GuideStar USA, Inc. · GUIDESTAR USA, INC. CONTENTS PAGE NO. INDEPENDENT AUDITOR'S REPORT 2 - 3...

GuideStar USA, Inc.

Financial Statements

For the Years Ended December 31, 2016 and 2015

GUIDESTAR USA, INC.

CONTENTS

PAGE NO.

INDEPENDENT AUDITOR'S REPORT 2 - 3

EXHIBIT A - Statements of Financial Position, as of December 31, 2016 and 2015 4 - 5

EXHIBIT B - Statements of Activities and Changes in Net Assets, for the YearsEnded December 31, 2016 and 2015 6 - 7

EXHIBIT C - Statement of Functional Expenses, for the Year Ended December 31,2016 8 - 9

EXHIBIT D - Statement of Functional Expenses, for the Year Ended December 31,2015 10 - 11

EXHIBIT E - Statements of Cash Flows, for the Years Ended December 31, 2016and 2015 12

NOTES TO FINANCIAL STATEMENTS 13 - 21

1

INDEPENDENT AUDITOR'S REPORT

To the Board of DirectorsGuideStar USA, Inc.Washington, D.C.

We have audited the accompanying financial statements of GuideStar USA, Inc. (theOrganization), which comprise the statements of financial position as of December 31, 2016 and 2015,and the related statements of activities and changes in net assets, functional expenses and cash flows forthe 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 statementsin accordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.

Auditor’s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures 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 tofraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of significantaccounting estimates made by management, as well as evaluating the overall presentation of the financialstatements.

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

4550 MONTGOMERY AVENUE · SUITE 650 NORTH · BETHESDA, MARYLAND 20814(301) 951-9090 · FAX (301) 951-3570 · WWW.GRFCPA.COM

___________________________

MEMBER OF CPAMERICA INTERNATIONAL, AN AFFILIATE OF HORWATH INTERNATIONAL

MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS' PRIVATE COMPANIES PRACTICE SECTION

2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,the financial position of the Organization as of December 31, 2016 and 2015, and the changes in its netassets and its cash flows for the years then ended in accordance with accounting principles generallyaccepted in the United States of America.

April 21, 2017

3

GUIDESTAR USA, INC.

STATEMENTS OF FINANCIAL POSITIONAS OF DECEMBER 31, 2016 AND 2015

ASSETS

2016 2015CURRENT ASSETS

Cash and cash equivalents $ 1,948,539 $ 3,252,900Grants receivable 101,845 275,000Accounts receivable, net of allowance for doubtful accounts

of $26,057 and $38,907 in 2016 and 2015, respectively 897,862 960,760Prepaid expenses 3,000 60,838

Total current assets 2,951,246 4,549,498

PROPERTY AND EQUIPMENT

Equipment 2,406,688 2,365,961Furniture 371,761 290,635Leasehold improvements 269,224 250,009Software development 1,963,216 1,694,022

5,010,889 4,600,627Less: Accumulated depreciation and amortization (4,104,446) (3,782,492)

Net property and equipment 906,443 818,135

OTHER ASSETS

Refundable security deposits 106,398 68,455Intangible asset - web site domain, less accumulated amortization

of $100,311 and $100,000 in 2016 and 2015, respectively 1,244 -

Total other assets 107,642 68,455

TOTAL ASSETS $ 3,965,331 $ 5,436,088

See accompanying notes to financial statements. 4

EXHIBIT A

LIABILITIES AND NET ASSETS (DEFICIT)

2016 2015CURRENT LIABILITIES

Accounts payable and accrued liabilities $ 476,762 $ 473,861Deferred program revenue 1,911,491 1,873,338Current portion of deferred rent and tenant allowance 29,709 27,375

Total current liabilities 2,417,962 2,374,574

LONG-TERM LIABILITIES

Long-term debt 600,000 600,000Deferred rent and tenant allowance, net of current portion 231,989 207,336

Total long-term liabilities 831,989 807,336

Total liabilities 3,249,951 3,181,910

NET ASSETS (DEFICIT)

Unrestricted (167,140) (116,655)Temporarily restricted 882,520 2,370,833

Total net assets (deficit) 715,380 2,254,178

TOTAL LIABILITIES AND NET ASSETS (DEFICIT) $ 3,965,331 $ 5,436,088


GUIDESTAR USA, INC.

STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

2016

UnrestrictedTemporarilyRestricted Total

REVENUE

Program revenue $ 8,669,702 $ - $ 8,669,702Grants 51,000 980,030 1,031,030Membership 1,395,740 - 1,395,740Contributions 35,754 - 35,754Interest 3,012 - 3,012Rental income 134,301 - 134,301Net assets released from donor restrictions 2,468,343 (2,468,343) -

Total revenue 12,757,852 (1,488,313) 11,269,539

EXPENSES

Program Services:Profile Program 2,413,196 - 2,413,196Web Program 3,034,636 - 3,034,636Platform Program 2,317,007 - 2,317,007Data & Knowledge Services 2,500,925 - 2,500,925

Total program services 10,265,764 - 10,265,764

Supporting Services:Administration 2,222,008 - 2,222,008Fundraising 320,565 - 320,565

Total supporting services 2,542,573 - 2,542,573

Total expenses 12,808,337 - 12,808,337

Changes in net assets (deficit) (50,485) (1,488,313) (1,538,798)

Net assets (deficit) at beginning of year (116,655) 2,370,833 2,254,178

NET ASSETS (DEFICIT) AT END OF YEAR $ (167,140) $ 882,520 $ 715,380


EXHIBIT B

2015

UnrestrictedTemporarilyRestricted Total

$ 8,456,209 $ - $ 8,456,209134,000 4,000,000 4,134,000

1,291,990 - 1,291,99044,630 - 44,63039,223 - 39,223

1,813,295 (1,813,295) -- - -

11,779,347 2,186,705 13,966,052

1,846,480 - 1,846,4803,011,450 - 3,011,4502,082,864 - 2,082,8641,912,624 - 1,912,624

8,853,418 - 8,853,418

2,481,590 - 2,481,590325,737 - 325,737

2,807,327 - 2,807,327

11,660,745 - 11,660,745

118,602 2,186,705 2,305,307

(235,257) 184,128 (51,129)

$ (116,655) $ 2,370,833 $ 2,254,178


Profile Program Web Program

Platform Program

Salaries 1,133,898$ 1,732,143$ 1,108,464$ Payroll taxes 108,976 99,309 99,309 Employee benefits 168,288 258,408 164,457 Training and recruitment 11,550 8,788 8,788

Total personnel 1,422,712 2,098,648 1,381,018

Data digitization 235,429 235,429 235,429 Infrastructure-Products 260,410 260,410 260,410 Infrastructure-Internal 33,149 27,809 27,809 Advertising and marketing 30,507 28,807 28,807 Travel 44,597 39,362 39,362 Consultants and contractors 76,243 76,243 76,243 Professional services 23,968 20,955 20,955 Rent, phone and utilities 133,699 111,910 111,910 Office expenses 33,266 28,350 28,350 Credit card and bank charges 36,038 35,985 35,985 Personal property taxes 1,112 923 923 Bad debt expense 5,749 5,748 5,749 Interest expense 3,190 2,648 2,648

Total operating expense 2,340,069 2,973,227 2,255,598

Depreciation and amortization 73,127 61,409 61,409

TOTAL 2,413,196$ 3,034,636$ 2,317,007$

Program Services

GUIDESTAR USA, INC.

STATEMENT OF FUNCTIONAL EXPENSESFOR THE YEAR ENDED DECEMBER 31, 2016


Data & Knowledge

Services

Total Program Services Administration Fundraising

Total Supporting

ServicesTotal

Expenses

1,232,139$ 5,206,644$ 1,265,668$ 232,154$ 1,497,822$ 6,704,466$ 107,710 415,304 94,359 9,026 103,385 518,689 183,087 774,240 174,538 31,552 206,090 980,330

9,416 38,542 57,735 1,109 58,844 97,386

1,532,352 6,434,730 1,592,300 273,841 1,866,141 8,300,871

235,429 941,716 - - - 941,716 260,410 1,041,640 45 297 342 1,041,982 31,351 120,118 159,708 3,170 162,878 282,996 28,807 116,928 37,903 5,109 43,012 159,940 40,339 163,660 74,649 1,893 76,542 240,202 76,243 304,972 52,065 1,101 53,166 358,138 22,964 88,842 59,951 8,441 68,392 157,234

126,384 483,903 133,445 12,252 145,697 629,600 31,597 121,563 36,961 7,585 44,546 166,109 36,021 144,029 315 29 344 144,373 1,049 4,007 1,118 104 1,222 5,229 5,749 22,995 - - - 22,995 3,009 11,495 3,207 298 3,505 15,000

2,431,704 10,000,598 2,151,667 314,120 2,465,787 12,466,385

69,221 265,166 70,341 6,445 76,786 341,952

2,500,925$ 10,265,764$ 2,222,008$ 320,565$ 2,542,573$ 12,808,337$

Supporting Services

EXHIBIT C


Profile Program Web Program

Platform Program

Salaries 943,076$ 1,498,072$ 901,911$ Payroll taxes 53,329 90,697 124,507 Employee benefits 114,522 183,169 109,430 Training and recruitment 10,305 34,671 10,322

Total personnel 1,121,232 1,806,609 1,146,170

Contract costs 152 152 152 Data digitization 268,588 268,588 268,588 Infrastructure-Products 113,013 433,372 170,162 Infrastructure-Internal 12,557 48,153 18,907 Advertising and marketing 51,111 51,491 51,905 Travel 37,052 42,119 45,994 Consultants and contractors 66,162 96,264 66,202 Professional services 5,498 8,094 9,160 Rent, phone and utilities 80,963 136,147 171,980 Office expenses 18,046 28,684 33,788 Credit card and bank charges 31,867 31,867 31,867 Personal property taxes 565 904 1,044 Bad debt expense 7,500 7,500 7,500 Interest expense 1,622 2,597 2,997

Total operating expense 1,815,928 2,962,541 2,026,416

Depreciation and amortization 30,552 48,909 56,448

TOTAL 1,846,480$ 3,011,450$ 2,082,864$

Program Services

GUIDESTAR USA, INC.

STATEMENT OF FUNCTIONAL EXPENSESFOR THE YEAR ENDED DECEMBER 31, 2015


Data & Knowledge

Services

Total Program Services Administration Fundraising

Total Supporting

ServicesTotal

Expenses

965,800$ 4,308,859$ 1,299,453$ 243,916$ 1,543,369$ 5,852,228$ 66,781 335,314 116,637 8,202 124,839 460,153

117,333 524,454 148,099 27,297 175,396 699,850 10,309 65,607 63,563 173 63,736 129,343

1,160,223 5,234,234 1,627,752 279,588 1,907,340 7,141,574

152 608 - - - 608 268,588 1,074,352 - - - 1,074,352 114,749 831,296 5,758 41 5,799 837,095 12,750 92,367 282,157 1,967 284,124 376,491 51,461 205,968 66,871 7,803 74,674 280,642 39,328 164,493 81,446 3,157 84,603 249,096 66,162 294,790 66,772 - 66,772 361,562 6,158 28,910 95,131 6,268 101,399 130,309

95,489 484,579 137,356 16,996 154,352 638,931 20,455 100,973 53,799 6,047 59,846 160,819 31,867 127,468 1,958 - 1,958 129,426

651 3,164 1,080 67 1,147 4,311 7,500 30,000 - - - 30,000 1,870 9,086 3,100 192 3,292 12,378

1,877,403 8,682,288 2,423,180 322,126 2,745,306 11,427,594

35,221 171,130 58,410 3,611 62,021 233,151

1,912,624$ 8,853,418$ 2,481,590$ 325,737$ 2,807,327$ 11,660,745$

EXHIBIT D

Supporting Services


EXHIBIT E

GUIDESTAR USA, INC.

STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

2016 2015CASH FLOWS FROM OPERATING ACTIVITIES

Changes in net assets (deficit) $ (1,538,798) $ 2,305,307

Adjustments to reconcile changes in net assets (deficit)to net cash (used) provided by operating activities:

Depreciation and amortization 341,952 233,151Loss on disposal of fixed assets - 3,540Allowance for doubtful accounts (12,850) 1,662Bad debt expense 22,995 30,000

(Increase) decrease in:Grants receivable 173,155 (185,000)Accounts receivable 52,753 (149,312)Prepaid expenses 57,838 47,568Refundable security deposits (37,943) (9,300)

Increase in:Accounts payable and accrued liabilities 2,901 145,300Deferred program revenue 38,153 199,810Deferred rent and tenant allowance 26,987 22,771

Net cash (used) provided by operating activities (872,857) 2,645,497

CASH FLOWS FROM INVESTING ACTIVITIES

Software development (269,194) (366,027)Purchase of property and equipment (160,755) (162,164)Website Name Renewal (1,555) -

Net cash used by investing activities (431,504) (528,191)

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on long-term debt - (450,000)

Net cash used by financing activities - (450,000)

Net (decrease) increase in cash and cash equivalents (1,304,361) 1,667,306

Cash and cash equivalents at beginning of year 3,252,900 1,585,594

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,948,539 $ 3,252,900

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Interest Paid $ 15,000 $ 12,378


GUIDESTAR USA, INC.

NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2016 AND 2015

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION

Organization -

GuideStar USA, Inc. (the Organization), formerly known as Philanthropic Research, Inc., wasformed under the laws of the State of Delaware as a non-stock, not-for-profit corporation. TheOrganization was founded to promote charitable giving and transparency in the philanthropicsector by creating, maintaining and disseminating to the public a database containinginformation on the missions, programs, operations and finances of charitable organizations. In2008, the Organization's name was formally changed to GuideStar USA, Inc. to align the legalname with its more commonly referred to brand name of GuideStar.

The Organization's Program Service Descriptions -

Profile Program -

GuideStar is working to create a common profile for nonprofit organizations. The creation of acomprehensive profile will help improve the nonprofit sector’s efficiency. Nonprofits, foundations,and others will more easily be able to compare and benchmark nonprofits’ programs, progress,and results. In 2015, we initiated the GuideStar Profile Standard (GSPS), a best practice guidefor collecting and sharing information about nonprofit organizations. The GSPS document isrefreshed yearly to reflect changes and developments. GSPS now applies to our Profile UpdateProgram and determines an organization’s qualifications for a Seal of Transparency.

Nonprofits can earn Bronze, Silver, Gold or Platinum Seals of Transparency depending on theamount of information they share. In 2016, GuideStar launched a feature in the Profile UpdateTool to enable nonprofits to share quantitative program results data, known as the Platinum levelof transparency. Organizations are empowered to tell their stories and explain their impactthrough programmatic metrics. As part of this process, GuideStar also created the first sector-wide database of common programmatic metrics, the Common Results Catalog, with 686common metrics applicable to different cause areas.

As of December 31, 2016, GuideStar had 3.1 billion pieces of data and more than 120,000organizations had provided additional data for their GuideStar Nonprofit Profiles. Some 36,534of these organizations achieved the Bronze, Silver, Gold, or Platinum Seals. Of the 1,627organizations that earned a Platinum Seal, 71% of their metrics came from the Common ResultsCatalog.

In 2016, GuideStar also continued to enhance the design of the GuideStar Nonprofit Profiles toemphasize an organization’s programs and results; leverage interactive data visualization andpre-calculated metrics for insight into financial performance and stability and offer deeperunderstanding of nonprofit practice.

Web Program -

GuideStar is working to create tools to support decision making by nonprofit and foundationprofessionals.

GuideStar believes the better people understand the philanthropic sector, the more effectivelyand efficiently it will operate, and the more support it will receive.

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GUIDESTAR USA, INC.


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION(Continued)

The Organization's Program Service Descriptions (continued) -

Web Program (continued) -

In 2016, the GuideStar database comprised information on nearly 2.5 million current and historictax-exempt organizations, including 1.7 million 501(c)(3) entities. Nearly 7 million unique usersvisited our website to explore this information. Total website visits in 2016 exceeded 12.6 million.

GuideStar continued to enhance its decision-making resources. GuideStar Charity Check, ourpre-grant due-diligence tool, is 100% compliant with IRS regulations. GuideStar Premium andPro give users deep and comprehensive research capabilities. In 2016, GuideStar updated itsNonprofit Profiles to simplify navigation and make program information more prominent. Thenew profiles present nonprofit data in an enhanced view that allows users to easily find andcompare relevant information alongside historical trends. GuideStar also refreshed its searchtool in 2016. The new search engine improves the initial relevancy of results and allows users tofilter by geography, issue area, Seal of Transparency, and different financial metrics. Theseadvances in user interface design and dynamic data visualization offer new opportunities tounderstand and analyze data.

The online GuideStar Community expanded its reach to include nearly 10,000 registered usersin 2016. The GuideStar Community allows our users and customers to more easily find asolution to issues and receive faster responses. More importantly, the community provides aspace for community participants to engage with one another and share needs, challenges, andsuccesses. It enabled users to more easily and efficiently find a solution to their issues, andprovided a forum for GuideStar to better understand the challenges faced by our users.

The total product count for our Web Program includes “free” products offered as part of theMembership Program. However, Membership revenue is listed separately on our financialstatements.

Platform Program -

GuideStar is working to disseminate high-quality information on nonprofits through as manychannels for donations and grantmaking as possible. GuideStar works to ensure that nonprofitinformation is available whenever and wherever it is needed. In 2016, we improved ourApplication Programming Interfaces (APIs) to better facilitate data delivery to our partners andcustomers. We also aligned GuideStar’s product architecture to be able to easily copy featuresfrom guidestar.org to our platform products.

Information in GuideStar Nonprofit Profiles powered 207 philanthropic websites and applicationsin 2016. Our data distribution network partners included Facebook, Volunteer Match,AmazonSmile, and the donor-advised funds of Fidelity, Schwab, and Vanguard. Hits toGuideStar data, via APIs and web services, totaled more than 14.6 million in 2016. GuideStarsupports community foundations’ fundraising and engagement efforts through the DonorEdgeplatform. In 2016, 20 community foundations used this service.

Data and Knowledge Services -

GuideStar provides custom support to various stakeholders working to research and report onthe nonprofit sector.

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GUIDESTAR USA, INC.



The Organization's Program Service Descriptions (continued) -

Data and Knowledge Services (continued) -

In 2016, we published the 16th edition of our annual compensation report and assisted manyorganizations in their research. We provided data and analysis on several topics to a number ofmedia organizations, including the New York Times, Wall Street Journal, Chicago Tribune, andNBC News. Journalists incorporated this information into stories or used it as background toenhance the quality of their reporting on the nonprofit sector.

Basis of presentation -

The accompanying financial statements are presented on the accrual basis of accounting, andin accordance with FASB ASC 958, Not-for-Profit Entities.

New accounting pronouncement -

In August 2016, the Financial Accounting Standards Board (FASB) issued AccountingStandards Update (ASU) 2016-14, Presentation of Financial Statements of Not-for-Profit Entities(Topic 958), intended to improve financial reporting for not-for-profit entity. The ASU will reducethe current three classes of net assets into two: with and without donor restrictions. The changein each of the classes of net assets must be reported on the Statements of Activities andChanges in Net Assets. The ASU also requires various enhanced disclosures around topicssuch as board designations, liquidity, functional classification of expenses, investmentexpenses, donor restrictions, and underwater endowments. The ASU is effective for yearsbeginning after December 15, 2017. Early adoption is permitted. The ASU should be appliedon a retrospective basis in the year that the ASU is first applied. While the ASU will change thepresentation of Guidestar's financial statements, it is not expected to alter Guidestar's reportedfinancial position activities.

Cash and cash equivalents -

The Organization considers all cash and other highly liquid investments with initial maturities ofthree months or less to be cash equivalents.

Bank deposit accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up toa limit of $250,000. At times during the year, the Organization maintains cash balances inexcess of the FDIC insurance limits. Management believes the risk in these situations to beminimal.

Grants receivable -

Grants receivable are recorded at fair value. Management considers all amounts to be fullycollectible within one year. Accordingly, an allowance for doubtful accounts has not beenestablished.

Accounts receivable -

Accounts receivable are recorded at their net realizable value, which approximates fair value.The Organization records an allowance that is based on prior years' experience andmanagement's analysis of specific accounts receivable balances. At December 31, 2016 and2015, management estimated an allowance of $26,057 and $38,907, respectively.

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GUIDESTAR USA, INC.



Property and equipment -

Property and equipment in excess of $1,000 are capitalized and stated at cost. Internal andexternal costs for software development are capitalized and amortized over a three year period.The cost of maintenance and repairs is recorded as expenses are incurred.

Property and equipment are depreciated on a straight-line basis over the estimated useful livesof the related assets as follows:

Years

Software development 3 - 5Computers 3 - 5Leasehold improvements 5Furniture and equipment 7

Depreciation expense for the years ended December 31, 2016 and 2015 was $341,641 and$232,596, respectively.

Impairment of long-lived assets -

Management reviews asset carrying amounts whenever events or circumstances indicate thatsuch carrying amounts may not be recoverable. When considered impaired, the carrying amountof the assets is reduced, by a charge to Statements of Activities and Changes in Net Assets, toits current fair value.

Income taxes -

The Organization is exempt from Federal income taxes under Section 501(c)(3) of the InternalRevenue Code. Accordingly, no provision for income taxes has been made in the accompanyingfinancial statements. The Organization is not a private foundation. Income from the unrelatedbusiness activity of advertising is subject to tax to the extent that it exceeds the cost ofgenerating the advertising income. There are no material amounts of taxes incurred onunrelated business income.

Uncertain tax positions -

For the years ended December 31, 2016 and 2015, the Organization has documented itsconsideration of FASB ASC 740-10, Income Taxes, that provides guidance for reportinguncertainty in income taxes and has determined that no material uncertain tax positions qualifyfor either recognition or disclosure in the financial statements.

Intangible asset -

The intangible asset represents rights to an internet domain, which was valued at $100,000when it was acquired in the year 2000, and was amortized over a period of 15 years. Guidestarpurchased a domain name renewal in 2016 for $1,555, which increased the total capitalizedvalue of intangible assets to $101,555. The cost of the renewal is being amortized over 5 years.

Amortization expense for the years ended December 31, 2016 and 2015 was $311 and $555.

Intangible assets are reviewed annually for impairment. When considered impaired, the carryingamount of the asset is reduced, by a charge to Statements of Activities and Changes in NetAssets, to its current fair value. There was no impairment for the years ended December 31,2016 and 2015.

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GUIDESTAR USA, INC.



Net asset classification -

The net assets are reported in three self-balancing groups as follows:

Unrestricted net assets include unrestricted revenue and contributions received without

donor-imposed restrictions. These net assets are available for the operation of the

Organization and include both internally designated and undesignated resources.

Temporarily restricted net assets include revenue and contributions subject to donor-

imposed stipulations that will be met by the actions of the Organization and/or the passage of

time. When a restriction expires, temporarily restricted net assets are reclassified to

unrestricted net assets and reported in the Statements of Activities and Changes in Net

Assets as net assets released from restrictions.

Permanently restricted net assets represent funds restricted by the donor to be maintained

in perpetuity by the Organization. At December 31, 2016 and 2015, there were no

permanently restricted net assets.

Contributions and grants -

Contributions and grants are recorded as revenue in the year notification is received from thedonor. Temporarily restricted contributions and grants are recognized as unrestricted supportonly to the extent of actual expenses incurred in compliance with the donor-imposed restrictionsand satisfaction of time restrictions. Such contributions and grants received in excess ofexpenses incurred are shown as temporarily restricted net assets in the accompanying financialstatements.

Use of estimates -

The preparation of financial statements in conformity with accounting principles generallyaccepted 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 revenue and expenses during the reporting period.Accordingly, actual results could differ from those estimates.

Functional allocation of expenses -

The costs of providing the various programs and other activities have been summarized on afunctional basis in the Statements of Activities and Changes in Net Assets. Accordingly, certaincosts have been allocated among the programs and supporting services benefited.

Volunteer services and in-kind contributions -

The Organization recognizes in-kind contributions as revenue and expenses in the period inwhich they are received. No amounts have been reflected in the accompanying financialstatements for volunteer services since they are not susceptible to objective measurement orvaluation.

Advertising -

Advertising costs are expensed as incurred. Advertising expense amounted to $88,226 and$92,116 for 2016 and 2015, respectively.

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GUIDESTAR USA, INC.



Deferred revenue -

Program services, advertising income and membership income are recognized as revenuewhen earned over the period. Revenue received for future periods that is not earned at year-endare recorded as deferred program revenue and is included in the Statements of FinancialPosition.

Deferred revenue consisted of the following at December 31, 2016 and 2015:

2016 2015

Program fees $ 1,861,491 $ 1,873,338Membership 50,000 100,000

TOTAL DEFERRED PROGRAM REVENUE $ 1,911,491 $ 1,873,338

Reclassification -

Certain amounts 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 reportedchanges in net assets.

2. TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets consisted of the following at December 31, 2016 and 2015:

2016 2015

Timing Restrictions $ 882,520 $ 2,370,833

3. NET ASSETS RELEASED FROM DONOR RESTRICTIONS

The following temporarily restricted net assets were released from donor restrictions, atDecember 31, 2016 and 2015, by incurring expenses, which satisfied the restricted purposesspecified by the donors or by the passage of time:

2016 2015Programmatic Restrictions:

TAG Project $ - $ 78,646User Advisory Board 15,000 -Board Source 5,000 -PUP Engagement 5,250 -West Coast Office 275,000 -NP Financial Risk 39,780 -Non Profits in Politics - 52,225Videoconferencing project 39,924Bridge Project 25,000 25,000Anniversary Video 13,333

Passage of Time 2,103,313 1,604,167

TOTAL NET ASSETS RELEASED FROM DONORRESTRICTIONS $ 2,468,343 $ 1,813,295

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GUIDESTAR USA, INC.


4. LONG-TERM DEBT2016 2015

Program-related investment loan payable to Wells FargoCommunity Development Corporation in the amount of$600,000. The principal balance is due October 2018. Theloan bears interest of 1.5% per annum, which is payablequarterly. $ 600,000 $ 600,000

For the years ended December 31, 2016 and 2015, the Organization was required to comply withdebt covenants associated with the program-related investment loan.

For the years ended December 31, 2016 and 2015, interest expense totaled $15,000 and $12,378,respectively.

5. LEASE COMMITMENTS

Operating leases -

The Organization has operating leases for office space in Williamsburg, Virginia, Washington,D.C. and Oakland, California.

The Organization's Williamsburg, Virginia lease extends through August, 2017 and has annual2% escalations of rental payments.

The Organization's Washington, D.C. lease expired in June, 2015 and a lease for new officespace was entered into effect July 2015 and extending through February 2024, with an annual2.5% escalation of rental payments. Under the new Washington, D.C. lease, the Organizationreceived eight (8) months of free rent, which is being amortized over the entire life of the lease,on a straight-line basis. The Organization also received an allowance from the landlord of$167,475 for improvements to the leased space. This allowance has been recorded as aleasehold improvement asset, and as part of the deferred rent liability, and is being amortizedover the entire life of the lease, on a straight line basis

The Organization's Oakland, California lease was signed in April 2016, effective July, 2016through September, 2021, with an annual 3% escalation of rental payments. The Organizationreceived three (3) months of free rent under the lease, which is being amortized over the entirelife of the lease, on a straight line basis.

Accounting principles generally accepted in the United States of America require that the totalrent commitment should be recognized on a straight-line basis over the term of the lease.Accordingly, the difference between the actual monthly payments and the rent expense beingrecognized for financial statement purposes is recorded as a deferred rent liability on theStatements of Financial Position.

Total expenses under the Organization's office space leases for 2016 and 2015 were $516,683and $538,238, respectively, and are included in Rent, phone and utilities in the accompanyingStatements of Functional Expenses.

The Organization also has various two and three year operating leases for web site hosting andother equipment. Total lease expense under these leases for 2016 and 2015 was $165,671 and$550,023, respectively, and are included in Rent, phone and utilities in the accompanyingStatements of Functional Expenses.

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GUIDESTAR USA, INC.


5. LEASE COMMITMENTS (Continued)

Operating leases (continued) -

Minimum future lease payments under all operating leases as of December 31, 2016 are asfollows:

Year Ending December 31, Equipment Facilities Total

2017 $ 92,118 $ 551,613 $ 643,7312018 - 421,766 421,7662019 - 433,224 433,2242020 - 445,013 445,0132021 - 389,809 389,809

Thereafter - 580,444 580,444

$ 92,118 $ 2,821,869 $ 2,913,987

The Organization subleases a portion of its Washington, D.C. office space under a subleaseexpiring February 29, 2024. Additionally, effective July 2016 the Organization subleases a portion ofits Oakland, California office space under an agreement expiring June 30, 2018.

The following is a schedule of the future minimum rental income:

Year Ending December 31,

2017 $ 160,0102018 138,2792019 114,8802020 117,7602021 120,708

Thereafter 271,938

$ 923,575

Rental income for the years ended December 31, 2016 and 2015 was $134,301 and $39,223,respectively.

6. LINE OF CREDIT

The Organization has a $500,000 working capital line of credit, with interest on advances payable atprime plus 1.5%. The line of credit is collateralized by all accounts, property and equipment,intangibles, and certain insurance policies. At December 31, 2016 and 2015, there was nooutstanding balance on the line of credit.

7. CONDITIONAL GRANT RECEIVABLE

During 2012, the Organization entered into a grant agreement for support totaling $250,000. Theinitial unconditional payment of $84,000 was received with time restrictions in November 2012, anda second payment of $83,000 was received in October 2014. The final payment of $83,000 wasreceived during 2015 as scheduled.

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7. CONDITIONAL GRANT RECEIVABLE (Continued)

During 2014, the Organization entered into a grant agreement for support totaling $3,000,000. Theinitial unconditional payment of $750,000 was received in October 2014. The remaining portion ofthe grant was contingent upon the Organization meeting certain goals set forth in the grantagreement. In 2015, these goals were met and the remaining $2,250,000 balance was received.

8. RETIREMENT PLANS

Effective January 1, 2003, the Organization established a defined contribution retirement plan,which covers all employees who work 1,000 hours in an employment year, except temporaryemployees. Under the defined contribution retirement plan, the Organization will match 100% ofeligible employees' plan contributions, for amounts up to 3.5% of their compensation.

The Organization made employer contributions of $196,367 and $164,344 for 2016 and 2015,respectively.

9. COMMITMENTS

The Organization has entered into several contractual agreements for data digitization and relatedservices, to make available the tax returns and other data and information of tax-exemptorganizations. The contracts have various expiration dates and are reviewed annually to determineif they should be renewed.

10. FUTURE FUNDING

For the year ended December 31, 2015, the Organization had a positive change in unrestricted netassets of approximately $118,600, and ended the year with an unrestricted net asset deficit ofapproximately $116,700.

For the year ended December 31, 2016, the Organization experienced a loss from operations ofapproximately $50,600, resulting in an unrestricted net assets deficit of approximately $167,200.

For fiscal year 2017, management revamped its strategic and budgeting planning process alongwith creating more realistic yet data-driven revenue targets with the goal of obtaining positiveunrestricted net assets for operational growth. Management believes that with the enhancedpeople, systems, and processes in place starting in 2016, there is a greater degree of confidence inachieving projected growth in 2017 and beyond. The financial statements do not include anyadjustment that might be necessary if the Organization is unable to accomplish their goals.

11. SUBSEQUENT EVENTS

In preparing these financial statements, the Organization has evaluated events and transactions forpotential recognition or disclosure through April 21, 2017, the date the financial statements wereissued.

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GuideStar USA, Inc. · GUIDESTAR USA, INC. CONTENTS PAGE NO. INDEPENDENT AUDITOR'S REPORT 2 - 3...

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