ANNUAL REPORT 2020

We inspire people to plant, nurture, and celebrate trees. 1 Arbor Day Foundation TABLE OF CONTENTS

Message from the Chief Executive, Matt Harris...... 5

Board of Trustees...... 6

Message from the Board Chair, Pat Covey...... 7

ARBOR DAY FOUNDATION PROGRAM UPDATES

Time for Trees® Initiative...... 8-9 Trees for America®...... 10-11 Replanting Our Forests...... 12-13 Tree City USA®...... 14-15 Community Tree Recovery™ ...... 16-17 Rain Forest Rescue®...... 18-19 Energy-Saving Trees® & Community Canopy™...... 20-21 Alliance for Community Trees™...... 22-23 Tree Campus®...... 24-25 Celebrate Arbor Day...... 26-27 Arbor Day Farm®...... 28-29 #TeamTrees®...... 30-31

Financial Report and Audit...... 32-42 When we plant trees, we plant the seeds of peace and the seeds of hope. —Wangari Maathai 2019-2020 Annual Report 4 Dear Members and Friends,

As I reflect on this past year, I cannot help but In the pages that follow, the story of the be humbled. So much has been happening Arbor Day Foundation’s unprecedented year all around us, and yet our members and unfolds. You will find an update on our supporters have remained committed to the Time for Trees® initiative, where I am happy importance of the Arbor Day Foundation’s to report that we reached our goal to inspire mission. And the chorus of people dedicated 5 million tree planters two years ahead of to using trees as a solution to global issues is schedule. You will see the continued strength growing — from YouTube stars to corporate of longstanding programs as well as the executives to school classrooms. Trees have promise of new ones. You will also read about again shown their ability to unite us this year. the powerful #TeamTrees® movement that They’ve proven particularly comforting as inspired a new generation of tree planters. many of us have sought peace and comfort amid trees during the global pandemic. None of this would be possible without the dedication of Foundation members and Together, we were able to plant trees at a partners. Thanks to each of you, the important historic level. This year more than 40 million work of making our world greener and trees were planted and distributed — the healthier continues. equivalent of planting New York City’s Central Park every 6 hours for an entire With deepest gratitude, year. Those 40 million trees have the power to provide us with the necessities of life for generations to come, the power to create change amid crisis. Matt Harris Chief Executive

2019-2020 Annual Report 5 BOARD OF TRUSTEES

Danielle Crumrine Mary Desjardins-Therrien Susan Henricks Ernesto Herrera Mark Johnson Pittsburgh, PA Toronto, ON Canada Omaha, NE Mexico City, Mexico Scottsdale, AZ

Denise Naguib Robert Ruano Crayton Webb Leslie Weldon Bethesda, MD Coral Gables, FL Dallas, TX Upper Marlboro, MD

6 Arbor Day Foundation Dear Members and Friends,

Resiliency has been at the forefront of Throughout this annual report, you will my mind lately. It is one of those traits find evidence of this resiliency. Stories about trees that I have always admired. that reflect the consistent and inspiring I am amazed by a tree’s ability to not work of longstanding Arbor Day only survive in less than ideal conditions, Foundation programs. Updates on new but then go on to thrive as it grows. and exciting programs and initiatives that are reaching new partners and tree In this way, the Arbor Day Foundation planters. Financials that illustrate the has much in common with the trees it is strong foundation your loyal membership dedicated to planting. In the face of all has helped to build. the adversity of this past year, and like the giant redwoods that stand up against the It has been an honor to step up to the California fires, the Foundation stayed role as chair of the Board of Trustees, and strong — and found ways to thrive. Team I am grateful to each of you for choosing members came together to overcome the to support a tree planting mission so challenges of a global pandemic. They close to my heart. Together, we can make helped communities celebrate Arbor Day tomorrow better through trees. in new ways, supported planting partners as they adapted to new strategies, and Sincerely, found ways to safely open Arbor Day Farm to visitors looking for a respite in nature. Foundation members and supporters also stepped up to inspire a new level of tree planting that will provide the necessities of life for all Pat Covey, Chair people … for generations to come. Board of Trustees

2019-2020 Annual Report 7 Time for Trees® Initiative

8 Arbor Day Foundation TREES ARE AN IMPORTANT PART OF THE SOLUTION TO MANY CRITICAL ISSUES FACING THE PLANET AND HUMANKIND.

Trees provide the very necessities of life itself. They clean our air, protect our drinking water, create healthy communities, and feed the human soul. But these life necessities are threatened around the globe. 56,048,771 To address this, we launched an unprecedented undertaking: trees have been planted in the Time for Trees initiative. Our goals through this initiative the past three years. are to plant 100 million trees and inspire 5 million tree planters to help carry our mission forward — all by 2022, the 150th anniversary of Arbor Day and the 50th anniversary of the 18 corporate partners joined the Arbor Day Foundation. Evergreen Alliance, making a long-term commitment to help us reach our goals. The 100 million trees will be planted in forests and communities throughout the U.S. and around the world. We will be restoring Bank of America Mary Kay forests affected by wildfires and other natural disasters, Bass Pro Shops Oncor distributing trees to those eager to plant in their own yards, and Brambles | CHEP Procter & Gamble establishing better urban tree cover so all residents can enjoy the Church & Dwight PwC benefits. And along the way, we are working to inspire new tree Exelon Target planters of all ages to spread the positive impact even further. FedEx TD Bank The Hershey Company UPS Since the public launch of the initiative in March of 2019, International Paper Verizon we have seen tremendous interest in the incredible potential Marriott International Wyndham Destinations of trees. Tree planting partners, corporate partners, social media influencers, and members alike are rallying together with us to create transformational change through the scale of these extraordinary goals. And we’re encouraged that more than 5 million tree planters have participated, surpassing our goal two years early.

If ever there was a time to plant trees, now is that time.

We are inspired by the momentum the Time for Trees initiative has gained. Together, we are building a better tomorrow … through trees.

5,852,132 tree planters have been inspired in the past three years.

2019-2020 Annual Report 9 Trees for America®

10 Arbor Day Foundation MEMBERS PLANT MILLIONS OF TREES TO PROVIDE THE VERY NECESSITIES OF LIFE IN THEIR COMMUNITIES AND ACROSS THE COUNTRY. Active members in 59 states, territories, and military bases Trees are being planted in neighborhoods throughout the as well as 38 additional countries. U.S. through the Trees for America program — providing critical benefits such as clean air and water, better stormwater management, natural beauty, and lower urban temperatures. Trees are also being planted on farms and ranches, protecting soil and water resources as well as creating new habitat for wildlife.

Every year the Foundation’s members — and potential new members — are invited to receive 10 free trees through this program. Each of these trees is directly fulfilling our mission. And collectively, our members received nearly 3.7 million trees to plant in their yards and neighborhoods this year. This work is critical to building healthy communities and inspiring others to become tree planters. membership And these trees will make a tremendous impact. As they grow, 3,697,130 trees distributed this year. they are estimated to remove nearly 21,400 tons of chemical air pollution, filter nearly 586 tons of particulate matter, sequester more than 268,000 metric tons of carbon, and intercept more than 262 million cubic meters of what would be wasted water runoff.*

The Arbor Day Foundation is proud to be the largest nonprofit membership organization dedicated to planting trees. And we are humbled that more than 1 million members, donors, and partners share in our commitment to forests, communities, and people.

Of more than 700,000 members, 504,250 also chose to support the planting of 6,116,822 trees in forests across the globe. *  U.S. Forest Service analysis based on native-species trees planted in Pennsylvania with a 97% annual survival rate, 3% mortality every year, for 100 years.

2019-2020 Annual Report 11 PHOTO CREDIT: TREES FOR THE FUTURE – SENEGAL

Replanting Our Forests

12 Arbor Day Foundation GENERATIONS PAST CARED FOR OUR FORESTS, PRESERVING THEM AS OUR HERITAGE. THE CONSERVATION OF THESE FORESTS WILL BE OUR LEGACY FOR THE FUTURE.

Our forests are woven into the fabric of our lives, providing the very necessities we need to not only survive but thrive — clean air, healthy drinking water, a tolerable climate, and so much more. But these majestic lands are threatened by insects, disease, and devastating More than wildfires. We are thankful for our dedicated Foundation members, 108 million trees have been planted since 1990 in corporate sponsors, and partners who continue to respond to the forests across the globe. need for replanting.

This year, the Foundation planted more than 21 million trees in forests through partnerships with the U.S. Forest Service, the National Association of State Foresters, and international partners.

Some reforestation work we support is ongoing, spanning several years due to the critical need for trees. One such project is in Oregon’s Willamette River Basin, home to two-thirds of the state’s population. The newly planted trees made possible by Foundation members and partners will not only protect the watershed supplying area residents with drinking water but also improve conditions in the waterways that endangered Chinook salmon rely on for spawning. And stronger populations of these salmon swimming back to the This year’s reforestation efforts spanned ocean mean a more stable food source for critically endangered 30 states and 33 countries. Southern Resident orcas.

Our replanting efforts have also spread to every continent except Antarctica. A new partnership with Trees for the Future in Senegal is one example of this growth, as we work with farmers throughout the Fatick and Kaffrine regions to plant 1 million trees that will create forest gardens. A variety of fruit and nut trees are being planted to help restore native landscapes while improving food security and the livelihoods of families in rural communities.

The generosity of supporters and on-the-ground-partners has made it possible for our replanting efforts to continue year after year, revitalizing important forestland for generations to come. 98 individual reforestation projects were supported by our members, donors, and partners.

2019-2020 Annual Report 13 SIOUX FALLS, SD – 40 -YEAR TREE CITY USA

Tree City USA®

14 Arbor Day Foundation TREE CITIES OF THE WORLD WITH THE BENEFITS OF With the successful Tree City USA STRONG AND SUSTAINABLE program as a guide, the Foundation URBAN FORESTRY PROGRAMS, partnered with the UN Food and Agriculture Organization to COMMUNITIES CAN THRIVE. expand our dedication to urban forestry internationally. The new The Tree City USA program has strengthened and sustained urban Tree Cities of the World program forests across the country thanks to support of Foundation members recognizes cities and towns around the globe committed to ensuring and partners. From the Gulf of Alaska to the Gulf Coast, nearly 155 that their urban forests and trees million Americans are living in Tree City USA towns and cities that are properly maintained, sustainably pay particular attention to tree planting, management, and care. managed, and duly celebrated. In its first year, 68 cities in 17 countries As a result, these communities enjoy profound environmental received recognition. and community benefits, including lower urban temperatures, cleaner air and water, increased property values, lower energy bills, neighborhood beauty, and civic pride. The program has been the foundation for city forestry management, and its impact is deep and far-reaching.

One community committed to its trees is Boise, Idaho. With both Tree City USA and Tree Cities of the World recognition, this community has formulated a long-term plan to plant 100,000 trees in the next 10 years, many on private land. The city has partnered with the local Treasure Valley Canopy Network to put the plan into action — increasing tree canopy, improving the environment, and combating the negative effects of climate change.

In addition to proponents in the city’s Parks and Recreation 3,538 communities (home to department, this initiative has gotten strong support from the Boise nearly 155 million people) received Tree City Council. “These trees will provide shade and comfort and City USA designation this year. support clean air and energy conservation for generations to come,” said City Council President Elaine Clegg.

In its 44th year, the Tree City USA program is still going strong. As a sign of its vitality, 89 communities applied for and received Tree City USA recognition for the very first time this year.

Tree City USA is the framework for urban forests across the country. Thanks to our members and partners, the program’s impact is broad and enduring. Within the support of this framework, additional city foresters and arborists are hired, city budgets include worthwhile investments in trees, and millions of Americans are taking pride in community improvement. 95.42% of last year’s Tree City USA communities applied for recertification this year.

2019-2020 Annual Report 15 TM Community Tree Recovery

16 Arbor Day Foundation IN THE WAKE OF NATURAL DISASTERS, NEW TREES BRING HOPE AND HEALING TO COMMUNITIES BEGINNING TO REBUILD.

Trees play a vital role in our communities. So when natural disasters strike, the loss of trees can be devastating. Damaged buildings and homes are often covered by insurance — but not the trees. The trees distributed Community Tree Recovery program was created out of the great 5.3 million since the program began in 2005. need to replace trees following natural disasters.

Through this program, residents who lost trees in major disasters caused by wildfires, floods, hurricanes, tornadoes, and insects can receive free trees to plant in their yards. This work is critical for re- establishing neighborhood trees ... as well as a sense of community.

The Arbor Day Foundation works with local partners on the ground to help organize events and to make sure we’re delivering the trees at a time when the community is ready to replant.

Nearly 5.3 million trees have been distributed through the program since its beginning. This year, 36 active campaigns were held in 11 states as well as Haiti, the Dominican Republic, and Burundi. The Coffey Park area of Santa Rosa, California, was one of the many distribution and planting events communities supported through the program. With the pandemic 121 were held for this year’s campaigns. preventing the planned tree distribution, the event was reworked into a tree planting. A local landscaper was contracted, and the trees were planted along the street where requested. Nina, one of the residents who received a tree, said, “The trees will be one step closer to making it home again.”

The beauty of this program is that, time and time again, we bear witness to the power of trees. They are a sign of life and a vibrant step toward recovery for entire communities.

106,155 trees were planted and distributed to community members at those events.

2019-2020 Annual Report 17 Rain Forest Rescue®

18 Arbor Day Foundation THE FOUNDATION IS WORKING WITH COMMUNITIES AND FAMILIES TO PRESERVE AND RESTORE TROPICAL RAIN FORESTS AND BUILD BETTER LIVES FOR THE 239,547 pounds PEOPLE LIVING THERE. of shade-grown Arbor Day® Coffee were sourced from Colombia, Nicaragua, Peru, Saving the Earth’s rain forests is a core conservation challenge. The and Honduras this year. Arbor Day Foundation’s Rain Forest Rescue program is working with on-location partners on large-scale tree planting, preservation, and recovery.

An example of this is our ongoing work in the Yucatan Peninsula of Mexico. Education for local farmers remains paramount, so they can develop better farming practices that are not only beneficial to the forest but to the efficiency of their operations as well. Through the support of Foundation members and partners, the Kaxil Kiuic tree nursery continues to thrive and provide trees for farmers looking to put newly learned agroforestry practices into action. In addition to ensuring that new trees are being planted, the nursery also helps with ongoing care for the trees.

The Rain Forest Rescue program is also at work in Santa Elena, 1,041,366 trees were Honduras. The rain forest here has faced much adversity, most planted in rain forests this year. recently due to southern pine beetles. The Foundation is not only working with local coffee producers to purchase their organic, shade- grown coffee, we are also supporting two local nurseries helping to restore the forest canopy. In addition to trees, these nurseries are also providing employment and skills development for residents.

With the help of our members and partners, the Rain Forest Rescue program has helped to ensure that the trees — and those who care for them — continue to thrive.

72 Rain Forest Rescue projects have engaged the Foundation and our partners in 16 countries since the program began.

2019-2020 Annual Report 19 Energy-Saving Trees® TM and Community Canopy

20 Arbor Day Foundation HOMEOWNERS ARE STRATEGICALLY PLANTING TREES IN PARTNERSHIP WITH LOCAL UTILITY PROVIDERS, PUBLIC AGENCIES, AND OTHER ORGANIZATIONS.

The Arbor Day Foundation’s Energy-Saving Trees and Community Canopy programs are designed to help utility companies, municipalities, and corporate organizations distribute trees to their communities. The core purpose is to lower energy bills, improve air quality, sequester carbon, and manage stormwater runoff. 50,130 trees were distributed and planted through the Energy-Saving Trees Central to the program is an interactive online tool that was and Community Canopy programs this year. created through a Foundation partnership by The Davey Institute, a division of The Davey Tree Expert Co. The tool uses peer- reviewed scientific research from the U.S. Forest Service’s i-Tree software to calculate estimated energy savings over time. People use the online tool to personally plot their yard as seen from satellite imagery to select the right tree — provided by their utility provider, municipality, or other organization — and the right place for planting that will yield the greatest energy and cost savings.

Once reserved, these trees are either delivered to homes or available for pickup at events organized by the Energy-Saving Trees or Community Canopy partner. in This year, working with 55 partners in 35 states across the country, $20,344,214 combined energy and community more than 50,000 trees were distributed through these programs. environmental benefits will be provided by And 364,261 trees have been distributed and planted through the these trees over 20 years. Energy-Saving Trees and Community Canopy programs since 2011.

For example, in its fifth year of partnership, the City of Orlando is involved in the Energy-Saving Trees program as a means of furthering the community’s Green Works Orlando sustainability initiative. The city collaborates with the local utility company each spring and fall to distribute more than 1,000 trees to residents to be planted in their yards for optimal energy savings. Since the spring of 2015, a total of 11,920 trees have been planted throughout the city. Collectively, these trees are projected to save 18,610,911 kWh and provide $4.9 million in environmental benefits over 20 years.

Universally, these programs are providing tremendous benefits — 20–50% reduction in energy not only in terms of trees planted but also in energy bill savings used for heating and 30% reduction in air and education. conditioning needs is possible when trees are properly placed around homes.

2019-2020 Annual Report 21 TM Alliance for Community Trees

22 Arbor Day Foundation THIS NATIONWIDE NETWORK OF LOCAL NONPROFIT TREE PLANTING ORGANIZATIONS IS UNITED IN AN EFFORT TO PLANT TREES FOR A BETTER TOMORROW.

Local impact happens when community-based tree planting More than organizations create projects that involve citizens, schools, churches, $1.3 million was directed to member organizations for local and government. This is the work of the 160 members of the planting projects. Alliance for Community Trees program. These passionate nonprofit organizations are the boots on the ground — a grass-roots network united in their purpose of improving communities and towns across the country with trees.

Never has the dedication of these organizations been more apparent than this past spring, as the world was gripped by pandemic. One such group is Green Columbus in Columbus, Ohio. In a community ranked first in rising urban heat island effect, Green Columbus has been hard at work to plant trees and curb the issue. Earth Day Columbus — known as the largest Earth Day volunteer event in the U.S. — needed to continue in 2020. The health of community residents depended on it. 63 events were coordinated With the support of the Arbor Day Foundation and its corporate through this network with support from our partners, the event was still possible. “For this project we relied on committed corporate partners, allowing greater professionals and individual experienced volunteer tree planters impact and engagement on a local level. to plant a total of 31,000 trees,” said Claus Eckert with Green Columbus. “It was a record year for tree plantings despite a global pandemic and a statewide shutdown, and the community accomplished it following health and safety guidelines. A huge thank you to Verizon and the Arbor Day Foundation for believing in us and supporting us in this project so that we could make this happen.”

With more than 90% of Americans living and working in towns and metropolitan areas, the need for informed action on a local level is greater than ever. The Alliance for Community Trees network is an integral part of making that happen. These committed organizations help deliver our shared mission in the communities they serve. 95% of Americans understand the shared benefits of having more trees in their communities according to a 2017 survey — inspiration for this network to keep up the good work.

2019-2020 Annual Report 23 Tree Campus®

24 Arbor Day Foundation COLLEGE CAMPUSES AND HEALTHCARE FACILITIES ACROSS THE COUNTRY ARE DEDICATED TO ESTABLISHING AND MAINTAINING HEALTHY COMMUNITY FORESTS. 402 colleges and universities As more focus is being placed on the importance of trees in urban are recognized as Tree Campus Higher spaces, the Arbor Day Foundation has sought out opportunities Education schools. to support and recognize more organizations that have made a concerted effort to bring our mission to life. This year we expanded our Tree Campus program to include healthcare facility campuses as well as college and university campuses.

Through Tree Campus Higher Ed (formerly Tree Campus USA), the Arbor Day Foundation continues to recognize two-year and four-year colleges and universities that practice sound tree management and care. In its 12th year, the program recognized 402 campuses — including 39 first-time applicants.

Tree Campus Healthcare, in its inaugural year, recognized 16 health facilities across 12 states — including five community hospitals, five university hospitals, two rural hospitals, two veterans hospitals, one children’s hospital, and one residential care facility. The diversity More than 81,000 students within this network demonstrates how healthcare facilities of all were engaged in service-learning projects types and sizes are becoming leaders in using trees to improve related to Tree Campus Higher Education. community health and wellness.

“We are committed to caring not only for our patients but also for our environment and setting an example for others to follow,” said Terry Kreiser, Director, Facilities Operations at Penn State Milton S. Hershey Medical Center, a recognized facility.

To recognize so much dedication is inspiring. We are watching young adults grow in their respect for conservation and understanding that the future must include more trees. We are also witnessing healthcare providers embracing trees as a way to improve the overall well-being of their communities.

16 healthcare facilities received Tree Campus Healthcare recognition in the program’s inaugural year.

2019-2020 Annual Report 25 Celebrate Arbor Day

26 Arbor Day Foundation State Arbor Days Alabama Last full week in February Alaska Third Monday in May Arizona Last Friday in April AFTER MORE THAN A CENTURY, Arkansas Third Monday in March California March 7-14 THIS NATIONAL HOLIDAY Colorado Third Friday in April CONTINUES TO EMBODY THE Connecticut Last Friday in April Delaware Last Friday in April IMPORTANCE OF PLANTING TREES. District of Columbia Last Friday in April Florida Third Friday in January Georgia Third Friday in February In 1872, the nation’s first tree planting holiday was celebrated. Guam Second Tuesday in October A century later, the Arbor Day Foundation was launched, in large Hawaii First Friday in November part, to bring the spirit of stewardship to the forefront throughout Idaho Last Friday in April Illinois Last Friday in April the year. Indiana Last Friday in April Iowa Last Friday in April The Foundation has grown and evolved in the past 48 years, but the Kansas Last Friday in April mission remains the same: We inspire people to plant, nurture, and Kentucky First Friday in April celebrate trees. And with the global issues we face today, our work is Louisiana Third Friday in January Maine Third full week in May more important than ever. Maryland First Wednesday in April Massachusetts Last Friday in April In the midst of a pandemic, celebrating Arbor Day looked much Michigan Last Friday in April different this year than in years past. One thing, however, remained Minnesota Last Friday in April constant. People were committed to showing their appreciation for Mississippi Second Friday in February Missouri First Friday in April trees. Some planted trees in their yards while others spent time in Montana Last Friday in April nature. Many communities celebrated online as much as possible, Nebraska Last Friday in April and some cities even encouraged residents to draw or paint trees and Nevada Last Friday in April hang them in their windows to share the spirit of Arbor Day with New Hampshire Last Friday in April neighbors passing by. New Jersey Last Friday in April New Mexico Second Friday in March New York Last Friday in April No matter how they celebrated, we wanted them to share it North Carolina First Friday following March 15 with the world. So the Arbor Day Foundation launched the North Dakota First Friday in May #ArborDayAtHome campaign. For each use of the hashtag on Ohio Last Friday in April social media, we planted a tree in a forest in need — up to 50,000 Oklahoma Last full week in March Oregon First full week in April trees. The pictures and positive Arbor Day messages spread quickly Pennsylvania Last Friday in April through Instagram, Twitter, and Facebook. Then corporate partner Rhode Island Last Friday in April Salesforce committed to match our tree pledge, ensuring that two South Carolina First Friday in December trees would be planted for each hashtag used. South Dakota Last Friday in April Tennessee First Friday in March Texas First Friday in November By the end of the National Arbor Day weekend, Utah Last Friday in April #ArborDayAtHome and #ArborDay had been posted more than Vermont First Friday in May 94,000 times. The hashtag campaign alone created 4.1 million social Virgin Islands Last Friday in September media impressions and a media reach of 97 million. Virginia Last Friday in April Washington Second Wednesday in April West Virginia Second Friday in April All in all, it was inspiring to see the strong desire to plant, Wisconsin Last Friday in April nurture, and celebrate trees — a passion for conservation and the Wyoming Last Monday in April environment that cannot be stopped even in the face of global crisis. NATIONAL ARBOR DAY Last Friday in April

2019-2020 Annual Report 27 Arbor Day Farm®

28 Arbor Day Foundation THIS IS WHERE THE FOUNDATION’S MISSION COMES TO LIFE — 260 ACRES OF NATURAL BEAUTY AND OUTDOOR EXPLORATION IN NEBRASKA CITY, NEBRASKA.

Building programs that are high-impact — life-changing, large-scale, partner-engaging, and sustainable — begins at Arbor Day Farm. The 260-acre National Historic Landmark, part of the original estate of Arbor Day originator J. Sterling Morton, is where the Arbor Day Foundation brings its mission to life for visitors year-round.

At Arbor Day Farm’s Tree Adventure attraction, guests experience 26th anniversary orchards, vineyards, conservation demonstrations, and hands-on of Lied Lodge at Arbor Day Farm. activities through their own exploration and by guided tours. They can also tour the carefully preserved home of the Morton family at Arbor Lodge State Historical Park, owned by the Nebraska Department of Game and Parks and managed by Arbor Day Farm. In the spring and fall, visitors can watch team members carefully package and ship many of the millions of tree seedlings that are delivered to Foundation members across America.

Lied Lodge at Arbor Day Farm serves as a destination for like minds from across the country and around the globe to gather and discuss forestry, conservation, education, and environmental stewardship. Amid that, you will also find family reunions, business conferences, weddings, and vacations. It is a truly one-of-a-kind destination that Nearly 45,000 visitors demonstrates the Foundation’s dedication to trees. explored the Arbor Day Farm Tree Adventure and Arbor Lodge State This year Arbor Day Farm added a new way for guests of all ages to ® Historical Park this year. experience nature. Known as Treetop Village , this 3-acre attraction is the only place in America where you can clamber into the treetops to explore 11 different treehouses connected by more than 800 feet of unique bridges and netted walkways. This attraction was designed specifically for Arbor Day Farm and is the first of its kind to be completed in the U.S. In addition, the Farm is the first in North America to feature the WonderNet, a large, elevated span of netting specifically designed for jumping and playing. Areas of Treetop Village are also specifically designed to be ADA-compliant — ensuring that the experience is engaging for all.

We are grateful for the support of our members and partners in helping position Arbor Day Farm to fulfill our mission of inspiring 30,270 room nights were people to plant, nurture, and celebrate trees. spent at Lied Lodge, as guests connected with nature.

2019-2020 Annual Report 29 #TeamTrees®

30 Arbor Day Foundation WHAT STARTED AS A CALLOUT ON THE SOCIAL MEDIA PLATFORM REDDIT QUICKLY TURNED INTO AN ENVIRONMENTAL FORCE, DRIVEN BY A NEW AUDIENCE OF TREE PLANTERS.

In the fall of 2019, #TeamTrees — a collective effort with YouTube $21.5 million content creators to inspire support for tree planting around the was raised by January 1, 2020. globe — took social media by storm. YouTube influencers MrBeast ( Jimmy Donaldson, widely followed for his creative philanthropy) and Mark Rober (former NASA scientist) formed a unique partnership with the Arbor Day Foundation to raise $20 million between October 25, 2019, and January 1, 2020. Each dollar raised would plant a tree, and trees would be planted on every continent except Antarctica.

Hundreds of other content creators on YouTube and other social platforms were recruited to help lead the charge, and everyone involved developed unique content to drive their viewers to donate on TeamTrees.org in support of tree planting.

The campaign was one of the fastest-growing environmental fundraising initiatives to date and the largest crowdfunding effort in More than 800,000 YouTube’s history. Within the first 24 hours, donations reached more individual donors supported the than $3.5 million. Just 48 hours after launch, more than $5 million #TeamTrees planting efforts. had been donated. The $20 million goal was reached on December 19, and the ticker continued to climb. As of January 1, the #TeamTrees campaign had raised more than $21.5 million for tree planting around the globe.

More than 800,000 people from around the world — everyone from Elon Musk to third grade classrooms — were inspired to “join the team” and help plant trees. Individual donations varied from $1 to $1,000,001.

The fundraising effort, however, was only the beginning. Through December 2022, the Foundation will be planting trees throughout North America, South America, Europe, Asia, Africa, and Australia. The first4.6 million trees were planted as of June 30, 2020 — part of the 22 million to be planted by 2022.

2019-2020 Annual Report 31 FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2020, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2019

The Board of Trustees on the effectiveness of the entity’s internal auditing procedures applied in the audit National Arbor Day Foundation control. Accordingly, we express no such of the financial statements and certain d/b/a Arbor Day Foundation opinion. An audit also includes evaluating additional procedures, including comparing Lincoln, Nebraska the appropriateness of accounting policies and reconciling such information directly to Report on the Financial Statements used and the reasonableness of significant the underlying accounting and other records accounting estimates made by management, used to prepare the financial statements or We have audited the accompanying as well as evaluating the overall presentation to the financial statements themselves, and financial statements of National Arbor Day of the financial statements. other additional procedures in accordance with auditing standards generally accepted Foundation d/b/a Arbor Day Foundation, We believe that the audit evidence we have in the United States of America. In our which comprise the statement of financial obtained is sufficient and appropriate to opinion, the Schedule of Expenditures position as of June 30, 2020, and the related provide a basis for our audit opinion. statements of activities, functional expenses, of Federal Awards is fairly stated in all and cash flows for the year then ended, and Opinion material respects in relation to the financial statements as a whole. the related notes to the financial statements. In our opinion, the financial statements Management’s Responsibility for referred to above present fairly, in all Emphasis of Matter the Financial Statements material respects, the financial position As discussed in Note B to the financial of National Arbor Day Foundation d/b/a statements, in 2020, the entity adopted Management is responsible for the Arbor Day Foundation as of June 30, 2020, new accounting guidance ASU 2014-09, preparation and fair presentation of these and the changes in its net assets and its cash Revenue from Contracts with Customers, financial statements in accordance with flows for the year then ended in accordance ASU 2018-08, Clarifying the Scope and the accounting principles generally accepted with accounting principles generally Accounting Guidance for Contributions in the United States of America; this accepted in the United States of America. Received and Contributions Made, and includes the design, implementation, and Report on Summarized maintenance of internal control relevant ASU 2018-13, Fair Value Measurement to the preparation and fair presentation Comparative Information (Topic 820): Disclosure Framework – of financial statements that are free from Changes to the Disclosure Requirements for We have previously audited National Fair Value Measurement. Our opinion is not material misstatement, whether due to fraud Arbor Day Foundation d/b/a Arbor Day or error. modified with respect to this matter. Foundation’s June 30, 2019 financial Other Reporting Required by Government Auditor’s Responsibility statements, and we expressed an unmodified audit opinion on those audited financial Auditing Standards Our responsibility is to express an opinion statements in our report dated October In accordance with Government Auditing on these financial statements based on our 23, 2019. In our opinion, the summarized Standards, we have also issued our audit. We conducted our audit in accordance comparative information presented herein report dated October XX, 2020, on our with auditing standards generally accepted as of and for the year ended June 30, 2019 is consideration of National Arbor Day in the United States of America and the consistent, in all material respects, with the Foundation d/b/a Arbor Day Foundation’s standards applicable to financial audits audited financial statements from which it internal control over financial reporting and contained in Government Auditing has been derived. Standards, issued by the Comptroller on our tests of its compliance with certain General of the United States. Those Other Matter provisions of laws, regulations, contracts and grant agreements and other matters. The standards require that we plan and perform Our audit was conducted for the purpose purpose of that report is solely to describe the audit to obtain reasonable assurance of forming an opinion on the financial the scope of our testing of internal control about whether the financial statements are statements as a whole. The accompanying over financial reporting and compliance free from material misstatement. Schedule of Expenditures of Federal and the results of that testing, and not to An audit involves performing procedures Awards is presented for purposes of provide an opinion on the effectiveness to obtain audit evidence about the amounts additional analysis as required by the of National Arbor Day Foundation d/b/a and disclosures in the financial statements. audit requirements of Title 2 U.S. Code Arbor Day Foundation’s internal control The procedures selected depend on the of Federal Regulations (CFR) Part 200, over financial reporting or on compliance. auditor’s judgment, including the assessment Uniform Administrative Requirements, That report is an integral part of an audit of the risks of material misstatement of the Cost Principles, and Audit Requirements performed in accordance with Government financial statements, whether due to fraud for Federal Awards (Uniform Guidance), Auditing Standards in considering National or error. In making those risk assessments, and is not a required part of the financial Arbor Day Foundation d/b/a Arbor Day the auditor considers internal control statements. Such information is the Foundation’s internal control over financial relevant to the entity’s preparation and fair responsibility of management and was reporting and compliance. presentation of the financial statements in derived from and relates directly to the order to design audit procedures that are underlying accounting and other records Lincoln, Nebraska appropriate in the circumstances, but not used to prepare the financial statements. October 28, 2019 for the purpose of expressing an opinion The information has been subjected to the

32 Arbor Day Foundation STATEMENT OF FINANCIAL POSITION YEAR ENDED JUNE 30, 2020, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2019

ASSETS 2020 2019 CURRENT ASSETS Cash and cash equivalents (notes A and F) $ 11,624,967 $ 2,008,809 Certificates of deposit 11,114,973 - Investments (notes A, C, F and O) 7,839,276 7,837,468 Accounts receivable, net of allowance of $350,000 (2020) 395,254 1,447,112 and $0 (2019) (note A) Unconditional promises to give (note A) 4,422,443 2,715,074 Grants receivable (note A) 436,813 597,771 Prepaid expense 1,315,715 519,109 Inventory (notes A and D) 5,274,737 4,129,434

Total current assets 42,424,178 19,254,777

PROPERTY AND EQUIPMENT, net (notes A and E) 29,088,873 28,736,696 OTHER ASSETS Restricted cash 1,187,832 1,178,106 Assets held for deferred compensation plan 34,098 17,159 Intangible asset 31,467 - Construction in progress 21,581 822,421 Contributions receivable from charitable trusts (notes F and O) 29,916 30,139

Total assets $ 72,817,945 $ 50,039,298 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 2,180,946 $ 1,930,124 Accrued expenses (note A) 11,525,486 4,726,805 Current maturities of long-term obligations (note H) 1,021,135 672,520 Conditional contributions (note A) 4,613,169 3,181,746 Deferred revenue (note A) 79,185 -

Total current liabilities 19,419,921 10,511,195 LONG-TERM OBLIGATIONS Conditional contributions (note A) - 571,429 Long-term obligations, net of current maturities (note H) 1,643,165 20,373

Total long-term obligations 1,643,165 591,802 OTHER LIABILITIES Annuities payable (notes F and O) 895,500 732,991

Total liabilities 21,958,586 11,835,988 NET ASSETS (notes A and I) Without donor restrictions Undesignated 40,579,722 27,704,048 Designated 9,410,362 9,431,154 With donor restrictions 869,275 1,068,108

Total net assets 50,859,359 38,203,310

Total liabilities and net assets $ 72,817,945 $ 50,039,298 See accompanying notes to financial statements.

2019-2020 Annual Report 33 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2020, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2019

2020 2019 WITHOUT DONOR WITH DONOR CHANGES IN NET ASSETS RESTRICTIONS RESTRICTIONS TOTAL TOTAL

REVENUE AND SUPPORT

Membership dues $ 13,713,943 $ - $ 13,713,943 $ 14,001,349 Contributions 52,690,027 169,315 52,859,342 25,126,373 Trees for America 4,539,579 - 4,539,579 4,763,456 Program grant income (note J) 2,581,167 - 2,581,167 1,927,723 Arbor Day Farm income 7,327,700 - 7,327,700 9,426,800 Rain Forest Rescue income 1,976,806 - 1,976,806 3,210,969 Other income (note K) 1,915,074 (235,397) 1,679,677 1,676,257 Net assets released from restrictions (note A) 132,751 (132,751) - - Total revenue and support 84,877,047 (198,833) 84,678,214 60,132,927 EXPENSES

PROGRAM SERVICES Tree City USA 1,357,791 - 1,357,791 1,159,578 Arbor Day/Youth Education 1,484,684 - 1,484,684 2,965,839 Rain Forest Rescue 3,847,044 - 3,847,044 4,789,764 Trees for America 37,882,482 - 37,882,482 22,989,138 Arbor Day Farm 11,161,641 - 11,161,641 11,825,022 Conference programs 820,720 - 820,720 632,759 SUPPORTING ACTIVITIES

General and administrative 6,478,094 - 6,478,094 6,367,102 Membership development 5,374,721 - 5,374,721 4,906,077 Fundraising 3,560,540 - 3,560,540 3,483,591 Total expenses 71,967,717 - 71,967,717 59,118,870 INCREASE (DECREASE) IN NET ASSETS 12,909,330 (198,833) 12,710,497 1,014,057

Net assets, beginning of year 37,135,202 1,068,108 38,203,310 37,189,253 CUMULATIVE EFFECT OF ADOPTION OF ASC 606 (NOTE B) (54,448) - (54,448) -

Net assets, beginning of year as restated 37,080,754 1,068,108 38,148,862 37,189,253

Net assets, end of year $ 49,990,084 $ 869,275 $ 50,859,359 $ 38,203,310

See accompanying notes to financial statements.

2% Rain Forest Rescue income 2% Other income General and administrative 1% Conference programs 9% 9% Arbor Day Farm income 16% Membership dues 7% Membership development 16% 3% Program grant income Arbor Day Farm 5% Trees for America 5% Fundraising 2% Tree City USA 2% Arbor Day/Youth Education

5% Rain Forest Rescue

63% 53% Contributions Trees for America

2020 REVENUE 2020 EXPENSES

34 Arbor Day Foundation STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2020, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2019

2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from revenue and support $ 84,651,895 $ 57,685,838 Cash paid to employees and suppliers (63,801,268) (58,314,864) Interest received 211,736 153,068 Interest paid (16,455) (40,635) Net cash provided (used) by operating activities 21,045,908 (516,593) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of certificates of deposit (11,096,841) - Purchase of investments (193,180) (105,811) Proceeds from the sale of investments 155,662 137,113 Purchase of property and equipment (2,136,687) (2,756,954) Net cash used by investing activities (13,271,046) (2,725,652) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on long-term obligations 2,664,300 - Principal payments on capital lease (692,893) (647,594) Payments on annuities (120,385) (137,113) Net cash provided (used) by financing activities 1,851,022 (784,707)

Net increase in cash, cash equivalents, and restricted cash 9,625,884 (4,026,952) CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR 3,186,915 7,213,867 Cash, cash equivalents, and restricted cash, end of year $ 12,812,799 $ 3,186,915 ADJUSTMENTS TO RECONCILE INCREASE IN NET ASSETS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

Increase in net assets $ 12,710,497 $ 1,014,057

Adjustments to reconcile increase in net assets to net cash provided (used) by operating activities≠ Depreciation 2,485,429 2,326,862 Reinvested interest (18,132) - Bad debt write off 361,285 - Investment loss 191,595 324,922 Actuarial loss on annuities 72,689 83,033 Decrease in contributions for annuity liabilities 54,543 23,889 Donated property and equipment - (29,101) (Increase) decrease in assets Accounts receivable 690,573 67,568 Unconditional promises to give (1,707,369) (1,452,937) Grants receivable 160,958 (57,415) Prepaid expense (796,606) (172,343) Inventory (1,145,303) (1,767,937) Assets held for deferred compensation plan (16,939) (17,159) Increase (decrease) in liabilities Accounts payable 319,276 (65,367) Accrued expenses 6,798,681 442,156 Conditional contributions 859,994 (665,392) Deferred revenue 24,737 (571,429) Total adjustments to increase in net assets 8,335,411 (1,530,650) Net cash provided (used) by operating activities $ 21,045,908 $ (516,593) SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION: Noncash investing activities Accounts payable assumed for property and equipment purchases $161,844 $230,298 In-kind donations of property and equipment - $29,101

Cash, cash equivalents, and restricted cash reported within the statements of financial position that sum to the total of the same such amounts shown above include:

Cash and cash equivalents $ 11,624,967 $ 2,008,809 Restricted cash 1,187,832 1,178,106 Cash, cash equivalents, and restricted cash $ 12,812,799 $ 3,186,915

2019-2020 Annual Report 35 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2020, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2019

PROGRAM SERVICES PROGRAM SERVICES SUPPORTING ACTIVITIES Arbor Day/Youth Rain Forest Trees for Conference Total Program General and Member Tree City USA Arbor Day Farm Fundraising 2020 Totals 2019 Totals Education Rescue America Programs Services Administrative Development Salaries, payroll taxes and employee benefits (note M) $ 551,846 $ 193,371 $ 422,997 $ 3,364,079 $ 5,053,919 $ 128,780 $ 9,714,992 $ 3,960,440 $ 886,685 $ 1,070,689 $ 15,632,806 $ 15,886,866 Contract labor 1,000 111,379 - 100,246 175,563 - 388,188 19,707 - - 407,895 200,852 Advertising and promotion (note A) 31,850 10,400 15,148 203,535 306,245 181 567,359 168,559 348 6,762 743,028 1,425,371 Printing, publications, mailing, and 199,802 572,690 1,451,092 3,081,895 168,800 251 5,474,530 100,116 1,660,206 1,209,165 8,444,017 8,525,554 photography Travel and mileage 18,469 50,850 24,661 146,230 59,184 22,518 321,912 107,362 10,883 140,561 580,718 789,955 Professional services 66,890 119,191 8,690 1,221,213 143,657 83,389 1,643,030 283,708 86,793 46,218 2,059,749 1,689,664 Recognition material 1,199 100 259 1,558 7,108 - 10,224 12,126 - 814 23,164 21,505 Professional development 544 92 216 3,935 7,836 22 12,645 31,805 - 6,298 50,748 54,394 Taxes 1,264 1,262 564 5,373 274,575 88 283,126 40,796 6,897 10,113 340,932 356,468 Repairs and maintenance 4,371 23,310 4,473 9,174 372,617 - 413,945 108,339 136,001 26,712 684,997 615,723 Tree purchases and shipping expenses 58,799 32,729 38,917 5,983,363 - - 6,113,808 - 1,571 110 6,115,489 5,743,243 Reforestation expenses - - - 14,246,897 203 - 14,247,100 - - - 14,247,100 4,211,903 Rain forest preservation - - 18,934 - - - 18,934 - - - 18,934 17,756 Inventory purchases 239,676 101,252 1,143,726 - 1,209,243 - 2,693,897 13,709 - 199,868 2,907,474 4,136,618 Computer services 47,512 683 80 295,045 78,861 - 422,181 549,166 992 23,403 995,742 762,742 Bank charges 182 252 573 837,357 155,148 2,882 996,394 32,522 - 543 1,029,459 508,041 Insurance 1,320 1,320 6,237 1,907 207,208 425 218,417 71,851 8,202 8,066 306,536 303,191 Telephone and utilities 6,843 5,543 4,715 72,430 591,655 454 681,640 21,550 30,646 38,874 772,710 767,336 Postage 99,120 219,729 328,632 1,051,000 123,724 968 1,823,173 17,004 2,399,220 636,197 4,875,594 4,700,159 Office supplies 1,477 491 561 8,042 12,606 1,283 24,460 32,752 2,659 3,126 62,997 69,602 Operating supplies 1,381 1,889 8,363 8,490 493,701 382,255 896,079 50,201 3,685 6,883 956,848 892,671 Dues and subscriptions 2,020 7,424 3,582 58,803 15,061 760 87,650 21,519 4,396 18,038 131,603 98,374 Interest expense - - - - 10,809 - 10,809 5,646 - - 16,455 39,442 Bad debts - - 351,157 2,224 571 - 353,952 7,333 - - 361,285 16,765 Rental expense (note L) 23 - - 5,214 53,883 60,846 119,966 43,741 - - 163,707 150,413 Depreciation (note E) 17,453 17,453 8,865 48,649 1,573,084 - 1,665,504 604,808 108,459 106,658 2,485,429 2,326,862

Subsidies for community tree planting - 11,356 - 1,242,336 - - 1,253,692 - - - 1,253,692 2,356,392 initiatives Reforestation carbon credits - - - 5,878,083 - - 5,878,083 - - - 5,878,083 2,193,576 Miscellaneous 4,750 1,918 4,602 5,404 66,380 135,618 218,672 173,334 27,078 1,442 420,526 257,432 Total Expenses $ 1,357,791 $ 1,484,684 $ 3,847,044 $37,882,482 $ 11,161,641 $ 820,720 $ 56,554,362 $ 6,478,094 $ 5,374,721 $ 3,560,540 $ 71,967,717 Total Expenses June 30, 2019 $ 1,159,578 $ 2,965,839 $ 4,789,764 $ 22,989,138 $ 11,825,022 $ 632,759 $ 44,362,100 $ 6,367,102 $ 4,906,077 $ 3,483,591 $ 59,118,870

NOTES TO FINANCIAL STATEMENTS

THE NATIONAL ARBOR DAY FOUNDATION d/b/a Arbor Day when the stipulated purpose for which the resource was restricted has been Foundation (the Foundation) was incorporated under the Nebraska Nonprofit fulfilled, or both, and are reported in the statements of activities as net assets Corporation Act on September 3, 1971. The purpose of the Foundation is to engage released from restrictions. in educational and charitable activities including officially promoting the annual Contributions restricted by donors received in the same period when the observance of Arbor Day; inspiring people to plant, nurture, and celebrate trees; associated stipulated time or purpose restriction is accomplished are reported stimulating a world-wide program of tree and horticultural planting and care; as increases in net assets without donor restrictions. All other donor-restricted advancing nature education and environmental education; and maintaining Arbor contributions are reported as increases in net assets with donor restrictions, Day Farm, the estate of J. Sterling Morton, the founder of the Arbor Day holiday. depending on the nature of the restrictions. NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents. For purposes of the statement of cash flows, the Method of Accounting. The accompanying financial statements have been Foundation considers all highly liquid investments with an original maturity of three prepared on the accrual basis of accounting. months or less to be cash equivalents. Net Asset Classification. Net assets, revenues, gains, and losses are classified based Investments. Investments in marketable securities with readily determinable fair on the existence or absence of donor or grantor imposed restrictions. Accordingly, values and all investments in debt securities are reported at their fair values in the net assets and changes therein are classified and reported as follows: statement of financial position. Unrealized gains and losses are included in the statement of activities. Donated securities are recorded as contributions equal to the Without donor restrictions. Net assets available for use in general operations fair market value of the securities at the date of gift. and not subject to donor or grantor restrictions. The governing board has designated, from net assets without donor restrictions, net assets for an operating Accounts Receivable. Accounts receivable are stated at the amount management reserve and board-designated endowment. expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation With donor restrictions. Net assets subject to donor- or grantor-imposed allowance based on its assessment of the current status of individual accounts. Balances restrictions. Some donor-imposed restrictions are temporary in nature, such that are still outstanding after management has used reasonable collection efforts as those that will be met by the passage of time or other events specified by the are written off through a charge to the valuation allowance and a credit to accounts donor. Other donor-imposed restrictions are perpetual in nature, where the donor receivable. Changes in the valuation allowance have not been material to the financial stipulates that resources be maintained in perpetuity. Gifts of long-lived assets statements. and gifts of cash restricted for the acquisition of long-lived assets are recognized as revenue when the assets are placed in service. Donor-imposed restrictions are Accounts receivable due from customers are uncollateralized customer obligations released when a restriction expires, that is, when the stipulated time has elapsed, due under normal trade terms either due upon receipt or requiring payment within

36 Arbor Day Foundation NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accrued Vacation. The Foundation’s vacation pay policy allows full-time employees CONTINUED 80 hours of vacation time for the first year of full-time employment, increasing each year of employment up to a maximum of 160 hours per year after 10 years of 30 days from the invoice date. Accounts receivable are stated at the amount billed employment. Vacation time is also available on a pro-rata basis for regular part- to the customer. The Foundation does not charge interest on overdue customer time employees. Up to 160 hours of accrued vacation time may be carried into a account balances. Payments of accounts receivable are allocated to the specific new calendar year but no more than 160 hours may be accumulated and unused invoices identified on the customer’s remittance advice or, if unspecified, are applied at anytime. All accumulated vacation time is paid out upon termination. Accrued to the earliest unpaid invoices. vacation for the years ended June 30, 2020 and 2019 was $590,457 and $512,610, Grants Receivable. Grants receivable are stated at the amount management expects respectively. to collect from balances outstanding at year-end. Based on management’s assessment Contract Balances. Contracts assets represent the Foundation’s right to of the credit history of grantors having outstanding balances and current relationships consideration in exchange for services that have been transferred to the customer with them, it has concluded that realization losses on balances outstanding at year-end before payment is due. Contract liabilities include consideration due or paid by will be immaterial. a customer prior to when the Foundation transfers services and represent the Revenue Recognition. The following is a description of the Foundation’s principal Foundation’s obligation to the customer. The Foundation refers to contract assets sources of revenue: and contract liabilities as accounts receivable and deferred revenue on the statement Government and Other Grants. The Foundation is the recipient of federal, of financial position. state, and local grants to fund its primary programs. Grants consist primarily of Leases. Assets which are acquired by lease-purchase agreements and meet the conditional grants, that is, those with a measurable performance or other barrier, criteria of a capital lease are recorded as assets and obligations at the lesser of the and a right of return. Grants are not recognized until the conditions on which following: they depend have been substantially met. The federal, state and local grants are (1) An amount equal to the present value, at the beginning of the lease term, conditioned upon the incurrence of allowable qualifying expenses. Grants are of minimum lease payments during the lease term, excluding that portion recorded as revenue when the related approved expenditures are made. Unearned of the payments representing executory costs to be paid by the lessor, grant revenue represents advances of grant funds received prior to the incurrence of together with any profit thereon. related costs by the Foundation. (2) Fair value of the leased property at the inception of the lease. Contributions. Contributions are recognized when a donor makes a promise to give that is, in substance, unconditional. Conditional promises to give, that is, Rental payments under agreements which meet the criteria of an operating lease are those with a measurable performance or other barrier, and a right of return, are not expensed when paid. recognized until the conditions on which they depend have been substantially met. Advertising. The Foundation expenses advertising as incurred. Advertising Conditional contributions received prior to the satisfaction of significant conditions expense for the years ended June 30, 2020 and 2019 was $743,028 and $1,425,371, are recognized as liabilities on the statement of financial position. respectively. Sales of Goods or Services. Fees charged to program users are recognized Shipping and Handling Costs. The Foundation records the freight billed to at a point in time as the Foundation satisfies its performance obligations by customers as sales revenue and the related freight costs as cost of goods sold. transferring program goods or services to users. The Foundation’s primary fees relate to conference revenue, tree sales, Arbor Day Farm revenues (food, beverage, Functionalized Expenses. The costs of providing various programs and other merchandise, activity and hotel/conference center rentals), and Rain Forest Rescue activities have been summarized on a functional basis in the Statement of revenues, in which program users simultaneously consume and receive benefits. Activities and in the Statement of Functional Expenses. Accordingly, certain Any program fees prepaid by users are accounted for as deferred revenue until the costs have been allocated among the programs and supporting services benefited. Foundation satisfies its obligations to provide the related program goods or services. The expenses that are allocated include occupancy, depreciation and property insurance, which are allocated on a square footage basis, as well as salaries and The Foundation records the freight billed to customers as sales revenue and the wages, benefits, payroll taxes, professional services, office expenses, information related freight costs as cost of goods sold. technology, interest, insurance and other, which are allocated on the basis of The Foundation collects sales tax from all nonexempt customers at the rate in effect estimates of time and effort. in the state where the delivery occurs if the Foundation has nexus in the state. The Fair Value Measurements. The Financial Accounting Standards Board has Foundation’s accounting policy is to exclude the tax collected from revenue and issued guidance defining fair value, establishing a framework for measuring fair remit the balance to the appropriate state. value and expanding disclosures about fair value measurements. Fair value is the Membership Dues. Dues are charged to members based on the length of time an price that would be received to sell an asset or paid to transfer a liability in an individual has been a member and the length of the memberships. Some members, orderly transaction between market participants at the measurement date. The based upon the level of membership, receive trees as a part of their membership, Foundation utilizes a fair value hierarchy to prioritize the inputs to valuation thus membership dues are split with a portion recognized when received as a techniques used to measure fair value. The hierarchy gives the highest priority contribution and the remaining balance deferred until the trees are shipped to the to unadjusted quoted prices in active markets for identical assets or liabilities member. (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). Inventory. Inventory is stated at the lower of cost or net realizable value determined by the first-in, first-out method. The three levels of the fair value hierarchy are described as follows: Property and Equipment and Depreciation. Property and equipment are carried Level 1 Inputs to the valuation methodology are unadjusted quoted at cost, if purchased, and at fair market value at the date of contribution, if received prices for identical assets or liabilities in active markets that the by donation, less accumulated depreciation. Depreciation is provided for in amounts Foundation has the ability to access. sufficient to relate the cost of depreciable assets to operations over their estimated useful Level 2 Inputs to the valuation methodology include: lives computed primarily on the straight-line method. It is the Foundation’s policy to capitalize property and equipment with a cost of $5,000 or more and an estimated • quoted prices for similar assets or liabilities in useful life of greater than one year. The cost of routine maintenance and repairs is active markets; charged to expense as incurred; significant renewals and betterments are capitalized. • quoted prices for identical or similar assets or liabilities in The estimated lives by asset class follow: inactive markets; Buildings 5-50 years • inputs other than quoted prices that are observable for the Leasehold improvements 20 years asset or liability; Farm improvements 5-32 years • inputs that are derived principally from or corroborated by Orchards 5-20 years observable market data by correlation or other means. Computer hardware 5-10 years If the asset or liability has a specified (contractual) term, the level 2 input must be Lied Lodge and Conference Center observable for substantially the full term of the asset or liability. equipment and improvements 3-30 years Level 3 Inputs to the valuation methodology are unobservable and Furniture and equipment 5-30 years significant to the fair value measurement. Computer software 5-10 years

2019-2020 Annual Report 37 NOTE A - SUMMARY OF SIGNIFICANT The most significant impact of the standard relates to the accounting for membership dues. ACCOUNTING POLICIES - CONTINUED The Foundation adopted ASC 606 on July 1, 2019 using the modified retrospective method, through The asset or liability’s fair value measurement level within the fair a cumulative-effect adjustment to net assets as of the effective date. The revenue recognition policies value hierarchy is based on the lowest level of any input that is disclosed in Note A reflect the impact of the adoption of the standard. The comparative information significant to the fair value measurement. Valuation techniques has not been restated and continues to be reported under the accounting standards in effect for those used should maximize the use of observable inputs and minimize periods. the use of unobservable inputs. The impact of the adoption of ASC 606 on the statement of financial position as of June 30, 2020 Income Taxes. The Foundation is exempt from Federal income was as follows: tax under Section 501(c)(3) of the Internal Revenue Code. As such, income earned in the performance of its exempt purpose As Reported Adjustments Balances without is not subject to income tax. Any income earned through adoption of activities not related to its exempt purpose is subject to income ASC 606 tax at normal corporate rates. Deferred revenue $ 79,185 $ (54,448) $ 24,737 Use of Estimates. The preparation of financial statements in Total liabilities 21,958,586 (54,448) 21,904,138 conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that Total net assets $ 50,859,359 $ 54,448 $ 50,913,807 affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The impact of the adoption of ASC 606 on the statement of activities for the year ended June 30, 2020 was as follows: Comparative Financial Information. The financial statements include certain prior year summarized comparative information As Reported Adjustments Balances without in total but not by net asset class. Such information does adoption of not include sufficient detail to constitute a presentation in ASC 606 conformity with generally accepted accounting principles in the United States of America (GAAP). Accordingly, Membership dues $ 13,713,943 $ 54,448 $ 13,768,391 such information should be read in conjunction with the Total revenue and support 84,678,214 54,448 84,732,662 Foundation’s financial statements for the year ended June 30, 2019, from which the summarized information was derived. Net increase in net assets $ 12,710,497 $ 54,448 $ 12,764,945

NOTE B - NEW ACCOUNTING STANDARDS Contributions NOTE C - INVESTMENTS In June 2018, FASB issued ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and 2020 2019 Contributions Made. This standard assists entities in evaluating whether transactions should be accounted for as contributions or Cost Fair Value Cost Fair Value exchange transactions and determining whether a contribution INVENTORY CONSISTS OF: is conditional. For nonexchange transactions, the contribution Mutual funds $ 7,025,452 $ 7,683,035 $ 7,357,956 $ 7,682,317 guidance in ASC 958 is typically applied, whereas for exchange transactions, an entity should apply ASC 606 or other appropriate Agency bonds 75,480 77,527 75,722 76,587 guidance. The Foundation has implemented the provisions of Exchange traded funds 61,379 78,714 62,099 78,564 ASU 2018-08 applicable to both contributions received and to contributions made in the accompanying financial statements $ 7,162,311 7,839,276 $ 7,495,777 7,837,468 under a modified prospective basis. Accordingly, there is no effect Unrealized gains $ 676,965 $ 341,691 on net assets in connection with the implementation of ASU 2018-08. OTHER INCOME Fair Value Measurement 2020 2019 In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to Interest and dividend income $ 150,575 $ 213,451 the Disclosure Requirements for Fair Value Measurement. The Realized gains 50,004 66,577 ASU removed some disclosures; modified others, and added some new disclosure requirements. The ASU is effective for all entities Unrealized losses (362,088) (84,246) for fiscal years beginning after December 15, 2019; however, the Investment management fees (30,086) (31,613) Foundation early adopted the standard, effective for the year $ (191,595) $ 164,169 ended December 31, 2019, as permitted by the standard. See Note O for disclosure of the Foundation’s assets and liabilities measured at fair value. NOTE D - INVENTORY Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from 2020 2019 Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides a single model for entities to use in accounting for INVENTORY CONSISTS OF: revenue arising from contracts with customers. The new standard Food and beverage inventory $ 219,348 $ 260,116 also requires expanded disclosures regarding the qualitative and quantitative information about the nature, amount, Merchandise inventory 81,375 121,638 timing, and uncertainty of revenue and cash flows arising from Coffee inventory 339,153 298,985 contracts with customers. The FASB has subsequently issued additional, clarifying standards to address issues arising from Catalog inventory 251,166 201,154 implementation of the new revenue recognition standard. ASU Other print inventory 23,344 72,456 2014-09 and all subsequently issued amendments, collectively “ASC 606,” is effective for annual reporting periods beginning Greenhouse inventory 110,586 77,651 after December 15, 2019, but early adoption is permitted. Carbon inventory 4,230,829 3,043,904 The standard permits the use of either a full retrospective or a modified retrospective approach. Miscellaneous inventory 18,936 53,530 $ 5,274,737 $ 4,129,434

38 Arbor Day Foundation NOTE E - PROPERTY AND EQUIPMENT NOTE H - LONG-TERM OBLIGATIONS 2020 2019 LONG-TERM OBLIGATIONS CONSIST OF: 2020 2019

PROPERTY AND EQUIPMENT Note payable to Union Bank & Trust Co., CONSISTS OF: Lincoln, Nebraska, with 3.75% interest. Secured by substantially all assets of the Foundation. Payable in Land $ 4,496,809 $ 4,496,807 monthly installments of $54,989. this note was paid Buildings 38,313,390 37,241,476 off on February 29, 2020. $ $ 646,254 Leasehold improvements 125,082 125,082 Note payable to Union Bank & Trust Co., Lincoln, Nebraska, with 3.95% interest. Secured by real estate Farm improvements 2,776,092 1,563,981 in Lincoln, Nebraska and Otoe County, Nebraska. Payable in monthly installments of $2,302, maturing Orchards 78,210 78,210 on March 24, 2021. - 46,639 Computer hardware 2,757,390 2,673,714 Note payable to Union Bank & Trust Co., Lincoln, Lied Lodge & Conference Center 4,504,573 4,504,563 Nebraska, dated April 10, 2020 was granted to the equipment and improvements Foundation pursuant to the Paycheck Protection Program (“the PPP”). The note matures on April 10, Furniture and equipment 4,586,659 4,350,675 2022 and bears an interest rate of 1% per annum, Computer software 4,349,068 4,115,692 payable in monthly installments of $149,966 commencing on November 10, 2020. The note may 61,987,273 59,150,200 be eligible for partial or complete forgiveness when used on qualifying expenses. In July, Union Bank & Less accumulated depreciation (32,898,400) (30,413,504) Trust Co. notified the Foundation of an extended $ 29,088,873 $ 28,736,696 deferral of payments to 10-months after the end of the Foundation’s forgiveness covered period if a loan forgiveness application is not submitted. The Depreciation expense for the years ended June 30, 2020 and 2019 was $2,485,429 and Foundation now has until July 24, 2021 to submit $2,326,862, respectively. for forgiveness or begin repayments. The foundation intends to apply for forgiveness. Maturities are NOTE F - SPLIT-INTEREST AGREEMENTS outlined based on the original note because a revised The Foundation has entered into charitable gift annuity contracts which provide for payment schedule with the lender will not be periodic distributions to the donor over a specified period of time, usually the life of established until it is necessary. 2,664,300 - the donor. Any amounts remaining, after all distributions have been made, are left 2,664,300 692,893 to the Foundation. Less current maturities (1,021,135) (672,520) When a gift annuity is created, the value of the annuity contract (payments due the annuitant) is treated as a liability of the Foundation. The discount rate used in $ 1,643,165 $ 20,373 calculating the annuity obligation is the prime rate at measurement date and the actuarial assumptions used in calculating the annuity obligation are those provided in Aggregate annual maturities of long-term obligations for the years actuarial tables. The difference between this liability and the total amount deposited following June 30, 2020, are as follows: by the annuitant is treated as a current contribution for that portion which Year ending June 30, ultimately accrues to the Foundation. 2021 $ 1,021,135 For the agreements where the Foundation is not the trustee, the Foundation has recorded an asset included in the caption “contributions receivable from charitable 2022 1,643,165 trusts” which represents its beneficial interest in the agreements. For the years ended June 30, 2020 and 2019, contributions include gift annuity contracts $ 2,664,300 valued at $150,271 and $47,374, respectively, after recognizing the liabilities relating to the annuity contracts. NOTE I - NET ASSETS The Foundation complies with requirements of various states’ laws, including mandated Net assets without donor restrictions have been designated by the governing board as follows: annuity reserves and limitations on the manner in which net assets are invested. 2020 2019 NOTE F - SPLIT-INTEREST AGREEMENTS - CONTINUED BOARD DESIGNATED: 2020 2019 Board designated reserve fund (cash and investments) $6,105,746 $6,134,723 Cash and cash equivalents $ 18,223 $ 36,687 Board designated reserve fund (property) 3,075,257 3,075,257 Contributions receivable from charitable trusts 29,916 30,139 Quasi-endowment fund 229,359 221,174 Investments 1,458,733 1,436,225 $ 9,410,362 $ 9,431,154 $ 1,506,872 $ 1,503,051 Net assets with donor restrictions comprise the following: NOTE G - REVOLVING CREDIT NOTE PAYABLE AND LETTER SUBJECT TO PURPOSE RESTRICTIONS: OF CREDIT Exhibition center $ 109,000 $ 209,000 The Foundation has secured a revolving credit note agreement with a financial institution, which provides it may borrow up to $3,000,000 at the bank’s variable interest rate. The Earnings on permanently restricted endowment funds 24,053 22,737 note is secured by substantially all of the assets of the Foundation. No amounts had been borrowed on the revolving credit note as of June 30, 2020 and 2019. The revolving credit Hazelnut project - 32,751 note expires January 31, 2021. SUBJECT TO TIME RESTRICTIONS: In addition, the Foundation has established an irrevocable letter of credit of $1,027,788 Split-interest agreements 695,779 763,177 for both years ended June 30, 2020 and 2019, for securing payment drawn in favor of a USDA Forest Service agreement. The letter of credit matures on January 31, 2021 SUBJECT TO PERPETUAL RESTRICTIONS: and may be renewed at that time. The fee for the letter of credit is waived. There was no Permanent endowments 40,443 40,443 outstanding balance under the letter of credit as of June 30, 2020 and 2019. $ 869,275 $ 1,068,108

2019-2020 Annual Report 39 NOTE J - PROGRAM GRANTS NOTE K - OTHER INCOME During the years ended June 30, 2020 and 2019, grant income consisted of: OTHER INCOME CONSISTS OF: 2020 2019 2020 2019 Grant Source Grant Purpose List rental income $ 489,965 $ 507,411 GOVERNMENT: Education material sales 212,367 88,796 Tree City USA material sales 36,167 46,004 U.S. Department of Agriculture Tree City USA $ 197,000 $ 237,091 Conference and training 762,152 567,166 Public Service Ads 140,000 - Rental income 102,049 135,268

Partners Conference Royalty income 35,000 14,375 Support 4,008 4,885 Investment income (loss) (191,595) 164,169 Urban Community 64,048 386,738 Forestry Program Interest income 229,868 153,068 NIFA Specialty Crop Other income 3,704 - Research Initiative 68,406 99,444 Sustainable Urban Forests $ 1,679,677 $ 1,676,257 Coalition 141,869 168,772

Trees and Health 59,908 - NOTE L - LEASES As Lessee Economic Impact of 44,870 - Urban Forestry The Foundation has an agreement to lease Steinhart Lodge from the City of Nebraska Biofuel Infrastructure 26,954 - City for a term of 99 years commencing June 1, 1985 for the sum of $1. The Foundation has the option to extend the agreement for an additional term of 99 years for the total Orchard Ozone Project 27,200 43,400 sum of $1. Since the lease term extends beyond the economic life of the asset, the Steinhart Lodge lease has been shown as a capital addition at a value of $297,750. 774,263 940,330 Steinhart Lodge is part of Arbor Day Farm. The Foundation leases real property under two operating lease agreements. Under the Environmental Trust/ first agreement, lease payments are $42,000 plus inflation adjustments annually through State of Nebraska Pollution 60,000 - December 31, 2098. The Foundation subleased the first operating lease to another party Tourism Marketing 13,163 - under the same terms as the Foundation’s. Under the second agreement, lease payments are $26,400 annually through December 31, 2046. 73,163 - The Foundation leases building space under an operating lease agreement. The term of the lease is from August 1, 2009 through December 31, 2018. Under the agreement, lease payments were $23,140 annually through December 31, 2013 and $25,396 State of Vermont Cooperative Forestry - 25,300 annually from January 1, 2014 through December 31, 2018. On January 1, 2019 the Assistance lease was renewed through December 31, 2021 at the same annual rate. Government grant income 847,426 965,630 The Foundation leases office equipment under an operating lease agreement. The term of the lease is from June 9, 2020 through June 8, 2025. Under the agreement, lease PRIVATE: payments are $764 per month. PriceWaterhouseCoopers 650,000 - Rent expense for the years ended June 30, 2020 and 2019 was $163,707 and $150,413, respectively. CSX 14,000 54,000 Future minimum lease payments for the years following June 30, 2020 are as follows: Peed Foundation 300,000 - TD Green Streets - 250,000 Year ending June 30, 2021 $ 60,962 Kropp/Nelson 10,000 20,000 2022 48,264 Earthshare 289 3,562 2023 35,566 Sunderland - 575,000 2024 35,566 TD Tree Days 237,267 42,000 2025 26,400 Fogg Charitable Trust 40,000 - 2026 and thereafter 567,600 Daugherty Foundation 100,000 - $ 774,358 Hubbard Foundation 50,000 - As Lessor The Foundation leases building space to a bakery-café restaurant under an operating Iowa West Foundation 56,250 - lease agreement. The term of the lease is from August 1, 2009 through December 31, Peter Kiewit Foundation 100,000 - 2018. Under the agreement, base lease payments were $97,156 annually until December 31, 2018. The tenant is also responsible for its proportionate share of common area UPS Foundation 153,935 - maintenance charges. This lease was extended three years and lease payments are $97,156 Others 22,000 17,531 annually until December 31, 2021. Thereafter, the lessee has two renewal options, the first for three years at $106,608 annually and the second for five years at $113,112. Private grant income 1,733,741 962,093 Rent income for the years ended June 30, 2020 and 2019 was $102,049 and $135,268. Total grant income $ 2,581,167 $ 1,927,723 Future minimum lease revenue for the years following June 30, 2020 is as follows:

Year ending June 30, 2021 $ 97,156 2022 48,578 $ 145,734

40 Arbor Day Foundation NOTE M - RETIREMENT PLAN The following tables set forth the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and 2019. The Foundation has established a defined contribution retirement plan qualified under Section 401(k) of the Internal Revenue Code. The plan covers employees age 2020 twenty-one and over with one year and at least 1,000 hours of service. Employees may, upon hire, make contributions to the plan up to the maximum amount allowed Significant Quoted Prices in Other Significant by the Internal Revenue Code. The Foundation provides a matching contribution on Active Markets Observable Unobservable the first three percent of contributions made by eligible employees up to a maximum for Identical Inputs Inputs of $3,000 annually. Matching contributions were $334,386 and $337,389 for the years INVESTMENTS: Fair Value Assets (Level 1) (Level 2) (Level 3) ended June 30, 2020 and 2019, respectively. Employees become vested in the matching Mutual funds contributions over a five year period, 20% each year. Large cap $ 1,985,239 $ 1,985,239 $ - $ - The Foundation also established a salary deferral plan for eligible employees under IRC 76,212 76,212 - - Section 457(b). Executive team members, as designated by the Foundation, are eligible Mid cap to participate in the plan. As of June 30, 2020 and 2019, $76,104 and $74,153 has been Small cap 839,754 839,754 - - deferred on behalf of the participants, respectively. International 1,536,174 1,536,174 - - High yield bond 31,544 31,544 - - NOTE N - ALLOCATION OF JOINT COSTS Intermediate-term bond 718,624 718,624 - - The Foundation conducted activities which incurred joint costs for educational Short-term bond 1,808,200 1,808,200 - - information and distribution of direct mail fundraising appeals, and for corporate 216,100 216,100 - - marketing activities. These costs were allocated as follows: World bond Inflation-protected bond 299,398 299,398 - - 2020 2019 Commodities 171,790 171,790 - - Agency bonds

Total joint costs allocated to program services $ 3,260,874 $ 3,460,822 AA+/Aaa 77,527 - 77,527 - Exchange traded funds Total joint costs allocated to fundraising 1,463,190 1,401,578 Large blend 61,070 61,070 - - $ 4,724,064 $ 4,862,400 Foreign large blend 17,644 17,644 - - $ 7,839,276 $ 7,761,749 $ 77,527 $ - NOTE O - FAIR VALUE MEASUREMENTS Contributions receivable Following is a description of the valuation methodologies used for assets and liabilities from charitable trusts $ 29,916 $ - $ - $ 29,916 measured at fair value. There have been no changes in methodologies used during the Annuities payable $ 895,500 $ - $ - $ 895,500 years ended June 30, 2020 and 2019. Mutual funds: Valued at the observable net asset value (NAV) of shares held by the Foundation at year-end. 2019 Agency bonds: Valued using independent pricing models. Significant Quoted Prices in Other Significant Exchange traded funds: Valued at the observable net asset value (NAV) Active Markets Observable Unobservable of shares held by the Foundation at year-end. for Identical Inputs Inputs INVESTMENTS: Fair Value Assets (Level 1) (Level 2) (Level 3) Contributions receivable from charitable trusts: VValued at an amount equal to the estimated present value of the life interest. The estimated value of the life interest of Mutual funds the trust is based on the trust’s current market value, a discount rate of 1.2 percent Large cap $ 2,042,605 $ 2,042,605 $ - $ - (2020) and 2.8 percent (2019) as provided in Internal Revenue Service (IRS) Mid cap 48,949 48,949 - - guidelines, and the estimate remaining life of the donor as provided in actuarial 760,561 760,561 - - tables. Small cap International 1,477,731 1,477,731 - - Annuities payable: Valued using the estimated present value of the annuity obligation. 29,320 29,320 - - The Foundation has elected the fair value option for measuring annuity obligations. High yield bond The discount rate of 5.00 percent (2020) and 5.50 percent (2019) used in calculating Intermediate-term bond 735,867 735,867 - - the annuity obligation is the prime rate and the actuarial assumptions used in Short-term bond 1,883,172 1,883,172 - - calculating the annuity obligation are those provided in actuarial tables. Both the World bond 216,836 216,836 - - discount rate and the actuarial assumptions are updated each period the obligations Inflation-protected bond 308,312 308,312 - - are valued. Commodities 178,964 178,964 - - Lied Lodge and Conference Center equipment and improvements: Valued using quoted Agency bonds prices for similar assets as provided by the vendors of such assets. AA+/Aaa 76,587 - 76,587 - The preceding methods described may produce a fair value calculation that may not Exchange traded funds be indicative of net realizable value or reflective of future fair values. Furthermore, 59,597 59,597 - - although the Foundation believes its valuation methods are appropriate and consistent Domestic equity with other market participants, the use of different methodologies or assumptions to Global equity 18,967 18,967 - - determine the fair value of certain financial instruments could result in a different fair $ 7,837,468 $ 7,760,881 $ 76,587 $ - value measurement at the reporting date. Contributions receivable from charitable trusts $30,139 $ - $ - $ 30,139 Annuities payable $ 732,991 $ - $ - $ 732,991

2019-2020 Annual Report 41 NOTE O - FAIR VALUE MEASUREMENTS - CONTINUED 2020 2019 The following table sets forth a summary of changes in the fair value of the Foundation’s Cash and cash equivalents $ 11,624,967 $2,008,809 level 3 assets and liabilities for the years ended June 30, 2019 and 2018. Certificates of deposit 11,114,973 - Contributions Receivable from Annuities Investments 7,839,276 7,837,468 Charitable Trusts Payable Accounts receivable 395,254 1,447,112 Balance at June 30, 2018 27,372 763,182 Unconditional promises to give 4,422,443 2,715,074 Annuity liabilities added - 57,626 Grants receivable 436,813 597,771 Annuity liabilities released - (33,737) Inventory 5,274,737 4,129,434 Actuarial change in split-interest Total financial assets $ 41,108,463 $ 18,735,668 agreements 2,767 (54,080) DONOR IMPOSED RESTRICTIONS: Balance at June 30, 2019 $ 30,139 $ 732,991 Annuity liabilities added - 155,661 Subject to expenditure for specified purpose or time (869,275) (1,068,108) Annuity liabilities released - (54,543) Net financial assets after donor-imposed Actuarial change in split-interest restrictions 40,239,188 17,667,560 agreements (223) 61,391 LESS:

Balance at June 30, 2020 $ 29,916 $ 895,500 Board-designated cash and investment funds (6,335,105) (6,355,897) The following table sets forth the balances of assets and liabilities measured at fair value Financial assets available to meet cash needs on a nonrecurring basis as of June 30, 2019. for general expenditures within one year $ 33,904,083 $ 11,311,663

Quoted Prices in Active Significant Markets Other Significant As part of the liquidity management plan, cash in excess of daily requirements is for Identical Observable Unobservable invested in short-term investments, CDs, and money market funds. Occasionally, the Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Board designates a portion of any operating surplus to its operating reserve, which was $6,183,193 as of year-end date. The operating reserve is a board-designated fund PROPERTY AND EQUIPMENT: with the objective of setting funds aside to be drawn upon in the event of financial distress or an immediate liquidity need resulting from events outside the typical life Lied Lodge and Conference Center equipment and $ 29,101 $ 29,101 $ - $ - cycle of converting financial assets to cash or settling financial liabilities. In the event 2019 improvements of an unanticipated short-term liquidity need, the organization also could draw upon a $3,000,000 available line of credit.

NOTE P - INCOME TAXES As of June 30, 2020, a significant portion of the financial assets available to meet cash needs for general expenditures within one year will be used to satisfy current The Foundation is exempt from federal income taxes under Section 501(c)(3) of liabilities, which in large part are made up of obligations to plant trees. the Internal Revenue Code, except on net income derived from unrelated business activities. The Foundation has hotel and conference center income, which is subject NOTE T - RISKS AND UNCERTAINTIES to tax on unrelated business income. For the years ended June 30, 2020 and 2019, the Foundation had no tax liability on unrelated business activity. The Foundation The COVID-19 (coronavirus) outbreak continues to prompt global health concerns. has Federal and Nebraska net operating loss carryforwards that may be offset against Consequently, it is possible the Foundation could be impacted by the resulting future taxable income. If not used, the Federal carryforward will expire between volatility in the economy beyond the financial statement date. Specifically, the now and June 30, 2039 and the Nebraska carryforward will expire between now and Foundation could experience decreases in donor giving, membership renewals, June 30, 2024. The loss carryforwards at June 30, 2020 total $16,975,273 (Federal) patronage at Arbor Day Farm, grant funding, and declines in investment markets. and $3,186,226 (Nebraska). No net operating loss is anticipated to be used prior NOTE U - DISAGGREGATION OF REVENUE to expiration; therefore, no deferred tax asset has been established. The Foundation believes that it has appropriate support for any tax positions taken, and as such, does The following table shows the Foundation’s revenues from contracts with customers not have any uncertain tax positions that are material to the financial statements. disaggregated according to the timing of transfer of control of goods or services: The Foundation’s federal Returns of Organization Exempt from Income Tax (Form 2020 990) and Exempt Organization Business Income Tax Returns (Form 990T) for June 30, 2020, 2019, and 2018 are subject to examination by the IRS, generally for three REVENUE RECOGNIZED AT A POINT IN TIME years after they were filed. Program fees NOTE Q - COMMITMENTS Membership dues $ 2,060,064 The Foundation had open commitments to purchase reforestation carbon credits in the Trees for America 4,539,579 amount of $5,417,858 and to purchase trees in the amount of $2,671,852 as of June 30, 2020. All are expected to be paid during the year ending June 30, 2021. Arbor Day Farm income 7,327,700 Rain Forest Rescue income 1,976,806 NOTE R - CONCENTRATIONS OF CREDIT RISK Other income 1,539,355 Financial instruments which potentially subject the Foundation to concentrations of credit risk consist principally of Short Term Federal Investment Trust (STFIT) Total revenue recognized at a point in time $ 17,443,504 accounts at a financial institution. The STFIT accounts are not federally insured. At June 30, 2020 and 2019, the STFIT account balances totaled $2,042,714 and NOTE V - RECLASSIFICATIONS $3,114,239 respectively. The Foundation has mitigated this risk by collateralizing these balances with federal agency bonds. Certain amounts in the year ended June 30, 2019 financial statements have been reclassified to conform with current year presentation. These reclassifications had no NOTE S - LIQUIDITY AND AVAILABILITY effect on the 2019 increase in net assets. Financial assets available for general expenditure, that is, without donor or other NOTE W - SUBSEQUENT EVENTS restrictions limiting their use, within one year of the statement of financial position date, comprise the following: Subsequent events have been evaluated through the audit report date, the date the financial statements were available to be issued.

42 Arbor Day Foundation EXECUTIVE MANAGEMENT TEAM

Matt Harris Chief Executive Dan Lambe President Yinka Akinyemi Vice President, Human Resources Britt Ehlers Chief of Staff and General Counsel Karen Houser Vice President, Systems Katie Loos Vice President, Ventures and Partnerships Austin Mackrill Vice President, Arbor Day Farm Woodrow Nelson Vice President, Marketing Communications

BOARD OF TRUSTEES

Pat Covey Chair Leslie Weldon Vice-Chair Danielle Crumrine Mary Desjardins Susan Henricks Ernesto Herrera Mark Johnson Denise Naguib Robert Ruano Crayton Webb 50127001 211 N. 12th St • Lincoln, Nebraska 68508 • 888-448-7337