YOUNG MEN’S CHRISTIAN ASSOCIATION OF GREATER RICHMOND · Young Men’s Christian Association Of...

YOUNG MEN’S CHRISTIAN ASSOCIATION OF GREATER RICHMOND

Financial Report | December 31, 2013

Contents Independent Auditor’s Report 1 – 2

Financial Statements

Statements Of Financial Position 3

Statements Of Activities 4 – 7

Statements Of Cash Flows 8

Statements Of Functional Expenses 9 – 12

Notes To Financial Statements 13 – 25

1

Independent Auditor’s Report To the Board of Directors Young Men’s Christian Association Of Greater Richmond Richmond, Virginia Report on the Financial Statements

We have audited the accompanying financial statements of Young Men’s Christian Association of Greater Richmond (the Association) which comprise the statements of financial position as of December 31, 2013 and 2012, and the related statements of activities, cash flows, and functional expenses 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 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 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 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 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 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Association as of December 31, 2013 and 2012, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Richmond, Virginia June 20, 2014

3

Young Men’s Christian Association Of Greater Richmond

Statements Of Financial PositionDecember 31, 2013 And 2012

Assets 2013 2012

Cash and cash equivalents 7,492,754 $ 6,276,085 $ Prepaid expenses and other receivables 477,193 608,850 Contributions receivable, net (Note 2) 1,697,376 2,206,288 Investments (Notes 3 and 4) 7,999,812 7,238,481 Land, buildings and equipment, net (Note 5) 61,963,623 64,051,485 Other assets 82,872 87,749

79,713,630 $ 80,468,938 $

Liabilities and Net AssetsLiabilities

Accounts payable and accrued expenses 2,165,368 $ 2,892,064 $ Deferred membership and program fees 988,545 963,188 Long-term debt (Note 6) 23,576,328 24,975,894

Total liabilities 26,730,241 28,831,146

Commitments (Note 7)

Net assets (Note 9):Unrestricted 46,525,977 46,058,055 Temporarily restricted 3,670,008 2,798,571 Permanently restricted 2,787,404 2,781,166

Total net assets 52,983,389 51,637,792

Total liabilities and net assets 79,713,630 $ 80,468,938 $

See Notes To Financial Statements.

4


Statements Of Activities

Years Ended December 31, 2013 And 2012

Temporarily Permanently

Unrestricted Restricted Restricted Total

Revenues and public support:

United Way Services 446,264 $ 11,678 $ -$ 457,942 $

Contributions 2,098,723 934,617 - 3,033,340

Endowment contributions 147,873 - 6,238 154,111

Capital campaign contributions - 624,678 - 624,678

Total public support 2,692,860 1,570,973 6,238 4,270,071

Membership fees 23,573,321 - - 23,573,321

Program fees 12,048,595 - - 12,048,595

Rental of facilities 153,726 - - 153,726

Merchandise sales and YMCA

training fees 124,123 - - 124,123

Other income 74,373 - - 74,373

Investment gain (Note 3) 383,164 531,220 - 914,384

Net assets released from

restrictions (Note 9) 1,230,756 (1,230,756) - -

Total revenues and

public support 40,280,918 871,437 6,238 41,158,593

2013

(Continued)

5



443,646 $ 3,482 $ -$ 447,128 $

2,190,142 773,845 - 2,963,987

24,427 - 30,440 54,867

- 837,098 - 837,098

2,658,215 1,614,425 30,440 4,303,080

22,425,850 - - 22,425,850

11,766,608 - - 11,766,608

232,175 - - 232,175

131,824 - - 131,824

64,328 - - 64,328

307,136 425,155 - 732,291

1,671,789 (1,671,789) - -

39,257,925 367,791 30,440 39,656,156

2012

6


Statements Of Activities (Continued)

Years Ended December 31, 2013 And 2012



Expenses:

Program services:

Healthy living 18,249,538 $ -$ -$ 18,249,538 $

Youth development 13,663,827 - - 13,663,827

Social responsibility 2,158,648 - - 2,158,648

Total program services 34,072,013 - - 34,072,013

Supporting services:

General administration 4,004,288 - - 4,004,288

Fundraising 1,327,820 - - 1,327,820

Total supporting services 5,332,108 - - 5,332,108

Unallocated payments

to national organization 291,924 - - 291,924

Total expenses 39,696,045 - - 39,696,045

Gain on sale of fixed assets 10,416 - - 10,416

Change in net assets 595,289 871,437 6,238 1,472,964

Net assets:

Beginning 46,058,055 2,798,571 2,781,166 51,637,792

Initial recognition of accumulated post

retirement benefit obligation (Note 7) (127,367) - - (127,367)

Ending 46,525,977 $ 3,670,008 $ 2,787,404 $ 52,983,389 $


2013

7



16,925,768 $ -$ -$ 16,925,768 $

13,750,261 - - 13,750,261

2,258,564 - - 2,258,564

32,934,593 - - 32,934,593

3,472,514 - - 3,472,514

2,109,249 - - 2,109,249

5,581,763 - - 5,581,763

286,590 - - 286,590

38,802,946 - - 38,802,946

19,521 - - 19,521

474,500 367,791 30,440 872,731

45,583,555 2,430,780 2,750,726 50,765,061

- - - -

46,058,055 $ 2,798,571 $ 2,781,166 $ 51,637,792 $

2012

8


Statements Of Cash FlowsYears Ended December 31, 2013 And 2012

2013 2012Cash Flows From Operating Activities

Change in net assets 1,472,964 $ 872,731 $ Adjustments to reconcile change in net assets

to net cash provided by operating activities:Depreciation and amortization 3,455,685 3,198,761 Net realized gain from disposition of investments and equipment (361,823) (146,844) Unrealized gain on investments (349,124) (386,118) Contributions restricted for construction (624,678) (837,098) Contributions restricted for long-term investments (6,238) (28,715) Non-cash donations - (16,367) Changes in assets and liabilities:

Prepaid expenses and other receivables 131,657 (270,337) Contributions receivable (68,436) 8,494 Accounts payable and accrued expenses (854,063) (65,642) Deferred membership and program fees 25,357 27,285

Net cash provided by operating activities 2,821,301 2,356,150 Cash Flows From Investing Activities

Proceeds from sales of investments 4,349,304 11,073,351 Proceeds from sales of equipment and other assets 7,998 18,654 Purchases of investments (4,408,168) (5,729,317) Acquisition and construction of land, buildings and equipment (1,360,529) (8,709,250) Changes in contributions receivable 8,727 15,248

Net cash used in investing activities (1,402,668) (3,331,314) Cash Flows From Financing Activities

Principal payments on notes payable (1,345,061) (1,296,365) Principal payments on capital lease obligations (54,504) (50,249) Changes in contributions receivable 644,288 407,323 Discount for net present value of pledges and provision

for uncollectible contributions receivable, net (77,603) (35,380) Contributions restricted for construction 624,678 837,098 Contributions restricted for long-term investments 6,238 28,715

Net cash used in financing activities (201,964) (108,858) Net increase (decrease) in cash and cash equivalents 1,216,669 (1,084,022)

Cash and cash equivalents:Beginning 6,276,085 7,360,107

Ending 7,492,754 $ 6,276,085 $

Supplemental Disclosure of Cash Flow InformationCash payments for interest 416,097 $ 483,692 $


9


Statement Of Functional ExpensesYear Ended December 31, 2013

Healthy Youth SocialLiving Development Responsibility Total

Salaries and wages 9,447,341 $ 6,060,237 $ 782,354 $ 16,289,932 $ Employee benefits 951,348 682,119 124,218 1,757,685 Payroll taxes and workers’

compensation 852,075 549,286 76,909 1,478,270

11,250,764 7,291,642 983,481 19,525,887

Professional fees and contractservices 333,346 242,609 20,561 596,516

Supplies 719,216 1,150,385 108,467 1,978,068 Telephone 107,052 82,052 14,361 203,465 Postage and shipping 21,041 15,653 2,499 39,193 Occupancy 3,236,827 2,630,116 370,887 6,237,830 Transportation and travel 62,555 284,417 13,409 360,381 Conferences and training 221,048 244,157 29,244 494,449 Printing, promotion and publicity 245,049 184,190 29,666 458,905 Specific assistance - - 330,016 330,016 Miscellaneous 292,412 220,685 47,848 560,945

16,489,310 12,345,906 1,950,439 30,785,655

Depreciation and amortization 1,760,228 1,317,921 208,209 3,286,358

18,249,538 $ 13,663,827 $ 2,158,648 $ 34,072,013 $


Program Services

10

General FundAdministration Raising Total Total

1,901,888 $ 815,459 $ 2,717,347 $ 19,007,279 $ 334,742 145,725 480,467 2,238,152

147,990 63,081 211,071 1,689,341

2,384,620 1,024,265 3,408,885 22,934,772

606,476 51,142 657,618 1,254,134 21,196 149,669 170,865 2,148,933

103,992 1,078 105,070 308,535 46,518 339 46,857 86,050

171,256 18,993 190,249 6,428,079 18,424 3,537 21,961 382,342

188,696 33,879 222,575 717,024 274,301 8,413 282,714 741,619

- - - 330,016 51,192 4,795 55,987 616,932

3,866,671 1,296,110 5,162,781 35,948,436

137,617 31,710 169,327 3,455,685

4,004,288 $ 1,327,820 $ 5,332,108 $ 39,404,121 $

Supporting Services

11


Statement Of Functional ExpensesYear Ended December 31, 2012

Healthy Youth SocialLiving Development Responsibility Total

Salaries and wages 8,686,980 $ 6,067,124 $ 790,296 $ 15,544,400 $ Employee benefits 836,547 664,819 123,089 1,624,455 $ Payroll taxes and workers’

compensation 800,068 569,691 79,061 1,448,820 $

10,323,595 7,301,634 992,446 18,617,675

Professional fees and contractservices 265,452 227,346 21,539 514,337

Supplies 706,083 1,108,910 132,547 1,947,540 Telephone 116,939 96,899 18,363 232,201 Postage and shipping 24,068 19,600 3,616 47,284 Occupancy 3,248,695 2,830,068 415,696 6,494,459 Transportation and travel 62,961 348,822 16,262 428,045 Conferences and training 183,146 195,678 28,513 407,337 Printing, promotion and publicity 166,345 135,979 33,074 335,398 Specific assistance - - 341,927 341,927 Miscellaneous 274,915 223,227 47,274 545,416

15,372,199 12,488,163 2,051,257 29,911,619 Depreciation and amortization 1,553,569 1,262,098 207,307 3,022,974

16,925,768 $ 13,750,261 $ 2,258,564 $ 32,934,593 $


Program Services

12

General FundAdministration Raising Total Total

1,594,805 $ 1,420,786 $ 3,015,591 $ 18,559,991 $ 305,412 259,428 564,840 2,189,295

129,816 111,464 241,280 1,690,100

2,030,033 1,791,678 3,821,711 22,439,386

559,796 63,361 623,157 1,137,494 23,811 173,688 197,499 2,145,039

102,056 3,362 105,418 337,619 46,257 197 46,454 93,738

113,091 11,166 124,257 6,618,716 27,883 4,509 32,392 460,437

110,766 17,374 128,140 535,477 272,363 3,567 275,930 611,328

- - - 341,927 43,502 7,516 51,018 596,434

3,329,558 2,076,418 5,405,976 35,317,595 142,956 32,831 175,787 3,198,761

3,472,514 $ 2,109,249 $ 5,581,763 $ 38,516,356 $

Supporting Services


Notes To Financial Statements

13

Note 1. Nature Of Activities And Significant Accounting Policies

Mission and nature of activities: The mission of the Young Men’s Christian Association of Greater Richmond (the Association) is to put Christian principles into practice through programs that build healthy spirit, mind and body for all. The Association is a not-for-profit charitable organization which promotes healthy living, youth development and social responsibility throughout the Richmond, Virginia metropolitan area and Petersburg, Virginia. The significant accounting policies followed by the Association are described below: Basis of accounting: The accompanying financial statements are presented in accordance with the accrual basis of accounting, whereby, revenue and public support is recognized when earned and expenses are recognized when incurred. Basis of presentation: The financial statement presentation follows the recommendations of The Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 958, Not-for-Profit Entities. Under ASC 958, the Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. Unrestricted net assets – Unrestricted net assets are the net assets that are neither permanently restricted nor temporarily restricted by donor-imposed stipulations. Temporarily restricted net assets – Temporarily restricted net assets result from contributions whose use is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Association pursuant to those stipulations. Net assets may be temporarily restricted for various purposes, such as use in future periods or use for specified purposes. Permanently restricted net assets – Permanently restricted net assets result from contributions whose use is limited by donor-imposed stipulations that neither expire by passage of time nor are otherwise removed by the Association’s actions. Contributions: Contributions receivable are carried at net present value less an estimate made for potentially uncollectible accounts based on a review of all outstanding amounts on a regular basis. Management determines the allowance by regularly evaluating individual donor receivables and considering a donor’s payment history and current economic conditions. Contributions receivable are written off when deemed uncollectible. Recoveries of receivables are recorded when received. The Association reports gifts of cash and other assets as temporarily or permanently restricted support if they are received with donor stipulations that limit the use or timing of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets in the statements of activities. All contributions to be received within one year are considered to be available for unrestricted use unless specifically restricted by the donor. Gifts of property and equipment are reported as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Contributed services: Contributed services are recorded at their fair value if such services create or enhance non-financial assets, would have been purchased if not provided by contribution, require specialty skills and are provided by individuals possessing such specialized skills. A substantial number of volunteers contribute significant amounts of time and services to the Association’s program operations, fund raising campaigns and boards and committees of the Association. Such contributed services do not meet the criteria for recognition of contributed services and are not reflected in the accompanying financial statements.



14

Note 1. Nature Of Activities And Significant Accounting Policies (Continued)

Accounting estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents: For purposes of reporting cash flows, the Association considers all highly liquid debt instruments with maturity when acquired of three months or less to be a cash equivalent. Membership and program fees: Membership and program fees are recognized as revenue over the membership or program period. Such fees received in advance are recorded as deferred revenue. Joining fees are non-refundable and are recognized as revenue when received. Investments: Equity securities with readily determinable fair values and all investments in debt securities are reported at fair value. Alternative investments are valued at fair value based on the applicable percentage of ownership of the underlying net assets or partners’ capital as determined by the fund at the measurement date. Unrealized gains and losses are reported in the statements of activities. In calculating realized gains and losses, the cost of securities sold is determined by the specific-identification method. Investments received by gift are recorded at the fair value on the date received. Financial risk: The Association maintains its cash and temporary cash investments in bank deposit accounts with major financial institutions which, at times, may exceed federally-insured limits. The Association has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and temporary cash investments. The Association invests in a professionally managed portfolio that contains common shares and bonds of publicly traded companies, U.S. obligations, mutual funds and money market funds. Such investments are exposed to various risks such as interest rate, market and credit. Due to the level of risk associated with such investments and the uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment balances and the amounts reported in the financial statements. Fair value of financial instruments: The carrying value of financial instruments, including cash equivalents, accounts payable, accrued expenses, deferred revenue and short-term borrowings, approximate fair value due to their short maturities. The fair values of the Association’s investments are determined using quoted market prices for those securities. The fair value of the Association’s long-term debt is estimated based on current market interest rates and credit spreads for debt with similar maturities. The fair value of long-term debt incorporates a credit valuation adjustment to appropriately reflect the Association’s own nonperformance risk. The Association believes the carrying value of the debt approximates fair value. Land, buildings and equipment: Land, buildings and equipment are stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives:

Years

Parking lots 5 – 20 Buildings and land improvements 15 – 39Other recreational facilities 10 – 20 Furniture, equipment and vehicles 3 – 15



15

Note 1. Nature Of Activities And Significant Accounting Policies (Continued)

Valuation of long-lived assets: Long-lived assets, such as buildings and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the accompanying statements of financial position and reported at the lower of the carrying amount or fair value less costs to sell. Functional expenses: Functional expenses are determined through allocating total expenses incurred to the programs and supporting services benefited. Income taxes: The Association has been recognized by the Internal Revenue Service as tax exempt under Section 501(c)(3) of the Internal Revenue Code. In addition, the Association qualifies for charitable contributions deductions under Section 170(b)(1)(A)(vi) and has been classified as an organization that is not a private foundation under Section 509(a)(1). As a nonprofit organization, the Association is subject to unrelated business income tax (UBIT), if applicable. The Association did not have any unrelated business income for the years ended December 31, 2013 and 2012. Management evaluated the Association’s positions and concluded that the Association had taken no uncertain tax positions that require adjustment to the financial statements to comply with the accounting standard on accounting for uncertainty in income taxes. The Association files an informational Form 990 in the U.S. federal jurisdiction. Generally, the Association is no longer subject to income tax examinations by the U.S federal, state, or local tax authorities for years before 2010. Advertising: Advertising costs are expensed as incurred and totaled $436,593 and $255,785, respectively, for the years ended December 31, 2013 and 2012. Recent accounting pronouncement: In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2012-05, Statement of Cash Flows (Topic 230): Not-for- Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows. The amendments in this ASU require a not-for-profit entity (NFP) to classify cash receipts from the sale of donated financial assets consistently with cash donations received in the statement of cash flows if those cash receipts were from the sale of donated financial assets that upon receipt were directed without any NFP-imposed limitations for sale and were converted nearly immediately into cash. Accordingly, the cash receipts from the sale of those financial assets should be classified as cash inflows from operating activities, unless the donor restricted the use of the contributed resources to long-term purposes, in which case those cash receipts should be classified as cash flows from financing activities. Otherwise, cash receipts from the sale of donated financial assets should be classified as cash flows from investing activities by the NFP. The amendments in the ASU are effective prospectively for fiscal years, and interim fiscal periods within those years, beginning after June 15, 2013. The Association elected to early adopt the ASU for the year ended December 31, 2012. Reclassification: Certain prior year balances have been reclassified to conform with the current year presentation. Total net assets and change in net assets were unchanged due to these reclassifications. Subsequent Events: The Association evaluated subsequent events for potential required disclosures through June 20, 2014, which is the date the financial statements were available to be issued. The Association determined that no subsequent event needs to be disclosed.



16

Note 2. Contributions Receivable

Anticipated collections of contributions receivable at December 31, 2013 and 2012, are as follows:

2013 2012

Within one year 827,318 $ 1,060,825 $ One to five years 947,335 1,165,343 More than five years 152,500 287,500

1,927,153 2,513,668 Less:

Discounts for the time-value of money at 2.5% in 2013 (104,777) (142,380) and 2012

Allowance for uncollectible contributions receivable (125,000) (165,000) 1,697,376 $ 2,206,288 $

Included in the balances above are amounts of $385,983 and $693,702 at December 31, 2013 and 2012, respectively, which are due from members of the Board of Directors and members of management. For the years ended December 31, 2013 and 2012, there were approximately $187,000 and $457,000 in gift revenues from those members, respectively.

Note 3. Investments

Investments are composed of the following at December 31, 2013 and 2012:

Cost Fair Value

Common stocks 3,998,471 $ 5,174,688 $ Corporate bonds 1,960,023 2,014,988 Alternative investments 188,766 191,475 Cash and cash equivalents 618,661 618,661

6,765,921 $ 7,999,812 $

2013

Cost Fair Value

Common stocks 3,389,563 $ 4,159,734 $ Corporate bonds 1,930,792 2,069,967 Alternative investments 450,000 424,874 Cash and cash equivalents 583,906 583,906

6,354,261 $ 7,238,481 $

2012



17

Note 3. Investments (Continued)

Components of investment gain for the years ended December 31, 2013 and 2012, consist of the following:

2013 2012

Realized gain 352,744 $ 127,323 $ Unrealized gain 349,124 386,118 Interest and dividends 212,516 218,850

914,384 $ 732,291 $

Note 4. Fair Value Measurements

The Association uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures Topic of the ASC, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The types of investments included in Level 1 include listed equities and listed derivatives. As required, the Association does not adjust the quoted price for these investments, even in situations where the Association holds a large position and a sale could reasonably impact the quoted price. Level 2 – Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this category include certain corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement. Level 3 – Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation. Investments that are included in this category generally include equity and debt positions in private companies and general and limited partnership interests in corporate private equity and real estate funds, debt funds, and distressed debt.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Association’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. In determining the appropriate levels, the Association performs a detailed analysis of the assets and liabilities that are subject to fair value measurements.



18

Note 4. Fair Value Measurements (Continued)

Publicly traded securities, both equity and debt securities, are classified as Level 1 instruments because they comprise assets traded on public exchanges with readily determinable fair values and observable market based inputs. The alternative investment is classified as a Level 2 instrument because it comprises equity interests in a limited partnership; however, there is an observable market-based input upon which fair market value can be reasonably determined. Alternative investments classified as Level 2 instruments have net asset values per share, or the equivalent, and are able to be redeemed by the Association at the statement of financial position date, or in the near term. The following table summarizes, by level within the fair value hierarchy, the assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 and 2012:

Quoted Prices in Significant

Active Markets Other Significant

for Identical Observable Unobservable

Assets Inputs Inputs

Description Total (Level 1) (Level 2) (Level 3)

2013

Assets

Common stocks 4,972,104$ 4,972,104$ -$ -$

Corporate bonds 1,944,973 1,944,973 - -

Alternative investment 191,475 - 191,475 -

Variable adjustable life insurance policy 272,599 272,599 - -

7,381,151$ 7,189,676$ 191,475$ -$

2012

Assets

Common stocks 4,010,224$ 4,010,224$ -$ -$

Corporate bonds 2,003,107 2,003,107 - -

Alternative investment 424,874 - 424,874 -

Variable adjustable life insurance policy 216,370 216,370 - -

6,654,575$ 6,229,701$ 424,874$ -$

Fair Value Measurements Using

Fair value for Level 1 is based on quoted market prices. The variable adjustable life insurance policy includes investments in publicly traded common stocks and corporate bonds. Alternative investments may span multiple markets, securities and risk factors with an intended strategy of providing the portfolio with greater potential for diversification, historically low correlation to traditional investments, minimization of market cycle peaks and troughs, and the potential to produce improved risk-adjusted returns.



19

Note 5. Land, Buildings And Equipment

Land, buildings and equipment as of December 31, 2013 and 2012, consist of the following:

2013 2012

Land 6,745,384 $ 6,784,418 $ Parking lots 2,252,280 2,197,419 Buildings and land improvements 75,172,947 74,706,997 Other recreational facilities 1,653,026 1,648,093 Furniture, equipment and vehicles, including assets under capital leases 2013 $213,519; and 2012 $227,531 12,504,995 12,159,138 Construction in progress 848,629 704,863

99,177,261 98,200,928 Less accumulated depreciation, including amortization

applicable to assets under capital leases2013 $95,331; and 2012 $59,634 37,213,638 34,149,443

61,963,623 $ 64,051,485 $

The Powhatan and Goochland facilities are constructed on leased land with initial terms of 50 and 99 years, respectively. Both leases contain provisions for extension of the initial terms.

Note 6. Debt

At December 31, 2013 and 2012, long-term debt consisted of the following:

2013 2012Note payable pursuant to loan agreement with the Economic Development

Authority of the Town of Ashland, Virginia, dated November 23, 2010 22,605,000 $ 23,805,000 $ Note payable to Wells Fargo Bank 864,091 1,009,153 Capital lease obligations 107,237 161,741

23,576,328 $ 24,975,894 $

Note payable pursuant to loan agreement with the Economic Development Authority of the Town of Ashland, Virginia, dated November 23, 2010: The Association entered into a transaction with the Economic Development Authority (EDA) of the Town of Ashland, Virginia in which the EDA issued its Health and Community Services Facilities Revenue and Refunding Bonds (2010 Bonds) in the amount of $26,000,000, pursuant to an Indenture of Trust dated November 1, 2010 (Indenture) between the EDA and Wells Fargo Bank, National Association, as bond trustee. The EDA loaned the proceeds of the 2010 Bonds, all of which were purchased by Wells Fargo Bank, National Association (Bank), to the Association pursuant to a loan agreement between the EDA and the Association, in exchange for an unsecured note. The unsecured note, and all principal and interest payments to be made pursuant thereto, were irrevocably assigned to the bond trustee for the benefit of the Bank. Interest on the 2010 Bonds is excludable from gross income for federal income tax purposes pursuant to the Internal Revenue Code of 1986, as amended.



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Note 6. Debt (Continued)

Proceeds of the 2010 Bonds were applied as follows: Refund Series A 2000 bonds 7,865,000 $ Principal and interest on the line of credit 8,479,356 Deposit to project fund to be used for facility development projects

and Issuance Costs 9,655,644 26,000,000 $

The 2010 Bonds have a scheduled maturity of December 1, 2030, and bear interest at 66% of one-month LIBOR (reset monthly) plus 1.21%. Pursuant to the terms of a Continuing Covenant Agreement dated as of November 1, 2010 (Covenant Agreement) between the Bank and the Association, the Bank and the Association agreed to an amortization schedule that provides for annual principal payments. Pursuant to the Covenant Agreement, the Bank agreed to purchase the 2010 Bonds for an initial three-year term. On June 2, 2013, the Bank and the Association agreed to extend the term for an additional three years ending on June 2, 2016. All other significant provisions of the original agreement remained the same with the exception of a reduction in the Credit Spread to 1.21%. The interest rate was 1.32% as of December 31, 2013. The 2010 Bonds may be prepaid at any time with no penalty. Note payable to Wells Fargo Bank: During 2003, the Association borrowed $2,000,000 to finance the expansion of a branch facility. The note payable is unsecured, bears a fixed interest rate of 5.98% and is payable in monthly installments through 2018. In the event of prepayment or acceleration of amounts due, the note provides for potential additional compensation to the lending institution. Other credit facilities: The Association established a $500,000 unsecured line of credit available for general Association purposes through August 31, 2014. Borrowings bear variable interest at one-month LIBOR plus 1.5% (1.67% at December 31, 2013). This facility had not been utilized as of December 31, 2013. The Association loan agreements contain various restrictive covenants, including limitations on additional indebtedness, the ability to encumber assets and revenues, and the maintenance of a minimum debt service coverage ratio. At December 31, 2013, long-term debt matures as follows: Years Ending December 31,

2014 993,713 $ 2015 996,228 2016 1,098,995 2017 1,104,776 2018 1,107,616 Thereafter 18,275,000

23,576,328 $

Total interest expense incurred was $410,080 in 2013 and $478,360 in 2012. In 2013 and 2012, interest expense of $62,067 and $152,062, respectively, was capitalized.



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Note 7. Commitments and Contingencies

Leases: The Association leases various facilities and equipment under operating leases with terms of one to ten years. Total rent expense was $984,159 in 2013 and $979,261 in 2012. The total minimum rental commitment at December 31, 2013, is due as follows: Years Ending December 31,

2014 854,341 $ 2015 306,569 2016 228,208 2017 46,426 2018 15,574

1,451,118 $

Pension plan: The Association is a participant in the National Y.M.C.A. Retirement Fund (Fund) defined contribution (individual accounts) plans for eligible employees. The Association’s contributions to the Fund are 12% of covered employees’ annual salaries. The total expense to the Association was $1,232,260 in 2013 and $1,264,362 in 2012. Postretirement benefit plan: Effective January 1, 2013, the Association adopted a postretirement medical benefit plan. The plan allows for the payment of $100 per month to a limited number of retirees who meet certain eligibility requirements. Upon plan initiation, the previously unrecognized prior service costs of $147,175, net of amortization of $19,808 in 2013, were recognized as a separate line item within changes in unrestricted net assets.

Note 8. Related Parties

The Association conducts business with financial institutions and other service providers throughout the Richmond and Petersburg areas. Certain members of the Association’s Board of Directors, volunteers and donors are employed by such entities.

Note 9. Restricted Net Assets

Temporarily restricted net assets are comprised primarily of funds raised for capital projects, as well as other funds not yet utilized for their intended purpose. Net assets totaling $1,230,756 and $1,671,789 were released from donor restrictions during 2013 and 2012, respectively, comprised primarily of expenditures for the purchase of property and equipment in connection with the current capital campaign as well as certain operating contributions. Temporarily restricted net assets set forth below are comprised as follows:

2013 2012

Capital projects 1,692,209 $ 1,219,690 $ Operating contributions for future periods 281,950 185,500 Cumulative increase in temporarily restricted endowment net assets 1,695,849 1,393,381

3,670,008 $ 2,798,571 $



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Note 9. Restricted Net Assets (Continued)

Permanently restricted net assets set forth below are comprised primarily of investments in perpetuity, the income from which is expendable to support the indicated purposes:

2013 2012

Volunteer and employee training 51,258 $ 50,258 $

Human Opportunity Program Endowment (H.O.P.E.) 300,000 300,000

Art education program 3,000 3,000

Northside youth programs 1,604,801 1,604,776

Learn To Swim program 54,625 54,625

Financial assistance 114,032 114,032

General purposes 631,138 626,525

Youth and Teen programs 28,550 27,950

2,787,404 $ 2,781,166 $

The Association’s endowment consists of approximately 20 individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by management as endowments. As required by U.S. GAAP, net assets associated with endowment funds, including funds designated by management to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. Interpretation of Relevant Law The Association has interpreted the Commonwealth of Virginia enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds, absent explicit donor stipulations to the contrary. As a result of this interpretation, the Association 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 Association in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Association considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

a. The duration and preservation of the fund b. The purposes of the Association and the donor-restricted endowment fund c. General economic conditions d. The possible effects of inflation and deflation e. The expected total return from income and the appreciation of investments f. Other resources of the Association g. The investment policies of the Association



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Return Objective and Risk Parameters The Association’s objective is to earn a reasonable, long-term, risk-adjusted total rate of return to support the designated programs. The Association recognizes and accepts that pursuing a reasonable rate of return involves risk and potential volatility. The generation of current income is a secondary consideration. The Association targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. The Association has established a policy portfolio, or normal asset allocation. While the policy portfolio can be adjusted from time to time, it is designed to serve for long-time horizons based upon long-term expected returns. Spending Policy Spending is first governed by donor stipulations associated with specific gifts with respect to both purpose and amount. Otherwise, the Association will appropriate for expenditure in its annual budget a maximum of 5% of the rolling average of the market value of the endowment assets over the preceding 12 quarters. There may be times when the Association may opt not to take the maximum spending rate but rather to reinvest some of the annual return. No distribution is permitted if the distribution would decrease the contributed principal of the respective component of the Endowment Fund.



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The Association had the following endowment-related activities for the years ended December 31, 2013 and 2012:

Temporarily PermanentlyUnrestricted Restricted Restricted Total

Endowment assets,January 1, 2012 1,357,029 $ 1,182,948 $ 2,750,726 $ 5,290,703 $

Investment return: Investment income (net of fees) 33,548 94,499 - 128,047 Net appreciation (realized and unrealized) 107,428 301,449 - 408,877 Total investment return 140,976 395,948 - 536,924

Additions 54,630 - 30,440 85,070

Appropriation of endowment assets for expenditure (48,099) (185,515) - (233,614)

Endowment assets, December 31, 2012 1,504,536 1,393,381 2,781,166 5,679,083

Investment return: Investment income (net of fees) 34,554 86,724 - 121,278 Net appreciation (realized and unrealized) 158,446 414,760 - 573,206 Total investment return 193,000 501,484 694,484

Additions 145,522 - 6,238 151,760

Appropriation of endowment assets for expenditure (64,462) (198,991) - (263,453)

Endowment assets, December 31, 2013 1,778,596 $ 1,695,874 $ 2,787,404 $ 6,261,874 $



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Endowment assets at December 31, 2013 and 2012, are comprised as follows:

Temporarily PermanentlyUnrestricted Restricted Restricted Total

2013

Donor-restricted endowment funds -$ 1,695,874 $ 2,787,404 $ 4,483,278 $

Management-restricted endowment funds 1,778,596 - - 1,778,596

Total funds 1,778,596 $ 1,695,874 $ 2,787,404 $ 6,261,874 $

2012Donor-restricted endowment funds -$ 1,393,381 $ 2,781,166 $ 4,174,547 $

Management-restricted endowment funds 1,504,536 - - 1,504,536

Total funds 1,504,536 $ 1,393,381 $ 2,781,166 $ 5,679,083 $

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