McGaw YMCA | Consolidated Financial Statements | June 30, 2011 · NOTES TO CONSOLIDATED FINANCIAL...

MCGAW YMCA

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2011

MCGAW YMCA

TABLE OF CONTENTS

INDEPENDENT AUDITORS� REPORT ........................................................................................ 3 CONSOLIDATED FINANCIAL STATEMENTS Statements of Financial Position.............................................................................................. 4 Statements of Activities............................................................................................................. 5 Statements of Functional Expenses ......................................................................................... 6�7 Statements of Cash Flows ......................................................................................................... 8 Notes to Financial Statements.................................................................................................. 9�26

MCGAW YMCACONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of June 30 2011 2010

ASSETS

CURRENT ASSETSCash and Cash Equivalents 1,684,573 $ 2,477,246 $ Investments, at Fair Value 4,167,947 3,658,456 Accounts Receivable 138,863 214,434 Short-Term Pledges Receivable, net 163,899 258,864 Beneficial Interest in Lead Trust 6,785 � Prepaid Expenses 161,965 177,855

Total Current Assets 6,324,032 6,786,855

NONCURRENT ASSETSInvestments, at Fair Value 513,910 415,571 Long-Term Pledges Receivable, net 60,174 147,211 Contribution Receivable - Charitable Remainder Trust 108,397 92,831 Beneficial Interest in Lead Trust 80,526 � Deferred Financing Costs, net of Accumulated Amortization 226,681 241,793 Interest Rate Cap Derivative 172,614 � Property and Equipment,

net of Accumulated Depreciation and Amortization 14,390,685 14,570,967 Total Noncurrent Assets 15,552,987 15,468,373

21,877,019 $ 22,255,228 $

LIABILITIES AND NET ASSETS

CURRENT LIABILITIESCurrent Portion of Capital Lease Obligation 10,749 $ 10,749 $ Current Portion of Notes Payable � 300,332 Accounts Payable and Other Accrued Expenses 437,290 490,558 Accrued Wages and Payroll Taxes 127,813 393,116 Accrued Vacation 307,946 279,698 Deferred Program and Camp Fee Revenue 1,154,804 1,052,476 Deferred Membership Dues 145,237 151,401 Funds Held - YMCA Sponsored Groups 146,300 161,022

Total Current Liabilities 2,330,139 2,839,352

NONCURRENT LIABILITIESNotes Payable 620,415 772,366 Long-Term Bonds Payable 5,600,000 6,300,000 Long-Term Portion of Capital Lease Obligation 13,438 24,187

Total Noncurrent Liabilities 6,233,853 7,096,553

NET ASSETSUnrestricted

General Unrestricted 11,833,774 11,142,921 Board-Designated for Specific Purposes 243,388 180,449

Total Unrestricted 12,077,162 11,323,370 Temporarily Restricted 465,045 322,814 Permanently Restricted 770,820 673,139

Total Net Assets 13,313,027 12,319,323

21,877,019 $ 22,255,228 $

See accompanying notes. 4

MCGAW YMCACONSOLIDATED STATEMENTS OF ACTIVITIES

For the Years Ended June 30

Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total

REVENUESSupport

Contributions and Grants 964,466 $ 192,233 $ 105,582 $ 1,262,281 $ 1,666,944 $ 125,001 $ 185,091 $ 1,977,036 $ United Way 19,850 19,850 20,384 19,849 40,233 Special Event Revenue 225,635 225,635 280,588 280,588

Net Assets Released from RestrictionsExpiration of Purpose Restrictions 55,553 (55,553) � 5,080 (5,080) � Expiration of Time Restrictions 122,224 (122,224) � 831,611 (831,611) �

Total Support 1,387,728 14,456 105,582 1,507,766 2,804,607 (691,841) 185,091 2,297,857 Program Revenues

Membership Dues, net 3,891,949 3,891,949 3,667,610 3,667,610 Child Care Fees, net 3,137,548 3,137,548 2,993,558 2,993,558 Camp Echo Fees, net 1,697,102 1,697,102 1,650,075 1,650,075 Transient and Extended Stay (Residence) Fees, net 1,057,700 1,057,700 1,015,047 1,015,047 Program Service Fees, net 1,223,346 1,223,346 1,095,845 1,095,845 Day Camp Fees, net 489,240 489,240 462,118 462,118 Fee Assistance (1,349,426) (1,349,426) (1,345,616) (1,345,616)

Total Program Revenues 10,147,459 10,147,459 9,538,637 9,538,637

Other RevenuesInterest and Dividends,

net of Investment Expenses of $22,668 and $14,018 120,023 120,023 117,318 117,318 Realized/Unrealized Net Gains on Investments 712,588 712,588 209,443 209,443 Forgiveness of Notes Payable 41,700 41,700 41,700 41,700 Change in Fair Market Value of Charitable Remainder Trust 15,565 15,565 14,192 14,192 Miscellaneous 245,679 245,679 254,028 254,028

Total Other Revenues, net 1,119,990 15,565 1,135,555 622,489 14,192 636,681

Total Revenues 12,655,177 30,021 105,582 12,790,780 12,965,733 (677,649) 185,091 12,473,175

EXPENSESProgram Services

Residence 926,904 926,904 862,458 862,458 Membership 1,252,685 1,252,685 1,164,880 1,164,880 Health and Wellness 1,795,806 1,795,806 1,713,314 1,713,314 Youth and Family 620,870 620,870 568,987 568,987 Aquatics 974,967 974,967 937,376 937,376 Child Care 3,087,115 3,087,115 2,889,407 2,889,407 Day Camp 269,378 269,378 213,584 213,584 Camp Echo 1,426,126 1,426,126 1,289,029 1,289,029

Total Program Services 10,353,851 10,353,851 9,639,035 9,639,035 Supporting Services

Management and General 1,068,458 1,068,458 792,192 792,192 Fundraising 313,130 313,130 640,624 640,624 Special Event Expenses 83,095 83,095 225,541 225,541

Total Supporting Services 1,464,683 1,464,683 1,658,357 1,658,357

Total Expenses 11,818,534 11,818,534 11,297,392 11,297,392

Bad Debt Loss (Recapture) (29,359) 7,901 (21,458) (40,400) 5,193 (35,207)

CHANGE IN NET ASSETS 836,643 59,380 97,681 993,704 1,668,341 (637,249) 179,898 1,210,990

Net Assets, Beginning, as Previously Reported 11,323,370 322,814 673,139 12,319,323 9,655,029 1,160,063 293,241 11,108,333

Net Assets Reclassified Among Asset Classes (82,851) 82,851 � (200,000) 200,000 �

NET ASSETS, ENDING 12,077,162 $ 465,045 $ 770,820 $ 13,313,027 $ 11,323,370 $ 322,814 $ 673,139 $ 12,319,323 $

20102011


MCGAW YMCACONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES

For the Year Ended June 30, 2011

Total Total Health and Youth and Program Management Special Supporting Total

Residence Membership Wellness Family Aquatics Child Care Day Camp Camp Echo Services and General Fundraising Events Services Expenses

Salaries 434,384$ 656,364$ 763,783$ 330,455$ 544,409$ 1,787,778$ 148,639$ 655,941$ 5,321,753$ 378,709$ 240,617$ $ 619,326$ 5,941,079$ Benefits/Payroll Taxes 122,954 174,716 188,994 83,701 127,708 495,570 24,503 177,194 1,395,340 103,796 66,768 170,564 1,565,904Supplies 48,303 28,438 59,873 57,936 65,354 220,350 52,119 268,686 801,059 68,647 68,647 869,706Professional and Contract Fees 3,897 17,365 128,509 44,306 3,767 99,509 859 19,629 317,841 78,619 78,619 396,460Interest Expense 4,843 3,330 12,608 1,272 4,359 1,272 605 636 28,925 17,202 17,202 46,127Facility Rental 18,945 232,309 251,254 � 251,254Vehicle Rental and Expense 1,008 497 1,810 6,180 949 42,779 7,809 86,300 147,332 271 271 147,603Promotion/Advertising 7,525 73,594 17,014 5,495 2,930 18,400 4,579 17,341 146,878 57,101 83,095 140,196 287,074Insurance 1,291 887 3,235 339 1,162 339 161 14,961 22,375 55,669 55,669 78,044Bond Maintenance Costs 11,987 8,241 30,043 3,147 10,789 3,147 1,498 1,573 70,425 4,495 4,495 74,920Bank Fees 83,455 15 30,727 22,790 136,987 10,897 10,897 147,884Computer Expense 2,744 2,744 � 2,744Dues And Subscriptions 235 70 195 12,991 1,890 4,535 19,916 5,798 5,798 25,714National YMCA Dues � 102,385 102,385 102,385Utilities 64,930 44,639 162,731 17,044 58,437 57,251 8,116 42,789 455,937 24,349 24,349 480,286Postage 3,103 10,497 7,384 1,373 1,135 6,244 864 2,915 33,515 8,849 5,745 14,594 48,109Telephone 4,390 2,466 3,505 1,958 815 10,296 448 5,727 29,605 1,345 1,345 30,950Repairs and Maintenance 61,925 40,437 164,944 15,440 52,936 21,386 7,352 27,843 392,263 37,544 37,544 429,807Training/Conference 487 539 1,400 384 123 3,820 15 9,030 15,798 43,731 43,731 59,529Laundry/Linen 5,364 38,424 5,733 49,521 � 49,521Travel 353 2,867 1,600 485 2,034 10,012 46 9,982 27,379 17,663 17,663 45,042Miscellaneous 809 1,215 223 632 4,043 6,922 24,091 24,091 31,013Real Estate Taxes 5,935 5,935 � 5,935Bad Debt Expense 34,996 1,151 75 3,154 138 15,573 257 55,344 (8,000) (8,000) 47,344

Total Expenses Before Depreciation and Amortization Expense 812,784 1,187,977 1,547,508 593,039 890,259 3,059,284 257,613 1,386,584 9,735,048 1,033,161 313,130 83,095 1,429,386 11,164,434

Depreciation and Amortization Expense 114,120 64,708 248,298 27,831 84,708 27,831 11,765 39,542 618,803 35,297 35,297 654,100

TOTAL EXPENSES 926,904 $ 1,252,685 $ 1,795,806 $ 620,870 $ 974,967 $ 3,087,115 $ 269,378 $ 1,426,126 $ 10,353,851 $ 1,068,458 $ 313,130 $ 83,095 $ 1,464,683 $ 11,818,534 $

Program Services Supporting Services


MCGAW YMCACONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES (Continued)

For the Year Ended June 30, 2010

Total Fundraising Total Health and Youth and Program Management and Special Supporting Total

Residence Membership Wellness Family Aquatics Child Care Day Camp Camp Echo Services and General Development Events Services Expenses

Salaries 413,161$ 630,637$ 701,514$ 313,824$ 522,143$ 1,659,594$ 113,669$ 572,221$ 4,926,763$ 165,603$ 398,608$ 7,361$ 571,572$ 5,498,335$ Benefits/Payroll Taxes 110,668 167,005 161,789 70,707 119,417 452,576 6,911 131,767 1,220,840 98,454 103,821 1,135 203,410 1,424,250Supplies 40,076 24,846 58,595 59,570 69,635 207,087 51,975 261,053 772,837 36,777 7,289 233 44,299 817,136Professional and Contract Fees 17,896 20,881 169,848 24,817 7,134 96,777 1,288 28,202 366,843 172,933 10,231 6,250 189,414 556,257Interest Expense 8,003 5,502 22,007 2,101 7,203 2,101 1,000 1,050 48,967 1,501 1,500 3,001 51,968Facility Rental 440 19,101 206,952 226,493 � 226,493Vehicle Rental and Expense 1,474 553 2,014 6,096 1,699 67,446 7,675 90,590 177,547 240 151 391 177,938Promotion/Advertising 7,173 36,438 4,440 2,540 1,355 9,244 2,117 6,273 69,580 22,948 45,763 196,193 264,904 334,484Insurance 1,334 917 3,343 350 1,200 350 167 15,758 23,419 69,286 250 69,536 92,955Bond Maintenance Costs 12,135 8,343 30,412 3,185 10,921 3,185 1,517 1,593 71,291 2,275 2,275 4,550 75,841Bank Fees/Computer Expense 82,186 30,251 25,059 137,496 5,745 5,390 1,404 12,539 150,035Dues And Subscriptions 167 35 70 5,415 989 4,020 10,696 3,870 1,884 5,754 16,450National YMCA Dues 104,770 104,770 104,770Utilities 59,940 41,209 150,225 15,734 53,946 63,783 7,493 41,457 433,787 11,239 11,239 22,478 456,265Postage 3,679 11,636 7,562 1,583 1,332 7,328 980 3,359 37,459 6,403 10,780 6,313 23,496 60,955Telephone 4,201 2,097 2,998 1,180 701 13,487 381 5,223 30,268 586 791 1,377 31,645Repairs and Maintenance 56,968 37,014 150,536 14,133 48,455 18,104 6,730 35,963 367,903 16,622 14,565 31,187 399,090Training/Conference 189 84 2,988 1,308 1,005 5,273 11 7,449 18,307 25,914 3,296 2,876 32,086 50,393Laundry/Linen 394 29,447 5,582 35,423 � 35,423Travel 378 1,414 1,486 1,475 1,787 10,549 29 5,493 22,611 9,031 5,201 14,232 36,843Miscellaneous 51 (118) 1,985 270 508 4,156 6,852 22,477 129 3,776 26,382 33,234Real Estate Taxes 5,869 5,869 � 5,869Bad Debt Expense 11,445 730 10 2,197 (55) 6,792 21,119 � 21,119

Total Expenses Before Depreciation and Amortization Expense 749,332 1,100,856 1,470,207 541,956 853,563 2,862,376 201,943 1,252,137 9,032,370 776,674 623,163 225,541 1,625,378 10,657,748

Depreciation and Amortization Expense 113,126 64,024 243,107 27,031 83,813 27,031 11,641 36,892 606,665 15,518 17,461 32,979 639,644

TOTAL EXPENSES 862,458 $ 1,164,880 $ 1,713,314 $ 568,987 $ 937,376 $ 2,889,407 $ 213,584 $ 1,289,029 $ 9,639,035 $ 792,192 $ 640,624 $ 225,541 $ 1,658,357 $ 11,297,392 $

Program Services Supporting Services


MCGAW YMCACONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended June 30 2011 2010

CASH FLOWS FROM OPERATING ACTIVITIESChange in Net Assets 993,704 $ 1,210,990 $

Adjustments to Reconcile Change in Net Assets toNet Cash Provided by Operating Activities

Depreciation and Amortization 654,100 639,644 Amortization of Deferred Financing Costs 15,112 15,113 Unrealized/Realized Net Gains on Investments (712,588) (209,443)Change in Fair Value of Derivative 15,386 �Allowance for Uncollectible Pledges (28,242) (62,907)Donated Property and Equipment � (12,573)Proceeds from Permanently Restricted Contributions (3,009) (134,850)Forgiveness of Notes Payable (41,700) (41,700)Changes in Operating Assets and Liabilities: (Increase) Decrease in: Accounts Receivable 75,571 (79,733) Pledges Receivable 210,244 680,406 Prepaid Expenses 15,890 (46,157) Contribution Receivable - Charitable Remainder Trust (15,566) (25,298) Beneficial Interest in Lead Trust (87,311) � Increase (Decrease) in: Accounts Payable and Other Accrued Expenses (53,268) 101,118 Accrued Wages and Payroll Taxes (265,303) 75,506 Accrued Vacation 28,248 8,476 Deferred Program and Camp Fee Revenue 96,164 20,417 Funds Held - YMCA Sponsored Groups (14,722) 28,823

Total Adjustments (110,994) 956,842

Net Cash Provided by Operating Activities 882,710 2,167,832

CASH FLOWS FROM INVESTING ACTIVITIESPurchases of Property and Equipment (473,818) (690,979)Proceeds from Sales of Investments 653,238 1,200,708 Purchases of Investments (548,480) (2,107,174)

Net Cash Used by Investing Activities (369,060) (1,597,445)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from Permanently Restricted Net Assets 3,009 134,850 Principal Payments on Notes Payable (410,583) (300,333)Payment for Interest Rate Cap Derivative (188,000) �Principal Payments on Capital Lease Obligation (10,749) (8,062)Principal Payments on Bonds Payable (700,000) �

Net Cash Used by Financing Activities (1,306,323) (173,545)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (792,673) 396,842

Cash and Cash Equivalents, Beginning 2,477,246 2,080,404

CASH AND CASH EQUIVALENTS, ENDING 1,684,573 $ 2,477,246 $

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash Paid for Interest 32,913 $ 52,817 $

Noncash ActivitiesProperty and Equipment Acquired under Capital Lease Obligation � $ 42,998 $


MCGAW YMCA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9

NATURE OF ORGANIZATION Founded in 1885, the McGaw YMCA (the Association), located in Evanston, Illinois, is a leading cause-driven charitable organization serving the needs of the Evanston Community. Originally created to "promote mental, moral, physical and social welfare", we have remained true to the spirit of that mission as �an open, charitable, membership association that promotes growth in spirit, mind and body through programs and services that have continued to expand to better serve everyone in our diverse community� as well as surrounding communities. Our programs are designed to focus on youth development, healthy living and social responsibility. In order to make the benefits of our programs and services affordable to the entire community, we provide sliding scale membership and program fees based on household income adjusted for the number of individuals in the household. In addition, we provide scholarships, camperships and program subsidies for early childhood education, day and resident camp, tutoring and mentoring programs, and for low and very low-income resident members. Over 12,000 members and another 8,000 community participants enjoy a complete health and wellness experience through a fully equipped health and wellness center, enhanced training options and targeted programs for all age groups, an aquatic program that includes swim lessons and teams in our two pools, a stand-alone Children�s Center with 19 classrooms for infants through school age providing early childhood education and enrichment programs, a summer resident camp in Fremont, Michigan serving over 1,300 children a year as well as a resident member program that provides safe, affordable housing. The Association is supported primarily through member dues, program service fees, donor contributions, grants, governmental loans and the United Way. In 2011, 3 donors contributed 16% of total support. In 2010, two donors contributed 23% of total support. NOTE 1�SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to assist in understanding the Association�s financial statements. The financial statements and notes are representations of management who is responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. BASIS OF CONSOLIDATION

The financial statements of the Association and the YMCA Camp Echo Corporation have been consolidated in accordance with the Financial Accounting Standards Board (FASB) provisions for consolidation. All inter-organizational transactions have been eliminated in consolidation. Substantially all of the revenues and assets are associated with the Association.

BASIS OF ACCOUNTING

The accompanying financial statements have been prepared using the accrual basis of accounting. Therefore, revenues are recognized when earned and expenses are recognized when incurred.

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10

NOTE 1�SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

BASIS OF PRESENTATION

Financial statement presentation follows the requirements of the FASB Codification. This guidance requires the Association to report information regarding its financial position and activities into three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. These classes of net assets are based on the existence or absence of externally (donor) imposed restrictions. Accordingly, net assets of the Association and changes therein are classified and reported as follows:

UNRESTRICTED NET ASSETS

Unrestricted net assets are not subject to donor-imposed stipulations and reflect revenues earned and expenses incurred in the operation of all Association activities. Investment earnings are reported as revenue in unrestricted net assets unless such amounts are restricted by the donor.

TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are subject to donor-imposed stipulations that can be removed through the passage of time (time restrictions) or actions of the Association (purpose restrictions). A significant portion of these net assets results from pledges receivable that have an implied donor-imposed restriction, which will elapse with the passage of time.

PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets are subject to restrictions imposed by donors who require that the principal of these classes of net assets be invested in perpetuity and only the investment earnings be expended.

USE OF ESTIMATES The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results may differ from those estimates. CASH EQUIVALENTS Cash and cash equivalents are comprised of petty cash, cash in banks and money market funds. Money market funds are recorded at cost, which approximates fair value based on quoted market prices.

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11


ACCOUNTS RECEIVABLE

Receivables consisting of program fees are reported at net realizable value, which is the amount management expects to collect from balances outstanding at year-end. Based on management�s assessment of the credit history of individuals having outstanding balances and taking into consideration the age of past due accounts, an assessment of the ability to pay, as well as current relationships, management considers receivables to be fully collectible at June 30, 2011 and 2010. Accordingly, no allowance for doubtful accounts is required. Individual accounts are written off when collection appears doubtful.

DEFERRED FINANCING COSTS

Deferred financing costs represent the unamortized balance of costs associated with the issuance of tax-exempt bonds. These costs are amortized over 25 years through 2027, which is the maturity date of the related bonds. Amortization expense was $15,112 for 2011 (See Note 12) and $15,113 for 2010. Amortization expense for each of the next five years is expected to be $15,112.

INVESTMENTS

Investments consist of marketable securities that are stated at fair value based on quoted market prices. Unrealized gains or losses on such securities are based on the change in fair value of the assets from the beginning to the end of the fiscal year. Realized gains or losses are based on the change in fair value of the assets from the beginning of the fiscal year to the date of sale.

Effective July 1, 2010, the Association adopted the guidance in the FASB Codification topic related to financial statement presentation and disclosure of the fair value measurements of equity securities. The standard recommends that disclosures should be made by major security type, determined based on the nature and risks of the security and considering the activity or business sector, vintage, geographic concentration, credit quality, or economic characteristics. The adoption of the guidance had no effect on the Association�s financial statements as of July 1, 2010 and resulted in no adjustment for the year ended June 30, 2011.

FINANCIAL INSTRUMENTS

The FASB Codification related to derivatives and hedging establishes accounting and reporting standards for derivative instruments. This standard requires an entity to recognize all derivatives as either assets or liabilities, and measure those instruments at fair value. Derivatives that do not qualify as a hedge must be adjusted to fair value in earnings. If the derivative does qualify as a hedge under the standards, changes in the fair value will either be offset against the change in fair value of the hedged assets or liabilities, or recognized in the statement of activities in revenues.

Interest Rate Cap

In November, 2010, the Association entered into an interest rate cap agreement with a notional principal amount of $5,000,000 maturing in November 2023. The agreement caps the borrower�s interest rate on bonds payable to a rate of 3.00%. The one-time payment of $188,000 for the cap agreement is recorded as an asset on the Statements of Financial Position as of June 30, 2011. The Association�s objective for using this instrument is to protect its cash flows from fluctuations in interest rates. This asset is subsequently measured at fair value with the resulting changes in fair value of the derivative, as provided by the bank, recorded as interest expense on the statements of functional expenses. The decrease in the fair value of the cap agreement for 2011 was $15,386.

MCGAW YMCA


12

NOTE 1�SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) PROPERTY AND EQUIPMENT Property and equipment purchases of $500 or more are recorded at cost. Depreciation and amortization, including assets under capital lease, are calculated using the straight-line method over the estimated useful lives of the assets or life of the lease. Major renewals and betterments, which extend the useful life of an asset, are capitalized while routine maintenance and repairs are expensed as incurred. Gains or losses on dispositions of property and equipment are included in the Statements of Activities. Asset Useful Life Building and Building Improvements................................................................................ 40 years Vehicles, Furniture and Equipment................................................................................... 5 - 8 years Computer Hardware............................................................................................................ 5 years Phone System Under Capital Lease................................................................................... 60 months Computer Software.............................................................................................................. 3 years PUBLIC SUPPORT AND PLEDGES RECEIVABLE

Public support consists of cash and securities received from donors. Securities and other assets received as contributions are recorded at fair market value at the date of gift.

Unconditional promises to give contributions are recorded as revenue when the promises are received. These pledges receivable have been discounted to their estimated present values. Management assesses the collectibility of pledges receivable based on historical experience and has established an allowance for uncollectible pledges accordingly. When amounts are determined to be uncollectible they are written off and charged to bad debt loss, whereas a reduction of the allowance for uncollectible pledges is reflected as bad debt recapture.

CONTRIBUTED FACILITIES AND SERVICES

The Association utilizes, at no cost, a parking lot owned by a third party. As no fair value is provided to the Association, the contributed facilities and corresponding expense are not reflected in the financial statements. In addition, a significant amount of donated services are contributed to the Association by various individuals who volunteer their time and perform a variety of tasks that assist the Association with specific programs and various committee assignments. The Association received more than 32,000 volunteer hours in both 2011 and 2010, from over 1400 volunteers. The value of these services is not reflected in these financial statements since they do not meet the criteria for recognition under the FASB Codification.

PROGRAM FEES, GRANTS AND DEFERRED REVENUE

Program fees and grant revenues are recognized as revenue when earned. Certain organizations involved in exchange transactions may specify monies be used in a specific future period and, as such, they are initially recorded as deferred revenue, and are then recognized in the period for which they were designated.

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13


FUNCTIONAL ALLOCATION OF EXPENSES

Expenses are charged to programs and supporting services on the basis of periodic time and expense studies as well as direct allocation of expenses incurred or estimates relating to specific usage. In 2011, the Association changed its method of allocation for fundraising expenses to better conform to industry practices and updated its overall allocation percentages to more accurately portray usage of services or support. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Association.

In 2011, Building Service Expenses totaling $1,585,616 were allocated by program on the Statements of Functional Expenses. Building Services Expenses included Salaries and Wages of $534,866, Benefits of $146,185, Utilities of $405,812, Maintenance of $367,612, and various other items. In 2010, Building Service Expenses totaling $1,477,092 were allocated by program on the Statements of Functional Expenses. Building Service Expenses included Salaries and Wages of $484,436, Benefits of $124,701, Utilities of $374,625, Maintenance of $336,493, and various other items.

INCOME TAXES

The Association is a nonprofit organization which has been granted an exemption from federal income taxes as a public charity under Section 501(c)(3) of the Internal Revenue Code for all business income related to its tax-exempt purpose. No unrelated business income tax provisions were required for 2011 or 2010. The Association is similarly classified by the State of Illinois.

The Association files its forms 990 in the U.S. federal jurisdiction and the office of the state's attorney general for the State of Illinois. The Organization is generally no longer subject to examination by the Internal Revenue Service for years before 2007.

Effective July 1, 2009, the Association adopted the guidance in the FASB Codification topic related to uncertainty in income taxes which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements uncertain tax positions that the Association has taken or expects to take in its tax returns. Under the guidance, the Association may recognize the tax benefit from an uncertain tax position only if it is "more likely than not� that it is sustainable, based on its technical merits. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. The adoption of the guidance had no effect on the Association�s financial statements as of July 1, 2009 and resulted in no adjustment for unrecognized income tax benefits for the years ended June 30, 2011 or 2010. The Association believes that it has appropriate support for the positions taken on its returns. CONCENTRATION OF CREDIT RISK The Association maintains cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits. The Association has not experienced any losses in such accounts and believes they are not exposed to any significant credit risk on cash and cash equivalents.

Investments are exposed to risks in the market. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of investments will occur in the near-term and that such changes could materially affect the Organization and the amounts reported in the Statements of Activities.

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NOTE 2�INVESTMENTS

Current and noncurrent investments consist of the following: 2011 2010 Equity Index Mutual Funds EAFE Index Fund ..................................................................................$ 543,065 $ 403,707 Emerging Markets Fund........................................................................ 401,115 326,714 Mid Cap Fund......................................................................................... 454,373 393,156 Total Stock Market Fund....................................................................... 1,462,050 919,800 Federal HOME Loan Bank Notes ............................................................ � 423,052 Corporate Bonds ........................................................................................ 1,129,842 1,106,883 Certificates of Deposit ............................................................................... 513,910 415,571 Municipal Bonds........................................................................................ 177,502 85,144

$ 4,681,857 $ 4,074,027 At June 30, 2011, Corporate Bonds included the following: Investment Grade Bonds of intermediate-term 49%, short-term duration 25% and long-term duration 4%, Below Investment Grade Bonds of short term duration 9% and intermediate duration 9% and Government Bonds of Investment Grade and intermediate duration 4%.

At June 30, 2010, Corporate Bonds included the following: Investment Grade Bonds of intermediate-term 55%, short-term duration 25% and long-term duration 4%, Below Investment Grade Bonds of short term duration 8% and intermediate duration 8%.

The above totals do not include $230,053 of money market funds at June 30, 2011 and $1,150,890 at June 30, 2010 which is included in cash and cash equivalents on the Statements of Financial Position. NOTE 3�PLEDGES RECEIVABLE

Pledges receivable represent unconditional promises to give.

Pledges at June 30 consist of items receivable in:

2011 2010 Less than One Year ................................................................................... $ 172,525 $ 299,457 One to Five Years ...................................................................................... 74,500 171,350 247,025 470,807 Less: Discount to Net Present Value........................................................ 10,601 24,139 Less: Allowance for Uncollectible Pledges ............................................... 12,351 40,593 22,952 64,732 Net Pledges Receivable ............................................................................. 224,073 406,075 Less: Current Portion................................................................................ 163,899 258,864 Long Term Portion ....................................................................................$ 60,174 $ 147,211

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NOTE 3�PLEDGES RECEIVABLE (Continued)

The discount rate used in determining the net present value of pledges receivable is 4% for pledges received in the year ended June 30, 2011 and 6% for pledges received prior to the current year. There were pledges receivable from Board members and employees totaling $45,000 at June 30, 2011 and $100,000 at June 30, 2010. NOTE 4�CHARITABLE REMAINDER TRUST

The Association was named as a beneficiary of a charitable remainder trust that began in 2001. The charitable remainder trust provides for the payment of distributions to the designated beneficiary over the designated beneficiary�s lifetime. At the end of the trust�s term, one-third of the remaining assets are available for the Association�s use. The portion of the trust attributable to the present value of the future benefits to be received by the Association was recorded in the Statements of Activities as a temporarily restricted contribution in 2009, when the Association was notified of the trust and in the Statements of Financial Position as a beneficial interest in a charitable remainder trust. The Association has not been designated as the trustee of the trust and, therefore, does not hold any of the trust assets, nor is liable for payment of distributions to the beneficiary. The present value of the estimated future payments was calculated using a discount rate of 8.00% and the estimated life expectancy of the beneficiary. NOTE 5�CHARITABLE LEAD TRUST

During 2011, a donor established a charitable lead trust naming the Association as a lead beneficiary. Under the terms of the agreement, the Association will receive $7,142 per year for 19 years commencing in the year ending June 30, 2012. The present value of the future payments to be received are estimated to be $87,311 at June 30, 2011 using a 4% discount rate. The discount for the year ended June 30, 2011 was $41,602 and the allowance for uncollectibility was $6,785. Based on the donor�s intent, $62,861 is reported as a permanently restricted contribution and $24,450 is reported as a temporarily restricted contribution.

NOTE 6�FAIR VALUE MEASUREMENTS

The FASB Codification provides a framework for measuring fair value using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Association has the ability to access.

Level 2 Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data

by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

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NOTE 6�FAIR VALUE MEASUREMENTS (Continued)

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset�s or liability�s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, 2011 and 2010.

Level 1 Fair Value Measurements

The fair values of common stock, equity mutual funds, corporate bonds, municipal bonds and U.S. government securities are based on quoted market prices, when available.


The fair value of the certificates of deposit is based on amortized cost or original cost plus accrued interest.


The beneficial interests in a charitable remainder trust and charitable lead trust are not actively traded and significant other observable inputs are not available. Thus, the fair value of the beneficial interests in the charitable remainder trust and charitable lead trust are determined by discounting the related cash flows based on current yields of similar instruments with comparable durations. The fair value of the interest rate cap agreement is provided to the Association by the bank and is based on the bank�s internal proprietary pricing models and estimates, certain assumptions, and available market data.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Association believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Fair values of assets measured on a recurring basis at June 30, 2011 are as follows:

Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs

Fair Value (Level 1) (Level 2) (Level 3)

Investments............................................... $ 4,681,857 $ 4,167,947 $ 513,910 $ Contributions Receivable -Charitable Remainder Trust.................................. 108,397 108,397 Beneficial Interest in Charitable Lead Trust............................................ 87,311 87,311 Interest Rate Cap Derivative................... 172,614 172,614

Total........................................................... $ 5,050,179 $ 4,167,947 $ 513,910 $ 368,322

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NOTE 6�FAIR VALUE MEASUREMENTS (Continued) Fair values of assets measured on a recurring basis at June 30, 2010 are as follows:

Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs

Fair Value (Level 1) (Level 2) (Level 3) Investments............................................... $ 4,074,027 $ 3,658,456 $ 415,571 $ Contribution Receivable � Charitable Remainder Trust ................................... 92,831 � � 92,831 Total........................................................... $ 4,166,858 $ 3,658,456 $ 415,571 $ 92,831 Fair values for investments are determined by reference to quoted market prices and other relevant information generated by market transactions. Fair value for the contribution receivable from a charitable remainder trust is determined by calculating the present value of the future distributions expected to be received, using published life expectancy tables and a 6.00% discount rate. Fair value for the beneficial interest in the charitable lead trust is determined by calculating the present value of the future distributions expected to be received over its 19-year term, using a 4.00% discount rate. The table below presents information about the changes in the contribution receivable�beneficial interest in the charitable remainder and lead trust, which is measured at fair value on a recurring basis using significant unobservable inputs: Balance, July 1, 2010 ............................................................................................................. $ 92,831 Contribution of Charitable Lead Trust, net of Discount and Allowance ............................ 87,311 Change in Market Value and Discount Accretion of Charitable Remainder Trust........... 15,566 June 30, 2011 .......................................................................................................................... $ 195,708

Balance, July 1, 2009 ............................................................................................................. $ 67,533 Change in Market Value and Discount Accretion of Charitable Remainder Trust........... 25,298 June 30, 2010 .......................................................................................................................... $ 92,831

The change in value in beneficial interest is included in other gains and losses in the Statement of Activities and is related to an asset still held at the Statement of Financial Position date.

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NOTE 7�PROPERTY AND EQUIPMENT Property and equipment consist of the following: 2011 2010 Land............................................................................................................$ 1,015,484 $ 1,015,484 Building...................................................................................................... 1,479,126 1,479,126 Building Improvements............................................................................. 19,341,209 18,955,345 Furniture and Equipment......................................................................... 2,755,372 2,746,613 Computer Hardware.................................................................................. 120,684 252,344 Computer Software.................................................................................... 313,903 290,896 Vehicles ...................................................................................................... 215,006 191,607 25,240,784 24,931,415 Accumulated Depreciation and Amortization ......................................... 10,850,099 10,360,448 $ 14,390,685 $ 14,570,967 Depreciation and Amortization Expense ................................................. $ 654,100 $ 639,644 NOTE 8�CAPITAL LEASE The Association leases a phone system under a capital lease with a cost of $42,998. The asset and liability under the capital lease are recorded at the fair value of the asset. The obligation represents the present value of the balance due in future years for the lease of the equipment. No discount has been applied as the interest amount was deemed immaterial. Accumulated amortization for this equipment was $12,899 at June 30, 2011 and $4,300 at June 30, 2010 with amortization included in depreciation and amortization expense on the Statements of Activities. The following is a schedule of the future minimum lease payments under the capital lease, by years, and the present value of those payments: Year Ending June 30 2012 ...................................................................................................................................... $ 10,749 2013 ...................................................................................................................................... 10,749 2014 ...................................................................................................................................... 2,689 Total......................................................................................................................................... 24,187 Less Amounts Representing Interest.................................................................................... � Present Value of Net Minimum Lease Payments ................................................................ 24,187 Less Current Portion.............................................................................................................. 10,749 Long-Term Portion ................................................................................................................. $ 13,438

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NOTE 9�NOTES PAYABLE

2011 2010

Note Payable to Illinois Housing Development Authority (IHDA) in connection with the funding of the rehabilitation work on the residence floors. The loan is a 20-year term due April 1, 2016, at 0% interest, with the entire principal balance forgiven at maturity unless certain material defaults exist as defined in the loan agreement. The note is secured by a third mortgage on the property, as well as other security and collateral as detailed in the Third Mortgage, Security Agreement and Collateral Assignment of Rents and Leases Agreement (See Note 11 for additional information). ...........................................................................................$ 415,891 $ 415,891

Note Payable to County of Cook, Illinois (lender) under its HOME Investment Partnership Program in connection with the funding of the rehabilitation work on the residence floors. The loan will be forgiven at the rate of 1/20th of the principal amount annually if the Association is in compliance with the rules and regulations of the HOME program as determined by an annual review by the lender. The maturity date of the loan is December 1, 2016. The note is secured by a junior mortgage on the property, as well as other security and collateral as detailed in the HOME Investment Partnerships Loan Agreement (See Note 11 for additional information). ..................................................... 204,524 246,223

Note Payable to officer, annual principal payments of $100,000 with accrued interest at 6.32% compounded and payable annually. The maturity date of the loan is June 1, 2011. ........................................................................................................ � 100,000

Note Payable to JPMorgan Chase Bank, N.A., monthly principal payments of $5,694 plus accrued interest at the adjusted rate (LIBOR plus .175%). The maturity date of the loan was March 15, 2012, the note was paid off in full October 14, 2010. .................................................................................... � 119,584

Note Payable to Harris, N.A., monthly principal payments of

$11,000 plus accrued interest at the prime rate less .75%. The maturity date of the loan was November 30, 2011, the note was paid off in full September 29, 2010. ...................................... � 191,000

620,415 1,072,698 Less Current Portion................................................................................. � 300,332 Long-Term Portion ....................................................................................$ 620,415 $ 772,366 The expected forgiveness of the Note Payable to the County of Cook under the HOME Investment Partnership Program is $41,700 per year through the maturity date.

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NOTE 10�BONDS PAYABLE 2011 2010 Bond Payable (Series 2002) to Illinois Development Finance

Authority in connection with the issuance of Adjustable Rate Demand Revenue Bonds, at a rate of 3.7%, secured by an irrevocable letter of credit issued by a bank (See Note 12 for additional information). ...................................................................$ 5,600,000 $ 6,300,000

Less Current Portion................................................................................. � � Long-Term Portion ....................................................................................$ 5,600,000 $ 6,300,000 Maturities or mandatory redemptions (if earlier) on the above debt are as follows: Year Ending June 30 2012 ...................................................................................................................................... $ � 2013 ...................................................................................................................................... � 2014 ...................................................................................................................................... 100,000 2015 ...................................................................................................................................... 400,000 2016 ...................................................................................................................................... 400,000 Thereafter ............................................................................................................................... 4,700,000 $ 5,600,000 NOTE 11�CONSTRUCTION FUNDING AND LOAN ARRANGEMENTS �

RESIDENCE FACILITY In connection with the rehabilitation of the Residence Facility, the Association entered into loan agreements with the Illinois Housing Development Association (IHDA) and County of Cook, Illinois under its HOME Investment Partnership Program to borrow $1,334,000. As security for these loans various mortgage and other collateral agreements were entered into (See Note 9). The construction was substantially completed at June 30, 1998. NOTE 12�CONSTRUCTION FUNDING AND LOAN ARRANGEMENTS �

FAMILY ACTIVITY CENTER In connection with the construction of the Family Activity Center, the Association entered into a loan agreement with IDFA to borrow $6,300,000 through the issuance by IDFA of Adjustable Rate Demand Revenue Bonds. Interest is payable monthly and the interest rate is determined using a variable rate as defined in the agreement. During the years ended June 30, 2011 and 2010, the weighted average interest rate was .36% and .47%, respectively. The bonds operated in a weekly floating mode bearing an interest rate of .14% and .41%, at June 30, 2011 and 2010, respectively.

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NOTE 12�CONSTRUCTION FUNDING AND LOAN ARRANGEMENTS � FAMILY ACTIVITY CENTER (Continued)

Pursuant to the above agreement, the Association has entered into a related reimbursement and irrevocable letter of credit agreement with a bank that provides for a portion of the Association�s assets, of approximately the amount of the carrying value of the bond principal and interest, to serve as collateral. The letter of credit totaled $5,693,333 at June 30, 2011 and $6,405,000 at June 30, 2010. In the unlikely event that the remarketing agent is unable to remarket the bonds, the bonds become pledged to the bank under the letter of credit. The Association paid quarterly letter of credits fees totaling $59,809 for 2011 and $60,729 for 2010. The letter of credit was extended and now expires May 31, 2014. The aforementioned agreements contain several financial and operating covenants, the most restrictive of which relate to liquidity requirements, additional indebtedness and investment policy. The Association was in compliance with all financial and operating covenants on June 30, 2011. Bond issuance costs incurred for services in connection with the bond financing totaled $354,097. The bonds were issued in June 2002. A cash escrow account was established to handle the disbursement of the funds. There was no balance in this account at June 30, 2011 and June 30, 2010. Effective November 15, 2010, the Association entered into an interest rate cap agreement (�Cap�) with a third party bank which limits the LIBOR rate the Association may be required to pay to 3.00% on a total notional principal amount of $5,000,000. The Cap agreement is effective through November 15, 2023. The Association paid a one-time fee of $188,000 for the Cap which is adjusted to fair value based upon periodic valuation provided by the bank. The Family Activity Center began operations in July 2002. NOTE 13�BOARD-DESIGNATED NET ASSETS Unrestricted net assets include the following board designated amounts: 2011 2010

Tom Hebbard Memorial Fund ..................................................................$ 83,499 $ 83,499 Ken Eckholt Testamentary Gift ............................................................... 96,750 96,750 Burning Triangle Fund for General Camp Echo Support ...................... 400 200 Camp Echo Fund ....................................................................................... 62,739 � $ 243,388 $ 180,449

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NOTE 14�TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets at June 30 were as follows: 2011 2010

Pledges Receivable .................................................................................... $ 9,504 $ 73,169 Contribution Receivable � Charitable Remainder Trust........................ 108,397 92,831 Charitable Lead Trust............................................................................... 24,450 � Foster Reading Program ........................................................................... 6,940 12,858 Camp Echo ................................................................................................. 246,798 75,000 Robert Ingram Leitch Memorial Fund..................................................... 50,000 50,000 Carlyle E. and Elizabeth W. Anderson Fund .......................................... 18,956 18,956 $ 465,045 $ 322,814 The principal of $50,000 for the Robert Ingram Leitch Memorial Fund was donated on October 13, 1972. The principal is restricted for 50 years under the terms of Mr. Leitch�s will. Investment earnings will be distributed to support youth programs annually. Certain pledges receivable are restricted for specific purposes by the donors and the remaining are time restricted. Camp Echo amounts in 2011 are restricted for the renovation of the camp and for scholarship purposes. Amounts in 2010 were restricted for renovation of the sewer and for scholarships. NOTE 15�DONOR DESIGNATED ENDOWMENT/PERMANENTLY RESTRICTED NET

ASSETS

During the year ended June 30, 2009, the Organization adopted the Codification standards for �Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds�. The Codification provides guidance as well as additional disclosures that are required for an organization�s endowment funds (both donor-restricted endowment funds and board-designated endowment funds) whether or not the organization is subject to UPMIFA.

As the State of Illinois enacted UPMIFA effective June 30, 2009, the provisions of which apply to endowment funds existing on or established after that date, the Board of Directors determined that the majority of the Association�s permanently restricted net assets meet the definition of endowment funds under UPMIFA. Based on the Association�s interpretation of UPMIFA, Association management reviewed all of its endowment funds, and created a document stating the �purpose� for each fund and the board reviewed and approved all fund designations. Thus for the years ended June 30, 2011 and 2010, the Association follows the Uniform Management of Institutional Funds Act of 1972 (UMIFA) and its own governing documents. UMIFA requires the historical dollar amount of a donor-restricted endowment fund to be preserved. In the absence of donor restrictions, the net appreciation on a donor-restricted endowment fund is spendable under UMIFA. Some of the Association�s donors have placed restrictions on the use of the investment income or net appreciation resulting from the donor-restricted endowment funds, and these are recorded as temporarily restricted until released from restriction when the intended purpose has been met.

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NOTE 15�DONOR DESIGNATED ENDOWMENT/PERMANENTLY RESTRICTED NET ASSETS (Continued)

The Board of Directors has determined that the majority of the Association�s contributions are subject to the terms of its governing documents. Certain contributions are received subject to other gift instruments, or are subject to specific agreements with the Association. Under the terms of the Association�s governing documents, the Board of Directors has the ability to distribute so much of the original principal of any trust or separate gift, devise, bequest, or fund, as the Board in its sole discretion shall determine. As a result of the ability to distribute the original principal, all contributions not classified as temporarily restricted or permanently restricted are classified as unrestricted net assets for financial statement purposes.

Endowment Investment and Spending Policies The Association has adopted investment and spending polices, approved by the Board of Directors, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of these endowment assets over the long-term. The Association�s spending and investment policies work together to achieve this objective. The investment policy establishes an achievable return objective through diversification of asset classes. The current long-term return objective is to return 4%, net of investment fees. Actual returns in any given year may vary from this amount. To satisfy its long-term rate-of-return objectives, the Association relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Association targets a diversified asset allocation that places an emphasis on U.S. Government bonds, corporate bonds, money market, and equity-based investments to achieve its long-term return objectives within prudent risk parameters. The spending policy calculates the amount of money annually distributed from the Association�s various endowed funds to support the mission of the Association. The current policy is to transfer to the Operating account an annual average of 4% of funds invested in the Association�s Wealth Accumulation Strategy (equity holdings of at least 10 years). For each fiscal year�s budget, the Board shall authorize for the following fiscal year a fund payout within the range of 0% to 5% based on a March 31st evaluation. Accordingly, over the long-term, the Association expects its current spending policy to allow its endowment assets to grow. This is consistent with the Association�s objective to maintain the purchasing power of endowment assets as well as to provide additional real growth through investment return. Endowment net asset composition by type of fund as of June 30, 2011 is as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Donor-Restricted Endowment Funds ......... $ 28,215 $ 61,256 $ 770,820 $ 860,291

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Changes in endowment net assets as of June 30, 2011 are as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment Net Assets, July 1, 2010..................... $ (22,565) $ 37,761 $ 673,139 $ 688,335 Contributions ..................... � � 97,681 97,681 Investment Income ............ 9,926 3,549 � 13,475 Net Appreciation................ 59,649 21,326 � 80,975 Amounts Appropriated for Expenditure .............. (18,795) (1,380) � (20,175) Endowment Net Assets, June 30, 2011.................. $ 28,215 $ 61,256 $ 770,820 $ 860,291 Endowment net asset composition by type of fund as of June 30, 2010 is as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Donor-Restricted Endowment Funds ......... $ (22,565) $ 37,761 $ 673,139 $ 688,335 Changes in endowment net assets as of June 30, 2010 are as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment Net Assets, July 1, 2009..................... $ (19,064) $ 24,550 $ 293,241 $ 298,727 Contributions ..................... � � 179,898 179,898 Investment Income ............ 4,138 6,279 � 10,417 Net Appreciation................ 7,534 11,432 � 18,966 Reclassification .................. � � 200,000 200,000 Amounts Appropriated for Expenditure .............. (15,173) (4,500) � (19,673) Endowment Net Assets, June 30, 2010.................. $ (22,565) $ 37,761 $ 673,139 $ 688,335

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Permanently restricted net assets at June 30 were as follows: 2011 2010 The Richard C. Romano Endowment Fund ............................................. $ 102,016 $ 102,016 The Jerry Chiss Memorial Fund .............................................................. 11,425 10,325 James D. Vail Endowment Fund.............................................................. 147,000 147,000 Kristin Kent Nature Trail Fund............................................................... 25,000 25,000 Brenner Runs Through It Fund ............................................................... 50,718 41,483 Strong Community Fund .......................................................................... 262,625 138,190 The Lewis-Sebring Family Foundation � Pledge Receivable ................. 100,000 200,000 Farley Charitable Lead Trust-Strong Community ................................ 62,861 � Roth Holtz Fund ........................................................................................ 9,175 9,125 $ 770,820 $ 673,139 NOTE 16�FEE ASSISTANCE

Fee assistance by program consists of the following:

2011 2010

Membership Dues......................................................................................$ 648,388 $ 706,744 Child Care Fees ......................................................................................... 379,500 348,387 Camp Echo Fees ........................................................................................ 133,302 121,985 Transient and Extended Stay (Residence) Fees...................................... 78,504 78,137 Program Service Fees................................................................................ 73,965 54,434 Day Camp Fees.......................................................................................... 35,767 35,929

$ 1,349,426 $ 1,345,616 NOTE 17�LEASED FACILITIES The Association entered into a ten-year lease with St. Mary�s School in Evanston beginning August 1, 1995 through July 31, 2005 for space to be utilized for a day care/child care center, recreational programs and office and meetings. The initial annual base rent of the lease was $180,000 with a 1% annual increase over the prior year. The lease was extended through July 31, 2010. The lease was further extended through July 31, 2015 at an annual base rent of $216,000 commencing June 1, 2010, with an annual escalation of 2% and $7,200 annually for designated parking spots with a $600 annual escalation. Beginning June 1, 2008, the Association entered into a new five-year lease agreement for office space with Family Focus with an annual escalation clause. Monthly rent for the first year was $625 per month. During 2010 this lease was converted to a one-year lease renewing annually.

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NOTE 17�LEASED FACILITIES (Continued) Future minimum lease payments are: Year Ending June 30 2012................................................................................................................................... $ 238,437 2013................................................................................................................................... 233,551 2014................................................................................................................................... 238,653 2015................................................................................................................................... 243,845 2016................................................................................................................................... 20,723

Aggregate Future Minimum Rentals .................................................................................... $ 975,209

Rent expense was $251,254 for 2011 and $226,493 for 2010.

NOTE 18�RETIREMENT PLAN

All employees of the Association, age 21 or older, who have 24 months of service and have worked 1,000 hours in each year, are eligible to participate in the YMCA Retirement Fund (the Plan). The Association in accordance with its personnel policies agreed to pay the participants� contributions for all eligible employees based on an amount equal to 11% of each participant�s monthly compensation. Effective July 1, 2006, participants still in service and employees who become eligible to participate in the Plan were immediately and fully vested (100%) in his/her accumulated Association contributions upon commencement of participation in the Plan. On July 1, 2009, the Plan was amended so that any contributions made for payrolls on or after July 1, 2009 will reside in a new account which must be annuitized. In August 2009, the contribution percentage was amended to 10% and in September 2010, the contribution percentage was changed to 11% for the Association. The retirement plan expense was $418,364 for 2011 and $338,882 for 2010. NOTE 19�RECLASSIFICATIONS

For the year ended June 30, 2011, it was determined that $82,851 of funds received for Camp Echo prior to July 1, 2010 should be reclassified from unrestricted to temporarily restricted net assets based on the donors� intention. A reclassification of the net asset balances has been reflected in the statements of activities for the year ended June 30, 2011. For the year ended June 30, 2010, it was determined that $200,000 of a larger pledge received in 2007 should be reclassified from temporarily restricted to permanently restricted based on the donors� request. A reclassification of the net asset balances has been reflected in the statements of activities for the year ended June 30, 2010. Additionally, certain other prior year amounts have been reclassified to conform to current year presentation. NOTE 20�SUBSEQUENT EVENTS

Management has evaluated subsequent events through October 19, 2011, the date which the financial statements were available for issue. There were no subsequent events which require disclosure.

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