YOUNGMENSCHRISTIANASSOCIATIONOFHONOLULU
FinancialStatements
December31,2023
(WithIndependentAuditorsReportThereon)
KPMGLLP Suite2210
1003BishopStreet
Honolulu,HI96813-6400
TheBoardofDirectors
YoungMensChristianAssociationofHonolulu:
ReportontheAuditoftheFinancialStatements
Opinion
WehaveauditedthefinancialstatementsofYongMensChristianAssociationofHonolulu(theAssociation), whichcomprisethebalancesheetasofDecember31,2023,andtherelatedstatementsofactivities,functional expenses,andcashflowsfortheyearthenended,andtherelatednotestothefinancialstatements.
Inouropinion,theaccompanyingfinancialstatementspresentfairly,inallmaterialrespects,thefinancial positionoftheAssociationasofDecember31,2023,andthechangesinitsnetassetsanditscashflowsfor theyearthenendedinaccordancewithU.S.generallyacceptedaccountingprinciples.
BasisforOpinion
WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesof America(GAAS)andthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards, issuedbytheComptrollerGeneraloftheUnitedStates.Ourresponsibilitiesunderthosestandardsarefurther describedintheAuditorsResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.We arerequiredtobeindependentoftheAssociationandtomeetourotherethicalresponsibilities,inaccordance withtherelevantethicalrequirementsrelatingtoouraudit.Webelievethattheauditevidencewehave obtainedissufficientandappropriatetoprovideabasisforourauditopinion.
ResponsibilitiesofManagementfortheFinancialStatements
Managementisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordance withU.S.generallyacceptedaccountingprinciples,andforthedesign,implementation,andmaintenanceof internalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrom materialmisstatement,whetherduetofraudorerror.
Inpreparingthefinancialstatements,managementisrequiredtoevaluatewhetherthereareconditionsor events,consideredintheaggregate,thatraisesubstantialdoubtabouttheAssociationsabilitytocontinueasa goingconcernforoneyearafterthedatethefinancialstatementsareavailabletobeissued.
AuditorsResponsibilitiesfortheAuditoftheFinancialStatements
Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefree frommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditorsreportthatincludesour opinion.Reasonableassuranceisahighlevelofassurancebutisnotabsoluteassuranceandthereforeisnot aguaranteethatanauditconductedinaccordancewithGAASandGovernmentAuditingStandardswillalways detectamaterialmisstatementwhenitexists.Theriskofnotdetectingamaterialmisstatementresultingfrom fraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions, misrepresentations,ortheoverrideofinternalcontrol.Misstatementsareconsideredmaterialifthereisa substantiallikelihoodthat,individuallyorintheaggregate,theywouldinfluencethejudgmentmadebya reasonableuserbasedonthefinancialstatements.
InperforminganauditinaccordancewithGAASandGovernmentAuditingStandards,we:
Exerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.
Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudor error,anddesignandperformauditproceduresresponsivetothoserisks.Suchproceduresinclude examining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthestatements.
Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatare appropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessof cordingly,nosuchopinionisexpressed.
Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccounting estimatesmadebymanagement,aswellasevaluatetheoverallpresentationofthefinancialstatements.
Concludewhether,inourjudgment,thereareconditionsorevents,consideredintheaggregate,thatraise time.
Wearerequiredtocommunicatewiththosechargedwithgovernanceregarding,amongothermatters,the plannedscopeandtimingoftheaudit,significantauditfindings,andcertaininternalcontrolrelatedmattersthat weidentifiedduringtheaudit.
ReportonSummarizedComparativeInformation
Wehavepreviouslyauditedthe2022financialstatements,andweexpressedanunmodified auditopiniononthoseauditedfinancialstatementsinourreportdatedSeptember28,2023.Inouropinion,the summarizedcomparativeinformationpresentedhereinasofandfortheyearendedDecember31,2022is consistent,inallmaterialrespects,withtheauditedfinancialstatementsfromwhichithasbeenderived.
OtherReportingRequiredbyGovernmentAuditingStandards
InaccordancewithGovernmentAuditingStandards,wehavealsoissuedourreportdatedSeptember30,2024 onourconsiderationoftheAssociationsinternalcontroloverfinancialreportingandonourtestsofits compliancewithcertainprovisionsoflaws,regulations,contracts,andgrantagreementsandothermatters. Thepurposeofthatreportissolelytodescribethescopeofourtestingofinternalcontroloverfinancial reportingandcomplianceandtheresultsofthattesting,andnottoprovideanopinionontheeffectivenessof theAssociationsinternalcontroloverfinancialreportingoroncompliance.Thatreportisanintegralpartofan auditperformedinaccordancewithGovernmentAuditingStandardsinconsideringtheAssociationsinternal controloverfinancialreportingandcompliance.
Honolulu,Hawaii September30,2024
YOUNGMENSCHRISTIANASSOCIATIONOFHONOLULU
BalanceSheet
December31,2023
(withsummarizedfinancialinformationasofDecember31,2022)
Assets20232022
Cashandcashequivalents$1,851,0672,820,727 Accountsandpledgesreceivable,net2,744,8892,962,926 Prepaidexpenses316,479235,395 Inventory38,47040,917 Operatingleaseright-of-useassets118,655184,542 Investments27,882,49124,237,251 Land,buildings,andequipment,lessaccumulateddepreciation34,480,69134,791,955
Totalassets$67,432,74265,273,713
LiabilitiesandNetAssets
Liabilities: Accountspayableandaccruedexpenses$2,633,8122,578,293 Deferredrevenue2,042,8373,148,082 Operatingleaseliabilities118,655184,542
Liabilityundersplit-interestagreements9,80810,798
Totalliabilities4,805,1125,921,715
Netassets: Withoutdonorrestrictions55,174,76552,534,455 Withdonorrestrictions7,452,8656,817,543
Totalnetassets62,627,63059,351,998
Commitmentsandcontingentliabilities
Totalliabilitiesandnetassets$67,432,74265,273,713
Seeaccompanyingnotestofinancialstatements.
YOUNGMENSCHRISTIANASSOCIATIONOFHONOLULU
StatementofActivities
YearendedDecember31,2023
(withsummarizedfinancialinformationfortheyearendedDecember31,2022)
Revenue,gains,andothersupport:
WithoutdonorWithdonor20232022 restrictionsrestrictionstotaltotal
Programservicefees$19,716,35419,716,35416,522,398 Governmentgrants6,244,8806,244,8808,701,597 Contributionsandbequests1,382,753734,8602,117,6131,882,964 Investmentreturn,net3,731,4231,054,8904,786,313(4,251,901)
AlohaUnitedWaycontributionallocation13,48613,48612,413
Specialeventsandothers,netofcostofsalesof $14,97986,22286,22255,777 Other158,257158,25772,852
Netassetsreleasedfromrestrictions:
Satisfactionofcapitalandprogramrestrictions1,154,428(1,154,428) Totalrevenue,gains,andothersupport32,487,803635,32233,123,12522,996,100
Expenses:
Programservices: Youthdevelopment12,998,47612,998,47611,776,521 Healthyliving7,790,8357,790,8357,242,199 Socialresponsibility4,523,8374,523,8374,108,432 Totalprogramservices25,313,14825,313,14823,127,152
Supportingservices:
Managementandgeneral3,442,8103,442,8103,246,357 Fund-raising1,091,5351,091,535726,415 Totalsupportingservices4,534,3454,534,3453,972,772 Totalexpenses29,847,49329,847,49327,099,924
Changeinnetassets2,640,310635,3223,275,632(4,103,824)
Netassetsatbeginningofyear52,534,4556,817,54359,351,99863,455,822
Netassetsatendofyear$55,174,7657,452,86562,627,63059,351,998
Seeaccompanyingnotestofinancialstatements.
Statement of Functional Expenses
ended December 31, 2023 (with summarized financial information for the year ended December 31, 2022)
YOUNGMENSCHRISTIANASSOCIATIONOFHONOLULU
StatementofCashFlows
YearendedDecember31,2023 (withsummarizedfinancialinformationfortheyearendedDecember31,2022)
Cashflowsfromoperatingactivities:
20232022
Changeinnetassets$3,275,632(4,103,824)
Adjustmentstoreconcilechangeinnetassetstonetcash providedbyoperatingactivities:
Depreciation2,022,0181,946,401
Netrealizedandunrealized(gain)lossoninvestments(3,941,445)4,522,066 Baddebtexpense164,47983,248
Loss(gain)ondisposalofland,buildings,andequipment80,424(22,000) Contributionsrestrictedforlong-terminvestment(5,360)(68,581)
Changesinoperatingassetsandliabilities:
Decreaseinaccountsandpledgesreceivable53,558898,420 (Increase)inprepaidexpenses(81,084)(36,325) Decreaseininventory2,4475,556
Decreaseinoperatingleaseright-of-useassets65,88765,096 (Decrease)inaccountspayableand accruedexpenses(13,981)(281,785) (Decrease)increaseindeferredrevenues(1,105,245)1,502,684 (Decrease)inoperatingleaseliabilities(65,887)(65,096)
Netcashprovidedbyoperatingactivities451,4434,445,860
Cashflowsfrominvestingactivities:
Purchasesofland,buildings,andequipment(1,721,678)(1,583,339) Proceedsfromsaleofinvestments3,310,5123,567,695 Purchasesofinvestments(3,014,307)(8,725,763)
Netcashusedininvestingactivities(1,425,473)(6,741,407)
Cashflowsfromfinancingactivities:
Decreaseinliabilitiesundersplit-interestagreements,net(990)(990) Proceedsfromcontributionsrestrictedforlong-terminvestment: Endowment5,36068,581 Repaymentonnotepayable(373,467)
Netcashprovidedby(usedin)financingactivities4,370(305,876)
Netdecreaseincashandcashequivalents(969,660)(2,601,423) Cashandcashequivalentsatbeginningofyear2,820,7275,422,150 Cashandcashequivalentsatendofyear$1,851,0672,820,727 Supplementaldisclosuresofnoncashinvestingactivities: Accountspayableandaccruedexpensesassociatedwith purchasesofland,buildings,andequipment$69,50033,285 Right-of-useassetsandleaseliabilitiesuponadoption ofnewaccountingstandard249,638
(1)OrganizationandSummaryofSignificantAccountingPolicies
(a)Organization
YoungMensChristianAssociationofHonolulu(theAssociationorYMCA)wasfoundedin1869and todayiscomprisedofnineoperatingbranchesontheislandofOahu,Hawaii.TheAssociationworksto advanceitscauseofstrengtheningcommunitythroughyouthdevelopment,healthyliving,andsocial responsibility.Youthdevelopmentaimstonurturethepotentialofeverychildandteenthrough programssuchasafterschoolandsummerchildcareprograms,educationandleadership,swimand camp.Healthylivingprogramsaimtoimprovethenationshealthandwell-beingthroughprogramsthat focusonfamilytime,well-beingandfitness,sportsandrecreation.Socialresponsibilityincorporates givingbackandprovidingsupporttoitsneighborswithprogramsthatincludesocialservices,global services,volunteerismandadvocacy.
(b)FinancialStatementPresentation
Netassetsandrevenue,gains,losses,andothersupportareclassifiedbasedontheexistenceor absenceofdonor-imposedrestrictions.Accordingly,netassetsoftheAssociationandchangestherein areclassifiedandreportedasfollows:
NetAssetswithoutdonorrestrictionsNetassetsnotsubjecttodonor-imposedstipulations.
NetAssetswithdonorrestrictionsNetassetssubjecttodonor-imposedstipulationsthatmayorwill bemeteitherbyactionsoftheAssociationand/orthepassageoftime.Otherdonor-imposed stipulationsareperpetualinnature,wherebythedonorhasstipulatedthefundsmustbemaintained permanentlybytheAssociation.ThedonorsoftheseassetspermittheAssociationtouseallofthe incomeearnedonrelatedinvestmentsforgeneralorspecificpurposes.
(c)CashEquivalents
Forpurposesofthestatementofcashflows,theAssociationconsidersallhighlyliquidinvestments withoriginalmaturitiesofthreemonthsorlesswhenpurchasedtobecashequivalents.At December31,2023,theAssociationheld$112,645ofcashequivalentsconsistingofmoneymarket accounts.
(d)Inventory
Suppliesinventoryiscarriedatthelowerofcost(determinedonthefirst-in,first-outmethod)ornet realizablevalue.
(e)Investments
Investmentsecuritiesarereportedatfairvaluewithunrealizedgainsandlossesincludedinthe statementofactivities.Gainsandlossesoninvestmentsarereportedasincreasesordecreasesinnet assetswithoutdonorrestrictions,unlesstheiruseisrestrictedbyexplicitdonorstipulationsorbylaw. Thefairvalueofinvestmentsecuritiesisthepricethatwouldbereceivedtoselltheinvestmentsecurity inanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.
Investmentsthatareusedforcurrentoperationsareclassifiedasshort-terminvestments.Investments thatarerestrictedfromwithdrawaloruseforotherthancurrentoperationsandsubjectto donor-imposedrestrictionsareclassifiedaslong-terminvestments.
(f)Land,Buildings,andEquipment
Land,buildings,andequipmentarecapitalizedatcost,ifpurchased,oratfairvalueatthedateofthe donation.
TheAssociationreportsgiftsofland,buildings,andequipmentasunrestrictedsupportunlessexplicit donorstipulationsspecifyhowthedonatedassetsmustbeused.Giftsoflong-livedassetswithexplicit restrictionsthatspecifyhowtheassetsaretobeusedandgiftsofcashorotherassetsthatmustbe usedtoacquirelong-livedassetsarereportedasrestrictedsupport.Absentexplicitdonorstipulations abouthowlongthoselong-livedassetsmustbemaintained,theAssociationreportsexpirationsof donorrestrictionswhentheacquiredlong-livedassetsareplacedinservice.
Depreciationoflong-livedassetsiscalculatedonthestraight-linebasisoverestimatedusefullivesas follows:
(g)DeferredRevenue
Deferredrevenueconsistsprimarilyofmembershipdues,andprogramfeescollectedinadvanceofthe effectiveperiodorservicesrendered.
(h)Contributions
Contributionsarerecordedintheperiodreceived.Unconditionalpromisestogive(pledges receivable)thatareexpectedtobecollectedwithinoneyeararerecordedatnetrealizablevalue. Contributionsreceivablethatareexpectedtobecollectedinfutureyearsarerecordedatthepresent valueoftheirestimatedfuturecashflows.Thediscountsonthoseamountsarecomputedusingfair valueinterestratesapplicabletotheyearsinwhichthepromisesarereceived.Amortizationofthe discountsisincludedincontributionsandbequests.Conditionalcontributionsarerecordedattheir estimatedfairvalueintheperiodtheconditionsaremetorintheperiodreceivedifthereisonlya remotelikelihoodthatthoseconditionswillnotbemet.
TheAssociationreportsgiftsofcashandotherassetsasrestrictedsupportiftheyarereceivedwith donorstipulationsthatlimittheuseofthedonatedassets.Whenadonorrestrictionexpires,thatis, whenastipulatedtimerestrictionendsorpurposerestrictionisaccomplished,netassetswithdonor restrictionsarereclassifiedtonetassetswithoutdonorrestrictionsandreportedinthestatementof activitiesasnetassetsreleasedfromrestrictions.
(i)Long-LivedAssets
Long-livedassets,suchasproperty,plant,andequipment,andpurchasedintangiblessubjectto amortizationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethat thecarryingamountofanassetmaynotberecoverable.Managementdidnotidentifyanymatterthat wouldleadtoanimpairmentlossfortheyearendedDecember31,2023.
(j)LiquidityandAvailability
TheAssociationsfinancialassetsavailablewithinoneyearofthebalancesheetforgeneral expenditureareasfollows:
TheAssociationsgoalisgenerallytomaintaincashandcashequivalentstomeet60daysofoperating expenses(approximately$4,600,000).Aspartofitsliquidityplan,excesscashisinvestedinshort-term investments,includingcertificatesofdeposit,mutualfunds,bondfunds,commonstockandexchange tradedfunds.TheAssociationhasamarginaccounttomeetadditionalcashflowneeds.
(k)UseofEstimates
ThepreparationofthefinancialstatementsinaccordancewithU.S.generallyacceptedaccounting principles,requiresmanagementoftheAssociationtomakeestimatesandassumptionsthataffectthe reportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedate ofthefinancialstatementsandthereportedamountsofrevenueandexpensesduringthereporting periods.Actualresultscoulddifferfromthoseestimates.Suchestimatesincludetheusefullivesof land,buildings,andequipment,thefairvalueofinvestments,andthevaluationallowancesof receivables.
(l)IncomeTaxes
TheAssociationisexemptfromincometaxesunderSection501(c)(3)oftheInternalRevenueCode. TheAssociationisgenerallynotsubjecttofederalincometaxes.However,theAssociationissubjectto incometaxesonanynetincomethatisderivedfromtradeorbusiness,regularlycarriedonandnotin furtheranceofthepurposesforwhichitwasgrantedexemption.Noincometaxprovisionhasbeen recorded,asitistheopinionofmanagementthatnetincomefromanyunrelatedtradeorbusiness,if any,isnotmaterialtothefinancialstatementstakenasawhole.TheAssociationisnolongersubject toincometaxexaminationsbyfederaltaxauthoritiesforyearsbefore2020andstatetaxauthoritiesfor yearsbefore2019.
December31,2023
(m)FairValueMeasurements
TheAssociationmeasuresitsfinancialassets,liabilities,andnonfinancialitemsthatarerecognizedor disclosedatfairvalueinthefinancialstatementsonarecurringbasis.Fairvalueisthepricethatwould bereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarket participantsatthemeasurementdate.
(n)PriorYearComparativeInformation
Thefinancialstatementsincludecertainprioryearsummarizedcomparativeinformationintotalbutnot bynetassetclass.Suchinformationdoesnotincludesufficientdetailtoconstituteapresentationin conformitywithU.S.generallyacceptedaccountingprinciples.Accordingly,suchinformationshouldbe readinconjunctionwiththeAssociationsfinancialstatementsfortheyearendedDecember31,2022, fromwhichthesummarizedinformationwasderived.
(2)PledgesReceivable
PledgesreceivablefortheAssociationscapitalcampaignconsistofthefollowingatDecember31,2023:
TheallowanceforuncollectiblepledgesreceivableatDecember31,2023was$13,873.
(3)Investments
(a)FairValueofFinancialInstruments
TheAssociationutilizesvaluationtechniquesthatmaximizetheuseofobservableinputsandminimize theuseofunobservableinputstotheextentpossible.TheAssociationdeterminesfairvaluebasedon assumptionsthatmarketparticipantswoulduseinpricinganassetorliabilityintheprincipalormost advantageousmarket.Whenconsideringmarketparticipantassumptionsinfairvaluemeasurements, thefollowingfairvaluehierarchydistinguishesbetweenobservableandunobservableinputs,whichare categorizedinoneofthefollowinglevels:
Level1Valuationsforassetsandliabilitiestradedinactiveexchangemarkets,suchastheNew YorkStockExchange.Valuationsareobtainedfromreadilyavailablepricingsourcesformarket transactionsinvolvingidenticalassetsorliabilities.
Level2Valuationsforassetsandliabilitiestradedinlessactivedealerorbrokermarkets.Level2 valuationsarebaseduponquotedpricesforsimilarinstrumentsinactivemarkets,quotedpricesfor identicalorsimilarinstrumentsinmarketsthatarenotactive,andmodel-basedvaluation techniquesforwhichallsignificantassumptionsareobservableinthemarket.
December31,2023
Level3Valuationsforassetsandliabilitiesthatarederivedfromothervaluationmethodologies, includingdiscountedcashflowmodelsandsimilartechniques,andnotbasedonmarketexchange, dealer,orbroker-tradedtransactions.Level3valuationsincorporatecertainassumptionsand projectionsindeterminingthefairvalueassignedtosuchassetsorliabilities.
Thelevelinthefairvaluehierarchywithinwhichafairvaluemeasurementinitsentiretyfallsisbased onthelowest-levelinputthatissignificanttothefairvaluemeasurementinitsentirety.
Investmentsarevaluedatclosingpricereportedontheactivemarketinwhichtheindividualsecurities aretraded.
Thefollowingtablepresentsthebalancesofassetsthataremeasuredatfairvalueonarecurringbasis bylevelatDecember31,2023:
TheAssociationsaccountingpolicyistorecognizetransfersbetweenlevelsofthefairvaluehierarchy onthedateoftheeventorchangeincircumstancesthatcausedthetransfer.Therewerenosignificant transfersintooroutofLevel3fortheyearendedDecember31,2023.
(4)Land,Buildings,andEquipment
Asummaryofland,buildings,andequipmentasofDecember31,2023isasfollows:
(5)CreditFacility
TheAssociationhasarevolvingmarginaccountwithaninvestmentfirmtobeusedforworkingcapital, short-term,orlong-termneeds.Thisaccounthasnoexpirationdate,andborrowingsareallowedupto50% ofitsinvestmentholdings.InterestonamountsdrawnarefloatingattheFederalFundrateplus1.5%.At December31,2023,theAssociationdidnothaveanyoutstandingborrowings.
(6)OperatingLeases
(a)AsLessee
TheAssociationleasesthelandunderlyingitsKaimukibranchunderanoperatingleaseexpiringin 2026.Theleaseprovidesforearlyterminationwith180dayspriorwrittennoticebyeitherthe Associationorthelessor.TheAssociationalsoleasesparkingforitsWindwardbranchthrough2023 underanoperatinglease.Inaddition,theAssociationhasoperatingleasesforitsofficemachines, whichexpireatvariousdatesthrough2023.Totalleaseexpenseundertheseleaseswas$50,000in 2023.
Right-of-useassetsandoperatingleaseliabilitiesreportedonthebalancesheetasofDecember31, 2023were$118,655and$118,655,respectively.
OtherinformationrelatedtoleasesasofDecember31,2023isasfollows:
Maturitiesofleaseliabilities,netofinterest,undernoncancellableleasesasofDecember31,2023are asfollows:
2024$48,624 202549,293 202620,738 $118,655
(b)AsLessor
TheAssociationleasesportionsofitsKalihi,andNuuanubranchesunderoperatingleasesexpiring through2054.
December31,2023
AtDecember31,2023,futureminimumrentalincomeisasfollows:
Minimumfuturerentalincomedoesnotincludecontingentrentsthatmaybereceivedunderthepartial buildingleasesforrentsbasedonthetenantsgrosssales.
(7)PensionPlan
TheAssociationparticipatesinadefined-contribution,individualaccount,moneypurchaseretirementplan, whichisadministeredbytheYoungMensChristianAssociationRetirementFund(YMCARetirement Fund)(aseparatecorporation).ThisplanisforthebenefitofalleligibleemployeesoftheAssociationwho qualifyundertheparticipationrequirements.
InaccordancewiththeagreementwiththeYMCARetirementFund,contributionsbytheAssociationand employeesoftheAssociationarebasedonapercentageoftheparticipatingemployeessalariesandare toberemittedtotheYMCARetirementFundonamonthlybasis.ContributionsmadebytheAssociationto theYMCARetirementFundfortheyearendedDecember31,2023totaled$886,091.
TheYMCARetirementFundisoperatedasachurchpensionplanandisanonprofit,tax-exemptNewYork Statecorporation(1922).ParticipationisavailabletoalldulyorganizedandreorganizedYoungMens ChristianAssociationsintheUnitedStates.
December31,2023
(8)NetAssetswithDonorRestrictions
NetassetswithdonorrestrictionsatDecember31,2023areavailableforthefollowingpurposes:
In2023,netassetsintheamountof$1,154,428werereleasedfromdonorrestrictionsbyincurring expensessatisfyingtherestrictedpurposesorbyoccurrenceofthepassageoftimeorotherevents specifiedbydonorsareasfollows:
(9)Endowment
TheAssociationsendowmentconsistsof11donor-designatedendowmentfundsestablishedforavariety ofpurposes.AtDecember31,2023,theendowmentfundamountedto$6,626,780.
FortheyearendedDecember31,2023,thechangesinendowmentnetassetsareasfollows:
Descriptionofamountsclassifiedasnetassetswithdonorrestrictionsisasfollows:
(a)InterpretationofRelevantLaw
TheAssociationissubjecttoHawaiisenactedversionoftheUniformPrudentManagementof InstitutionalFundsAct(HUPMIFA)and,thus,classifiesamountsinitsdonor-restrictedendowment fundsasnetassetswithdonorrestrictionsbecausethosenetassetsaretimerestricteduntiltheboard ofdirectorsappropriatessuchamountsforexpenditure.Mostofthosenetassetsalsoaresubjectto purposerestrictionsthatmustbemetbeforereclassifyingthosenetassetstonetassetswithoutdonor restrictions.TheboardofdirectorshasinterpretedHUPMIFAasnotrequiringthemaintenanceof purchasingpoweroftheoriginalgiftamountcontributedtoanendowmentfund,unlessadonor stipulatesthecontrary.Asaresultofthisinterpretation,whenreviewingitsdonor-restrictedendowment funds,theAssociationconsidersafundtobeunderwaterifthefairvalueofthefundislessthanthe sumof(a)theoriginalvalueofinitialandsubsequentgiftamountsdonatedtothefundand(b)any accumulationstothefundthatarerequiredtobemaintainedinperpetuityinaccordancewiththe directionoftheapplicabledonorgiftinstrument.TheAssociationhasinterpretedHUPMIFAtopermit spendingfromunderwaterfundsinaccordancewiththeprudentmeasuresrequiredunderthelaw. Additionally,inaccordancewithHUPMIFA,theAssociationconsidersthefollowingfactorsinmakinga determinationtoappropriateoraccumulatedonor-restrictedendowmentfunds:
(1)Thedurationandpreservationofthefund
(2)Thepurposesoftheorganizationandthedonor-restrictedendowmentfund
(3)Generaleconomicconditions
(4)Thepossibleeffectofinflationanddeflation
(5)Theexpectedtotalreturnfromincomeandtheappreciationofinvestments
December31,2023
(6)Otherresourcesoftheorganization
(7)TheinvestmentpoliciesoftheAssociation.
(b)DescriptionofAmountsClassifiedasNetAssetswithDonorRestrictions
(i)ReturnObjectivesandRiskParameters
TheAssociationhasadoptedinvestmentandspendingpoliciesforendowmentassetsthatattempt toprovideapredictablestreamoffundingtoprogramssupportedbyitsendowmentwhileseeking tomaintainthepurchasingpoweroftheendowmentassets.Endowmentassetsincludethose assetsofdonor-restrictedfundsthattheAssociationmustholdinperpetuity.
(ii)StrategiesEmployedforAchievingObjectives
Tosatisfyitslong-termrateofreturnobjectives,theAssociationreliesonatotalreturnstrategyin whichinvestmentreturnsareachievedthroughbothcapitalappreciation(realizedand unrealized)andcurrentyield(interestanddividends).TheAssociationtargetsadiversifiedasset allocationthatplacesagreateremphasisonequity-basedinvestmentstoachieveitslong-term returnobjectiveswithinprudentriskconstraints.
(iii)SpendingPolicyandHowtheInvestmentObjectivesRelatetoSpendingPolicy
Underthetermsoftheendowmentfund,theAssociationhasapolicyofappropriating,forprogram use,amountsnottoexceed4.5%oftheinvestmentportfolio,providedthatsuchwithdrawaldoes noterodetheprincipalbalance.Inestablishingthispolicy,theAssociationconsideredthe long-termexpectedreturnonitsendowment.Accordingly,overthelongterm,theAssociation expectsthecurrentspendingpolicytoallowitsendowmenttogrowataratethatexceedsthe spendingrate.ThisisconsistentwiththeAssociationsobjectivetomaintainthepurchasingpower oftheendowmentassetsheldinperpetuityorforaspecifiedtermaswellastoprovideadditional realgrowththroughnewgiftsandinvestmentreturn.
(10)Litigation
TheAssociationisinvolvedinclaimsarisingintheordinarycourseofbusiness.Management,after consultationwithlegalcounsel,isoftheopinionthattheultimateresolutionofthesematterswillnothavea materialadverseeffectontheAssociationsfinancialstatements.
(11)CommitmentsandContingencies
Federalgrantprogramsaresubjecttoreviewbythegrantoragencies,whichcouldresultinrequestsfor reimbursementtograntoragenciesfordisallowedexpenditures.Managementbelievesthatithasadhered tothetermsofitsgrantsandthatanydisallowedexpendituresresultingfromsuchreviewwouldnothavea materialeffectonthefinancialpositionoftheAssociation.
(12)SubsequentEvents
TheAssociationhasevaluatedsubsequenteventsfromthebalancesheetdatethroughSeptember30, 2024,thedateatwhichthefinancialstatementswereavailabletobeissued,anddeterminedthereareno otheritemstodisclose.