NEW ENGLAND FORESTRY FOUNDATION, INC. FINANCIAL …...Conserving New England’s forests since 1944...

Conserving New England’s forests since 1944

32 Foster Street * P.O. Box 1346 * Littleton, MA 01460 * 978-952-6856 www.newenglandforestry.org

NEW ENGLAND FORESTRY FOUNDATION, INC.

FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

Years Ended April 30, 2015 and 2014


TABLE OF CONTENTS


Page INDEPENDENT AUDITORS’ REPORT ........................................................................................ 1 FINANCIAL STATEMENTS: Statements of Financial Position .................................................................................................... 3 Statements of Activities .................................................................................................................. 4 Statements of Cash Flows .............................................................................................................. 6 Notes to Financial Statements ........................................................................................................ 7 SUPPLEMENTARY INFORMATION: Schedules of Functional Expenses ................................................................................................. 26

101 Edgewater Drive Suite 210 Wakefield, MA 01880

T (781) 914-3400 F (781) 914-3405

www.jocllp.com

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors New England Forestry Foundation, Inc. Littleton, Massachusetts Report on the Financial Statements We have audited the accompanying financial statements of New England Forestry Foundation, Inc. which comprise the statements of financial position as of April 30, 2015 and 2014, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of New England Forestry Foundation, Inc. as of April 30, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. Report on Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information included in the Schedules of Functional Expenses is presented for the purpose of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information had been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Wakefield, Massachusetts September 10, 2015


STATEMENTS OF FINANCIAL POSITION

April 30, 2015 and 2014

2015 2014

Cash and cash equivalents 99,267$ 318,447$ Investments 9,070,992 8,115,864Pledges receivable 39,435 321,435 Grant receivable 15,624 144,487Interest receivable - 2,516 Prepaid expenses 23,787 11,748Available-for-sale real estate 699,375 - Restricted cash and cash equivalents 531,487 531,487Property and equipment, net 1,255,151 1,298,990Foundation forests, net 23,900,107 23,956,002Deposits 17,126 126

Total assets 35,652,351$ 34,701,102$

LIABILITIES:Accounts payable 38,910$ 60,375$ Grants payable - 2,500 Accrued expenses 76,332 56,680 Advance deposits 10,000 10,000Deferred timber sales 11,780 -

Total liabilities 137,022 129,555

NET ASSETS:Unrestricted net assets -

Unrestricted 8,237,124 7,478,893 Foundation forests, net 19,888,294 19,944,189

28,125,418 27,423,082 Temporarily restricted net assets -

Temporarily restricted 3,278,656 3,037,210 Foundation forests, net 934,900 934,900

4,213,556 3,972,110 Permanently restricted net assets -

Permanently restricted 99,442 99,442 Foundation forests, net 3,076,913 3,076,913

3,176,355 3,176,355

Total net assets 35,515,329 34,571,547

Total liabilities and net assets 35,652,351$ 34,701,102$

LIABILITIES AND NET ASSETS

ASSETS

See notes to financial statements.Page 3


STATEMENT OF ACTIVITIES

Year Ended April 30, 2015

Temporarily PermanentlyTotal Unrestricted Restricted Restricted

REVENUES:Real property contribution 1,380,000$ 1,380,000$ -$ -$ Contributions and grants 1,179,944 714,816 465,128 - Sale of conservation easement 300,000 300,000 - - Foundation forests contributions 281,286 281,286 - - Timber sales 226,079 226,079 - - Interest and dividend income 185,223 185,223 - - Rental income 7,670 7,670 - - Net assets released from restriction - 328,609 (328,609) -

Total revenues 3,560,202 3,423,683 136,519 -

EXPENSES:Program services -

Conservation and educational services 1,180,024 1,180,024 - -

Supporting services -Management and general 361,587 361,587 - - Fundraising 213,641 213,641 - -

Total supporting services 575,228 575,228 - -

Total expenses 1,755,252 1,755,252 - -

GAINS (LOSSES):Net realized and unrealized gains

on investments 293,953 189,026 104,927 - Unrealized loss on available-for-sale

real estate (50,625) (50,625) - - Gain (loss) on sale of foundation forests (322,303) (322,303) - - Impairment due to conservation easements (782,193) (782,193) - -

Total gains (losses) (861,168) (966,095) 104,927 -

Change in net assets 943,782 702,336 241,446 -

NET ASSETS - BEGINNINGOF YEAR 34,571,547 27,423,082 3,972,110 3,176,355

NET ASSETS - END OF YEAR 35,515,329$ 28,125,418$ 4,213,556$ 3,176,355$



STATEMENT OF ACTIVITIES


Temporarily PermanentlyTotal Unrestricted Restricted Restricted

REVENUES:Real property contribution -$ -$ -$ -$ Contributions and grants 2,065,826 1,835,949 229,877 - Sale of conservation easement - - - - Foundation forests contributions 2,543,100 1,656,500 886,600 - Timber sales 364,197 364,197 - - Interest and dividend income 171,717 171,717 - - Rental income 5,904 5,904 - - Net assets released from restriction - 337,607 (337,607) -

Total revenues 5,150,744 4,371,874 778,870 -

EXPENSES:Program services -

Conservation and educational services 1,920,152 1,920,152 - -

Supporting services -Management and general 334,737 334,737 - - Fundraising 149,769 149,769 - -

Total supporting services 484,506 484,506 - -

Total expenses 2,404,658 2,404,658 - -

GAINS (LOSSES):Net realized and unrealized gains

on investments 662,764 420,091 242,673 - Unrealized loss on available-for-sale

real estate - - - - Gain (loss) on sale of foundation forests 39,140 39,140 - - Impairment due to conservation easements - - - -

Total gains (losses) 701,904 459,231 242,673 -

Change in net assets 3,447,990 2,426,447 1,021,543 -

NET ASSETS - BEGINNING OF YEAR 31,123,557 24,996,635 2,950,567 3,176,355

NET ASSETS - END OF YEAR 34,571,547$ 27,423,082$ 3,972,110$ 3,176,355$



STATEMENTS OF CASH FLOWS


2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES:Change in net assets 943,782$ 3,447,990$ Adjustments to reconcile change in net assets

to net cash provided (used) by operating activities:Net realized and unrealized gains on investments (293,953) (662,764) Depreciation 63,488 68,661 Foundation forest contributions (281,286) (2,543,100) Available-for-sale real estate contribution (1,380,000) - Unrealized loss on available-for-sale real estate 50,625 - (Gain) loss on sale of foundation forests 322,303 (39,140) Impairment due to conservation easement 782,193 Bad debt expense - 2,000 (Increase) decrease in operating assets:

Pledges receivable 282,000 (274,305)Grant receivable 128,863 (144,487) Interest receivable 2,516 (2,516) Prepaid expenses (12,039) 6,414Deposits (17,000) -

Increase (decrease) in operating liabilities:Accounts payable (21,465) 2,021Grants payable (2,500) (14,500) Accrued expenses 19,652 7,461Deferred timber sales 11,780 (33,625)

Net cash provided (used) by operating activities 598,959 (179,890)

CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of investments 166,565 464,353 Purchase of investments (827,740) (217,523) Proceeds from sale of foundation forests 190,000 39,180 Purchase of foundation forests (327,315) - Purchase of property and equipment (19,649) (26,464)

Net cash provided (used) by investing activities (818,139) 259,546

Net increase (decrease) in cash (219,180) 79,656

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 318,447 238,791

CASH AND CASH EQUIVALENTS - END OF YEAR 99,267$ 318,447$

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITY:Donation of available-for-sale real estate 1,380,000$ -$ Acquisition of foundation forests through donation 281,286 2,543,100 Impairment due to conservation easement 782,193 - Acquisition of investments through donation 138,946 105,774



NOTES TO FINANCIAL STATEMENTS


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1. STATEMENT OF PURPOSE

New England Forestry Foundation, Inc. (the Foundation) is a non-profit organization incorporated in Massachusetts in accordance with Internal Revenue Code Section 501(c)(3). The Foundation’s purpose is to promote and provide for the conservation and sustainable management of privately-owned forestlands through assistance to landowners, promoting and actively managing its community forests as demonstration and educational forests, permanently protecting working forests through gifts and acquisitions of land and easements, and promoting and developing sustainable forest practices and policies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting –

The Foundation reports information regarding its financial position and activities according to the following three classes of net assets:

i. Unrestricted Net Assets - use of resources is not limited or restricted by donors.

ii. Temporarily Restricted Net Assets - use of resources is limited by donors for a specified

purpose and/or time period.

iii. Permanently Restricted Net Assets - resources must be maintained in accordance with permanent restrictions imposed by donors.

The Foundation reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. The Foundation records all pledges as temporarily restricted until payment is received. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

The Foundation reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service.




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Functional Expenses –

The Foundation allocates expenses on a functional basis among its programs and supporting services. Supporting services are those related to operating and managing the Foundation and its programs on a day-to-day basis and are composed of the following:

Management and general – includes all activities related to the Foundation’s internal management and accounting for program services.

Fundraising – includes all activities related to maintaining contributor information, writing grant proposals, distribution of materials and other similar projects related to the procurement of funds for the Foundation’s programs.

Expenses that can be identified with a specific program or supporting service are allocated directly to those classifications. Other expenses that are common to several functions are allocated in accordance with the Foundation’s indirect costs allocation plan. Allocations of functional expenses are based on management’s discretion and estimates. These variables may change from year to year. As a result, there may be fluctuations in the comparative presentation of data from year to year. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Date of Management’s Review –

Subsequent events have been evaluated by management through September 10, 2015, the date the financial statements were available to be issued.

Cash and Cash Equivalents –

Investments with a maturity of three months or less when purchased are considered to be cash equivalents for financial statement purposes. Cash and cash equivalents for purposes of the statement of cash flows exclude restricted cash and cash equivalents. Cash and cash equivalents designated for investment purposes are categorized as investments for financial statement purposes.




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Pledges Receivable –

Pledges receivable are presented in the statements of financial position net of estimated uncollectible amounts. The Foundation establishes an allowance for estimated uncollectible accounts sufficient to cover anticipated losses. The Foundation determines its allowance based upon an analysis of the collectability of specific pledges, historical experience and the aging of the pledges receivable. Adjustments are made in periods any excess or shortfall is identified. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. Based on the Foundations assessment, management has determined that pledges receivable are fully collectible at April 30, 2015 and 2014. Therefore, no allowance for uncollectible accounts was recorded at April 30, 2015 and 2014.

The Foundation discounts pledges that are not fully collectible within one year to their present value using an effective interest rate of 3.5%. Discounts are ratably amortized over the life of the pledge and are recorded as contributions in the statement of activities.

Conditional Pledges –

Pledges are considered to be conditional if they depend on the occurrence of a specified future and uncertain event that is outside of the Foundation’s control. Conditional pledges are not recognized as contributions in the statement of activities until the specified conditions are met.

Investments –

Investments are carried at fair market value based on quoted market prices. Changes in fair market value are reflected in the statement of activities.

Property and Equipment –

Property and equipment are recorded at cost if purchased or fair value if contributed. Routine maintenance and repairs are expensed as incurred. The Foundation has a policy of capitalizing only assets with cost basis of $1,000 or more. The Foundation provides for depreciation of property and equipment using the straight-line method over the estimated useful lives of the related assets, which range from three to thirty-nine years. Upon retirement or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the statement of activities. Grants Payable –

Grants authorized but unpaid at year-end are reported as liabilities. Grants to be paid more than one year after the financial statement date are discounted to their present value; these discounts are ratably amortized over the life of the grant and are recorded as program service expenses in the statement of activities.




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Non-Cash Donations –

The Foundation’s non-cash donations consist primarily of donated foundation forests, conservation easements, investments, and professional services. Donations of foundation forests and are recorded at fair market value based on current professional appraisals obtained by the donor or Foundation. Donations of conservation easements are not valued due to the nature of the restrictions they place on property. Donations of investments are recorded at fair market value based on quoted market prices at the date of donation. When significant, donations of professional services are recorded at their estimated fair market value based on the current fee schedule of the donor at the date of receipt and are reflected as both a contribution and expense in the statement of activities.

The Foundation reports write-downs of forests encumbered with conservation easements as an impairment charge in the period in which the easement is purchased or placed. Impairments on foundation forests totaling $152,193 and $0 were recorded during the years ended April 30, 2015 and 2014, respectively. Impairments on available-for-sale real estate totaling $630,000 and $0 were recorded during the years ended April 30, 2015 and 2014, respectively.

Bargain Purchases –

The Foundation’s policy is to record land acquisitions at cost. However, if a seller can document the fact that land was sold to the Foundation at below-market value by providing an appraisal (such as the one required to be filed with Form 8283 when a donor claims a charitable deduction of more than $5,000), then the difference between the appraised fair market value and the amount paid for the land is recorded as a contribution by the Foundation.

Timber Sales Revenue –

Revenue from the sale of timber is recognized when the harvesting of timber is substantially complete in order to properly match timber sale revenue with the related harvesting expenses.

Income Taxes –

The Foundation is organized and operated exclusively for charitable and educational purposes. Income related to these purposes is exempt from federal and state income taxes under the provisions of Section 501(c)(3) of the Internal Revenue Code. Unrelated business income would be taxable according to applicable Internal Revenue Code sections.




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded) Income Taxes (Concluded) – The Foundation regularly reviews and evaluates its tax positions taken in its filed returns and recognizes the benefit from a tax position only if it is more likely than not that the position would be sustained upon audit based solely on the technical merits of the tax position. The Foundation accrues interest and penalties on uncertain tax positions as a component of the provision for income taxes.

The Foundation files federal and Massachusetts tax returns. The statute of limitations for these jurisdictions is generally three years. The Foundation had no returns under examination as of April 30, 2015.

Advertising –

The Foundation follows the policy of expensing advertising costs as incurred. Advertising expense totaled $2,285 and $2,650 for the years ended April 30, 2015 and 2014, respectively.

Joint Costs –

The Foundation’s policy is to allocate clearly identifiable management and general and program services costs of multi-purpose materials that include fundraising appeals to these functions. The remainder of the cost is allocated to fundraising. The newsletter is considered a joint cost, and management determines the extent of the fundraising allocation. Joint costs totaled $23,255 and $18,730 for the years ended April 30, 2015 and 2014, respectively. These costs were not specifically identifiable to either the program component or the fundraising component of the activities. Joint costs, totaling $3,798 and $3,278 were allocated to fundraising for the years ended April 30, 2015 and 2014, respectively. The balance was allocated to program activities. Reclassifications –

Certain amounts in the prior year’s financial statements have been reclassified for comparative purposes to conform to the presentation in the current year’s financial statements. These reclassifications have no effect on the previously reported change to net assets. Adoption of Accounting Policy – During the fiscal year the ended April 30, 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2012-05 (ASU 2012-05). The provisions of this standard impact presentation of donated investments and their subsequent sale in the Foundation's Statement of Cash Flows. Under ASU 2012-05 cash receipts from the sale of unrestricted donated investments which were converted nearly immediately into cash shall be classified as operating cash flows. As of May 1, 2014, the Foundation adopted this policy, which was applied retrospectively in the comparative statement of cash flows for the years ended April 30, 2015 and 2014.




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3. CONCENTRATION OF RISK

Financial instruments that potentially subject the Foundation to concentrations of credit and market risks consist of principally cash and cash equivalents and investments. Cash and Cash Equivalents – The Foundation maintains cash in bank deposit accounts which, at times, may exceed federally insured limits. The Foundation has not experienced any losses in such accounts and believes it is not exposed to any significant credit risks on cash and cash equivalents. Investments – The Foundation maintains investments in accounts that are not federally insured. Because the Foundation’s investments are not insured, there is risk that future changes in market prices may affect the value of marketable securities.

4. RESTRICTED CASH

In August 2007, the Foundation, as the easement holder on a tract of land, agreed to participate in a cost-sharing agreement through the Wetlands Reserve Program, which is administered by the National Resources Conservation Service, U.S. Department of Agriculture. Under this agreement, the Foundation received $531,487 and agreed to preserve a riparian buffer zone on the land for a period of ten years. Pursuant to a contract with the land owner allowing the Foundation’s participation in the program, the Foundation agreed to restrict the use of the monies to expenses incurred for repairing or defending the buffer during the ten-year period of the contract. Since the restriction resulted from a contract with the land owner and not a donor restriction, it is classified as and reported in unrestricted net assets. Upon the expiration of the agreement, the funds received are available to the Foundation for any purpose deemed appropriate by the Board of Directors.

5. PLEDGES RECEIVABLE

As of April 30, 2015 and 2014, pledges receivable are due to be collected as follows:

2015 2014

Amounts due in: Less than one year 39,435$ 321,435$ One to five years - -

39,435 321,435 Less: Unamortized discount - -

39,435$ 321,435$




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6. GRANT RECEIVABLE

Grants receivable consist of amounts due from government agencies and are related to conservation easements of the Foundation. The grant receivable in 2015 is receivable within the next fiscal year; the grant receivable in 2014 was received during fiscal year 2015. Grants receivable totaled $15,624 and $144,487 at April 30, 2015 and 2014, respectively.

7. INVESTMENTS

Investments are carried at fair market value and are summarized as follows:

2015 2014

Mutual funds 8,878,112$ 8,115,864$ Cash and cash equivalents 192,880 -

9,070,992$ 8,115,864$

Investments restricted by the donor for endowment purposes are recorded as permanently restricted net assets based on the original amount of the gift. Dividends and interest on such endowed assets are reflected as an increase in unrestricted or temporarily restricted net assets based on the intention stipulated by the donor.




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8. FAIR VALUE MEASUREMENTS

The following tables present the Foundation’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of April 30, 2015 and 2014, using quoted prices in active market for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

April 30, 2015:

Description of Assets Level 1 Level 2 Level 3 Total

Mutual fundsDomestic equity 4,636,995$ -$ -$ 4,636,995$ Bonds 2,153,037 - - 2,153,037 International equity 2,088,080 - - 2,088,080 Emerging markets - - - -

8,878,112 - - 8,878,112

Cash and cash equivalents 192,880 - - 192,880

Total assets measured at fair value 9,070,992$ -$ -$ 9,070,992$

April 30, 2014: Description of Assets Level 1 Level 2 Level 3 Total

Mutual fundsDomestic equity 4,262,566$ -$ -$ 4,262,566$ Bonds 1,496,353 - - 1,496,353 International equity 2,000,420 - - 2,000,420 Emerging markets 356,525 - - 356,525

8,115,864 - - 8,115,864

Cash and cash equivalents - - - -

Total assets measured at fair value 8,115,864$ -$ -$ 8,115,864$




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9. PROPERTY AND EQUIPMENT

Property and equipment at April 30, 2015 and 2014 consisted of the following:

2015 2014

Buildings and building improvements 1,899,443$ 1,883,877$ Office and computer equipment 64,575 83,022Field equipment 5,838 5,838Rice Sanctuary 830 830

1,970,686 1,973,567 Less: Accumulated depreciation 715,535 674,577

1,255,151$ 1,298,990$

10. AVAILABLE-FOR-SALE REAL ESTATE

Available-for-sale real estate consists of a single family residence situated on 37.4 acres in Gilford, New Hampshire. This property was donated to the Foundation in fiscal year 2015 as unrestricted real property and was recorded at its fair market value as determined by an independent appraisal. The Board of Directors has determined that it is in the Foundation’s best interest to sell the property and has listed the property for sale with a local agent. At that time the recorded value approximated the fair market value less the estimated cost to sell the property. The following table summarizes the fair market value less the estimated cost to sell the property:

Donated cost basis 1,380,000$ Impairment due to conservation easement (630,000) Closing costs (50,625)

Fair market value less estimated costs to sellat April 30, 2015 699,375$

11. CONSERVATION EASEMENTS

As of April 30, 2015 and 2014, the Foundation held 155 conservation easements on 1,148,863 acres of land and 155 conservation easements on 1,149,221 acres of land, respectively, including 762,192 acres in the Pingree project and 335,168 acres in the Downeast Lakes project.

During the year ended April 30, 2015, the Foundation received two donations totaling 38 acres. During the year ended April 30, 2015, two temporary conservation easements expired totaling 396 acres.




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11. CONSERVATION EASEMENTS (Concluded) During the year ended April 30, 2014, the Foundation received a donation of one easement totaling 3,300 acres. During the year ended April 30, 2014, the Foundation purchased four easements totaling 830 acres.

The Foundation records purchases of conservation easements as program expenses in the statement of activities during the period of purchase.

12. FOUNDATION FORESTS

Foundation forests included the following at April 30, 2015 and 2014:

2015 Acres Amount

Donated LandAt appraised value at date of contribution 21,210 20,241,798$

Purchased Land:At cost 5,488 3,658,309

26,698 23,900,107$

2014

Donated LandAt appraised value at date of contribution 20,974 20,521,515$

Purchased Land:At cost 5,368 3,434,487

26,342 23,956,002$

Foundation forest acreage by state as of April 30, 2015 was as follows:

Acres Value

Massachusetts 7,827 11,660,489$ New Hampshire 11,126 6,991,397 Vermont 4,208 2,857,020 Maine 2,853 1,743,928 Connecticut 684 647,273

26,698 23,900,107$




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12. FOUNDATION FORESTS (Concluded)

Foundation forest activities during the year ended April 30, 2015 and 2014 included the following:

Acres Value

Total foundation forests at April 30, 2013 24,693 21,412,942$

Donation of foundation forests -Todhah Hill Land 1,548 886,600 Sennott Maple Forest 70 84,000 Carye Cherry Valley 28 380,000 Carye Littleton Marsh 22 612,500 Weld Memorial Forest 21 580,000

Sale of foundation forests -Wharton Plantation (40) (40)


Donation of foundation forests -Peirce Family Forest 236 125,000 Augustus Hemenway Memorial Forest 67 64,000

Prouty Woods Community Forest 8 31,901 Scott S. Lytton Memorial Forest 10 25,700

Purchase/Donation of foundation forests -Fitz Family Memorial Forest 35 62,000

Purchase of foundation forests -Mixter Nields 86 300,000 Reserve for conservation easement (152,193)

Sale of foundation forests -Kemp Woods (85) (510,000) Keyes - Groton Boundary (1) (2,303)





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13. LINE OF CREDIT

The Foundation maintains a demand bank line of credit totaling $150,000 under which the Foundation may borrow on an unsecured basis at the bank’s prime rate less .25% (3% at April 30, 2015). There were no amounts outstanding under this line of credit at April 30, 2015 and 2014. The credit agreement is renewable annually on October 31.

14. RESTRICTED NET ASSETS

Temporarily restricted net assets were available for the following purposes at April 30, 2015 and 2014:

2015 2014

Conservation easement monitoring 2,148,424$ 2,122,781$ Foundation forests 934,900 934,900 Groton Place and Weld 487,362 483,221 Unrealized appreciation on permanently

restricted investments 177,655 168,156 Hemenway Conservation Fund 162,948 14,755 Land purchases and maintenance 155,456 143,040 Maine land projects 63,976 88,652 Planned giving research 56,280 - Education projects 13,941 - Conservation easement purchases 11,605 11,605 Heart of New England 1,009 5,000

4,213,556$ 3,972,110$




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14. RESTRICTED NET ASSETS (Concluded)

Certain temporarily restricted assets were released from restriction during the years ended April 30, 2015 and 2014 by satisfaction of the restricted purpose specified by the donor, and were reclassified as unrestricted net assets as follows:

2015 2014

Hemenway Conservation Fund 99,807$ 284$ Maine land projects 79,676 51,882 Conservation easement monitoring 51,835 89,990 Land purchases and maintenance 39,461 - Heart of New England 38,242 183,050 Groton Place and Weld 13,359 12,401 Education projects 4,059 - Planned giving research 1,720 - Unrealized appreciation on permanently

restricted investments 450 -

328,609$ 337,607$

Permanently restricted net assets at April 30, 2015 and 2014 consisted of the following:

2015 2014

Investments in perpetuity, the income from whichis expendable to support operations after donor restricted costs are funded 99,442$ 99,442$

Foundation forests 3,076,913 3,076,913

3,176,355$ 3,176,355$




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15. ENDOWMENT FUNDS

Board-designated –

As of April 30, 2015, the Board of Directors had designated $369,002 of unrestricted net assets to support the acquisition, conservation, monitoring, and defense of the Foundation’s easements and forests. Since that amount resulted from an internal designation and is not donor-restricted, it is classified as and reported in unrestricted net assets.

Composition of and changes in Board-designated net assets for the years ended April 30, 2015 and 2014 were as follows:

2015 2014

Board-designated net assets - beginning of year 352,200$ 341,748$ Investment income, net 7,165 7,133 Net realized and unrealized gains

on investments 9,933 25,823 Released from restriction (296) (22,504)

Board-designated net assets - end of year 369,002$ 352,200$

Donor-designated Endowment – The Board of Directors has determined that the majority of the Foundation’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 Foundation. Under the terms of the Foundation’s governing documents, the Board of Directors has the ability to distribute so much of the original principal of any Foundation 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.




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15. ENDOWMENT FUNDS (Continued)

Endowment net asset composition, excluding foundation forests, by type of fund and changes in endowment net assets as of April 30, 2015 were as follows:

Total

Temporarily Permanently EndowmentUnrestricted Restricted Restricted Net Assets

Endowment net assets, beginning of year -$ 651,377$ 99,442$ 750,819$ Investment income, net - - - - Net realized and unrealized gains on investments - 26,824 - 26,824 Amounts appropriated for expenditure - (13,183) - (13,183)

Endowment net assets, end of year -$ 665,018$ 99,442$ 764,460$

Endowment net asset composition, excluding foundation forests, by type of fund and changes in endowment net assets, were as follows as of April 30, 2014:

Total

Temporarily Permanently EndowmentUnrestricted Restricted Restricted Net Assets

Endowment net assets, beginning of year -$ 599,386$ 99,442$ 698,828$ Investment income, net - 1,783 - 1,783 Net realized and unrealized

losses on investments - 62,609 - 62,609 Amounts appropriated for expenditure - (12,401) - (12,401)

Endowment net assets, end of year -$ 651,377$ 99,442$ 750,819$




Page 22

15. ENDOWMENT FUNDS (Concluded)

Endowment Investment and Spending Policies –

The Board of Directors of the Foundation has interpreted the Massachusetts Uniform Prudent Management of Institutional Funds Act (MA UPMIFA) as requiring the preservation of the fair value of the original gift of the donor-restricted endowment funds as of the gift date absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by MA UPMIFA. In accordance with MA UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donor-restricted endowment funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6) other resources of the Foundation, and (7) the Foundation’s investment policies. The Foundation has adopted investment and spending polices, approved by the Board of Directors, for Board-designated and endowment assets that support the acquisition, conservation, monitoring and defense of the Foundation’s easements and forests. The Foundation’s spending and investment policies work together to achieve this objective. The investment policy establishes an achievable return objective through diversification of asset classes. To satisfy its long-term rate-of-return objectives, the Foundation 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 Foundation targets a diversified asset allocation that places an emphasis on U.S. Treasury securities, corporate and federal bonds, and equity-based investments to achieve its long-term return objectives within prudent risk parameters.

The spending policy defines the amount to be distributed from the fund to support the acquisition, conservation, monitoring, and defense of the Foundation’s easements and forests. The current spending policy is to distribute an amount each year of 3% of its endowment fund’s market value. Accordingly, the Foundation expects its endowment assets, over time, to grow in line with the Foundation’s objectives.




Page 23

16. HEART OF NEW ENGLAND CAMPAIGN

The Foundation’s Heart of New England campaign is a carefully designed, comprehensive, tangible response to the sweeping conservation vision proposed in Harvard Forest’s report Wildlands and Woodlands: A Vision for the New England Landscape. As a leader and innovator in forest conservation and management programs in the region, the Foundation is uniquely positioned to play a central role in helping to meet the goal of conserving 30 million acres by 2060. To do this, the Foundation is focusing on three new interconnected program areas that empower our three key constituencies, forestland owners, partner land trusts and professional foresters; and the enhancement of the Foundation’s traditional program areas, fundraising for land protection, and broad-based communications to raise general public awareness. The Foundation is developing an innovative approach to communication with forest landowners, a unique training method for foresters, and offering consulting services for land trust coalitions seeking to increase the scale of conservation. The programs will build the core foundation necessary for a successful long-term effort.

17. IN-KIND CONTRIBUTIONS

The fair value of donated services included as contributions in the financial statements and the corresponding program expenses for the year ended April 30, 2015 were as follows:

Forest

Stewardship Development Administration Total

Office -$ -$ 2,453$ 2,453$ Printing - 1,985 - 1,985 Legal - - - - Forest management service - - - -

-$ 1,985$ 2,453$ 4,438$

The fair value of donated services included as contributions in the financial statements and the corresponding program expenses for the year ended April 30, 2014 were as follows:

Forest

Stewardship Development Administration Total

Office -$ -$ 3,535$ 3,535$ Printing - 500 - 500 Legal 336,364 - - 336,364 Forest management service 525 - - 525

336,889$ 500$ 3,535$ 340,924$




Page 24

18. RETIREMENT PLAN

The Foundation sponsors a retirement plan pursuant to Section 401(k) of the Internal Revenue Code. Under the plan, eligible employees may defer a portion of their compensation on a pre-tax basis. The Foundation matches employee contributions up to 50% of the first 6% deferred. The Foundation made matching contributions of $15,526 and $12,670 for the years ended April 30, 2015 and 2014, respectively.

Prior to the adoption of the 401(k) plan, the Foundation sponsored a Section 403(b) plan to which employees could contribute on a pre-tax basis. No matching contributions were made to this plan, and the plan was frozen with the adoption of the 401(k) plan.

19. RELATED PARTY TRANSACTIONS

During fiscal year 2015, the Foundation entered into an agreement with a real estate company with two common board members. This company is assisting the Foundation with the sale of available-for-sale real estate in exchange for a 6% commission. During the year ended April 30, 2014, this company provided consulting services to the Foundation. The Foundation made payments totaling $0 and $4,180 for the years ended April 30, 2015 and 2014, respectively. There were no amounts payable at April 30, 2015 and 2014.

20. COMMITMENTS

In April of 2015, the Foundation entered into a consulting agreement with an independent contractor, for a project which will be completed in December 2015. Upon completion, the foundation must pay this individual $17,000.

21. AGENCY FUND AGREEMENTS

In 2000 an agency fund was established at the Maine Community Foundation (MCF) through contributions designated to provide current income and long-term protection for the stewardship, monitoring, and enforcement of the Foundation’s conservation easements. Under the terms of the agreement, the Foundation receives annual distributions equal to a percentage of the market value of the fund’s assets, as determined by the MCF’s spending policy for the fund. In accordance with U.S. generally accepted accounting principles, the Foundation has determined that it does not have variance power over the assets of the fund and, accordingly, it does not recognize them as assets of the Foundation. MCF investments designated for the Foundation’s easement programs were valued at $1,043,589 and $1,032,153, at April 30, 2015 and 2014 respectively.




Page 25

21. AGENCY FUND AGREEMENTS (Concluded) In 2007 an agency fund was established at the MCF through contributions designated to provide current income and long-term protection for the stewardship, monitoring, and enforcement of the Foundation’s Sabbath day Lake Shaker Village, Forest and Farm conservation easement. Under the terms of the agreement, the Foundation receives annual distributions equal to a percentage of the market value of the fund’s assets, as determined by the MCF’s spending policy for the fund. In accordance with U.S. generally accepted accounting principles, the Foundation has determined that it does not have variance power over the assets of the fund and, accordingly, it does not recognize them as assets of the Foundation. MCF investments designated for the Foundation’s easement programs were valued at $88,431and $87,414, at April 30, 2015 and 2014 respectively.

22. SPLIT INTEREST AGREEMENTS

In 2008 a charitable lead unitrust was established. Under the terms of the trust, the Foundation receives annual distributions equal to 7% of the market value of the trust’s assets. Distributions received by the Foundation totaled $51,877 and $50,568 for the years ended April 30, 2015 and 2014, respectively. Beginning in calendar year 2009, the distributions must be temporarily restricted for the purpose of protecting land, by purchase or easement, in New Hampshire or Maine. In accordance with U.S. generally accepted accounting principles, the Foundation has determined that it does not have variance power over the assets of the fund and, accordingly, it does not recognize them as assets of the Foundation. The value of the investments in the unitrust was estimated at $741,500 and $741,000 at April 30, 2015 and 2014 respectively. The increase in the value of the unitrust totaled $500 and $25,000 for the years ended April 30, 2015 and 2014, respectively.

In 2007 a charitable trust was established with the purpose of supporting the activities and purpose of the Foundation. Under the terms of an agreement with the trust, the Foundation should receive annual distributions of $5,000. In accordance with U.S. generally accepted accounting principles, the Foundation has determined that it does not have variance power over the assets of the trust and, accordingly, it does not recognize them as assets of the Foundation. The assets of the unitrust were estimated at $2,574,167 and $2,571,700, at April 30, 2015 and 2014 respectively. The increase in the value of the unitrust totaled $2,442 and $472,000 for the years ended April 30, 2015 and 2014, respectively.

23. MAJOR CONTRIBUTORS

During the year ended April 30, 2015, the Foundation received contributions in the amount of $1,380,000 from one donor. This amount represents approximately 49% of the total contributions and grants received during the year.

During the year ended April 30, 2014, the Foundation received contributions in the amount of $2,079,100 from three donors. This amount represents approximately 45% of the total contributions and grants received during the year.

SUPPLEMENTARY INFORMATION


SCHEDULE OF FUNCTIONAL EXPENSES


Total Program ManagementExpenses Services and General Fundraising

Salaries 781,390$ 428,745$ 149,403$ 203,242$ Professional fees 153,161 136,475 5,543 11,143 Employee benefits 105,653 43,877 18,472 43,304 Repairs and maintenance 84,604 56,916 4,250 23,438 Forest management services 73,587 73,587 - - Depreciation 63,488 61,945 234 1,309 Payroll taxes 60,016 28,415 13,298 18,303 Legal 46,500 45,454 475 571 Publication and communication 44,780 37,880 35 6,865 Commission 44,396 44,396 - - Meetings and conferences 40,615 18,761 4,967 16,887 Accounting and payroll fees 37,663 19,934 8,276 9,453 Property taxes 36,204 36,204 - - Survey and appraisal fees 31,208 31,208 - - Travel 30,643 24,068 1,712 4,863 Insurance 25,978 19,067 2,155 4,756 Foundation forest 18,009 18,009 - - Timber taxes 17,943 17,943 - - Office supplies 9,447 5,880 928 2,639 Bank and broker charges 7,765 5,675 1,584 506 Dues and subscriptions 7,567 6,392 73 1,102 Postage 7,470 3,791 1,031 2,648 Office rent and utilities 7,178 4,351 585 2,242 Education programs 4,663 1,930 22 2,711 Telephone 3,836 2,369 401 1,066 State filing fees 2,814 855 197 1,762 Grants 2,500 2,500 - - Advertising 2,285 1,466 - 819 Direct mailing 2,252 294 - 1,958 Recording fees 1,637 1,637 - - Bad debt expense - - - - Purchase of conservation easement - - - - Title fees - - - -

Total operating expenses 1,755,252 1,180,024 213,641 361,587

Interest - - - -

1,755,252$ 1,180,024$ 213,641$ 361,587$

See independent auditors’ report.Page 26


SCHEDULE OF FUNCTIONAL EXPENSES


Total Program ManagementExpenses Services and General Fundraising

Salaries 589,219$ 314,809$ 99,494$ 174,916$ Professional fees 303,209 254,981 1,885 46,343 Employee benefits 91,066 48,709 17,794 24,563 Repairs and maintenance 45,371 21,001 3,672 20,698 Forest management service 107,552 107,552 - - Depreciation 68,661 63,751 2,116 2,794 Payroll taxes 45,471 22,158 7,305 16,008 Legal 375,082 374,246 418 418 Publication and communication 24,876 17,887 77 6,912 Commission 57,583 57,583 - - Meetings and conferences 18,313 9,480 2,292 6,541 Accounting and payroll fees 39,331 20,033 8,917 10,381 Property taxes 38,862 38,862 - - Survey and appraisal fees 12,836 12,836 - - Travel 26,590 21,964 1,208 3,418 Insurance 23,385 16,937 2,159 4,289 Foundation forest 215 215 - - Timber taxes 10,133 10,133 - - Office supplies 9,921 5,787 470 3,664 Bank and broker charges 1,345 191 7 1,147 Dues and subscriptions 7,736 7,480 41 215 Postage 6,530 3,717 619 2,194 Office rent and utilities 6,478 3,779 626 2,073 Education programs 1,701 919 20 762 Telephone 3,467 1,975 444 1,048 State filing fees 2,976 937 202 1,837 Grants - - - - Advertising 2,650 1,556 3 1,091 Direct mailing 1,819 394 - 1,425 Recording fees 1,156 1,156 - - Bad debt expense 2,000 - - 2,000 Purchase of conservation easement 476,525 476,525 - - Title fees 2,599 2,599 - -

Total operating expenses 2,404,658 1,920,152 149,769 334,737

Interest - - - -

2,404,658$ 1,920,152$ 149,769$ 334,737$

See independent auditors’ report.Page 27

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