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Avon Products Foundation, Inc.

Financial Statements

December 31, 2013


Notes to Financial Statements

December 31, 2013

Table of Contents Page 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 7-17

O’CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Suite 301, Harrison, NY 10528 I Tel: 914.381.8900 I Fax: 914.381.8910 I www.odpkf.com O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Independent Auditors' Report The Board of Directors Avon Products Foundation, Inc. We have audited the accompanying financial statements of Avon Products Foundation, Inc. (the “Foundation”) which comprise the statement of financial position as of December 31, 2013 and the related statement of activities, functional expenses and cash flows for the year 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 audit. We conducted our audit 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 of 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.

The Board of Directors Avon Products Foundation, Inc. Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Avon Products Foundation, Inc. as of December 31, 2013 and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited the Avon Products Foundation, Inc.’s December 31, 2012 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated April 22, 2013. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2012 is consistent, in all material respects, with the audited financial statements from which it has been derived.

May 9, 2014 New York, New York

2013 2012ASSETSCash and cash equivalents 20,036,715$ 24,718,730$ Investments 5,949,000 5,944,360Pledges receivable, net of allowance for uncollectible pledges of $36,338 and $25,671 100,639 987,040

Other receivables, net of allowance for uncollectible accounts of $54,000 in 2012 261,392 1,203,175

Prepaid expenses 7,298,406 149,486Due from Avon Products, Inc. 344,035 887,635Deferred program costs 733,997 1,139,460

Equipment, net of accumulated depreciation of $119,836

and $74,800 52,673 74,800

34,776,857$ 35,104,686$

LIABILITIES AND NET ASSETSLiabilities

Accounts payable and accrued expenses 451,565$ 478,184$ Due to Avon Products, Inc. 136,344 99,643Grants payable, net 12,257,073 8,033,857

Total Liabilities 12,844,982 8,611,684

Net AssetsUnrestricted 19,326,577 22,329,895 Temporarily restricted 2,605,298 4,163,107

Total Net Assets 21,931,875 26,493,002

34,776,857$ 35,104,686$


Statements of Financial Position

December 31, 2013(with comparative amounts at December 31, 2012)

See notes to financial statements 3

2012Temporarily

Unrestricted Restricted Total Total

PUBLIC SUPPORT AND REVENUESpecial events income 684,499$ 33,994,980$ 34,679,479$ 42,480,029$ Special event in-kind donations - 543,043 543,043 750,442 Contributions from Avon:

Special Events 3,784,000 - 3,784,000 4,534,000 Breast Cancer Crusade - 3,631,185 3,631,185 4,057,657 Scholarship / Other Programs - 1,221,000 1,221,000 1,221,000 Domestic Violence / Empowerment - 3,481,028 3,481,028 3,888,516 Reforestation 1,476,184 1,476,184 - General Support - Donation - - - 350,000 General Support - In-Kind 1,686,139 - 1,686,139 2,064,099

Contributions from others 571,585 606,163 1,177,748 1,181,085 Pledges - 1,652,870 1,652,870 1,336,932 Investment income 124,347 - 124,347 133,350 Net Assets Released from Restrictions:

Satisfaction of purpose restriction 46,071,330 (46,071,330) - - Satisfaction of time restriction 2,092,932 (2,092,932) - -

Total Public Support and Revenue 55,014,832 (1,557,809) 53,457,023 61,997,110

EXPENSESProgram Services

2013


Statements of Activities

Year Ended December 31, 2013(with summarized totals for the year ended December 31, 2012)

See notes to financial statements

4

Breast Cancer Crusade 31,399,558 - 31,399,558 39,937,690 Scholarship / Other Programs 1,543,189 - 1,543,189 1,550,873 Domestic Violence / Empowerment 6,539,295 - 6,539,295 5,089,746 Reforestation 1,484,289 - 1,484,289 - Emergency Relief Fund 64,515 - 64,515 13,810

Total Program Expenses 41,030,846 - 41,030,846 46,592,119

Supporting ServicesManagement and general 1,891,829 - 1,891,829 1,967,730 Fundraising 15,095,475 - 15,095,475 16,422,410

Total Supporting Services 16,987,304 - 16,987,304 18,390,140

Total Expenses 58,018,150 - 58,018,150 64,982,259

Change in Net Assets (3,003,318) (1,557,809) (4,561,127) (2,985,149)

NET ASSETSBeginning of year 22,329,895 4,163,107 26,493,002 29,478,151

End of year 19,326,577$ 2,605,298$ 21,931,875$ 26,493,002$

See notes to financial statements

4

Supporting ServicesBreast Scholarship/ Domestic Emergency Management Cancer Other Violence/ Relief and Crusade Programs Empowerment Reforestation Fund Total General Fundraising Total 2013 2012

EXPENSES

Staffing 339,751$ -$ 137,484$ -$ -$ 477,235$ 681,248$ 83,100$ 764,348$ 1,241,583$ 1,208,817$ Grants 20,138,542 1,350,141 5,798,787 1,476,184 63,446 28,827,100 - - - 28,827,100 31,728,699 Equipment - - - - - - - 1,333,815 1,333,815 1,333,815 1,611,299 Communications - - - - - - 54,743 1,138,945 1,193,688 1,193,688 1,269,232 Travel and meals 40,546 - - - - 40,546 - 417,168 417,168 457,714 1,168,267 Supplies 410,833 - - - - 410,833 5,288 111,679 116,967 527,800 514,151 Facilities - - - - - - - 320,819 320,819 320,819 518,080 Public awareness 6,583,279 - - - - 6,583,279 - 2,826,643 2,826,643 9,409,922 10,596,168 Public relations 147,445 - - - - 147,445 3,000 26,926 29,926 177,371 239,863 Printing 1,830,662 - - - - 1,830,662 - 336,448 336,448 2,167,110 3,207,607 Professional services 502,960 - 13,549 - - 516,509 165,168 5,473,447 5,638,615 6,155,124 5,859,133 Other services 716,541 - - - - 716,541 - 1,909,776 1,909,776 2,626,317 2,988,239 Insurance - - - - - - 37,210 99,413 136,623 136,623 78,022 Taxes and licenses - - - - - - 51,503 297,236 348,739 348,739 296,555 Bank fees - - - - - - 631,934 - 631,934 631,934 724,802 Agency labor - - - - - - 25,530 - 25,530 25,530 45,763 Bad debt expense - - - - - - 162,743 - 162,743 162,743 75,621 Depreciation expense - - - - - - - 45,036 45,036 45,036 37,400

Total Direct Expenses 30,710,559 1,350,141 5,949,820 1,476,184 63,446 39,550,150 1,818,367 14,420,451 16,238,818 55,788,968 62,167,718

Staffing 462,735 169,732 500,089 7,284 1,069 1,140,909 65,639 173,997 239,636 1,380,545 1,673,391 Communications 6,103 970 3,719 - - 10,792 325 1,597 1,922 12,714 19,340 Travel and meals 18,237 2,899 11,113 118 - 32,367 973 4,654 5,627 37,994 84,532 Supplies 6,451 1,025 3,931 - - 11,407 344 430,988 431,332 442,739 614,574 Facilities 39,691 6,309 24,187 256 - 70,443 2,117 10,130 12,247 82,690 82,690 Public awareness 79,579 - - - - 79,579 - 34,165 34,165 113,744 177,217 Public relations 35,144 5,586 21,416 227 - 62,373 1,874 8,969 10,843 73,216 77,201 Other services 7,013 1,115 4,273 - - 12,401 374 1,835 2,209 14,610 32,517 Agency labor 34,046 5,412 20,747 220 - 60,425 1,816 8,689 10,505 70,930 53,079

Total In-Kind Expenses 688,999 193,048 589,475 8,105 1,069 1,480,696 73,462 675,024 748,486 2,229,182 2,814,541

Total Expenses ########## 1,543,189$ 6,539,295$ 1,484,289$ 64,515$ 41,030,846$ 1,891,829$ 15,095,475$ 16,987,304$ 58,018,150$ 64,982,259$

Total

Program Services


Statements of Functional Expense

Year Ended December 31, 2013

(with summarized totals for the year ended December 31, 2012)


2013 2012

CASH FLOW FROM OPERATING ACTIVITIESChange in net assets (4,561,127)$ (2,985,149)$ Adjustments to reconcile change in net assets to

net cash from operating activitiesBad debt expense 162,743 75,621 Depreciation expense 45,036 37,400 Net changes in operating assets and liabilities

Pledges receivable, net 777,658 950,775 Other receivable 887,783 (625,490) Prepaid expense (7,148,920) 76,518 Due from Avon Products, Inc. 543,600 (441,004) Deferred program costs 405,463 555,611 Accounts payable and accrued expenses (26,619) (505,132) Due to Avon Products, Inc. 36,701 (44,300) Grants payable, net 4,223,216 (7,215,806)

Net Cash from Operating Activities (4,654,466) (10,120,956)

CASH FLOW FROM INVESTING ACTIVITIESPurchase of equipment (22,909) - Purchase of investments (4,640) (1,719,360)

Net Cash from Investing Activities (27,549) (1,719,360)

Net Change in Cash and Cash Equivalents (4,682,015) (11,840,316)

CASH AND CASH EQUIVALENTSBeginning of year 24,718,730 36,559,046

End of year 20,036,715$ 24,718,730$


Statements of Cash Flows

Year Ended December 31, 2013

(with comparative amounts for the year ended December 31, 2012)



Notes to Financial Statements December 31, 2013

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1. Organization

The Avon Products Foundation, Inc. (the “Foundation”) was incorporated in the State of New York in 1955 by Avon Products, Inc. (“Avon”). The fundamental mission of the Foundation since its inception is to promote or aid charitable, scientific, educational, and humanitarian activities, with a special emphasis on those activities that improve the lives of women and their families. In its work to realize those aspirations, its current mission focus is on two causes of great importance to women: eradicating breast cancer and ending domestic and gender violence. It works toward achieving those goals through four complementary strategies: Funding, Convening, Initiating and Educating. The Foundation receives generous financial support to fund its mission initiatives from Avon Products, Inc, through special product sales and direct donations. It also receives generous support for its work from the public—individuals, companies and foundations—through direct donations, sponsorships and special events, including the Avon Walk for Breast Cancer, the Avon Awards and other programs. The Foundation also operates small additional programs that advance the Foundation’s fundamental mission to improve the lives of women. Those programs include Avon Representative and employee-eligible scholarships and Avon employee matching gifts, which are all fully funded by Avon Products, Inc. It also raises funds and receives donations from Avon periodically for emergency relief and rehabilitation efforts in times of disasters, with a grant prioritization on organizations providing assistance for women and families who are affected. In 2013 the Foundation began to operate the Avon global reforestation grant program, Healthy Forests, Beautiful World, which is focused on mobilizing women to nurture nature and help reverse deforestation.

Programs

The major program activities of the Foundation are as follows:

a. Breast Cancer

The Avon Foundation for Women is committed to the mission of eradicating breast cancer. The Avon Breast Cancer Crusade was launched in the US in 1993 to accelerate progress toward that goal.

To realize that mission, the Foundation’s current priorities are:: 1. Accelerate breast cancer research, 2. Improve access to screening, diagnosis and care for all populations, especially

the underserved and poor, 3. Increase both the awareness and understanding of the need to improve breast

health care for all populations, and to provide equal access to the resources necessary for long-term breast cancer survival.



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1. Organization (continued)

a. Breast Cancer (continued) To achieve these objectives, Foundation strategies include:

FUNDING: Make grants to outstanding nonprofit organizations working with breast cancer populations, with a focus on those that conduct research; provide education and awareness programs; improve screening, diagnoses and care for underserved populations; and offer critical support and services for breast cancer patients, survivors and all those appropriate for screening.

CONVENING: Convene breast cancer care, research and direct service leaders to identify needs and new directions and to share best practices and new advances. Uniquely among funders, the Avon Foundation convenes hundreds of its breast cancer grantees annually, alternating between research and access to care focused programs, to ensure optimum outcomes and success of all funded programs. It also regularly convenes other leadership assemblies around key issues, such as its Virus and Breast Cancer Research Consortium; New Diagnostic Tests and Treatments Consortium that most recently launched an Innovation Start-Up Challenge for business schools; a Patient Navigation Summit; two Global Breast Cancer Congresses; and two Global Breast Cancer Clinical Scholars US Conference and Study Programs.

INITIATING: Identify key gaps in breast cancer research and access to care and work with grantees, partners and leaders to develop and launch new work and accelerate the impact of their achievements, including the identification and launch of new research directions; partnering on key research projects; fostering and funding new collaborative programs; identifying government and industry partners with shared goals and creating public/private partnerships which often lead to significant education and awareness campaigns to advance the understanding and utility of our funded work and to bring findings and advances to public attention, especially within underserved and poor communities.

EDUCATING: Educate and raise awareness with general and targeted populations and the media to ensure that advances in breast cancer screening, diagnosis, treatment, research and early detection are well known, understood and accessible to all. The goal of these communications and materials is to improve the screening, diagnosis and treatment of all women, and men, for breast cancer, regardless of insurance or economic status. Avon research demonstrates that, unlike 20 years ago, today large disparities exist in black-white mortality rates from breast cancer. Five black women per day are dying needlessly from breast cancer in the United States, and this disparity has grown since improved screening and treatment have become available, but are not equally utilized.



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a. Breast Cancer (continued) EDUCATING (continued) This situation is directly attributable to the lack of education and access to needed services and care. The Avon Foundation funds research on disparities, as well as supporting extensive programming to address inequities in screening and treatment. We fund comprehensive breast care and research centers, safety net public hospitals and an extensive community-based breast health outreach program. But our provision of quality equipment, introduction of patient navigators, and efforts to improve access to screening and care in poor communities are futile without an adequate understanding of the relevance and need for these services by uninsured and underserved populations. This need compels the Foundation to continue to expand its educational and awareness commitment to ensure that these and other available programs are known, understood and well used.

b. Domestic Violence

The Avon Foundation is committed to the mission of ending domestic and gender violence. The Avon Foundation Speak Out Against Domestic Violence initiative was launched in the US in 2004 to accelerate progress toward that goal. To realize that mission, the Foundation’s current priorities are: 1. Break the public and private silence that surrounds partner and gender violence

and abuse, and excuses and encourages abusers. 2. Improve and expand successful and impactful victim services for both immediate

crisis care and long term advances to safety, security and the successful interruption of the cycle of violence for victims and families.

3. Identify and launch strategies to prevent family and gender violence and save lives.

To achieve these objectives, Foundation strategies include: FUNDING: Make grants to outstanding nonprofit organizations working to end violence against women and serve victims and their families, with a focus on those that provide education and awareness programs; offer critical support or services for victims and their families; offer education and direction for peer-led programs; design and conduct prevention programs; implement laws to protect victims of violence; train victims to become economically independent; conduct research; and address and reduce dating abuse among young populations.



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b. Domestic Violence (continued)

CONVENING Convene leaders and implement collaborative program approaches to accelerate advances in reducing gender violence. Uniquely among funders, the Avon Foundation facilitates the convening of its grantees, partners and experts to encourage best practices and to design and advance creative solutions and pilots, including conferences for the Avon Foundation-funded Survivor Economic Empowerment Coordinators; collaborating within its Global Partnership to End Violence Against Women to hold global conferences, mentoring programs and training initiatives; and creating impactful forums for presentation of the Global Communications X-Change Awards.

INITIATING; Identify and work with grantees, partners and leaders to launch new work and accelerate the impact of their achievements, including the identification and presentation of new research for the NO MORE Domestic Violence and Sexual Assault coalition; creation of materials to engage more employers and funders on the issue of domestic violence for a White House Council on Women and Girls program; expansion of child trauma counseling pilot to include children in domestic violence shelters and foster children; and expansion of the Domestic Violence Homicide Emergency Response Initiative.

EDUCATING: Increase the public’s awareness and knowledge of the impact of the epidemic of gender violence on women, children, families and whole communities. Lead efforts to expand the public dialogue necessary to change attitudes and reverse the silent acceptance of abuse. Generate public interest and media coverage to remove the stigma and shame experienced by survivors to allow them to create violence-free futures for themselves and their families.

c. Reforestation

A reforestation initiative, Healthy Forests, Beautiful World, was launched as Hello Green Tomorrow by Avon in 2010 to mobilize women to nurture nature and help reverse deforestation. Thanks to the commitment of more than 30 Avon markets globally, millions of dollars have been raised through the sale of special cause products and donated to the World Wildlife Fund for their reforestation projects in Indonesia, and to The Nature Conservancy for their reforestation projects in the Atlantic Rainforest in South America. In 2013 the operation of this initiative was moved to the Foundation.



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d. Other Programs

Scholarships The Foundation manages U.S. college scholarship programs for children of Avon associates, Avon independent sales representatives, children and grandchildren of Avon independent sales representatives, and for children residing in and around the Suffern New York school district. It also manages a global scholarship program for the children of Avon Sales Representatives. Matching Gifts The Foundation manages a program that matches specified charitable donations made by Avon employees in the U.S.

e. Emergency Relief Funds

In the aftermath of periodic specified disasters or emergencies when the Foundation receives designated donations from Avon, or donations resulting from the sale of special designated Avon products, or direct public designated donations made at the product purchase site avon.com, the Foundation will provide grants to selected appropriate nonprofit agencies providing assistance in those specific emergency or crisis situations with a focus on the special needs of women and families.

Examples of Avon Emergency Relief Support 2013 – the Foundation provided funds to the United Way of Central Oklahoma May Tornadoes Relief Fund for tornado relief efforts and to Rebuilding Together for Hurricane Sandy relief efforts in New York and New Jersey. 2010 – the Foundation donated to relief and rehabilitation efforts in Haiti after the earthquake, as well as to improve breast cancer treatment and to prevent violence against women in the aftermath of the disaster. 2008 – after the earthquake in Sichuan Province, Avon and the Foundation supported reconstruction and relief efforts. 2005 – in response to the devastation of Hurricanes Katrina and Rita, the Heart of America keychain was sold to raise funds to support recovery and rebuilding. 2004 – in response to the Tsunami tragedy in Asia, the Foundation created the Heart of Asia Relief Fund that funded relief and recovery. 2001 – in the aftermath of the September 11, 2001 tragedies, the Avon Foundation Heart of America Charity was created and made grants for the benefit of the children affected by those events.



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2. Summary of Significant Accounting Policies Basis of Presentation The financial statement presentation is in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for nonprofit organizations, which requires the Foundation to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted net assets. There are no permanently restricted net assets. Use of Estimates

The preparation of financial statements 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. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents

The Foundation considers all highly liquid debt instruments with a maturity of three months or less at the time of purchase, excluding certificates of deposit, to be cash equivalents.

Allowance for Uncollectable Receivables An allowance for uncollectable receivables is estimated based on a combination of write-off history, aging analysis and any specific known troubled accounts. Fair Value of Financial Instruments The Foundation follows U.S. GAAP on Fair Value Measurements and Disclosures which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. Level 1 inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets. Level 2 inputs relate to assets with other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be corroborated by observable market data. Level 3 inputs are unobservable inputs and are used to the extent that observable inputs do not exist.

Money market mutual funds included in cash equivalents are valued using level 1 inputs see Note 4).



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2. Summary of Significant Accounting Policies (Continued) Investments and Investment Income

Investments consist of certificates of deposit valued at cost plus accrued interest which approximates fair value. Income or losses from investments, including both realized and unrealized gains and losses, are treated as an increase or decrease in unrestricted net assets unless otherwise specified by the donor. Equipment The Foundation capitalizes equipment purchases of more than $5,000. These assets are recorded at cost. Depreciation of equipment is provided for on a straight-line basis over the estimated useful lives of the assets of four years. Public Support and Revenue Unconditional promises to give are recorded as received. Unconditional promises to give due in the next year are reflected as current promises to give and are recorded at their net realizable value. Unconditional promises to give that are due in subsequent years are reflected as long-term promises to give and are discounted to the present value of their net realizable value, using discount rates applicable to the years in which the promises are received. The discount is amortized to contribution income over the discount period. Grants and other contributions of cash and other assets are reported as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. Grants

Contributions of donated noncash assets are recorded at their fair values in the period received. Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchases if not provided by donation, are recorded at the fair value in the period received. Grants are recorded when a commitment is made and approved by the Board of Directors. Multi-year grants are recorded at present value using a risk adjusted interest rate, which generally approximates the rate of the two year Treasury bill plus 150 basis points.



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2. Summary of Significant Accounting Policies (Continued) Public Awareness

Public awareness and education costs consisted primarily of television, radio, and direct-mail communications, local and national print and point-of-sale materials, and educational pamphlets, interactive, electronic and digital materials. The Foundation expensed public awareness costs as incurred. During the year ended December 31, 2013, public awareness expense was $9,523,666. Functional Allocation of Expenses

The costs of providing the various programs and supporting services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services in reasonable ratios determined by management.

Tax Status

The Foundation is a public charity and is exempt from Federal income taxes pursuant to Section 501 (c) (3) of the Internal Revenue Code. The Foundation recognizes the effects of income tax positions only when they are more likely than not of being sustained. Management has determined that the Foundation has no uncertain tax positions that would require financial statement recognition or disclosure. The Foundation is no longer subject to examinations by the applicable taxing jurisdictions for periods prior to 2010. Subsequent Events Evaluation by Management Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, which date is May 9, 2014.

3. Comparative Data

The financial statements include prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Foundation’s financial statements for the year ended December 31, 2012 from which the summarized information was derived.



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4. Concentration Risk

Financial instruments that potentially subject the Foundation to concentration of credit risk consist principally of cash and cash equivalents and investments. The Foundation maintains its cash in bank deposit accounts which, at times, may exceed Federally insured limits. Cash equivalents consist of investments in money market mutual funds held with two money managers the balance of which was $19,543,501 at December 31, 2013. The Foundation monitors this risk on a regular basis. Investments consist of brokered certificates of deposit, all of which were less than federally insured limits. The Foundation has not experienced any losses in such accounts.

5. Other Related Party Transactions

Contributions

Avon made a pledge of $15,279,356 to the Foundation in 2013. The Foundation received $14,935,501 of this amount during the year. The balance of $344,035 is reflected as a receivable at December 31, 2013. This receivable was subsequently collected in 2014.

The Foundation under an administrative services arrangement has outstanding obligations to Avon for expenses of the finance and operations department and other management services amounting to $136,344 as of December 31, 2013.

In-Kind Contributions

Avon provides the Foundation with a substantial amount of support including the following:

Staffing 1,380,545$ Travel & meals 37,994 Supplies 10,678 Facilities 82,690 Communications 12,714 Public relations 73,217 Agency labor 70,931 Other 17,370

1,686,139$ The support of $1,686,139 is reflected in the financial statements as contributions and expenses for the year ended December 31, 2013. The Foundation also received valuable voluntary management support from the Board of Directors and numerous associates of Avon Products, Inc. which do not meet the requirements for measurement and recognition in the financial statements.



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6. Special Events

Awareness and fundraising programs in 2013 included events such as the Avon Walk for Breast Cancer (“AWBC”) comprised of eight weekend awareness and fundraising walks in the United States and the Foundation Awards Reception. In 2013, all special events provided the Foundation with total income of $40,659,392, of which $36,332,349 was from the public (including $1,652,870 of 2013 special events income pledged in 2012), $543,043 was from in-kind donations from sponsors and $3,784,000 was from Avon.

7. Joint Costs

The Foundation conducted activities that included direct-mail campaigns and special events. The costs of conducting those activities included a total of $14,484,788 of joint costs. These joint costs were allocated as follows:

Breast Cancer Crusade 10,083,684$ Scholarships/Other Programs 193,048 Domestic Violence 589,476 Reforestation 8,232 Emergency Relief Fund 1,253 Management and General 73,462 Fundraising 3,535,633

14,484,788$ 8. Equipment

Equipment consists of tents purchased for AWBC. Depreciation is provided by the straight-line method over an estimated life of four years.

9. Leases

The Foundation has various lease agreements with unrelated parties for certain administrative office space. Rent expense for the year ended December 31, 2013 and 2012 was $239,616 and $409,161. Minimum future lease payments to be made for each of the years in the period ended December 31, are as follows:

2014 129,945$ 2015 79,661 2016 50,384 2017 51,707 2018 53,030 Thereafter 105,289



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10. Grants Payable

The Foundation has entered into longer-term commitments with certain grant beneficiaries. Payments to these organizations at December 31, 2013 are due to be made as follows:

Less than one year 11,960,207$ One to two years 296,866

12,257,073$ 11. Temporarily Restricted Net Assets Temporarily restricted net assets are available as follows at December 31, 2013:

Time RestrictionBreast Cancer Crusade 1,652,870$

Purpose RestrictionScholarships/Other Programs 942,278 Emergency Relief 10,150

2,605,298$ The Breast Cancer Crusade time restriction relates to contributions received and pledges made towards the 2014 events received in 2013.

12. Deferred Program Costs

Expenses related to the 2014 events have been reflected as deferred program costs at December 31, 2013. 13. Prepaid Expenses

Due to a change in marketing timing certain expenses related to the 2014 events have been reflected as prepaid costs at December 31, 2013.

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