THE CARAPROGRAM AND SUBSIDIARIES - … · Statements Performed in Accordance with Government...

THE CARA PROGRAMAND SUBSIDIARIES

Consolidated Financial Statements and Supplementary Information

For the Year EndedJune 30, 2016

THE CARA PROGRAM AND SUBSIDIARIESAnnual Financial Report

Table of Contents

Section I

Independent Auditor’s Report ..........................................................................................................1 - 2

Consolidated Financial Statements

Statement of Financial Position..................................................................................................3 - 4

Statement of Activities ....................................................................................................................5

Statement of Functional Expenses...................................................................................................6

Statement of Cash Flows ............................................................................................................7 - 8

Notes to Consolidated Financial Statements ..................................................................................9 - 17

Supplementary Information

Exhibit I – Consolidating Financial Statements ..................................................................18 - 21

Exhibit II – Segment Financial Statements – The Cara Program .........................................22 - 25

Exhibit III – Segment Financial Statements – Cleanslate Chicago, LLC ..............................26 - 28

Exhibit IV – Segment Financial Statements – TCP Staffing, LLC........................................29 - 31

Section II

Other Report

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance with Government Auditing Standards.......................32 - 33

Desmond &Ahern, Ltd.CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

Independent Auditor’s Report

To the Board of Directors ofThe Cara Program, Cleanslate Chicago, LLC and TCP Staffing, LLCChicago, IL

We have audited the accompanying consolidated financial statements of The Cara Program (a nonprofit organization), Cleanslate Chicago, LLC and TCP Staffing, LLC, (The Cara Program and Subsidiaries) which comprise the consolidated statement of financial position as of June 30, 2016, and the related consolidated statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated 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 consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

10827 S. WESTERN AVENUE, CHICAGO, IL 60643-3206 • PHONE 773-779-4720 • FAX 773-779-8310

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

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Cara Program and Subsidiaries as of June 30, 2016, and the changes in their net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters - Supplemental Schedules

Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying supplementary information, as listed in the accompanying table of contents, is presented for purposes of additional analysis and is not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2016, on our consideration of The Cara Program and Subsidiaries’ internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering The Cara Program and Subsidiaries internal control over financial reporting and compliance.

September 30, 2016Chicago, IL

See independent auditor's report and notes to consolidated financial statements.-3-

THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATED STATEMENT OF FINANCIAL POSITIONAs of June 30, 2016

AssetsCurrent Assets Cash and cash equivalents 1,970,934$ Accounts receivable Government 118,783 Other contributions 203,611 Fee for service 409,063 Total accounts receivable 731,457 Capacity building campaign pledges receivable, current 309,000 Inventory 18,316 Prepaid expenses 114,306 Total current assets 3,144,013

Property and Equipment (at cost) Building and improvements 7,234,072 Leasehold improvements 24,319 Furniture and equipment 1,400,101 Vehicles 448,860 Total property and equipment 9,107,352 Less accumulated depreciation (2,564,743) Net property and equipment 6,542,609

Other Assets Capacity building campaign pledges receivable, net of current portion 355,000 Debt financing costs, net of accumulated amortization 7,210 Security deposits 14,492 Total other assets 376,702 Total Assets 10,063,324$


THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATED STATEMENT OF FINANCIAL POSITIONAs of June 30, 2016

Liabilities and Net AssetsCurrent Liabilities Accounts payable 159,598$ Accrued payroll and related costs 293,170 Refundable advances 78,060 Deferred revenue 4,571 Current portion of long-term debt 80,772 Current portion of capital lease obligations 54,085 Accrued interest payable 6,071 Total current liabilities 676,327

Long-Term Liabilities Long-term debt, less current maturities 2,689,090 Long-term portion of capital lease obligations 117,739 Total long-term liabilities 2,806,829 Total Liabilities 3,483,156

Net Assets Unrestricted General 520,424 Net investment in property and equipment 3,608,133 Operating reserve 1,584,000 Total unrestricted 5,712,557 Temporarily restricted 867,611 Total net assets 6,580,168 Total Liabilities and Net Assets 10,063,324$


THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATED STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2016

TemporarilyUnrestricted Restricted Total

Public Support and RevenueSpecial Events Contributions 701,638$ -$ 701,638$ Ticket revenue 207,090 - 207,090 Auction revenue 72,348 - 72,348 In-kind contributions - food and drink 31,370 - 31,370 Less costs of direct benefits to donors (280,438) - (280,438) Net revenues from special events 732,008 - 732,008

Government contributions - 722,217 722,217 Private contributions 1,473,357 1,212,818 2,686,175 Capacity building campaign contributions 285,643 - 285,643 Fee for service revenue 2,516,172 - 2,516,172 Donated services 3,009 - 3,009 In-kind donations 51,860 - 51,860 Gain on disposal of equipment 3,621 - 3,621 Miscellaneous 23,266 - 23,266 Net assets released from restrictions - satisfaction of program restrictions 2,147,909 (2,147,909) -

Total Public Support and Revenue 7,236,845 (212,874) 7,023,971

ExpensesProgram Services Traditional Services 1,221,193 - 1,221,193 Quad Communities Campus 701,072 - 701,072 Employment Retention 572,044 - 572,044 Cleanslate 1,263,809 - 1,263,809 TCP Staffing 1,138,665 - 1,138,665 Total program services 4,896,783 - 4,896,783

Management and general 1,077,713 - 1,077,713 Fundraising 908,262 - 908,262 Total Expenses 6,882,758 - 6,882,758

Change in Net Assets 354,087 (212,874) 141,213 Net assets, beginning of year 5,358,470 1,080,485 6,438,955 Net assets, end of year 5,712,557$ 867,611$ 6,580,168$


THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSESFor the Year Ended June 30, 2016

Program ManagementServices and General Fundraising Total

Salaries 1,816,518$ 653,040$ 509,279$ 2,978,837$ Payroll taxes and employee benefits 482,737 120,208 95,097 698,042 Intern wages and benefits 1,112,619 - - 1,112,619 Staff training and development 9,787 2,177 3,199 15,163 Pre-admissions screening 23,856 - - 23,856 Client assistance 246,127 - - 246,127 Professional and contractual fees 25,727 39,007 13,424 78,158 Uniforms 21,199 - - 21,199 Donated services - 3,009 - 3,009 Occupancy 287,598 65,489 49,878 402,965 Telephone 49,878 7,665 6,938 64,481 Insurance 28,356 5,778 4,470 38,604 Building repairs and maintenance 17,244 7,515 5,647 30,406 Equipment and software purchases 56,548 127 209 56,884 Rental and maintenance of equipment 93,548 26,020 21,431 140,999 Supplies 57,788 4,205 3,997 65,990 In-kind donations 50,889 1,202 894 52,985 Marketing and promotion 11,210 1,475 1,500 14,185 Printing and publications 7,270 2,041 2,391 11,702 Postage and shipping 1,187 1,315 18,651 21,153 Dues and memberships 11,771 4,586 4,795 21,152 Fees 39,300 5,877 27,913 73,090 Vehicle costs 82,395 158 136 82,689 Travel and meetings 11,464 2,563 1,427 15,454 Fundraising 2,219 533 37,711 40,463 Sales tax 300 - - 300 Miscellaneous 28,426 24,257 23,690 76,373 Total expenses before interest, amortization, and depreciation 4,575,961 978,247 832,677 6,386,885

Interest 67,020 28,930 21,994 117,944 Amortization 1,992 765 586 3,343 Depreciation 251,810 69,771 53,005 374,586 Total Expenses 4,896,783$ 1,077,713$ 908,262$ 6,882,758$


THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWSFor the Year Ended June 30, 2016

Cash Flows from Operating ActivitiesCash received - contributions 4,021,436$ Cash received - business contracts 2,462,559 Cash received - special events 732,008 Cash received - other income 23,266 Payments for interest (117,777) Payments for wages and other operating activities (6,141,385) Net cash provided by operating activities 980,107

Cash Flows from Investing ActivitiesAcquisition of property and equipment (42,461) Proceeds from sale of property and equipment 11,000 Cash used in investing activities (31,461)

Cash Flows from Financing ActivitiesPayments on long-term debt (75,691) Payments on capital leases (46,803) Cash used in financing activities (122,494)

Increase in cash and cash equivalents 826,152 Cash and cash equivalents, beginning of year 1,144,782 Cash and cash equivalents, end of year 1,970,934$


THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWSFor the Year Ended June 30, 2016

Reconciliation of Change in Net Assets to NetCash Provided by Operating ActivitiesChange in net assets 141,213$ Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation 374,586 Amortization 3,343 Gain on sale of vehicles and equipment (3,621) Change in assets - (increase) decrease Receivables 287,735 Prepaid expenses 25,015 Inventory (2,311) Change in liabilities - increase (decrease) Accounts payable 58,809 Accrued payroll and related costs 109,452 Deferred revenue (1,761) Accrued interest payable (167) Refundable advances (12,186) Net cash provided by operating activities 980,107$

Supplemental Information: Equipment purchased through capital leases 42,164$

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THE CARA PROGRAM AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJune 30, 2016

Note 1 – Nature of Operations and Summary of Significant Accounting Policies

The Cara Program (Cara) was established in 1991 and incorporated as an Illinois not-for-profit corporation on January 5, 1999. The mission of Cara is to prepare and inspire motivated individuals to break the cycles of homelessness and poverty, transform their lives, strengthen our communities and forge paths to real and lasting success. They realize this mission through the following five core programs:

Traditional Training & Placement Program: Cara’s Traditional Services include a comprehensive range of training and support for motivated individuals affected by poverty and homelessness, including life-skills training, specialized job-skills training, and personalized career placement services.

Quad Communities Campus: Quad Communities Campus (QCC) is Cara’s Southside campus and provides services similar to Cara traditional as well as assistance with income supports and financial literacy. The QCC helps residents establish careers, advance professionally, and accumulate assets through structured training, job placement support, and individual coaching.

Employment Retention: To ensure that students of Cara have the tools they need for long-term self-sufficiency, Cara offers "aggressive outreach" throughout each student’s first year of employment. These services include: regular one-on-one meetings with employed students about on-the-job successes and challenges; and development of individual long-term goals, including goals related to housing, education, and debt repayment. As a result, over 70% or more of employed Cara students receiving this support remain in their first job placement for at least one year. In addition to employment retention support, Cara’s Career Advancement Program supports students who have not only achieved stability in their personal and professional lives, but who also show an exceptional drive to grow in their careers. Once students have been employed for at least six months and are established personally and professionally, they may opt in to career advancement services.

Cleanslate Chicago, LLC (Cleanslate), a wholly-owned limited liability company, started in 2005, that provides neighborhood beautification services to customers across Chicago, was created as vehicle for individuals with significant obstacles to employment - particularly individuals with criminal backgrounds - to gain on-the-job work experience and intensive support services through transitional jobs. Cleanslate is a complement to Cara and provides additional services and training opportunities for at-risk individuals. For tax purposes, Cleanslate is treated as a disregarded entity and will be included in Cara’s financial statements and tax reporting. Under applicable accounting standards, Cara is required to prepare consolidated financial statements with Cleanslate.

TCP Staffing, LLC (TCP Staffing), a wholly owned limited liability company started in 2011, was created to manage employment of students participating in the transitional jobs aspect of Cara. TCP Staffing employs students that are working transitional jobs for Cleanslate and Cara

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Note 1 – Nature of Operations and Summary of Significant Accounting Policies (cont.)

as well as select companies outside of the enterprise. In 2013, TCP Staffing expanded to be a contract staffing firm dedicated to sourcing quality candidates to fulfill critical entry-level positions within Chicago’s growing job market by providing temporary and temporary to permanent opportunities.

Through management agreements with Cleanslate and TCP Staffing, Cara provides certain management, administrative and financial services, use of certain personnel employed by Caraand office space to Cleanslate and TCP Staffing. The direct costs of each Organization are kept separate along with an allocation of shared costs based on usage. Management service fees of $308,331 and $172,265 were billed to Cleanslate and TCP Staffing, respectively, for the year ended June 30, 2016.

Consolidated Financial StatementsThe accompanying financial statements reflect the consolidation of the financial statements of The Cara Program, Cleanslate Chicago, LLC, and TCP Staffing, LLC (collectively referred to as The Cara Program and Subsidiaries and the Organizations). All material inter-organization accounts and transactions have been eliminated in consolidation.

Basis of AccountingThe accounts and consolidated financial statements are maintained on the accrual basis of accounting and, accordingly, reflect all significant accounts receivable, payable, and other liabilities in conformity with accounting principles applicable to non-profit organizations.

Basis of PresentationThe Organizations report information regarding their financial position and activities according to three classes of net assets: - unrestricted, temporarily restricted, and permanently restricted net assets, as required by Generally Accepted Accounting Principles (GAAP).

Use of EstimatesThe preparation of financial statements in conformity with 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 consolidated financial statements and the reported amounts of the revenues, expenses, gains, losses and other changes in net assets during the reporting period. Actual results could differ from those estimates.

Cash and Cash EquivalentsCash and cash equivalents consist of bank deposits in federally insured accounts. The accounts may at times exceed the federally insured limit of $250,000. The Organizations have never experienced any such losses in these accounts.

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For purposes of the Consolidated Statement of Cash Flows, the Organizations consider all highly liquid debt instruments, if any, purchased with an original maturity of one year or less to be cash equivalents.

Grants and Pledges ReceivableContributions receivable represent amounts promised by donors (unconditional promises to give), some of which are due in installments. All amounts are deemed collectible and no discount is deemed necessary as the balances approximate fair value.

Property and EquipmentProperty and equipment are stated at cost. Acquisitions of property and equipment in excess of $500 and those items which substantially increase the useful lives of existing assets, are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which are:

Building and improvements 40 yearsLeasehold improvements 2 - 5 yearsFurniture and equipment 5 yearsVehicles 5 years

InventoryInventory consists of salt, uniforms and trash bags recorded at cost.

Debt Financing CostsDebt financing costs incurred of $24,865 associated with the Standard Bank loan are being amortized over the 10 year life of the loan. Amortization expense was $3,343 for the year ended June 30, 2016. The unamortized debt financing costs were $7,210 at June 30, 2016.

Net Assets Released from RestrictionsNet assets were released from restriction by incurrence of expenses satisfying the restricted purpose or by occurrence of events specified under the terms of the agreements.

Support and RevenueThe Organizations report gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or 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.

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Government ContributionsSupport funded by government contracts, which qualify as conditional promises to give, are recognized when the condition of performing the contracted services is met. Revenue is therefore recognized as earned as the condition of eligible expenses are incurred. These expenditures are subject to audit and acceptance by the granting Organization and, as a result of such audit, adjustments could be required.

Contributed Services and In-Kind DonationsContributed services are required to be recognized if the services received (a) create or enhance non-financial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. During the year ending June 30, 2016, The Organizations received donated legal services valued at $3,009.

The Organizations also receive a significant amount of donated services from unpaid volunteers who act as mentors and provide other assistance to clients. No amounts for these volunteer services have been recognized in the statement of activities or statement of functional expenses because the criteria for recognition under GAAP has not been satisfied.

In-kind donations were recognized at fair value in the consolidated financial statements during the year ending June 30, 2016. In-kind donations received consisting of the following:

Demand tools - license fees donated 3,500$

Dumpsters 48,360

Total in-kind donation revenue received 51,860

Plus:

Prior year capitalized inventory used 1,125

Net in-kind donation expense 52,985$

Functional Allocation of ExpensesThe costs of providing various programs and other activities have been summarized on a functional basis in the consolidated statement of activities and the consolidated statement of functional expenses. Directly identifiable expenses are charged to the specific program or supporting service. Expenses related to more than one function are generally allocated to program expenses and supporting services on the basis of periodic time and expense reviews made by management.

Income Tax StatusThe Cara Program was granted an exemption from federal income taxes by the Internal Revenue Service pursuant to the provisions of Internal Revenue Code Section 501(c)(3). The tax exempt purpose of the Organization and the nature in which it operates is described in the first paragraph of Note 1. The Organization continues to operate in compliance with its tax exempt purpose.

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Cleanslate Chicago, LLC and TCP Staffing, LLC are sole-member LLC’s. For tax purposes, Cleanslate and TCP Staffing are treated as disregarded entities and are included in Cara’s financial statements and tax reporting.

The Organizations’ annual information and income tax returns filed with the federal and state governments are subject to examination, generally for three years after they are filed.

Subsequent EventsAccounting principles generally accepted in the United States of America establish general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Organization has evaluated subsequent events through the date of the report on the financial statements, which is the date the statements were available to be issued. No subsequent events have been identified that are required to be disclosed as of that date.

Note 2 – Conditional Promises to Give

The Organizations have received the following conditional promises to give that are not recognized as assets in the consolidated statement of financial position as of June 30, 2016:

Advanced or

Grant Earned as of Funding

Term Amount June 30, 2016 Available

Local Initiative Support Corporation

Community Development Block Grant 1/1/16 to 32,300$ 5,288$ 27,012$

Training and Placement 12/31/16

City of Chicago Department of Family & Support Services

Community Development Block Grant 1/1/16 to

Training and Placement 12/31/16 120,000 75,184 44,816

Employment Preparation and Placement 127,000 64,364 62,636

Community Services Block Grant 1/1/16 to

TJ 12/31/16 133,000 91,556 41,444

City of Chicago Total 380,000 231,104 148,896

REDF

Social Innovation Fund (SIF) 200,000 28,600 171,400

DCEO/DHS

EPIC 200,000 10,332 189,668

$ 812,300 $ 275,324 $ 536,976

Conditional Promises to Give Upon Expenditure of Funds and/or Performance of Services

1/1/16-

12/31/16

1/1/16-

12/31/16

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Note 3 – Contributions and Pledges Receivable

At June 30, 2016, contributions and pledges receivable are reflected in the consolidated statement of financial position as follows:

Capacity

Building

Campaign Other Total

Due within one year 309,000$ 203,611$ 512,611$

Due in 1-5 years 355,000 - 355,000

664,000$ 203,611$ 867,611$

Contributions receivable designated for specific purposes are as follows:

Restricted to future time periods - capacity building campaign 664,000$

Restricted to future time periods - unrestricted contributions 203,611

867,611$

Note 4 – Lines of Credit

The Organizations maintains a $250,000, variable interest, line of credit with Standard Bank expiring on April 5, 2018. As of June 30, 2016, nothing was borrowed against this line. The line of credit is secured by the general assets of the Organizations.

Note 5 – Long Term Debt

Long-term debt consists of the following at June 30, 2016:

4% loan payable to Standard Bank, due April 10, 2023 with interest and principal

of $15,835 payable monthly. Loan is secured by a primary lien on commercial

property located at 237 South Desplaines, Chicago, IL, with a net book value of

$6,056,077 as of June 30, 2016. 2,769,862$

Less short term portion (80,772)

Net long-term debt 2,689,090$

The total interest incurred and expensed for the year ending June 30, 2016 was $114,163.

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Note 5 – Long Term Debt (cont.)

Future anticipated principal loan payments at June 30, 2016 are as follows:

June 30, Amount

2017 80,772$

2018 84,063

2019 87,488

2020 91,052

2021 94,765

2022 and thereafter 2,331,722

2,769,862$

Note 6 – Leases

The Organizations lease office space and copiers under non-cancellable operating lease arrangements. These leases expire at various dates through August 2017. Rental expense for these leases included in the consolidated statement of activities for the year ended June 30, 2016 was $173,804.

Future minimum lease payments anticipated under these operating leases are as follows:

Year Cara Cleanslate Total

2017 56,532$ 83,025$ 139,557$

2018 28,266 13,906 42,172

84,798$ 96,931$ 181,729$

Cleanslate also leases vehicles used in operation of its mission under master capital lease agreements with various outside parties that expire over the next five years. The gross amount of vehicle costs and related accumulated depreciation recorded under these capital leases and included in property and equipment are as follows:

Cost of vehicles 294,212$

Accumulated depreciation (130,830)

163,382$

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Note 6 – Leases (cont.)

The future minimum capital lease payments are as follows:

2017 54,085$

2018 50,017

2019 30,996

2020 19,374

Thereafter 20,532

Total minimum lease payments 175,004

Amount representing interest (3,180)

Present value of net minimum capital lease payments 171,824

Current installments of obligations under capital leases (54,085)

Long-term capital lease obligations 117,739$

Note 7 – Temporarily Restricted Net Assets

Temporarily restricted net assets are available for the following projects as of June 30, 2016:

Restricted to future time periods - capacity building campaign 664,000$

Restricted to future time periods - unrestricted contributions 136,789

Student supports 66,822

Total temporarily restricted net assets 867,611$

Note 8 – Unrestricted Net Assets

Unrestricted net assets consist of the following as of June 30, 2016:

Unrestricted

General 520,424$

Net investment in property and equipment 3,608,133

Operating reserve 1,584,000

5,712,557$

Operating Reserves - Cara’s Board maintains operating reserves for use in emergencies to sustain financial operations in the unanticipated event of significant unbudgeted increases in operating expenses and/or losses in operating revenues. Cara’s current goal is three months of the annualizedoperating expense budget which is projected to be $530,000 per month.

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Note 9 – Retirement Plans

The Organizations have a 401(k) defined contribution plan for the benefit of substantially all of its employees, allowing both employee and employer contributions. All employees are eligible after one year of service and are immediately fully vested in the employer match. The employer match is dollar for dollar on the employee’s contribution of one to three percent of their salary. Employer contributions are reviewed annually by senior management and approved by the Board of Directors as part of their approval of the annual budget. Cara contributed $28,553 and Cleanslate contributed $2,119 to the 401(k) plan during the year ending June 30, 2016.

SUPPLEMENTARY INFORMATION


Exhibit IPage 1 of 4

THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATING SCHEDULE OF FINANCIAL POSITIONAs of June 30, 2016

The Cara Cleanslate TCPProgram Chicago, LLC Staffing, LLC Consolidated

AssetsCurrent Assets Cash and cash equivalents 1,481,668$ 280,348$ 208,918$ 1,970,934$ Accounts receivable Government 118,783 - - 118,783 Other contributions 203,611 - - 203,611 Fee for service - 309,537 99,526 409,063 Total accounts receivable 322,394 309,537 99,526 731,457 Capacity building campaign pledges receivable, current 309,000 - - 309,000 Inventory - 18,316 - 18,316 Prepaid expenses 114,225 81 - 114,306 Total current assets 2,227,287 608,282 308,444 3,144,013

Property and Equipment (at cost) Building and improvements 7,234,072 - - 7,234,072 Leasehold improvements 11,685 12,634 - 24,319 Furniture and equipment 1,153,718 245,283 1,100 1,400,101 Vehicles - 448,860 - 448,860 Total property and equipment 8,399,475 706,777 1,100 9,107,352 Less accumulated depreciation (2,073,238) (491,322) (183) (2,564,743) Net property and equipment 6,326,237 215,455 917 6,542,609

Other Assets Due to/from related party 870,380 (641,020) (229,360) - Capacity building campaign pledges receivable, net of current portion 355,000 - - 355,000 Debt financing costs 7,210 - - 7,210 Security deposits 2,500 11,992 - 14,492 Total other assets 1,235,090 (629,028) (229,360) 376,702 Total Assets 9,788,614$ 194,709$ 80,001$ 10,063,324$



THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATING SCHEDULE OF FINANCIAL POSITIONAs of June 30, 2016

The Cara Cleanslate TCPProgram Chicago, LLC Staffing, LLC Consolidated

Liabilities and Net AssetsCurrent Liabilities Accounts payable 118,786$ 30,143$ 10,669$ 159,598$ Accrued payroll and related costs 162,162 43,949 87,059 293,170 Refundable advances 78,060 - - 78,060 Deferred revenue - 4,571 - 4,571 Current portion of long-term debt 80,772 - - 80,772 Current portion of capital lease obligations - 54,085 - 54,085 Accrued interest payable 6,071 - - 6,071 Total current liabilities 445,851 132,748 97,728 676,327

Long-Term Liabilities Long-term debt, less current maturities 2,689,090 - - 2,689,090 Long-term portion of capital lease obligations - 117,739 - 117,739 Total long-term liabilities 2,689,090 117,739 - 2,806,829 Total Liabilities 3,134,941 250,487 97,728 3,483,156

Net Assets Unrestricted 5,786,062 (55,778) (17,727) 5,712,557 Temporarily restricted 867,611 - - 867,611 Total net assets 6,653,673 (55,778) (17,727) 6,580,168 Total Liabilities and Net Assets 9,788,614$ 194,709$ 80,001$ 10,063,324$



THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATING STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2016

Cleanslate TCPChicago, LLC Staffing, LLC

Temporarily TemporarilyUnrestricted Restricted Unrestricted Unrestricted Eliminations Unrestricted Restricted Total

Public Support and RevenueSpecial Events Contributions 701,638$ -$ -$ -$ -$ 701,638$ -$ 701,638$ Ticket revenue 207,090 - - - - 207,090 - 207,090 Auction and raffle revenue 72,348 - - - - 72,348 - 72,348 In kind contributions - food and drink 31,370 - - - - 31,370 - 31,370 Less costs of direct benefits to donors (280,438) - - - - (280,438) - (280,438) Net revenues from special events 732,008 - - - - 732,008 - 732,008

Government contributions - 722,217 - - - - 722,217 722,217 Private contributions 1,473,357 1,212,818 - - - 1,473,357 1,212,818 2,686,175 Capacity building campaign contributions 285,643 - - - - 285,643 - 285,643 Fee for service revenue - - 1,857,959 667,828 (9,615) 2,516,172 - 2,516,172 Subcontracted work from related party - - 104,766 617,240 (722,006) - - - Management fees 430,025 - 62,866 172,265 (665,156) - - - Donated services 3,009 - - - - 3,009 - 3,009 In-kind donations 3,500 - 48,360 - - 51,860 - 51,860 Gain (loss) on disposal of equipment - - 3,621 - - 3,621 - 3,621 Miscellaneous 23,265 - 1 - - 23,266 - 23,266 Net assets released from restrictions - - satisfaction of program restrictions 2,147,909 (2,147,909) - - - 2,147,909 (2,147,909) -

Total Public Support and Revenue 5,098,716 (212,874) 2,077,573 1,457,333 (1,396,777) 7,236,845 (212,874) 7,023,971

ExpensesProgram Services Traditional Services 1,229,190 - - - (7,997) 1,221,193 - 1,221,193 Quad Communities Campus 702,194 - - - (1,122) 701,072 - 701,072 Employment Retention 576,509 - - - (4,465) 572,044 - 572,044 Cleanslate 104,766 - 1,860,746 - (701,703) 1,263,809 - 1,263,809 TCP Staffing - - - 1,260,405 (121,740) 1,138,665 - 1,138,665 Total program services 2,612,659 - 1,860,746 1,260,405 (837,027) 4,896,783 - 4,896,783

Management and general 1,305,225 - 129,651 197,465 (554,628) 1,077,713 - 1,077,713 Fundraising 913,384 - - - (5,122) 908,262 - 908,262 Total Expenses 4,831,268 - 1,990,397 1,457,870 (1,396,777) 6,882,758 - 6,882,758

Change in Net Assets 267,448 (212,874) 87,176 (537) - 354,087 (212,874) 141,213 Net assets, beginning of year 5,518,614 1,080,485 (142,954) (17,190) - 5,358,470 1,080,485 6,438,955 Net assets, end of year 5,786,062$ 867,611$ (55,778)$ (17,727)$ -$ 5,712,557$ 867,611$ 6,580,168$

The Cara Program Consolidated



THE CARA PROGRAM AND SUBSIDIARIESCONSOLIDATING STATEMENT OF FUNCTIONAL EXPENSESFor the Year Ended June 30, 2016

Quad CombinedTraditional Communities Employment Total Management

Services Campus Retention Cleanslate TCP Staffing Program and General Fundraising TotalSalaries 606,707$ 378,087$ 261,664$ 570,060$ -$ 1,816,518$ 653,040$ 509,279$ 2,978,837$ Payroll taxes and employee benefits 140,154 101,561 73,278 167,744 - 482,737 120,208 95,097 698,042 Intern wages and benefits - - - - 1,112,619 1,112,619 - - 1,112,619 Staff training and development 2,666 1,979 1,371 3,652 119 9,787 2,177 3,199 15,163 Pre-admissions screening 23,616 71 169 - - 23,856 - - 23,856 Client assistance 127,843 44,702 73,582 - - 246,127 - - 246,127 Professional and contractual fees 3,631 13,027 5,214 - 3,855 25,727 39,007 13,424 78,158 Uniforms - - - 21,199 - 21,199 - - 21,199 Donated services - - - - - - 3,009 - 3,009 Occupancy 85,212 48,078 41,217 113,091 - 287,598 65,489 49,878 402,965 Telephone 9,567 15,872 5,628 18,811 - 49,878 7,665 6,938 64,481 Insurance 7,650 5,435 3,887 7,440 3,944 28,356 5,778 4,470 38,604 Building repairs and maintenance 9,674 2,079 4,715 776 - 17,244 7,515 5,647 30,406 Equipment and software purchases 325 263 88 55,872 - 56,548 127 209 56,884 Rental and maintenance of equipment 31,324 28,542 14,529 18,790 363 93,548 26,020 21,431 140,999 Supplies 5,110 4,668 2,376 45,543 91 57,788 4,205 3,997 65,990 In-kind donations 1,529 212 788 48,360 - 50,889 1,202 894 52,985 Marketing and promotion 2,152 1,597 1,215 4,357 1,889 11,210 1,475 1,500 14,185 Printing and publications 2,211 808 3,596 655 - 7,270 2,041 2,391 11,702 Postage and shipping 414 414 359 - - 1,187 1,315 18,651 21,153 Dues and memberships 5,578 1,403 2,577 1,713 500 11,771 4,586 4,795 21,152 Fees 6,032 4,259 3,009 12,553 13,447 39,300 5,877 27,913 73,090 Vehicle costs 1,026 362 1,206 79,801 - 82,395 158 136 82,689 Travel and meetings 5,106 3,910 1,392 - 1,056 11,464 2,563 1,427 15,454 Special events 584 1,527 108 - - 2,219 533 37,711 40,463 Sales tax - - - 300 - 300 - - 300 Miscellaneous 12,613 7,305 4,292 3,790 426 28,426 24,257 23,690 76,373 Total expenses before interest, amortization, and depreciation 1,090,724 666,161 506,260 1,174,507 1,138,309 4,575,961 978,247 832,677 6,386,885

Interest 37,917 6,141 19,181 3,781 - 67,020 28,930 21,994 117,944 Amortization 1,326 162 504 - - 1,992 765 586 3,343 Depreciation 91,226 28,608 46,099 85,521 356 251,810 69,771 53,005 374,586 Total Expenses 1,221,193$ 701,072$ 572,044$ 1,263,809$ 1,138,665$ 4,896,783$ 1,077,713$ 908,262$ 6,882,758$

Cara's


Exhibit IIPage 1 of 4

THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: THE CARA PROGRAM - STATEMENT OF FINANCIAL POSITIONAs of June 30, 2016

AssetsCurrent Assets Cash and cash equivalents 1,481,668$ Government contributions receivable 118,783 Other contributions receivable 203,611 Capacity building campaign pledges receivable 309,000 Prepaid expenses 114,225 Total current assets 2,227,287

Property and Equipment (at cost) Building and improvements 7,234,072 Leasehold improvements 11,685 Furniture and equipment 1,153,718 Total property and equipment 8,399,475 Less accumulated depreciation (2,073,238) Net property and equipment 6,326,237

Other Assets Due from related party, Cleanslate 609,380 Due from related party, TCP Staffing 261,000 Capacity building campaign pledges receivable, net of current portion 355,000 Debt financing costs, net of accumulated amortization $4,893 7,210 Security deposits 2,500 Total other assets 1,235,090 Total Assets 9,788,614$



THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: THE CARA PROGRAM - STATEMENT OF FINANCIAL POSITIONAs of June 30, 2016

Liabilities and Net AssetsCurrent Liabilities Accounts payable 118,786$ Accrued payroll and related costs 162,162 Refundable advances 78,060 Current portion of long-term debt 80,772 Accrued interest payable 6,071 Total current liabilities 445,851

Long-Term Liabilities Long-term debt, less current maturities 2,689,090Total Liabilities 3,134,941

Net Assets Unrestricted 5,786,062 Temporarily restricted 867,611 Total net assets 6,653,673 Total Liabilities and Net Assets 9,788,614$



THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: THE CARA PROGRAM - STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2016

ConsolidatingTotal Eliminations

Temporarily Before to TemporarilyUnrestricted Restricted Eliminations Unrestricted Unrestricted Restricted Total

Public Support and RevenueSpecial Events Contributions 701,638$ -$ 701,638$ -$ 701,638$ -$ 701,638$ Ticket revenue 207,090 - 207,090 - 207,090 - 207,090 Auction and raffle revenue 72,348 - 72,348 - 72,348 - 72,348 In kind contributions - food and drink 31,370 - 31,370 - 31,370 - 31,370 Less costs of direct benefits to donors (280,438) - (280,438) - (280,438) - (280,438) Net revenues from special events 732,008 - 732,008 - 732,008 - 732,008

Government contributions - 722,217 722,217 - - 722,217 722,217 Private contributions 1,473,357 1,212,818 2,686,175 - 1,473,357 1,212,818 2,686,175 Capacity building contributions 285,643 - 285,643 - 285,643 - 285,643 Management fees 430,025 - 430,025 (430,025) - - - Donated services 3,009 - 3,009 - 3,009 - 3,009 In-kind donations 3,500 - 3,500 - 3,500 - 3,500 Loss on disposal of equipment - - - - - - - Miscellaneous 23,265 - 23,265 - 23,265 - 23,265 Net assets released from restrictions - satisfaction of program restrictions 2,147,909 (2,147,909) - - 2,147,909 (2,147,909) -

Total Public Support and Revenue 5,098,716 (212,874) 4,885,842 (430,025) 4,668,691 (212,874) 4,455,817

ExpensesProgram Services Traditional Services 1,229,190 - 1,229,190 (7,997) 1,221,193 - 1,221,193 Quad Communities Campus 702,194 - 702,194 (1,122) 701,072 - 701,072 Employment Retention 576,509 - 576,509 (4,465) 572,044 - 572,044 Cleanslate 104,766 - 104,766 (104,766) - - - Total program services 2,612,659 - 2,612,659 (118,350) 2,494,309 - 2,494,309

Management and general 1,305,225 - 1,305,225 (241,843) 1,063,382 - 1,063,382 Fundraising 913,384 - 913,384 (5,122) 908,262 - 908,262 Total Expenses 4,831,268 - 4,831,268 (365,315) 4,465,953 - 4,465,953

Change in Net Assets 267,448 (212,874) 54,574 (64,710) 202,738 (212,874) (10,136) Net assets, beginning of year 5,518,614 1,080,485 6,599,099 1,223,324 6,741,938 1,080,485 7,822,423 Net assets, end of year 5,786,062$ 867,611$ 6,653,673$ 1,158,614$ 6,944,676$ 867,611$ 7,812,287$

After Intercompany EliminationsBefore Intercompany Eliminations



THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: THE CARA PROGRAM - EXPENDITURES BY FUNCTIONFor the Year Ended June 30, 2016

Quad TotalTraditional Communities Employment Management

Services Campus Retention Cleanslate Total and General Fundraising TotalSalaries 606,707$ 378,087$ 261,664$ -$ 1,246,458$ 653,040$ 509,279$ 2,408,777$ Payroll taxes and employee benefits 140,154 101,561 73,278 - 314,993 120,208 95,097 530,298 Intern wages and benefits 7,997 1,122 4,465 - 13,584 6,712 5,122 25,418 Staff training and development 2,666 1,979 1,371 - 6,016 2,177 3,199 11,392 Sub-contracting related party, Cleanslate - - - 104,766 104,766 - - 104,766 Contribution to related party, Cleanslate and TCP Staffing - - - - - 235,131 - 235,131 Pre-admissions screening 23,616 71 169 - 23,856 - - 23,856 Client assistance 127,843 44,702 73,582 - 246,127 - - 246,127 Professional and contractual fees 3,631 13,027 5,214 - 21,872 24,676 13,424 59,972 Donated services - - - - 3,009 - 3,009 Occupancy 85,212 48,078 41,217 - 174,507 65,489 49,878 289,874 Telephone 9,567 15,872 5,628 - 31,067 7,665 6,938 45,670 Insurance 7,650 5,435 3,887 - 16,972 5,778 4,470 27,220 Building repairs and maintenance 9,674 2,079 4,715 - 16,468 7,515 5,647 29,630 Equipment and software purchases 325 263 88 - 676 127 209 1,012 Rental and maintenance of equipment 31,324 28,542 14,529 - 74,395 26,020 21,431 121,846 Supplies 5,110 4,668 2,376 - 12,154 4,205 3,997 20,356 Donated materials 1,529 212 788 - 2,529 1,202 894 4,625 Marketing and promotion 2,152 1,597 1,215 - 4,964 1,475 1,500 7,939 Printing and publications 2,211 808 3,596 - 6,615 2,041 2,391 11,047 Postage and shipping 414 414 359 - 1,187 1,315 18,651 21,153 Dues and memberships 5,578 1,403 2,577 - 9,558 4,586 4,795 18,939 Fees 6,032 4,259 3,009 - 13,300 5,877 27,913 47,090 Vehicle costs 1,026 362 1,206 - 2,594 158 136 2,888 Travel and meetings 5,106 3,910 1,392 - 10,408 2,563 1,427 14,398 Special events 584 1,527 108 - 2,219 533 37,711 40,463 Miscellaneous 12,613 7,305 4,292 - 24,210 24,257 23,690 72,157 Total expenses before interest, amortization, and depreciation 1,098,721 667,283 510,725 104,766 2,381,495 1,205,759 837,799 4,425,053

Interest 37,917 6,141 19,181 - 63,239 28,930 21,994 114,163 Amortization 1,326 162 504 - 1,992 765 586 3,343 Depreciation 91,226 28,608 46,099 - 165,933 69,771 53,005 288,709 Total Expenses 1,229,190$ 702,194$ 576,509$ 104,766$ 2,612,659$ 1,305,225$ 913,384$ 4,831,268$

Program Services


Exhibit IIIPage 1 of 3

THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: CLEANSLATE CHICAGO, LLC - STATEMENT OF FINANCIAL POSITIONAs of June 30, 2016

AssetsCurrent Assets Cash and cash equivalents 280,348$ Contracts receivable 309,537 Inventory 18,316 Prepaid expenses 81 Total current assets 608,282

Property and Equipment (at cost) Leasehold improvements 12,634 Furniture and equipment 245,283 Vehicles 448,860 Total property and equipment 706,777 Less accumulated depreciation (491,322) Net property and equipment 215,455 Security deposit 11,992 Total Assets 835,729$

Liabilities and Net AssetsCurrent Liabilities Current portion of capital lease obligations 54,085$ Accounts payable 30,143 Accrued payroll and related costs 43,949 Deferred revenue 4,571 Total current liabilities 132,748 Due to related party, Cara 586,493 Due to related party, TCP Staffing 54,527 Long term portion of capital lease obligations 117,739 Total Liabilities 891,507

Net deficit (55,778) Total Liabilities and Net Assets 835,729$



THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: CLEANSLATE CHICAGO, LLC - STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2016

ConsolidatingBefore Eliminations After

Intercompany to Intercompany Eliminations Unrestricted Eliminations

Public Support and RevenueFee for service contracts 1,857,959$ (9,615)$ 1,848,344$ Subcontracted work from related party, Cara 104,766 (104,766) - In-kind management fee to related party, Cara 62,866 (62,866) - Donated supplies 48,360 - 48,360 Miscellaneous income 1 - 1 Gain on disposal of vehicles and equipment 3,621 - 3,621 Total Public Support and Revenue 2,077,573 (177,247) 1,900,326

ExpensesProgram services 1,860,746 (596,937) 1,263,809 Management and general 129,651 (115,320) 14,331 Total Expenses 1,990,397 (712,257) 1,278,140

Change in net assets - unrestricted 87,176 535,010 622,186 Net assets - unrestricted, beginning of year (142,954) 979,112 836,158 Net assets (deficit) - unrestricted, end of year (55,778)$ 1,514,122$ 1,458,344$



THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: CLEANSLATE CHICAGO, LLC - STATEMENT OF FUNCTIONAL EXPENSESFor the Year Ended June 30, 2016

ManagementTotal Prior Program and General

Management to Intercompany Intercompany IntercompanyProgram and General Eliminations Eliminations Eliminations Total

Salaries 570,060$ -$ 570,060$ -$ -$ 570,060$ Payroll taxes and employee benefits 167,744 - 167,744 - - 167,744 Intern wages and benefits 596,017 - 596,017 (596,017) - - Staff training and development 3,652 - 3,652 - - 3,652 Management fee to related party, Cara - 48,000 48,000 - (48,000) - In-kind management fee from related party, Cara - 62,866 62,866 - (62,866) - Professional and contractual fees - 14,331 14,331 - - 14,331 Uniforms 21,199 - 21,199 - - 21,199 Occupancy 113,091 - 113,091 - - 113,091 Telephone 18,811 - 18,811 - - 18,811 Insurance 8,360 - 8,360 (920) - 7,440 Building repairs and maintenance 776 - 776 - - 776 Equipment and software purchases 55,872 - 55,872 - - 55,872 Rental and maintenance of equipment 18,790 - 18,790 - - 18,790 Supplies 45,543 - 45,543 - - 45,543 Donated supplies 48,360 - 48,360 - - 48,360 Marketing and promotion 4,357 - 4,357 - - 4,357 Printing and publications 655 - 655 - - 655 Dues and memberships 1,713 - 1,713 - - 1,713 Fees 12,553 4,454 17,007 - (4,454) 12,553 Vehicle costs 79,801 - 79,801 - - 79,801 Sales tax 300 - 300 - - 300 Interest expense 3,781 - 3,781 - - 3,781 Miscellaneous 3,790 - 3,790 - - 3,790 Total expenses before depreciation 1,775,225 129,651 1,904,876 (596,937) (115,320) 1,192,619

Depreciation 85,521 - 85,521 - - 85,521 Total Expenses 1,860,746$ 129,651$ 1,990,397$ (596,937)$ (115,320)$ 1,278,140$


Exhibit IVPage 1 of 3

THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: TCP STAFFING, LLC - STATEMENT OF FINANCIAL POSITIONAs of June 30, 2016

AssetsCurrent Assets Cash and cash equivalents 208,918$ Accounts receivable 99,526 Due from related party, Cleanslate 31,640 Total current assets 340,084

Property and Equipment (at cost) Furniture and equipment 1,100 Less accumulated depreciation (183) Net property and equipment 917 Total Assets 341,001$

Liabilities and Net AssetsCurrent Liabilities Accounts payable 10,669$ Accrued payroll and related costs 87,059 Due to related party, Cara 261,000 Total Liabilities 358,728

Net Assets (17,727) Total Liabilities and Net Assets 341,001$



THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: TCP STAFFING, LLC - STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2016

ConsolidatingBefore Eliminations After

Intercompany to Intercompany Eliminations Unrestricted Eliminations

Public Support and RevenueSubcontracted work from related party, Cleanslate 617,240$ (617,240)$ -$ In-kind management fee to related party, Cara 172,265 (172,265) - Temporary staffing service revenue 667,828 - 667,828 Total Public Support and Revenue 1,457,333 (789,505) 667,828

ExpensesProgram services 1,260,405 (121,740) 1,138,665 Management and general 197,465 (197,465) - Total Expenses 1,457,870 (319,205) 1,138,665

Change in net assets - unrestricted (537) (470,300) (470,837) Net assets (deficit), beginning of year (17,190) (2,202,436) (2,219,626) Net assets (deficit), end of year (17,727)$ (2,672,736)$ (2,690,463)$



THE CARA PROGRAM AND SUBSIDIARIESSEGMENT INFORMATION: TCP STAFFING, LLC - STATEMENT OF FUNCTIONAL EXPENSESFor the Year Ended June 30, 2016

ManagementTotal Prior Program and General

Management to Intercompany Intercompany IntercompanyProgram and General Eliminations Eliminations Eliminations Total

Intern wages and benefits 1,234,359$ -$ 1,234,359$ (121,740)$ -$ 1,112,619$ Staff development and training 119 - 119 - - 119 In-kind management fee from related party, Cara - 197,465 197,465 - (197,465) - Professional fees 3,855 - 3,855 - - 3,855 Travel and meetings 1,056 - 1,056 - - 1,056 Insurance 3,944 - 3,944 - - 3,944 Rental and maintenance of equipment 363 - 363 - - 363 Supplies 91 - 91 - - 91 Marketing and promotions 1,889 - 1,889 - - 1,889 Dues and memberships 500 - 500 - - 500 Fees 13,447 - 13,447 - - 13,447 Depreciation 356 - 356 - - 356 Miscellaneous 426 - 426 - - 426 Total Expenses 1,260,405$ 197,465$ 1,457,870$ (121,740)$ (197,465)$ 1,138,665$

OTHER REPORT

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Desmond &Ahern, Ltd.CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

Independent Auditor’s Report on Internal Control overFinancial Reporting and on Compliance and Other Matters

Based on an Audit of Financial Statements Performed inAccordance with Government Auditing Standards

To the Board of Directors ofThe Cara Program, Cleanslate Chicago, LLC.,and TCP Staffing, LLC. Chicago, IL

We have audited in accordance with auditing standards accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the consolidated financial statements of The Cara Program, Cleanslate Chicago, LLC and TCP Staffing, LLC. (the Organization), which comprise the consolidated statement of financial position as of June 30, 2016, and the related consolidated statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated September 30, 2016.

Internal Control over Financial Reporting

In planning and performing our audit of the consolidated financial statements, we considered the Organization’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

10827 S. WESTERN AVENUE, CHICAGO, IL 60643-3206 • PHONE 773-779-4720 • FAX 773-779-8310

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Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Organization’s consolidated financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, noncompliance with which could have a direct and material effect on the determination of consolidated financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of the Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the Organization’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Organization’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

September 30, 2016Chicago, IL

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