2021 Financial Statements
Statements of Financial Position
| December 31 | 2021 | 2020 |
|---|---|---|
Assets |
||
| Cash and cash equivalents | $ 13,786,880 | $ 10,951,593 |
| Investments, net | 627,50,569 | 586,444,103 |
| Interest and dividends receivable | 437,667 | 331,938 |
| Federal excise tax | — | 32,000 |
| Other assets | 144,586 | 137,205 |
| Total assets | $ 641,819,702 | $ 597,896,839 |
Liabilities |
||
| Accounts payable and accrued expenses | $ 1,288,105 | $ 977,964 |
| Grants payable | 10,286,975 | 14,830,810 |
| Accrued federal excise tax | 84,000 | — |
| Deferred federal excise tax | 2,088,000 | 1,968,000 |
| Total liabilities | 13,747,080 | 17,776,774 |
Net Assets |
||
| Net assets without donor restrictions | 628,072,622 | 580,120,065 |
| Total liabilities and net assets | $ 641,819,702 | $ 597,896,839 |
The accompanying notes are an integral part of the financial statements.
Statements of Activities
| December 31 | 2021 | 2020 |
|---|---|---|
Net Investment Income |
||
| Total investment income, net of expenses | $ 108,956,216 | $ 60,745,343 |
Expenses |
||
| Grants expensed | 55,517,318 | 39,906,992 |
| Program support and management and general (see note 11) | 3,699,750 | 3,296,635 |
| Total expenses | 59,217,068 | 43,203,627 |
| Increase in net assets before federal excise taxes | 49,739,148 | 17,541,716 |
| Federal excise tax provision | (1,786,591) | (959,700) |
| Change in net assets without donor restrictions | 47,952,557 | 16,582,016 |
| Net assets – beginning of the year | 580,120,065 | 563,538,049 |
| Net assets – end of the year | $ 628,072,622 | $ 580,120,065 |
The accompanying notes are an integral part of the financial statements.
Statements of Cash Flows
| December 31 | 2021 | 2020 |
|---|---|---|
Cash Flows from Operating Activities |
||
| Change in net assets | $ 47,952,557 | $ 16,582,016 |
|
Adjustments to reconcile change in net assets to net cash used in operating activities: |
||
| Depreciation and amortization | 32,403 | 30,503 |
| Net realized and unrealized losses gains on investments | (107,258,061) | (58,602,805) |
| Deferred federal excise tax | 120,000 | (1,000) |
| Changes in assets and liabilities: | ||
| Interest and dividends receivables | (105,729) | 97,091 |
| Accrued federal excise tax | 116,000 | 882,000 |
| Other assets | 10,951 | (9,186) |
| Accounts payable and accrued expenses | 310,141 | 39,959 |
| Grants payable | (4,543,835) | (6,126,278) |
| Net cash used in operating activities | (63,365,573) | (47,107,700) |
Cash Flows from Investing Activities |
||
| Proceeds from sale of investments | 252,043,448 | 165,551,195 |
| Purchases of investments | (185,791,853) | (119,326,053) |
| Purchase of equipment and improvements | (50,735) | (20,500) |
| Net cash provided by investing activities | 66,200,860 | 46,204,642 |
| Net increase (decrease) in cash and cash equivalents | 2,835,287 | (903,058) |
| Cash and cash equivalents – beginning | 10,951,593 | 11,854,651 |
| Cash and cash equivalents – ending | $ 13,786,880 | $ 10,951,593 |
Supplemental Disclosure of Cash Flow Information |
||
| Cash paid during the year: | ||
| Income taxes, excise | $ 1,552,000 | $ 78,500 |
The accompanying notes are an integral part of the financial statements.
Notes to Financial Statements — December 31, 2020 and 2019
Note 1
Summary of Significant Accounting Policies
Nature of operations The George Gund Foundation (the Foundation) was established in 1952 as a private, nonprofit institution with the sole purpose of contributing to human well-being and the progress of society. The Foundation is rooted in Cleveland, Ohio, and organizes its grantmaking through the following program areas: climate and environmental justice; creative culture and arts; public education; thriving families and social justice; and vibrant neighborhoods and inclusive economy.
Basis of Accounting The Foundation’s financial statements are presented on the accrual basis of accounting. Accordingly, revenues are recorded when earned, and expenses are recognized when incurred.
Basis of presentation The Foundation has adopted ASU 2016-14. Under this provision, the Foundation is required to report information regarding its financial position and activities according to two classes of net assets: net assets without donor restrictions and net assets with donor restrictions. Accordingly, net assets of the Foundation and changes therein are classified and reported as follows:
Net Assets without Donor Restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Trustees (the Board) and/or management for general operating purposes. The Board may designate a portion of these net assets for specific purposes, which makes them unavailable for use at management’s discretion.
Net Assets with Donor Restrictions – Net assets with donor restrictions consist of assets whose use is limited by donor-imposed, time and/or purpose restrictions. The Foundation did not have any assets with donor restrictions as of December 31, 2021 and 2020.
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents Cash and cash equivalents consist of cash on deposit with financial institutions and highly liquid investments with maturity dates of three months or less, which are readily convertible into cash.
Investments in fixed maturity securities Investments in fixed maturity securities are classified at the acquisition date and the classification is re-evaluated at each balance sheet date. Trading investments are securities acquired with the intent to sell in the near term and are carried at fair value with changes in fair value reported in earnings. As of December 31, 2021 and 2020, all of the Foundation’s investments in fixed maturity securities were classified as trading.
Investments in equity securities Investments in equity securities are carried at fair value with changes in fair value reported in earnings.
Other investments Other investments primarily include program-related investments (notes receivable and an investment in a limited liability company that support program initiatives) totaling $8,444,676 and $8,580,617 at December 31, 2021 and 2020, respectively. The notes receivable are due from various not-for-profit organizations at various dates from 2022 through 2035 and carry interest at rates between 1% and 2%; principal and interest payment arrangements vary by note. As of December 31, 2021 and 2020, there were unfunded commitments totaling $2,500,000, and $2,000,000, respectively. The Foundation has an additional mission-related loan due from a not-for-profit organization valued at $225,076 and $307,191 as of December 31, 2021 and 2020, respectively, and included in investments, net on the statements of financial position. This investment is secured by a deposit account and matures in 2023.
The Foundation invests in certain alternative investments, which include investments in limited partnerships. Market values represent the Foundation’s pro rata interest in the net assets of each limited partnership as of December 31, 2021 and 2020, as provided by the fund managers. Market values as of December 31, 2021 and 2020 are not based on audited financial information supplied by the general partner or manager of the funds. Audited information is only available annually based on the partnerships or funds’ year-end. Management reviews monthly valuations provided by the general partner or manager of the funds and assesses the reasonableness of the fair values provided at the interim dates and included in the financial statements. At December 31, 2021 and 2020, the Foundation had total unfunded capital commitments related to alternative investments of $11,037,500,and $1,037,500 respectively. There was a conditional unfunded capital commitment of $3,250,000 at both December 31, 2021 and 2020. Because of the inherent uncertainty of the valuation of alternative investments, the market values reflected in the accompanying financial statements may differ significantly from realizable values.
Allowance for uncollectible accounts Investments in program-related loans are stated at the present value of the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for uncollectible accounts, and a credit to a valuation allowance, based on its assessment of the current status of individual accounts. At December 31, 2021 and 2020, management determined that no allowance for uncollectible note receivable was deemed necessary.
Interest receivable is stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for uncollectible interest, and a credit to a valuation allowance, based on its assessment of the current status of individual accounts. At December 31, 2021 and 2020, management determined that no allowance for uncollectible interest was deemed necessary.
Furniture, equipment, and leasehold improvements Furniture, equipment, and leasehold improvements (included in other assets) are stated at cost. Amortization and depreciation is recorded using both straight-line and accelerated methods over the estimated useful lives of the assets. Depreciation and amortization expense amounted to $32,403 and $30,503 for the years ended December 31, 2021 and 2020, respectively.
Fair value measurement – definition and hierarchy The Foundation follows Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) 820-10, Fair Value Measurements. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
In determining fair value, the Foundation uses various valuation approaches, including market, income, and/or cost approaches. FASB ASC 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs, and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the Foundation. Unobservable inputs reflect the Foundation’s assumptions used in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels, based on the reliability of inputs, as follows:
- Level 1 – Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the Foundation has the ability to access.
- Assets and liabilities utilizing Level 1 inputs include: exchange-traded equity securities that are actively traded.
- Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
- Assets and liabilities utilizing Level 2 inputs include: government bonds, corporate bonds, foreign bonds, private equity investments in mutual funds, and program related savings.
- Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
- Assets and liabilities utilizing Level 3 inputs include: equity securities that are not actively traded, private equity investments, and program related/other investments held in loans.
Recently issued accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02 entitled “Leases (Topic 842),” which may change the Foundation’s statement of financial position by adding lease-related assets and liabilities. This new standard is effective for the Foundation for annual reporting periods beginning after December 15, 2021, with early adoption permitted. Management has not yet determined whether this new standard will have a material effect on its financial statements.
Note 2
Revenue and Support Recognition
Contributions are recognized when cash, securities, or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Foundation received no contributions for the years ended December 31, 2021 and 2020.
Note 3
Grants
Grants are expensed upon approval by the Board of Trustees, payable upon the performance of specified conditions, and paid when the specified conditions are satisfied. Discretionary grants in amounts up to $10,000 and cumulative for the year up to $700,000 for the years ended December 31, 2021 and 2020, respectively, are recommended by the program directors and approved by the President. These discretionary grants are expensed upon approval and ratified by the Board of Trustees at the following board meeting. Grants that are cancelled or in excess of needed amounts are included as a reduction of grant expense in the year they are cancelled or returned.
On an annual basis, the Foundation’s Board sets a target payout rate of grants paid in relation to average portfolio value. During 2021 and 2020, the Board approved a 10% payout rate to better support the community during the coronavirus pandemic (COVID-19).
Note 4
Investments
Market values of investments were as follows at December 31:
| 2021 | 2020 | ||
|---|---|---|---|
| Fixed income securities | $22,594,038 | $18,826,870 | |
| Common stocks and alternative investments | 604,856,531 | 567,617,233 | |
| Total | $627,450,569 | $586,444,103 |
Market values of investments are based on December 31, 2021 and 2020 published quotations, except that, estimates are used when quotations are not available. Fixed income securities consist of U.S. government securities, U.S. government guaranteed securities, and corporate securities. Common stocks and alternative investments consist principally of U.S. and international equity securities, program and mission-related investments, and investments in limited partnerships.
Published market quotations do not necessarily represent realizable values, particularly where sizable holdings of a company’s stock exist, as in the case of the Foundation’s holding of the Kellogg Company common stock.
Note 5
Credit Concentration
Aside from its holdings in the Kellogg Company, the Foundation’s portfolio of investments is highly diversified; however, at December 31, 2021 and 2020, 12% and 14% of the total market value of securities, and approximately 54% and 60%, respectively, of dividend income in each year are attributable to ownership of Kellogg Company stock.
Note 6
Fair Value Disclosure and Measurement
The Foundation’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with FASB ASC 820-10. See Note 1 for a discussion of the Foundation’s policies regarding this hierarchy.
The following fair value hierarchy tables present information about the Foundation’s assets and liabilities measured at fair value on a recurring basis:
| Fair Value Measurements at Reporting Date | ||||
|---|---|---|---|---|
| December 31, 2021 | (Level 1) | (Level 2) | (Level 3) | Balance |
Corporate stock |
||||
| Consumer goods | $101,080,381 | $— | $— | $101,080,381 |
| Financial | 65,493,923 | — | — | 65,493,923 |
| Services | 26,198,719 | — | — | 26,198,719 |
| Industrial goods | 28,109,493 | — | — | 28,109,493 |
| Basic materials | 5,154,756 | — | — | 5,154,756 |
| Technology | 40,210,655 | — | — | 40,210,655 |
| Healthcare | 5,019,120 | — | — | 5,019,120 |
| Retail | 9,465,654 | — | — | 9,465,654 |
| Media | 716,244 | — | — | 716,244 |
| Mgf – other | 2,344,566 | — | — | 2,344,566 |
Preferred stock |
||||
| Preferred stock | — | 126,500 | — | 126,500 |
Bonds |
||||
| Corporate | — | 2,235,892 | — | 2,235,892 |
| United States Treasury and Agency | — | 18,632,493 | — | 18,632,493 |
| State and municipal | — | 1,725,653 | — | 1,725,653 |
Limited partnerships |
||||
| Limited partnerships | — | 302,580,401 | 9,659,482 | 312,239,883 |
Other investments |
||||
| Program-related savings | — | 26,885 | — | 26,885 |
| Program-related loans | — | — | 8,444,676 | 8,444,676 |
| Mission-related investment | — | — | 225,076 | 225,076 |
| Total fair value assets | $283,793,511 | $325,327,824 | $18,329,234 | $627,450,569 |
| Fair Value Measurements at Reporting Date | ||||
|---|---|---|---|---|
| December 31, 2020 | (Level 1) | (Level 2) | (Level 3) | Balance |
Corporate stock |
||||
| Consumer goods | $98,751,551 | $— | $— | $98,751,551 |
| Financial | 22,602,713 | — | — | 22,602,713 |
| Services | 15,894,291 | — | — | 15,894,291 |
| Industrial goods | 12,989,521 | — | — | 12,989,521 |
| Basic materials | 8,910,054 | — | — | 8,910,054 |
| Technology | 32,444,192 | — | — | 32,444,192 |
| Healthcare | 7,398,400 | — | — | 7,398,400 |
| Retail | 2,363,981 | — | — | 2,363,981 |
| Closely-held | — | — | 100 | 100 |
Preferred stock |
||||
| Preferred stock | — | 134,400 | — | 134,400 |
Bonds |
||||
| Corporate | — | 3,785,249 | — | 3,785,249 |
| United States Treasury and Agency | — | 13,863,495 | — | 13,863,495 |
| State and municipal | — | 1,178,126 | — | 1,178,126 |
Limited partnerships |
||||
| Limited partnerships | — | 276,153,431 | 81,060,432 | 357,213,863 |
Other investments |
||||
| Program-related savings | — | 26,359 | — | 26,359 |
| Program-related loans | — | — | 8,580,617 | 8,580,617 |
| Mission-related investment | — | — | 307,191 | 307,191 |
| Total fair value assets | $201,354,703 | $295,141,060 | $89,948,340 | $586,444,103 |
The following table presents information about the Level 3 assets measured at fair value on a recurring basis for the years ended December 31, 2021 and 2020:
| 2021 | 2020 | |||||
|---|---|---|---|---|---|---|
| Limited Partnerships | Other Investments | Total | Limited Partnerships | Other Investments | Total | |
| Purchases | $3,709,329 | $526 | $3,709,855 | $— | $3,500,518 | $3,500,518 |
| Sales proceeds | (74,280,361) | (218,582) | (74,498,943) | (4,457,894) | (351,522) | (4,809,446) |
| $(70,571,032) | $(218,056) | $(70,789,088) | $(4,457,894) | $3,148,966 | $(1,308,928) |
At December 31, 2021 and 2020, the Foundation’s limited partnerships are subject to withdrawal restrictions as follows:
| 2021 | 2020 | |
|---|---|---|
| Available for redemption: | ||
| Monthly | $302,580,401 | $351,525,181 |
| Subject to distribution | 9,659,482 | 5,688,682 |
| Total | $312,239,883 | $357,213,863 |
Investments that are available for redemption may be redeemed by the Foundation generally with 15 to 30 day advance notice on a monthly basis, subject to the terms of the investment agreement.
Investments subject to distribution cannot be redeemed by the Foundation, but rather will be distributed by the limited partnership upon the liquidation of the underlying assets of the partnership. Distributions are generally expected, but not guaranteed, over the next five years.
The investment objective for limited partnerships is long-term capital appreciation in excess of what is available in the public markets. Private equity funds generally hold illiquid debt and equity securities of public and/or privately held companies. This asset class includes venture capital, buyout, and distressed funds.
Gains and losses (realized) from Level 3 investments included in changes in net assets include net realized investment gains of $79,338 and $447,366 for the years ended December 31, 2021 and 2020, respectively.
Note 7
Liquidity and Funds Available
As part of its liquidity management, the Foundation structures its financial assets to be available as grants and general expenditures come due. At December 31, 2021, the Foundation has approximately $597,049,000 of financial assets available to meet cash needs for general expenditures within one year of the statement of financial position date, which assets consist of cash and cash equivalents of $13,787,000, interest and dividends receivable of $438,000, and investments of $582,824,000. These financial assets are not subject to donor or other contractual restrictions that make them unavailable for general expenditures within one year.
Note 8
Leases
The Foundation occupies office space in the Landmark Office Towers. The lease expires December 31, 2023, with a renewal option for an additional five-year period. Rental expense for the years ended December 31, 2021 and 2020 amounted to $166,282 and $154,582, respectively.
The future minimum lease commitments under this lease are as follows:
| 2022 | $147,849 |
| 2023 | 150,775 |
| $298,624 |
Note 9
Employee Benefit Plan
The Foundation has an employees’ tax-sheltered annuity plan for all eligible employees. Such a plan is intended to comply with the requirements of Section 403(b) of the Internal Revenue Code (IRC). Employer contributions are required at 9% of the participant’s compensation up to the social security wage base for the year, and 14.7% of the participant’s compensation in excess of this wage base, with a limit of $290,000 and $285,000 of compensation for the years ended December 31, 2021 and 2020, respectively. Employer contributions to the plan for the years ended December 31, 2021 and 2020 amounted to $161,881 and $162,598, respectively. Participants are also permitted to make salary reduction contributions to the plan.
Note 10
Excise Taxes
The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC), but is subject to a 1.39% federal excise tax on net investment income, including net realized gains, as defined by the IRC for tax year 2021 and 2020.
Deferred federal excise taxes are provided on the unrealized appreciation or depreciation of investments, interest and dividend income, and certain expenses being reported for financial statement purposes in different periods than for tax purposes.
The current and deferred portions of the excise tax provision were $1,666,591 and $120,000 respectively, for a net provision of $1,786,591 in 2021. The current and deferred portions of the excise tax provision (benefit) were $960,700 and $1,000 respectively, for a net provision of $959,700 in 2020.
The Foundation follows the provisions of FASB ASC 740-10, Income Taxes, which provides guidance on the recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition issues. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the accompanying financial statements.
Accrued interest relating to uncertain tax positions would be recorded as a component of interest expense, and penalties relating to uncertain tax positions would be recorded as a component of general and administrative expenses.
Note 11
Functional Expenses
The table below presents expenses by both their nature and function for the year ended December 31, 2021:
| Grants | Program Support | Management & General | Program Support and Management and General Totals | |
|---|---|---|---|---|
| Salaries and benefits | $— | $1,809,243 | $619,823 |
$2,429,066 |
| Grants to other organizations | 55,517,318 | — | — | — |
| Office and occupancy | — | 351,658 | 120,625 | 472.283 |
| Services and professional fees | — | 127.974 | 577,067 | 705,041 |
| Travel, meetings, other | — | 45,777 | 15,180 | 60,957 |
| Depreciation and amortization | — | 26,720 | 5,683 | 32,403 |
| $55,517,318 | $2,361,372 | $1,338,378 | $3,699,750 |
The table below presents expenses by both their nature and function for the year ended December 31, 2020:
| Grants | Program Support | Management & General | Program Support and Management and General Totals | |
|---|---|---|---|---|
| Salaries and benefits | $— | $2,005,678 | $394,554 | $2,400,232 |
| Grants to other organizations | 39,906,992 | — | — | — |
| Office and occupancy | — | 245,853 | 48,346 | 294,199 |
| Services and professional fees | — | 175,753 | 344,135 | 519,888 |
| Travel, meetings, other | — | 41,518 | 10,295 | 51,813 |
| Depreciation and amortization | — | 25,153 | 5,350 | 30,503 |
| $39,906,992 | $2,493,955 | $802,680 | $3,296,635 |
Expenses are recorded as attributable to either grant support or administrative functions wherever possible; however, the financial statements report certain categories of expenses that are attributable to more than one function. Therefore, these expenses require allocation on a reasonable basis that is consistently applied. The allocations above are primarily based on management’s estimates of percentage of staffing costs attributable by function.
As described in Note 3, grants to other organizations are expensed in the year approved by the Board and are paid to achieve the annual target payout rate set by the Board. The Foundation targeted a 10% payout rate for 2021 and 2020 in consideration of the extraordinary investment returns. Accordingly, the Board approved significantly more grants in 2021 to meet the target payout rate.
Note 12
Subsequent Events
The Foundation has evaluated subsequent events from the statement of financial position date through May 5, 2022, which is the date the financial statements were available to be issued.
Independent Auditor’s Report
To the Board of Trustees, The George Gund Foundation
Opinion We have audited the financial statements of The George Gund Foundation (the Foundation), which comprise the statements of financial position as of December 31, 2021 and 2020, the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Foundation as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Foundation and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Foundation’s ability to continue as a going concern for the period of one year from the date of this report.
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not absolute assurance, and therefore, is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit 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 Foundation’s internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Foundation’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Rea & Associates, Inc.
Cleveland, Ohio
May 5, 2022