AIGA Financial Statement FY2013

8/12/2019 AIGA Financial Statement FY2013

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AMERICAN INSTITUTE OF GRAPHIC ARTS

FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2013 AND 2012

AND

INDEPENDENT AUDITORS REPORT


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TABLE OF CONTENTS

Page

Independent Auditors Report 1

Financial Statements

Statements of Financial Position 3

Statement of Activities for the Year Ended September 30, 2013 4

Statement of Activities for the Year Ended September 30, 2012 5

Statements of Cash Flows 6

Notes to Financial Statements 7


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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of the American Institute of Graphic Arts. as of September 30, 2013 and 2012, andthe related statements of activities and cash flows for the years then ended in accordance withaccounting principles generally accepted in the United States of America.

January 29, 2014


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STATEMENTS OF FINANCIAL POSITION

September 30,

2013 2012

ASSETS

Cash and cash equivalents 364,571$ 134,970$

Accounts receivable 98,816 94,419

Prepaid expenses and deposits 313,376 266,758

Investments 2,497,137 2,657,309

Property and equipment, net 2,125,443 2,257,390

Mortgage financing cost, net 38,290 44,106

5,437,633$ 5,454,952$

LIABILITIES AND NET ASSETS

Liabilities

Line of credit payable 249,900$ 249,900$

Accounts payable and accrued expenses 363,690 388,234

Deferred revenue 2,160,956 1,565,264

Loan payable 48,228 72,979

Mortgage payable 1,067,951 1,192,931

3,890,725 3,469,308

Net assets

Unrestricted

Undesignated 774,377 1,276,702

Board designated 341,195 340,573

1,115,572 1,617,275

Temporarily restricted 331,336 268,369

Permanently restricted 100,000 100,000

Total net assets 1,546,908 1,985,644

5,437,633$ 5,454,952$

See notes to financial statements.

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STATEMENT OF ACTIVITIES

YEAR ENDED SEPTEMBER 30, 2013

Temporarily Permanently

Unrestricted Restricted Restricted Total

Revenues

Membership dues 2,896,749$ -$ -$ 2,896,749$

Programs 1,331,966 - - 1,331,966

Grants and contributions 62,469 67,210 129,679

Special events (net of direct donor

benefits of $58,960) 102,240 - - 102,240

Investment return 188,568 1,257 - 189,825

Miscellaneous 172,332 - - 172,332

Net assets released from restrictions 5,500 (5,500) - -

Total revenue 4,759,824 62,967 - 4,822,791

Expenses

Program services 4,457,268 - - 4,457,268

Management and general 638,495 - - 638,495

Fund raising 165,764 - - 165,764

Total expenses 5,261,527 - - 5,261,527

Change in net assets (501,703) 62,967 - (438,736)

Net assets

Beginning of year 1,617,275 268,369 100,000 1,985,644

End of year 1,115,572$ 331,336$ 100,000$ 1,546,908$


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STATEMENT OF ACTIVITIES

YEAR ENDED SEPTEMBER 30, 2012

Temporarily Permanently

Unrestricted Restricted Restricted Total

Revenues

Membership dues 3,188,136$ -$ -$ 3,188,136$

Programs 2,475,911 - - 2,475,911

Publications 122 - - 122

Grants and contributions 85,525 22,620 - 108,145

Special events (net of direct donor

benefits of $40,710) 90,691 - - 90,691

Investment return 438,266 1,574 - 439,840

Miscellaneous 157,145 - - 157,145

6,435,796 24,194 - 6,459,990

Net assets released from restrictions -

satisfaction of program restrictions 33,106 (33,106) - -

Total revenues 6,468,902 (8,912) - 6,459,990

Expenses

Program services 5,025,545 - - 5,025,545Management and general 537,136 - - 537,136

Fund raising 405,842 - - 405,842

Total expenses 5,968,523 - - 5,968,523

Change in net assets 500,379 (8,912) - 491,467

Net assets

Beginning of year 1,116,896 277,281 100,000 1,494,177

End of year 1,617,275$ 268,369$ 100,000$ 1,985,644$


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STATEMENTS OF CASH FLOWS

Year Ended September 30,

2013 2012

Cash flows from operating activities

Change in net assets (438,736)$ 491,467$

Adjustments to reconcile change in net assets to net cash

provided by (used in) operating activities

Depreciation and amortization 140,750 140,754

Net realized and unrealized gain on investments (104,379) (362,788)

Changes in operating assets and liabilities

Accounts receivable (4,397) 118,924

Prepaid expenses and deposits (46,618) 49,507

Accounts payable and accrued expenses (24,544) (236,057)

Deferred revenue 595,692 (775,401)

Net cash provided by (used in) operating activities 117,768 (573,594)

Cash flows from investing activities

Proceeds from sale of investments 952,928 1,429,036

Purchase of investments (688,377) (1,301,488)

Acquisition of property and equipment (2,987) (52,133)

Net cash provided by investing activities 261,564 75,415

Cash flows from financing activities

Principal payments on line of credit - (77,000)

Proceeds from loan payable - 75,000

Principal payments on loan payable (24,751) (2,021)

Principal payments on mortgage (124,980) (116,915)

Net cash used in financing activities (149,731) (120,936)

Net increase (decrease) in cash and cash equivalents 229,601 (619,115)

Cash and cash equivalents, beginning of year 134,970 754,085

Cash and cash equivalents, end of year 364,571$ 134,970$

Supplemental cash flow disclosure

Cash paid for interest 88,802$ 97,634$


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NOTES TO FINANCIAL STATEMENTS

1 - ORGANIZATION

American Institute of Graphic Arts (AIGA), the professional association for design, wasfounded in 1914. Its mission is to advance design as a professional craft, strategic advantage andvital cultural force. At the national level, we pursue our mission by connecting practitioners,enthusiasts and patrons through regional, national and global events, and by creating and curatingcontent that:

Advocates for a greater understanding of the value of designers and design ingovernment, business, media and the public

Enhances professional development Defines global standards and ethical practices Inspires designers and the public Establishes criteria for design education that meet the needs of the profession Makes powerful tools and resources available and accessible Celebrates and enhances the value of design Mobilizes a global design movement

As of October 1, 2012, AIGA had 22,475 members: 2 Trustees, 35 Design Leaders, 8,030Sustaining Members, 3,341 Supporters and 11,067 Contributors. AIGA transitioned to a newmembership model in August 2012.

AIGA had 66 chapters as of October 1, 2012. The accompanying financial statements do notinclude the financial position or the change in net assets and cash flows of these chapters, each ofwhich is an autonomous corporation organized under the laws of the state in which it is located.

AIGAs revenues are primarily derived from membership dues and various programmaticactivities it carries out. AIGA offered the following programs during its 2013 fiscal year:

Gain: Design for Social Value Conference, October 9-10, 2012, San Francisco(504 attendees)


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1 - ORGANIZATION(Continued)

Geographics: Design, Education and the Transnational Terrain, December 13-15,2012, Honolulu (157 attendees)

Blunt: Explicit and Graphic Design Criticism Now, April 12-14, 2013, Norfolk(106 attendees)

Bright Lights: The AIGA Awards Gala, April 19, 2013, New York City (360attendees)

AIGA Leadership Retreat, May 30-June 1, 2013, Philadelphia (327 attendees) Facilitation: by Design, June 27-28, 2013, Minneapolis (40 attendees) Business Perspectives for Creative Leaders, July 21-26, 2013, at Yale School of

Management (31 attendees)

Deferred revenue and prepaid expenses were recorded for Head, Heart, Hands: AIGA DesignConference held in Minneapolis on October 10-12, 2013.

Justified: AIGA Design Competition received 263 entries; 14 were selected for publication onAIGA .org.

AIGA offered several webinar series for members during 2012-2013:

Breakthroughs: Where Inspiration and Technology Meet, three sessions

Ask Aquent, live Q&A with career experts, seven sessions

Industry Insights, career development webinars, three sessions

AIGA Voices, featuring thoughtful and influential designers, 10 sessions

Open AIGA, about AIGAs policies and activities, five sessions

AIGA Insights, what AIGA is doing and why, 12 sessions


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1 - ORGANIZATION(Continued)

Exhibitions in AIGAs gallery included:

Get Out the Vote 2012, October 3-November 30, 2012

The Lustigs: A Cover Story, December 10, 2012-February 15, 2013

We the Designers, March 5-April 5, 2013

AIGA Colorado Presents: Bordo Bello NYC, April 22-July 2, 2013

Estrada: Sailing through Design, July 17-October 7, 2013

National sponsors for the year were Adobe Systems, the official sponsor for design solutions;Aquent, the official sponsor for professional development; and Shutterstock, the official sponsorfor creative inspiration.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Presentation

AIGAs net assets, revenues, expenses, gains and losses are classified, based on the existence orabsence of donor-imposed restrictions, into the following three categories:

Unrestricted net assets - Unrestricted net assets represent the portion of expendable fundsavailable for the support of all AIGAs operations.

Temporarily restricted net assets - Net assets subject to donor-imposed stipulations that mayor will be met, either by action of AIGA and/or the passage of time.

When a restriction expires, that is, when a stipulated time restriction ends or purposerestriction 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.

Permanently restricted net assets - Net assets subject to donor-imposed stipulations that mustbe maintained permanently by AIGA. Generally, the donors of these assets would permitAIGA to use all or part of the income earned on any related investments for general or specificpurposes.


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2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America (GAAP) requires management to make estimates andassumptions that affect certain reported amounts and disclosures. Accordingly, actual resultscould differ from those estimates.

Cash and Cash Equivalents

Cash balances in banks are insured by the Federal Deposit Insurance Corporation subject to

certain limitations. For purposes of the statement of cash flows, AIGA considers all highly liquidinvestments with a maturity of three months or less when purchased to be cash equivalents.

Investments

Investments are stated at fair value. GAAP establishes a framework for measuring fair value.That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniquesused to measure fair value. The hierarchy gives the highest priority to unadjusted quoted pricesin active markets for identical assets or liabilities (Level 1 measurements) and the lowest priorityto unobservable inputs (Level 3 measurements). Under GAAP, the three levels of the fair valuehierarchy are described below:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical

assets or liabilities in active markets that AIGA has the ability to access.

Level 2: Inputs to the valuation methodology include:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in inactive markets;

Inputs other than quoted prices that are observable for the asset or liability;

Inputs that are derived principally from or corroborated by observable market

data by correlation or other means.

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

Level 3: Unobservable inputs that reflect managements own assumptions.


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Property and Equipment

Property and equipment are stated at cost or, if donated, at the estimated fair market value of theassets at the date of donation. Costs for repairs and maintenance are charged to expense asincurred. All plant assets, other than land, are depreciated over their estimated useful lives usingthe straight-line method. Estimated useful lives used to calculate depreciation are as follows:

Building and improvements 30 yearsFurniture, fixtures and equipment 5 years

Computer equipment 3 years

Deferred Revenue and Related Expenses

Revenue received and expenses paid in the current period for publications, conferences,exhibitions, programs and other events scheduled to take place in the subsequent period aredeferred on the statement of financial position. The majority of non-membership deferredrevenue and related expenses relate to the national conference which is held in October,subsequent to the fiscal year.

Membership dues are allocated to the period to which they relate and are recognized accordingly.Membership dues billed and received in advance are reflected as deferred revenue in thestatement of financial position.

Donated Materials and Services

Donated materials, generally, printing and paper supplies, are estimated at $106,024 and$438,612 for the years ended September 30, 2013 and 2012, respectively. Such donations arerecorded in the statement of activities as program revenue, with an offset to program expenses asdonors of such items receive commensurate value in return.

Volunteer officers and committees which serve without remuneration play an important role inthe functioning of AIGA. No amounts have been reflected in the financial statements for suchdonated services, as they do not meet the criteria for recognition.

Functional Allocation of ExpensesExpenses have been charged to program or supporting services, either directly when identifiable,or indirectly based on managements estimation of the services benefited.


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Income Taxes

AIGA is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Codeand is classified as a publicly supported organization as described in Section 509(a).

AIGAs tax filings prior to 2010 are no longer subject to examination by tax authorities.

ReclassificationCertain 2012 amounts have been reclassified to conform to the 2013 presentation.

Subsequent Events

These financial statements were approved by management and available for issuance onJanuary 29, 2014. Management has evaluated subsequent events through this date.

3 - PREPAID EXPENSES AND DEPOSITS

Prepaid expenses and deposits consisted of the following:

September 30,

2013 2012

AIGA Design Conference $ 187,838 $ -Gain: AIGA Business and Design Conference - 208,997Other conferences 23,910 12,166Security deposit 4,660 -Other prepayments 96,968 45,595

$ 313,376 $ 266,758


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4 - INVESTMENTS AND INVESTMENT RETURN

AIGAs investments, which are considered to be Level 1, consisted of the following:

September 30,

2013 2012

Common stock $ 1,491,180 $ 1,584,417Corporate fixed income 233,345 332,330Mutual funds 698,816 667,574

Short-term deposits 73,796 72,988$ 2,497,137 $ 2,657,309

The investment return is summarized as follows:

Year Ended September 30,

2013 2012

Interest and dividends $ 85,446 $ 77,052Net unrealized gain on investments 19,056 221,777Net realized gain on sale of investments 85,323 141,011

$ 189,825 $ 439,840

AIGA invests in various investment securities in accordance with a board-adopted investmentrisk strategy. Investment securities are exposed to various risks such as interest rate, market, andcredit risks. Due to the level of risk associated with certain investment securities, it is at leastreasonably possible that changes in the values of investment securities will occur in the near termand that such changes could materially affect the amounts reported in the statement of financialposition.


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5 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

September 30,

2013 2012

Land $ 388,800 $ 388,800Building 2,066,035 2,066,035Building improvements 1,423,995 1,423,995

Office machinery and equipment 645,233 642,245Furniture and fixtures 303,193 303,194

4,827,256 4,824,269Less - Accumulated depreciation 2,701,813 2,566,879

$ 2,125,443 $ 2,257,390

6 - MORTGAGE FINANCING COST

Mortgage financing cost, which represents the unamortized balance of expenses incurredassociated with the March 2006 refinancing, is amortized over the life of the loan and consisted

of the following:

September 30,

2013 2012

Legal fees $ 5,073 $ 5,073Other 82,168 82,168

87,241 87,241

Less - Accumulated amortization 48,951 43,135

$ 38,290 $ 44,106

Amortization expense for each of the years ended September 30, 2013 and 2012 was $5,816.


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7 - NOTES PAYABLE, BANK

AIGA has a $250,000 line of credit with a bank, payable on demand. Interest is determined basedon the prime rate plus 1%. The interest rate at both September 30, 2013 and 2012 was 4.25%. Theamount outstanding at September 30, 2013 and 2012 was $249,900. Interest expense for fiscal2013 and 2012 was $13,478 and $14,086, respectively.

AIGA has a term loan agreement with a bank in the amount of $77,000 with principal and interestpayments over a 36-month period at a fixed interest rate of $4.25%. The amount outstanding atSeptember 30, 2013 and 2012 was $48,228 and $72,979, respectively. Principal payments of

$25,833 and $22,381 are due in fiscal 2014 and 2015, respectively. Interest expense for fiscal2013 and 2012 was $2,623 and $538, respectively.

Both the line of credit and the term loan agreement contain covenants relating to the debt servicecoverage ratios. The line of credit and term loan agreement were not in compliance with the loancovenant as of September 30, 2013. AIGA received a waiver from the bank for the line of creditand term loan for the year ended September 30, 2013.

In June 2013, AIGA obtained a line of credit (Portfolio Loan Agreement or PLA) with abank. The amount of the line of credit is based on a percentage of investment assets pledged byAIGA on which the line of credit is secured. At September 30, 2013, the line of credit amountedto $1,500,000. The interest rate is determined by a variable rate (Corresponding PLA Index) plus

3.0%. The interest rate at September 30, 2013 was 3.17%. There was no amount outstandingunder this line of credit at September 30, 2013, nor any interest expense incurred under this lineof credit in fiscal 2013.

8 - DEFERRED REVENUE

Deferred revenue consisted of the following:

September 30,

2013 2012

Conferences $ 1,121,787 $ 415,988Membership dues 1,039,169 1,149,276

$ 2,160,956 $ 1,565,264


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9 - MORTGAGE PAYABLE

AIGA has a 15-year mortgage loan agreement with Citibank, N.A. for $1,900,000, at a fixedinterest rate of 6.69% that matures on April 1, 2020.

Future annual principal payments are as follows:

Year Ending

September 30,

2014 $ 133,6032015

142,8202016 152,6732017 163,2062018 174,466Thereafter 301,183

$ 1,067,951

Interest expense on the mortgage debt for the years ended September 30, 2013 and 2012 was$75,323 and $83,435, respectively.

10 - AIGA LEGACY CAMPAIGN

The AIGA Legacy Campaign is the banner under which a variety of funds have been created tochannel charitable gifts toward the challenges facing the profession. The funds to which peoplegiving to the campaign can commit their donations include funds in support of AIGAs archivesand scholarship programs, as well as the AIGA Legacy Fund (for special projects), the LegacyEndowment (to secure the future of AIGA), the Diversity Fund, the Design Writing & CriticismAwards and the AIGA Disaster Relief Fund.

Board-designated net assets consisted of the following:

September 30,

2013 2012

AIGA Legacy Fund $ 105,924 $ 105,924Archives Funds 38,007 38,007Scholarship Funds 51,237 50,615Legacy Endowment 44,300 44,300Diversity Fund 14,577 14,577Denver Archives 87,150 87,150

$ 341,195 $ 340,573


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11 - TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets consisted of the following:

September 30,Program 2013 2012

Scholarship Funds $ 61,345 $ 39,562Disaster Relief Fund 9,087 9,087Archives Funds 2,758 1,984AIGA Legacy Fund 256,070 215,660

Diversity Fund 975 975Legacy Endowment 1,101 1,101Total $ 331,336 $ 268,369

12 - PERMANENTLY RESTRICTED NET ASSETS

Permanently restricted net assets are restricted to investments held in perpetuity, the income fromwhich is expendable to support the Henry Wolf AIGA Scholarships.

13 - RETIREMENT PLAN

AIGA has a defined contribution retirement plan that covers substantially all full-time employees.Contributions, which are made entirely by AIGA, will vary each year and are determined by theExecutive Director, as part of AIGAs budget, approved annually at the Board of Directorsmeeting. Expense for the years ended September 30, 2013 and 2012 was $4,927 and $65,021respectively.

14 - RELATED PARTY TRANSACTIONS

AIGA provides management and personnel services to AIGAs New York Chapter. Fees andexpenses billed by AIGA were as follows:

Year Ended September 30,2013 2012

Management fees $ 12,000 $ 12,000Payroll and related benefits 138,615 161,409

$ 150,615 $ 173,409

Documents

AIGA Financial Statement FY2013