Foundation for
Muskegon Community College
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS’ REPORT
Years ended June 30, 2014 and 2013
Foundation for Muskegon Community College
CONTENTS
INDEPENDENT AUDITORS' REPORT .................................................................................................. 3
FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION ....................................................................................... 5
STATEMENT OF ACTIVITIES .......................................................................................................... 6
STATEMENT OF CASH FLOWS ....................................................................................................... 8
NOTES TO FINANCIAL STATEMENTS .......................................................................................... 9
SUPPLEMENTAL INFORMATION
SCHEDULE OF ACTIVITIES ........................................................................................................... 17
BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
November 6, 2014
Foundation Board of Directors
Foundation for Muskegon Community College
Muskegon, Michigan
We have audited the accompanying financial statements of the Foundation for Muskegon Community College (a
Michigan nonprofit corporation), which are comprised of the statements of financial position as of June 30, 2014
and 2013, 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.
Auditors’ 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.
3
678 Front Ave., NW Suite 230
Grand Rapids, MI 49504
PHONE (616) 742-1300
FAX (616) 742-1318
316 Morris Ave., Suite 500, P.O. Box 999
Muskegon, MI 49443
PHONE (231) 726-5800
FAX (231) 722-0260
www.brickleydelong.com
907 S. State St., P.O. Box 331
Hart, MI 49420
PHONE (231) 873-1040
FAX (231) 873-0602
BRICKLEY DELONG
Foundation for Muskegon Community College
November 6, 2014
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of the Foundation for Muskegon Community College as of June 30, 2014 and 2013, 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.
Other Matter
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The
schedule of activities on pages 17 through 18 is presented for purposes of additional analysis and is not a required
part of the financial statements. Such information is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial statements and
certain additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the financial statements or to the financial statements themselves,
and other additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated in all material respects in relation to the financial
statements as a whole.
Muskegon, Michigan
4
Foundation for Muskegon Community College
STATEMENT OF FINANCIAL POSITION
June 30, 2014 and 2013
ASSETS
2014
CURRENT ASSETS
Cash
Pledges receivable
$
Total current assets
BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS
74,908
2,887
2013
$
53,156
-
77,795
53,156
154,534
134,556
$
232,329
$
187,712
$
210,938
21,391
$
134,556
53,156
$
232,329
$
187,712
LIABILITIES AND NET ASSETS
NET ASSETS
Unrestricted
Temporarily restricted
The accompanying notes are an integral part of these statements.
5
Foundation for Muskegon Community College
STATEMENT OF ACTIVITIES
Years ended June 30, 2014 and 2013
Unrestricted
Revenues and support
Contributions
Cash
In-kind
Income from beneficial interest in assets held by others
Net assets released from restrictions
Satisfaction of purpose restrictions
$
Total revenues and support
Expenses
Distributions for the benefit of Muskegon Community College
Management and general
Fundraising
Total expenses
19,978
2014
Temporarily
Restricted
$
177,180
195,757
-
Total
$
177,180
195,757
19,978
404,702
(404,702)
-
424,680
(31,765)
392,915
198,982
85,911
63,405
-
198,982
85,911
63,405
348,298
-
348,298
Change in net assets
76,382
(31,765)
44,617
Net assets at beginning of year
134,556
53,156
187,712
$
Net assets at end of year
The accompanying notes are an integral part of these statements.
6
210,938
$
21,391
$
232,329
Unrestricted
$
$
9,988
2013
Temporarily
Restricted
$
Total
118,248
142,391
-
$
118,248
142,391
9,988
246,417
(246,417)
-
256,405
14,222
270,627
216,871
73,243
61,803
-
216,871
73,243
61,803
351,917
-
351,917
(95,512)
14,222
(81,290)
230,068
38,934
269,002
134,556
$
53,156
$
187,712
7
Foundation for Muskegon Community College
STATEMENT OF CASH FLOWS
Years ended June 30, 2014 and 2013
2014
Operating activities
Change in net assets
$
Adjustments to reconcile change in net assets to net
cash provided by (used for) operating activities:
Gain from beneficial interest in assets held by others
2013
44,617
$
(19,978)
24,639
Increase in operating assets
Pledges receivable
Decrease in operating liabilities
Accounts payable
Due to Muskegon Community College
(9,988)
(91,278)
(2,887)
Net cash provided by (used for) operating activities
Investing activities
Proceeds from beneficial interest in assets held by others
Cash at beginning of year
Cash at end of year
$
The accompanying notes are an integral part of these statements.
8
-
-
(13,408)
(15,614)
21,752
(120,300)
-
INCREASE (DECREASE) IN CASH
(81,290)
105,500
21,752
(14,800)
53,156
67,956
74,908
$
53,156
Foundation for Muskegon Community College
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Foundation for Muskegon Community College (Foundation) was established in 1981. The Foundation’s
sole purpose is to support the mission of Muskegon Community College (College) through fund development.
As part of this purpose, it is responsible for managing the fundraising efforts of the College.
Basis of Accounting
The financial statements are presented on an accrual basis of accounting which recognizes income when earned
and expenses when incurred.
Basis of Presentation
The Foundation is required to report information regarding its financial position and activities according to
three classes of assets: unrestricted, temporarily restricted, and permanently restricted net assets. As of June
30, 2014 and 2013, all of the net assets of the Foundation were unrestricted or temporarily restricted.
Unrestricted net assets. Net assets that are not subject to donor-imposed stipulations.
Temporarily restricted net assets. Net assets subject to donor-imposed stipulations that may or will be met
either by actions of the Foundation and/or the passage of time.
Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donorimposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on
investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless
their use is restricted by explicit donor stipulation or by law.
These financial statements are discretely presented in the financial statements of Muskegon Community
College.
Revenue Recognition
The Foundation records appropriations, grants, and earned revenues on an accrual basis. The Foundation
records as revenue in the period received the following types of contributions, when they are received
unconditionally, at their fair value: cash, promises to give (pledges), certain contributed services and gifts of
long-lived and other assets. Conditional contributions are recognized as revenue when the conditions on which
they depend have been substantially met. Substantially all of the Foundation’s appropriations and grants are
considered to be contributions for purposes of applying revenue recognition policies. Contributions are
recorded net of estimated uncollectible amounts.
The Foundation reports gifts of cash or other assets as temporarily restricted support if they are received with
donor stipulations limiting the use of the donated assets. When a donor restriction expires, temporarily
restricted net assets are reclassified as unrestricted net assets and are reported in the statement of activities as
net assets released from restriction. If a restriction is fulfilled in the same period in which the contribution is
received, the Foundation reports the support as unrestricted.
Volunteers
A number of volunteers, including the members of the Board of Directors, have made significant contributions
of time to the Foundation’s policy-making, program, and support functions. The value of this contributed time
does not meet the criteria for recognition of contributed services and, accordingly, is not reflected in the
accompanying financial statements.
9
Foundation for Muskegon Community College
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Other Donated Services
Donated services are recognized in the financial statements at their fair market value if the following criteria
are met:
•
The services require specialized skills and the services are provided by individuals possessing those
skills.
•
The services would typically need to be purchased if not donated.
Those donated services for the years ended June 30, 2014 and 2013 include the following:
2014
Management services
Management
and General
Fundraising
$
$
85,742
42,434
Total
$
128,176
2013
Management services
Management
and General
Fundraising
$
$
73,099
47,562
Total
$
120,661
Non-monetary Transactions
Non-monetary transactions are recorded on the basis of the market value of services provided or assets
transferred.
Tax Status
The Foundation is exempt from federal income tax under Internal Revenue Code Section 501(c)(3).
In preparation of tax returns, tax positions are taken based on interpretation of federal, state and local income
tax laws. Management periodically reviews and evaluates the status of uncertain tax positions and makes
estimates of amounts, including interest and penalties, ultimately due or owed. No amounts have been
identified, or recorded, as uncertain tax positions. Federal, state and local tax returns generally remain open
for examination by the various taxing authorities for a period of three or four years.
Use of Estimates
Preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Date of Management's Review
Subsequent events have been evaluated through November 6, 2014, which is the date the financial statements
were available to be issued.
10
Foundation for Muskegon Community College
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE B—CASH
The Foundation’s cash is maintained in a separate bank account using the tax identification number of the
College. The combined Foundation and College balances are insured by the Federal Deposit Insurance
Corporation (FDIC) up to certain limitations. At June 30, 2014, the Foundation’s cash balances were
substantially uninsured as its share of the FDIC coverage of the combined Foundation and College accounts
was insignificant.
NOTE C—FAIR VALUE MEASUREMENTS
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level
3). The three levels of the fair value hierarchy are described below:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities
in active markets that the Foundation has the ability to access.
Level 2 Inputs to the valuation methodology include
- Quoted prices for similar assets or liabilities in active markets;
- Quoted prices for identical or similar assets or liabilities in inactive markets;
- Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable market data by correlation
or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for
substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
The asset’s or liability’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.
Following is a description of the valuation methodologies used for assets measured at fair value. There have
been no changes in the methodologies used at June 30, 2014 and 2013.
Beneficial interest in assets held by others: The assets are valued based upon the Foundation’s allocable
share of the Community Foundation for Muskegon County (Community Foundation) pooled investment
portfolio. The allocable share is based on the value of the underlying assets owned by the fund, minus its
liabilities.
The beneficial interests in assets held by others are valued monthly by the Community Foundation and
are allocated based upon each organization’s calculated share of the Community Foundation’s pooled
investment portfolio. Each entity with an interest within the pooled investments receives a statement
from the Community Foundation indicating the additions to the investment (via contributions),
withdrawals from the investment (via grants), and the investment returns allocated via a unitization
process. The Foundation calculates the fair value of its beneficial interest in the pooled investment assets
held by the Community Foundation based on the estimated fair value of the underlying assets. The
Community Foundation controls the investments and makes all management and investment decisions.
11
Foundation for Muskegon Community College
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE C—FAIR VALUE MEASUREMENTS—Continued
The preceding methods described above may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the Foundation believes its valuation
methods are appropriate and consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the Foundation’s assets at fair value as
of June 30, 2014 and 2013:
Assets at Fair Value as of June 30, 2014
Level 1
Level 2
Level 3
Beneficial interest in assets
held by others
$
-
$
$
-
$
Assets at Fair Value as of June 30, 2013
Level 2
Level 3
Level 1
Beneficial interest in assets
held by others
$ 154,534
-
$ 134,556
$
-
$
Total
154,534
Total
134,556
NOTE D—BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS
The Funds
The Foundation has multiple funds with the Community Foundation for Muskegon County (Community
Foundation).
Special Needs Fund
The Foundation for Muskegon Community College Special Needs Fund (Special Needs Fund) was
established in 1996 to provide financial support to Muskegon Community College in pursuing excellence
in education. The fund agreement allows the use of both the Fund’s principal and income in accordance
with the Community Foundation’s spending policy.
General Endowment Fund
The Foundation for Muskegon Community College Endowment Fund (General Endowment Fund) was
established in 1996 to provide financial support to Muskegon Community College in pursuing excellence
in education. The fund agreement allows the use of the Fund’s income only in accordance with the
Community Foundation’s spending policy.
Scholarship Funds
The Foundation also has approximately twenty separate Scholarship Funds (Scholarship Funds)
established to provide financial support to Muskegon Community College Students. The fund
agreements generally allow the use of the Funds’ income only in accordance with the Community
Foundation’s spending policy.
12
Foundation for Muskegon Community College
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE D—BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS
The Funds—Continued
The Community Foundation invests the contributions to the funds in various types of marketable equity and
debt securities, U.S. Treasuries, commercial paper, and certificates of deposit. The majority of investments
are uninsured and uncollateralized.
Reporting of the Assets of the Funds
The investments held at the Community Foundation, which were contributed by the Foundation along with
the earnings on these investments, are reported at fair value as unrestricted assets of the Foundation. The
contributions to this fund made by third party donors directly to the Community Foundation have been
excluded from the net assets of the Foundation.
Summary of Foundation Funds
A summary of revenues, expenses, and changes in the net assets at fair value of the funds, inclusive of the
unrestricted and permanently restricted assets in the financial statements for the years ended June 30, 2014
and 2013 follows:
2014
Special
Needs
Fund
Revenues
Contributions
Dividends and interest
Realized and unrealized gains
on investments
$
200
6,382
General
Endowment
Fund
Scholarship
Funds
$
$
26,180
13,112
62,738
29,701
Totals
$
89,118
49,195
21,709
44,608
100,701
167,018
28,291
83,900
193,140
305,331
967
2,002
14,270
8,706
14,270
11,675
967
2,002
22,976
25,945
27,324
81,898
170,164
279,386
Net assets at beginning of year
180,225
370,351
833,653
1,384,229
Net assets at end of year
207,549
452,249
1,003,817
1,663,615
(159,428)
(345,836)
(1,003,817)
(1,509,081)
Expenses
Disbursements
Investment fees
Change in net assets
Less assets recorded as those of
the Community Foundation
Assets reported on the
Statement of Financial Position
$
48,121
13
$
106,413
$
-
$
154,534
Foundation for Muskegon Community College
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE D—BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS—Continued
2013
Special
Needs
Fund
Revenues
Contributions
Dividends and interest
Realized and unrealized gains
on investments
$
3,950
6,685
General
Endowment
Fund
Scholarship
Funds
$
$
4,354
11,355
47,023
24,571
Totals
$
55,327
42,611
11,642
15,253
32,289
59,184
22,277
30,962
103,883
157,122
105,000
1,008
500
1,812
11,285
5,772
116,785
8,592
106,008
2,312
17,057
125,377
(83,731)
28,650
86,826
31,745
Net assets at beginning of year
263,956
341,701
746,827
1,352,484
Net assets at end of year
180,225
370,351
833,653
1,384,229
(138,393)
(277,627)
(833,653)
(1,249,673)
Expenses
Disbursements
Investment fees
Change in net assets
Less assets recorded as those of
the Community Foundation
Assets reported on the
Statement of Financial Position
$
41,832
$
92,724
$
-
$
134,556
The Board of Trustees of the Community Foundation has the power to modify any restriction or condition on
the distribution of funds for any specified charitable purpose or to a specified organization if, in the sole
judgment of the Board, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment,
or inconsistent with the charitable needs of the community served. The authority to modify restrictions is
sometimes referred to as “variance power” and is a legal standard imposed on all community foundations.
NOTE E—TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets are available for the following purposes at June 30, 2014 and 2013:
2014
Academics
Facilities improvements
Scholarships
Other
14
2013
$
8,504
12,887
-
$
24,250
15,601
13,305
$
21,391
$
53,156
Foundation for Muskegon Community College
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE F—TRANSACTIONS WITH MUSKEGON COMMUNITY COLLEGE
Distributions to the College or for the College’s benefit by the Foundation for the years ended June 30, 2014
and 2013 are summarized as follows:
2014
Academics
Facilities improvements
Planetarium
Student services
Scholarships
Unrestricted
Other
2013
$
43,329
22,306
24,611
5,267
56,209
3,949
43,311
$
5,943
18,065
103,376
7,889
56,804
24,794
$
198,982
$
216,871
For the years ended June 30, 2014 and 2013, the College also provided $128,176 and $120,661, respectively,
of in-kind contributions to the Foundation by providing personnel support, supplies and equipment to the
Foundation.
15
SUPPLEMENTAL INFORMATION
Foundation for Muskegon Community College
SCHEDULE OF ACTIVITIES
Years ended June 30, 2014 and 2013
Total
Revenues and support
Contributions
Income from beneficial interest in assets held by others
$ 177,180
19,978
392,915
195,757
197,158
198,982
85,911
63,405
46,610
85,742
63,405
152,372
169
-
348,298
195,757
152,541
Change in net assets
44,617
-
44,617
Net assets at beginning of year
187,712
-
187,712
-
$ 232,329
Expenses
Distributions for benefit of Muskegon Community College
Management and general
Fundraising
Total expenses
Net assets at end of year
$ 232,329
17
$
Net
195,757
-
Total revenues and support
$ 372,937
19,978
2014
Less in-kind
$
2013
Less in-kind
Total
$ 260,639
9,988
$
Net
142,391
-
$ 118,248
9,988
270,627
142,391
128,236
216,871
73,243
61,803
7,489
73,099
61,803
209,382
144
-
351,917
142,391
209,526
(81,290)
-
(81,290)
269,002
-
269,002
-
$ 187,712
$ 187,712
$
18