Jon Bon Jovi Soul Foundation Financial Statements Years
JON BON JOVI SOUL FOUNDATION
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
JON BON JOVI SOUL FOUNDATION TABLE OF CONTENTS YEARS ENDED DECEMBER 31, 2012 AND 2011
INDEPENDENT AUDITORS’ REPORT 1
FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL POSITION 3
STATEMENTS OF ACTIVITIES 4
STATEMENTS OF FUNCTIONAL EXPENSES 5
STATEMENTS OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7
INDEPENDENT AUDITORS’ REPORT
Board of Directors Jon Bon Jovi Soul Foundation Philadelphia, Pennsylvania
We have audited the accompanying financial statements of Jon Bon Jovi Soul Foundation (a nonprofit organization), which comprise the statements of financial position as of December 31, 2012 and 2011, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
(1) Board of Directors Jon Bon Jovi Soul Foundation
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jon Bon Jovi Soul Foundation as of December 31, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
CliftonLarsonAllen LLP
Plymouth Meeting, Pennsylvania April 29, 2013
(2) JON BON JOVI SOUL FOUNDATION STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2012 AND 2011
2012 2011
ASSETS
Cash $ 2,564,835 $ 3,040,878 Contributions Receivable 80,917 143,297 Prepaid Expenses 10,766 11,425 Other Assets 5,235 5,000 Property and Equipment 80,497 232,826
Total Assets$ 2,742,250 $ 3,433,426
LIABILITIES AND NET ASSETS
LIABILITIES Accounts Payable and Accrued Expenses$ 12,786 $ 6,751 Grants Payable 750,000 ‐ Total Liabilities 762,786 6,751
NET ASSETS Unrestricted 1,807,397 3,326,675 Temporarily Restricted 172,067 100,000 Total Net Assets 1,979,464 3,426,675
Total Liabilities and Net Assets$ 2,742,250 $ 3,433,426
See accompanying Notes to Financial Statements. (3) JON BON JOVI SOUL FOUNDATION STATEMENTS OF ACTIVITIES YEARS ENDED DECEMBER 31, 2012 AND 2011
2012 2011 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total
SUPPORT AND REVENUE Contributions ‐ Corporate and Individuals$ 282,419 $ 543,213 $ 825,632 $ 995,929 $ 216,849 $ 1,212,778 Kitchen Program Income 137,497 ‐ 137,497 57,842 ‐ 57,842 Investment Income 6,979 ‐ 6,979 4,604 ‐ 4,604 In‐Kind Services and Donated Assets 21,905 17,859 39,764 7,760 252,222 259,982 Net Assets Released From Restrictions 489,005 (489,005) ‐ 369,071 (369,071) ‐ Total Support and Revenue 937,805 72,067 1,009,872 1,435,206 100,000 1,535,206
EXPENSES Program Services 2,296,332 ‐ 2,296,332 272,174 ‐ 272,174 Support Services 160,751 ‐ 160,751 135,397 ‐ 135,397 Total Expenses 2,457,083 ‐ 2,457,083 407,571 ‐ 407,571
CHANGE IN NET ASSETS (1,519,278) 72,067 (1,447,211) 1,027,635 100,000 1,127,635
Net Assets ‐ Beginning of Year 3,326,675 100,000 3,426,675 2,299,040 ‐ 2,299,040
NET ASSETS ‐ END OF YEAR $ 1,807,397 $ 172,067 $ 1,979,464 $ 3,326,675 $ 100,000 $ 3,426,675
See accompanying Notes to Financial Statements. (4) JON BON JOVI SOUL FOUNDATION STATEMENTS OF FUNCTIONAL EXPENSES YEARS ENDED DECEMBER 31, 2012 AND 2011
2012 2011 Supporting Services Supporting Services Program Management Fund Total Program Management Fund Total Services & General Raising Expenses Services & General Raising Expenses
Salaries and Payroll Taxes$ 287,971 $ 40,202 $ 50,489 $ 378,662 $ 92,897 $ 44,963 $ 53,622 $ 191,482 Grant Expense 1,655,000 ‐ ‐ 1,655,000 31,400 ‐ ‐ 31,400 Kitchen Program 147,809 ‐ ‐ 147,809 67,219 ‐ ‐ 67,219 Professional Fees 20,448 13,869 1,439 35,756 11,790 8,973 1,441 22,204 Supplies and Meals 5,408 2,234 12,720 20,362 2,204 3,909 ‐ 6,113 Occupancy 5,365 3,033 2,461 10,859 4,170 3,422 2,768 10,360 Postage ‐ 255 1,018 1,273 ‐ 1,509 674 2,183 Travel 2,308 2,338 ‐ 4,646 6,407 1,265 ‐ 7,672 Marketing 8,527 11,937 ‐ 20,464 1,659 328 ‐ 1,987 Insurance ‐ 4,983 ‐ 4,983 354 4,621 ‐ 4,975 Memberships 2,500 ‐ ‐ 2,500 2,335 ‐ ‐ 2,335 Fees ‐ ‐ 13,565 13,565 ‐ ‐ 4,973 4,973 Miscellaneous ‐ 172 36 208 ‐ ‐ 2,929 2,929 2,135,336 79,023 81,728 2,296,087 220,435 68,990 66,407 355,832 Depreciation 160,996 ‐ ‐ 160,996 51,739 ‐ ‐ 51,739
Total Functional Expenses$ 2,296,332 $ 79,023 $ 81,728 $ 2,457,083 $ 272,174 $ 68,990 $ 66,407 $ 407,571
See accompanying Notes to Financial Statements. (5) JON BON JOVI SOUL FOUNDATION STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets$ (1,447,211) $ 1,127,635 Adjustments to Reconcile Change in Net Assets to Net Cash Provided (Used) by Operating Activities: Donated Assets ‐ (248,222) Depreciation 160,996 51,739 (Increase) Decrease in Assets: Accounts Receivable 62,380 143,496 Prepaid Expenses 659 (5,557) Other Assets (235) (5,000) Increase (Decrease) in Liabilities: Accounts Payable 6,035 1,382 Grants Payable 750,000 (505) Net Cash Provided (Used) by Operating Activities (467,376) 1,064,968
CASH FLOWS FROM INVESTING ACTIVITIES Purchases of Leasehold Improvements (8,667) (36,343)
NET INCREASE (DECREASE) IN CASH (476,043) 1,028,625
Cash ‐ Beginning 3,040,878 2,012,253
CASH ‐ ENDING $ 2,564,835 $ 3,040,878
See accompanying Notes to Financial Statements. (6) JON BON JOVI SOUL FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations The Jon Bon Jovi Soul Foundation (the “Foundation”), formerly known as Philadelphia Soul Charitable Foundation, was incorporated in 2006 under the Pennsylvania Nonprofit Corporation Law of 1988, as amended, to operate exclusively for charitable purposes within the meaning of IRC Section 501(c)(3). The Mission of the Foundation is to combat issues that force individuals and families into economic despair. The Foundation develops partnerships to provide grants to organizations that help to improve the quality of life for impoverished and homeless people. The goal is to recognize and maximize the human potential in those affected by poverty and homelessness by offering assistance to programs that provide for affordable housing and provide nutritional programs for low‐income, impoverished families and individuals in cities across the country.
By leveraging the celebrity status of members of the Board of Directors, the Foundation is committed to developing role models on the individual, corporate, and community level. The programs and partnerships created will assist and promote innovative and long‐lasting solutions to rebuilding pride in one’s self and one’s community.
The Foundation also participates in fundraising events and campaigns to support its programs and grants to deserving community development organizations that serve those affected by poverty and homelessness.
Financial Statement Presentation The Foundation is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Currently, the Foundation has no activities from permanently restricted net assets.
Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Advertising Costs Advertising costs are charged to operations when incurred. Advertising costs are to promote the program services of the Foundation.
(7) JON BON JOVI SOUL FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents For purposes of reporting cash flows, the Foundation considers all highly liquid debt instruments with an initial maturity of less than three months to be cash equivalents.
Contributions Receivable Contributions are recognized when the donor makes a promise to give to the Foundation that is, in substance, unconditional.
Contributions that are expected to be collected within one year are recorded at their net realizable value. Contributions due after one year are subjected to a discount factor of 3%. All contributions are expected to be collected; therefore, no allowance for doubtful contributions is warranted. At December 31, 2012 and 2011, respectively, all contributions receivable were expected to be collected within the next fiscal year.
Contributions Contributions received are recorded as unrestricted, temporarily restricted or permanently restricted support depending on the existence or nature of any donor restrictions. Contributions that are restricted by donor are required to be reported as temporarily restricted support when the unconditional promise to give is received by the Foundation and are then reclassified to unrestricted net assets upon expiration of a time restriction or payment satisfaction by the Foundation.
Property and Equipment Property and equipment is stated at cost or at their estimated fair value at date of donation. Depreciation is provided using the straight‐line method over the estimated useful lives of the assets as follows:
Computer Equipment 3 years Leasehold Improvements 22 months
Additions and betterments of $1,500 or more are capitalized, while maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed currently.
Functional Expenses The costs of supporting the programs and other activities have been summarized on a functional basis in the statements of functional expenses and activities. Accordingly, certain costs have been allocated among the classifications benefited: program, management & general and fundraising.
Income Tax Status The Foundation was approved on February 22, 2007 to be a tax exempt organization, effective May 23, 2006, under Section 501(c)(3) of the Internal Revenue Code and, therefore, does not need a provision for federal income taxes.
(8) JON BON JOVI SOUL FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Tax Status (Continued) The Foundation follows the income tax standard for uncertain tax positions. The Foundation believes there are no uncertain tax positions that need to be disclosed in the financial statements.
The Foundation is not aware of any activities that would jeopardize its tax‐exempt status. The Foundation’s informational tax returns for years ended December 31, 2009, 2010, and 2011 are subject to review and examination by federal, state, and local authorities.
Subsequent Events In preparing these financial statements, the Foundation has evaluated events and transactions for potential recognition or disclosure through April 29, 2013, the date the financial statements were available to be issued.
NOTE 2 CONCENTRATIONS AND RISKS
Cash The Foundation maintains cash balances at financial institutions. The balances are insured by the Federal Deposit Insurance Corporation up to certain limits. At times during the years ended December 31, 2012 and 2011, the balance was in excess of insured amount.
Revenue and Support The Foundation received approximately 50% and 65% of its contributions revenue from eight and five contributors during 2012 and 2011, respectively.
NOTE 3 TEMPORARILY RESTRICTED NET ASSETS
The temporarily restricted net assets are restricted as to time or use with the expectation that such restrictions will be satisfied in the future. Temporarily restricted net assets as of December 31, 2012 and 2011 consist of the following:
2012 2011 Soul Kitchen ‐ Purpose Restriction $ ‐ $ 50,000 Hurricane Sandy Relief ‐ Purpose Restriction 107,267 ‐ Portrait Project ‐ Purpose Restriction 64,800 ‐ Contribution ‐ Time Restriction ‐ 50,000
Total$ 172,067 $ 100,000
(9) JON BON JOVI SOUL FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011
NOTE 4 PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31:
2012 2011 Computer Equipment$ 7,051 $ 7,051 Leasehold Improvements 293,232 284,565 Total Property and Equipment 300,283 291,616 Less: Accumulated Depreciation 219,786 58,790 Total Property and Equipment, Net$ 80,497 $ 232,826
Depreciation expense was $160,996 and $51,739 for the years ended December 31, 2012 and 2011, respectively.
NOTE 5 GRANTS PAYABLE
Grants payable consist of amounts awarded, but not paid at year end. The grants payable at December 31, 2012 and 2011, was $750,000 and $0, respectively. In 2012 and 2011, the Foundation awarded and paid out grants. The 2012 grants consisted of an affordable housing grant to Project HOME for the JBJ Soul Homes Project, a grant to Northern Home For Children for affordable housing, and other grants that were awarded to organizations which address housing and anti‐hunger initiatives. The 2011 grants consisted of an affordable housing grant to the St. Joseph’s Carpenter Society, a job training grant to Café Reconcile, and numerous smaller grants that were awarded to organizations which address food/nutrition and job training programs.
NOTE 6 IN‐KIND DONATIONS
The Foundation recognizes donated services that creates or enhances nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. The donated services consisted of office space for the Foundation, volunteer time of professional chefs for the kitchen program, and legal services provided to the Foundation. During 2012 and 2011, an amount has been reflected in the statements of activities as a contribution for donated services with a like amount included as donated expenses of $21,905 and $7,760, respectively.
During 2012 and 2011, the Foundation received donations of food for the kitchen program. The value of donated food was $17,859 and $4,000, respectively.
During 2011, the Foundation received donations of the leasehold improvements made to the Soul Kitchen location during the year. The value of the leasehold improvements was $248,222.
(10) JON BON JOVI SOUL FOUNDATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011
NOTE 6 IN‐KIND DONATIONS (CONTINUED)
Starting in August 2009, the Foundation received pro‐bono website hosting services for their new website. The Foundation did not record any value of these services as a result of the amount being minimal for 2012 and 2011.
In addition, individuals volunteer their time and perform a variety of tasks that assist the Foundation with their purpose and programs. During 2012, over 200 volunteers contributed over 1,800 hours to the Soul Kitchen. The efforts of these volunteers are not valued as they do not meet the criteria for recording as donated services.
NOTE 7 RELATED PARTY TRANSACTIONS
Starting in 2009, the Foundation, in conjunction with St. Anthony's Church in Red Bank, NJ, piloted a community kitchen program (“Soul Kitchen”). The pilot kitchen program operated for 7 dates in 2009 and 9 dates through May 2010. Beginning in September 2010, the location was changed to the LunchBreak in Red Bank, NJ, and operated 10 dates through December 2010. In September 2011, the program was moved to a permanent location in Red Bank, NJ. The Soul Kitchen is coordinated and monitored by a family member of one of the board members. Supplies and food for the Soul Kitchen are paid for by the Foundation. For the years end December 31, 2012 and 2011, the total expenses incurred are $147,809 and $67,219, respectively.
During 2012 and 2011 the Foundation used limited office space of a board member, in which the rent value of $7,760 was recorded as donated services in Note 5.
During 2012, the Foundation granted Project HOME, a $1,500,000 grant for the JBJ Soul Homes Project. A board member of the Foundation is the executive director of Project HOME.
During 2011, the Foundation received donations totaling $125,000 from a company who is affiliated with a board member.
NOTE 8 COMMITMENTS
On February 1, 2011, the Foundation entered into a two year lease agreement to house the Soul Kitchen. The effective lease date was June 24, 2011. Rent expense was $30,000 and $15,000 for the years ended December 31, 2012 and 2011, respectively.
Years Ending December 31, Amount 2013$ 15,000
On March 27, 2013, the Foundation made notification that it was exercising the option to extend the lease for an additional three years until June 30, 2016.
(11)