community foundation of the south okanagan …community foundation ofthe south okanagan similkameen...

COMMUNITY FOUNDATION OF THE SOUTH OKANAGAN SIMILKAMEEN

FINANCIAL STATEMENTS

DECEMBER 31, 2016

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COMMUNITY FOUNDATION OF THE SOUTH OKANAGAN SIMILKAMEENFINANCIAL STATEMENTS

DECEMBER 31, 2016

CONTENTS

INDEPENDENT AUDITORS'REPORT 1

STATEMENT OF FINANCIAL POSITION 2

STATEMENT OF CHANGES IN FUND BALANCES 3

STATEMENT OF OPERATIONS 4

STATEMENT OF CASH FLOWS 5

NOTES TO FINANCIAL STATEMENTS 6 -12

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HLWPh: 250 -492 -8821

Fax:250-492-8288CHARTERED PROFESSIONAL [email protected]

ACCOUNTANTS 502 Ellis StreetPenticton, BC

V2A4M3

INDEPENDENT AUDITORS' REPORT

To the Board of Directors

Community Foundation of the South Okanagan Similkameen

We have audited the accompanying financial statements of the Community Foundation of the South OkanaganSimilkameen which comprise the statement of financial position as at December 31, 2016 and statements ofchanges in fund balances, operations, and cash flows for the year then ended, and a summary of significantaccounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordancewith Canadian accounting standards for not-for-profit organizations, and for such internal control as managementdetermines is necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our

audit in accordance with Canadian generally accepted auditing standards. Those standards require that we complywith ethical requirements and 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 in thefinancial statements. The procedures selected depend on the auditors' judgment, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby 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 auditopinion.

Opinion

In our opinion, these financial statements present fairly, in all material respects, the financial position of theFoundation as at December 31, 2016, and its results of operations and cash flows for the year then ended inaccordance with Canadian accounting standards for not-for-profit organizations.

Report on Other Legal and Regulatory Requirements

As required by the Society Act of British Columbia, we report that, in our opinion, these financial statements havebeen prepared on a basis consistent with the basis on which the financial statements of the preceding year wereprepared.

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Penticton, BC

May 19, 2017

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COMMUNITY FOUNDATION OF THE SOUTH OKANAGAN SIMILKAMEENSTATEMENT OF FINANCIAL POSITION

as at December 31,2016

CURRENT ASSETS

Cash

Investments - Note 3

Accounts receivable

Prepaid expensesDue from funds - Note 4

CAPITAL ASSETS-Note 5

CURRENT LIABILITIES

Accounts payable - Note 6Due to funds - Note 4

INVESTED IN CAPITAL ASSETS

EXTERNALLY RESTRICTED

- Note 7

INTERNALLY RESTRICTED - Note 8

UNRESTRICTED

FUNDS HELD IN TRUST - Note 9

APPROVED BY THE BOARD:

ASSETS

Income and

Operating Restricted Grants Endowment 2016

Fund Fund Fund Fund Total

2015

Total

$ 27,782 $ 136,999 $ 55,042 $ 586,658 $ 806,481 $ 240,31477,426

1,393

5,956

31,983

1,243

517f965 1,364,778

9,228,561 9,305,987

2,636

5,956

9,042,445

1,988

1,389

144,540 654,964 1,421,063 9,815,219 10,121,060 9,286,136

1,989 : : : 1,989 1,614

S 146.529 £ 654.964 S 1.421.063 £ 9.815.219 S 10.123.049 $9.287.750

LIABILITIES

$ 17,522 $

17,522

FUND BALANCES

1,989

654,964 1,421,063

$ - $ 17,522 $ 14,7161,914,726 : -

1,914,726 17,522 14,716

1,989 1,614

5,102,227 7,178,254 6,540,862

2,798,266 2,798,266 2,598,211

127,018 - 127.018 132.347

129,007 654,964 1,421,063 7,900,493 10,105.527 9.273,034

§ 146.529 $ 654.964 JLLdZM^,,,^815,219 $10,123,049 ? 9,287,750

. PRESIDENT ^TREASURER

See accompanying notes to financial statements


COMMUNITY FOUNDATION OF THE SOUTH OKANAGAN SIMILKAMEENSTATEMENT OF CHANGES IN FUND BALANCES

year ended December 31,2016

Income and

Operating Restricted Grants Endowment 2016 2015

Fund Fund Fund Fund Total Total

Beginning balance $ 133,960 $ 640,408 $ 1,213,648 $ 7,285,018 $ 9,273,034 $ 9,062,687

Excess (deficiency) of revenue over

expenses (102,248) 21,592 320,894 592,255 832,493 210,347

Interfund transfers - Note 11 97,295 (7,036) (113,479) 23,220 : -

Ending balances S 129.007 £ 654.964 $ 1.421.063 £ 7.900.493 £10.105.527 S 9.273.034



COMMUNITY FOUNDATION OF THE SOUTH OKANAGAN SIMILKAMEENSTATEMENT OF OPERATIONS


Income and



REVENUES

Donations $ $ 223,843 $ $ 592,255 $ 816,098 $ 245,993Investment income - Note 3 18,341 2,561 705,100 - 726,002 464,679

Grants and sponsorships 68,901 11,168 9,703 - 89,772 100,118

Fundraising events 73,223 270 - - 73,493 84,479Managed funds fees 4,751 - - - 4,751 4,539

165,216 237,842 714,803 592,255 1,710,116 899,808

EXPENSES

Amortization of capital assets 1,021 - - - 1,021 1,247

Bank charges 106 - - - 106 73

Contract work 24,003 20,250 - - 44,253 22,378

Employee benefits 6,947 - - - 6,947 7,508

Entertainment 321 - - - 321 491

Events and seminars - 3,347 - - 3,347 8,383Fundraising activities 40,669 - - - 40,669 43,848

Grants paid - 191,416 340,813 - 532,229 331,644

Insurance 1,543 - - - 1,543 1,660Investment management fee - - 53,096 - 53,096 52,110

Licences, dues and fees 4,957 - - - 4,957 12,879Office and sundry 14,168 1,193 - - 15,361 23,669Professional development 1,901 - - - 1,901 5,821

Professional fees 21,031 - - - 21,031 15,526

Publicity and promotion 11,148 44 - - 11,192 27,609

Rent 10,800 - - - 10,800 7,200Telephone 2,971 - - - 2,971 2,623

Travel 4,931 - - - 4,931 6,118

Wages 120,947 - - - 120,947 118,674

267,464 216,250 393,909 : 877,623 689,461

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENSES £ (102.248) £ 21.592 £ 320.894 £ 592.255 £ 832.493 £ 210.347


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COMMUNITY FOUNDATION OF THE SOUTH OKANAGAN SIMILKAMEENSTATEMENT OF CASH FLOWS


Income and



OPERATING ACTIVITIES

Cash receipts from fundraising $ 70,904 $ 270 $ $ - $ 71,174 $ 102,258Cash received from contributors 37,601 175,936 9,703 - 223,240 97,844Cash receipts from contributors for

endowments - - - 552,778 552,778 199,429Cash receipts from interest and

dividends 333 98 - 707,563 707,994 630,723Cash paid for administration (229,634) (24,686) - - (254,320) (268,766)Grants paid - (191,416) (340,813) - (532,229) (331,644)

' (120,796) (39,798) (331,110) 1,260,341 768,637 429,844

INVESTING ACTIVITIES

Proceeds from sale of investments - 103,414 - 403,075 506,489 340,000Purchase of capital assets (1,396) - - - (1,396) (1,241)Purchase of investments - - - (707,563) (707,563) (676,895)

(1.396) 103,414 _ (304,488) (202,470) (338,136)

INCREASE (DECREASE) IN CASH (122,192) 63,616 (331,110) 955,853 566,167 91,708

CASH, BEGINNING OF YEAR 60,243 20,845 57,754 101,472 240,314 148,606

Interfund adjustments 89,731 52,538 328,398 (470,667) . _

CASH, END OF YEAR £ 27.782 £ 136.999 £ 55.042 £ 586.658 £ 806.481 $ 240.314

See accompanying notes to finan@& statements



NOTES TO FINANCIAL STATEMENTS

December 31,2016

1. NATURE OF THE FOUNDATION

The Community Foundation of the South Okanagan Similkameen (the "Foundation") is dedicated tobuilding healthy, vibrant, and livable communities across the South Okanagan Similkameen. TheFoundation makes beneficial and lasting improvements by connecting gifts of energy, ideas, time andmoney with the needs and opportunities of our communities.

The Foundation sees itself operating three "lines of business". As "brokers" we achieve our goalsthrough supporting others to achieve their legacies, primarily by working with donors to fulfill theirgiving goals. As "catalysts" we act and engage in social change, working as philanthropic leaders to builda culture of giving, and proactively conducting research to better understand community needs. As"facilitators" we encourage others to join as groups to create their dreams by collaborating andconvening with community partners to fulfill identified community needs.

The Foundation accepts donations received as contributions to its operations, endowment funds,restricted funds, or managed funds, as directed by donors. Grants are made to charitable organizationsthroughout the South Okanagan Similkameen using income earned from the investment of donatedassets.

The Foundation was incorporated on December 18,1991 under the Society Act of British Columbia andbecame a registered charity under the Income Tax Act on August 10,1992. As a result of its status as acharity, the Foundation is exempt from income taxes and may issue tax receipts to donors as long as itcomplies with the rules and regulations of the Income Tax Act.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of accounting

These financial statements have been prepared in accordance with Canadian accountingstandards for not-for-profit organizations (ASNPO).

b) Fund accounting

The Foundation follows the restricted fund method of accounting for contributions.

The Operating Fund reports the operating and administrative activities of the Foundation. Thisfund reports unrestricted resources and restricted administrative contributions includingdonations and investment income designated for administrative activities.

The Restricted Fund reports contributions for purposes designated or advised by the donor andthat are not to be held in perpetuity, grants designated for specific charitable purposes and therelated program expenses and grants to organizations.

The Income and Grants Fund reports all investment income earned from endowments that is notdesignated for administrative purposes, grants received for non-specific charitable activities,grants paid, and investment management fees.

The Endowment Fund reports resources contributed with the restriction that they be held inperpetuity. This fund also reports amounts that have been internally restricted for endowmentpurposes.




December 31,2016

2. SIGNIFICANTACCOUNTING POLICIES (continued)

c) Revenue recognition

Unrestricted contributions are recognized as revenue of the Operating Fund in the year receivedor receivable if the amount to be received can be reasonably estimated and collection isreasonably assured.

Restricted contributions designated for general operations are recognized as revenue of theOperating Fund in the year in which the related expenses are incurred. All other restrictedcontributions are recognized as revenue of the appropriate restricted fund.

Contributions for endowment purposes, including contributions of financial instruments, arerecognized as revenue in the Endowment Fund when received or receivable if the amount to bereceived can be reasonably estimated and collection is reasonably assured.

All other revenues are recorded when earned or when the amounts can be reasonably estimatedand collection is reasonably assured.

d) Cash and cash equivalents

Cash and cash equivalents include cash on hand, balances with banks and short-term depositswith original maturities of three months or less.

e) Financial instruments

Financial instruments are recorded at fair value on initial recognition.

Investments in term deposits and investment certificates are subsequently measured atamortized cost based on stated interest rates. Income from financial assets measured at

amortized cost and realized gains and losses are reported in net income. Transaction costs onfinancial assets measured at amortized cost are capitalized.

Investments in equity instruments that are quoted in an active market are subsequentlymeasured at fair value based on quoted market prices. Income from financial assets measured atfair value and gains and losses, whether realized or unrealized, are reported in net income.Transaction costs on financial assets measured at fair value are expensed when incurred.

Financial assets are assessed for impairment on an annual basis at the end of the fiscal year ifthere are indicators of impairment. If there is an indicator of impairment, managementdetermines if there is a significant adverse change in the expected amount or timing of futurecash flows from the financial asset. If there is a significant adverse change in the expected cashflows, the carrying value of the financial asset is reduced to the highest of the present value ofthe expected cash flows, the amount that could be realized from selling the financial asset or theamount realized by exercising its right to any collateral. If events and circumstances reverse in afuture period, an impairment loss will be reversed to the extent of the improvement, notexceeding the initial carrying value. Impairment losses, if any, are reported in net income in theyear the impairment is identified.


COMMUNITY FOUNDATION OF THE SOUTH OKANAGAN SIMILKAMEENNOTES TO FINANCIAL STATEMENTS

December 31,2016

2. SIGNIFICANTACCOUNTING POLICIES (continued)

f) Capital assets

Purchased capital assets are reported at cost. Contributed capital assets are recorded at the fairmarket value of the asset at the date of contribution. Amortization expense is recorded in theOperating Fund. Amortization has been recorded at the following rates, which have beenestablished by estimates of useful lives.

Furniture and equipment 20% decliningbalanceComputer equipment 100% declining balanceComputer software 5 year straight-line

Amortization is recorded at half the normal rate in the year of acquisition and no amortization istaken in the year of disposition.

Impairment of capital assets is reviewed whenever events or changes in the circumstancesindicate that the carrying value may not be recoverable. If the total of the estimatedundiscounted future cash flows is less than the carrying value of the asset, an impairment loss isrecognized for the excess of the carrying value over the fairvalue of the asset during the year theimpairment occurs.

g) Use of estimates

When preparing financial statements in accordance with ASNPO, the Foundation's managementis required to make estimates and assumptions relating to the:

• Reported amounts of revenue and expenses for the year;• Reported amounts of assets and liabilities; and

• Disclosure of contingent assets and liabilities at the report date.

Management's assumptions are based on a number of factors, including historical experience,current events and actions that the Foundation may undertake in the future, and otherassumptions that are believed to be reasonable under the circumstances. Actual results coulddiffer from those estimates under different conditions and assumptions. Estimates were usedwhen accounting for certain items, such as the useful livesof capital assets.

h) Donated supplies and services

The Foundation benefits from the value of volunteer time which has not been recognized in thefinancial statements, but the value of donated supplies and services, when the amount can bereasonably estimated has been recorded at fair market value.

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December 31,2016

HLW

INVESTMENTS

The carrying amounts of investments are comprised of the following:

2016 2015

At amortized cost:

Term deposits, including accrued interest in the amount of $212.(2015-$263) $ 77,426 $ 180,408

At fair value:

Portfolio of marketable securities with a cost of $8,223,054 (2015$8,338,002) 9,228,561 8,862,037

£ 9.305.987 $ 9.042.445

Term deposits are issued by TD Bank and earn interest at 0.40%. They have maturity dates betweenApril 15, 2017 and May 18, 2017.

Included in investment income are the following:2016 2015

Interest income $ 89,608 $ 83,662Income from investments carried at fair market value 262,158 564,486

Unrealized gains (losses) from investments carried at fair marketvalue 374,236 (183,469)

£ 726.002 $ 464.679

DUETO (FROM) FUNDS

Operating Restricted

Income and

Grants Endowment

Designated and donor advised funds $ - $ 516,511 $ $ (516,511)Friends of the Foundation donation 9,750 - - (9,750)Fair market value adjustments - - 1,364,778 (1,364,778)Expenses 22,233 1,454 : (23,687)

£ 31.983 £ 517.965 £1.364.778 £(1.914.726)

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December 31,2016

5. CAPITAL ASSETS

Furniture and equipmentComputer equipmentComputer software

ACCOUNTS PAYABLE

Trade payablesVacation pay payableWorkers compensation payable

Accumulated Net Book Value

Cost Amortization 2016 2015

$ 2,457 $ 1,166 $ 1,291 $ 1,6143,220 2,522 698 -

6.150 6.150 - -

-i. 11.827 J- 9.838 $ 1,989 S 1.614

2016 2015

$ 15,745 $ 13,4691,500 980

277 267

17.522 ± 14.716

EXTERNALLY RESTRICTED FUNDS

The Endowment Fund is subject to donor restrictions which state that the capital must be held inperpetuity. The earnings may be utilized to meet the Foundation's goals or reinvested in theendowment. The net assets in the Restricted Fund are restricted for future distributions in accordance

with the general wishes of the donors. The net assets in the Income and Grants Fund are restricted forthe distribution of grants to qualified donees.

8. INTERNALLY RESTRICTED FUNDS

Internally restricted funds represent amounts the Foundation's board of directors internally restrictedto be held for endowment purposes.

HLW

FUNDS HELD IN TRUST

The Foundation holds funds in trust for the Making a Difference Foundation in the amount of $930,323,and for the South Okanagan Performing Arts Centre (SOPAC) in the amount of $11,781. These assets, aswell as the related investment income and unrealized gains, are not reflected in the financialstatements of the Foundation.

10

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December 31,2016

10. VANCOUVER FOUNDATION

The Board of Directors has established an endowment fund of $200,000 with the VancouverFoundation. The capital of the fund is held permanently in trust by the Vancouver Foundation. Theendowment is invested with the income paid at least annually to the Community Foundation of theSouth Okanagan Similkameen for distribution to non-profit charitable organizations and for such othercharitable purposes contributing to the mental, moral, cultural and physical improvement of theinhabitants of the South Okanagan. The Foundation received $9,703 in 2016 ($9,210 in 2015).

As the Vancouver Foundation controls the endowment, the principal of that endowment is not includedon the statement of financial position.

11. INTERFUND TRANSFERS

Transfers between funds are made to allocate to the Operating Fund the notional fee foradministration of investments, and to record the reinvestment of income in the Endowment Fund.

12. DISBURSEMENT POLICY

The Foundation seeks to maximize annual granting while also covering costs, protecting againstinflation, and working towards having a market value buffer that ensures two years of granting inreserve. When determining the buffer the Foundation considers the five year annualized return oninvestments, the five year average inflation rate, and the administration fee as set by the Board ofDirectors from time to time.

13. WAGES AND BENEFITS

During the year, the executive director was paid wages and benefits totaling $80,000 ($72,500 in2015).

14. REQUEST FOR REFUND OF ENDOWMENT

The Foundation has received a petition and affidavit filed in the Supreme Court of British Columbiaon behalf of the Duokhobor Heritage Retreat Society. The Society is asking the Foundation toterminate the agency endowment agreement and transfer the capital of the Allan P. MarkinWhatshan Retreat Fund to the petitioner. The current market value of the fund is $111,423. Thepetition is scheduled to be heard on June 1, 2017.

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December 31,2016

15. FINANCIAL RISKS

The Foundation manages its investment portfolio to earn investment income and invests according toan investment policy approved by the Board. The Foundation is not involved in any hedgingrelationships through its operations and does not hold or use any derivative financial instruments fortrading purposes.

The Foundation manages interest-rate, market, credit and cash flow risk from its financial instrumentsby investing in a diversified portfolio managed by a nationally based investment counsel firm.

Additionally, the Foundation believes it is not exposed to significant liquidity risk as all investments areheld in instruments that are highly liquid and can be disposed of to settle commitments.

16. COMPARATIVE FIGURES

Certain of the comparative figures have been reclassified to conform to the current year'spresentation.

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