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COMMONPROPOSALFORM COVER SHEET

The Cover Sheet Summary is to provide the essential data about the organization, the contact person, and the proposal. Please input text in s~ecl.bQxes. Complete this form and submit with your full proposal.

Request to: Orville W. Forte Charitable Foundation, Inc. Date of Aoolication: 2/14/2014

Full Leqal Orqanization Name: Playworks Education Enerqized Address: 29 Germania Street City: Boston I State:MA I Zip Code: 02130 Website : http://www. playworks.orqjcommunities/massachusetts President/Exec. Dir.: Max Fripp I Title: Executive Director

Phone#: 617-522-3600 I Email: [email protected]

Contact Person (if different): Jonathan Gay I Title: Director of Partnerships and Development

Phone#: 617-522-3600 I Email: [email protected] Organizational Information 501(c)(3)? Yes~ NoD I If Yes FIN#: 92-3251867 I Year established: 1996 If No provide name of fiscal sponsor enter organization name and address): Total Organization Budget I Fiscal Yr: Month Jul Day 01 $1 952 276 ~~tal #of Board Members: I Total #of staff: 42 I Volunteers#: 250

Organizational Mission Statement (50 words or less): The mission of Playworks is to improve the health and well-being of children and enhance their education by increasing opportunities for safe meaninqful olav. Brief Description of Organization (75 words or less): Playworks places one full-time program coordinator at each partner school to transform the playground into an unconventional classroom designed to foster social skills, improve student's ability to focus, decrease behavioral problems, and promote student leadership. A randomized control trial conducted by Stanford University and Mathematica Policy Research found that Playworks decreases bullying, increases physical activity, and enhances students' readiness to learn. Population Served (25 words or less, include age groups, race & ethnicity, income levels, etc.): 74% of students we serve qualify for free and/or reduced lunch . 48% identify as Latino, 32% as African-American 12% as Caucasian 5% as Asian-American and 3% as other. Proposa Request: Program/Project Name: Playworks Junior Coach Leadership Academy Total Program Budqet: $390 455 I Requested Amount: $5 000 %:1%

Multi-Year? No Type of Request: Program Support I Grant Period: 7/1/2014 to 6/30/2015

Geographic Area Served: Greater Boston and Lawrence Priority funding areas of grant maker (indicate how your request fits within the grant maker's strategic interest[s]): Our Junior Coach Leadership Academy improves job skills, increases self-esteem and heightens personal aspirations for over 500 disadvantaqed Greater Boston

© Associated Grant Makers provides this form as a service to foundations and corporate grant makers, and nonprofit organizations seeking grants in Massachusetts and New Hampshire. We prohibit any

duplication or modification of this document without permission. Page- 1 -

http://www.playworks.org/communities/massachusetts

mailto:[email protected]

mailto:[email protected]

outh . Most recent grants received from this funder: Amount: $0

Amount: $0 Date: N/a Date: N/a

I hereby verify that the information provided is accurate and honest to the best of my knowledge.

lfVV".- 2/ tt I rt Authorizing signature (President of the Board or Executive Director) Date

© Associated Grant Makers provides this form as a service to foundations and corporate grant makers, and nonprofit organizations seeking grants in Massachusetts and New Hampshire. We prohibit any

duplication or modification of this document without permission. Page - 2 -

Associated Grant Makers provides this form as a service to foundations and corporate grant makers, and nonprofit organizations seeking grants in Massachusetts and New Hampshire. We prohibit any

duplication or modification of this document without permission. - 1 -

AGM COMMON PROPOSAL FORM FULL PROPOSAL NARRATIVE

The Full Proposal Narrative is to provide a complete description of the request. This is a

suggested format that includes the most common information asked by foundations and

corporate grant makers. Read the Common Proposal Instructions before you begin. We

strongly recommend that you check the specific guidelines developed by the funder before

completing this form. Please input text in shaded boxes. The suggested limit is eight

(8) pages.

Request to: Orville W. Forte Charitable Foundation, Inc.

Organization Name: Playworks Education Energized

Project Name (if any): Playworks Junior Coach Leadership Academy

Organizational Information

1. Organization’s History:

For the past 18 years, Playworks has been positively impacting children’s health and well-

being by harnessing the power of play during recess and throughout the school day,

creating valuable opportunities for children to grow physically, emotionally and socially. In

2008, the Robert Wood Johnson Foundation (RWJF), the nation’s leading public health

foundation, invested $18.7 million in Playworks because it believes that Playworks’ program

improves children’s health. In the last two years, Playworks has been featured on Nightline,

Good Morning America, PBS NewsHour and in the Boston Globe, where it was touted as a

program that turns recess into an opportunity to make schools happier, healthier

institutions in which academic performance can improve for all students. In 2011, Forbes

chose Playworks Founder and CEO Jill Vialet as one of its top 30 social entrepreneurs, those

who are tackling the world’s most intractable problems.

By creating a safe, inclusive and healthy atmosphere Playworks Massachusetts has

transformed the way students experience the school day at 33 public elementary schools

across Boston and Lawrence. What began as a small expansion to seven Boston Public

Schools in 2006 is now serving over 15,000 students daily.

2. Organizational Goals and Objectives (short-term and/or long-term):

Playworks Massachusetts has an eight-year track record of success in implementing its

model youth development program in low-income, urban schools. As a result of Playworks’

partnership with an elementary school: •Bullying will decrease as more children are able to resolve conflicts, cooperate, and

handle healthy competition. •Children will increase their physical activity at school. •Students will be more focused and engaged upon returning to class from recess.

For our ninth year in the greater Boston region, Playworks will partner with 33 low-income

schools across Boston and Lawrence. By placing a full-time program coordinator, or “coach”,

in each partner school to deliver our in-and-out-of-school youth development program, we

will energize education for over 15,000 students, of which 72% receive free and/or reduced-

fare lunch.



Playworks’ mission is to improve the health and well-being of children and enhance their

education by increasing opportunities for safe, meaningful play. Our vision is that one day,

every student will have access to healthy play at school, recognizing that play creates

valuable opportunities for children to grow cognitively, physically, emotionally and socially.

3. Programs and Services (briefly describe your organization’s programs and

services):

Playworks currently places full time program coordinators (coaches), who are decreasing

bullying, enhancing learning and improving school climate, at 33 schools in the greater

Boston area, affecting over 15,000 students daily. Specifically, Playworks programming is: •Appointing over 500 students to the Junior Coaching Leadership Academy in order to

develop their leadership skills; •Providing approximately 15,000 students from 33 schools with 150 minutes of weekly

physical activity through recess, lunch and physical activity classes; •Offering 1,000 students the opportunity to participate in Playworks’ interscholastic

developmental sports leagues; and •Creating a statistically proven positive school community in which students feel safe and

engaged, resulting in reduced bullying and increased learning time.

Playworks is the only organization working nationally to leverage recess as a

transformational tool for educators and children. Through 18 years of practice and research

we have developed an inexpensive and replicable model that accelerates learning, increases

physical activity, teaches conflict resolution, greatly reduces or eliminates bullying, and

returns instruction time to teachers.

4. Organizational Structure (board, staff, volunteers):

Playworks Massachusetts’ consistent program quality and impact is a direct result of our

talented team. We place a full-time, well-trained program coordinator or “coach” in each

partner school to deliver our in and out-of-school program model. All coaches come to

Playworks with previous youth development experience and are selected through a rigorous

hiring process. Coaches receive intensive training prior to being placed in a school, and on-

going training throughout the year. Coaches are present every day of the school year and

offer students a consistent mentor throughout the school day.

Program coordinators are supported by four program managers and one program director,

all of whom have experience as Playworks program coordinators. Program managers

provide on-going support, coaching and feedback to a “pod” of program coordinators. The

program director focuses on curriculum development, school relations and overall program

supervision. This staffing model is critical to our ability to run strong programs at all 33

sites.

Executive Director Max Fripp joined Playworks in 2008 and has led our growth from 14 to 33

schools. In 2010 Max and Playworks were recognized as a 2010 Social Innovator with Root

Cause's Social Innovation Forum, further positioning Playworks as a proven and scalable

program aimed at improving school climate and increasing physical activity. Prior to

Playworks, Max spent four years at Citizen Schools where he focused on national growth

and partnership development.

The Board of Directors currently consists of thirteen individuals who serve on a volunteer

basis. This professionally and geographically diverse group provides insight on strategic

direction, brokers relationships with corporate, individual and foundation donors, and

monitors the financial health of our Massachusetts operation.



We also engage consistent volunteers in our recess, league and afterschool components

who work closely with our coaches to deliver our programs. Prior to any school or program-

based volunteer opportunities, we provide external volunteers with specific trainings to

prepare them for their experience.

Proposal Information (If you are requesting general operating support, provide information about your

organizations overall purpose, operating needs, and strategic plans.)

5. Description of Program/Project:

Over the past eight years Playworks has become a key partner to Boston Public Schools and

the acceleration agenda. Our proven impact on decreasing bullying, increasing daily physical

activity and helping teachers recover valuable instructional time has driven principal

demand for our program from six to thirty-three partner schools. Playworks is positioned to leverage our strong impact and scale to improve the educational

pipeline for students across Boston and Lawrence by focusing on the difficult transition from

elementary to middle school. With the support of Orville W. Forte Charitable Foundation, we

will continue our Junior Coach Leadership Academy in all 33 of our partner elementary

schools. Further, we plan on launching a summer component to the academy in August

2014, with the goal of building cohorts of rising sixth graders in middle schools across

Boston and Lawrence.

The Junior Coach Leadership Academy builds upon our existing Junior Coach Program, which

has always been a core component of Playworks. Our decision to increase the dosage of

training we provide Junior Coaches was based on a recent external strategic planning

process and school partner goals. Through our strategic planning process with TDC, it

became clear that the junior coach program is a strong asset of Playworks and that we are

unique in offering a robust leadership program for elementary schools. At the same time,

school principals continue to report that Junior Coaches’ leadership and conflict resolution

have ripple effects across the school day, and have requested we attempt to further

enhance this program.

During the 2014-15 school year Playworks will engage 500 4th and 5th grade students across

thirty-three partner schools in our Junior Coach Leadership Academy (JCLA). Year after year

we see positive growth in Junior Coaches leadership and conflict resolution skills and we

celebrate these successes. At the same time, we are confident that we will see greater gains

in these skills with the 500 students in the JCLA. Furthermore, students participating in the

program will benefit from curriculum and training focused on building the academic and

study skills needed to succeed in middle school.

6. Description of Need (What is the issue you plan to address? What is your

approach? What research supports your idea? How does your strategy differ from

others in the field?):

Since the passing of the 1993 Education Reform Act billions of dollars have been invested in

improving education across Massachusetts. While gains have been made the achievement

gap has not been adequately closed, students’ social and emotional learning has been

ignored, and opportunities for physical activity have decreased. As a result bullying has

become a statewide issue and youth in the Greater Boston area are losing opportunities to

improve job skills, increase self-esteem and heighten personal aspirations. Playworks has

proven that recess and youth leadership are untapped opportunities to address these needs.

An analysis of Playworks’ work in California by the Department of Education WestEd

program demonstrates Playworks’ impact, specifically the Junior Coaches impact, on school



climate and social-emotional health of our students. Two groups of students were

compared: 1) those exposed to Playworks Junior Coach programming and 2) control schools

matched for similar social-economic demographics. Results from fifth grade students

revealed that the longer schools had Playworks and the presence of Junior Coaches, the

greater students felt about the safety in their schools, their ability to avoid drugs and that

their schools had caring adults. These students also demonstrated greater problem solving

skills and a trend toward more meaningful participation in school. As policy makers examine opportunities to improve education, develop community, and

decrease bullying in schools, it is time to take a good look at student leadership and positive

learning environments. There is significant research that supports the role and impact of

school climate on children’s educational experience. In its review of these studies, the

Search Institute found that a caring school climate is associated with higher grades,

engagement, attendance, expectations and aspirations, a sense of scholastic competence,

fewer school suspensions, and on-time progression through grades (19 studies). It also

found a caring school climate associated with higher self-esteem and self-concept (5

studies), less anxiety, depression and loneliness (3 studies), and less substance abuse (4

studies).

Through years of practice and research Playworks has developed an inexpensive and

replicable model that greatly reduces or eliminates bullying, increases physical activity, and

returns instruction time to teachers. The Playworks Junior Coach Leadership Academy has

both immediate and long term benefits to our schools. Within a month of launching the

program, we will see benefits to both the student leaders and the overall school

environment in which they learn. Further, this program will have long term benefits in

helping low-income students successfully transition from elementary to middle school with

the skills they need to succeed both academically and socially.

7. Specific Activities (Include information about service delivery and/or timeline.):

By creating a culture of leadership, Playworks will use 500 Junior Coaches across the

greater Boston region to build a positive school community, as well as position each student

for unique personal growth. The Junior Coach Leadership Academy will include: •Training of all teachers and school staff associated with the project throughout August

and September. The goal of this training is to provide the partner schools with the

information they need to support Junior Coaches both in the classroom and throughout the

school day. •Recruitment of fifteen Junior Coaches from all 33 schools associated with the JCLA during

the month of September. Each Playworks program coordinator will work with the school to

recruit a diverse group of students. A total of 500 Junior Coaches will participate in the

program from the beginning of October through June. •Weekly leadership development training focused on conflict resolution, communication,

and self-advocacy. Trainings will begin in October and will be led by the Playworks program

coordinator. Each week they will build their leadership skills, as well as learn different life

skills. The objectives of the trainings are to teach Junior Coaches the skills necessary to lead

games at recess as well as teach conflict resolution and positive peer role modeling

strategies. Trainings will include content specific to anti-bullying, positive decision making,

self-advocacy, personal goal-setting and study skills. •Weekly volunteer opportunities with the Playworks program coordinator during recess

(facilitating activities, resolving conflicts, and serving as youth leaders on the playground).

Each Junior Coach will work with the Playworks program coordinator at least one time a

week at recess. •The opportunity to participate in a free leadership and anti-bullying academy at

Northeastern University over February vacation. This event, the Junior Coach Leadership

Convention, will bring together Junior Coaches from across the greater Boston Region to



further their leadership development, share best practices, as well as introduce students to

the college opportunity. •A graduation ceremony to celebrate all Junior Coaches’ leadership development and

school impact in June. •A “moving-up” ceremony in August to bring all Junior Coaches together prior to beginning

middle school. We will hold a conference to help Junior Coaches navigate the difficult

transition from elementary school to middle school. The Junior Coach Leadership Academy offers all of our Junior Coaches with: •Over 100 hours of Junior Coach training (a minimum of 2 hours of training a week); •Increased leadership application (opportunities to apply leadership skills in settings other

than recess, including the lunchroom and classroom); •Increased development of team leadership (groups of Junior Coaches at the school will

lead as a group); •Increased access to problem solving activities, self-advocacy strategies, and conflict

resolution methods; and, •Increased time spent with experienced, dedicated, positive role model.

Each school will have a full-time program coordinator to implement the Junior Coach

Leadership Academy. The Playworks program coordinator, or coach, will commit two hours

weekly to training and an additional four hours weekly to curriculum development.

8. Objectives and Goals for this Request (How will this grant strengthen the

organization, address the issues, make improvements, or achieve success?):

Playworks is uniquely positioned to change the way students, teachers, and principals

experience the school day. While our request focuses on our Junior Coach program, we now

know that this innovative youth leadership model is key to our ability to ensure safety,

increase physical activity, and enhance classroom learning for every student in a Playworks

school.

With respect to our Junior Coaches, our ultimate goal is to make sure these students have

the social, emotional, leadership, and academic skills needed to succeed in middle school.

Support from the Orville W. Forte Charitable Foundation is critical to helping us with this

goal. Moreover, Playworks will support these students’ transition to middle school by

launching them to 6th grade in cohorts with other Junior Coaches, ensuring they have a

positive peer network on the first day of middle school.

In moving this work forward, we will deepen our relationship with two partners. Boston

After School & Beyond will be a key ally in helping to develop our summer learning program

which we plan to launch in 2014. And we are working with Gil Noam from Harvard’s PEAR

(Program in Education, Afterschool & Resiliency) to strengthen our data measurement and

curriculum development.

The objectives of the Junior Coach Leadership Academy are: · To provide expanded opportunities for exploration and development of student

leadership within the school environment. · To teach self-advocacy, conflict resolution, peer mediation, and anger management

skills. · To provide positions of responsibility for students to experience leadership and its

gifts and challenges. · To develop the academic skills needed to successfully navigate the transition to

middle school.



Playworks has proven that our Junior Coach program has strong impacts on the entire

school environment as well as their own development. We are excited to build upon this

work to ensure that these students continue on a pathway of success.

9. Evaluation (What are the anticipated outcomes and how will you know if you

are successful?):

With the support of the Orville W. Forte Foundation, the Playworks Junior Coach Leadership

Academy will: •Enroll over 500 fourth and fifth grade students, ages 10-12, in the Playworks Junior

Coach Leadership Academy at 33 low-income schools across greater Boston. •Provide each Junior Coach a minimum of one hundred hours of leadership training, as

well as daily service learning opportunities through year-round service at recess with peers

and younger students. •Measure the leadership development of all Junior Coaches using the Junior Coach

Assessment Tool. •Demonstrate that Junior Coaches support the overall school climate by reducing bullying

and decreasing conflicts at recess. •In addition, Playworks evaluates the impact of the Junior Coach Program through the

administration of a pre/mid/post assessment that is modeled after an evidence-based

assessment of youth development skills. •Upon entry to the program, the Playworks coaches assess the student on a series of

questions using a three point scale (developing skill, acquired skill and performs skill

independently). The questions focus on expected outcomes of the program including

leadership, teamwork and conflict resolution skills. We will report on this new assessment

tool throughout the term of this project

In addition to Playworks internal measurement systems, we will use Gil Noam’s “clover leaf

of success” that identifies four basic needs of youth: 1) Active Engagement 2)

Assertiveness/voice and choice 3) Relationships/Belonging and 4) Reflection

We believe that Playworks success is driven by both our well-trained, full-time Playworks

staff and the leadership of our junior coaches. To that end, we will continue to track and

report on school wide impacts as measured by teacher and principal surveys. These surveys

assess the program’s impact on school climate, conflict resolution and youth leadership. Our

Massachusetts 2012-2013 teacher and principal data indicates that: •91% reported that Playworks had a positive impact on overall school climate. •98% reported an increase in the level of cooperation among students during recess. •96% reported an increase in the use of conflict resolution strategies during recess. •81% reported a decrease in the number of conflicts (physical or verbal). •80% reported a decrease in the number of disciplinary incidents. •79% reported a crease in the number of bullying incidents. •82% reported that Junior Coaches took on a leadership role during recess. •99% reported that they would like Playworks back at their school next year.

10. Other (Use this space to provide any additional information that you feel would

be relevant to this grant request that is not covered in the sections above or

respond to any other questions an individual grant maker may have.):

The JCLA will be delivered by each school’s full-time Playworks coach, providing additional

opportunities to develop strong learning and mentoring relationships. Students apply to be a

Junior Coach and are selected based on a written application, interview, and

teacher/principal feedback. The Junior Coaches will begin weekly trainings, in addition to

daily service learning opportunities beginning in October. The students selected for this

program will not necessarily be the stars of the class, and often will be the exact opposite –



kids who are very active, have limited communication skills, are struggling academically and

even those who typically bully other children because they want to play but don't know how

to appropriately engage. We have found that, when given the opportunity, a set of well-

defined responsibilities, a supportive adult role model, a Junior Coach t-shirt and a whistle,

these students will typically turn their behavior around and become model students. Budget Information Use the Budget Form to provide the organizational financial information and the program or

project budget, both income and expenses.

11. Use this section below to indicate what funding you have received from other

foundations, and from which other foundations you plan to seek funding. Describe

any unusual or special circumstances and provide an explanation/justification of

funding request and the amount.

Playworks relies on a diversified funding model for sustainability and our selection as a

Social Innovator by Root Cause’s Social Innovation Forum illustrates that Playworks

Massachusetts is a smart investment. Each school invests $30,000 to partner with

Playworks, nearly 48 percent of the cost of the program, contributing to a sustainable

earned income funding base. We also receive funding from private foundations,

corporations, and individual supporters.

We currently benefit from strong local partnerships with The Boston Foundation and Brown

Brothers Harriman. These income streams, in addition to growing revenue from fee-for-

service trainings, corporate partnerships and individual donors will create a balanced

funding portfolio to support our work in all 33 schools throughout Boston and Lawrence.

Playworks Massachusetts will allocate 82% of its operating expenses directly to program,

11% to administration, and 7% to fundraising. Committed Funds = $273,000

$198,000 – School Fees

o All 33 schools associated with this project will commit $6,000 to implement

the Junior Coach Leadership Academy at their school

$45,000 – Brown Brothers Harriman (BBH)

o BBH has adopted this program at 8 schools across Boston during the 2014-

15 school year

$30,000 – The Boston Foundation

Pending Funds = $90,000

$45,000 – The Amelia Peabody Foundation

o The Amelia Peabody Foundation would be the lead partner for the

implementation of this project and the Junior Coach Leadership Convention

over February Break.

$25,000 - Boston Bruins Foundation

$15,000 – The Stevens Foundations

o The Stevens Foundations would help support our expansion of this program to

Lawrence

$5,000 - Orville Charitable Foundation

Prospecting Funds = $27,455.22

$25,000 – Blue Cross Blue Shield of Massachusetts

$2,455.22 – Individual Donations

o Playworks’ annual appeal in October 2013 would support this project

TOTAL = $390,455.22

Organization Name

Federal ID # 94-3251867

Fiscal Year End 6/30/2015

Total % to Total % to

This Project Total Organization Total

Request Budget Income Budget Income

Income SourcesGovernment Grants - - 0.0% 266,000 13.6%

Foundation and Corporate Grants 5,000 190,000 48.7% 600,000 30.7%

United Way - - 0.0% - 0.0%

Individual Contributions - 2,455 0.6% 85,000 4.4%

Earned Income - 198,000 50.7% 990,000 50.7%

Interest Income - - 0.0% - 0.0%

In-Kind Support - - 0.0% - 0.0%

Other Income - - 0.0% 11,276 0.6%

Total Income 5,000 390,455 100.0% 1,952,276 100.0%

ExpensesSalaries and Wages 4,200 320,500 82.1% 1,302,106 66.7%

Employee Benefits and Taxes 800 62,190 15.9% 288,955 14.8%

Total Personnel Costs 5,000 382,690 98.0% 1,591,061 81.5%

Bank/Investment Fees - - 0.0% - 0.0%

Depreciation Expense - - 0.0% - 0.0%

Equipment Rental & Maintenance - - 0.0% 11,000 0.6%

Food Costs - - 0.0% 9,440 0.5%

Fundraising/Development Expenses - - 0.0% - 0.0%

Insurance Expense - - 0.0% - 0.0%

Marketing/Advertising - - 0.0% - 0.0%

Postage and Delivery - - 0.0% 4,000 0.2%

Professional Development - - 0.0% 1,815 0.1%

Professional Fees - - 0.0% 6,135 0.3%

Rent and Occupancy - - 0.0% 24,000 1.2%

Supplies and Materials - - 0.0% 18,000 0.9%

Telephone Expense - - 0.0% 8,320 0.4%

Travel Expense - - 0.0% 3,350 0.2%

Other Expense 1 - 7,765 2.0% 250,195 12.8%

Other Expense 2 - - 0.0% 24,960 1.3%

Miscellaneous Expenses - - 0.0% - 0.0%

Total Non Personnel Costs - 7,765 2.0% 361,215 18.5%

Total Expenses 5,000 390,455 100.0% 1,952,276 100.0%

Excess of Revenue Over Expenses - - 0.0% - 0.0%

Enter Footnotes Here* Other Expense 1 - National Support @ 15% (HR, IT, Finance, Communications Development) **Other

Expense 2 - Allocated Costs and Special Events

Junior Coach Leadership Academy

AGM COMMON PROPOSAL FORM

Playworks Education Energized

PROJECT & ORGANIZATION BUDGET SUMMARY

© Associated Grant Makers 2007

PLAYWORKSEDUCATION ENERGIZED

(A Nonprofit Public Benefit Corporation)

***FINANCIAL STATEMENTS

INCLUDING SUPPLEMENTARY INFORMATIONON FEDERAL FINANCIAL AWARDS

Years Ended June 30, 2013 and 2012



TABLE OF CONTENTS

Pages

I. FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT 1-2

FINANCIAL STATEMENTS

Statements of Financial Position 3

Statements of Activities 4-5

Statements of Functional Expenses 6-7

Statements of Cash Flows 8

Notes to Financial Statements 9-21

II. SUPPLEMENTARY INFORMATION

Schedule of Expenditures of Federal Awards 22

Notes to Schedule of Expenditures of Federal Awards 23

III. REPORTS

Independent Auditor's Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards 24-25

Independent Auditor's Report on Compliance for each Major Program and onInternal Control Over Compliance Required by OMB Circular A-133 26-27

IV. SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Schedule of Findings and Questioned Costs 28-29

Summary Schedule of Prior Audit Findings 30-31

SECTION I

FINANCIAL SECTION

Thomas C. Bondi Lawrence S. Kuechler Roberto M. Maragoni Frank A. Minuti, Jr.

BERGER LEWIS ACCOUNTANCY CORPORATION

Daniel C. Moors Randy G. Peterson Todd W. Robinson

David R. Sheets Robert W. Smiley

EMERITUS CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS Alexander W. Berger ( 1916-2005) Griffith R. Lewis

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors Playworks Education Energized (A Nonprofit Public Benefit Corporation) Oakland, California

Report on the Financial Statements

We have audited the accompanying financial statements ofPlayworks Education Energized, (formerly "Spmis4Kids"), ("Playworks" or the "Organization"), (a nonprofit public benefit corporation), which comprise the statements of financial position as of June 30, 2013 and 2012, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 fmancial 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 Organization'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.

55 ALMADEN BLVD. SUITE 600 SAN JOSE, CA 95113-1605 (408) 494-1200 (P) (408) 279-8186 (F)

MEMBER OF AGN AN ASSOCIATION OF SEPARATE AND INDEPENDENT ACCOUNTING&. CONSULTING FIRMS INtE.IfHAfiONAL ~-

- 1 -

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Playworks Education Energized as of June 30, 2013 and 2012, and the changes inits net assets and its cash flows for the years then ended in accordance with accounting principlesgenerally accepted in the United States of America.

Other Matters

Supplementary Information

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole.The accompanying schedule of expenditures of federal awards, as required by Office of Managementand Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, ispresented for purposes of additional analysis and is not a required part of the financial statements.Such information is the responsibility of management and was derived from and relates directly to theunderlying accounting and other records used to prepare the financial statements. The informationhas been subjected to the auditing procedures applied in the audit of the financial statements andcertain additional procedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare the financial statements or to the financialstatements themselves, and other additional procedures in accordance with auditing standardsgenerally accepted in the United States of America. In our opinion, the information is fairly stated, inall material respects, in relation to the 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 December11, 2013, on our consideration of Playworks Education Energized's internal control over financialreporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements and other matters. The purpose of that report is to describe the scope of our testingof internal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on internal control over financial reporting or on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards in consideringPlayworks Education Energized's internal control over financial reporting and compliance.

BERGER LEWIS ACCOUNTANCY CORPORATIONSan Jose, CaliforniaDecember 11, 2013

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STATEMENTS OF FINANCIAL POSITION

June 30, 2013 and 2012

ASSETS2013 2012

CURRENT ASSETS:Cash and Cash Equivalents $ 878,508 $ 2,254,019Accounts Receivable, Less Allowance for Doubtful Accounts

of $158,387 and $74,331 in 2013 and 2012, Respectively 1,104,537 723,122Grants Receivable, Current Portion (See Note 5) 5,482,747 4,415,314Pledges Receivable 385,361 167,800Prepaid Expenses 254,660 454,943

Total Current Assets 8,105,813 8,015,198

PROPERTY AND EQUIPMENT, NET 180,445 290,289

OTHER ASSETS:Grants Receivable, Net of Current Portion (See Note 5) 1,945,867 5,756,925Deposits 63,491 41,215Website Development Costs 80,921 -Intangible Assets 1,624 4,095

Total Other Assets 2,091,903 5,802,235

TOTAL ASSETS $ 10,378,161 $ 14,107,722

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES:Accounts Payable $ 178,651 $ 259,286Accrued Liabilities 1,162,952 979,227Deferred Revenue 559,941 313,254

Total Current Liabilities 1,901,544 1,551,767

LONG-TERM LIABILITIES, NET OF CURRENTPORTION:Lines of Credit 3,800,000 2,900,000Other Long-Term Liabilities 70,200 49,489

Total Long-Term Liabilities, Net of Current Portion 3,870,200 2,949,489

Total Liabilities 5,771,744 4,501,256

NET ASSETS:Unrestricted Net Assets (Deficit) (See Note 17) (355,266) (411,682)Temporarily Restricted Net Assets (See Note 8) 4,961,683 10,018,148

Total Net Assets 4,606,417 9,606,466

TOTAL LIABILITIES AND NET ASSETS $ 10,378,161 $ 14,107,722

The Accompanying Notes are an Integral Part of these Financial Statements.

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STATEMENT OF ACTIVITIES

Year Ended June 30, 2013 with Comparative Totals for the Year Ended June 30, 2012

2013 2012

UnrestrictedTemporarilyRestricted TOTAL TOTAL

SUPPORT AND REVENUE:Support:

Foundation Grants (See Note 2) $ 750 $ 4,092,244 $ 4,092,994 $ 14,495,079Corporate Support 1,358,142 1,639,100 2,997,242 2,231,456Contributions In-Kind 1,617,076 - 1,617,076 1,240,522Events, Net of Donor Benefit 677,150 - 677,150 580,590Individual Contributions 3,220,000 - 3,220,000 415,246

Total Support 6,873,118 5,731,344 12,604,462 18,962,893

Revenue:Direct Service Fees 8,903,905 - 8,903,905 7,332,261Training Fees 932,266 - 932,266 688,805Government Grants 2,215,188 - 2,215,188 2,133,046Other Revenue 251,381 - 251,381 179,477Investments Income 138 - 138 503Loss on Disposal of Equipment (203) - (203) (39,888)

Total Revenue 12,302,675 - 12,302,675 10,294,204

Total Support and Revenue 19,175,793 5,731,344 24,907,137 29,257,097

Net Assets Released from Restrictions 10,787,809 (10,787,809) - -

Total Support, Revenue and NetAssets Released fromRestrictions 29,963,602 (5,056,465) 24,907,137 29,257,097

EXPENSES:Program Services:

Direct Services 22,210,898 - 22,210,898 18,915,902Training Services 1,845,721 - 1,845,721 1,075,501

Total Program Services 24,056,619 - 24,056,619 19,991,403

Supporting Services:Management and General 3,148,111 - 3,148,111 2,603,334Fundraising 2,702,456 - 2,702,456 1,834,352

Total Supporting Services 5,850,567 - 5,850,567 4,437,686

Total Expenses 29,907,186 - 29,907,186 24,429,089

CHANGE IN NET ASSETS (See Note 2) 56,416 (5,056,465) (5,000,049) 4,828,008

NET ASSETS (DEFICIT), Beginning ofYear (411,682) 10,018,148 9,606,466 4,778,458

NET ASSETS (DEFICIT), End of Year(See Note 17) $ (355,266) $ 4,961,683 $ 4,606,417 $ 9,606,466


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STATEMENT OF ACTIVITIES

Year Ended June 30, 2012

UnrestrictedTemporarilyRestricted TOTAL

SUPPORT AND REVENUE:Support:

Foundation Grants (See Note 2) $ 57,646 $ 14,437,433 $ 14,495,079Corporate Support 890,656 1,340,800 2,231,456Contributions In-Kind 1,240,522 - 1,240,522Events, Net of Donor Benefit 580,590 - 580,590Individual Contributions 64,084 351,162 415,246

Total Support 2,833,498 16,129,395 18,962,893

Revenue:Direct Service Fees 7,332,261 - 7,332,261Training Fees 688,805 - 688,805Government Grants 2,133,046 - 2,133,046Other Revenue 179,477 - 179,477Investments Income 503 - 503Loss on Disposal of Equipment (39,888) - (39,888)

Total Revenue 10,294,204 - 10,294,204

Total Support and Revenue 13,127,702 16,129,395 29,257,097

Net Assets Released from Restrictions 10,805,749 (10,805,749) -

Total Support, Revenue and Net AssetsReleased from Restrictions 23,933,451 5,323,646 29,257,097

EXPENSES:Program Services:

Direct Services 18,915,902 - 18,915,902Training Services 1,075,501 - 1,075,501

Total Program Services 19,991,403 - 19,991,403

Supporting Services:Management and General 2,603,334 - 2,603,334Fundraising 1,834,352 - 1,834,352

Total Supporting Services 4,437,686 - 4,437,686

Total Expenses 24,429,089 - 24,429,089

CHANGE IN NET ASSETS (See Note 2) (495,638) 5,323,646 4,828,008

NET ASSETS, Beginning of Year 83,956 4,694,502 4,778,458

NET ASSETS, End of Year (See Note 17) $ (411,682) $ 10,018,148 $ 9,606,466


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STATEMENT OF FUNCTIONAL EXPENSES

Year Ended June 30, 2013 with Comparative Totals for the Year Ended June 30, 2012

PROGRAM SERVICES SUPPORTING SERVICES TOTAL

Direct Services Training Services TotalManagement and

General Fundraising Total 2013 2012

EXPENSES:Salaries and Wages $ 15,476,769 $ 1,123,513 $ 16,600,282 $ 1,575,939 $ 1,569,638 $ 3,145,577 $ 19,745,859 $ 15,920,729Employee Benefits 1,663,832 120,783 1,784,615 169,422 168,744 338,166 2,122,781 1,900,442Payroll Tax 1,321,925 95,963 1,417,888 134,607 134,068 268,675 1,686,563 1,334,222

Total Salaries and Related Expenses 18,462,526 1,340,259 19,802,785 1,879,968 1,872,450 3,752,418 23,555,203 19,155,393

Other Professional Services, Including In-Kind 1,351,873 43,266 1,395,139 287,085 132,074 419,159 1,814,298 1,326,321Travel and Related Expenses 659,853 159,573 819,426 222,827 444,006 666,833 1,486,259 1,220,087Rent, Including In-Kind 729,170 51,392 780,562 139,872 33,247 173,119 953,681 816,641Staff Recruitment and Training 177,859 20,483 198,342 89,979 28,207 118,186 316,528 276,106Dues, Licenses, Service Fees 122,218 9,928 132,146 123,563 41,534 165,097 297,243 189,952Telephone 108,349 18,391 126,740 23,349 25,335 48,684 175,424 127,930School Supplies 142,952 4,136 147,088 1,686 2,303 3,989 151,077 219,970Printing and Publications 40,497 38,815 79,312 18,595 36,354 54,949 134,261 124,151Interest 88,763 6,633 95,396 6,741 19,344 26,085 121,481 90,609Legal Fees, Including In-Kind - - - 105,649 - 105,649 105,649 137,261Bad Debt 93,334 10,000 103,334 - - - 103,334 83,254Insurance 69,439 5,590 75,029 11,275 15,801 27,076 102,105 73,986Small Equipment and Maintenance 35,982 5,111 41,093 48,069 7,408 55,477 96,570 94,703Marketing and Advertising, Including In-Kind 18,081 52,749 70,830 15,715 3,846 19,561 90,391 61,179Postage 26,653 10,181 36,834 20,932 12,323 33,255 70,089 60,542Accounting Fees - - - 57,100 - 57,100 57,100 53,475Supplies 12,456 28,974 41,430 3,177 3,140 6,317 47,747 87,906Utilities 10,303 4,527 14,830 10,148 2,768 12,916 27,746 25,783Government Grant Commission 10,186 - 10,186 - 22 22 10,208 10,402

Total Expenses Before Depreciation andAmortization 22,160,494 1,810,008 23,970,502 3,065,730 2,680,162 5,745,892 29,716,394 24,235,651

Depreciation and Amortization 50,404 35,713 86,117 82,381 22,294 104,675 190,792 193,438

Total Functional Expenses $ 22,210,898 $ 1,845,721 $ 24,056,619 $ 3,148,111 $ 2,702,456 $ 5,850,567 $ 29,907,186 $ 24,429,089

Percentage of Total %74.3 %6.2 %80.5 %10.5 %9.0 %19.5 %100.0


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STATEMENT OF FUNCTIONAL EXPENSES


PROGRAM SERVICES SUPPORTING SERVICES

Direct Services Training Services TotalManagement and

General Fundraising Total TOTAL

EXPENSES:Salaries and Wages $ 12,878,620 $ 659,785 $ 13,538,405 $ 1,322,218 $ 1,060,106 $ 2,382,324 $ 15,920,729Employee Benefits 1,654,331 51,374 1,705,705 87,888 106,849 194,737 1,900,442Payroll Tax 1,099,585 52,763 1,152,348 95,892 85,982 181,874 1,334,222

Total Salaries and Related Expenses 15,632,536 763,922 16,396,458 1,505,998 1,252,937 2,758,935 19,155,393

Other Professional Services, Including In-Kind 1,029,178 25,442 1,054,620 174,167 97,534 271,701 1,326,321Travel and Related Expenses, Including In-Kind 672,578 111,321 783,899 99,559 336,629 436,188 1,220,087Rent, Including In-Kind 579,994 39,612 619,606 180,286 16,749 197,035 816,641Staff Recruitment and Training 181,613 11,901 193,514 62,505 20,087 82,592 276,106Dues, Licenses, Service Fees 90,292 2,983 93,275 79,666 17,011 96,677 189,952Telephone 91,707 11,809 103,516 21,428 2,986 24,414 127,930School Supplies 183,394 1,341 184,735 8,454 26,781 35,235 219,970Printing and Publications 35,439 14,395 49,834 44,671 29,646 74,317 124,151Interest 75,989 3,370 79,359 8,126 3,124 11,250 90,609Legal Fees, Including In-Kind - - - 137,261 - 137,261 137,261Bad Debt 83,254 - 83,254 - - - 83,254Insurance 60,143 3,455 63,598 7,585 2,803 10,388 73,986Small Equipment and Maintenance 55,046 5,611 60,657 31,665 2,381 34,046 94,703Marketing and Advertising, Including In-Kind 9,081 17,831 26,912 31,425 2,842 34,267 61,179Postage 21,339 6,520 27,859 25,767 6,916 32,683 60,542Accounting Fees - - - 53,475 - 53,475 53,475Supplies 35,948 24,217 60,165 23,387 4,354 27,741 87,906Utilities 11,246 3,169 14,415 10,182 1,186 11,368 25,783Government Grant Commission 10,402 - 10,402 - - - 10,402

Total Expenses Before Depreciation andAmortization 18,859,179 1,046,899 19,906,078 2,505,607 1,823,966 4,329,573 24,235,651

Depreciation and Amortization 56,723 28,602 85,325 97,727 10,386 108,113 193,438

Total Functional Expenses $ 18,915,902 $ 1,075,501 $ 19,991,403 $ 2,603,334 $ 1,834,352 $ 4,437,686 $ 24,429,089

Percentage of Total %77.4 %4.4 %81.8 %10.7 %7.5 %18.2 %100.0


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STATEMENTS OF CASH FLOWS

Years Ended June 30, 2013 and 2012

2013 2012

CASH FLOWS FROM OPERATING ACTIVITIES:Change in Net Assets $ (5,000,049) $ 4,828,008Adjustments to Reconcile Change in Net Assets to Net Cash

Provided (Used) by Operating Activities:Depreciation and Amortization 190,792 193,438Loss on Disposal of Equipment 203 39,888Amortization of Present Value Discount on Multi-Year

Grants Receivable (109,114) (31,999)Bad Debt Expense 103,334 83,254

(Increase) Decrease in Assets:Accounts Receivable (484,749) 43,893Grants Receivable 2,852,739 (3,504,517)Pledges Receivable (217,561) (91,031)Prepaid Expenses 200,283 (186,449)Deposits (22,276) (11,989)

Increase (Decrease) in Liabilities:Accounts Payable (80,635) 240,889Accrued Liabilities 183,725 186,613Deferred Revenue 246,687 133,611Other Long-Term Liabilities 20,711 8,520

Net Cash Provided (Used) by Operating Activities (2,115,910) 1,932,129

CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of Property and Equipment (153,106) (89,078)Purchase of Intangible Assets (6,495) -

Net Cash Used by Investing Activities (159,601) (89,078)

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from Lines of Credit Borrowings 13,010,361 10,580,000Repayments of Lines of Credit Borrowings (12,110,361) (11,036,639)

Net Cash Provided (Used) by Financing Activities 900,000 (456,639)

NET INCREASE (DECREASE) IN CASH AND CASHEQUIVALENTS (1,375,511) 1,386,412

CASH AND CASH EQUIVALENTS, Beginning of Year 2,254,019 867,607

CASH AND CASH EQUIVALENTS, End of Year $ 878,508 $ 2,254,019

SUPPLEMENTAL DISCLOSURE OF CASH FLOWSINFORMATION:Cash Paid for Interest $ 121,383 $ 90,609


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NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION:

Playworks Education Energized ("Playworks" or the "Organization") is a nonprofit public benefitcorporation that transforms schools by providing play and physical activity at recess and throughoutthe school day. Through on-site direct service and trainer-led professional development workshops,Playworks restores valuable teaching time, reduces bullying, increases physical activity and improvesthe school and learning environment.

Founded in 1996, the Organization provides direct services to public elementary schools with at least50% of student enrollment eligible for free/reduced lunch. Playworks is the only organization in thecountry to send trained adult program coordinators into low-income schools, where they enhance andtransform recess and play into a positive experience that helps children and teachers get the most outof every learning opportunity throughout the school day.

During the year ended June 30, 2013, the Organization served nearly 150,000 children in 366 schoolslocated in 22 regions. Playworks operated full-time, direct service programs in the following regionsin the 2012-13 year: Arizona, Colorado, Illinois, Louisiana, Michigan, Maryland, Massachusetts,New Mexico, New York, New Jersey, North Carolina, Northern California (East Bay, San Francisco,Silicon Valley), Pacific Northwest, Pennsylvania, Southern California, Texas, Twin Cities, Utah,Washington D.C., and Wisconsin.

In addition to direct service programs, Playworks has developed a comprehensive model of trainingadults who wish to provide inclusive, healthy play and promote a positive school climate. PlayworksTraining is a solution that empowers staff to pro-actively manage the chaos at recess, reduce bullyingbehavior and increase healthy physical activity so students can return to the classroom ready to learn.Playworks trainers work on location with adults in schools and youth organizations. Throughcustomized, high-energy workshops, and with coaching and support, teachers and other professionalslearn how to use games, play strategies and group management techniques to teach kids how to playwell together, share, resolve conflicts and develop leadership skills.

NOTE 2 - NATIONAL EXPANSION / CHANGE IN NET ASSETS:

In April 2012, Playworks received a three-year grant from May 15, 2012 through June 30, 2015 in theamount of $8,488,328 from the Robert Wood Johnson Foundation (see Note 5) to support ongoinggrowth. The Organization was required to recognize the entire grant amount of $8,488,328 (lesspresent value discount) as temporarily restricted support in the year ended June 30, 2012.

In June 2008, Playworks received a four-year grant from July 1, 2008 through June 30, 2012 in theamount of $18,734,344 from the Robert Wood Johnson Foundation (see Note 5) to expand school-based play and physical activity to 22 new cities across the United States, to provide technicalassistance to 4,000 additional schools and to develop Playworks as a national voice for play. TheOrganization was required to recognize the entire grant amount of $18,734,344 (less present valuediscount) as temporarily restricted support in the year ended June 30, 2008.

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NOTES TO FINANCIAL STATEMENTS(Continued)

NOTE 2 - NATIONAL EXPANSION / CHANGE IN NET ASSETS (Continued):

As a result of this required accounting for these grants, there are annual “Net Assets Released fromRestrictions” in the Temporarily Restricted column of the statements of activities related to theaccounting for these grants. The following table summarizes the activity included in the TemporarilyRestricted column for these two grants.

6/30/08 6/30/09 6/30/10 6/30/11 6/30/12 6/30/13

Foundation Grants $ 18,734,344 $ - $ - $ - $ 8,488,328 $ -Net Assets Released from

Restrictions - (3,956,056) (4,767,138) (6,701,803) (4,809,347) (4,748,523)

Change in Net Assets $ 18,734,344 $ (3,956,056) $ (4,767,138) $ (6,701,803) $ 3,678,981 $ (4,748,523)

The amount shown in the Total column in the Change in Net Assets on the statement of activities (anamount that is analogous to “net income” or “net loss” in a for-profit income statement) is$(5,000,049) and $4,828,008 for the years ended June 30, 2013 and 2012, respectively, primarily as aresult of the required accounting treatment described above.

The four-year grant follows a smaller grant awarded in 2005 which also supported the Organization’sexpansion. The initial grant enabled Playworks to launch programs in three new cities and toestablish its national office to support the expansion.

The Robert Wood Johnson Foundation is the largest philanthropic organization devoted exclusively toimproving the health and health care of all Americans.

NOTE 3 - PROGRAM SERVICES:

Direct Services - The Organization addresses the physical, emotional, and cognitive needs of childrenby coordinating full-day play and physical activity programming - during lunchtime, recess, and afterschool - taught from a framework of youth development. At each school, enthusiastic, well-trainedPlayworks’ Program Coordinators:

• create a safe, active and inclusive environment on the playground by coordinating a variety ofschoolyard sports and games during recess and lunch;

• work with individual classes and with classroom teachers to introduce games and physicalactivity into the school curriculum;

• develop and coordinate before or after school physical activity programs;

• coordinate interscholastic developmental sports leagues such as basketball, volleyball, soccerand others;

• implement a youth leadership program at each site; and

• employ play as a tool for generating more community and family involvement.

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NOTE 3 - PROGRAM SERVICES (Continued):

Each Playworks’ Program Coordinator works at their school five days a week, throughout the schoolday and during non-school hours, to lead games and physical activities based on a curriculum that hasbeen tested and refined over a decade of program operations.

Training Services - Built on best practices in youth development, as well as a history of evidence-based success from its direct service program. Playworks Training teaches group management,conflict resolution, games facilitation and other essential skills that transform playgrounds.Playworks Training provides customized staff trainings to schools and school districts, after schoolprograms, summer camps, and other youth service organizations. Training is provided on a fee-for-service basis, customized depending on the number of trainings requested, the number of participants,and the length of each training.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting - The financial statements of Playworks Education Energized have been preparedon the accrual basis of accounting.

Basis of Presentation - The Organization follows standards of accounting and financial reporting forvoluntary health and welfare organizations. In accordance with accounting principles generallyaccepted in the United States of America, the Organization reports its financial position and operatingactivities in three classes of net assets: unrestricted net assets, temporarily restricted net assets, andpermanently restricted net assets.

Unrestricted net assets include those assets over which the Board of Directors hasdiscretionary control in carrying out the operations of the Organization. Under thiscategory, the Organization maintains an operating fund plus any net assets designatedby the Board for specific purposes.

Temporarily restricted net assets include those assets which are subject to donorrestriction and for which the applicable restriction was not met as of the year end ofthe current reporting period.

Permanently restricted net assets include those assets which are subject to a non-expiring donor restriction, such as endowments. There are currently no permanentlyrestricted net assets.

Use of Estimates - The preparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of support, revenue and expenses during the period.Accordingly, actual results could differ from those estimates.

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NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

Cash and Cash Equivalents - Cash and cash equivalents include highly liquid investments andinvestments with a maturity of three months or less, and exclude donor restricted receipts andamounts designated for long-term purposes. The Organization maintains its cash in bank depositaccounts which, at times, may exceed federally insured limits. The Organization has not experiencedany losses in such accounts. Management believes it is not exposed to any significant risk on cashaccounts.

Fair Value Measurement - Fair value is defined as "the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between market participants at the measurementdate."

A hierarchy has been established to prioritize the inputs to valuation techniques used to measure fairvalue. The hierarchy gives the highest ranking to fair values determined using unadjusted quotedprices in active markets for identical assets (Level 1) and the lowest ranking to fair values determinedusing methodologies and models with unobservable inputs (Level 3). Observable inputs are those thatmarket participants would use in pricing the asset based on market data obtained from sourcesindependent of the Organization. Unobservable inputs reflect the Organization’s assumption aboutthe inputs market participants would use in pricing the asset or liability developed based on the bestinformation available in the circumstances.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 - Values are unadjusted quoted prices for identical assets and liabilities inactive markets accessible at the measurement date.

Level 2 - Inputs include quoted prices for similar assets or liabilities in activemarkets, quoted prices from those willing to trade in markets that are not active, orother inputs that are observable or can be corroborated by market data for the term ofthe instrument. Such inputs include market interest rates and volatilities, spreads andyield curves.

Level 3 - Certain inputs are unobservable (supported by little or no market activity)and significant to the fair value measurement. Unobservable inputs reflect theOrganization’s best estimate of what hypothetical market participants would use todetermine a transaction price for the asset or liability at the reporting date.

Accounts Receivable - Accounts receivable represent amounts due from schools and are stated at theamount the Organization expects to collect for contract services. Provision for losses on receivablesis made when considered necessary to maintain an adequate allowance to cover bad debts.Receivables are charged against the allowance when the Organization determines that payments willnot be received. Any subsequent receipts are credited to the allowance. As of June 30, 2013 and2012, the Organization had a allowance for doubtful accounts of $158,387 and $74,331, respectively.Bad debt expense for the years ended June 30, 2013 and 2012 amounted to $103,334 and $83,254,respectively.

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Grants Receivable - Unconditional promises to give, less an allowance for uncollectible amounts, arerecognized as contribution income in the period received and as assets, decreases of liabilities, orexpenses depending on the form of the benefits received. Promises are recorded at net realizablevalue if expected to be collected in one year and at fair value if expected to be collected in more thanone year. Conditional promises to give, if any, are recognized only when the conditions on whichthey depend are substantially met and the promises become unconditional. The Organizationconsiders all unconditional promises to give to be fully collectible; accordingly, no allowance fordoubtful accounts is considered necessary.

Property and Equipment - Property and equipment are recorded at cost or estimated fair value fordonated items. Equipment purchases over $1,000 are capitalized. The cost of repairs andmaintenance which do not improve or extend the lives of the respective assets are expensed currently.Depreciation is computed on the straight-line method based on the estimated useful lives of the assets,which range from 3 to 5 years. Depreciation is charged to the activity benefiting from the use of theproperty or equipment.

Accrued Vacation - Accrued vacation represents vacation earned, but not taken as ofJune 30, 2013 and 2012, and is included in "accrued liabilities" in the statements of financial position.The accrued vacation balance as of June 30, 2013 and 2012 was $337,004 and $370,894, respectively.

Revenue Recognition - The Organization recognizes support and revenue on the accrual basis ofaccounting. Revenue from grants which have been classified as "exchange transactions" and contractservice fees are recognized as revenue in the period in which the service is provided.

Deferred Revenue - Deferred revenue represents amounts paid in advance for school site programsand exchange transactions.

Contributions - Contributions are recognized when the donor makes a pledge to give that is, insubstance, an unconditional promise. Contributions are recorded as unrestricted, temporarilyrestricted, or permanently restricted depending on the nature of donor restrictions. Temporarilyrestricted contributions are reported as increases in restricted net assets. When the restriction is metthe amount is shown as a reclassification of restricted net assets to unrestricted net assets.

Contributions In-Kind - Donated equipment and other donated goods are recorded at their estimatedfair value as of the date of the donation. Contributed services, which require a specialized skill andwhich the Organization would have paid for if not donated, are recorded at the estimated fair value atthe time the services are rendered. The Organization also receives donated services that do notrequire specific expertise but which are nonetheless central to the Organization's operations.

Expense Allocation - The costs of providing the various programs and other activities have beensummarized on a functional basis in the statements of activities and in the statements of functionalexpenses. Accordingly, certain costs have been allocated among the programs and supportingservices benefited. Management's estimate of indirect salary expense allocation is based on individualemployee timesheets and/or estimated time spent by function. Management's estimate of otherindirect costs are based on salary expense and/or headcount.

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Income Taxes - Playworks Education Energized is exempt from federal income taxes under Section501(c)(3) of the Internal Revenue Code and exempt from state income taxes under various state codes.Accordingly, no provision for income taxes has been made in the accompanying statements. Inaddition, the Organization qualifies for the charitable contribution deduction under Section170(b)(1)(A) of the Internal Revenue Code and has been classified as an organization that is not aprivate foundation under Section 509(a)(1) of the Internal Revenue Code.

Uncertainty in Taxes - Generally accepted accounting principles provide accounting and disclosureguidance about positions taken by an organization in its tax returns that might be uncertain.Management has considered its tax positions and believes that all of the positions taken by theOrganization in its federal and state exempt organization tax returns are more likely than not to besustained upon examination.

The Organization's federal returns for the years ended June 30, 2012, 2011 and 2010 could be subjectto examination by federal taxing authorities, generally for three years after they are filed. TheOrganization’s state returns for the years ended June 30, 2012, 2011, 2010 and 2009 could be subjectto examination by state taxing authorities, generally for four years after they are filed.

Marketing and Advertising - The Organization's policy is to expense marketing and advertising costsas the costs are incurred. Marketing and advertising expenses for the years ended June 30, 2013 and2012 was $90,391 and $61,179, respectively.

Reclassifications - Certain amounts in the prior year have been reclassified in order to be consistentwith the current year presentation.

Subsequent Events - Management of the Organization has evaluated events and transactionssubsequent to June 30, 2013 for potential recognition or disclosure in the financial statements. TheOrganization had no subsequent events that required recognition or disclosure in the financialstatements for the year ended June 30, 2013. Subsequent events have been evaluated through the datethe financial statements became available to be issued, December 11, 2013. The Organization has notevaluated subsequent events after December 11, 2013.

- 14 -




NOTE 5 - GRANTS RECEIVABLE:

The Organization received a four-year grant in the amount of $18,734,344 during the year ended June30, 2008. This grant receivable is reflected at present value using a discount rate of 3.2%. TheOrganization also received two 3-year grants totaling $3,225,000 during the year ended June 30, 2010.In addition, the Organization received one 3-year grant totaling $250,000 during the year ended June30, 2011. The Organization received two 3-year grants totaling $11,488,328, and one 2-yearcorporate grant totaling $1,200,000 during the year ended June 30, 2012. The Organization receiveda 3-year grant totaling $2,500,000 during the year ended June 30, 2013. These grants receivable arereflected at present value using discount rates ranging from 1.7% to 5.1%.

2013 2012

Total Grants Receivable $ 7,532,347 $ 10,385,086Present Value Discount (103,733) (212,847)

7,428,614 10,172,239Less: Current Portion (5,482,747) (4,415,314)

Total Grants Receivable, Net of Current Portion $ 1,945,867 $ 5,756,925

Future grants receivable payments are as follows:

Year Ending June 30, GrossPresent Value

Discount Net

2014 $ 5,566,683 $ (83,936) $ 5,482,7472015 1,965,664 (19,797) 1,945,867

Total Future Grants Receivable Payments $ 7,532,347 $ (103,733) $ 7,428,614

- 15 -




NOTE 6 - PROPERTY AND EQUIPMENT:

The cost and related accumulated depreciation of the property and equipment as of June 30, consistedof the following:

2013 2012

Furniture and Equipment $ 307,569 $ 243,312Tenant Improvements 195,199 187,833Software Development 133,869 133,869Website 131,041 131,041Capitalized Software 30,527 30,527Capital Lease Equipment 7,120 7,120

805,325 733,702Less: Accumulated Depreciation (624,880) (443,413)

Property and Equipment, Net $ 180,445 $ 290,289

Depreciation expense for the years ended June 30, 2013 and 2012 was $181,826 and $182,144,respectively.

NOTE 7 - LINES OF CREDIT:

The Jenesis Group - The Organization entered into a one-year loan agreement effective as of October1, 2010 with The Jenesis Group allowing for borrowings up to $2 million to be used for cash flow foroperations. The interest rate was at 2.79%. This agreement provided for two additional 12-monthextensions subject to the approval of The Jenesis Group prior to expiration of the agreement. TheJenesis Group approved a 12-month extension of the line of credit through October 1, 2012 and theinterest rate was adjusted to 2.86%. The Jenesis Group approved the second 12-month extension ofthe line of credit on October 1, 2012 and the interest rate was adjusted to 3.02%. The line of creditmatured on September 30, 2013. On October 1, 2013, The Jenesis Group approved another 12-monthextension of the line of credit through September 30, 2014 and the interest rate was adjusted to3.02%. As of June 30, 2013 and 2012, the amount outstanding was $2,000,000 and $0, respectively.

One PacificCoast Bank - The Organization entered into a $2,500,000 loan on March 1, 2012 with OnePacificCoast Bank (formerly OneCalifornia Bank). The line of credit is secured by a businesschecking account of Robert Wood Johnson Foundation. The loan bears interest at 3.00%. The loanmatured on September 30, 2012. The loan was amended and restated on September 30, 2012. Theprincipal amount of the note was increased from $2,500,000 to $3,500,000. The maturity date wasextended from September 30, 2012 to September 30, 2013. On October 22, 2013, the maturity datewas extended to October 21, 2014. As of June 30, 2013 and 2012 the amount outstanding was$1,800,000 and $2,500,000, respectively.

- 16 -




NOTE 7 - LINES OF CREDIT (Continued):

One PacificCoast Bank - The Organization entered into a $1,000,000 loan on March 1, 2012 with OnePacificCoast Bank (formerly OneCalifornia Bank). The line of credit is secured by the Organization'smachinery, equipment, furniture and accounts. The loan bears interest at 3.00% plus index. As ofJune 30, 2013 the interest rate was 6.25%. The loan matured on September 30, 2012. The loan wasamended and restated on September 30, 2012. The principal amount of the loan was increased from$1,000,000 to $1,200,000. The maturity date was extended from September 30, 2012 to September30, 2013. On October 22, 2013, the maturity date was extended to October 21, 2014 and the line ofcredit was increased to $3,000,000. As of June 30, 2013 and 2012 the amount outstanding was$0 and $400,000, respectively.

NOTE 8 - TEMPORARILY RESTRICTED NET ASSETS:

The Organization's temporarily restricted net assets as of June 30, consisted of the following:

2013 2012

National Expansion $ 3,745,206 $ 8,826,753Colorado Programs 453,471 99,397Indianapolis Programs 300,000 -Northern California Programs 160,000 535,000Pennsylvania Program 100,000 -Maryland Programs 67,558 30,000Texas Programs 60,000 -Pacific Northwest Programs 35,000 -Minnesota Programs 24,000 36,000New Jersey / New York Programs 11,820 -North Carolina Programs 4,112 -Louisiana Programs 516 -New England Programs - 349,331Michigan Programs - 116,667Utah Programs - 25,000

Total Temporarily Restricted Net Assets $ 4,961,683 $ 10,018,148

- 17 -




NOTE 9 - CONTRIBUTIONS IN-KIND:

The estimated fair value of donated space, supplies and expert services are recorded as contributions.During the years ended June 30, the following in-kind contributions were received by theOrganization:

2013 2012

Consulting Services $ 1,392,212 $ 981,974Legal Services 105,649 135,761Office Space 72,803 79,969Miscellaneous 46,412 42,818

Total Contributions In-Kind $ 1,617,076 $ 1,240,522

NOTE 10 - NET ASSETS RELEASED FROM RESTRICTIONS:

Net assets were released from restrictions during the year by incurring expenses satisfying therestricted purpose or by the expiration of time as follows:

2013

National Expansion $ 7,898,270Northern California Programs 684,000New England Programs 540,052Colorado Programs 330,629Maryland Programs 224,442Training 187,500Minnesota Programs 186,000Michigan Programs 157,167Southern California Programs 135,600Pennsylvania Programs 79,000Washington D.C. Programs 77,000Pacific Northwest Programs 67,747Texas Programs 57,350Utah Programs 55,000New Jersey / New York Programs 50,680North Carolina Programs 48,888Arizona Programs 5,500Louisiana Programs 2,984

Total Net Assets Released from Restrictions $ 10,787,809

- 18 -




NOTE 11 - CONFLICT OF INTEREST POLICY:

Included among the Organization's Board of Directors and Officers are volunteers from thecommunity who provide valuable assistance to the Organization in the development of policies andprograms and in the evaluation of business transactions. The Organization has adopted a conflict ofinterest policy whereby Board members are disqualified from participation in the final decisionsregarding any action affecting their related company or agency.

NOTE 12 - CONTINGENCIES:

Grants and contracts awarded to Playworks Education Energized are subject to the funding agencies'criteria, contract terms and regulations under which expenditures may be charged and are subject toaudit under such terms, regulations and criteria. Occasionally, such audits may determine that certaincosts incurred in connection with the grants do not comply with the established criteria that governthem. In such cases, the Organization could be held responsible for repayments to the funding agencyfor the costs or be subject to a reduction of future funding in the amount of the costs. Managementdoes not anticipate any material questioned costs for the contracts and grants administered during theperiod. The Organization would be responsible for the absorption of any over-expenditure of itsrestricted grants which cannot be covered by additional grant funds or contributions from othersources.

NOTE 13 - CONCENTRATIONS:

The Organization has three grantors that comprised 72% and one grantor that comprised 64% ofgrants receivable as of June 30, 2013 and 2012, respectively.

The Organization received over 17% and 43% of its total support and revenue from three donors forthe years ended June 30, 2013 and 2012, respectively.

NOTE 14 - OPERATING LEASE COMMITMENTS:

The Organization leases office space in Oakland (two locations), San Francisco, Washington D.C.,Baltimore, New Orleans, Los Angeles, Newark, Portland, Phoenix, Salt Lake City, Campbell,Albuquerque, Jamaica Plain (MA), Houston, Jackson, Chicago, St. Paul, Denver, Detroit,Philadelphia, New York and Durham. The office space leases expire at various periods throughSeptember 30, 2016. The Organization also leases office equipment. The office equipment leasesexpire at various periods through September 10, 2014. Rental expense, including in-kind, for theyears ended June 30, 2013 and 2012 was $953,681 and $816,641, respectively.

- 19 -




NOTE 14 - OPERATING LEASE COMMITMENTS (Continued):

Future minimum lease payments are as follows:

Year Ending June 30, Amount

2014 $ 653,8732015 337,4742016 88,0632017 4,696

Total Future Minimum Lease Payments $ 1,084,106

NOTE 15 - RELATED PARTY TRANSACTIONS:

A board member is a principal at a company that owns the building in which the Organization rentsoffice space in downtown Oakland, California at 380 Washington Street. The term of the lease is fiveyears ending on December 31, 2014. The office space is approximately 9,375 square feet. The rentfor the years ended June 30, 2013 and 2012 was $204,000 and $192,000, respectively.

The same board member also owns the building in which the Organization rents office space indowntown San Francisco, California at 650 Fifth Street, Suite 201 and 203. The office space isapproximately 1,444 square feet. The term of the lease is on a month-to-month basis. Rental expensefor the years ended June 30, 2013 and 2012 was $18,000 and $18,000, respectively.

A board member is a program officer for The Jenesis Group. The Organization was awarded a $3million grant from The Jenesis Group during the year ended June 30, 2010. The Organizationreceived the final three installments of $500,000 in July 2011, December 2011 and June 2012. Grantsreceivable as of June 30, 2012 from The Jenesis Group was $0.

The Organization was awarded a $3.5 million grant from an individual on May 20, 2013. The JenesisGroup is designated to act on behalf of the grantor with respect to the administrative roles andresponsibilities of the grant. The $3.5 million grant consists of two components: a) a $2.5 millionunrestricted grant, with payments of $500,000 as follows - initial payment following receipt of signedgrant, December 31, 2013, June 30, 2014, December 31, 2014 and June 30, 2015 and b) a $1 million"All or Nothing Incentive" Challenge, in which Grantor will pay $1 million if Playworks 1) raises anadditional $9.6 million to close-out its capital campaign of $26.4 million by June 30, 2014, and 2)meets all the reporting requirements outlined in the grant. Grants receivable as of June 30, 2013included $2,000,000 from the individual.

The Organization has a line of credit with The Jenesis Group, see Note 7.

- 20 -




NOTE 16 - RETIREMENT PLANS:

401(k) Plan - Effective January 1, 2010 the Organization sponsors a defined contribution plan underInternal Revenue Code Section 401(k) (the Plan). Under the provisions of the Plan, participatingemployees may make voluntary contributions through salary deductions up to the maximum amountallowed by law. The Organization is authorized under the Plan to make employer contributions onbehalf of its eligible employees. During the years ended June 30, 2013 and 2012, no contributionswere made by the Organization.

NOTE 17 - UNRESTRICTED NET ASSETS (DEFICIT) / CONTINUING OPERATIONS:

The Organization has historically had restricted net assets as of June 30 with release provisions for thefollowing fiscal year ranging between $4 to $6 million, and unrestricted net assets of less than $1million. The unrestricted deficit as of June 30, 2013 was temporarily funded by unsecured lines ofcredit and is expected to be permanently funded by budgeted unrestricted income for the year endingJune 30, 2014. The following table summarizes historical net assets:

6/30/13 6/30/12 6/30/11 6/30/10 6/30/09 6/30/08

Unrestricted Net Assets(Deficit) $ (355,266) $ (411,682) $ 83,956 $ 452,886 $ 420,449 $ 679,225

Restricted Net Assets 4,961,683 10,018,148 4,694,502 11,763,478 14,444,595 18,194,185

Total Net Assets $ 4,606,417 $ 9,606,466 $ 4,778,458 $ 12,216,364 $ 14,865,044 $ 18,873,410

In May 2012, Playworks launched a Growth Capital Campaign to raise $26.4 million to fund ongoingoperations and to build net assets for future years. A total of $11.5 million was raised in May 2012,including $8.5 million from the Robert Wood Johnson Foundation (see Note 2). As of June 30, 2013$17 million has been raised.

- 21 -

SECTION II

SUPPLEMENTARY INFORMATION



SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Pass-through Grant Period/Government Grantor Federal Entity Period InPass-through Grantor CFDA Identifying Current Revenue FederalProgram Title Number Number Fiscal Year Recognized Expenditures

Corporation for National and Community Service:AmeriCorps 94.006 10NDHCA0004 8/1/10 - 7/31/13 $ 970,120 $ 970,120Passed Through:State of California

AmeriCorps 94.006 11AFHY19-F153 7/1/12 - 12/31/13 853,237 853,237AmeriCorps - California Planning Grant 94.006 11AFHCA001 7/1/12 - 6/30/13 2,211 2,211

District of ColumbiaAmeriCorps 94.006 12AFHDC0010003 8/1/12 - 7/31/13 143,239 143,239

State of PennsylvaniaAmeriCorps 94.006 41000057390-1 8/20/12 - 12/31/13 127,718 127,718

State of New MexicoAmeriCorps 94.006 13-690-15408 8/30/12 - 8/13/13 86,476 86,476

State of MississippiAmeriCorps 94.006 12AC140054 8/23/12 - 8/22/13 32,187 32,187

Total Corporation for National and Community Service 2,215,188 2,215,188

TOTAL FEDERAL ASSISTANCE $ 2,215,188 $ 2,215,188

See Accompanying Notes to Schedule of Expenditures of Federal Awards.

- 22 -



NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

NOTE 1 - BASIS OF PRESENTATION:

The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federalgrant activity of Playworks Education Energized under programs of the federal government for theyear ended June 30, 2013. The information in this Schedule is presented in accordance with therequirements of OMB Circular A-133, Audits of States, Local Governments, and Non-ProfitOrganizations. Because the Schedule presents only a selected portion of the operations of PlayworksEducation Energized, it is not intended to and does not present the financial position, changes in netassets, or cash flows of Playworks Education Energized.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Expenditures reported on the Schedule are reported on the accrual basis of accounting. Suchexpenditures are recognized following the cost principles contained in OMB Circular A-122, CostPrinciples for Non-Profit Organizations, wherein certain types of expenditures are not allowable orare limited as to reimbursement.

Pass-through entity identifying numbers are presented where available.

- 23 -

SECTION III

REPORTS

Thomas C. Bondi Lawrence S. Kuechler Roberto M. Maragoni Frank A . Minuti. Jr.

BERGER LEWIS A C COUNT A NCY CORPORAT I ON


David R. Sheets Robert W. Smiley EMERITUS CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS

Alexander W. Berger ( 1916-2005) Griffith R. Lewis

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Directors Playworks Education Energized (A Nonprofit Public Benefit Corporation) Oakland, Califmnia

We have audited, in accordance with auditing standards generally 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 financial statements of Playworks Education Energized (a nonprofit public benefit corporation), which comprise the statement of financial position as of June 30, 2013, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our repmi thereon dated December 11, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Playworks Education Energized'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 financial statements, but not for the purpose of expressing an opinion on the effectiveness of Playworks Education Energized'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 intetnal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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.


MEMBER OF /[Ci!J. AN ASSOCIATION OF SEPARATE AND INDEPENDENT ACCOUNTING&. CONSULTING FIRMS

-24-

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Playworks Education Energized's financialstatements are free from material misstatement, we performed tests of its compliance with certainprovisions of laws, regulations, contracts, and grant agreements, noncompliance with which couldhave a direct and material effect on the determination of financial statement amounts. However,providing an opinion on compliance with those provisions was not an objective of our audit, andaccordingly, we do not express such an opinion. The results of our tests disclosed no instances ofnoncompliance or other matters that are required to be reported under Government AuditingStandards.

Purpose of this Report

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


- 25 -

Thomas C. Bondi Lawrence S. Kuechler Roberto M. Maragoni Frank A. Minuti, Jr.

BERGER LEWIS AC COUNTA NC Y CORPORATION


David R. Sheets Robert W. Smiley EMERITUS CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS

A lexander W. Berger ( 1916-2005) Griffith R. Lewis

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB

CIRCULAR A-133

To the Board of Directors Playworks Education Energized (A Nonprofit Public Benefit Corporation) Oakland, California

Report on Compliance for Each Major Federal Program

We have audited Playworks Education Energized's (a nonprofit public benefit corporation) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Playworks Education Energized's major federal programs for the year ended June 30, 2013. Playworks Education Energized's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor's Responsibility

Our responsibility is to express an opmton on compliance for each of Playworks Education Energized's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Playworks Education Energized's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Playworks Education Energized's compliance.


MEMBER OF li..Ji ~-

AN ASSOCIATION OF SEPARATE AND INDEPENDENT ACCOUNTING&. CONSULTING FIRMS

-26-

Opinion on Each Major Federal Program

In our opinion, Playworks Education Energized complied, in all material respects, with the types ofcompliance requirements referred to above that could have a direct and material effect on each of itsmajor federal programs for the year ended June 30, 2013.

Report on Internal Control Over Compliance

Management of Playworks Education Energized is responsible for establishing and maintainingeffective internal control over compliance with the types of compliance requirements referred toabove. In planning and performing our audit of compliance, we considered Playworks EducationEnergized’s internal control over compliance with the types of requirements that could have a directand material effect on each major federal program to determine the auditing procedures that areappropriate in the circumstances for the purpose of expressing an opinion on compliance for eachmajor federal program and to test and report on internal control over compliance in accordance withOMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internalcontrol over compliance. Accordingly, we do not express an opinion on the effectiveness ofPlayworks Education Energized’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing theirassigned functions, to prevent, or detect and correct, noncompliance with a type of compliancerequirement of a federal program on a timely basis. A material weakness in internal control overcompliance is a deficiency, or combination of deficiencies, in internal control over compliance, suchthat there is a reasonable possibility that material noncompliance with a type of compliancerequirement of a federal program will not be prevented, or detected and corrected, on a timely basis.A significant deficiency in internal control over compliance is a deficiency, or a combination ofdeficiencies, in internal control over compliance with a type of compliance requirement of a federalprogram that is less severe than a material weakness in internal control over compliance, yetimportant enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in thefirst paragraph of this section and was not designed to identify all deficiencies in internal control overcompliance that might be material weaknesses or significant deficiencies. We did not identify anydeficiencies in internal control over compliance that we consider to be material weaknesses.However, material weaknesses may exist that have not been identified.

This purpose of this report on internal control over compliance is solely to describe the scope of ourtesting of internal control over compliance and the results of that testing based on the requirements ofOMB Circular A-133. Accordingly, this report is not suitable for any other purpose.


- 27 -

SECTION IV

SCHEDULE OF FINDINGS AND QUESTIONED COSTS



SCHEDULE OF FINDINGS AND QUESTIONED COSTS


SUMMARY OF AUDITOR'S RESULTS:

1. The auditor's report expresses an unmodified opinion on the financial statements of PlayworksEducation Energized.

2. No significant deficiencies relating to the audit of the financial statements are reported in theIndependent Auditor's Report on Internal Control over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial Statements Performed in Accordance withGovernment Auditing Standards.

3. No instances of noncompliance material to the financial statements of Playworks EducationEnergized, which would be required to be reported in accordance with Government AuditingStandards, were disclosed during the audit.

4. No significant deficiencies relating to the audit of the major federal award programs are reportedin the Independent Auditor's Report on Compliance for Each Major Program and on InternalControl over Compliance Required by OMB Circular A-133.

5. The auditor's report on compliance for the major federal award programs for PlayworksEducation Energized expresses an unmodified opinion on all major federal programs.

6. No audit findings which would be required to be reported in accordance with Section 510(a) ofOMB Circular A-133 are reported in this Schedule.

7. The program tested as a major program was: Corporation for National and Community Service -AmeriCorps - CFDA 94.006.

8. The threshold used for distinguishing between Type A and B programs was $300,000.

9. Playworks Education Energized was determined to be a low-risk auditee.

- 28 -



SCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)


FINDINGS - FINANCIAL STATEMENTS AUDIT:

None

FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS AUDIT:

CORPORATION FOR NATIONAL AND COMMUNITY SERVICEName of Program - AmeriCorpsCFDA No. - 94.006None

- 29 -



SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


Item 2012-1 - AmeriCorps: Living Allowances

CORPORATION FOR NATIONAL AND COMMUNITY SERVICEName of Program - AmeriCorpsCFDA No. - 94.006Grant Period 7/1/11 - 6/30/12

Condition

During our audit, we noted that some AmeriCorps members were paid living allowances thatexceeded the maximum allowance. Specifically, we noted that an overpayment of $368 each for 24AmeriCorps members (total $8,832) occurred due to a transposition error in the entry of their finalstipend amounts into the payroll system. The final stipend was being modified from previous semi-monthly stipends by $0.02 in order to pay the member the designated annual stipend amount.

Criteria

An effective internal control includes adequate procedures to ensure that Playworks EducationEnergized complies with 45 CFR § 2522.24 that states that AmeriCorps members be paid amountsless than or equal to the maximum amount that the program allows.

Effect

Playworks Education Energized was not in compliance with 45 CFR § 2522.240 which states thatliving allowances paid to the AmeriCorps members should not exceed the maximum allowance.

Cause

A transposition error in the entry of the AmeriCorps members final stipend amounts into the payrollsystem resulted in overpayment of living allowances.

Context

AmeriCorps members were paid living allowances that exceeded the maximum allowance.

Recommendation

We recommend that the Organization comply with 45 CFR § 2522.24 that states that livingallowances paid to the AmeriCorps members should not exceed the maximum allowance.

- 30 -



SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS(Continued)


Management's Response

Playworks’ most recent audit was completed in November 2012 for the year ended June 30, 2012.The independent audit firm, Berger Lewis Accountancy Corporation, issued an unqualified opinionand found the financial statements to be prepared in accordance with GAAP. In the federal awardsportion of the audit, our auditors issued an opinion that Playworks complied in all material respectswith the compliance requirements of OMB Circular A-133 and for all major federal programs. Theauditors noted a finding as 24 AmeriCorps members were overpaid by $368 each (total $8,832) due toa data entry error in the final paycheck intended to add $0.02 and instead added $368.02. Playworkshas modified its procedures to not adjust final living allowance payments for rounding differencesresulting from dividing the annual living allowance by the number of payperiods.

Current Status

During our audit for the year ended June 30, 2013 we noted that the above recommendation has beenimplemented.

- 31 -

Playworks Massachusetts Key Staff Members

Board of Directors

Joe Casagrande

President, North America

MBT Shoes

Dave Czesniuk

Assistant Dean

NEU College of Professional Studies

Lucy Darragh

Senior Manager, Corporate Citizenship

Blue Cross Blue Shield of MA

Valerie Fleishman

Executive Director

NEHI

Taz Hussein

Partner

Bridgespan Group

Cori Lable

Associate

Ropes & Gray

Matt Meyersohn

Community Relations Director

Boston Celtics

Dave Newman

Vice President

Strategy Group Inc.

Ed Orazem

President, Family Office Services

Fidelity Investments

Susan Passoni

Committee Member

EdVestors and University Club of Boston

Allyson Perron (Board Chair)

Senior Director of Government Relations

Massachusetts, American Heart Association

Laurie Sherman

Mayoral Advisor for Education and Health

City of Boston

Christine Weithman

Director of Nutrition Services and Product Development

Health Management Resources

U)'\%'1 IRS DL'parlment of lh,: Trt!<Jsury \ttfb'?J/ Internal Revenue Service

030465

P.O. Box 2508, Room 4010 Cincinnati OH 45201

PLAYWDRKS EDUCATION ENERGIZED % JILL C VIALET 517 4TH ST OAKLAND CA 94607-3533

Employer Identification Number:

In reply refer to: 4077552510 Oct. 26, 2009 LTR 4168C 0 94-3251867 000000 00

94-3251867

00025867 BDDC: TE

Person to Contact: Michelle Jones Toll Free Telephone Number: l-877-829-5500

Dear Taxpayer:

This is in response to your Oct. 09, 2009, request for information regarding your tax-exempt status.

Our records indicate that your organization was recognized as exempt under section 50l(c)(3) of the Internal Revenue Code in a determination letter issued in November 1996.

Our records also indicate that you are not a private foundation within the meaning of section 509Ca) of the Code because you are described in sectionCs) 509Ca)(l) and 170(b)(l)(A)(vi).

Donors may deduct contributions to you as provided in section 170 of the Code. Bequests, legacies, devises, transfers, or gifts to you or for your use are deductible for Federal estate and gift tax purposes if they meet the applicable provisions of sections 2055, 2106, and 2522 of the Code.

Beginning with the organization's sixth taxable year and all succeeding years, it must meet one of the public support tests under section 170Cb)C1lCAlCvi) or section 509Cal(2) as reported on Schedule A of the Form 990. If your organization does ~ot meet the public support test for two consecutive years, it is required to file Form 990-PF, Return of Private Foundation, for the second tax year that the organization failed to meet the support test and will be reclassified as a private foundation.

If you have any questions, please call us at the telephone number shown in the heading of this letter.

Sincerely yours,

Cindy Westcott Manager, ED Determinations

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