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Financial Statements and Report of Independent Certified Public Accountants Consolidated Financial Statements and Report of Independent Certified Public Accountants ACCION INTERNATIONAL December 31, 2016 and 2015 ACCION INTERNATIONAL TABLE OF CONTENTS Page Report of Independent Certified Public Accountants 1 - 2 Consolidated Financial Statements Consolidated Statements of Financial Position 3 Consolidated Statements of Activities 4 Consolidated Statements of Functional Expenses 5 - 6 Consolidated Statements of Cash Flows 7 Notes to Consolidated Financial Statements 8 - 25 Grant Thornton LLP 1400 Computer Drive, 3rd Floor Westborough, MA 01581 T 508.926.2200 F 508.616.2972 GrantThornton.com linkd.in/GrantThorntonUS twitter.com/GrantThorntonUS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors ACCION International We have audited the accompanying consolidated financial statements of ACCION International and subsidiaries, which comprise the consolidated statements of financial position as of December 31, 2016 and 2015, and the related consolidated 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 consolidated 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 consolidated 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 consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. Grant Thornton LLP U.S. member firm of Grant Thornton International Ltd We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ACCION International and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Westborough, Massachusetts August 23, 2017 - 2 - ACCION INTERNATIONAL AND SUBSIDIARIES Consolidated Statements of Financial Position As of December 31, 2016 and 2015 2016 2015 ASSETS CURRENT ASSETS Cash and cash equivalents $ 26,578,086 $ 21,591,499 Short-term investments 89,545,845 91,457,399 Notes receivable from affiliates 250,000 992,243 Receivable from investments sold - 6,249,180 Grants receivable - net 4,664,905 2,311,246 Contributions receivable - net 378,014 345,203 Contracts receivable 1,160,723 1,838,705 Prepaid expenses 1,147,316 971,179 Deposits, advances and other receivables 694,233 543,591 Total current assets 124,419,122 126,300,245 NONCURRENT ASSETS Cash restricted by foundation for long-term purposes - 150,352 Grants receivable - net 5,189,602 2,356,759 Contributions receivable - net 234,000 360,000 Global Bridge Guarantee Program investments 3,313,492 6,771,867 Investments in affiliates 225,163,743 229,963,499 Property and equipment - net 2,059,918 2,345,505 Total noncurrent assets 235,960,755 241,947,982 Total assets $ 360,379,877 $ 368,248,227 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable and accrued liabilities $ 5,265,529 $ 4,928,797 Deferred revenue 510,442 574,895 Notes payable 250,000 1,644,976 Total current liabilities 6,025,971 7,148,668 NONCURRENT LIABILITIES Notes payable - net of current portion - 3,773,293 Total noncurrent liabilities - 3,773,293 Total liabilities 6,025,971 10,921,961 NET ASSETS Unrestricted Undesignated 327,891,720 336,118,371 Board designated 6,602,266 6,704,262 Noncontrolling interest in holding entities 4,023,621 4,032,795 Total unrestricted net assets 338,517,607 346,855,428 Temporarily restricted 15,836,299 10,470,838 Total net assets 354,353,906 357,326,266 Total liabilities and net assets $ 360,379,877 $ 368,248,227 The accompanying notes are an integral part of these consolidated financial statements. - 3 - ACCION INTERNATIONAL AND SUBSIDIARIES Consolidated Statements of Activities Years ended December 31, 2016 and 2015 2016 2015 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total REVENUES Contributions and grants $ 4,976,241 12,564,181 $ 17,540,422 $ 10,564,105 $ 4,384,642 $ 14,948,747 Dividend and interest income from program investments 2,235,204 2,234 2,237,438 3,537,119 - 3,537,119 Dividend and interest income from short-term investments 3,214,160 - 3,214,160 2,984,494 - 2,984,494 Contract revenues and training fees 3,487,528 - 3,487,528 4,176,551 - 4,176,551 Net assets released from restrictions 7,200,954 (7,200,954) - 6,244,302 (6,244,302) - Total revenues 21,114,087 5,365,461 26,479,548 27,506,571 (1,859,660) 25,646,911 FUNCTIONAL EXPENSES Program services Global Programs 11,616,745 - 11,616,745 12,020,737 - 12,020,737 Global Investments 6,956,620 - 6,956,620 8,938,179 - 8,938,179 Center for Financial Inclusion 6,381,852 - 6,381,852 7,339,828 - 7,339,828 Communications 1,512,475 - 1,512,475 1,444,695 - 1,444,695 Total program services 26,467,692 - 26,467,692 29,743,439 - 29,743,439 Supporting services General and administrative 5,139,923 - 5,139,923 5,229,045 - 5,229,045 Fundraising 2,289,253 - 2,289,253 2,637,253 - 2,637,253 Total supporting services 7,429,176 - 7,429,176 7,866,298 - 7,866,298 Total functional expenses 33,896,868 - 33,896,868 37,609,737 - 37,609,737 Change in net assets from operations (12,782,781) 5,365,461 (7,417,320) (10,103,166) (1,859,660) (11,962,826) Income tax expense (Note 9) (16,048) - (16,048) (7,657) - (7,657) Equity in income of equity investments 12,199,275 - 12,199,275 12,570,762 - 12,570,762 Deconsolidation of SCM - - - 8,210,204 - 8,210,204 Net unrealized loss on investments (26,450,493) - (26,450,493) (25,967,193) - (25,967,193) Net realized gain on investments 18,754,883 - 18,754,883 11,103,868 - 11,103,868 Foreign currency translation losses, net (68,172) - (68,172) (202,857) - (202,857) Other 25,515 - 25,515 (200,595) - (200,595) Change in net assets (8,337,821) 5,365,461 (2,972,360) (4,596,634) (1,859,660) (6,456,294) Net assets - beginning of year 346,855,428 10,470,838 357,326,266 351,452,062 12,330,498 363,782,560 Net assets - end of year $ 338,517,607 $ 15,836,299 $ 354,353,906 $ 346,855,428 $ 10,470,838 $ 357,326,266 The accompanying notes are an integral part of these consolidated financial statements. - 4 - ACCION INTERNATIONAL AND SUBSIDIARIES Consolidated Statement of Functional Expenses Year ended December 31, 2016 Program Services Supporting Services Center for Global Global Financial General and Total Programs Investments Inclusion Communications Administrative Fundraising Expenses FUNCTIONAL EXPENSES Salaries and related expenses $ 6,155,752 $ 3,209,350 $ 3,364,624 $ 867,669 $ 2,918,327 $ 1,438,386 $ 17,954,108 Professional services 3,004,453 1,893,228 1,320,523 275,877 1,025,375 326,349 7,845,805 Travel and conferences 1,328,621 1,306,775 1,069,382 178,376 298,331 163,927 4,345,412 Office and occupancy 717,120 367,026 423,850 163,220 661,283 281,528 2,614,027 Awards and grants 265,674 - 111,310 - - - 376,984 Provision for doubtful accounts 2,961 - - - - - 2,961 Taxes and penalties 31,418 - - - - - 31,418 Depreciation 75,501 40,577 57,377 22,698 131,717 52,928 380,798 Interest and fees 7,083 113,721 3,185 175 51,101 10,970 186,235 Miscellaneous 28,162 25,943 31,601 4,460 53,789 15,165 159,120 Total $ 11,616,745 $ 6,956,620 $ 6,381,852 $ 1,512,475 $ 5,139,923 $ 2,289,253 $ 33,896,868 The accompanying notes are an integral part of this consolidated financial statement. - 5 - ACCION INTERNATIONAL AND SUBSIDIARIES Consolidated Statement of Functional Expenses Year ended December 31, 2015 Program Services Supporting Services Center for Global Global Financial General and Total Programs Investments Inclusion Communications Administrative Fundraising Expenses FUNCTIONAL EXPENSES Salaries and related expenses $ 7,536,072 $ 4,145,948 $ 3,139,895 $ 768,339 $ 3,179,476 $ 1,744,609 $ 20,514,339
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