EngenderHealth, Inc.

Financial Statements and Uniform Guidance Schedules Together With Independent Auditors’ Reports

June 30, 2019

EngenderHealth, Inc.

Financial Statements and Uniform Guidance Schedules Together With Independent Auditors’ Reports

June 30, 2019

TABLE OF CONTENTS Page

Independent Auditors’ Report

FINANCIAL STATEMENTS

Statements of Financial Position 3 Statements of Activities 4-5 Statements of Functional Expenses 6-7 Statements of Cash Flows 8 Notes to Financial Statements 9-32

UNIFORM GUIDANCE SCHEDULES AND REPORTS

Schedule of Expenditures of Federal Awards 33 Notes to Schedule of Expenditures of Federal Awards 34

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

Schedule of Findings and Questioned Costs 40

Independent Auditors’ Report

Board of Directors EngenderHealth, Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of EngenderHealth, Inc., which comprise the statements of financial position as of June 30, 2019 and 2018, and the related statements of activities, functional expenses 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 auditors’ 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 EngenderHealth, Inc. as of June 30, 2019 and 2018, 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.

PKF O’CONNOR DAVIES, LLP 665 Fifth Avenue, New York, NY 10022 I Tel: 212.867.8000 or 212.286.2600 I Fax: 212.286.4080 I www.pkfod.com

PKF O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Board of Directors EngenderHealth, Inc. Page 2

Change in Accounting Principle

As discussed in note 2 to the financial statements, during the year ended June 30, 2019, EngenderHealth, Inc. adopted new accounting guidance resulting in a change in the manner in which it presents net assets and reports certain aspects of its financial statements. Our opinion is not modified with respect to this matter.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 27, 2020 on our consideration of EngenderHealth, Inc.’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of EngenderHealth, Inc.’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering EngenderHealth, Inc.’s internal control over financial reporting and compliance.

March 27, 2020

EngenderHealth, Inc.

Statements of Financial Position

June 30 2019 2018 ASSETS Cash and cash equivalents $ 8,669,998 $ 11,299,247 Grants and contracts receivable, net of allowance of $0 and $102,779 in 2019 and 2018 1,657,420 311,712 Prepaid expenses and other assets 2,977,164 2,359,091 Contributions receivable, net (Note 6) 7,101,982 17,962,269 Investments (Note 4) 1,503,103 1,670,909 Property and equipment, net (Note 7) 1,734,172 2,270,518 Postretirement health benefits asset (Note 10) 1,472,126 476,884 Restricted investments (Notes 4 and 9) 2,019,091 3,344,876

$ 27,135,056 $ 39,695,506

LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 10,797,514 $ 9,761,294 Advances from U.S. Agency for International Development (USAID) - 1,664,077 Obligations due under split interest agreements (Note 5) 226,666 237,096 Total Liabilities 11,024,180 11,662,467

Net Assets Without donor restrictions 28,060 (46,316) With Donor Restrictions Temporary in nature (Notes 8 and 9) 14,063,725 24,734,479 Perpetual in nature (Notes 8 and 9) 2,019,091 3,344,876 Total Net Assets 16,110,876 28,033,039

$ 27,135,056 $ 39,695,506

See notes to financial statements

3 EngenderHealth, Inc.

Statement of Activities Year Ended June 30, 2019

With Donor Restriction Without Donor Temporary Perpetual Restrictions in Nature in Nature Total OPERATING REVENUES AND OTHER SUPPORT USAID, DHHS and other grants (Note 12)$ 23,413,880 $ - $ - $ 23,413,880 Contributions and private grants 1,360,813 3,367,701 - 4,728,514 Net assets released from restrictions 14,001,857 (14,001,857) - - Total Operating Revenues and Other Support 38,776,550 (10,634,156) - 28,142,394

OPERATING EXPENSES Program Services Reproductive health services 30,434,362 - - 30,434,362 Supporting Services Management and general 9,351,041 - - 9,351,041 Fundraising 336,523 - - 336,523 Total Supporting Services 9,687,564 - - 9,687,564 Total Operating Expenses 40,121,926 - - 40,121,926 Change in Net Assets from Operating Activities before Depreciation (1,345,376) (10,634,156) - (11,979,532)

Depreciation (507,206) - - (507,206) Change in Net Assets from Operating Activities (1,852,582) (10,634,156) - (12,486,738)

NON OPERATING ACTIVITIES Investment return (Note 4) 61,501 119,002 - 180,503 Change in value of split-interest agreements (Note 5) - (10,430) - (10,430) Write-off of pledge due to project cancellation - (145,170) - (145,170) Pension-related and post retirement healthcare benefits changes other than net periodic cost (Note 10) (344,182) - - (344,182) Pension liability curtailment and settlement gain 1,137,901 - - 1,137,901 Gain on exit of rental obligation (Note 11) 203,449 - - 203,449 Loss on disposal of asset (457,496) - - (457,496) Donor redesignation (Note 9) 1,325,785 - (1,325,785) - Change in Net Assets 74,376 (10,670,754) (1,325,785) (11,922,163)

NET ASSETS Beginning of year (46,316) 24,734,479 3,344,876 28,033,039

End of year$ 28,060 $ 14,063,725 $ 2,019,091 $ 16,110,876

See notes to financial statements

4 EngenderHealth, Inc.

Statement of Activities Year Ended June 30, 2018

With Donor Restrictions Without Donor Temporary Perpetual Restrictions in Nature in Nature Total OPERATING REVENUES AND OTHER SUPPORT USAID, DHHS and other grants (Note 12)$ 36,839,211 $ - $ - $ 36,839,211 Contributions and private grants 3,052,864 10,228,539 - 13,281,403 Net assets released from restrictions 16,436,280 (16,436,280) - - Total Operating Revenues and Other Support 56,328,355 (6,207,741) - 50,120,614

OPERATING EXPENSES Program Services Reproductive health services 41,202,530 - - 41,202,530 Supporting Services Management and general 13,034,098 - - 13,034,098 Fundraising 545,788 - - 545,788 Total Supporting Services 13,579,886 - - 13,579,886 Total Operating Expenses 54,782,416 - - 54,782,416 Change in Net Assets from Operating Activities before Depreciation 1,545,939 (6,207,741) - (4,661,802)

Depreciation (952,506) - - (952,506) Change in Net Assets from Operating Activities 593,433 (6,207,741) - (5,614,308)

NON OPERATING ACTIVITIES Investment return (Note 4) 208,136 407,934 - 616,070 Change in value of split-interest agreements (Note 5) - 112,496 - 112,496 Write-off of pledge due to project cancellation - (1,422,347) - (1,422,347) Pension-related and post retirement healthcare benefits changes other than net periodic cost (Note 10) (201,295) - - (201,295) Loss on exit of rental obligation (Note 11) (1,057,940) - - (1,057,940) Change in Net Assets (457,666) (7,109,658) - (7,567,324)

NET ASSETS Beginning of year 411,350 31,844,137 3,344,876 35,600,363

End of year $ (46,316) $ 24,734,479 $ 3,344,876 $ 28,033,039

See notes to financial statements

5 EngenderHealth, Inc.

Statement of Functional Expenses Year Ended June 30, 2019

Program Services Supporting Services Reproductive Management Health and Total Services General Fundraising Expenses

Salaries $ 11,232,422 $ 4,322,712 $ 46,339 $ 15,601,473 Employee benefits 2,314,101 890,564 9,547 3,214,212 Overseas allowance 24,818 9,108 - 33,926 Domestic allowance - 16,500 - 16,500 Total Salaries and Related Expenses 13,571,341 5,238,884 55,886 18,866,111

Subawards 5,667,530 - - 5,667,530 Professional fees and contract service payments 983,116 1,809,886 183,672 2,976,674 Travel, training and other activities 6,438,672 573,934 8,141 7,020,747 Rent and utilities 1,405,145 1,125,185 4,403 2,534,733 Equipment purchases, rental, and supplies 1,953,616 328,577 5,145 2,287,338 Communication, printing, postage, and telephone 218,381 167,198 59,524 445,103 Other expenses 196,561 107,377 19,752 323,690 Total Expenses Before Depreciation 30,434,362 9,351,041 336,523 40,121,926 Depreciation 503,322 3,884 - 507,206

Total Expenses $ 30,937,684 $ 9,354,925 $ 336,523 $ 40,629,132

See notes to financial statements

6 EngenderHealth, Inc.

Statement of Functional Expenses Year Ended June 30, 2018

Program Services Supporting Services Reproductive Management Health and Total Services General Fundraising Expenses

Salaries $ 15,334,993 $ 6,324,707 $ 218,886 $ 21,878,586 Employee benefits 2,820,589 1,161,686 40,223 4,022,498 Overseas allowance 175,456 11,987 - 187,443 Domestic allowance - 19,000 - 19,000 Total Salaries and Related Expenses 18,331,038 7,517,380 259,109 26,107,527

Subawards 4,237,221 - - 4,237,221 Professional fees and contract service payments 1,489,845 2,909,784 135,803 4,535,432 Travel, training and other activities 11,733,609 608,739 1,372 12,343,720 Rent and utilities 1,778,277 1,252,727 33,040 3,064,044 Equipment purchases, rental, and supplies 2,150,762 502,601 46,203 2,699,566 Communication, printing, postage, and telephone 708,597 144,152 65,480 918,229 Other expenses 773,181 98,715 4,781 876,677 Total Expenses Before Depreciation 41,202,530 13,034,098 545,788 54,782,416 Depreciation 713,615 229,340 9,551 952,506

Total Expenses $ 41,916,145 $ 13,263,438 $ 555,339 $ 55,734,922

See notes to financial statements

7 EngenderHealth, Inc.

Statements of Cash Flows

Year Ended June 30 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets$ (11,922,163) $ (7,567,324) Adjustments to reconcile change in net assets to net cash from operating activities Net realized and unrealized gains on investments (92,632) (434,737) Depreciation 507,206 952,506 Deferred rent (56,507) (23,324) Present value discount (70,811) (74,284) Bad debt (recovery) expense (166,480) 409,135 Loss on disposal of asset 457,496 - Write-off of pledge due to project cancellation 145,170 1,422,347 Change in split interest agreements (10,430) (112,496) Post retirement benefit adjustment (995,242) (219,961) (Gain) loss on exit of rental obligation (203,449) 1,057,940 Changes in assets and liabilities Grants and contracts receivable (1,179,228) 527,492 Prepaid expenses and other assets (618,073) (864,152) Contributions receivable 10,785,928 5,348,111 Accounts payable and accrued expenses 1,296,176 (850,041) Advances from USAID (1,664,077) (1,591,870) Net Cash from Operating Activities (3,787,116) (2,020,658)

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments (1,337,776) (1,057,330) Proceeds from sale of investments 2,923,999 3,304,065 Purchase of property and equipment (428,356) (535,637) Net Cash from Investing Activities 1,157,867 1,711,098 Net Change in Cash and Cash Equivalents (2,629,249) (309,560)

CASH AND CASH EQUIVALENTS Beginning of year 11,299,247 11,608,807

End of year$ 8,669,998 $ 11,299,247

See notes to financial statements

8 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

1. Organization and Tax Status

EngenderHealth, Inc. (“EngenderHealth”), a tax-exempt organization incorporated in the state of New Jersey, is a nonprofit voluntary health and welfare agency whose purpose is to promote and support quality family planning and reproductive health services throughout the world. EngenderHealth’s program service activities are as follows:

Capacity Building and Technical Assistance

Orientation, training, and technical support to provider institutions, professionals, and government entities on all aspects of developing, implementing, and evaluating family planning and reproductive healthcare service delivery systems to introduce, expand, and improve services. EngenderHealth works to transfer knowledge and skills in the areas of medical and surgical services, gender and gender-based violence prevention, training, counseling, evaluation, and research. These activities are generally for the benefit of specific country programs and they may include financial support in the form of grants, contracts and medical equipment.

Global and Emerging Programs

Work to advance health and family planning services worldwide, principally leadership in the public and professional arenas and development of innovative approaches to reproductive health service delivery and related operations. These activities include developing and disseminating client, public, and professional information and education materials, training curricula, and other technical materials; conducting and publishing clinical and practical research; assisting in the development of public policy; and convening and conducting seminars, conferences, and other professional events.

Program Support

Activities to guide, direct, and assess the development, implementation, and evaluation of program service activities.

EngenderHealth is exempt from federal income tax under Section 501(c) (3) of the Internal Revenue Code and has been classified as an organization that is not a private foundation under Section 509(a). Income generated from activities unrelated to EngenderHealth’s exempt purpose is subject to tax under Internal Revenue Code Section 511.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

9 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions 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 reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Change in Accounting Principle

On July 1, 2018, EngenderHealth adopted new guidance regarding the Presentation of Financial Statements for Not-for-Profit Entities (ASU 2016-14). This guidance requires EngenderHealth to collapse the three-category (unrestricted, temporarily restricted, and permanently restricted) classification of net assets into two categories: with donor restrictions and without donor restrictions. In addition, the new guidance requires EngenderHealth to make certain expanded disclosures relating to (1) the liquidity of financial assets, and (2) expenses by both their natural and functional classification in one location in the financial statements. As a result of implementing this standard prior year amounts for temporarily and permanently restricted net assets were combined and reclassified as net assets with donor restrictions and unrestricted net assets were reclassified as net assets without donor restrictions.

Net Asset Presentation

Net assets, revenues, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, EngenderHealth’s net assets are classified as with or without donor restrictions. Net assets without donor restrictions are not subject to donor-imposed stipulations and may be expended at the discretion of management and the Board. Net assets with donor restrictions are those whose use is limited by donors for a specific time period or purpose or are to be held in perpetuity.

10 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Fair Value Measurements

EngenderHealth follows U.S. GAAP guidance on Fair Value Measurements which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. The three levels are defined as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Cash and Cash Equivalents

EngenderHealth considers all highly liquid financial instruments having a maturity of ninety days or less at the time of purchase to be cash equivalents.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is established for receivables where there exists doubt as to whether an amount will be fully collected. The determination of this allowance is an estimate based on EngenderHealth's historical experience, review of account balances and expectations relative to collections.

Investments and Income Recognition

Investments in equity securities with readily determinable fair values and all investments in debt securities are reported at fair value, based on quoted market prices. Investments in alternative investments are reported based on the underlying net asset value, which is estimated at fair value by management of the investment vehicle. EngenderHealth reviews and evaluates the value provided by the investment vehicle’s management and will adjust as necessary. EngenderHealth records investment transactions based on the trade date. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date.

Investments are exposed to various risks, such as interest rate, market, credit, and other risks. Due to such risks and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the values of investment securities could occur in the near term and such changes could materially affect the amounts reported in the accompanying financial statements.

11 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Contributions

Contributions and unconditional promises to give are recorded as revenue when signed pledges are made and are classified as without donor restrictions or with donor restrictions support based on the presence or absence of donor restrictions. Verbal and written intentions to contribute amounts are not recorded in these financial statements because they do not meet EngenderHealth’s criteria for recognition.

Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts are computed using rates applicable to the years in which the promises are received and consider market and credit risk as applicable. Amortization of the discounts and changes in allowance for doubtful accounts are included in contribution revenue on the statements of activities and other expenses on the statements of functional expenses, respectively.

Revenue from Government Grants

Cooperative agreements with the U.S. Agency for International Development (“USAID”) and other grants and contracts are recognized as revenue and a receivable is recorded when EngenderHealth incurs expenses reimbursable under the terms of the agree- ments. An allowance for uncollectible grants and contracts receivable is estimated based upon such factors as prior collection history, potential cost disallowances, and other factors. At June 30, 2019, management determined that grant and contract receivable are fully collectible. Cash received under grants and contracts in advance of incurring the related expenses is reported as a liability until spent.

Property and Equipment

EngenderHealth capitalizes property and equipment with a unit cost in excess of $1,000. All office furniture and fixtures, computers, vehicles and equipment purchased under USAID grants are subject to return to USAID, upon request. Depreciation of office furniture and fixtures, computer software and equipment is computed using the straight-line method based on estimated useful lives of three to seven years. Leasehold improvements are amortized over the life of the office lease or the estimated life of the leasehold improvement, whichever is shorter.

Property and equipment are reviewed for impairment if the use of the asset significantly changes or another indicator of possible impairment is noted. If the carrying amount for the asset is not recoverable, the value is written down to the asset’s fair value.

Subawards

Grants awarded to subrecipients by EngenderHealth are recorded as an expense and a liability at the time the expenses are incurred. Amounts payable to subrecipients are included in accounts payable and accrued expenses.

12 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Non-Operating Activities

EngenderHealth reports investment return, losses on contributions receivable, if any, change in the value of split-interest agreements, and pension-related and post retirement healthcare benefits changes other than net periodic benefit cost/credit and other activities not affecting operations as non-operating activities in the accompanying statements of activities.

Foreign Currency Translation EngenderHealth has determined that its functional currency is the U.S. dollar. Accordingly, assets and liabilities denominated in other currencies are translated using the current exchange rates in effect at the statement of financial position date. Revenue and expense accounts are translated at the average rate in effect during the year.

Functional Allocation of Expenses

The costs of providing the program and other activities of EngenderHealth have been summarized on a functional basis. Specific expenses that are readily identifiable to a single program or activity are charged to that function. Certain expenses are attributable to more than one program or supporting function and have been allocated in a reasonable ratio by management. These expenses include salaries, employee benefits, professional fees and contract service payments, travel, training and other activities, rent and utilities, and equipment purchases, rental and supplies which are allocated based on estimates of time and effort.

Reclassification

Certain amounts in the June 30, 2018 financial statements have been reclassified to conform to the June 30, 2019 presentation. These changes had no impact on the change in net assets for the year ended June 30, 2018.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were $19,037 and $13,601 for 2019 and 2018, respectively.

Accounting for Uncertainty in Income Taxes

EngenderHealth recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Management has determined that EngenderHealth had no uncertain tax positions that would require financial statement recognition or disclosure. The Organization is no longer subject to examination by the applicable taxing jurisdictions for years prior to June 30, 2016.

13 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Subsequent Events Evaluation by Management

Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, which date is March 27, 2020.

3. Concentration of Credit Risk

Financial instruments that potentially subject EngenderHealth to concentrations of credit risk consist principally of cash and cash equivalents, investments and receivables. At times cash balances held at financial institutions may be in excess of federally insured limits. EngenderHealth also maintains bank accounts in various countries. There is no insurance on these accounts. EngenderHealth has not experienced any losses on its cash deposits.

The investment portfolio is diversified by type of investment and industry concentrations so that no individual investment or group of investments represent a significant concentration of credit risk. Total contributions and private grants revenue received from one donor aggregate to 29% and 71% during 2019 and 2018, respectively. In addition, contributions receivable from two individuals aggregate to 98% at June 30, 2019. Contributions receivable from four individuals aggregate to 94% at June 30, 2018.

4. Fair Value Measurements

The following are major categories of assets and liabilities at June 30, which are measured at fair value and grouped by their fair value hierarchy on a recurring basis:

2019 Level 1 Level 2 Level 3 Total

Common stocks$ 1,816,832 $ - $ - $ 1,816,832 Corporate debt securities 1,360,696 - - 1,360,696 U.S. Treasury securities 197,059 - - 197,059 Real estate mutual funds 100,993 - - 100,993 Total 3,475,580 - - 3,475,580 Life annuity - 46,614 - 46,614 Total Investments $ 3,475,580 $ 46,614 $ -$ 3,522,194

Fair value of split interest agreements $ - $ -$ 226,666 $ 226,666

14 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

4. Fair Value Measurements (continued)

2018 Level 1 Level 2 Level 3 Total

Common stocks$ 3,415,510 $ - $ - $ 3,415,510 Corporate debt securities 1,007,552 - - 1,007,552 U. S. Treasury securities 422,947 - - 422,947 Real estate mutual funds 123,162 - - 123,162 Total 4,969,171 - - 4,969,171 Life annuity - 46,614 - 46,614 Total Investments $ 4,969,171 $ 46,614 $ -$ 5,015,785

Fair value of split interest agreements $ - $ -$ 237,096 $ 237,096

EngenderHealth recognizes transfers between levels in the fair value hierarchy on the date of the event or change in circumstances that causes the transfer. There were no transfers between levels for the years ended June 30, 2019 and 2018.

The following is a reconciliation of the beginning and ending balances for Level 3 liabilities during 2019 and 2018:

2019 2018

Beginning balance$ 237,096 $ 349,592 Change in value of annuities payable (10,430) (112,496) $ 226,666 $ 237,096 Ending balance

Included in investments are those assets held by EngenderHealth relating to certain split-interest agreements, totaling $374,420 and $394,808 at June 30, 2019 and 2018, respectively.

15 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

4. Fair Value Measurements (continued)

The following table presents the total investment return, reported in the accompanying statements of activities under non-operating activities, for the years ended June 30, 2019 and 2018:

2019 2018

Interest and dividends, net of investment management and related fees of $38,154 $ 87,871 $ 181,333 and $41,889 Unrealized losses (373,401) (79,372) Realized gains 466,033 514,109 $ 180,503 $ 616,070

5. Split-Interest Agreements

EngenderHealth’s split-interest agreements with donors consist primarily of irrevocable charitable gift annuities and pooled life income funds for which EngenderHealth serves as trustee. Assets held in these instruments are included in investments. Contribution revenue is recognized on the date the instruments are established, after recording liabilities for the present value of the estimated future payments to be made to the donors and/or other beneficiaries. The liabilities are adjusted during the term of the instruments for changes in the value of the assets, accretion of the discount, and other changes in the estimates of future benefits.

6. Contributions Receivable

Contributions receivable consist of the following at June 30:

2019 2018 Due within Up to one year$ 7,101,982 $ 11,309,965 One to five years - 6,723,115 7,101,982 18,033,080 Present value discount - (70,811) Contributions Receivable, Net$ 7,101,982 $ 17,962,269

Management determined that contributions receivable is fully collectible. No allowance for doubtful accounts have been established.

16 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

6. Contributions Receivable (continued)

For the years ended June 30, 2019 and 2018, management wrote off pledges of $145,170 and $1,422,347, respectively, due to the cancellation of the Shang Ring EIMC, Technical Support to the Government of Bihar and the Uttar Pradesh Family Planning projects.

7. Property and Equipment

Property and equipment at June 30 consist of the following:

2019 2018

Furniture, fixtures and equipment $ 3,263,819 $ 4,936,407 Computer software 720,857 720,857 Leasehold improvements 2,216,898 2,570,697 6,201,574 8,227,961 Accumulated depreciation (4,467,402) (5,957,443) $ 1,734,172 $ 2,270,518

8. Net Assets With Donor Restrictions

Net assets with donor restrictions that are temporary in nature are available for the following at June 30:

2019 2018

Reproductive health programs$ 12,944,079 $ 23,604,403 Split-interest agreements 1,119,646 1,130,076 $ 14,063,725 $ 24,734,479

For the years ended June 30, 2019 and 2018, perpetually restricted net assets totaling $2,019,091 and $3,344,876 provided investment income of $119,002 and $407,934, respectively, to support operations.

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purpose specified by the donor or as a result of the expiration of donor imposed time restrictions as follows:

2019 2018

Reproductive health programs$ 13,882,855 $ 14,686,146 Appropriated earnings on endowment fund - reorganization - 1,520,688 Appropriated earnings on endowment fund - operations 119,002 229,446 $ 14,001,857 $ 16,436,280

17 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

9. Endowment Fund

(a) History of the Endowment Fund In 2001, the officers and the Board of Directors of EngenderHealth approved a five-year endowment campaign. The officers and the members of the Board of Directors were the main contributors to the endowment fund. The income generated from the endowment fund is intended to be used to provide EngenderHealth with the resources to ensure the continuity of its ongoing programs around the world, thereby allowing EngenderHealth to bridge funding gaps and to meet other emergent needs when funding is not available. The Board of Directors also established a quasi-endowment fund with net assets without donor restrictions.

The net assets of the donor restricted endowment and quasi-endowment funds are commingled in the same investment portfolio (collectively, the “endowment fund”) and accordingly, the investment return on the endowment is allocated in the same proportions as the initially invested corpus.

(b) Investment Objectives and Guidelines

EngenderHealth’s primary investment objective is to maximize total return through income and capital appreciation while investing in a prudent manner by avoiding high-risk investments. EngenderHealth has adopted investment policy guidelines as approved by the Finance Committee of the Board of Directors. The policy provides for diversification in both equity and fixed income securities so as to provide a balance to the investment portfolio thereby avoiding undue risk concentration in any single asset class or investment category. The preferred long-term mix is 55% – 60% equities and 40% – 45% fixed income. The Finance Committee of the Board of Directors has the authority to make adjustments to the asset allocations in order to maintain target ranges in the endowment fund and any permanent changes in policy.

(c) Spending Policy

EngenderHealth has a policy whereby 5.5% of the total fair value of the endowment fund’s assets is calculated annually as a spending rate using the rolling three-year average of the fair value at the close of each fiscal year. This method is designed to protect the endowment fund from extreme market value fluctuations while improving the consistency in level of available spending. This spending policy is reviewed annually by the Finance Committee of the Board of Directors.

18 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

9. Endowment Fund (continued)

(d) Classification of Endowment Net Assets

Based on interpretation by the Board of Directors of EngenderHealth as it relates to the Uniform Prudent Management of Institutional Funds Act (UPMIFA), and accounting guidance surrounding the management of endowment funds, and absent explicit donor stipulations to the contrary, EngenderHealth classifies as net assets with donor restrictions to be held in perpetuity as, (a) the original value of gifts donated to the endowment, (b) the original value of subsequent gifts to the endowment, and (c) accumulations to the endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified as net assets to be held in perpetuity is classified as net assets with purpose restrictions until those amounts are appropriated for expenditure by EngenderHealth in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, EngenderHealth considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

(1) The duration and preservation of the fund (2) The purposes of the organization and the donor-restricted endowment fund (3) General economic conditions (4) The possible effect of inflation and deflation (5) The expected total return from income and the appreciation of investments (6) Other resources of the organization (7) The investment policies of the organization

The following is the endowment net asset composition (excluding a third-party perpetual trust and contribution receivables totaling $25,000 for both years):

Without Donor With Donor Restrictions Restrictions

Board-designated Endowment quasi endowment Funds Total June 30, 2019: Donor-restricted endowment$ - $ 1,994,091 $ 1,994,091

June 30, 2018: Board-designated quasi endowment$ 646,029 $ - $ 646,029 Donor-restricted endowment - 3,319,876 3,319,876 Total Endowment$ 646,029 $ 3,319,876 $ 3,965,905

19 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

9. Endowment Fund (continued)

Changes in endowment net assets for the years ended June 30, 2019 and 2018 are as follows:

Without Donor Restrictions With Donor Restrictions Board-designated Purpose Endowment quasi endowment Restricted Funds Total Endowment net assets, July 1, 2018$ 646,029 $ - $ 3,319,876 $ 3,965,905 Investment income 13,268 68,184 - 81,452 Net appreciation in fair value of investments 9,889 50,818 - 60,707 Appropriation for operations (130,306) (119,002) - (249,308) Board appropriation (538,880) - - (538,880) Donor redesignation - - (1,325,785) (1,325,785) Endowment net assets, June 30, 2019 $ - $ -$ 1,994,091 $ 1,994,091

During fiscal 2019, management requested permission from certain of the original donors to the endowment fund to redesignate their original contributions to net assets without donor restrictions. As of June 30, 2019, a total of $1,325,785 was redesignated.

Without Donor Restrictions With Donor Restrictions Board-designated Purpose Endowment quasi endowment Restricted Funds Total Endowment net assets, July 1, 2017$ 1,230,144 $ 1,342,200 $ 3,319,876 $ 5,892,220 Investment income 35,745 135,466 - 171,211 Net appreciation in fair value of investments 71,894 272,468 - 344,362 Appropriation for operations (60,542) (229,446) - (289,988) Appropriations for reorganization (631,212) (1,520,688) - (2,151,900) Endowment net assets, June 30, 2018$ 646,029 $ -$ 3,319,876 $ 3,965,905

During fiscal 2018, EngenderHealth relocated its headquarters from New York City to Washington, DC. In order to finance the costs of relocation, the Board of Directors authorized the appropriation of $2,151,900 of accumulated endowment earnings.

20 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

10. Benefit Plans

(a) Retirement EngenderHealth has a defined contribution retirement plan, which covers substantially all employees. Pension expense for the years ended June 30, 2019 and 2018 was $1,168,523 and $1,681,902, respectively. Under the terms of the plan, employer contributions are fully vested upon participation in the plan. EngenderHealth contributes 8.5% of employee compensation as the employer contribution in compliance with EngenderHealth’s personnel policies and negotiated agreements.

(b) Postretirement Healthcare Benefits EngenderHealth’s benefit policy provides for contributions of healthcare benefits, including dental and vision care coverage, for employees who retire after completing 15 years of service and reaching retirement age as defined in the plan agreement. Benefits are reduced by Medicare benefits after age 65. Employees who joined EngenderHealth after January 1, 2001 are not eligible for coverage under this plan. The plan is being funded by an irrevocable Voluntary Employees’ Beneficiary Association (VEBA) trust.

EngenderHealth records annual amounts relating to the plan based on calculations that incorporate various actuarial and other assumptions including discount rates, mortality, assumed rates of return, and healthcare cost trend rates. EngenderHealth reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. The effect of modifications to these assumptions is recorded as a charge to net assets without donor restrictions and amortized to net periodic cost over future periods using the corridor method. EngenderHealth believes that the assumptions utilized in recording its obligation under its plan are reasonable based on its experience and market conditions. The net periodic cost is recognized as employees render the services necessary to earn the postretirement benefits.

EngenderHealth recognizes the funded status of its defined benefit postretirement plan on a net basis as an asset or liability and recognizes changes in that funded status in the year in which the changes occur through a charge to net assets without donor restrictions to the extent those changes are not included in net periodic benefit cost. The funded status is reported on the statements of financial position as the difference between the fair value of plan assets and the benefit obligation.

EngenderHealth’s funded status of its defined benefit postretirement plan was valued based on Actuarial Standards of Practice No. 6. This standard takes into consideration the age of each participant when valuating future claim costs. This valuation methodology significantly reduced the anticipated cost of future claims by the plan beneficiaries, where the fair value of the plan assets exceed the future benefit obligation.

21 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

10. Benefit Plans (continued)

(b) Postretirement Healthcare Benefits (continued) On April 18, 2018, EngenderHealth relocated its headquarters from New York City to Washington DC. As a result of the relocation, 11 out of the 12 active participants in the Plan terminated employment. The terminations resulted in a significant reduction in active plan participants’ expected years of future service and therefore a curtailment is recognized.

Information with respect to this plan as of and for the years ended June 30 is as follows:

2019 2018 Change in benefit obligation Benefit obligation at beginning of year$ 1,490,175 $ 1,579,113 Service cost 3,116 34,071 Interest cost 26,248 59,043 Plan participants' contributions 25,459 27,019 Amendments/Curtailments/Special Termination (820,722) - Actuarial gain (29,951) (109,323) Benefits paid (107,186) (99,748) Benefit Obligation at End of Year 587,139 1,490,175

Change in plan assets Fair value of plan assets at beginning of year 1,967,059 1,836,036 Actual return on plan assets 92,206 131,023 Employer contributions 81,727 72,729 Plan participants' contributions 25,459 27,019 Benefits paid (107,186) (99,748) Fair value of plan assets at end of year 2,059,265 1,967,059 Funded Status at End of Year$ 1,472,126 $ 476,884

The table below reflects amounts unrecognized in unrestricted net assets at June 30, 2019 and 2018 which have not yet been recognized in net periodic pension cost:

2019 2018

Net prior service cost$ 1,785 $ 50,001 Net actuarial gain (557,077) (949,475) $ (555,292) $ (899,474)

22 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

10. Benefit Plans (continued)

(b) Postretirement Healthcare Benefits (continued)

Other changes in plan assets and benefit obligation recognized in changes in net assets without donor restrictions are as follows:

2019 2018 Net periodic postretirement benefit cost Service cost$ 3,116 $ 34,071 Interest cost 26,248 59,043 Expected return on plan assets (118,024) (110,162) Amortization of prior service cost 4,837 22,146 Amortization of net gain (35,973) (93,257) Curtailment credit (777,343) - Settlement credit (360,558) - Net Periodic Postretiment Benefit Cost (1,257,697) (88,159)

Unamortized actuarial (gain)/loss (4,133) 130,184 Unamortized curtailment and settlement gain (820,722) - Amortization of prior service cost (4,837) (22,146) Amortization of actuarial gain 35,973 93,257 Amortization of curtailment and settlement gain 1,137,901 - Total Changes Recognized in Net Assets Without Donor Restrictions 344,182 201,295 Total Recognized in Net Periodic Postretirement Benefit Cost and Net Assets Without Donor Restrictions$ (913,515) $ 113,136

The estimated prior service and experience loss that will be amortized from net assets without donor restrictions into net periodic benefit cost over the next fiscal year are as follows:

Amortization of prior service cost$ 1,785 Amortization of net gain (34,734) $ (32,949)

23 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

10. Benefit Plans (continued)

(b) Postretirement Healthcare Benefits (continued) Information in respect to the plan as of and for the years ended June 30 is as follows:

2019 2018 Weighted average assumptions as of the measurement date Discount rate - benefit obligation 3.07% 4.10% Discount rate - net periodic benefit cost 4.10% 3.81% Expected long-term return on plan assets 6.00% 6.00%

Assumed healthcare cost trend rates Healthcare cost trend rate assumed for next year - medical (pre-65) 0.00% 7.00% Healthcare cost trend rate assumed for next year - medical (post-65) 4.75% 6.00% Healthcare cost trend rate assumed for next year - prescription drug 9.00% 10.25% Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 3.78% 3.89% Year that the rate reaches the ultimate trend 2075 2075

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plan. A one-percentage-point change in assumed healthcare cost trend rates would have the following effects:

1% point 1% point increase decrease

Effect in total of service and interest cost components$ 2,329 $ (2,162) Effect on postretirement benefit obligation 49,811 (46,249)

EngenderHealth’s overall expected long-term rate of return is 6%. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based on historical returns as well as investment objectives, the desired outcomes of which are to provide capital appreciation and current income through investment in a blend of securities expected to grow in value over the long term and those expected to produce income.

24 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

10. Benefit Plans (continued)

(b) Postretirement Healthcare Benefits (continued) EngenderHealth’s primary investment objective is to maximize total return through income and capital appreciation while investing in a prudent manner by avoiding high-risk investments. EngenderHealth’s plan asset allocation strategy provides for diversification in both equity and fixed income securities so as to provide a balance to the investment portfolio, thereby avoiding undue risk concentration in a single class or category. The Finance Committee of the Board of Directors has the authority to make adjustments to the asset allocations in order to maintain target ranges in the postretirement fund and any permanent changes in policy.

The target and current asset allocations of the plan at June 30, 2019 and 2018 are as follows:

Target 2019 2018

Equity securities 25% - 65% 57% 57% Debt securities 25% - 65% 39% 40% Cash and cash equivalents 0% - 20% 1% 1% Other 0% - 25% 3% 2%

Plan assets at June 30, 2019 and 2018 are valued using Level 1 inputs in the fair value hierarchy. All are mutual funds and are summarized as follows:

2019 2018

Equity - domestic stock$ 688,983 $ 629,383 Equity - international and emerging markets 478,622 486,188 Fixed income - government agencies 236,136 216,907 Fixed income - corporate bonds 538,847 486,080 U.S. Treasury securities 20,345 80,360 Short-term investments 26,384 27,519 Real estate and other 69,948 40,622 $ 2,059,265 $ 1,967,059

Projected payments to retired participants over the next 10 years, which reflect expected future service, are as follows:

2020$ 52,962 2021 45,293 2022 43,343 2023 48,977 2024 46,869 2025 - 2029 193,955 Total$ 431,399

25 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

10. Benefit Plans (continued)

(b) Postretirement Healthcare Benefits (continued) The expected benefit payments are based on the same assumptions used to measure EngenderHealth’s benefit obligation at June 30 and include estimated future employee service. Retired participants contribute 50% of the premium cost of their benefits EngenderHealth contributes the remainder.

In 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively, the Health Care Acts) were signed into law by President Obama. The Health Care Acts include several provisions that may affect a company’s postretirement benefit plans, including imposing an excise tax on high cost coverage, eliminating lifetime and annual coverage limits, reducing subsidies to Medicare Advantage plans, and imposing inflation-adjusted fees of $2 ($2.39 in fiscal 2019) for each person covered by a health insurance policy for each policy plan year ending after September 30, 2012 through September 30, 2019. EngenderHealth has evaluated the effects of the Health Care Acts and concluded that there is no material impact on EngenderHealth’s measurement of its postretirement healthcare benefit obligation as of June 30, 2019. Management will continue to monitor developments, interpretations, and evidence relating to the law and incorporate the latest thinking in future measurements.

11. Commitments and Contingencies

(a) In May 2018, EngenderHealth relocated its headquarters to 505 9th Street NW in Washington, DC under a lease agreement expiring on September 15, 2022.

EngenderHealth had maintained its headquarters at 440 Ninth Avenue in New York City under a lease that expires on February 28, 2028. An amendment to the lease agreement was made on February 1, 2015 reducing the total square footage under the lease. Aggregate minimum rental payments under this lease, the Washington, DC and leases maintained at various foreign office locations are as follows:

2020$ 1,465,439 2021 1,351,600 2022 1,304,376 2023 1,290,170 2024 1,074,101 Thereafter 3,670,862 $ 10,156,548

26 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

11. Commitments and Contingencies (continued)

Minimum rental commitments do not include utilities or annual operating escalation charges, which are also payable under the office leases. Accounts payable and accrued expenses include $1,840,928 and $1,897,435 as of June 30, 2019 and 2018 respectively, of deferred rent related to the amount of straight-lined rent expensed in advance of rental payments made. Rent expense was $1,697,225 and $1,943,024 for the years ended June 30, 2019 and 2018, respectively.

In conjunction with the New York City lease, EngenderHealth has a letter of credit with Citibank in the amount of $268,411 to be held and used under the security provisions of the lease. The letter of credit is secured by EngenderHealth’s investments.

On May 1, 2018, EngenderHealth relocated its headquarters from New York City to Washington, DC. At June 30, 2019, the remaining lease obligation on the New York City office space was $8,386,395. Using third party real estate professionals and appraisers, management estimated potential lease income of $8,166,832 through the remainder of the lease period. At June 30, 2019 and 2018, EngenderHealth estimated the liability on the exit of its rental obligation to be $854,491 and $1,057,940, respectively. These amounts are reported in accounts payable and accrued expenses in the statements of financial position.

(b) EngenderHealth receives funding from U.S. government agencies, primarily USAID, and other organizations for various activities which are subject to audits. Although such audits may result in disallowance of certain expenditures, which would be absorbed by EngenderHealth, in management’s opinion, the ultimate outcome of such audits would not have a material effect on the financial position, changes in net assets, or cash flows of EngenderHealth.

12. Significant Funders

During the years ended June 30, 2019 and 2018, 67% and 75%, respectively, of operating revenues and other support were received from the U.S. government, either directly or through pass-through agencies. In 2019 and 2018, 79% and 80%, respectively, of such amounts were received from USAID. The operations of EngenderHealth’s programs at present levels are dependent upon continued funding from the U.S. government, primarily USAID.

13. Foreign Currency Translation

Substantially all assets and liabilities of the foreign office operations are translated at year-end exchange rates; support and revenue and expenses are translated at the average exchange rates during the year. Translation adjustments for such assets and liabilities are accumulated in net assets without donor restrictions. Gains and losses from foreign currency translation of $13,912 and ($189,109) during the years ended June 30, 2019 and 2018, respectively, and are included in other expenses on the statements of functional expenses.

27 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

14. Grant Agreement

In August 2017, the State of the Netherlands pledged and agreed to provide EngenderHealth with a five year contract of $9,333,889 to be used for the AGO project – Afar. In May 2019, the State of the Netherlands amended the contract to increase funding by an additional $1,706,385. During the years ended June 30, 2019 and 2018, EngenderHealth received advances of $3,819,773 and $1,211,293, respectively, and incurred expenses of $3,234,912 and $728,225, respectively. The unspent advances of $1,067,929 and $483,068 are included in accounts payable and accrued expenses on the statement of financial position at June 30, 2019 and 2018, respectively.

15. Liquidity and Availability of Financial Assets

The following reflects EngenderHealth’s financial assets as of June 30, 2019 reduced by amounts not available for general use within one year, due to contractual or donor- imposed restrictions or internal designations:

Financial Assets Cash and cash equivalents$ 8,669,998 Grants and contracts receivable 1,657,420 Contributions receivable 7,101,982 Investments 1,503,103 Total Financial Assets 18,932,503

Less amounts unavailable for general expenditures within one year due to: Lease security provision (268,411) Donor imposed restrictions (14,063,725) (14,332,136)

Financial Assets Available to Meet General Expenditures Over the Next Twelve Months$ 4,600,367

As part of EngenderHealth’s strategy, management structures its financial assets, consisting of cash and cash equivalents, grant and contracts receivable, contributions receivable and investments to be available as its general expenditures and liabilities come due within one year. EngenderHealth receives cash flow from various government, not-for-profit entities and foundations to fund its programs to meet future cash flow needs.

28 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

16. Management’s Discussion of Current Economic Environment and Plan to Improve Results of Operations

Management is currently making significant efforts to stabilize the organization in the short term and start implementing measures to achieve sustainable growth in the years to come.

The main priorities of focus are the increase of revenue and support through intensifying efforts to increase potential sources by taking the following actions:

a) Establish strategic partnerships with key local and International non-governmental organizations to bid on proposals.

b) Bid on and win large awards to generate economies of scale and keep reducing indirect rates.

c) Continuously improve the quality of EngenderHealth’s proposals and success rate by training staff, identifying and hiring top consultants as necessary, and learning from feedback from donors.

d) Seek opportunities to win prime awards to increase EngenderHealth’s impact, exposure to donors, and revenue.

e) Strengthen pricing methodologies on proposals. Budgets are now fully aligned with the technical proposals and justified with thorough budget notes. Unrecoverable indirect costs for non-U.S. government donors have been reduced significantly by implementing an effective level of effort policy which fairly price EngenderHealth’s staff and shift staffing costs appropriately to direct program implementation. This shift is allowing EngenderHealth to meet or get very close to the indirect rate ceilings allowed by non-U.S. government donors. Therefore, the depletion of unrestricted funds has been contained.

Management has strengthened the international finance team to provide more support and capacity building on pricing, project start up, timely and accurate reporting and analysis, accounting, internal controls and processes, compliance, sub-award monitoring, and project close out. The main objective of this initiative is to meet program deliverables without overspending projects’ budgets or underspending them, where possible.

29 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

16. Management’s Discussion of Current Economic Environment and Plan to Improve Results of Operations (continued)

Due to the COVID-19 pandemic, EngenderHealth is expecting a short-term reduction of revenue because some programmatic activities may be delayed while the world addresses this global health crisis. However, EngenderHealth’s major donors, both governmental and private, have reached out to express their support and flexibility with their current awards. Some donors have offered to convert project grants to general operating support; all have expressed their flexibility with extensions. EngenderHealth cannot yet assess the financial impact of program changes due to the pandemic. However, management knows that the need for the work EngenderHealth performs will only be amplified during the COVID-19 response and recovery periods, and management anticipates maintaining and expanding program engagement, especially during the recovery period. With this opportunity and the current support of EngenderHealth’s donors to offset short-term challenges, management maintains a strong outlook for fiscal 2020 and 2021.

Contributions and Fundraising:

Contributions in fiscal 2020 are expected to increase by approximately $5,300,000, including $4,300,000 from two individual bequests and a $1,000,000 from a private foundation. In addition, EngenderHealth projects to receive approximately $1,400,000 in other contributions in fiscal 2020 and fiscal 2021.

The above contributions will strengthen EngenderHealth’s liquidity position and unrestricted reserves. This will significantly protect EngenderHealth from any unexpected downturn and allow management to run operations in a more efficient and effective manner.

Find Cost Savings and Efficiencies without Impacting Productivity:

EngenderHealth was able to sub-lease the New York office and will save approximately $1,000,000 annually until the end of its primary lease ending in February 27, 2028. In addition, management is targeting $300,000 in savings in fiscal 2020 by reducing unnecessary consulting services and international travel.

At the same time, management is currently negotiating a reduction of EngenderHealth’s existing Washington, DC office lease agreement to benefit from savings as a result of monthly rent costs.

Management is also planning to terminate EngenderHealth’s contract with its outsourced IT provider and instead hire an in-house IT senior manager. This will generate efficiencies and cost savings of approximately $100,000 annually.

30 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

16. Management’s Discussion of Current Economic Environment and Plan to Improve Results of Operations (continued)

Find Cost Savings and Efficiencies without Impacting Productivity (continued):

Finally, EngenderHealth’s lawyers are working to recover amounts from its overfunded post-retirement health benefit plan from its plan trustee. Management estimates that the amount recovered could total $1,400,000 to $2,000,000.

Program Improvements:

With a new strategic plan in place, EngenderHealth is working to maximize its impact and ensure efficiency in its programs. Management has developed and will soon roll out an organization-wide approach to Value for Money, starting with EngenderHealth’s principles and commitment to measure and track how it can provide more value with finite resources. Value for Money is a key component of any project funded by the UK government, and EngenderHealth’s approach will make it more competitive in bids for UK Aid as well as more desirable to other donors.

EngenderHealth’s strategic plan provides a clear direction on the goals of its work. It also offers significant opportunity to work on a wide range of topics in health and social services, especially through new and innovative partnerships. As EngenderHealth brings its strengths to new partnerships and integrates its work into new consortia, EngenderHealth will have more opportunities to be funded and to achieve impact. Additionally, scopes of work that are new to EngenderHealth, such as working in humanitarian settings, are ones where management anticipates increased opportunities in the future. Management is building EngenderHealth’s capacity and ability to demonstrate its capabilities in these areas, which will position EngenderHealth well for additional funding opportunities and impact.

COVID-19:

EngenderHealth has taken proactive measures to protect its staff in the US as well as overseas, as noted in a public statement on its website. Staff has pivoted quickly to working from home in the US and in some of EngenderHealth’s international offices, moving additional business systems online and ensuring staff are connected by technology. Management is working with EngenderHealth’s host country governments to support COVID-19 response efforts and to ensure that its support for sexual and reproductive health services continues uninterrupted; this is a crucial time for women and girls to have access to the health services they need.

Management is also facilitating conversations among EngenderHealth’s international non-governmental organization (“NGO”) partners, both at the executive level and at the program management level. Through this coordination management is aligning EngenderHealth’s policies and practices especially where it works in partnership and through prime/sub relationships, to ensure that EngenderHealth’s collective staff are safe and supported and its joint projects are protected.

31 EngenderHealth, Inc.

Notes to Financial Statements June 30, 2019 and 2018

16. Management’s Discussion of Current Economic Environment and Plan to Improve Results of Operations (continued)

COVID-19 (continued):

The COVID-19 pandemic is unprecedented for all of the international NGOs and the governments of the countries where EngenderHealth works. Because of the work EngenderHealth does, management has perspectives and skills that are useful and needed during this time. EngenderHealth is standing with its partners and colleagues in solidarity to ensure a productive response and a swift recovery.

17. Subsequent Events

Subsequent to year end, the COVID-19 pandemic has resulted in substantial volatility in the global financial markets. As a result, EngenderHealth’s investment portfolio has incurred a significant decline in its fair value since June 30, 2019. Because the value of EngenderHealth’s individual investments have and will fluctuate in response to changing market conditions, the amount of losses, if any, that will be recognized in subsequent periods, cannot be determined.

* * * * *

32

EngenderHealth, Inc.

Uniform Guidance Schedules and Reports

June 30, 2019

EngenderHealth, Inc.

Schedule of Expenditures of Federal Awards Year Ended June 30, 2019

Federal CFDA Pass-Through Entity Identyfing Provided to Total Federal Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Number Award Period Subrecipients Expenditures

U.S. Agency for International Development USAID Foreign Assistance for Programs Overseas - Direct Programs: Mayer Hashi Family Planning Project in Bangladesh (MH-II) 98.001 10/1/13 - 12/31/18$ 32,734 $ 801,033 Fistula Care Plus 98.001 12/12/13 - 9/30/19 637,847 5,004,557 Integrated Maternal, Neonatal, Child Health and Nutrition/Family Planning Regional Projects in Luzon, Visayas and Mindanao 98.001 2/19/13 - 12/31/18 107,598 1,150,179 Agir Pour La Planification Familiale - AGIR-PF 98.001 7/5/13 - 7/4/18 - 122,715 Burundians Responding Against Violence and Inequality (BRAVI) 98.001 9/22/14 - 9/21/19 61,560 1,137,938 Reproductive, Maternal and Newborn Health Program (RMNH) 98.001 8/18/14 - 8/17/19 34,159 1,891,366

Total USAID Foreign Assistance for Programs Overseas - Direct Programs 873,898 10,107,788

USAID Foreign Assistance for Programs Overseas - Indirect Programs: Pass-through Social Marketing Company (SMC): Marketing Innovation For Health 98.001 SMC-AID-MISHD-005 11/16/16 - 7/31/21 - 100,378

Pass-through Elizabeth Glaser Pediatric Aids Foundation: Comprehensive Health Services Delivery Program 98.001 UT-00-9-280-04191-0-00 10/1/16 - 6/20/21 - 729,179

Pass-through Jhpiego Corporation: Sauti - TZ 98.001 15-SBA-048 2/9/15 - 11/8/19 - 1,256,143 Guinea Health Services Delivery 98.001 16-SBA-046 1/1/16 - 8/31/20 - 606,960 Boresha Afya - Lake/Western Zone 98.001 17-SBA-154 10/1/16 - 6/30/21 - 1,020,849

Pass-through Deloitte Consulting Limited: Comprehensive Health Services Delivery Program, Southern Region in Tanzania 98.001 USA001/1/ENGENDERHEALTH 10/1/16 - 9/30/21 - 1,289,266

Total USAID Foreign Assistance for Programs Overseas - Indirect Programs - 5,002,775

Total U.S. Agency for International Development 873,898 15,110,563

U.S. Department of Health & Human Services Teenage Pregnancy Prevention Program - Direct Program: New or Innovative Approaches to Prevent Teen Pregnancy 93.297 7/1/15 - 6/30/20 199,301 935,310

U.S. Department of State Office of Global Women's Issues - Direct Program: Global Women's Empowerment Programs 19.801 9/30/16 - 3/31/19 1,309,305 2,924,606

Total Expenditures of Federal Awards $ 2,382,504 $ 18,970,479

See independent auditors' report and notes to schedule of expenditures of federal awards

33 EngenderHealth, Inc.

Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2019

1. Basis of Presentation

The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) includes the federal award activity of EngenderHealth, Inc. (“EngenderHealth”) under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of EngenderHealth, it is not intended to and does not present the financial position, changes in net assets or cash flows of EngenderHealth.

2. Summary of Significant Accounting Policies

Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available.

3. Nonmonetary Assistance

Nonmonetary assistance is reported in the Schedule based on the amount disbursed or received. EngenderHealth received no nonmonetary assistance for the year ended June 30, 2019.

4. Indirect Cost Rate

The Organization has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

34

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards

Independent Auditors’ Report

Board of Directors EngenderHealth, Inc.

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of EngenderHealth, Inc. (“EngenderHealth”) which comprise the statement of financial position as of June 30, 2019, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated March 27, 2020.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered EngenderHealth’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of EngenderHealth’s internal control. Accordingly, we do not express an opinion on the effectiveness of EngenderHealth’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

PKF O’CONNOR DAVIES, LLP 665 Fifth Avenue, New York, NY 10022 I Tel: 212.867.8000 or 212.286.2600 I Fax: 212.286.4080 I www.pkfod.com

PKF O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Board of Directors EngenderHealth, Inc. Page 2

Compliance and Other Matters

As part of obtaining reasonable assurance about whether EngenderHealth’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

March 27, 2020

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

Independent Auditors’ Report

Board of Directors EngenderHealth, Inc.

Report on Compliance for Each Major Federal Program

We have audited EngenderHealth, Inc.’s (“EngenderHealth”) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of EngenderHealth’s major federal programs for the year ended June 30, 2019. EngenderHealth’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditors’ Responsibility

Our responsibility is to express an opinion on compliance for each of EngenderHealth’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about EngenderHealth’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of EngenderHealth’s compliance.

Opinion on Each Major Federal Program

In our opinion, EngenderHealth complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.

PKF O’CONNOR DAVIES, LLP 665 Fifth Avenue, New York, NY 10022 I Tel: 212.867.8000 or 212.286.2600 I Fax: 212.286.4080 I www.pkfod.com

PKF O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Board of Directors EngenderHealth, Inc. Page 2

Report on Internal Control Over Compliance

Management of EngenderHealth is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered EngenderHealth’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of EngenderHealth’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Board of Directors EngenderHealth, Inc. Page 3

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

We have audited the financial statements of EngenderHealth as of and for the year ended June 30, 2019, and have issued our report thereon dated March 27, 2020, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance 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.

March 27, 2020

EngenderHealth, Inc.

Schedule of Findings and Questioned Costs Year Ended June 30, 2019

Section I – Summary of Auditors’ Results

Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Noncompliance material to financial statements noted? yes X no

Federal Awards Internal control over major federal programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Type of auditors’ report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516 (a)? yes X no Identification of major federal programs: CFDA Number(s) Name of Federal Program or Cluster 98.001 USAID Foreign Assistance for Programs Overseas 19.801 Office of Global Women’s Issues

Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee? X yes no

Section II – Financial Statement Findings

During our audit, we noted no material findings for the year ended June 30, 2019.

Section III – Federal Award Findings and Questioned Costs

During our audit, we noted no material instances of noncompliance and none of the costs reported in the federal financially assisted programs are questioned or recommended to be disallowed.

Section IV – Prior Year Audit Findings

There were no findings in the prior year.

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