PAYBACK, INC - Variety the Children's... · financial position of Variety the Children’s Charity of St. Louis as of September 30, 2015 and 2014, and the changes in its net assets

2015financial statements

Variety the Children’s Charity of St. Louis

with independent auditor’s report september 30, 2015

Variety the Children’s Charity of St. Louis helps local children with disabilities reach their full potential by providing services each time they need assistance.

TABLE OF CONTENTS

Page

Independent Auditor’s Report ....................................................................................... 1

Financial Statements

Statements of Financial Position ................................................................................................ 3

Statements of Activities ............................................................................................................. 4

Statements of Functional Expenses............................................................................................ 6

Statements of Cash Flows .......................................................................................................... 8

Notes to Financial Statements .................................................................................................... 9

Independent Auditor’s Report

Board of Directors

Variety the Children’s Charity of St. Louis

St. Louis, Missouri

Report on the Financial Statements

We have audited the accompanying financial statements of Variety the Children’s Charity of St. Louis

(the “Organization”), which comprise the statements of financial position as of September 30, 2015 and

2014, 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.

Auditor’s 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 audits 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 Variety the Children’s Charity of St. Louis as of September 30, 2015 and 2014, 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.

St. Louis, Missouri

December 9, 2015

VARIETY THE CHILDREN’S CHARITY OF ST. LOUIS

Statements of Financial Position September 30, 2015 and 2014

-3-

2015 2014

Assets

Cash and cash equivalents 1,168,648$ 1,192,654$

Promises to give (Note C) 671,612 217,900

Prepaid expenses 160,321 161,989

Investments (Note D) 3,015,911 3,137,199

Equipment (net of accumulated depreciation of

$42,076 in 2015 and $40,697 in 2014) 2,035 3,414

Assets restricted for permanent investment (Notes D and E) 1,402,928 1,402,928

Total Assets 6,421,455$ 6,116,084$

Liabilities And Net Assets

Liabilities

Accounts payable and accrued expenses 403,512$ 168,878$

Deferred revenue 36,968 39,909

Total Liabilities 440,480 208,787

Net Assets (Note E)

Unrestricted:

Board designated for grants to partner agencies 360,000 650,000

Board designated for endowment 2,680,381 2,705,696

Board designated for reserve fund 100,000 100,000

Undesignated 209,671 218,020

Total Unrestricted 3,350,052 3,673,716

Temporarily restricted 1,227,995 830,653

Permanently restricted 1,402,928 1,402,928

Total Net Assets 5,980,975 5,907,297

Total Liabilities And Net Assets 6,421,455$ 6,116,084$

The accompanying notes are an integral part of these financial statements.


Statement of Activities Year ended September 30, 2015

-4-

Temporarily Permanently

Unrestricted Restricted Restricted Total

Revenue

Contributions 2,089,445$ 774,693$ -$ 2,864,138$

Grants 145,993 62,757 - 208,750

Special events (Note I) 1,097,183 - - 1,097,183

In-kind revenue (Note J) 95,890 - - 95,890

Program revenue - Variety Children's Theatre 131,773 - - 131,773

Net assets released from restrictions (Note E) 389,912 (389,912) - -

Total Revenue 3,950,196 447,538 - 4,397,734

Expenses

Program 3,408,262 - - 3,408,262

Management and general 237,853 - - 237,853

Fundraising 540,219 - - 540,219

Total Expenses 4,186,334 - - 4,186,334

Change in Net Assets from Operations (236,138) 447,538 - 211,400

Investment Income (Note D) (87,526) (50,196) - (137,722)

Change in Net Assets (323,664) 397,342 - 73,678

Net Assets, Beginning Of Year 3,673,716 830,653 1,402,928 5,907,297

Net Assets, End Of Year 3,350,052$ 1,227,995$ 1,402,928$ 5,980,975$



Statement of Activities Year ended September 30, 2014

-5-

Temporarily Permanently

Unrestricted Restricted Restricted Total

Revenue

Contributions 2,326,856$ 228,668$ 177,928$ 2,733,452$

Grants 79,850 65,000 - 144,850

Special events (Note I) 1,081,005 - - 1,081,005

In-kind revenue (Note J) 160,335 - - 160,335

Program revenue - Variety Children's Theatre 84,640 - - 84,640

Net assets released from restrictions (Note E) 391,914 (391,914) - -

Total Revenue 4,124,600 (98,246) 177,928 4,204,282

Expenses

Program 3,357,438 - - 3,357,438

Management and general 205,533 - - 205,533

Fundraising 482,624 - - 482,624

Total Expenses 4,045,595 - - 4,045,595

Change in Net Assets from Operations 79,005 (98,246) 177,928 158,687

Investment Income (Note D) 216,754 109,797 - 326,551

Change in Net Assets 295,759 11,551 177,928 485,238

Net Assets, Beginning Of Year 3,377,957 819,102 1,225,000 5,422,059

Net Assets, End Of Year 3,673,716$ 830,653$ 1,402,928$ 5,907,297$



Statement of Functional Expenses Year ended September 30, 2015

-6-

Children's

Theatre

Resource

Center Outings

Education

Programs Awareness

Total

Education

Management

& General Fundraising Total

Special equipment and therapy 121,850$ -$ 992,935$ -$ -$ -$ -$ -$ -$ -$ 1,114,785$ -$ -$ 1,114,785$

Grants to partner agencies 171,002 133,650 113,398 - - - 165,900 - 165,900 58,432 642,382 - - 642,382

Salaries and related expenses 80,611 252,351 224,496 184,820 68,094 13,238 5,956 233,404 505,512 2,359 1,065,329 123,838 368,338 1,557,505

Advertising 324 - 449 10,850 - - - 5,853 16,703 - 17,476 - 26,893 44,369

Computer and equipment 3,119 10,079 8,577 5,970 1,518 462 159 11,870 19,979 51 41,805 4,880 16,083 62,768

Depreciation - - - - - - - 781 781 - 781 598 - 1,379

Food 49 6,398 104 11,722 12,227 6,169 - 1,765 31,883 - 38,434 3,035 8,273 49,742

Insurance - - - - - - - - - - - 14,677 - 14,677

Office expense 51 990 1,047 5,364 135 16 4 1,493 7,012 - 9,100 37,145 4,500 50,745

Outside services and professional fees 475 8,198 3,100 9,564 200 1,400 - 3,228 14,392 - 26,165 10,177 10,961 47,303

Postage and printing 195 623 1,267 6,204 835 3 110 12,465 19,617 67 21,769 1,839 60,501 84,109

Production costs - - - 235,428 11,220 - - 4,531 251,179 - 251,179 - 149 251,328

Rent 9,605 25,191 22,542 54,894 5,681 5,424 479 17,110 83,588 188 141,114 8,767 28,637 178,518

Supplies - 4,355 13,234 1,090 3,134 - - 818 5,042 - 22,631 385 2,837 25,853

Travel 294 3,387 1,017 4,563 906 136 22 1,892 7,519 50 12,267 1,500 6,362 20,129

Other - 192 354 1,168 798 - - 533 2,499 - 3,045 31,012 6,685 40,742

Total Expenses 387,575$ 445,414$ 1,382,520$ 531,637$ 104,748$ 26,848$ 172,630$ 295,743$ 1,131,606$ 61,147$ 3,408,262$ 237,853$ 540,219$ 4,186,334$

Program

Therapy Recreation Equipment

Education Sunshine

Coach

Vans

Total

Program

Expenses



Statement of Functional Expenses Year ended September 30, 2014

-7-

Children's

Theatre

Resource

Center Outings

Education

Programs Awareness

Total

Education

Management

& General Fundraising Total

Special equipment and therapy 195,156$ -$ 732,923$ -$ -$ -$ -$ -$ -$ -$ 928,079$ -$ -$ 928,079$

Grants to partner agencies 293,425 107,000 37,454 - - - 221,500 - 221,500 93,969 753,348 - - 753,348

Salaries and related expenses 82,137 262,517 178,226 180,619 55,487 10,555 6,019 226,543 479,223 2,590 1,004,693 113,368 304,984 1,423,045

Advertising - - - 12,336 - - - 2,518 14,854 - 14,854 - 10,993 25,847

Computer and equipment 3,877 4,355 8,016 6,300 1,273 348 166 23,019 31,106 50 47,404 5,442 24,612 77,458

Depreciation - - - - - - - 711 711 - 711 675 - 1,386

Food 11 6,768 357 13,126 14,562 7,938 - 2,166 37,792 - 44,928 1,731 8,955 55,614

Insurance - - - 2,561 - 83 - - 2,644 - 2,644 11,292 - 13,936

Office expense 162 1,175 708 4,604 163 19 5 3,113 7,904 - 9,949 47,049 4,920 61,918

Outside services and professional fees 1,088 3,362 3,510 24,057 300 200 - 3,414 27,971 - 35,931 8,287 13,794 58,012

Postage and printing 35 565 1,262 14,749 1,278 75 16 18,121 34,239 - 36,101 3,525 54,635 94,261

Production costs - - - 268,477 10,888 - - 708 280,073 - 280,073 47 3,018 283,138

Rent 12,337 26,535 21,057 54,057 5,063 16,110 487 17,518 93,235 159 153,323 9,747 27,945 191,015

Supplies 26 6,520 11,503 957 2,824 - - 985 4,766 - 22,815 14 4,060 26,889

Travel 330 5,713 523 7,969 803 212 7 3,256 12,247 29 18,842 2,074 6,883 27,799

Other 50 195 394 1,086 817 - 24 1,177 3,104 - 3,743 2,282 17,825 23,850

Total Expenses 588,634$ 424,705$ 995,933$ 590,898$ 93,458$ 35,540$ 228,224$ 303,249$ 1,251,369$ 96,797$ 3,357,438$ 205,533$ 482,624$ 4,045,595$

Program

Education Sunshine

Coach

Vans

Total

Program

ExpensesTherapy Recreation Equipment



Statements of Cash Flows Years ended September 30, 2015 and 2014

-8-

2015 2014

Cash Flows From Operating Activities

Increase in net assets 73,678$ 485,238$

Adjustments to reconcile increase in net assets to

net cash provided by operating activities:

Depreciation 1,379 1,386

Realized gain on investments (22,020) -

Unrealized (gain) loss on investments 242,901 (241,913)

Contributions restricted for endowment - (177,928)

Changes in assets and liabilities:

Increase in promises to give (453,712) (27,075)

(Increase) decrease in prepaid expenses 1,668 (1,979)

Increase (decrease) in accounts payable and accrued expenses 234,634 (21,916)

Increase (decrease) in deferred revenue (2,941) 17,145

Net Cash Provided By Operating Activities 75,587 32,958

Cash Flows from Investing Activities

Proceeds from sale of investments 384,794 -

Purchase of investments (484,387) (274,454)

Purchases of property and equipment - (1,399)

Net Cash Used In Investing Activities (99,593) (275,853)

Cash Flows From Financing Activities

Proceeds from contributions restricted for endowment - 177,928

Net Cash Provided By Financing Activities - 177,928

Net Decrease In Cash And Cash Equivalents (24,006) (64,967)

Cash And Cash Equivalents, Beginning Of Year 1,192,654 1,257,621

Cash And Cash Equivalents, End Of Year 1,168,648$ 1,192,654$



Notes to Financial Statements September 30, 2015

-9-

Note A - Nature of Activities

For more than 80 years, Variety the Children’s Charity of St. Louis (Variety) has helped

thousands of children with disabilities say “I can” by providing them with vital medical

equipment, as well as educational, therapeutic and recreational programs such as Variety

Adventure Camp and Variety Children’s Theatre. A leader in fundraising, Variety the

Children’s Charity also distributes grants to more than 60 qualified partner agencies

throughout the St. Louis area to fund programs and/or services that directly impact the lives of

children with physical and intellectual disabilities.

Significant sources of revenue include contributions from individuals and corporations,

grants, special event revenue and investment income.

Description of Program Services and Supporting Activities

Therapy

Variety ensures that children who need physical, occupational, speech, aqua or equine therapy

receive it no matter their insurance or ability to pay. In order for children to sustain and/or

improve their physical and mental health, professionally prescribed therapy is critical to their

overall health care plan.

Recreation

Open to children ages 4-12 with physical and intellectual disabilities, Variety Adventure

Camp includes a four-week day camp in the summer and a two-day session in the winter.

Specially trained counselors and medical professionals work one-on-one, with each camper,

as they navigate the joys and triumphs of rock climbing, basketball, tennis, cooking, music,

art, bicycling, ice skating, karaoke and so much more. A Teen Track is offered to older

children, ages 13-16, which includes all of the above activities, plus leadership development.

Equipment

Special equipment encompasses medically prescribed equipment to help each child reach their

full potential. Special equipment aids in mobility (wheel chairs, standers, walkers, back

braces), communication (hearing aids, augmentative speech devices, talkers, iPad

applications) and therapy (indoor swings, therapeutic bikes, weighted vests).



-10-

Note A - Nature of Activities (Continued)

Education

Variety Children’s Theatre is a unique production which showcases the talents of theatrically

gifted children and adults in an inclusive setting, with many children with disabilities

appearing on stage. In addition to the onstage talent, many teens have worked to learn

professional skills and assist the show’s designers and directors. No one else in this

community or in the United States has a production like this. Additionally, many children

have performed with the Children’s Chorus, which has accepted two invitations to perform

their Holiday Concert at the White House for the First Lady.

The Resource Center provides valuable information and community connections to resolve

the legal, social, therapeutic, educational, medical and counseling issues often encountered by

families of children with disabilities. The Resource Center’s signature event is the annual

Champions for Children Summit, bringing together families, educators and experts in special

needs to network and address growing trends in the field.

Outings are offered to Variety children and their families to attend St. Louis attractions for a

day of learning, socialization and fun. Education departments from the selected venues

partner with Variety to provide an unforgettable experience for all in attendance, allowing the

children to experience events with their siblings. Past outings have included the Gateway

Arch & Riverfront, Grant’s Farm, Missouri Botanical Garden, St. Louis Art Museum, Purina

Farms, St. Louis Zoo, The Magic House and The Muny.

Variety collaborates with partner agencies to develop educational programs tailored to the

needs of children with physical and intellectual disabilities, including evaluation and early

intervention. These programs are carefully monitored and reviewed for maximum results.

Variety is committed to raising awareness through communication to the general public,

constituent base, parents and families, partner agencies and community health care providers

regarding our mission, vision, programs and events.

Sunshine Coach Vans

Sunshine Coach vans are provided to Variety partner agencies through the allocations process.

Sunshine Coach vans are used to transport children to physician visits, therapy sessions, and

educational and recreational activities.



-11-

Note B - Summary of Significant Accounting Policies

Basis of Presentation

Financial statement presentation follows the requirements of Financial Accounting Standards

Board Accounting Standards Codification (FASB ASC) 958-205 (Presentation of Financial

Statements) which requires Variety 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.

Estimates

Variety uses estimates and assumptions in preparing financial statements. Those estimates

and assumptions affect the reported amounts of assets and liabilities, the disclosure of

contingent assets and liabilities, and the reported revenues and expenses. Actual results could

differ from those estimates.

Cash and Cash Equivalents

Variety considers all cash investment instruments with original maturities of less than 90 days

to be cash equivalents. Variety maintains cash accounts at one national financial institution. At

times, bank balances exceed federal depository insurance limits of $250,000 per financial

institution. Cash balances in excess of FDIC limits amounted to $962,055 at September 30, 2015

and $857,345 at September 30, 2014.

Promises to Give

Promises to give consist of unconditional contributions and grants. Conditional promises to

give, which depend upon specified future and uncertain events, are recognized as support

when the conditions upon which they depend are substantially met.

Based on a review of outstanding balances and past collection history, management does not

believe an allowance for uncollectible promises to give is necessary. Management closely

monitors outstanding balances and writes off, through a charge to earnings, balances when

they are deemed uncollectible.



-12-

Note B - Summary of Significant Accounting Policies (Continued)

Investments

Investments in domestic and international exchange traded funds and fixed income mutual funds

are reported at fair value based upon quoted market prices. Gains or losses on sale of

investments are determined on a specific cost identification method. Unrealized gains and losses

are determined based on year-end fair value fluctuations.

Investment securities are exposed to various risks such interest rate, market and credit risks.

Due to the level of risk associated with investment securities, it is at least reasonably possible

that changes in the values of investment securities will occur in the near term and that such

changes could materially affect the amounts reported in the Statement of Financial Position.

Equipment

Equipment is carried at cost, less accumulated depreciation. The assets are depreciated over

periods ranging from three to seven years using the straight-line method.

Deferred Revenue

Program revenue includes ticket sales. Revenue from ticket sales is recognized in the fiscal

year of the program or performance. Proceeds from ticket sales received prior to year-end for

the next fiscal year are deferred and recognized as revenue in the next fiscal year.

Restricted and Unrestricted Revenue and Support

Variety reports gifts of cash and other assets received without donor stipulations as

unrestricted. Support that is restricted by the donor or which extends beyond the year is

reported as temporarily or permanently restricted. When a donor stipulated time restriction

ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to

unrestricted and reported in the Statement of Activities as net assets released from restrictions.

Support that is restricted by the donor is reported as an increase in unrestricted net assets if the

restriction expires in the reporting period in which the support is recognized.

Expense Allocation

Expenses are charged to program services and supporting activities on the basis of periodic

time and expense studies. Management and general expenses include those expenses that

provide for the overall support and direction of Variety. Fundraising expenses support

activities related to identifying and accessing the resources necessary to maintain operations

and achieve programmatic goals.



-13-


Donated Services, Use of Facilities, and Materials

Significant services, use of facilities and materials are donated to Variety by various

organizations and individuals. Donated materials and use of facilities are recorded at fair

value at the date of donation. Donated services that meet the criteria for recognition under

FASB ASC 958-605-25 (Not-For-Profit Organizations Revenue Recognition) are recorded.

For the years ended September 30, 2015 and 2014, the value of donated materials, use of

facilities and services recorded was $95,890 and $353,150, respectively. In addition, a

substantial number of volunteers have donated a significant amount of time to Variety’s

programs. However, such donated services have not been recorded because they do not meet

the criteria for recognition under FASB ASC 958-605-25.

Tax Status

Variety constitutes a qualified not-for-profit organization under Section 501(c)(3) of the

Internal Revenue Code and is, therefore, exempt from federal income taxes.

Variety has addressed the provisions of FASB ASC 740 (Accounting for Income Taxes). In

that regard, Variety has evaluated its tax positions, expiring statutes of limitations, audits,

proposed settlements, changes in tax law and new authoritative rulings and believes that no

provision for income taxes is necessary, at this time, to cover any uncertain tax positions.

Advertising

Advertising costs are expensed as incurred. Advertising costs amounted to $44,369 and $25,847

in 2015 and 2014 respectively.

Joint Costs

Variety achieves some of its programmatic and management and general goals in special

events and direct mail campaigns that include requests for contributions.

During the years ended September 30, 2015 and 2014, Variety incurred joint costs of

$478,494 and $449,188, respectively, as a result of various events held during Variety Week

that benefited both program and fundraising objectives. Variety allocated $391,910 to

fundraising expenses and $86,584 to program expenses for the year ended September 30,

2015. For the year ended September 30, 2014, Variety allocated $362,493 to fundraising

expenses and $86,695 to program expenses.



-14-


Joint Costs (continued)

During the years ended September 30, 2015 and 2014, Variety incurred joint costs of $6,610

and $19,704, respectively, as a result of marketing collateral that benefited program,

management and general and fundraising objectives. Variety allocated $4,729 to fundraising

expenses, $279 to management and general expenses and $1,602 to program expenses for the

year ended September 30, 2015. For the year ended September 30, 2014, Variety allocated

$13,404 to fundraising expenses, $164 to management and general expenses and $6,136 to

program expenses.

Subsequent Events

Management has evaluated subsequent events through December 9, 2015, the date which the

financial statements were available for issue. No events require recognition in the financial

statements or disclosures of Variety per the definitions and requirements of FASB ASC 855-

10 (Subsequent Events).

Note C - Promises to Give

Promises to give represent pledges which have been made by donors but not yet received by

Variety. Promises to give are collectible as follows:

2015 2014

Due in less than one year 392,748$ 217,900$

Due in one to five years 300,000 -

692,748 217,900

Less: discount on promises to give (21,136) -

671,612$ 217,900$

Promises to give are recorded after discounting to the present value of future cash flows using

a discount rate of 3.25%.



-15-

Note D - Investments and Fair Value Measurements

Variety accounts for certain investments at fair value in accordance with accounting principles

generally accepted in the United States of America. Variety has adopted FASB ASC 820-10

(Fair Value Measurements and Disclosures). FASB ASC 820-10 establishes a framework for

measuring fair value, and expands disclosures about fair value measurements.

FASB ASC 820-10 defines fair value as the price that would be received to sell an asset or

paid to transfer a liability in an orderly transaction between market participants at the

measurement date. FASB ASC 820-10 also establishes a fair value hierarchy, which requires

an entity to maximize the use of observable inputs and minimize the use of unobservable

inputs when measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the

following three levels:

• Level 1: Observable inputs that are derived from quoted prices (unadjusted) for

identical assets or liabilities in an active market.

• Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar

assets or liabilities, quoted prices in active markets that are not active, or other inputs

that are observable or can be corroborated by observable market data for substantially

the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that

are significant to the fair value of the assets or liabilities and reflect substantial

management judgement or estimation using available market data.

Management determines the fair value measurement valuation policies and procedures, which

are subject to Board of Directors assessment and approval. At least annually, management

determines if the current valuation techniques used in fair value measurements are still

appropriate. During the years ending September 30, 2015 and 2014, there were no changes in the

methods and/or assumptions utilized to derive the fair value of Variety’s assets.

Variety recognizes transfers, if any, between levels in the fair value hierarchy at the end of the

reporting period. There were no transfers during the years ended September 30, 2015 and 2014.



-16-

Note D - Investments and Fair Value Measurements (Continued)

Investments, including those restricted for permanent endowment, consist of the following at

September 30, 2015:

Level 1 Level 2 Level 3 Fair Value

Exchange traded funds:

Small cap 161,833$ -$ -$ 161,833$

Mid cap 339,867 - - 339,867

Large cap 1,214,680 - - 1,214,680

Foreign large cap 475,753 - - 475,753

Emerging markets 211,102 - - 211,102

Commodities 108,777 - - 108,777

Real estate 301,738 - - 301,738

Mutual funds:


Large cap 61,078 - - 61,078

International 19,535 - - 19,535

Fixed income mutual funds:

Short term 109,429 - - 109,429

Mid term 485,290 - - 485,290

Long term 197,121 - - 197,121


Inflation protected 293,265 - - 293,265

World 147,102 - - 147,102

Total securities 4,196,456$ -$ -$ 4,196,456$

Investments required to be disclosed in the fair value hierarchy 4,196,456$

Cash and cash equivalents 222,383

Total investments 4,418,839$



-17-


Investments, including those restricted for permanent endowment, consist of the following at

September 30, 2014:

Level 1 Level 2 Level 3 Fair Value

Exchange traded funds:

Small cap 156,240$ -$ -$ 156,240$

Mid cap 335,398 - - 335,398

Large cap 1,304,738 - - 1,304,738

Foreign large cap 442,786 - - 442,786


Commodities 87,290 - - 87,290

Real estate 252,553 - - 252,553

Mutual funds:


Large cap 63,076 - - 63,076

International 19,105 - - 19,105

Fixed income mutual funds:

Short term 333,513 - - 333,513

Mid term 350,817 - - 350,817

Long term 276,635 - - 276,635


Inflation protected 295,936 - - 295,936

World 133,057 - - 133,057

Total securities 4,323,633$ -$ -$ 4,323,633$

Investments required to be disclosed in the fair value hierarchy 4,323,633$

Cash and cash equivalents 216,494

Total investments 4,540,127$



-18-


Investments are included in the Statement of Financial Position as follows:

2015 2014

Investments 3,015,911$ 3,137,199$

Assets restricted for permanent investment 1,402,928 1,402,928

4,418,839$ 4,540,127$

Investment income consists of:

2015 2014

Investment income 83,159$ 84,638$

Realized gain on the sale of investments 22,020 -

Unrealized gain (loss) on investments (242,901) 241,913

(137,722)$ 326,551$

Note E - Net Assets

Board Designated Net Assets

In addition to board-designated for endowment net assets as described in Note G, Variety has

board-designated net assets for grants to partner agencies and for a reserve fund. Board-

designated net assets for grants to partner agencies are comprised of funds held in cash and cash

equivalents to be given to certain qualifying agencies outside of Variety that intend to utilize

such funds to carry out the mission of Variety. Board-designated net assets for a reserve fund are

comprised of funds held in cash and cash equivalents for outreach programs and direct programs.



-19-

Note E - Net Assets (Continued)

Temporarily Restricted Net Assets

Temporarily restricted net assets are restricted for the following:

2015 2014

Variety Adventure Camp 1,980$ 28,000$

Variety Adventure Camp Endowment - unappropriated

endowment earnings (Note G) 44,000 139,971

Summer Outings 30,275 55,483

Variety Playground 291,531 291,531

Variety Children's Theatre 175,025 130,257

Bikes for Kids 190,707 35,166

Resource Center & Champion for Children Summit 67,639 40,000

Equipment 62,757 109,745

Therapy - 500

Time restrictions 364,081 -

1,227,995$ 830,653$

Net assets released from restrictions consist of the following:

2015 2014

Program restrictions 389,912$ 389,479$

Time restrictions - 2,435

389,912$ 391,914$

Releases for program restrictions include $45,626 and $54,867 of appropriation of endowment

earnings for Variety Adventure Camp in 2015 and 2014, respectively (Note G).

Permanently Restricted Net Assets

Permanently restricted net assets are restricted for the following:

2015 2014

Variety Adventure Camp 1,402,928$ 1,402,928$



-20-

Note F - Benefit Plan

Variety has a Simple IRA plan which allows eligible employees to make tax-deferred

contributions. In addition, Variety makes 100% matching contributions up to 3% of

participating employees’ wages on behalf of eligible employees. Variety’s contributions to the

Plan were $31,055 and $27,808 for the years ended September 30, 2015 and 2014, respectively.

Note G - Endowment Funds – Board-Designated and Donor-Restricted

Variety’s endowment includes both donor-restricted funds and funds designated by the Board

of Directors to function as endowments. As required by generally accepted accounting

principles, net assets associated with endowment funds, including funds designated by the

Board of Directors to function as endowments, are classified and reported based on the

existence or absence of donor-imposed restrictions.

The Board of Directors of Variety has interpreted the Uniform Prudent Management of

Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original

gift as of the gift date of the donor-restricted endowment funds absent explicit donor

stipulations to the contrary. As a result of this interpretation, Variety classifies as permanently

restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the

original value of subsequent gifts to the permanent endowment, and (c) accumulations to the

permanent endowment made in accordance with the direction of the applicable donor gift

instrument at the time the accumulation is added to the fund. The remaining portion of the

donor-restricted endowment fund that is not classified in permanently restricted net assets is

classified as temporarily restricted net assets until those amounts are appropriated for

expenditure by Variety in a manner consistent with the standard of prudence prescribed by

UPMIFA. In accordance with UPMIFA, Variety considers the following factors in making a

determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration

and preservation of the various funds, (2) the purposes of the donor-restricted endowment

funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the

expected total return from income and the appreciation of investments, (6) other resources of

Variety, and (7) Variety’s investment policies.

From time to time, the fair value of assets associated with individual donor-restricted

endowment funds may fall below the level that the donor or UPMIFA requires Variety to retain

as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature that are

reported in unrestricted net assets were $4,046 as of September 30, 2015. These deficiencies

resulted from unfavorable market fluctuations that occurred shortly before year-end.

Subsequent to year-end, the funds recovered their losses.



-21-

Note G - Endowment Funds – Board-Designated and Donor-Restricted (Continued)

Variety has adopted investment and spending policies for endowment assets to achieve the

following objectives: a) preservation of capital, b) generation of income to help fulfill the

operating needs of Variety, and c) growth of the principal asset value at a rate greater than

inflation as measured by the Consumer Price Index. Achieving these objectives requires

assuming a moderate level of risk, a long-term investment horizon and diversification among

assets. Assets shall be diversified among the following asset classes: a) cash and equivalents

consisting of obligations of the U.S. government, U.S. agencies, and corporate issues rated “A”

or better and the two highest grades of commercial paper, b) fixed income securities rated not

less than “A” by Moody’s or Standard and Poor’s with staggered maturity dates, and c) equities

publicly traded on U.S. Exchanges, NASDAQ listed stocks and securities convertible into

stocks plus a limited amount in foreign stocks. The portfolio is invested in passive, low-cost

mutual or exchange-traded funds which should be expected to produce rates of return in line

with their respective asset classes.

Income earned by the board-designated endowment assets, as well as net appreciation (both

realized and unrealized) in the fair market value of the principal assets over the historic dollar

value of such principal, may be initially expended, at the discretion of the Endowment

Committee, to ensure that vitally essential medical equipment is provided, based on need, to

children with disabilities. Once the funds needed to perpetuate this goal have been obtained,

the income and net appreciation may be expended for any purpose the Endowment Committee

deems to be in the best interest of Variety, including but not limited to: providing supplemental

support of annual general operating revenues; providing financial assistance to ongoing and

new programs; and compensating and training appropriate staff to support the Board in

carrying out Variety’s mission.

For the donor-restricted endowment, Variety may use a maximum of four percent of the total

amount of the fund, based on the value of the fund as determined at December 31 of the

preceding year, to support Variety Adventure Camp.

Endowment funds consist of the following at September 30:

Unrestricted

Temporarily

Restricted

Permanently

Restricted Total

Board-designated endowment 2,680,381$ -$ -$ 2,680,381$

Donor-restricted endowment (4,046) 48,045 1,402,928 1,446,927

2,676,335$ 48,045$ 1,402,928$ 4,127,308$

2015



-22-

Note G - Endowment Funds – Board-Designated and Donor-Restricted (Continued)

Unrestricted

Temporarily

Restricted

Permanently

Restricted Total

Board-designated endowment 2,705,696$ -$ -$ 2,705,696$

Donor-restricted endowment - 139,971 1,402,928 1,542,899

2,705,696$ 139,971$ 1,402,928$ 4,248,595$

2014

The changes in endowment net assets are as follows for the year ended September 30:

Unrestricted

Temporarily

Restricted

Permanently

Restricted Total

Endowment Net Assets

Beginning of year October 1, 2013 2,421,887$ 85,341$ 1,225,000$ 3,732,228$

Proceeds from contributions

restricted for endowment - - 177,928 177,928

Transfers to Board-Designated

Endowment 67,205 - - 67,205

Interest and dividends 56,422 28,216 - 84,638

Unrealized gain 160,332 81,581 - 241,913

Total Investment Income 216,754 109,797 - 326,551

Investment fees (150) (300) - (450)

Appropriation of endowment earnings - (54,867) - (54,867)

Endowment Net AssetsEnd of year September 30, 2014 2,705,696$ 139,971$ 1,402,928$ 4,248,595$


Beginning of year October 1, 2014 2,705,696$ 139,971$ 1,402,928$ 4,248,595$

Proceeds from contributions

restricted for endowment - - - -

Transfers to Board-Designated

Endowment 62,361 - - 62,361

Interest and dividends 50,313 32,846 - 83,159

Realized gain 22,020 - - 22,020

Unrealized loss (163,905) (78,996) - (242,901)

Total Investment Income (91,572) (46,150) - (137,722)

Investment fees (150) (150) - (300)

Appropriation of endowment earnings - (45,626) - (45,626)


End of year September 30, 2015 2,676,335$ 48,045$ 1,402,928$ 4,127,308$



-23-

Note H - Lease Commitment

Variety has operating leases for office space and equipment. Future minimum lease payments

as of September 30, 2015 are as follows:

Years ending September 30th Amount

2015 $ 26,698

2016 872

2017 872

2018 436

Rent expense resulting from lease commitments included in the financial statements totaled

$50,959 and $52,136 for the years ended September 30, 2015 and 2014, respectively.

Note I – Special Events

Special events consist of:

2015 2014

Event table and ticket sales 1,107,010$ 976,405$

Contributions for underwriting support 650,555 1,397,477

Auction revenue 37,810 44,235

Program book ad sales 9,300 9,200

In-kind revenue - 192,815

Other revenue 12,463 11,059

Gross special event revenue 1,817,138 2,631,191

Less: direct event expenses 719,955 1,550,186

Special event revenue (net) 1,097,183$ 1,081,005$



-24-

Note J – In-Kind Revenue

In-kind revenue consists of:

2015 2014

Computer and equipment 18,420$ 18,420$

Food 470 -

Production costs - 34,315

Outside services and professional fees - 20,000

Rent 73,000 73,000

Supplies - 645

Special equipment and therapy - 450

Other 4,000 13,505

95,890$ 160,335$

Documents

PAYBACK, INC - Variety the Children's... · financial position of Variety the Children’s Charity of St. Louis as of September 30, 2015 and 2014, and the changes in its net assets