MIDTOWN ASSISTANCE CENTER, INC.

FINANCIAL STATEMENTS (MODIFIED BASIS)

SEPTEMBER 30, 2019

MIDTOWN ASSISTANCE CENTER, INC. TABLE OF CONTENTS SEPTEMBER 30, 2019

INDEPENDENT AUDITORS’ REPORT 1

FINANCIAL STATEMENTS

Statements of , Liabilities and Net Assets – Modified Cash Basis 3

Statement of Support, and – Modified Cash Basis 4

Statement of Functional Expenses – Modified Cash Basis 5

Notes to the Financial Statements 6

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors Midtown Assistance Center, Inc.

We have audited the accompanying financial statements of Midtown Assistance Center, Inc. (a nonprofit organization), which comprise the statement of assets, liabilities, and net assets – modified cash basis as of September 30, 2019, the related statement of support, revenue, and expenses – modified cash basis, statement of functional expenses – modified cash basis for the year 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 the modified cash basis of as described in Note 2; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our . We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities, and net assets – modified cash basis of Midtown Assistance Center, Inc. as of September 30, 2019, and its support, revenue, and expenses – modified cash basis for the year then ended in accordance with the basis of accounting as described in Note 2.

Basis of Accounting We draw attention to Note 2 of the financial statements, which describes the basis of accounting. The financial statements are prepared in the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to that matter.

Report on Summarized Comparative Information We have previously audited Midtown Assistance Center, Inc.’s 2018 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated February 12, 2019. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2018, is consistent, in all material respects, with the audited financial statements from which it has been derived.

Emphasis of Matter As discussed in Note 7 to the financial statements, the 2018 statement of assets, liabilities and net assets – modified cash basis and statement of support, revenue and expenses – modified cash basis have been restated to correct a misstatement. Our opinion is not modified with respect to this matter.

Atlanta, Georgia April 6, 2020

2 MIDTOWN ASSISTANCE CENTER, INC. STATEMENTS OF ASSETS, LIABILITIES AND NET ASSETS – MODIFIED CASH BASIS SEPTEMBER 30, 2019 AND 2018

ASSETS 2018 2019 (Restated) ASSETS Cash and cash equivalents $ 255,794 $ 327,997 TOTAL ASSETS $ 255,794 $ 327,997

LIABILITIES AND NET ASSETS LIABILITIES Unearned income $ - $ 51,514 TOTAL LIABILITIES - 51,514 NET ASSETS Without donor restrictions 164,703 94,858 With donor restrictions Restricted by purpose 91,091 181,625 TOTAL NET ASSETS 255,794 276,483 TOTAL LIABILITIES AND NET ASSETS $ 255,794 $ 327,997

See notes to the financial statements.

3 MIDTOWN ASSISTANCE CENTER, INC. STATEMENT OF SUPPORT, REVENUE AND EXPENSES – MODIFIED CASH BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2019 (with comparative totals for 2018)

2019 Without Donor With Donor 2018 Restrictions Restrictions Total (Restated)

PUBLIC SUPPORT AND REVENUE Individual, corporation and foundation contributions $ 455,067 $ 90,074 $ 545,141 $ 588,105 Government grants - 133,850 133,850 110,350 Congregation support 108,150 - 108,150 113,240 Special events (direct benefit to donor $9,218 and $9,596 for 2019 and 2018, respectively) 38,155 - 38,155 39,058 Fee for service revenue 61,395 - 61,395 58,391 Interest income 1,554 - 1,554 383 Net assets released from restrictions 314,458 (314,458) - -

Total public support and revenue 978,779 (90,534) 888,245 909,527

EXPENSES Program services 803,132 - 803,132 783,601 Supporting services Management and general 50,251 - 50,251 51,026 Fundraising 55,551 - 55,551 37,007

Total expenses 908,934 - 908,934 871,634

CHANGES IN NET ASSETS 69,845 (90,534) (20,689) 37,893

NET ASSETS AT BEGINNING OF YEAR (RESTATED) 94,858 181,625 276,483 238,590 NET ASSETS AT END OF YEAR $ 164,703 $ 91,091 $ 255,794 $ 276,483

See notes to the financial statements.

4 MIDTOWN ASSISTANCE CENTER, INC. STATEMENT OF FUNCTIONAL EXPENSES – MODIFIED CASH BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2019 (with comparative totals for 2018)

2019 2018 Program Management Fund Total Total Services and General Raising Expenses Expenses SALARIES AND RELATED EXPENSES Salaries and wages $ 311,725 $ 7,716 $ 39,543 $ 358,984 $ 336,796 Payroll taxes 21,342 590 2,957 24,889 22,598 Employee benefits 20,726 8,017 4,577 33,320 26,927 Total salaries and related expenses 353,793 16,323 47,077 417,193 386,321

OTHER EXPENSES Housing assistance 234,761 - - 234,761 238,333 Utilities assistance 99,794 - - 99,794 106,213 Other 33,024 2,467 7,874 43,365 29,375 Food assistance 40,560 - - 40,560 33,997 Transportation assistance 26,105 - - 26,105 31,576 Professional fees - 15,909 - 15,909 16,102 Insurance - 9,938 - 9,938 9,756 Telephone 7,246 600 600 8,446 7,723 Technology 7,849 - - 7,849 7,849 Dues/publications - 3,535 - 3,535 1,187 Office expense - 1,479 - 1,479 3,202

Total other expenses 449,339 33,928 8,474 491,741 485,313

TOTAL EXPENSES $ 803,132 $ 50,251 $ 55,551 $ 908,934 $ 871,634

See notes to the financial statements.

5 MIDTOWN ASSISTANCE CENTER, INC. NOTES TO THE FINANCIAL STATEMENTS MODIFIED CASH BASIS SEPTEMBER 30, 2019 AND 2018

1. ORGANIZATION

Midtown Assistance Center, Inc. (the Center) was incorporated as a nonprofit organization in the state of Georgia in November 1988. The Center’s mission is to provide temporary emergency assistance (primarily rent and utility support and food distribution) to the working poor of Midtown and Downtown Atlanta to prevent homelessness and hunger during periods of crisis. The Center is supported by member congregations, public and private grants as well as individual and corporate contributions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Adoption of New Accounting Pronouncement In August 2016, the Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-14-Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, which made several improvements to current financial reporting for not-for-profits. The guidance was effective for the Center’s annual financial statements for the year ended September 30, 2019. The changes in the ASU were applied on a retrospective basis, which means that all financial statements presented reflected the changes and the effect was disclosed for each period presented.

Basis of Presentation The accompanying financial statements have been prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America (GAAP). That basis differs from GAAP primarily because the Center records contributions and expenses on a cash basis instead of recognizing contributions and expenses on an basis.

Net assets, , expenses, gains, and losses are recorded based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Center and changes therein are classified and reported as follows: Without Donor Restrictions – Net assets that are not subject to donor-imposed restrictions. With Donor Restrictions – Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Center and/or passage of time as well as net assets subject to donor-imposed stipulations that the Center maintain them permanently.

Comparative Statements The amounts shown for the year ended September 30, 2018 in the accompanying financial statements are included to provide a basis for comparison with 2019 and present summarized totals only. Accordingly, the 2018 totals are not intended to present all information necessary for a fair presentation in conformity with the modified cash basis of accounting. Such information should be read in conjunction with the financial statements for the year ended September 30, 2018, from which the summarized information was derived.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Accounting for Contributions Contributions are recognized as received. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Contributions received that are designated by the donor for specific purposes or for use in a future period are reported as an increase to net assets with donor restrictions.

Restrictions on contributions expire when a purpose or time restriction is accomplished. Upon satisfaction, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the accompanying statement of activities as net assets released from restrictions.

Restricted contributions received in the same year in which the restrictions are met are recorded as an increase in restricted support at the time of receipt and as net assets released from restrictions upon satisfaction of the donor restriction.

Fee for Service Revenue As noted, fee for service revenue is recognized on an accrual basis. The Center entered into a contract during 2017 and received $51,514 of funding in 2018 in advance of services to be performed through June 30, 2019. Revenue from this contract was recognized as services are performed.

Cash and Cash Equivalents For financial reporting purposes, the Center considers all financial instruments with maturities of less than 90 days as cash equivalents. The Center believes minimal credit risk exists with respect to any of its financial instruments. The Company maintains cash balances with financial institutions. Deposit accounts at the institutions are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). No exposure existed at September 30, 2019 or 2018.

Tax Status The Center is exempt from income taxes under Section 501(c)(3) of the U.S. Internal Revenue Code (IRC) and is classified as an organization which is not a private foundation under Section 509(a) of the IRC. The Center qualifies for the charitable contribution deduction.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

In Kind Contributions The Center receives significant in kind contributions that are not reflected in the accompanying modified cash basis financial statements. Management estimated the of in kind contributions for the years ended September 30, to be as follows:

2019 2018 Food $ 125,000 $ 117,000 Rent for office space provided free of charge 46,000 46,000 Clothing 32,000 32,000 Christmas gifts 15,000 15,000 Transportation tokens 15,000 14,000 Printing services 4,000 5,000 Other 700 400 Computer, software and equipment - 52,000 Office furniture - 1,600

In addition, many individuals volunteer their time and perform a variety of tasks that assist the Center with its programs, fundraising and various administrative functions. The Center received more than 8,400 and 8,000 volunteer hours in 2019 and 2018, respectively.

Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited and personnel costs have been allocated based on estimates of time and effort.

Recently Issued Accounting Standards In May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) superseding the guidance in former Accounting Standards Codification (ASC) 605, . It requires entities to recognize revenue based on the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance will be effective for fiscal year ending September 30, 2020 for the Center. The Center does not expect the adoption to have a material impact on the financial statements.

In June 2018 the FASB issued ASU 2018-08 Not-for-Profit Entities (Topic 958-605) clarifying the accounting guidance for contributions received and contributions made to further improve the scope and the accounting guidance for revenue recognition, to assist entities distinguishing between contributions (non-reciprocal) and exchange (reciprocal) transactions and to determine whether a contribution is conditional. The effective date of the amendment is fiscal year ending September 30, 2020. The Center does not expect the adoption to have a material impact on the financial statements.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Events Occurring After Report Date Management has evaluated events and transactions that occurred between September 30, 2019 and April 6, 2020, which is the date that the financial statements were available to be issued, for possible disclosure in the financial statements. Reference Note 8.

3. DESIGNATED FUND

During 2008 The William F. Shallenberger Trust Fund (the Fund) contributed $950,000 to The Community Foundation for Greater Atlanta, Inc. to establish a designated fund to support the Center in perpetuity. The Fund agreement provides for an annual distribution of at least $50,000 to the Center beginning in the year ended September 30, 2009. The Center received $50,000 during each of the years ended September 30, 2019 and 2018.

4. COMPOSITION OF NET ASSETS

Net assets with donor restrictions were available for the following purposes at September 30, 2019 and 2018:

2018 2019 (Restated) Subject to expenditures for specific purpose: Homeless prevention $ 63,082 $ 107,647 Internet and digital inclusion 25,186 58,204 Hunger prevention 2,823 15,774 $ 91,091 $ 181,625

Net assets with donor restrictions released from restrictions during the year ended September 30, 2019 were as follows:

2019 Homeless prevention $ 269,285 Internet and digital inclusion 29,722 Hunger prevention 15,451 $ 314,458

9 MIDTOWN ASSISTANCE CENTER, INC. NOTES TO THE FINANCIAL STATEMENTS MODIFIED CASH BASIS SEPTEMBER 30, 2019 AND 2018

5. FUND RAISING EVENTS

A 5K race, luncheon, and two other smaller fund-raising events were held during the year ended September 30, as follows:

2019 2018 Sponsorships, entry fees, and tickets $ 47,373 $ 48,654 Direct costs for race management, t-shirts, awards, promotion, and food and beverage (14,093) (13,570) Net proceeds $ 33,280 $ 35,084

For reporting, both the revenue and costs have been reduced by $9,218 and $9,596 as of September 30, 2019 and 2018, respectively, which is the computed value of t-shirts and awards given to participants which offset reportable contributions in accordance with FASB ASC 958, Not-For-Profit Entities.

6. LIQUIDITY AND FUNDS AVAILABLE

The following table reflects the Center’s financial assets as of September 30, 2019, reduced by amounts not available for expenditure within one year. Financial assets are considered unavailable when illiquid or not convertible to cash within one year.

Financial assets: Cash and cash equivalents $ 255,794 Financial assets, at year-end 255,794 Less: Assets unavailable for general expenditures within one year: Net assets with donor purpose restrictions (91,091) Financial assets available to meet cash needs for general expenditures within one year $ 164,703

The Center is substantially supported by contributions and grants. Because a donor’s restrictions requires resources to be used in particular manner or in a future period, The Center must maintain sufficient resources to meet those responsibilities to donors. Therefore, certain financial assets may not be available for general expenditures within one year. As part of the Center’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due.

10 MIDTOWN ASSISTANCE CENTER, INC. NOTES TO THE FINANCIAL STATEMENTS MODIFIED CASH BASIS SEPTEMBER 30, 2019 AND 2018

7. PRIOR PERIOD ADJUSTMENT

The Center restated the previously issued 2018 statement of assets, liabilities and net assets – modified cash basis and statement of support, revenue and expenses – modified cash basis due to an error in the classification of net assets with donor restrictions. As the purpose restrictions are met, an amount is reclassified from net assets with donor restrictions to net assets without donor restrictions. Management noted two donor contributions for which $22,484 of restrictions were met and were not released as of September 30, 2018. Correcting this error increased net assets without donor restrictions and reduced net assets with donor restrictions in the amount of $22,484. There was no effect of the restatement on total net assets.

The correction is made in accordance with FASB ASC 250, Accounting Changes and Error Corrections. As a result of the correction, the following adjustments were recorded to reflect the restatement in the statement of assets, liabilities and net assets – modified cash basis and statement of support, revenue and expenses – modified cash basis as of and for the year ended September 30, 2018.

Net Assets without Net Assets Donor with Donor Total Net Restrictions Restrictions Assets Balance, September 30, 2018 as previously stated $ 72,374 $ 204,109 $ 276,483 Net assets released from restriction 22,484 (22,484) - Balance, September 30, 2018 as restated $ 94,858 $ 181,625 $ 276,483

8. SUBSEQUENT EVENT

In early 2020, an outbreak of a novel strain of coronavirus (COVID-19) emerged globally. As a result, there have been mandates from federal, state and local authorities resulting in an overall decline in economic activity. The ultimate impact of COVID-19 on the financial performance of the Center is not reasonably estimable at this time.

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