies. The Organization has adopted investment and spending policies, approved by the Board of Directors, 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, with acceptable levels of risk. Endowment assets are invested in a mix that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make an annual distribution, if appropriate, while growing the funds if possible. Therefore, the Organization expects its endowment assets, over time, to produce an average rate of return of approximately 1% 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 in order not to expose the fund to unacceptable levels of risk. Spending Policy. The donor restriction states that annual distributions from the investment account can be made to support the facilitator training course in Jerusalem. For the first five years, the aggregate distribution is not allowed to exceed the greater of $20,000 or 5% of the total fair market value of the account. After these five years have ended, the aggregate distribution can not exceed the greater of $25,000 or 7% of the total fair market value of the account. The Organization expects the current spending policy to allow its endowment funds to grow at a nominal average rate of 1% annually, which is consistent with the Organization’s objective to maintain the purchasing power of the endowment assets as well as to provide additional real growth through investment return. Changes and composition of endowment net assets for the years ended December 31, 2020 and 2019 are as follows: 2020 Donor restricted endowment, beginning of year $ 362,069 Investment return 37,247 Donor restricted endowment, end of year $ 399,316
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2019 $ 354,556 7,513 $ 362,069
SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS 8.
Commitments and Contingencies Office lease: The Organization leases office space at 370 Lexington Avenue, NY, NY, under a non-cancelable lease that was extended until March 31, 2022. In accordance with the lease agreement, the Organization has outstanding an irrevocable letter of credit with a bank in the amount of $63,512 as of December 31, 2020 and 2019. Camp lease: The Organization leases property located in Pleasant Lake, Otisfield, Maine, under a non-cancelable lease. In lieu of rent payments, the Lessor had agreed to accept up to $200,000 in leasehold improvements made by the Organization during the term of the lease. As of September 30, 2001, the Organization exceeded $200,000 in capital improvements and accordingly was not required to pay the $50,000 annual rent. During the 2002 fiscal year, the Lessor agreed to forgo receiving all future rent as long as the Organization continues to maintain and make capital improvements on the property. The Organization expects to continue making capital improvements on the property and therefore does not expect to make any future rent payments. Regional leases: The Organization has several short-term, non-cancelable leases for office space in the Middle East and South Asia. As of December 31, 2020, the minimum aggregate annual rentals for all existing long-term leases are as follows: Year ended December 31, 2021 2022 Total
$ 296,929 75,496 $ 372,425
Total rent expense charged to operations for the years ended December 31, 2020 and 2019 was $387,846 and $419,249, respectively. Insurance coverage: The Organization maintains its cash, cash equivalents, and investments in various accounts. The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to $250,000 per financial institution. The Securities Investor Protection Corporation insures cash and securities, including money market funds, up to $500,000 per financial institution. At times, the balances of the accounts may have exceeded the insured limits during the years ended December 31, 2020 and 2019. 9.
Pension Plan On February 1, 2002 the Organization adopted a salary reduction, 401(K) retirement plan that is funded by voluntary employee contributions and discretionary employer contributions. The plan was converted to a tax-deferred 403(b) plan in 2010. Organization contributions to the plan amounted to $13,850 and $15,308 for the years ended December 31, 2020 and 2019, respectively
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SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS
10.
Liquidity and Availability of Financial Assets The Organization regularly monitors liquidity required to meet its operating needs and other obligations as they come due. In the event of an unanticipated liquidity need, the Organization also could draw upon $250,000 of an available line of credit (as further discussed in Note 11). For purposes of analyzing resources available to meet general expenditures over a 12month period, the Organization considers all expenditures related to its ongoing activities to be general expenditures. Amounts available for general expenditures over a 12-month period include donor-restricted amounts that are available for ongoing programmatic and support expenditures. The following reflects the Organization’s financial assets, as of December 31, 2020 and 2019, reduced by amounts not available for general use within one year because of contractual, donor-imposed, or internal restrictions and designations: 2020 Financial assets Cash and cash equivalents Receivables, net Investments Total financial assets
11.
$
2,644,847 733,166 383,800 3,761,813
2019 $ 2,283,023 1,418,546 367,219 4,068,788
Less those unavailable for general expenditures within one year: Cash restricted for compensating balance ( 64,801) Cash restricted for endowment ( 15,516) Investments restricted for endowment ( 383,800) Receivables scheduled to be collected in more than one year ( 110,457)
(
64,736) 362,069)
(
235,152)
Financial assets available to meet cash needs for general expenditures within one year $
$ 3,406,831
3,187,239
(
Loans and Notes Payable The Organization has a $250,000 credit line with a financial institution that matures on June 30, 2021 and is secured by all present and future personal property and fixtures of the Organization. Interest is to be paid monthly on the outstanding balance based on two percent above the prime rate in effect. As of December 31, 2020 and 2019, the Organization had no outstanding loan balances.
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SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS 12.
COVID-19 During the year ended December 31, 2020, the Organization was negatively affected by COVID-19. This was due to lockdowns and social distancing. The effect was that the summer camp program and the annual fundraising gala had to be cancelled which resulted in a decrease in program service revenue and special event revenue from prior year levels. The effects on revenue were partially mitigated by cost cutting measures and conducting program activities virtually. The Organization expects the downturn to be temporary.
13.
Government Grants The Organization was awarded various government grants to support its programs. Total revenue, by grantor, during the years ended December 31, 2020 and 2019 is as follows: 2020 2019 US Department of State $ 82,813 $ 115,945 US Small Business Administration 597,333 Onondaga County 20,000 16,052 $ 700,146 $ 131,997
14.
Net Assets With Donor Restrictions As of December 31, 2020 and 2019, net assets with donor restrictions are available as follows: 2020 Subject to passage of time or purpose: Campership, Seeds and other Facilitator training Multinational programming Scholarships, internships mediation and education 2020 operations 2021 operations 2022 operations Endowment: Subject to spending policy and appropriation Total
$
308,938 14,694 910,515
2019 $
263,752 383 963,035
170,720 74,163 54,023 $ 1,533,053
202,603 111,494 92,366 70,638 $ 1,704,271
399,316 $ 1,932,369
362,069 $ 2,066,340
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SEEDS OF PEACE, INC. NOTES TO FINANCIAL STATEMENTS 15.
Revenue from Contracts with Customers All of the revenue derived from contracts with customers during 2020 and 2019 was fully earned in the same annual reporting period. Detail of revenue from contracts with customers during the years ended December 31, 2020 and 2019 is as follows: Camp fees and miscellaneous
16.
$
2020 4,538
2019 $ 1,293,978
Subsequent Events Management has evaluated subsequent events through June 9, 2021, the date the financial statements were available to be issued, to evaluate whether any such events warrant adjustment to any reported amounts or inclusion of additional disclosures. No such adjustments or disclosures were judged to be necessary.
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