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CENTER OF CONCERN

FINANCIAL STATEMENTSAND

INDEPENDENT AUDITORS' REPORT

JUNE 30, 2015 AND 2014

TABLE OF CONTENTS

Independent auditors' report................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1 - 2

Audited financial statements

Statements of financial position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3

Statements of activities................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................4 - 5

Statements of cash flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................6

Notes to financial statements................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................7 - 14

Supplemental information

Schedules of functional expenses................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................15 - 16

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INDEPENDENT AUDITORS' REPORT

To the Board of DirectorsCenter of ConcernWashington, D.C.

We have audited the accompanying financial statements of Center of Concern (the Center), whichcomprise the statements of financial position as of June 30, 2015 and 2014, and the related statements ofactivities 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 inaccordance with accounting principles generally accepted in the United States of America; this includes thedesign, implementation, and maintenance of internal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. Weconducted our audits in accordance with auditing standards generally accepted in the United States of America.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditors' judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentationof the financial statements in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, weexpress no such opinion. An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of significant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

1.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of the Center as of June 30, 2015 and 2014, and the changes in its net assets and its cash flowsfor the years then ended in accordance with accounting principles generally accepted in the United States ofAmerica.

Other Matter

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole.The schedules of functional expenses (pages 15-16) are presented for purposes of additional analysis and are not arequired part of the financial statements. Such information is the responsibility of management and was derivedfrom and relates directly to the underlying accounting and other records used to prepare the financial statements.The information has been subjected to the auditing procedures applied in the audits of the financial statements andcertain additional procedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the financial statements or to the financial statements themselves, andother additional procedures in accordance with auditing standards generally accepted in the United States ofAmerica. In our opinion, the information is fairly stated in all material respects in relation to the financialstatements as a whole.

Alexandria, VirginiaAugust 8, 2016

2.

CENTER OF CONCERN

STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2015 AND 2014

2015 2014ASSETS

Current assets:

Cash $ 97,023 $ 7,854Pledges receivable, net 100,767 81,700Accounts receivable - 471Prepaid expenses 3,084 3,367Inventory 28,805 28,477

Total current assets 229,679 121,869

Pledges receivable, non-current, net 227,905 299,571Property and equipment, net 95,156 116,584

Total assets $ 552,740 $ 538,024

LIABILITIES AND NET ASSETSCurrent liabilities:

Bank line of credit $ 124,706 $ 125,083Accounts payable and accrued expenses 72,778 89,321Deferred revenue 275,430 164,689

Total current liabilities 472,914 379,093

Net assets:

Unrestricted deficit (259,474) (251,826)Temporarily restricted 339,300 410,757

Total net assets 79,826 158,931

Total liabilities and net assets $ 552,740 $ 538,024

See accompanying notes to the financial statements.3.

CENTER OF CONCERN

STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2015

TemporarilyUnrestricted Restricted Total

Revenues:

Contributions $ 414,857 $ - $ 414,857Grants and contract revenue 155,184 145,133 300,317Publications and Web site subscriptions 63,968 - 63,968Other income 15,623 - 15,623Stipend income 15,538 - 15,538Rental income 1,400 - 1,400Net assets released from restrictions:

Satisfaction of donor restrictions 216,590 (216,590) -

Total revenues 883,160 (71,457) 811,703

Expenses:

Program services 464,751 - 464,751

Support services:Management and general 242,632 - 242,632Fundraising 183,425 - 183,425

Total support services 426,057 - 426,057

Total expenses 890,808 - 890,808

Change in net assets (7,648) (71,457) (79,105)

Net (deficit) assets, beginning of year (251,826) 410,757 158,931

Net (deficit) assets, end of year $ (259,474) $ 339,300 $ 79,826


CENTER OF CONCERN

STATEMENT OF ACTIVITIES


TemporarilyUnrestricted Restricted Total

Revenues:

Contributions $ 161,967 $ 102,500 $ 264,467Grants and contract revenue 215,696 100,000 315,696Publications and Web site subscriptions 50,112 - 50,112Rental income 21,180 - 21,180In-kind contributions 1,850 - 1,850Other income 550 - 550Net assets released from restrictions:

Satisfaction of donor restrictions 189,052 (189,052) -

Total revenues 640,407 13,448 653,855

Expenses:

Program services 536,958 - 536,958

Support services:Management and general 294,939 - 294,939Fundraising 178,153 - 178,153

Total support services 473,092 - 473,092

Total expenses 1,010,050 - 1,010,050

Change in net assets (369,643) 13,448 (356,195)

Net assets, beginning of year 117,817 397,309 515,126

Net (deficit) assets, end of year $ (251,826) $ 410,757 $ 158,931


CENTER OF CONCERN

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2015 AND 2014

2015 2014Cash flows from operating activities:

Change in net assets $ (79,105) $ (356,195)

Adjustments to reconcile change in net assetsto net cash provided by (used in) operating activities:

Depreciation and amortization 21,428 22,215Bad debt expense 4,000 -

Decrease (increase) in assets:Pledges receivable, net 48,599 (16,978)Accounts receivable 471 287Prepaid expenses 283 (2,854)Inventory (328) 1,883

Increase (decrease) in liabilities:Accounts payable and accrued expenses (16,543) 54,087Deferred revenue 110,741 19,776

Total adjustments 168,651 78,416

Net cash provided by (used in) operating activities 89,546 (277,779)

Cash flows from investing activities:Purchases of property and equipment - (18,891)

Net cash used in investing activities - (18,891)

Cash flows from financing activities:Principal payments on bank line of credit (377) (138,417)Proceeds from bank line of credit - 263,500

Net cash (used in) provided by financing activities (377) 125,083

Net increase (decrease) in cash 89,169 (171,587)

Cash, beginning of year 7,854 179,441

Cash, end of year $ 97,023 $ 7,854

Supplemental disclosures of cash flow information:

Cash paid for interest expense $ 13,031 $ 3,872


CENTER OF CONCERN

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

1. Organization

Center of Concern (the Center) is a social profit organization that is tax-exempt under Internal

Revenue Code §501(c)(3). It has operated under the legal status of a nonprofit organization in the District

of Columbia since its founding in 1971. The Center's mission is to research, educate, and advocate from

Catholic social tradition to create a world where economic, political, and cultural systems promote

sustainable flourishing of the global community.

The ultimate governing authority for the organization is a voluntary board of directors.

2. Summary of significant accounting policies

Basis of presentation

The Center's financial statements are presented in accordance with generally accepted accounting

principles for nonprofit organizations. Under those principles, the Center is required to report information

regarding its financial position and activities according to three classes of net assets:

Unrestricted Net Assets represent resources that are not subject to donor-imposed stipulations and

are available for operations at management's discretion.

Temporarily Restricted Net Assets represent resources restricted by donors as to purpose or by the

passage of time.

Permanently Restricted Net Assets represent resources whose use by the Center is limited by

donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise

removed by action of the Center. Income from the assets held is available for either general operations or

specific purposes, in accordance with donor stipulations.

The Center has no permanently restricted net assets at June 30, 2015 and 2014.

7.

CENTER OF CONCERN


JUNE 30, 2015 AND 2014

Basis of accounting

The Center's financial statements are prepared on the accrual basis of accounting. Accordingly,

revenues are recognized when earned and expenses when obligations are incurred.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting

principles requires management to make estimates and assumptions that affect certain reported amounts of

assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses and their functional allocation during the

reporting period. Actual results could differ from those estimates.

Income taxes

The Center is exempt from federal and local income taxes under Section 501(c)(3) of the Internal

Revenue Code on income derived from activities related to its exempt purpose. This code section enables

the Center to accept donations that qualify as charitable contributions to the donor. The Center is subject

to income taxes on taxable income from unrelated business activities. For the years ended June 30, 2015

and 2014, the Center did not recognize income tax expense in the accompanying financial statements as

there was no unrelated business taxable income.

The Center is not aware of any activities that would jeopardize its tax-exempt status that would

require recognition in the accompanying financial statements. Generally, tax returns are subject to

examination by taxing authorities for up to three years from the date a completed return is filed. If there

are material omissions of income, tax returns may be subject to examination for up to six years. It is the

Center’s policy to recognize interest and/or penalties related to uncertain tax positions, if any, in the

accompanying financial statements. As of June 30, 2015 and 2014, the Center had no accruals for interest

and/or penalties.

8.

CENTER OF CONCERN


JUNE 30, 2015 AND 2014

Pledges receivable

Pledges receivable are unconditional promises to give that are recognized as pledges when the

promise is received. Pledges receivable that are expected to be collected in less than one year are reported

at their net realizable value. Amounts that are expected to be collected in more than one year are recorded

at the present value of their estimated future cash flows. The cash flows are discounted at a discount rate

commensurate with the risk involved. Amortization of the resulting discount is recognized as additional

contribution revenue. Reserves are established for receivables that are delinquent and considered

uncollectible based on periodic reviews by management.

Inventory

Inventory consists of books and publications, and is stated at the lower of cost or market by the

first-in, first-out method.

Property and equipment, net

Property and equipment acquisitions are recorded in the financial statements at cost, net of

accumulated depreciation and amortization. Depreciation and amortization expense is computed using the

straight-line method over the estimated useful lives of the assets as follows:

Building 18 yearsComputer equipment 3 - 10 yearsFurniture and fixtures 5 - 7 yearsBuilding improvements 18 years

The Center's policy is to capitalize major additions and improvements over $500. Repairs and

maintenance which do not significantly add to the value of assets are expensed as incurred.

9.

CENTER OF CONCERN


JUNE 30, 2015 AND 2014

Revenue recognition

Contributions

Contributions and certain foundation and corporate grants are recognized as revenue when

received or promised and are recorded net of any current year allowance or discount activity. The Center

reports gifts of cash and other assets as temporarily restricted support if they are received or promised with

donor stipulations that limit the use of the donated assets to the Center's programs or to a future year.

When a donor restriction expires, that is, when a purpose restriction is accomplished or time restriction has

elapsed, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the

accompanying statements of activities as net assets released from restrictions. Contributions that are

restricted by the donor are reported as unrestricted if the restriction expires in the same reporting period in

which the contribution is recognized.

Grants and contract revenue

Grants and contract revenue are recognized as earned when the qualifying costs are incurred.

Amounts received in advance are recorded as deferred revenue in the accompanying statements of

financial position.

Publications and Web site fees

Publications and Web site fees are recognized as revenue in the period in which services are

provided. Fees received relating to future periods are recorded as deferred revenue in the accompanying

statements of financial position.

Revenue from all other sources is recognized when earned.

Functional allocation of 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

programs and supporting services benefited.

10.

CENTER OF CONCERN


JUNE 30, 2015 AND 2014

3. Pledges receivable, net

Pledges receivable consist of unconditional promises to give. Pledges expected to be collected in

more than one year are initially measured at fair value. The fair value is estimated by calculating the

present value of estimated future cash flows. The rate used to discount contributions to their net realizable

value at June 30, 2015 and 2014 is noted below.

The amount of the discounted pledges at June 30, 2015 and 2014 at their realizable present value is

reflected below:

2015 2014Unconditional promises to give expected to be collected in:

Less than one year $ 101,767 $ 82,700Less: Allowance for uncollectible amounts (1,000) (1,000)

Pledges receivable, current, net 100,767 81,700

One to five years 247,567 327,500Less: Discount to present value (3% interest rate) (19,662) (27,929)

Pledges receivable, non-current, net 227,905 299,571

Total pledges receivable, net $ 328,672 $ 381,271

4. Property and equipment, net

The following is a summary of property and equipment held at June 30:

2015 2014

Land $ 45,000 $ 45,000Building 205,000 205,000Building improvements 54,008 54,008Furniture and fixtures 30,333 30,333Computer equipment and software 39,311 39,311

Property and equipment 373,652 373,652

Accumulated depreciation and amortization (278,496) (257,068)

Total property and equipment, net $ 95,156 $ 116,584

Depreciation and amortization expense for the years ended June 30, 2015, and 2014, was $21,428

and $22,215, respectively.

11.

CENTER OF CONCERN


JUNE 30, 2015 AND 2014

5. Line of credit

In March 2015, the Center renewed a $125,000 revolving line of credit to support short-term

operating needs. The credit line is secured with a deed of trust on the Center's property. Interest is

payable monthly on the outstanding principal balance at the Wall Street Journal prime rate plus 6%. The

interest rate at June 30, 2015 and 2014 was 9.25%. The credit line was renewed for one year on April 2,

2016, and was paid in full and terminated as of August 4, 2016. During the year ended June 30, 2015, the

Center did not borrow against the line of credit and repaid $377. During the year ended June 30, 2014, the

Center borrowed $263,500 against the line of credit and repaid $138,417.

In May 2016, the Center entered into a one-year line of credit agreement with another financial

institution for $850,000. The credit line is secured with a deed of trust on the Center's property and a

blanket UCC lien on the business assets. Interest is payable monthly on the outstanding principal balance

at the Wall Street Journal prime rate plus 1.75%. The interest rate at August 8, 2016, the date these

financial statements were available for issue, was 5.25%.

6. Temporarily restricted net assets

Net assets were released from donor restrictions during the years ended June 30, 2015 and 2014,

for the following purposes:

2015 2014

To build the development program $ 91,590 $ 164,052Time-restricted assets 125,000 25,000

Total net assets released from restrictions $ 216,590 $ 189,052

At June 30, 2015, and 2014, temporarily restricted net assets were available for the following

purposes:

2015 2014

To build the development program $ 41,667 $ 33,257Global Advocacy on Sustainable Livelihoods 45,133 -Time restricted asset 252,500 377,500

Total temporarily restricted net assets $ 339,300 $ 410,757

12.

CENTER OF CONCERN


JUNE 30, 2015 AND 2014

7. Concentrations of support risk

During the years ended June 30, 2015 and 2014, the Center received $400,000 and $211,296,

respectively, from 2 donors which is approximately 51% and 32%, respectively, of its total support. Any

significant reduction in support may adversely impact the Center financial position and operations.

8. Retirement plan

The Center sponsors a retirement plan classified under Internal Revenue Code §403(b). All

employees who have attained the age of 18 are eligible to participate after completing six months of

service. The Center contributes a discretionary amount that is determined annually. The retirement plan

consists of retirement savings accounts to which the Center contributed $21,989 and $22,748 for the years

ended June 30, 2015 and 2014, respectively.

9. Related-party transactions

The Center received a short-term interest-free loan in the amount of $18,000 from a member of

management in December 2013, which the Center paid back in the same month.

13.

CENTER OF CONCERN


JUNE 30, 2015 AND 2014

10. Contingency

The Center had a net deficit in unrestricted assets for the years ended June 30, 2015 and 2014.

Management is looking to diversify the revenues by increasing contract revenues and took measures to

eliminate expenses where possible, including consolidating staffing requirements. The Center has

significant excess space in its legacy building and double-size tract of land. It is marketing its real

property for sale so that it can move to right-sized leased space closer to its business relationships. On the

basis of advice from its real estate advisors, the Center imputes a market value for its real property

significantly greater than its book value. Center management intends to invest the funds from the sale for

the Center's financial security and long-term sustainable growth and to supplement this capital with

planned giving and other appeals for support for long-term investment in anticipation of its 50th

anniversary. In the meantime, it has sufficient resources to meet working capital and other needs. As a

result of these actions, management expects to be able to continue to meet financial obligations as they

come due. Accordingly, these financial statements do not include any adjustments that would be necessary

should Center of Concern be unable to continue as a going concern.

11. Subsequent events

In preparing the financial statements, the Center has evaluated events and transactions for potential

recognition or disclosure through August 8, 2016, which is the date the financial statements were available

to be issued. Except for the item in note 5, there were no subsequent events that require recognition of, or

disclosure in, these financial statements.

14.

SUPPLEMENTAL INFORMATION

CENTER OF CONCERN

SCHEDULE OF FUNCTIONAL EXPENSES


Programservices

Managementand general Fundraising

Total supportservices

Totalexpenses

Salaries $ 150,059 $ 92,333 $ 141,764 $ 234,097 $ 384,156Payroll taxes 12,692 11,552 11,911 23,463 36,155Employee benefits 39,434 24,786 17,806 42,592 82,026Accounting fees - 10,005 - 10,005 10,005Insurance 5,182 5,340 - 5,340 10,522Marketing 9,807 4,377 210 4,587 14,394Bank service charges 217 5,880 282 6,162 6,379Conferences, conventions and meetings 13,074 1,070 500 1,570 14,644Professional fees 64,238 7,137 - 7,137 71,375Consultants 70,356 3,821 98 3,919 74,275Depreciation and amortization 4,776 16,156 496 16,652 21,428Memberships 4,195 340 - 340 4,535Repair and maintenance 4,033 6,558 453 7,011 11,044Travel 38,225 4,724 410 5,134 43,359Utilities 2,667 9,541 623 10,164 12,831Taxes and fees 4,765 16,117 495 16,612 21,377Meals and entertainment 1,974 3,548 142 3,690 5,664Printing and publications 21,388 - 2,256 2,256 23,644Postage and delivery 2,023 341 2,978 3,319 5,342Web site 4,295 36 - 36 4,331Supplies 6,433 3,061 2,286 5,347 11,780Miscellaneous 10 45 - 45 55Telephone and Internet 1,754 2,039 142 2,181 3,935Cost of goods sold 250 - 271 271 521Interest expense 2,904 9,825 302 10,127 13,031Bad debt expense - 4,000 - 4,000 4,000

Total expenses $ 464,751 $ 242,632 $ 183,425 $ 426,057 $ 890,808

15.

CENTER OF CONCERN

SCHEDULE OF FUNCTIONAL EXPENSES


Programservices

Managementand general Fundraising

Total supportservices

Totalexpenses

Salaries $ 247,796 $ 169,619 $ 138,602 $ 308,221 $ 556,017Payroll taxes 18,508 12,229 9,829 22,058 40,566Employee benefits 46,218 21,976 10,224 32,200 78,418Accounting fees - 9,662 - 9,662 9,662Insurance 5,234 5,364 - 5,364 10,598Marketing 2,071 4,467 2,189 6,656 8,727Bank service charges 1,145 5,337 788 6,125 7,270Conferences, conventions and meetings 7,972 386 520 906 8,878Professional fees 50,000 342 - 342 50,342Consultants 3,779 4,592 - 4,592 8,371Depreciation and amortization 7,397 14,062 756 14,818 22,215Memberships 5,220 751 500 1,251 6,471Repair and maintenance 3,774 8,609 476 9,085 12,859Travel 72,399 2,449 3,834 6,283 78,682Utilities 4,525 7,619 649 8,268 12,793Taxes and fees 8,126 15,447 829 16,276 24,402Meals and entertainment 1,827 1,550 325 1,875 3,702Printing and publications 31,121 - 3,836 3,836 34,957Postage and delivery 1,632 357 2,199 2,556 4,188Web site 7,769 1,030 169 1,199 8,968Supplies 6,546 1,940 2,111 4,051 10,597Miscellaneous - 1,434 - 1,434 1,434Telephone and Internet 3,156 1,845 162 2,007 5,163Cost of goods sold 743 - 155 155 898Interest expense - 3,872 - 3,872 3,872

Total expenses $ 536,958 $ 294,939 $ 178,153 $ 473,092 $ 1,010,050

16.

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