GBGM Financial Statements by Global Ministries

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only)

Table of Contents Page INDEPENDENT AUDITOR’S REPORT ............................................................................

1-2

FINANCIAL STATEMENTS Statements of Financial Position................................................................................

Statements of Activities .............................................................................................

4-7

Statements of Cash Flows ..........................................................................................

Notes to Financial Statements....................................................................................

9 - 31

Independent Auditor’s Report

The Board of Directors of the General Board of Global Ministries of The United Methodist Church The Audit Committee of the General Board of Global Ministries of The United Methodist Church The Committee on Audit and Review of the General Council on Finance and Administration of The United Methodist Church We have audited the accompanying financial statements of the General Board of Global Ministries of The United Methodist Church (Parent Only) (a nonprofit organization), which comprise the statements of financial position as of December 31, 2012 and 2011, and the related statements of activities 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 from 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.

The Astoria • 3803 Bedford Avenue, Suite 103 • Nashville, Tennessee 37215 • phone: 615-320-5500 • fax: 615-329-9465 • www.crosslinpc.com An Independent Member of The BDO Seidman Alliance

General Board of Global Ministries of the United Methodist Church (Parent Only)

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 The General Board of Global Ministries of the United Methodist Church (Parent Only) as of December 31, 2012 and 2011, 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.

Nashville, Tennessee May 28, 2013

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Statements of Financial Position December 31, 2012 and 2011

2012

Assets Cash and cash equivalents Cash held in pooled cash management Receivables: Accrued World Service Fund allocation Due from General Council on Finance and Administration (GCFA) Due from GBGM-related entities Accrued investment income Bequests receivable Mortgage loans to churches and staff, net of allowance Other Prepaid expenses and other assets Investments Buildings and equipment, net Collins Health Plan for Missionaries Beneficial interest in Collins Forests Perpetual trusts held by others, including revolving loan funds Total assets

11,781,589 -

2011

34,518,039 34,242,741

9,069,363 8,344,268 240,746 1,358,008 818,685 889,193 587,515 681,357 138,667,700 712,350 1,922,379 37,789,000 40,423,437 $ 253,285,590

9,101,613 4,442,499 56,890 162,498 697,182 939,603 1,576,519 781,031 116,566,604 874,692 2,228,795 38,767,000 22,137,934 $ 267,093,640

Liabilities and Net Assets Liabilities: Accounts payable, accrued expenses and other liabilities Grants and projects payable Due to GBGM-related entities Annuities payable Due to Collins Pension Plan Assets held for related entities-pooled investments Assets held for others Total liabilities Net assets: Unrestricted: General operating fund Other undesignated Designated for programs Designated for missionaries retirement including pension & health benefit costs Total unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets

See accompanying notes to the financial statements. 3

16,733,292 4,547,165 258,799 658,581 26,856,934 21,832,642 70,887,413

8,542,426 5,268,565 241,355 708,370 28,874,810 34,242,741 21,773,749 99,652,016

20,404,195 2,667,953 13,476,464

9,941,495 1,996,803 12,214,746

6,831,200 43,379,812 29,722,977 109,295,388 182,398,177

6,214,534 30,367,578 28,304,785 108,769,261 167,441,624

$ 253,285,590

$ 267,093,640

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Statement of Activities Year Ended December 31, 2012

Unrestricted Operating revenue: World Service Fund: Allocation National Plan for Hispanic Ministries Substance Abuse and Related Violence Asian American Language Ministry Korean American Task Force Native American Awareness Sunday World Communion Offering Human Relations Day Advance Special Gifts: Support for persons in mission Other United Methodist Women appropriation United Methodist Committee on Relief appropriation United Methodist Development Fund appropriation Benefit Trust distribution Agency Group Insurance fund distribution Bequests Grants and other contributions Interest income on cash equivalents, mortgage loans and perpetual trusts Investment income, net of fees Collins Forests income distribution Service fees Missionary salary reimbursements Other

Total Net assets released from restrictions Total operating revenue (loss)

25,526,202 -

Temporarily Restricted

568,892 631,141 333,398 671,679 92,791 347,665 374,658

924,114 677,772 2,622,543 1,077,743 1,250,199 489,453 696,680 480,052

4,940,137 5,511,872 5,100 574,171 141,768

516,489 1,399,098 3,019,049 348,789 1,510,119 844,724

Permanently Restricted

Total

25,526,202 568,892 631,141 333,398 671,679 92,791 347,665 374,658

4,940,137 6,435,986 682,872 2,622,543 1,077,743 1,250,199 489,453 1,270,851 621,820

98,654 660,894 -

7,941 -

623,084 2,059,992 3,019,049 348,789 1,510,119 844,724

41,383,026

14,952,820

7,941

56,343,787

16,623,397

(16,623,397)

58,006,423

(1,670,577)

7,941

56,343,787

See accompanying notes to the financial statements. 4

(Continued)

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Statement of Activities Year Ended December 31, 2012

Unrestricted Operating expenses: Program Services: Mission and Evangelism: Mission and evangelism Mission theology and new initiatives Justice and discipleship Mission relationships Missionary services Board-wide mission program expenses Advance special projects Distribution of designated funds Total program services

4,287,268 3,238,568 1,634,506 1,839,576 14,420,534 4,619,683 5,683,034 5,425,686 41,148,855

Temporarily Restricted

Permanently Restricted

Total

4,287,268 3,238,568 1,634,506 1,839,576 14,420,534 4,619,683 5,683,034 5,425,686 41,148,855

Supporting services: Management and general Fund-raising Total supporting services

8,033,711 2,637,257 10,670,968

Total operating expenses

51,819,823

7,941

4,523,964

9,537,226 1,194,094 (978,000) (688,540) 302,092 1,065,717

Increase (decrease) in net assets from operations

6,186,600

(1,670,577)

6,448,457 (688,540) 1,065,717

3,088,769 -

1,194,094 (978,000) 302,092 -

6,825,634

3,088,769

518,186

10,432,589

Increase in net assets

13,012,234

1,418,192

526,127

14,956,553

Net assets at beginning of year

30,367,578

28,304,785

108,769,261

167,441,624

29,722,977

$ 109,295,388

$ 182,398,177

Nonoperating activities: Net appreciation in fair value of investments Net appreciation in fair value of perpetual trusts Collins Forests Collins Pension and Health Benefits Plan Endowment contributions, including perpetual trusts Other income Total nonoperating activities

Net assets at end of year

43,379,812

See accompanying notes to the financial statements. 5

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Statement of Activities Year Ended December 31, 2011

Total Net assets released from restrictions Total operating revenue (loss)

25,929,320 -

Temporarily Restricted

596,682 661,971 349,683 704,489 80,815 332,875 362,556

Permanently Restricted

Total

25,929,320 596,682 661,971 349,683 704,489 80,815 332,875 362,556

590,062 752,354 3,388,016 879,119 524,620 489,453 277,865 558,036

4,458,038 3,473,307 98,214 77,943

4,458,038 4,063,369 752,354 3,388,016 879,119 524,620 489,453 376,079 635,979

315,993 1,181,641 2,616,964 358,142 1,683,045 573,799

105,811 545,587 -

421,804 1,727,228 2,616,964 358,142 1,683,045 573,799

40,118,429

11,847,971

51,966,400

15,535,956

(15,535,956)

55,654,385

(3,687,985)

51,966,400

See accompanying notes to the financial statements. 6

(Continued)

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Statement of Activities Year Ended December 31, 2011

Unrestricted Operating expenses: Program Services: Mission and Evangelism: Mission and evangelism Justice and discipleship Mission relationships Missionary services Board-wide mission program expenses Advance special projects Distribution of designated funds Total program services

4,447,897 4,204,218 2,024,081 12,660,246 5,231,371 3,573,126 6,831,070 38,972,009

Temporarily Restricted

Permanently Restricted

Total

4,447,897 4,204,218 2,024,081 12,660,246 5,231,371 3,573,126 6,831,070 38,972,009

Supporting services: Management and general Fund-raising Total supporting services

7,929,072 2,641,811 10,570,883

Total operating expenses

49,542,892

2,423,508

Increase (decrease) in net assets from operations

6,111,493

(3,687,985)

(1,207,165) (12,713,720) 9,000

(1,045,877) -

(635,275) 470,605

(2,253,042) (635,275) (12,713,720) 479,605

(13,911,885)

(1,045,877)

(164,670)

(15,122,432)

Decrease in net assets

(7,800,392)

(4,733,862)

(164,670)

(12,698,924)

Net assets at beginning of year

38,167,970

33,038,647

108,933,931

180,140,548

28,304,785

$ 108,769,261

$ 167,441,624

Nonoperating activities: Net depreciation in fair value of investments Net depreciation in fair value of perpetual trusts Collins Pension and Health Benefits Plan Endowment contributions, including perpetual trusts Total nonoperating activities

Net assets at end of year

30,367,578

See accompanying notes to the financial statements. 7

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Statement of Cash Flows Years Ended December 31, 2012 and 2011

2012 Cash flows from operating activities: Increase (decrease) in net assets Adjustments to reconcile increase (decrease) in net assets to net cash (used in) provided by operating activities: Depreciation Decrease in value of Collins Forest Net (appreciation) depreciation in fair value of investments Net (appreciation) depreciation in fair value of perpetual trusts Net appreciation in fair value of investments held for others Increase in perpetual trusts held by others, from contributions Contributions and investment return restricted for long-term investment Actuarial loss on annuity obligations (Increase) decrease in receivables Decrease (increase) in prepaid expenses and other assets Decrease in Collins Health Plan for Missionaries Increase (decrease) in accounts payable, accrued expenses, and other liabilities Change in due from GBGM-related entities Change in due to GBGM-related entities (Decrease) increase in due to Collins Pension and Health Benefits Trust Decrease in grants and projects payable Increase in assets held for others Net cash (used in) provided by operating activities

Cash flows from investing activities: Proceeds from sale of investments Purchases of investments Purchases of equipment Principal collections on mortgages Net cash (used in) provided by investing activities Cash flows from financing activities: Payment of annuity obligations Contributions and investment return restricted for long-term investment Net cash provided by financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year $

Cash and cash equivalents at end of year

See accompanying notes to the financial statements. 8

14,956,553

2011 $

(12,698,924)

328,455 978,000 (9,537,226) (1,194,094) (1,314,801) (17,091,409) (302,092) 115,984 (4,197,528) 99,674 306,416 8,190,866 (183,856) 17,444 (2,017,876) (721,400) 58,893 (11,507,997)

327,121 2,253,042 635,275 (586,438) (11,279) (470,605) 25,741 218,739 (86,952) 810,758 (500,370) 829,265 128,797 10,102,962 (575,051) 716,105 1,118,186

190,998,325 (202,247,394) (166,113) 50,410 (11,364,772)

79,887,169 (74,812,152) (370,324) 1,744,153 6,448,846

(165,773) 302,092 136,319

(131,178) 470,605 339,427

(22,736,450)

7,906,459

34,518,039

26,611,580

11,781,589

34,518,039

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

(1)

Nature of Organization The General Board of Global Ministries of The United Methodist Church (“GBGM”) is a taxexempt, not-for-profit organization incorporated in New York which functions through its program units described as follows: Mission and Evangelism This program area carries the responsibilities within the General Board of Global Ministries as it seeks to enhance the involvement of all United Methodists in Christian mission and develop ways to facilitate this mission involvement and collaborates in realizing the radical will of God for the transformation of the world. It develops mission programming around the following areas: Identification and analysis of the missional concerns that shape the conditions under which the church is called to engage in God’s Mission; Providing opportunities for United Methodists to understand the global mission of The United Methodist Church and for personal and corporate witness through involvement in and support of this mission; Working with ecumenical agencies in fulfilling mission education responsibilities; and Providing opportunities for United Methodists to gather and witness as a global church. Mission Theology and New Initiatives This program area provides strategic, long-term vision and leadership for the mission of the agency. The unit provides mission theology expertise to/for the Board projects, develops and creates programs geared to the mission education of United Methodist and other constituents, is also responsible for special program initiatives which are not part of established portfolios in any department, such as global migration, microfinance initiative, relating with the Large Churches Mission Connection, and the planning and expansion of the agency’s regional presence. It is also responsible for the supervision and relationships with the General Conference mandated plans assigned to the General Board of Global Ministries: the Special Program on Substance Abuse and Related Violence (“SPSARV”), the National Plan for Hispanic/Latino Ministry (“NPHLM”), the Korean Ministry Plan (“KMP”), the Asian American Language Ministry (“AALM”), and the Plan for Pacific Islander Ministry (“PPIM”). Justice and Discipleship This program develops mission programming around the following areas: Resourcing leadership training programs and administering scholarships; Congregational development, particularly among racial ethnic congregations and congregations in transitional communities/ neighborhoods; Initiating and developing programs and resources that will encourage persons of particular cultures to become receivers and bearers of the gospel across boundaries and to live faithfully within a multicultural world; Church and community development; Community-based programs in areas such as agricultural mission, communications, student and youth ministries;

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Development of strong local and regional organizations for community development; Fostering cooperative patterns of ministry, including rural and urban ministries; Resource sharing for projects and programsâ&#x20AC;&#x201D;especially those serving women, children, and youth of partner churches and ecumenical bodies; Providing information and assisting in developing action and advocacy for global justice, peace, and freedom through working cooperatively with other agencies of the Church; other denominations and ecumenical, interfaith, and secular coalitions; and Initiating and developing special programs and resources through which children and youth may understand the mission of the Church. Mission Relationships This program develops mission programming around the following areas: Congregational and Community Development among people who have not heard or heeded the gospel; Strategic new mission initiatives where United Methodism and/or cooperative church relationships do not exist; Identifying, preparing, training and empowering persons for leadership in the church and community so that vital mission-oriented congregations may be developed; Working with denominational, ecumenical, and secular coalitions, as appropriate, to develop new patterns of joint mission; Development of and sustaining cooperative relationships and mission partnerships that include sharing of opportunities and resources, networking and collaboration; Developing missional relationships in countries where The United Methodist Church has no commitments; Liaising with each central conference and its conferences, both annual and provisional, and each affiliated autonomous Methodist church or united church; Fostering interaction of churches and ecumenical groups for the purpose of mutuality in the definition and implementation of Christian mission and international concerns; and Relating to persons in mission of partner churches. Missionary Services The program develops mission programming around the following areas: Mission volunteer opportunities for short-term assignments, including promoting and interpreting the need for volunteers with a variety of skills and abilities; and Promoting opportunities for mission service related to the General Board of Global Ministries throughout the constituencies of the Church, through the recruitment, selection, preparation, commissioning, and assignment of all categories of mission personnel, with necessary supervision and support of those persons in assignments in the widest variety of church and ecumenical partners in the United States and around the globe. In addition, the following describes other functional areas in which GBGM conducts additional program activities not assigned to a specific program unit: Board-wide Mission Programs Board-wide programs offer each section of GBGM unique opportunities to provide global program support and resourcing in media production, financial development in support of missions, grants to emerging mission initiatives, releases to General Conference designated programs, and mission interpretation through New World Outlook.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Advance Special Gifts These are expenses associated with numerous projects funded through the Advance for Christ and His Church. Distributions of Designated Funds These are designated and temporarily restricted fund balance expenditures. (2)

Summary of Significant Accounting Policies (a) Basis of Presentation The financial statements of GBGM are prepared on the accrual basis of accounting. GBGM considers the net change in fair value of financial instruments, fair value adjustments of certain alternative investment holdings, endowment contributions, perpetual trust contributions and change in value, change in pension obligations, and property sale gains or losses to be nonoperating activities. (b) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, and short-term investments with original maturity dates of 90 days or less that are readily convertible to known amounts of cash, except for short-term investments held by the GBGMâ&#x20AC;&#x2122;s investment manager, as part of a long-term investment strategy and cash held in the pooled cash management program held for related entities as described in Note 3. Cash held by GBGM in the pooled cash management program totaled $29,568,483 at December 31, 2011, and was included in cash and cash equivalents. In November 2012, the pooled cash management program was discontinued and GBGM transferred their funds to other cash and investment accounts. (c) Investments Securities purchased for investments are recorded at cost of acquisition and those received as gifts are recorded at fair value, as determined by quoted market prices or other valuation methods.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

(d) Buildings and Equipment Buildings and equipment are recorded at the cost of acquisition, if purchased, or at fair value at the date of gift. Buildings, building improvements, and equipment are depreciated on a straight-line basis over their estimated useful lives of 30, 20, and 5 years, respectively. Leasehold improvements are amortized over the life of the asset or the remaining lease term, whichever is shorter. GBGM has granted indefinite use of certain properties (land and buildings) to related church organizations under leasing or other arrangements and, accordingly, these properties are not reflected in the accompanying financial statements. These arrangements may call for nominal payments and are typically renewed so long as the grantee continues to carry out the stated program. The carrying value of such properties was reflected as a program expense at the time the arrangements for indefinite use of the property was made. Repair and maintenance costs incurred by GBGM for such properties are recorded as program expenses in the accompanying financial statements. (e) Bequests and Other Contributions Contributions, which include unconditional promises to give, are recognized as revenue when received. Bequest income is recorded when the will is declared valid. Contributions received on behalf of a specified unaffiliated beneficiary are recorded as a liability to the specified beneficiary concurrent with recognition of the assets received from the donor. GBGM is named as beneficiary of several perpetual trusts, which are administered by third parties. The perpetual trusts are reported in the permanently restricted net asset class and the reported value is measured by the fair value of the trust assets as provided by trustees. (f) Net Assets Unrestricted net assets represent resources over which the board of directors has full discretion with respect to use. Temporarily restricted net assets represent expendable resources which have been time or purpose restricted by the donor. Permanently restricted net assets represent contributions and other gifts which require that the corpus be maintained intact and that only the income be used as specified by the donor.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Revenues are reported as increases in unrestricted net assets unless their use is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. New York State law (substantially in conformity with the Uniform Management of Institutional Funds Act) authorizes expenditures of appreciation (both realized and unrealized) in the value of endowment funds subject to a standard of business care and prudence. Gains and losses on investments are reported as increases or decreases in unrestricted net assets unless their use is restricted by donors or State law. When a donor restriction expires, that is, when a stipulated time restriction ends or the purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying statements of activities as net assets released from restrictions. (g) Federal Income Tax Exemption GBGM is covered under General Council on Finance and Administrationâ&#x20AC;&#x2122;s (â&#x20AC;&#x153;GCFAâ&#x20AC;?) group determination letter from the Internal Revenue Service indicating that it is a nonprofit corporation and, except for taxes pertaining to unrelated business income, is exempt from Federal and State income taxes under Section 501(c)(3) of the Internal Revenue Code. GBGM had no significant unrelated business income during the years ended December 31, 2012 and 2011. GBGM accounts for the effect of any uncertain tax positions based on a more likely than not threshold to the recognition of the tax positions being sustained based on the technical merits of the position under examination by the applicable taxing authority. If a tax position or positions are deemed to result in uncertainties of those positions, the unrecognized tax benefit is estimated based on a cumulative probability assessment that aggregates the estimated tax liability for all uncertain tax positions. Tax positions for GBGM include, but are not limited to, the tax-exempt status and determination of whether income is subject to unrelated business income tax; however, GBGM has determined that such tax positions do not result in an uncertainty requiring recognition. (h) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the revenue and expenses during the reporting period. The more significant areas include valuation of financial instruments, actuarial computations regarding various benefit obligations and the valuation of the Collins Forests. Actual results could differ from those estimates.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

(i) Financial Instruments Assets recorded at fair value in the statements of financial position are categorized based on the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by ASC 820, Fair Value Measurements and Disclosures, are as follows: Level 1 - Values are unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Level 2 - Inputs include quoted prices for similar assets in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads and yield curves. Level 3 - Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect GBGM’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. (3)

Related Parties Funding for GBGM’s operations is principally received from other units of The United Methodist Church (the “Church”). Amounts received from the General Funds of The United Methodist Church are allocated to GBGM based on a four-year budget developed from projections of expected program costs. The main allocation received by GBGM is through the World Service Fund. The World Service Fund provides the basic financial resources for the Church. The amount of the annual World Service budget, the method by which it shall be apportioned to the annual conferences, and the plan of distribution of World Service receipts among the World Service agencies are approved at each quadrennial session of the General Conference. The Advance for Christ and His Church is an official program of the Church through which support may be designated for projects approved by the Advance Committee of the General Board of Global Ministries of The United Methodist Church (“Advance Committee”). An Advance Special Gift is a contribution made by an individual, local church, organization, district, or conference to a project authorized by the Advance Committee. Advance Special Gifts and World Service offerings are passed to GBGM through GCFA from the General Funds of The United Methodist Church. GBGM also receives appropriations from United Methodist Women (“UMW”), the United Methodist Committee on Relief (“UMCOR”), and The United Methodist Development Fund (“UMDF”), for support of certain programs and administrative and management services. These appropriations have not been eliminated in these Parent Only financial statements.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Service fees include contract services revenue from Collins Pension Plan for Missionaries Trust. Other service fees from related parties consist mainly of sales of supplies to other GBGM-related entities, principally the United Methodist Women and UMCOR. Amounts received from other United Methodist units accounted for approximately 79% and 82% of GBGM’s total operating revenue in 2012 and 2011, respectively. GBGM’s continued existence at the present level is dependent upon the Church’s future financial support. The Church’s financial support of GBGM is dependent upon contributions from its congregations (i.e., congregational participation in the appointment covenant). Cash held in the pooled cash management program at December 31, 2011 represents a pooled cash management program that was administered by GBGM for GBGM-related entities and other Church agencies. At December 31, 2011, the balances held by GBGM in the pooled cash management program for related entities totaled $34,242,741. In November 2012, the pooled cash management program was discontinued and GBGM transferred these funds back to the related entities. In addition, GBGM transferred their own funds from the pooled cash management account to other cash and investment accounts. (4)

Investments At December 31, 2012 and 2011, the cost and fair value of investments are as follows:

Cost Short-term securities U.S. Government securities Multiple Asset Fund (GBOPHB) Corporate bonds Bond mutual funds Other bonds Equities Total investments

2012 Fair Value

2011 Cost

Fair Value

$ 1,417,032 11,021

$ 1,417,032 10,858

$ 3,974,715 16,963,504

$ 3,974,715 17,624,400

127,339,315 555,531 1,427,046 804,191

134,642,026 555,531 1,497,764 544,489

9,854,279 12,022,590 1,814,315 67,118,559

10,476,124 12,511,299 1,912,367 70,067,699

$131,554,136

$138,667,700

$111,747,962

$116,566,604

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Investment return (loss) for the years ended December 31, 2012 and 2011 consisted of the following: 2012 Interest and dividends

$ 2,395,960

$ 2,457,188

7,047,080

3,216,280

2,490,146

(5,469,322)

9,537,226

(2,253,042)

Net appreciation (depreciation) in fair value of investments: Realized gains on investments Increase (decrease) in accumulated unrealized gains on investments Net appreciation (depreciation) in fair value of investments Total return on investments

11,933,186

Investment management expenses

(

Return (loss) on investments, net (5)

2011

335,968)

$ 11,597,218

204,146 ( 729,960) $( 525,814)

Mortgage Loans to Churches and Staff Mortgage loans to churches and staff consist of the following at December 31, 2012 and 2011: 2012 Church mortgage loans Staff mortgage loans Allowance for doubtful loans Total mortgage loans, net

(6)

2011

$ 1,756,722 115,471 1,872,193 ( 983,000)

$ 1,807,132 115,471 1,922,603 ( 983,000)

$ 889,193

$ 939,603

Beneficial Interest in Collins Forests GBGM owns a beneficial interest in two timberlands in the Collins Forests, which are working forests of old growth timber in California. GBGM also has a beneficial interest in a Collins Trust which owns a timberland in Pennsylvania. GBGM receives annual income from its interest in the California timberlands and has an irrevocable right to a percentage of the annual income from the trust which holds the Pennsylvania Forest. GBGM has recognized both its interest in the California timberlands and its beneficial interest in the Pennsylvania timberland as permanently restricted net assets. The value of $37,789,000 and $38,767,000 as of December 31, 2012 and 2011, respectively, represents the discounted present value of the

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

estimated future cash flows (over 30 years) from the Forests. The fair value as of 2012 and 2011 has been computed from estimates provided by management of the Forests during 2011 and 2010, (Level 3 inputs). The economic decline in the United States during recent years have significantly impacted the lumber and building products industry resulting in revenue streams that are less than earlier projections. Management of the Forests and of GBGM believe the economic conditions are temporary in nature and that over the 30-year period, revenues will approximate the original projections. There was a write down in fair value of $978,000 in 2012. There was no write down of fair value in 2011. This is supported by ASC 820, Fair Value Measurements and Disclosures, which provides guidelines regarding fair value considerations during depressed economic events. The income from the Forests is used to satisfy the actuarially determined funding requirements for the Collins Pension Plan. In addition, the income from the Forests supports contributions to the Collins Health Benefits Plan for post-retirement benefits and pays benefits to qualifying missionaries. The Forests’ income also supplements medical costs of active missionaries. (7)

Employee Benefits (a) Retirement Benefits Full-time laypersons and clergy employed by GBGM participate in the Retirement Plan for General Agencies (“RPGA”). This defined contribution plan is administered by the General Board of Pension and Health Benefits of The United Methodist Church (“GBOPHB”). GBGM makes semi-monthly contributions to each eligible employee’s account held by GBOPHB based on 8% of annual employee compensation. Additionally, GBGM matches up to 2% of each employee’s contribution to their United Methodist Personal Investment Plan (“UMPIP”). Total contributions made by GBGM for both components during 2012 and 2011 were $975,802 and $973,731, respectively. (b) Collins Pension Plan The missionaries employed by GBGM are covered by the Collins Pension Plan for Missionaries, a defined benefit plan. Benefits under the plan are based on the missionaries’ years of service. The annual benefit level (per year of pension credit service) in both 2012 and 2011 was $495. Each missionary contributes $3.50 per month through a payroll deduction into the plan. GBGM contributes such amounts as are necessary on an actuarial basis to provide the plan with sufficient assets to meet the plan’s benefit obligation.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

The following sets forth financial information about the plan as of December 31, 2012 and 2011: 2012

2011

Benefit obligation at December 31 Fair value of plan assets at December 31

$ 106,956,552 80,099,618

$ 102,637,508 73,762,698

Unfunded obligation

$( 26,856,934)

$( 28,874,810)

4.50% 8.00%

5.50% 8.00%

4.50% 8.00%

5.50% 8.00%

$2,605,546 9,901,590 2,400,000

$11,995,507 9,856,675 1,800,000

Benefit obligation weighted average assumptions: Discount rate Expected return on plan assets Benefit cost weighted average assumptions: Discount rate Expected return on plan assets Benefit cost Benefits paid Employer contributions Plan Assets

The following table presents the fair value of the plan’s assets at December 31, 2012 and 2011: 2012 Cash Multiple Asset Fund - GBOPHB Receivables and payables Total plan assets

2011

$ 235,335 78,056,763 1,807,520

$ 2,629,590 71,098,212 34,896

$80,099,618

$73,762,698

The plan’s investments are recorded at fair value using primarily Level 1 inputs, except for the Multiple Asset Fund – GBOPHB, which is recorded at fair value using primarily Level 2 inputs. The General Board of Pension and Health Benefits of The United Methodist Church (“GBOPHB”) Multiple Asset Fund’s investment objective is to maximize long-term investment returns, including current income and capital appreciation, while reducing shortterm risk by investing in a broad mix of investments. The fund is a composite of U.S. equity funds (44%), fixed income funds (25%), international equity funds (20%), inflation protection funds (10%), and multiple asset fund cash (1%), which are Level 2 inputs.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

The plan’s assets are maintained in the Collins Pension Plan for Missionaries Trust (the “Trust”) administered by GBGM. The following table presents information with respect to plan assets:

Target asset Allocation

Asset Category______ Equities Fixed income

65% 35%

Actual Allocation at December 31, 2012 2011 65% 35%

65% 35%

Based on historically indexed data, the assumed long-term rates of return for 2012 are: equities 8.0%, fixed income 6.0%, which produces an expected composite rate of return of 7.2%. GBGM has an Investment Committee comprised of the board of directors, executive management, and external consultants with financial and investment expertise. The Investment Committee meets on a quarterly basis to review investment performance and asset allocation. Managers are evaluated against prevalent market indices and changes are made when deemed necessary. Future Benefit Payments Estimated future benefit payments reflecting expected future service for the next five fiscal years and thereafter through 2022 are as follows: December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 Thereafter through 2022

$10,417,930 9,990,824 9,527,570 9,156,150 8,704,905 37,659,714

A contribution will likely be made to the Collins Pension Plan in 2013. The exact amount will be determined at a later date.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

(8)

Health, Life, and Other Employee Benefits GBGM provides health, life, and other employee benefits for its active employees and health, dental, and life benefits to retirees through a group plan which qualifies for treatment as a multiemployer plan. Substantially all retired employees are eligible to participate in the plan if they have attained normal retirement age while in the employ of GBGM. The General Agencies of The United Methodist Church Benefit Plan provides medical, dental, life, and long- and short-term disability defined benefits to participants of the general agencies. The plan’s unfunded accumulated postretirement benefit obligation (“APBO”) was approximately $148,000,000 and $144,000,000 and the plan’s unfunded expected postretirement benefit obligation (“EPBO”) was approximately $195,000,000 and $188,000,000 as of December 31, 2012 and 2011, respectively. GBOPHB transferred certain excess pension assets to the General Agency Benefit Trust (the “Benefit Trust”) established by the 1996 General Conference as of December 31, 1996. Annually, the Benefit Trust allows a stated percentage, 6% and 4% for 2012 and 2011, respectively, of the fair market value of Benefit Trust assets at year-end to be available for distribution in the subsequent year in order to reimburse the participating agencies, through GCFA, for their funding of active and retiree health employee benefits. The fair value of the Benefit Trust’s assets (not plan assets) was approximately $148,945,000 and $138,884,000 as of December 31, 2012 and 2011, respectively. The total amount available for reimbursement in 2012 and 2011 was $8,333,065 and $5,842,051, respectively, of which GBGM’s share, net of retiree health benefits was $1,250,199 and $524,620, respectively. All of GBGM’s active employees are covered by the plan. The cost of the benefits is recognized as expense as premiums are paid. The total cost of benefits for active employees was $1,248,751 and $1,178,483 in 2012 and 2011, respectively, exclusive of reimbursement from the Benefit Trust. Collins Retiree Medical/Dental Reimbursement Plan GBGM also sponsors the Collins Retiree Medical/Dental Reimbursement Plan, a noncontributory postretirement welfare plan, which covers all retired missionaries, with a minimum service requirement of 15 years, for their respective lifetimes. Plan benefits include reimbursements for medical and dental care, medically related travel, Medicare premiums, and expenses for special medical care assistance. The level of benefits is based on the employees’ years of service: 50% reimbursement for retirees with 15 to 24 years and 75% for retirees with 25 years and over. Medicare premiums are reimbursed at 50% for retirees with 15 to 24 years and 75% for retirees with 25 years and over.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

The following sets forth financial information about the Collins Retiree Medical/Dental Reimbursement Plan as of December 31, 2012 and 2011: 2012 Benefit obligation at December 31 Fair value of plan assets at December 31 Funded status Benefit obligation weighted average assumptions: Discount rate Expected return on plan assets Benefit cost weighted average assumptions: Discount rate Expected return on plan assets Benefit cost Benefits paid Employer contributions

2011

$(27,912,154) 29,834,533

$(25,557,908) 27,786,703

$ 1,922,379

$ 2,228,795

4.50% 8.00%

5.00% 8.00%

4.50% 8.00%

5.00% 8.00%

$( 385,893) 1,578,654 -

$(1,197,811) 1,601,420 -

For measurement purposes, the assumed annual rates of increase in the per capita costs were as follows in 2012: Medical

6.5% in 2013, decreasing by 0.5% per year to ultimate rate of 5.0% in 2016 and all future years.

Drug

5.5% in 2013 and all future years.

Medicare Part B

5.0% in 2013 and all future years.

Dental

1.0% in 2013 and all future years.

Nursing home care

6.0% in 2013 and all future years.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Plan Assets The following table presents the fair value of the plan’s assets at December 31, 2012 and 2011:

Cash and cash equivalents Domestic bond fund Domestic stock fund International stocks Receivables and payables Accrued income Total plan assets

2012

2011

$ 382,165 12,277,673 11,803,179 4,575,134 54,071 742,311

$ 2,207,269 11,443,750 10,228,173 3,913,552 ( 6,041) -

$29,834,533

$ 27,786,703

The plan’s cash and cash equivalents, receivables and payables, and accrued income are recorded at fair value using primarily Level 1 inputs. The plan’s domestic bond fund, domestic stock fund, and international stocks are recorded at fair value using primarily Level 2 inputs. The plan assets are maintained in the Collins Health Benefit Trust (the “Health Trust”) administered by GBGM. GBGM contributes such amounts as are necessary to provide the plan with sufficient assets to meet the plan’s current benefit obligation. The following table presents information with respect to plan assets:

Target asset Allocation

Asset Category______ Equities Fixed income

65% 35%

Actual Allocation at December 31, 2012 2011 57% 43%

55% 46%

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Future Benefit Payments Estimated future benefit payments reflecting expected future service for the next five fiscal years and thereafter through 2022 are as follows: Benefits Benefits not reflecting reflecting Medicare subsidy Medicare subsidy December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 Thereafter through 2022

$1,907,000 1,888,000 1,843,000 1,816,000 1,772,000 8,193,000

$2,128,000 2,107,000 2,059,000 2,028,000 1,980,000 9,165,000

A contribution may be made to the Collins Health Benefit Trust in 2013. The exact amount will be determined at a later date. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was signed into law in December 2003. The Act included a prescription drug benefit under Medicare (Medicare Part D), as well as a federal subsidy to sponsors of retiree health plans that provide a benefit at least actuarially equivalent to Medicare Part D. Accordingly, in 2012 the postretirement benefit obligation and benefit cost were reduced by $3,525,000 and $439,000, respectively, and in 2011 the postretirement benefit obligation and benefit cost were reduced by $3,325,000 and $397,000, respectively. (9)

Distributions from Agency Group Insurance Plan GBGM receives a distribution of funds from the Agency Group Insurance Plan (“AGI”) to offset a portion of the costs of its employee health insurance plan. AGI is a self-insured medical benefits plan which is funded by participating organizations. This distribution was $489,453 in both 2012 and 2011. The final year of this distribution was 2012. The amount of each participating organization’s distribution is based upon the organization’s proportionate share of the base year health insurance premium cost.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

(10)

Commitments GBGM has a noncancelable operating lease for office space which expires in 2013. The annual rental is adjusted each year upon the landlord’s analysis of carrying, maintenance, depreciation, and capital improvement fund charges for the building. The future minimum rental commitments under this lease are as follows: Amount Year Ended December 31: 2013

$2,283,909

GBGM shares the office space with the United Methodist Women, UMCOR and other related Methodist agencies. The rental payments are allocated to each agency based on square feet utilization. Total rent expense incurred by GBGM under the lease amounted to approximately $2,213,092 and $2,477,000 in 2012 and 2011, respectively. This includes approximately $769,000 and $724,000 in 2012 and 2011, respectively, paid by the other related Methodist agencies. (11)

Assets Held for Others Assets held for others consist of amounts held for the following at December 31, 2012 and 2011:

Foundation for Theological Education in Southeast Asia (the “Foundation”) Education Endowment Fund Beneficiary organizations designated by donors Total assets held for others

2012

2011

$14,058,217 2,096,235 5,678,190

$13,105,967 2,165,265 6,502,517

$21,832,642

$21,773,749

The investments held by GBGM for the Foundation are maintained in the Swope Wendell Fund, the return from which was designated by the donor for programs to improve Christian theological education in Southeast Asia and China. All the investment return from the Swope Wendell Fund is given to the Foundation. The Educational Endowment Fund represents investments held by GBGM to assist missionaries in their children’s education. Missionaries with children under 18 years of age automatically contribute a fixed percentage of their salary which is combined with a matching contribution from GBGM. The missionaries’ vested interest in the Fund is distributed to them upon their termination or nonenrollement of their children.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

(12)

Description of Net Assets Unrestricted net assets at December 31, 2012 and 2011 include amounts board designated for programs as follows: 2012 Annuity fund Missionary work Field projects Property Plant and equipment Humanitarian relief Special program emphasis Advance Office Economic development VIM - Haiti Mission education Women, children, and youth

Total board designated unrestricted net assets

2011

211,690 2,795,453 3,453,429 4,007,011 75,049 189,657 1,023,486 800,000 44,076 434,539 434,413 7,661

$ 202,109 845,453 3,392,844 4,127,755 75,049 188,657 970,183 1,300,000 37,415 541,400 526,220 7,661

$13,476,464

$12,214,746

Temporarily restricted net assets at December 31, 2012 and 2011 are available for the following purposes: 2012 2011 Advance special projects China programs Projects for individuals and institutions Scholarships and leadership training Restricted through General Conference Field projects Missionary support Other Total temporarily restricted net assets

$ 1,593,831 1,943,346 957,471 6,332,627 6,025,907 12,087,638 653,888 128,269

$ 1,733,806 1,688,688 948,536 6,435,560 5,792,632 11,102,311 492,884 110,368

$29,722,977

$28,304,785

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Permanently restricted net assets at December 31, 2012 and 2011 represent contributions restricted to investment in perpetuity. Income from these funds is expendable to support the following purposes:

Collins Forests Revolving loan fund - available for loans for restricted purposes Permanent funds - income unrestricted Permanent funds - income donor restricted for the following: Advance special projects China programs Field projects Scholarships Missionary support Projects for individuals and institutions Pensions Total permanently restricted net assets (13)

2012

2011

$ 37,789,000

$ 38,767,000

17,632,168 25,344,169

17,493,976 24,488,436

1,647,781 1,173,185 15,622,560 4,931,918 3,953,314 817,827 383,466

1,574,085 1,181,019 15,415,701 4,820,142 3,738,282 907,154 383,466

$109,295,388

$108,769,261

Endowment GBGMâ&#x20AC;&#x2122;s endowment consists of approximately 1,400 individual funds established for a variety of purposes. Its endowment includes only donor-restricted endowment funds. As required by GAAP, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Interpretation of Relevant Law The Board of Directors of GBGM has interpreted the applicable state law as requiring the preservation 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, GBGM 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.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Changes in Endowment Net Assets

Endowment net assets, January 1, 2011 Investment return (loss): Investment income Net depreciation (realized and unrealized) Total investment return (loss) Contributions and transfers Appropriation of endowment assets for expenditure Endowment net assets, December 31, 2011 Investment return: Investment income Net appreciation (realized and unrealized) Total investment return Contributions Appropriation of endowment assets for expenditure Endowment net assets, December 31, 2012

Unrestricted

Temporarily Restricted

Permanently Restricted

Total

$ 6,596,335

$ 16,213,559

$ 52,614,171

$ 75,424,065

1,170,570

545,569

654,829

2,370,968

635,275)

( 2,111,109)

( 429,957) 740,613

( 1,045,877) (

(

500,308) -

259,859

470,605

(1,728,703)

( 3,876,665)

5,608,245

11,836,586

52,449,501

69,894,332

848,920

660,894

639,390

2,149,204

1,314,652

3,088,769

1,194,094

5,597,515

2,163,572

3,749,663

1,833,484

7,746,719

302,092

(

19,554

(1,213,218) $ 6,558,599

( 2,239,633) $ 13,346,616

(

654,829)

639,390)

$ 53,945,687

( 6,260,197)

( 4,092,241) $ 73,850,902

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Funds with Deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or the applicable state law requires GBGM to retain as a fund of perpetual duration. There were no deficiencies as of December 31, 2012 and 2011. Return Objectives and Risk Parameters GBGM has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that GBGM must hold in perpetuity or for a donor-specified period(s) as well as board-designated funds. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of a combination of the S&P 500 Index, MSCI-EAFE and BC Aggregate, while assuming a moderate level of investment risk. GBGM expects its endowment funds, over time, to provide an average rate of return of approximately 7% annually. Actual returns in any given year may vary from this amount. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, GBGM relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). GBGM targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. Spending Policy and How the Investment Objectives Relate to Spending Policy GBGM has a policy of appropriating 100% of income for distribution annually. Capital gains are re-invested. From time to time realized gains may be distributed upon approval by the Board of Directors during the Annual Board Meeting. In establishing this policy, GBGM considered the long-term expected return on its endowment. Accordingly, over the long term, GBGM expects the current spending policy to allow its endowment to grow at an average rate of 7% annually. This is consistent with GBGMâ&#x20AC;&#x2122;s objective to maintain the purchasing power of the endowment assets held in perpetuity or for a specified term as well as to provide additional real growth through new gifts and investment return.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

(14)

Fair Value of Financial Instruments Required disclosures concerning the estimated fair value of financial instruments are presented below. The estimated fair value amounts have been determined based on GBGMâ&#x20AC;&#x2122;s assessment of available market information and appropriate valuation methodologies. The following table summarizes required fair value disclosures and measurements at December 31, 2012 and 2011 for assets measured at fair value on a recurring basis under ASC 820, Fair Value Measurements and Disclosures: Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Significant Assets (Liabilities) Active Markets for Other Observable Unobservable Measured Identical Assets Inputs Inputs at Fair Value (Level 1) (Level 2) (Level 3) December 31, 2012: Assets: Investments: Multiple Asset Fund (GBOPHB) $134,642,026 Short-term securities 1,417,032 U.S. Government securities 10,858 Bond mutual funds 555,531 Other bonds 1,497,764 Equities 544,489 Total investments 138,667,700

1,417,032

$134,642,026 -

10,858 555,531 544,489

1,497,764 -

2,527,910

136,139,790

Beneficial interest in Collins Forests

37,789,000

Perpetual trusts held by others

40,423,437

( 21,832,642)

37,789,000

Liabilities: Assets held for others

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Significant Assets (Liabilities) Active Markets for Other Observable Unobservable Measured Identical Assets Inputs Inputs at Fair Value (Level 1) (Level 2) (Level 3) December 31, 2011: Assets: Investments: Short-term securities $ 3,974,715 U.S. Government securities 17,624,400 Corporate bonds 10,476,124 Bond mutual funds 12,511,299 Other bonds 1,912,367 Equities 70,067,699 Total investments 116,566,604

3,974,715

17,624,400 12,511,299 70,067,699

10,476,124 1,912,367 -

104,178,113

12,388,491

Beneficial interest in Collins Forests

38,767,000

Perpetual trusts held by others

22,137,934

( 21,773,749)

38,767,000

Liabilities: Assets held for others

The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Investments The fair value of short-term securities, U.S. Government securities, bond mutual funds, and equities are determined using primarily Level 1 inputs in accordance with ASC 820. The fair values of the Multiple Asset Fund (GBOPHB), corporate bonds, and other bonds are determined using primarily Level 2 inputs.

GENERAL BOARD OF GLOBAL MINISTRIES OF THE UNITED METHODIST CHURCH (Parent Only) Notes to Financial Statements December 31, 2012 and 2011

Beneficial Interest in Collins Forests Fair value is based on the discounted present value of the estimated future cash flows (over 30 years) from the Forests (Note 6). Because no public market exists for these assets and an estimate of fair value is not practicable to obtain, the fair value is determined using primarily Level 3 inputs. The following is a reconciliation of activity for 2012 and 2011 for assets measured at fair value based on significant unobservable information: 2012

2011

Balance at beginning of year Write down in fair value of Collins Forests

$ 38,767,000 ( 978,000)

$38,767,000 -

Balance at end of year

$ 37,789,000

$38,767,000

Perpetual Trusts Held by Others and Assets Held for Others Fair values are based on quoted market prices. Other The fair value of financial instruments for which estimated fair value amounts have not been specifically presented is estimated to approximate the related book value. (15)

GBGM Revolving Loan Funds During 2012, GBGM transferred $17,150,000 of its revolving loan funds to UMDF, on behalf of GBGM, for the purpose of making â&#x20AC;&#x153;missionalâ&#x20AC;? loans. The UMDF is best equipped within GBGM to manage and service GBGM loan funds. These funds are included in perpetual trusts held by others and permanently restricted net assets in the accompanying statements of financial position.

(16)

Subsequent Events Management has evaluated subsequent events through May 31, 2013, the date the financial statements were available for issuance, and has determined that there are no subsequent events requiring disclosure.