Alliance for a Healthier Generation

Transcription

1 GaryMcGee & Co. LLP CERTIFIED PUBLIC ACCOUNTANTS Alliance for a Healthier Generation Financial Statements and Other Information as of and for the Years Ended June 30, 2014 and 2013 and Report of Independent Accountants

2 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N TABLE OF CONTENTS Page Year in Review 3 Management Discussion and Analysis 4 Report of the Chief Financial Officer 6 Report of Independent Accountants 7 Financial Statements: Statements of Financial Position 9 Statements of Activities 10 Statements of Functional Expenses 12 Statements of Cash Flows 16 Notes to Financial Statements 17 Other Information: Governing Board and Management 27 Inquiries and Other Information 28

3 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N Year in Review Total Revenues Operating Revenues [1] Total Program Service Costs Total Supporting Service Costs July 1, June 30, 2014 $16.3 million $17.3 million $13.6 million $2.7 million Total Assets Total Expendable Net Assets $15.6 million $10.7 million [1] Excludes release of restrictions of $489,467 for capital purposes. Funding Highlights 2014 Revenues Government grants 0.7% Contributions 3.3% Grants 65.7% In-kind contributions 1.3% Other 0.1% Grants, related parties 2.7% Contributions, related parties 24.5% Consulting fees 1.7% 2014 Expenses by Function 2014 Expenses by Type Management and general 12.9% Strategic Alliances Initiative 4.6% Fundraising 3.5% Salaries and related costs 65.1% Grants and stipends 2.4% Healthy Out-of- School Time Initiative 11.5% Program services 83.6% Supporting services 16.4% Healthy Schools Program 67.5% Professional services other 2.6% Depreciation 2.9% Other 7.2% Program evaluation 7.7% Travel 8.5% Conferences and meetings 3.6% 3

4 Management Discussion and Analysis T he Alliance for a Healthier Generation (the Alliance ), founded by the American Heart Association (the AHA ) and the Clinton Foundation, works to reduce the prevalence of childhood obesity and to empower kids to make lifelong, healthy habits. The Alliance works with schools, companies, community organizations, healthcare professionals and families to transform the conditions and systems that lead to healthier children. The Alliance has three programs: the Healthy Schools Program, Healthy Out-of-School Time (HOST) Initiative, and the Strategic Alliances Initiative. Revenues for the year ended June 30, 2014 (FY 2014) demonstrate the progress of the Alliance toward direct funding relationships. During FY 2014, grants and government grants increased to $10.8 million, compared to $10.7 million during the year ended June 30, 2013 (FY 2013), while grants from related parties decreased to $0.4 million, compared to $0.8 million in FY Contributions from related parties reflect the pledges made by the AHA and the Clinton Foundation. The AHA and the Clinton Foundation each pledged $2.0 million for operations for FY This $4.0 million in revenue was recorded as temporarily restricted during FY The AHA and the Clinton Foundation each pledged $2.0 million for operations for the year ending June 30, 2015 (FY 2015). This $4.0 million in revenue was recorded as temporarily restricted during FY During FY 2014, program expenses of $13.6 million accounted for 84% of total expenses compared to $11.0 million and 82% during FY Of this $13.6 million, the Healthy Schools Program accounts for $11.0 million, the HOST Initiative accounts for $1.9 million, and the Strategic Alliances Initiative accounts for $0.7 million. The three largest drivers of the change in program expense year over year are labor related expenses, grant awards and stipends, and professional services for program evaluation. During FY 2014, the Alliance hired new employees to perform services in conjunction with new grant agreements as well as normal wage and benefit increase. During FY 2014, the Alliance incurred expenses for individual grants to out-of-school time sites to implement the Healthy Out-of-School Time Initiative. During FY 2014, the Alliance incurred increased expense for new program evaluation efforts for the Healthy Schools Program specifically related to work with the grant funding from the Robert Wood Johnson Foundation and the JPB Foundation, as well as other grant funders. As of June 30, 2014, the Healthy Schools Program supports more than 24,000 schools, reaching more than 11 million students, in all 50 states, the District of Columbia and Puerto Rico. Funding for this program comes from many sources, the largest of which is the Robert Wood Johnson Foundation. The Healthy Schools Program supports schools to implement health-promoting policies and programs. Specifically, the Alliance provides onsite and online training, technical assistance, resource brokering, and media support to participating schools. The Healthy Schools Program focused much of its resources in FY 2014 in supporting schools in their early implementation of the USDA s national nutrition standards. The Alliance offered critical tools and resources, including inspirational success stories and a popular Smart Snacks Calculator, to assist schools in making healthier meal and snack choices for students. The Alliance s Healthy Out-of-School Time Initiative has become one of the first national organizations to not only disseminate the Healthy Eating and Physical Activity Standards, but also provide implementation technical assistance to out-of- school time sites through the Healthy Out-of-School Time Framework. In FY 2014, the Alliance announced a national expansion of its pilot work in 8 communities to support out-ofschool time settings, where 15% of kids spend part of their day. Through an unprecedented partnership 4

5 commitment from the Boys & Girls Clubs of America, announced by President Clinton in January, as well as a similar commitment from the National Recreation and Park Association, the Alliance s work in out-of-school time settings will reach 5.5 million young people in more than 6300 out-of-school time sites. Expenses in this program consist of labor for staff working with kids and local before and after school programs, one gatherings each year of the Youth Advisory Board, individual grants for out-of-school time sites to implement the Healthy Out-of-School Time Initiative, and materials for kids to share the message of healthy eating and moving more. The Alliance s Strategic Alliances Initiative has two components: School/Out of School Time food and beverage and Healthcare. The Alliance collaborates with companies large and small to provide healthier food and beverage choices for millions of children in schools across the nation. As a result of the school meals agreements brokered by the Alliance, more than 30 million students across the country will have access to healthier school meals. In addition, more than 70 companies have committed to following the Alliance School Beverage and Competitive Foods Guidelines to help improve school food. The voluntary agreement with the American Beverage Association has resulted in a 90 percent reduction in total beverage calories shipped to schools between 2004 and In September 2013, McDonald s partnered with the Alliance for a Healthier Generation to increase customers access to fruit and vegetables and help families and children to make informed choices in keeping with balanced lifestyles. Finally, the Alliance Healthcare Initiative currently works with more than 56,000 providers offering the Healthier Generation benefit to more than 2.8 million children nationwide. Eligible children have access to at least four follow up visits with their primary care provider and four visits with a registered dietitian per year through the Healthier Generation Benefit. This program is paid for by unrestricted contributions from the AHA and the Clinton Foundation. Expenses in the Strategic Alliances Initiative consist largely of labor related expenses, travel to meet with industry representatives, and program evaluation. Management and general expenses accounted for $2.1 million of total expenses in FY 2014, compared to $1.9 million in FY Fundraising expenses totaled $0.6 million for FY 2014 and FY These expenses are largely labor for a development team and travel to meet with potential funders. The accompanying financial statements and related notes provide more detail regarding the financial activities of the Alliance during FY 2014 and FY

6 Report of the Chief Financial Officer T he financial statements and other information contained in this report have been prepared by management, which is responsible for the information s integrity and objectivity. The financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis and are deemed to present fairly the financial position of the ALLIANCE FOR A HEALTH- IER GENERATION and the changes in its net assets and cash flows. Where necessary, management has made informed judgments and estimates of the outcome of events and transactions, with due consideration given to materiality. As a means of fulfilling its responsibility for the integrity of financial information included in this report, management relies on a system of internal controls established to ensure, within reasonable limits, that assets are safeguarded against loss or unauthorized use, that transactions are properly recorded and executed in accordance with management s authorization, and that the accounting records can be relied upon to prepare financial statements in accordance with generally accepted accounting principles. This system is augmented by careful selection and training of qualified personnel and the dissemination of written policies and procedures. The financial statements have been examined by the Alliance s independent accountants, GARY MCGEE & CO. LLP, whose report follows. Their examinations were made in accordance with generally accepted auditing standards. The Board of Directors meets periodically with management and the independent accountants to review accounting, auditing, internal accounting controls, and financial reporting matters, and to ensure that all responsibilities are fulfilled with regard to the objectivity and integrity of the Alliance s financial statements. The Board of Directors also reviews the scope and results of the Alliance s audit, and current and emerging accounting and financial requirements and practices affecting the organization. Julie Satterwhite Chief Financial Officer and Chief Operating Officer 6

7 GaryMcGee & Co. LLP CERTIFIED PUBLIC ACCOUNTANTS REPORT OF INDEPENDENT ACCOUNTANTS The Board of Directors Alliance for a Healthier Generation: We have audited the accompanying financial statements of Alliance for a Healthier Generation, which comprise the statements of financial position as of June 30, 2014 and 2013, 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; 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. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the organization 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 organization s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alliance for a Healthier Generation as of June 30, 2014 and 2013, 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. October 2, SW Third Avenue, Suite 700 Portland, Oregon p: f:

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9 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N STATEMENTS OF FINANCIAL POSITION J U N E 3 0, A N D Assets: Cash and cash equivalents $ 8,646,086 10,308,735 Grants and contributions receivable (note 4) 1,390,457 1,346,259 Grants receivable from related parties (note 4) 60, ,803 Contributions receivable from related parties (note 4) 4,000,000 4,000,000 Consulting fees receivable 59, ,363 Prepaid expenses and other assets 259, ,283 Capital assets (note 5) 1,171,752 1,144,272 Total assets $ 15,587,276 17,400,715 Liabilities: Accounts payable and accrued expenses 359, ,994 Accrued payroll and related expenses 636, ,385 Advances on conditional grants (note 4) 2,717,953 4,545,681 Advances on conditional grants from related parties (note 4) 45, ,954 Total liabilities 3,760,143 5,666,014 Net assets: Unrestricted: Available for programs and general operations 4,631,871 3,126,858 Net investment in captial assets 1,171,752 1,144,272 Total unrestricted 5,803,623 4,271,130 Temporarily restricted (note 6) 6,023,510 7,463,571 Total net assets 11,827,133 11,734,701 Commitments and contingencies (notes 3, 4, 5, 12, 13, 14, 15 and 16) Total liabilities and net assets $ 15,587,276 17,400,715 See accompanying notes to financial statements. 9

10 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N STATEMENTS OF ACTIVITIES Y E A R S E N D E D J U N E 3 0, A N D Temporarily Unrestricted restricted Total Revenues and other support: Grants $ 10,726,206 10,726,206 Government grants 114, ,296 Contributions (note 9) 450,414 91, ,414 Grants from related parties (note 3) 443, ,071 Contributions from related parties (note 3) 4,000,000 4,000,000 Consulting fees 277, ,394 In-kind contributions 210, ,390 Interest and other income 8,447 8,447 Total revenues and gains 946,645 15,374,573 16,321,218 Net assets released from restrictions (note 7) 16,814,634 (16,814,634) Total revenues, gains, and other support 17,761,279 (1,440,061) 16,321,218 Expenses (note 10) : Program services: Healthy Schools Program 10,952,350 10,952,350 Healthy Out-of-School Time Initiative 1,862,358 1,862,358 Strategic Alliances Initiative 747, ,499 Total program services 13,562,207 13,562,207 Supporting services: Management and general 2,088,428 2,088,428 Fundraising 578, ,151 Total supporting services 2,666,579 2,666,579 Total expenses 16,228,786 16,228,786 Change in net assets 1,532,493 (1,440,061) 92,432 Net assets at beginning of year 4,271,130 7,463,571 11,734,701 Net assets at end of year $ 5,803,623 6,023,510 11,827,133 See accompanying notes to financial statements. 10

11 2013 Temporarily Unrestricted restricted Total 10,567,246 10,567,246 95,114 95, , , , , ,220 4,000,000 4,000, , , , ,996 43,050 43, ,373 15,575,830 16,372,203 12,691,314 (12,691,314) 13,487,687 2,884,516 16,372,203 9,067,398 9,067,398 1,227,815 1,227, , ,005 11,004,218 11,004,218 1,939,149 1,939, , ,734 2,489,883 2,489,883 13,494,101 13,494,101 (6,414) 2,884,516 2,878,102 4,277,544 4,579,055 8,856,599 4,271,130 7,463,571 11,734,701 11

12 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N STATEMENTS OF FUNCTIONAL EXPENSES Y E A R E N D E D J U N E 3 0, Program services Healthy Healthy Out-of- Strategic Schools School Time Alliances Program Initiative Initiative Total Salaries and wages $ 5,552, , ,306 6,724,882 Payroll taxes and employee benefits 1,580, ,226 86,561 1,919,128 Grant awards and stipends (note 11) 96, , ,799 Computer hardware, software, and service fees 154,461 16,427 5, ,688 Conferences and meetings (note 12) 529,788 46,755 5, ,350 In-kind program promotion 90,814 14,294 6, ,354 Occupancy 155,056 46,871 4, ,492 Other 47,768 5,082 5,722 58,572 Postage and shipping 54,779 3,948 1,063 59,790 Printing and reproduction 91,716 8, ,389 Professional services other 106,161 14,394 9, ,917 Professional services program evaluation (note 13) 912, , ,293 1,246,454 Professional services technology 144,628 9, ,954 Supplies 62,909 4, ,239 Telephone 86,708 18,664 4, ,837 Travel 1,008, ,022 45,436 1,205,988 Depreciation and amortization 277,260 35, ,374 Total expenses $ 10,952,350 1,862, ,499 13,562,207 See accompanying notes to financial statements. 12

13 Supporting services Management and general Fundraising Total Total 1,188, ,155 1,523,954 8,248, ,142 82, ,688 2,314, ,799 41,556 7,507 49, ,751 5,842 4,149 9, ,341 3,336 3, ,690 80,501 7,553 88, ,546 17,727 26,450 44, ,749 2,874 2,417 5,291 65, ,054 1, ,133 86,626 40, , ,602 1,246,454 13, , ,433 46,600 2,244 48, ,083 26,031 4,390 30, , ,016 61, ,237 1,379, , , ,989 2,088, ,151 2,666,579 16,228,786 13

14 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N STATEMENTS OF FUNCTIONAL EXPENSES Y E A R E N D E D J U N E 3 0, Program services Healthy Healthy Out-of- Strategic Schools School Time Alliances Program Initiative Initiative Total Salaries and wages $ 4,931, , ,488 5,836,605 Payroll taxes and employee benefits 1,392, ,263 74,615 1,665,790 Grant awards and stipends (note 11) 116, ,452 Computer hardware, software, and service fees 150,034 16,036 31, ,483 Conferences and meetings (note 12) 468,224 86,096 4, ,169 In-kind program promotion 185,091 8,298 22, ,644 Occupancy 152,176 39,652 4, ,153 Other 36,367 2,492 2,421 41,280 Postage and shipping 44,963 4, ,331 Printing and reproduction 66,870 6, ,063 Professional services other 148,944 8,385 17, ,614 Professional services program evaluation (note 13) 184,773 52, , ,015 Professional services technology 77,405 24, ,385 Supplies 64,790 5, ,977 Telephone 83,234 16,610 5, ,126 Travel 825, ,455 44, ,658 Depreciation and amortization 137, ,473 Total expenses $ 9,067,398 1,227, ,005 11,004,218 See accompanying notes to financial statements. 14

15 Supporting services Management and general Fundraising Total Total 1,044, ,890 1,357,745 7,194, ,586 82, ,702 2,013, ,452 22,655 4,114 26, ,252 42,449 1,290 43, , ,644 76,671 11,004 87, ,828 (4,081) 10,930 6,849 48,129 3,569 1,697 5,266 55,597 3,535 1,129 4,664 78, ,385 21, , , ,015 51,021 6,858 57, ,264 7,540 5,329 12,869 83,846 29,732 6,254 35, , ,820 85, ,971 1,181,629 89,412 89, ,885 1,939, ,734 2,489,883 13,494,101 15

16 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N STATEMENTS OF CASH FLOWS Y E A R S E N D E D J U N E 3 0, A N D Cash flows from operating activities: Grants $ 8,802,231 11,876,036 Government grants 98, ,678 Contributions 609, ,646 Grants from related parties 420, ,341 Contributions from related parties 4,000,000 2,400,000 Consulting fees 331,404 Interest and other income received 8,447 43,050 Cash paid to employees (10,521,076) (9,182,643) Cash paid to suppliers and others (4,919,146) (3,658,152) Net cash provided by (used in) operating activities (1,170,180) 2,068,956 Cash flows from investing activities: Capital expenditures (492,469) (606,464) Net cash used in investing activities (492,469) (606,464) Net increase (decrease) in cash and cash equivalents (1,662,649) 1,462,492 Cash and cash equivalents at beginning of year 10,308,735 8,846,243 Cash and cash equivalents at end of year $ 8,646,086 10,308,735 See accompanying notes to financial statements. 16

17 A L L I A N C E F O R A H E A L T H I E R G E N E R A T I O N NOTES TO FINANCIAL STATEMENTS Y E A R S E N D E D J U N E 3 0, A N D Organization The Alliance for a Healthier Generation (the Alliance ) is a nonprofit organization founded in 2005 by the American Heart Association and the Clinton Foundation. Initially established as a program of the American Heart Association, the Alliance transitioned to a separate legal entity and Section 501(c)(3) organization on July 1, The Alliance works to address one of the nation s leading public health threats childhood obesity. The goal of the Alliance is to reduce the nationwide prevalence of childhood obesity and to empower kids to make healthy lifestyle choices. The Alliance works to positively affect the places that can make a difference to a child s health: homes, schools, doctors offices and communities. To learn more about the Alliance, visit The Alliance incurred expenses in the following major programs during the years ended June 30, 2014 and 2013: Healthy Schools Program The Healthy Schools Program supports schools to implement healthpromoting policies and programs. Specifically, the Alliance provides onsite and online training, technical assistance, and resource brokering to participating schools. The Alliance also creates and promotes multi-media success stories to inspire all schools to initiate engagement or further implementation of the Healthy Schools Program Six Step Process. The Healthy Schools Program supports more than 24,000 schools, reaching more than 15 million students, in all 50 states, the District of Columbia and Puerto Rico. Healthy Out-of-School Time Initiative The Alliance s Healthy Out-of-School Time Initiative has become one of the first national organizations to not only disseminate the Healthy Eating and Physical Activity Standards, but also provide implementation technical assistance to out-of- school time sites through the Healthy Out-of-School Time Framework. Strategic Alliances Initiative The Alliance s Strategic Alliances Initiative has two components: School/Out of School Time food and beverage and Healthcare. The Alliance collaborates with companies large and small to provide healthier food and beverage choices for millions of children in schools across the nation. Finally, the Alliance Healthcare Initiative currently works with more than 56,000 providers offering the Healthier Generation benefit to more than 2.8 million children nationwide. 2. Summary of Significant Accounting Policies The significant accounting policies followed by the Alliance are described below to enhance the usefulness of the financial statements to the reader. Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles and the principles of fund accounting. Fund accounting is the procedure by which resources for various purposes are classified for accounting purposes in accordance with activities or objectives specified by donors. 17

18 Basis of Presentation The Alliance has adopted the provisions of Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ) No , Revenue Recognition, and FASB ASC No , Presentation of Financial Statements. Under these provisions, net assets and all balances and transactions are presented based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Alliance and changes therein are classified and reported as follows: Unrestricted net assets Net assets not subject to donor-imposed stipulations. Temporarily restricted net assets Net assets subject to donor-imposed stipulations that will be met either by actions of the Alliance and/or the passage of time. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as net assets released from restrictions. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. In the opinion of management, such differences, if any, would not be significant. Cash Equivalents For purposes of the financial statements, the Alliance considers all liquid investments having initial maturities of twelve months or less to be cash equivalents. The Alliance s cash equivalents included $503,558 and $502,804 held in money market funds at June 30, 2014 and 2013, respectively. The Alliances cash equivalents also included $1,962,201 in money market funds only invested in U.S. Treasury Bills at June 30, The Alliance s cash equivalents also included $1,957,984 in certificates of deposit with maturities between two and nine months at June 30, Capital Assets and Depreciation Property and equipment are carried at cost when purchased, and initially measured at fair value when acquired by gift. Capital assets having a unit cost exceeding $5,000 or more and an estimated useful life of more than one year are capitalized. Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets, which is generally three to five years. Computer Software The Alliance capitalizes the costs of computer software developed or obtained for internal use in accordance with FASB ASC No , Intangibles Goodwill and Other, Internal-Use Software. Capitalized software development costs in process will be amortized when the projects are completed. Amortization is recorded on a straight-line basis over the estimated useful life of the software, generally not to exceed five years. Concentrations of Credit Risk The Alliance s financial instruments consist primarily of cash equivalents, which may subject the organization to concentrations of credit risk as, from time to time, for example, cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation ( FDIC ). In addition, the market value of securities is dependent on the ability of the issuer to honor its contractual commitments, and the investments are subject to changes in market values. 18

19 All checking and savings accounts, money market deposit accounts, and certificates of deposit are insured by the FDIC for up to $250,000 for each depositor, for each insured bank, for each account ownership category. The Alliance held $8,682,780 and $8,004,225 in excess of FDIC insurance at June 30, 2014 and 2013, respectively. Cash and money market funds are all held with US Bank and their subsidiary, US Bancorp Investments, Inc. The underlying money market funds are only invested in U.S. Treasuries. Certificates of deposit are FDIC insured and further screened through IDC Financial Publishing. The Alliance only selects banks that fall in the Superior (top) ratings category at the time of selection. Certain receivables may also, from time to time, subject the organization to concentrations of credit risk. To minimize its exposure to significant losses from customer or donor insolvencies, the organization s management evaluates the financial condition of its customers and donors, and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics. When necessary, receivables are reported net of an allowance for uncollectible accounts. Revenue Recognition All grants and contributions are considered available for unrestricted use unless specifically restricted by the donor. Conditional grants are recognized as contribution revenue in the period in which the conditions are substantially met. To the extent that cash advances are received from the grantor, conditional grants are reported as advances on conditional grants in the accompanying statements of financial position. Contributions from individuals and organizations through Team Healthier Generation are recorded as revenue when received or when a promise to give has been finalized, whichever is first. In addition, the Alliance receives promises from corporate donors for corporate sponsorship agreements. Revenue is recognized when the promise to give is communicated and a signed agreement has been executed. Consulting fees are recognized as unrestricted revenue using the percentage of completion method. Grants Awarded Grants are accrued when awarded by the Alliance and unconditional. Grants are provided from available resources in accordance with restrictions imposed by donors. Contributions Contributions are recognized as revenues in the period received. Unconditional promises to give (pledges) are recognized as revenues when the commitment is communicated to the Alliance. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Pledges for the support of future grants, operations, programs, and activities are recorded at the present value of the estimated future cash flows. Amortization of discount is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. An allowance for uncollectible contributions receivable is provided based upon management s judgment, including such factors as prior collection history, type of contribution, and nature of fundraising activity. The Alliance receives contributions from individuals and groups through marathons and other individual fund-raising activities through Team Healthier Generation. Contributions of furniture, equipment, and other capital assets without donor stipulations concerning the use of such long-lived assets are reported as revenues of the unrestricted net asset class. Contributions of cash or other assets to be used to acquire furniture and equipment with such donor stipulations are reported as revenues of the temporarily restricted net asset class; the restrictions are considered to be released at the time of acquisition of such long-lived assets. Consulting Fees The Alliance receives program revenue from consulting fees and speaking engagements related to the Healthy Schools Program, Healthy Out-of-School Time Initiative and Strategic Alliances Initiative. 19

20 In-Kind Contributions The Alliance receives contributed services from a large number of volunteers who assist in program and fundraising efforts through their participation in a range of activities. In particular, interns from the Clinton Foundation donated 5,474 and 4,170 hours of time to the Alliance during the years ended June 30, 2014 and 2013, respectively. In addition, Youth Ambassadors donated 1,065 and 3,074 hours of time to the Alliance during the years ended June 30, 2014 and 2013, respectively. Further, Healthy Schools Ambassadors donated 2,081 and 3,108 hours of time to the Alliance during the years ended June 30, 2014 and 2013, respectively. Finally, the Alliance Board of Directors also donated time in support of the Alliance. In accordance with FASB ASC No , Revenue Recognition, the value of such services, which the Alliance considers not practicable to estimate, has not been recognized in the accompanying statements of activities. In contrast, significant services received that create or enhance a non-financial asset or require specialized or technical skills that the Alliance would have purchased if not donated are recognized in the statements of activities. Furthermore, in-kind contributions of equipment and other materials are recorded where there is an objective basis upon which to value these contributions and where the contributions are an essential part of the Alliance s activities. The following tables summarize the in-kind contributions recorded by the Alliance during the years ended June 30, 2014 and 2013, and the programs benefitted: Professional services $ 8,000 8,000 Free use of facilities 20,250 13,750 Program promotion 114, ,644 Capitalized computer software 96,000 Materials and supplies 67,450 58,602 Healthy Schools Program $ 97, ,847 Healthy Out-of-School Time Initiative 33,544 23,045 Strategic Alliances Initiative 11,446 52,104 Management and general 67,586 7,000 $ 210, , Including $18,000 and $232,394 of in-kind contributions from related parties during the years ended June 30, 2014 and 2013, respectively. The Alliance was awarded an in-kind contribution through the Clinton Foundation for use of Google AdWords. The program allowed the Alliance to select key words that would highlight the Alliance on Google when an external party searched for a program related item. The value of the AdWords is based on the cost a for-profit organization or company would pay for the same service. Total value of $215,644 was recorded for the year ended June 30, 2013, and is reported as in-kind program promotion in the accompanying statements of functional expenses. The Alliance entered into a separate agreement with Google effective in July, 2013 for a similar service with a total value of $114,690 for the year ended June 30, The Alliance was awarded an in-kind contribution for implementation of a learning management system. The learning management system will be used to manage all aspects of Alliance external training events. Computer software implementation services were donated and allocated a value of $96,000 during the year ended June 30, The vendor committed to providing the use of the fully developed learning management system during the years ending June 30, 2014 and 2015, with an estimated value of $15,000 and $20,000, respectively. The value and related expense for this agreement of $15,000 was recorded for the year ended June 30, $ 210, ,

21 Income Taxes The Alliance is exempt from federal and state income taxes under Section 501(c)(3) of the Internal Revenue Code ( IRC ) and comparable state law, and is a publicly supported organization as defined in IRC Sections 170(b)(1)(A)(vi) and 509(a)(1). Contributions to the Alliance qualify for applicable charitable contribution deductions. For tax purposes, the Alliance s open audit periods are for the years ended June 30, 2011 through The Alliance has adopted the recognition requirements for uncertain income tax positions as required by FASB ASC No , Income Taxes. Under this standard, income tax benefits are recognized for income tax positions taken or expected to be taken in a tax return only when it is determined that the income tax position will more-likely-than-not be sustained upon examination by taxing authorities. Subsequent Events As required by FASB ASC No , Subsequent Events, subsequent events have been evaluated by management through October 2, 2014, which is the date the financial statements were available to be issued. Other Significant Accounting Policies Other significant accounting policies are set forth in the financial statements and the following notes. 3. Related Party Transactions The Alliance s Board of Directors is comprised of three members appointed by the American Heart Association, three members appointed by the Clinton Foundation, and three additional members nominated and approved by the Alliance Board itself. Contributions During the year ended June 30, 2014, the American Heart Association and the Clinton Foundation each pledged contributions of $2,000,000 for the year ending June 30, During the year ended June 30, 2013, the American Heart Association and the Clinton Foundation each pledged contributions of $2,000,000 for the year ended June 30, Temporarily restricted contributions and grants from related parties for the years ended June 30, 2014 and 2013 comprise the following: Contribution from the American Heart Association $ 2,000,000 2,000,000 Contribution from the Clinton Foundation 2,000,000 2,000,000 Grants assigned and transferred by the American Heart Association 243, ,220 Grants assigned and transferred by the Clinton Foundation 200, ,000 $ 4,443,071 4,777,220 For additional information on the Alliance s funding sources, see note 8. Rental Agreements The Alliance leased office space from the Clinton Foundation on a monthto-month basis, as described in note 15, during the years ended June 30, 2014 and In addition, the Alliance leased office space from the American Heart Association on a month-tomonth basis, as described in note 15, during the year ended June 30, Science Advisor The Alliance entered into an agreement with the American Heart Association for the review of science-based materials. The American Heart Association provided review of science-based materials as in-kind donation valued at $8,000 during the years ended June 30, 2014 and Legal Services The Alliance entered into an agreement with the Clinton Foundation for legal consulting. The annual fee for this service was $25,000 and $50,000, respectively, for the years ended June 30, 2014 and

22 4. Grants and Contributions Receivable Grants and contributions receivable are summarized as follows at June 30, 2014 and 2013: Unconditional promises expected to be collected within: Less than one year $ 5,245,696 5,382,500 From one to five years 204, ,562 $ 5,450,457 5,593,062 Grants and contributions are receivable from the following at June 30, 2014 and 2013: Others $ 1,390,457 1,346,259 Related parties grants 60, ,803 Related parties contributions 4,000,000 4,000,000 Conditional Grants $ 5,450,457 5,593,062 In addition to the receivables described above, the Alliance also held $13,539,107 and $23,418,845 in conditional grants at June 30, 2014 and 2013, respectively. Recognition of these grants as revenue is dependent upon the Alliance incurring qualifying expenses and achieving satisfactory progress toward the programs in the sole judgment of the grantors. As such, the associated grant revenues have not yet been included in the accompanying financial statements because the associated conditions had not been satisfied at the fiscal year s end. Subsequent Grants Subsequent to June 30, 2014, the Alliance was the recipient of two significant grants for the Healthier Out-of-School Time program and the Let s Move! Active Schools program. The two grant awards totaled $1,309,293. Conditional grants are as follows at June 30, 2014 and 2013: Robert Wood Johnson Foundation $ 4,323,641 11,763,910 JPB Foundation 4,214,521 5,453,108 The Kaiser Permanente National Community Benefit Fund at the East Bay Community Foundation 4,226,639 5,173,289 Related parties grants 43, ,880 Other 730, ,658 $ 13,539,107 23,418,845 For additional information on the Alliance s funding sources, see note 8. Of the total conditional grants, the Alliance had received advances at June 30, 2014 and 2013, as follows: Others $ 2,717,953 4,545,681 Related parties 45, ,954 $ 2,763,234 4,800, Capital Assets and Related Commitments Capital assets are summarized as follows at June 30, 2014 and 2013: Computer software and website development $ 1,908,762 1,416,293 Furniture and equipment 60,837 60,837 1,969,599 1,477,130 Less accumulated depreciation and amortization (797,847) (332,858) $ 1,171,752 1,144,272 The Alliance entered into purchase commitments with two vendors for web site upgrades totaling $119,689 at June 30, 2014, with additional purchase commitments of $235,440 signed subsequent to year-end. 22

23 6. Restrictions and Limitations on Net Asset Balances Temporarily restricted net assets consist of grants and contributions available for future periods or specific program services as follows at June 30, 2014 and 2013: Future periods $ 4,091,060 4,113,060 Healthy Schools Program 1,336,259 2,192,233 Healthy Out-of-School Time Initiative 571,193 1,158,278 Other 24,998 $ 6,023,510 7,463, Net Assets Released from Restrictions The Alliance incurred expenses in satisfaction of the restricted purposes specified by donors, or satisfied the restrictions by the occurrence of other events, of $16,814,634 and $12,691,314 during the years ended June 30, 2014 and 2013, respectively. Accordingly, a corresponding amount has been reclassified from temporarily restricted net assets to unrestricted net assets in the statements of activities during the years ended June 30, 2014 and 2013, as follows: For operating purposes $ 16,325,167 12,211,000 For capital purposes 489, , Significant Sources of Revenue $ 16,814,634 12,691,314 The Alliance entered into a grant agreement with RWJF for the Healthy Schools Program. The RWJF grant has a total grant award of $23,232,782 for the period from September 1, 2011 through November 30, The Alliance recognized $7,440,269 and $6,659,902 in grant revenues from the RWJF grant during the years ended June 30, 2014 and 2013, respectively. A balance of $4,323,641 remained payable on this grant at June 30, 2014, but was conditioned upon the incurrence of equivalent qualifying expenses. The Alliance also entered into a grant agreement with the JPB Foundation ( JPB ) for the Healthy Schools Program during the year ended June 30, The JPB grant has a total grant award of $7,402,786 for the period from January 1, 2012 through March 31, The Alliance recognized $1,608,944 and $1,194,533 in grant revenues from the JPB grant during the years ended June 30, 2014 and 2013, respectively. A balance of $4,214,521 remained payable on this grant at June 30, 2014, but was conditioned upon the incurrence of equivalent qualifying expenses. During the year ended June 30, 2013, the Alliance entered into a grant agreement with the Kaiser Permanente National Community Benefit Fund at the East Bay Community Foundation ( Kaiser ) for the Healthy Schools Program. The Kaiser grant has a total grant award of $5,302,999 for the period from February 1, 2013 through June 30, The Alliance recognized $946,650 and $129,710 in grant revenues from the Kaiser grant during the years ended June 30, 2014 and 2013, respectively. A balance of $4,226,639 remained payable on this grant at June 30, 2014, but was conditioned upon the incurrence of equivalent qualifying expenses. A significant portion of the Alliance s revenues during the year ended June 30, 2014 was earned under grant agreements and contracts with, or assigned by, the American Heart Association and the Clinton Foundation, as described in note 3. Additional funding for the Alliance s programs was received from other grantors and donors. 23

24 A summary of the RWJF, JPB and Kaiser grants is as follows: Revenue Revenue Remaining Total year ended year ended balance at contract June 30, 2013 June 30, 2014 June 30, 2014 RWJF $ 23,232,782 6,659,902 7,440,269 4,323,641 JPB 7,402,786 1,194,533 1,608,944 4,214,521 Kaiser 5,302, , ,650 4,226, Team Healthier Generation The Alliance benefited from the following Team Healthier Generation events: New York City Marathon $ 84,874 88,015 Other THG events 27,708 61,994 $ 112, ,009 The above events resulted in net revenues totaling $63,532, after direct costs of $49,050 for the year ended June 30, 2014, and $104,695, after direct costs of $45,314 for the year ended June 30, Gross revenues for these events are included in contributions on the statement of activities. 11. Grant Awards and Stipends The Alliance provides grants to schools and school districts to help implement the Healthy Schools Program. Grant amounts range from $1,000 to $5,000 each. The Alliance also provides stipends to cover the cost of substitute teachers to allow teachers to attend Alliance technical assistance sessions. Grant awards and stipends totaled $96,874 and $116,452 for the years ended June 30, 2014 and 2013, respectively. The Alliance provides grants to out-of-school time settings to help implement the Healthy Outof-School Time Initiative. Grant amounts range from $500 to $1,100 each. Grant awards totaled $298,925 for the year ended June 30, Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Expenses by natural classification are presented in the statements of functional expenses. 12. Conferences and Meetings The Alliance incurred expenses for conferences and meetings totaling $592,341 and $602,908 for the years ended June 30, 2014 and 2013, respectively. A significant portion of these costs related to the Leaders Summit, formerly known as the Healthy Schools Forum, which the Alliance hosts each calendar year. The Leaders Summit is an annual conference to recognize schools that have achieved certain goals in the Healthy Schools Program. In 2014, the Leaders Summit was expanded to include recognition of one Healthy Out-of-School Time site and key corporate and governmental partners. 24

25 The Alliance entered into purchase commitments with vendors for hotel, catering and event planning for the Leaders Summit in September, 2014 totaling $277,723 at June 30, 2014 with additional purchase commitments totaling $55,131 signed subsequent to year end. Related expenses will be recorded in the financial statements in the period the expenses are incurred. 13. Program Evaluation Expense and Related Commitments The Alliance has entered into various contracts with vendors for program evaluation of the Healthy Schools Program, Healthy Out-of-School Time Initiative and the Strategic Alliances Initiative. Program evaluation activities are intended to measure the success and impact of the aforementioned efforts. Program evaluation expenses totaled $1,246,454 and $466,015 for the years ended June 30, 2014 and 2013, respectively. Purchase commitments with vendors for future program evaluation services at June 30, 2014 are as follows: Healthy Schools Program, through June 30, 2016 $ 495,098 Healthy Out-of-School Time Initiative through March 31, ,003 Strategic Alliances Initiative through December 31, ,660 $ 728,761 The Alliance entered into various contracts with vendors for program evaluation subsequent to June 30, 2014 totaling $247,837. Related expenses will be recorded in the financial statements in the period the expenses are incurred. 14. Consulting and Other Commitments 15. Operating Lease Commitments The Alliance leases facilities in Portland, Oregon and Washington, DC under non-cancelable operating leases that expire in August of 2016 and June of 2017, respectively. The minimum rental commitments for each of the above total as follows: Years ending June 30, 2015 $ 133, , ,875 $ 344,253 In addition, the Alliance leases facilities at several locations under month-to-month agreements with the Clinton Foundation, including agreements that provide for the free use of facilities. Rental expense for all facilities for the years ended June 30, 2014 and 2013, respectively, is as follows: Paid to related parties $ 14,717 25,191 Value of the free use of facilities provided by related parties 3,000 1,750 Paid to others 134, ,048 Value of the free use of facilities provided by others 17,250 12,000 $ 169, ,989 Finally, the Alliance provides a monthly stipend to employees working in home office locations. Total home office stipends were $118,740 and $110,626 during the years ended June 30, 2014 and 2013, respectively. The Alliance has also entered into various contracts with vendors for consultation services related to marketing, training, organizational development and other services. Commitments related to these services at June 30, 2014 totaled $127,828, with additional contracts totaling $172,504 signed after year-end. 25

26 16. Retirement Plan The Alliance provides management and staff an opportunity to participate in a Section 401(k) retirement plan. Employees are eligible to participate in the plan upon the first of the month following their date of hire. Employee contributions to the plan may be made on either a pre-tax or after-tax basis. Prior to July 1, 2014, the Alliance provided matching contributions of 100% of employee contributions up to 4% of employee compensation and discretionary employer contributions ranging from 6% to 10%, depending on the employee s years of service, for eligible participants after two years of service. The Alliance amended the retirement plan effective July 1, The Alliance provides a Safe Harbor matching contribution of 100% of employee contributions, up to 4%, immediately for all eligible participants. The Alliance provides a discretionary employer contribution for all eligible participants depending on years of service: between 3.5% and 10% for eligible participants. Both employer and employee contributions are 100% vested as contributed. Years of service with the American Heart Association prior to July 1, 2010 are considered years of service for purposes of calculating employer contributions and match under the Alliance plan. The Alliance made employer contributions and employer match to the plan of $537,714 and $503,243 during the years ended June 30, 2014 and 2013, respectively. 17. Reclassification of 2013 Comparative Totals Certain 2013 amounts presented herein have been reclassified to conform to the 2014 presentation. 18. Statement of Cash Flows Reconciliation The following presents a reconciliation of the change in net assets (as reported on the statements of activities) to net cash provided by (used in) operating activities (as reported on the statements of cash flows): Change in net assets $ 92,432 2,878,102 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 464, ,885 In-kind contribution of capital assets (96,000) Net changes in: Grants and contributions receivable (44,198) (261,053) Grants receivable from related parties 186,803 (85,299) Contributions receivable from related parties (1,600,000) Consulting fees receivable 54,010 (113,363) Prepaid expenses and other assets (18,345) (10,377) Accounts payable and accrued expenses 88, ,603 Accrued payroll and related expenses 42,576 25,199 Advances on conditional grants (1,827,728) 1,437,839 Advances on conditional grants from related parties (209,673) (448,580) Total adjustments (1,262,612) (809,146) Net cash provided by (used in) operating activities $ (1,170,180) 2,068,956 26