legal momentum financial statements 6.30.2015

8/20/2019 Legal Momentum Financial Statements 6.30.2015

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LEGAL MOMENTUM

FINANCIAL STATEMENTS

JUNE 30 2015 and 2014


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INDEPENDENT AUDITORS' REPORT

Board of DirectorsLegal Momentum

New York, New York

Report on the Financial Statements

We have audited the accompanying financial statements of Legal Momentum (the "Organization"), whichare comprised of the statements of financial position as of June 30, 2015 and 2014, the relatedstatements of activities, functional expenses, and cash flows for the years then ended, and the relatednotes to the financial statements.

Management's Responsibility for the Financial Statements

The Organization's management is responsible for the preparation and fair presentation of these financialstatements 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 preparationand fair presentation of financial statements that are free from material misstatement, whether due tofraud or error.

Audi tors ' Responsibil ity

Our responsibility is to express an opinion on these financial statements based on our audits. Weconducted our audits in accordance with auditing standards generally accepted in the United States of

America. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditors' judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditors consider internal control relevant to theorganization's preparation and fair presentation of the financial statements, in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion onthe effectiveness of the organization's internal control. Accordingly, we express no such opinion. Anaudit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overall presentation ofthe financial statements.

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Legal Momentum as of June 30, 2015 and 2014, and the changes in its net assetsand its cash flows for the years then ended, in accordance with accounting principles generally acceptedin the United States of America.

New York, New YorkOctober 26, 2015


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LEGAL MOMENTUM

See notes to financial statements 2

Statements of Financial Position

June 30,

2015 2014

ASSETS

Cash and cash equivalents $ 294,823 $ 926,394

Investments 981,493 982,502Grants and contributions receivable 1,173,765 406,359Other receivables 6,976 2,519Prepaid expenses and other assets 123,109 56,094Property and equipment, net 82,476 105,552

$ 2,662,642 $ 2,479,420

LIABILITIES AND NET ASSETS

Liabilities: Accounts payable and other liabilities $ 177,459 $ 247,345Deferred rent obligation 9,994 41,216

187,453 288,561

Commitments (Note K)

Net assets:Unrestricted 1,282,333 1,642,606Temporarily restricted 992,856 348,253Permanently restricted 200,000 200,000

2,475,189 2,190,859

$ 2,662,642 $ 2,479,420


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LEGAL MOMENTUM

See notes to financial statements

Statements of Activities

Year Ended June 30,

2015

Temporarily Permanently

Unrestricted Restricted Restricted Total Unrestricted

Public support and revenue:

Contributions:Individual $ 380,282 $ 380,282 $ 492,512 Corporations and foundations 239,167 $ 270,833 510,000

Bequests 250,231 250,231 486,384 Government grants 600,000 600,000 Special events (net of direct benefits to donors of $143,934

and $172,831 for 2015 and 2014, respectively) 998,078 998,078 977,710 Net investment (loss) income (85) (85) 97,491 Rental income 86,088 86,088 240,169 Program income 67,908 67,908 23,867 Donated services 728,225 728,225 535,666 Other income 34,681 34,681 5,283

Total public support and revenue before netassets released from restriction 2,784,575 870,833 3,655,408 2,859,082

Net assets released from restriction:

Satisfaction of program restrictions 226,230 (226,230) 0 858,524

Total public support and revenue 3,010,805 644,603 3,655,408 3,717,606

Expenses:

Program services:National judicial educational program 618,615 618,615 681,320 Legal 936,931 936,931 558,203 Domestic and campus sexual violence 617,787 617,787 425,712 Helpline 136,948 136,948 83,128 Employment and poverty 519,209 Immigrant women's program 402,457

Total program services 2,310,281 2,310,281 2,670,029

Supporting services:

Management and general 302,972 302,972 385,398 Fund-raising 757,825 757,825 811,034

Total supporting services 1,060,797 1,060,797 1,196,432

Total expenses 3,371,078 3,371,078 3,866,461

Change in net assets (360,273) 644,603 284,330 (148,855) Net assets - beginning of year 1,642,606 348,253 $ 200,000 2,190,859 1,791,461

Net assets - end of year $ 1,282,333 $ 992,856 $ 200,000 $ 2,475,189 $ 1,642,606


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LEGAL MOMENTUM

See notes to financial statements 6

Statements of Cash Flows

Year Ended June 30,

2015 2014

Cash flows from operating activities:

Change in net assets $ 284,330 $ (506,275) Adjustments to reconcile change in net assets to net

cash used in operating activities:Depreciation and amortization 26,102 65,707Loss on disposal of equipment 366 333Donated marketable securities (30,113) (11,842)Proceeds from sale of marketable securities 30,113 11,842Net realized and unrealized losses (gains) on investments 33,739 (64,334)Bad debt expense 2,100Changes in:

Grants and contributions receivable (767,406) 589,538Other receivables (4,457) 23,663

Prepaid expenses and other assets (67,015) (4,246) Accounts payable and other liabilities (69,886) (100,756)Deferred rent obligation (31,222) (70,072)Deferred revenue (13,632)

Net cash used in operating activities (595,449) (77,974)

Cash flows from investing activities:Proceeds from sales of investments 30,534 260,884Purchases of investments (63,264) (292,292)Purchase of property and equipment (3,392) (97,588)

Net cash used in investing activities (36,122) (128,996)

Cash flows from financing activities: Proceeds from line of credit 130,000Repayments on line of credit (130,000)

Net cash provided by financing activities 0

Decrease in cash and cash equivalents (631,571) (206,970)Cash and cash equivalents - beginning of year 926,394 1,133,364

Cash and cash equivalents - end of year $ 294,823 $ 926,394

Supplemental disclosures of cash flow information: Donated services $ 728,225 $ 535,666


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LEGAL MOMENTUM

Notes to Financial StatementsJune 30, 2015 and 2014

7

NOTE A - THE ORGANIZATION AND ITS SIGNIFICANT ACCOUNTING POLICIES

[1] The Organization:

Legal Momentum (the "Organization"), formerly known as the NOW Legal Defense and Education Fund,was established in 1970 under the not-for-profit laws of the District of Columbia. The Organization pursuesequality for women and girls in the workplace, the schools, the family, and the courts, using a variety ofstrategies, including litigation, policy analysis, administrative advocacy, and public education programs.

The Organization is exempt from federal income taxes under Section 501(c)(3) of the U.S. Internal RevenueCode and from state and local taxes under comparable laws. The Organization has filed an election withthe Internal Revenue Service to make expenditures to influence legislation.

[2] Basis of accounting:

The accompanying financial statements of the Organization have been prepared using the accrual basis ofaccounting and conform to accounting principles generally accepted in the United States of America as

applicable to not-for-profit entities.

[3] Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amounts of assets, liabilities,revenues and expenses and the disclosure of contingencies. Actual results may differ from those estimates.

[4] Investments:

Investments in cash held in interest-bearing accounts, and debt securities with readily determinable fairvalues are reported at their fair values in the accompanying statements of financial position, with realizedand unrealized gains and losses included in the accompanying statements of activities. The Organization's

mutual funds, consisting of equity and fixed-income funds, are also reported at values determined by therelated investment manager or advisor and reviewed by the Organization's management forreasonableness.

Investment transactions are recorded on a trade-date basis. Realized gains or losses on investments aredetermined by comparison of the average cost of acquisition to proceeds at the time of disposition. Theearnings from dividends and interest are recognized when earned.

Donated securities are recorded at their fair values, as determined on the date of gift, with realized gains orlosses recorded when the securities are sold. The Organization's policy, generally, is to sell donatedsecurities immediately upon receipt. Accordingly, for purposes of the accompanying statements of cashflows, donated securities received and sold within the same year are reported in the change in net assetsand shown in operating activities.

[5] Property and equipment:

The Organization's property and equipment are reported at their costs at the dates of acquisition or their fairvalues at their dates of donation. Minor costs of repairs and maintenance are expensed as incurred. TheOrganization capitalizes property and equipment that have a cost of $1,000 or more and useful lives greaterthan one year. Depreciation and amortization are provided using the straight-line method over theestimated useful lives of the respective assets, ranging from three to ten years. Leasehold improvementsare amortized over either the useful lives of the assets or the term of the lease, whichever is shorter.


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LEGAL MOMENTUM


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NOTE A - THE ORGANIZATION AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[5] Property and equipment: (continued)

Management evaluates the recoverability of the investment in long-lived assets on an on-going basis andrecognizes any impairment in the year of determination. Long-lived assets were tested for impairment as ofJune 30, 2015 and 2014, respectively, and, in the opinion of management, there were no impairments. It isreasonably possible that relevant conditions could change in the near term and necessitate a change inmanagement's estimate of the recoverability of these assets.

[6] Accrued vacation:

Accrued vacation is a liability that represents the Organization's obligation for the cost of unused employeevacation time that would be payable in the event of employees' departures; the obligation is recalculatedevery year. At June 30, 2015 and 2014, the accrued vacation obligation was $84,653 and $85,614,respectively, and was reported as part of "accounts payable and other liabilities" in the accompanyingstatements of financial position.

[7] Deferred rent obligation:

The difference between rent expense incurred by the Organization on an accrual basis and the lesseramounts paid in cash is attributable to scheduled rent increases and is reported as a deferred rent liability inthe accompanying statements of financial position.

[8] Net assets:

(i) Unrestricted:

Unrestricted net assets represent those resources that are not subject to donor restrictions and areavailable for current operations.

(ii) Temporarily restricted:

Temporarily restricted net assets represent those resources that are subject to the requirements ofWashington D.C.'s Uniform Prudent Management of Institutional Funds Act ("UPMIFA") and the use ofwhich has been restricted by donors or state law for specific purposes and/or the passage of time.When a donor restriction expires, that is, when a stipulated time restriction ends, a purpose restriction isaccomplished, or funds are appropriated through action of the Board Directors, temporarily restricted netassets are reclassified as unrestricted net assets and reported in the accompanying statements ofactivities as "net assets released from restrictions."

(iii) Permanently restricted:

Permanently restricted net assets represent those resources the principal of which is originallyrestricted into perpetuity by donors. The purposes for which the income and net capital appreciationarising from the underlying assets may be used depend on the wishes of those donors. Under theterms of UPMIFA, those earnings are classified as temporarily restricted in the accompanyingstatements of activities, pending action by the Board of Directors.


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LEGAL MOMENTUM


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[9] Revenue recognition :

(i) Contributions and bequests:

Contributions to the Organization are recognized as revenue upon the receipt of cash or other assets orof unconditional pledges. Contributions are recorded as either temporarily or permanently restricted ifthey are received with donor stipulations or time considerations as to their use. Conditionalcontributions are recorded when the specified conditions have been met. The Organization recordsbequest income at the time it has an established right to a bequest and the proceeds are measurable.Contributions to be received over periods longer than a single year are discounted at an interest ratecommensurate with the risk involved.

(ii) Governmental grants:

Government grants and contracts are recognized as temporarily restricted support when received andreleased from restrictions when the expenditures are incurred.

(iii) Rental income:

The Organization subleases a portion of its District of Columbia's office space to unrelated tenantsunder month-to-month operating lease agreements which are cancellable by either the Organization orthe tenants with appropriate notification.

(iv) Program income:

The Organization's program income consists of sales of instructional materials, honoraria paid to LegalMomentum staff by other organizations and attorney fees, and income is recorded when services areprovided.

(v) Other income:

Other income is recognized as services are rendered.

[10] Donated services:

Donated services are recognized in the financial statements if the services (i) require specialized skills, (ii)be provided by individuals possessing these skills, and (iii) would typically need to be purchased if notprovided by donation. Donated services are recorded as support at their estimated fair values at the datesof donation and are reported as unrestricted support. Donated pro-bono legal services for the Organizationfor fiscal-years 2015 and 2014 were approximately $728,225 and $535,666, respectively.

[11] Functional allocation of expenses:

The costs of providing the Organization's various programs and supporting services have been summarizedon a functional basis in the accompanying statements of activities. Accordingly, certain costs have beenallocated among the programs and supporting services using reasonable ratios determined bymanagement.

[12] Interns:

A substantial number of unpaid interns (approximately 20 to 25 per year) have made significantcontributions of their time to the Organization. The value of this contributed time does not meet the criteriafor recognition of contributed services required under generally accepted accounting principles and,accordingly, is not included in the accompanying financial statements.


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[13] Endowment fund:

The Organization reports all applicable disclosures to its funds designated as endowment.

[14] Income tax uncertainties:

The Organization is subject to the provisions of the Financial Accounting Standards Board's (the "FASB") Accounting Standards Codification ("ASC") Topic 740, Income Taxes, relating to accounting and reportingfor uncertainty in income taxes. Because of the Organization's general tax-exempt status, managementbelieves ASC Topic 740 has not had, and is not expected to have, a material impact on the Organization'sfinancial statements.

[15] Fair-value measurement:

The Organization reports a fair-value measurement of all applicable financial assets and liabilities, including

investments, grants and contributions and other receivables, and short-term payables.

[16] Subsequent events:

The Organization considers all of the accounting treatments, and the related disclosures in the currentfiscal-year's financial statements, that may be required as the result of all events or transactions that occurafter the fiscal year-end through October 26, 2015, the date the financial statements were available to beissued.

[17] Reclassification:

Certain amounts included in the prior-year's financial statements have been reclassified to conform to thecurrent year's presentation. These reclassifications had no effect on the previously reported change in net

assets.

NOTE B - INVESTMENTS

At each fiscal year-end, investments consisted of the following:

June 30,

2015 2014

Fair Value Cost Fair Value Cost

Cash and cash equivalents $ 184,857 $ 184,857 $ 174,396 $ 174,396Mutual funds:

Fixed-income securities 307,389 305,448 309,484 296,522Equity securities 481,615 387,935 490,650 373,905

U.S. government obligations 7,632 14,339 7,972 14,605

$ 981,493 $ 892,579 $ 982,502 $ 859,428


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NOTE B - INVESTMENTS (CONTINUED)

During each fiscal year, net investment (losses) income consisted of the following:

Year Ended June 30,2015 2014

Interest and dividends $ 33,654 $ 33,157Net realized gains 421 23,117Net unrealized (losses) gains (34,160) 41,217

$ (85) $ 97,491

The FASB's ASC Topic 820, Fair Value Measurements and Disclosures, establishes a three-level valuationhierarchy of fair-value measurements. These valuation techniques are based on observable and unobservableinputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputsreflect market assumptions. These two types of inputs create the following fair-value hierarchy:

Level 1: Valuations are based on observable inputs that reflect quoted market prices in active markets for thesame or identical assets and liabilities at the reporting date.

Level 2: Valuations are based on (i) quoted prices for those investments, or similar investments in activemarkets, or (ii) quoted prices for those investments, or similar investments in markets that are notactive, or (iii) pricing inputs other than quoted prices that are directly or indirectly observable at thereporting date. Level 2 assets include those investments that are redeemable at or near the balancesheet date and for which a model was derived for valuation.

Level 3: Valuations are based on pricing inputs that are unobservable and include situations where (i) thereis little, if any, market activity for the investments, or (ii) the investments cannot be independentlyvalued, or (iii) the investments cannot be immediately redeemed at or near the fiscal year-end.

The availability of available market data is monitored to assess the appropriate classification of financialinstruments within the fair-value hierarchy. Changes in economic conditions or valuation techniques may requirethe transfers of financial instruments from one level to another. In such instances, the transfer is reported at thebeginning of the reporting period. There were no transfers between Levels 1 and 2 for fiscal-years 2015 and2014.

The following table summarizes the fair values of the Organization's assets at each fiscal year-end, in accordancewith ASC Topic 820 valuation levels:

June 30,

2015 2014

Level 1 Level 2 Total Level 1 Level 2 Total

Cash and cash equivalents $ 184,894 $ 184,894 $ 174,396 $ 174,396Mutual funds:

Fixed-income securities 307,352 307,352 309,484 309,484Equity securities 481,615 481,615 490,650 490,650

U.S. government obligations $ 7,632 7,632 $ 7,972 7,972

Total $ 973,861 $ 7,632 $ 981,493 $ 974,530 $ 7,972 $ 982,502


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LEGAL MOMENTUM


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NOTE C - RECEIVABLES

[1] Grants and contributions receivable:

Grants and pledges of future contributions made to the Organization as of each fiscal-year end, but not yetcollected as of that date, were recorded as grants and contributions receivable of $1,165,405 and $406,359during fiscal-years 2015 and 2014, respectively, and were estimated to be due within one year. Based onprior experience, management expects to collect the receivables in full, and, accordingly, has notestablished an allowance for uncollectible accounts.

[2] Other receivables:

At each fiscal year-end, other receivables consisted of amounts due to the Organization for exchange-typetransactions. All amounts are due within one year. Based on management's past experience, allreceivables in this category are expected to be fully collected.

NOTE D - PROPERTY AND EQUIPMENT

At each fiscal year-end, property and equipment consisted of the following:

June 30,

2015 2014

Furniture and fixtures $ 87,851 $ 88,219Telephone system 2,742 2,742Computers 8,350 4,956Leasehold improvements 177,855 177,855

276,798 273,772Less accumulated depreciation and amortization (194,322) (168,220)

$ 82,476 $ 105,552

Depreciation expense for fiscal-years 2015 and 2014 was $26,102 and $65,707, respectively.

During fiscal-year 2015, the Organization wrote off property and equipment of $2,205, with accumulateddepreciation of $1,839, resulting in loss on the disposition of $366. During fiscal-year 2014, the Organizationwrote off partially depreciated office equipment of $1,581,754, resulting in a loss on disposition of $333.

NOTE E - RETIREMENT BENEFITS

The Organization has a defined-contribution pension plan, qualified under Section 403(b) of the Internal RevenueCode. The plan covers all employees who meet the Organization's length-of-service requirements. Contributionsby the Organization are discretionary and can be made only with the Board of Directors' approval. TheOrganization's contribution for fiscal-years 2015 and 2014 was approximately $52,000 and $61,000, respectively.

In addition, the Organization has a 403(b) tax-sheltered annuity retirement plan, which is available to allemployees. Contributions are made by employees and are not matched by the Organization.


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NOTE F - SIGNIFICANT SOURCES OF REVENUE

The Organization received grants from the Department of Justice Office on Violence Against Women in theamount of $600,000 and $467,000 for fiscal-years 2015 and 2014, respectively. Such grants represented 34%and 32% of public support, respectively. During fiscal-year 2015, the Organization received a contribution from adonor in the amount of $500,000. Such contribution represented 29% of public support.

NOTE G - CREDIT RISK

The Organization places its cash investments with high-credit-quality financial institutions. At times, the balancesin such accounts may exceed federally insured limits. The Organization's management believes that there is nosubstantial risk of loss associated with the failure of these financial institutions.

NOTE H - TEMPORARILY RESTRICTED NET ASSETS

At each fiscal year-end, temporarily restricted net assets consisted of the following:

June 30,

2015 2014

National judicial educational program $ 152,949 $ 348,253Domestic and campus sexual violence 569,074Time restricted 270,833

$ 992,856 $ 348,253

During each fiscal year, net assets released from restrictions consisted of the following:

Year Ended June 30,

2015 2014

National judicial educational program $ 195,304 $ 279,040Domestic and campus sexual violence 30,926Immigrant women's program 368,651Employment and poverty 2,500Time restricted 208,333

$ 226,230 $ 858,524

NOTE I - PERMANENTLY RESTRICTED NET ASSETS

At June 30, 2015 and 2014, net assets of $200,000 were permanently restricted, with investments earnings to beused for legal support.


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NOTE J - ACCOUNTING AND REPORTING FOR ENDOWMENTS

[1] The endowment:

The Organization's endowment consists of a single donor-restricted fund, which is reported as permanentlyrestricted.

[2] Interpretation of relevant law:

UPMIFA is applicable to all of the Organization's institutional funds, including its donor-restrictedendowment funds. The Board of Directors adheres to UPMIFA's requirements.

[3] Endowment objectives:

The Organization has adopted investment and spending policies for it's endowment assets that are intendedto provide a predictable stream of funding to programs supported by its endowment, while seeking tomaintain the purchasing power of the endowment assets.

NOTE K - COMMITMENTS

[1] Operating leases:

The Organization rents office space in Washington, D.C., under a lease which expires in May 2017. Thelease for the office space in New York City expired in December 2013, and the Organization subsequentlysigned a new lease agreement, commencing in October 2013 and expiring in February 2019. Rent expensewas approximately $476,000 and $622,000 for fiscal-years 2015 and 2014, respectively.

During fiscal-year 2011, the Organization entered into a sublease agreement for a portion of its WashingtonD.C.'s office space under a cancelable operating lease terminating May 2017. Pursuant to a provisionwithin the lease agreement, the tenant exercised the option to terminate the lease, effective January 31,

2015. During fiscal-year 2015, the Organization entered into a sublease agreement for an additionalportion of its Washington D.C.'s office space; the agreement expires in May 2017.

During fiscal-years 2015 and 2014, rental income generated from the above-referenced subleaseagreements amounted to approximately $74,000 and $240,000, respectively.

The Organization is obligated under certain office equipment lease agreements. The obligations arepayable in annual installments of approximately $17,000 through June 2016 and of approximately $6,000through June 2019.

The minimum annual future rental commitments under the lease agreements, net of sublease agreements,are as follows:

Year EndingJune 30, RentalExpense SubleaseIncome Net

2016 $ 509,336 $ 212,766 $ 296,5702017 457,434 191,709 265,7252018 223,200 223,2002019 75,324 75,324

$ 1,265,294 $ 404,475 $ 860,819


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NOTE K - COMMITMENTS (CONTINUED)

[2] Revolving line-of-credit agreement:

During fiscal-year 2015, the Organization arranged a revolving line of credit with JPMorgan Chase in theamount of $500,000 held with JPMorgan Chase and Co., and amounts drawn down under the line of creditwere subject to interest at 5.50% plus LIBOR. During fiscal-year 2015, the Organization drew down$130,000 but repaid the full amount by June 30, 2015.

[3] Government contracts:

The Organization's government-funded activities are subject to audit by the applicable granting agencies. At June 30, 2015, there were no material obligations outstanding as a result of such audits, and theOrganization's management believes that unaudited projects will not result in any material obligations.

[4] Employment agreement:

The Organization has an employment agreement with its President ending in April 2016.

[5] Other contracts:

The Organization has entered into various contracts and agreements in the normal course of businessoperations.

legal momentum financial statements 6.30.2015

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