Focus on the Family
and CitizenLink
2010 Annual Report
Consolidated Financial Statements with
Independent Auditors’ Report
September 30, 2010 and 2009
CLICK H ER E T O BEGIN
Table of Contents
T
Jim Daly’s Letter
Independent Auditors’ Report
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Audited Financial Statements
Consolidated Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to Consolidated Financial Statements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Supplemental Information
Independent Auditors’ Report on Supplemental Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Consolidating Statement of Financial Position - September 30, 2010 . . . . . . . . . . . . . . . . . . . . . 19
Consolidating Statement of Financial Position - September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . 20
Consolidating Statement of Activities - Year Ended September 30, 2010 . . . . . . . . . . . . . . . . 21
Consolidating Statement of Activities - Year Ended September 30, 2009 . . . . . . . . . . . . . . . 22
N EX T PA GE
Board of Directors and Executive Leadership
Guidelines for Fund-Raising
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PR EV I O U S PA GE
QUIT
2
23
24
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Jim Daly’s Letter
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N EX T PA GE
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QUIT
Daly
James D.
and CEO
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INDEPEN
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Independent
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Auditors’ Report
N EX T PA GE
PR EV I O U S PA GE
CO N T EN T S PA GE
QUIT
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2435 Resea
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Colorado
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Focus on
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Consolidated Statements
of Financial Position
2010 Focus on the Family and CitizenLink
Annual Report
NE XT PAGE
PREVI OUS PAGE
CO NT E NT S PAGE
QUI T
2010 Focus on the Family and CitizenLink Annual Report
Models used for illustrative purposes only.
Consolidated Statements of Financial Positon (in thousands)
September 30,
2010
2009
Assets:
Current assets:
Cash and cash equivalents
Investments
Accounts receivable - net
Inventory
Pledges receivable
Prepaid expenses
$
Property and equipment - net
Film production costs - net
Other assets
Endowment assets
Total Assets
16,428
5,471
778
309
1,010
2,940
26,936
$
47,613
2,637
4,946
115
25,984
5,605
838
487
1,087
2,530
36,531
49,267
3,810
4,832
106
$
82,247
$
94,546
$
4,798
6,017
3,007
443
14,265
$
4,236
5,591
2,201
429
12,457
Liabilities and Net Assets:
Current liabilities:
Accounts payable
Accrued expenses
Deferred revenue
Current portion of charitable gift annuity liability
NEX T PA G E
PR E V I O US
PA G E
Charitable gift annuity liability - net of current portion
Total liabilities
Net assets:
Unrestricted:
Operations
Equity in property and equipment
CO N T E N T S
PA G E
Q UI T
Temporarily restricted
Permanently restricted
Total net assets
Total Liabilities and Net Assets
6
See Notes to Consolidated Financial Statements
$
3,143
17,408
3,256
15,713
14,919
47,613
62,532
25,921
49,267
75,188
2,216
91
64,839
3,554
91
78,833
82,247
$
94,546
2010
201
20
010 F
Focu
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on the
the
h Fam
Family
Fa
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Citiizen
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inkk Annnu
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Reeppor
Rep
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Consolidated Statements of Activities (in thousands)
Year Ended September 30,
Unrestricted
Temporarily
Restricted
$ 92,888
7,771
1,949
1,030
292
1,008
60
405
$ 9,189
-
24
105,427
2010
Permanently
Restricted
Total
Unrestricted
Temporarily
Restricted
2009
Permanently
Restricted
Total
Support and Revenue:
Contributions
Sales
Royalty and licensing revenue
Institute income
Investment income
Event revenue
Membership dues
Other revenue
Change in value of charitable
gift annuities
-
$ 102,077
7,771
1,949
1,030
292
1,008
60
405
$ 119,376
7,773
1,558
1,363
316
1,416
92
222
9,189
-
24
114,616
(48)
132,068
1,715
8,812
115,954
(1,715)
(8,812)
(1,338)
-
114,616
18,740
15,672
16,558
15,119
8,256
5,825
7,664
21,673
109,507
-
-
Supporting activities:
General and administrative
Fund-raising
Total Expenses
8,789
10,314
128,610
-
Change in Net Assets
(12,656)
Net Assets, Beginning of Year
75,188
Net assets released:
Time restrictions
Purpose restrictions
Total Support and Revenue
$
$
6,932
-
$
-
$ 126,308
7,773
1,558
1,363
316
1,416
92
222
6,932
-
(48)
139,000
1,653
6,834
140,555
(1,653)
(6,834)
(1,555)
-
139,000
18,740
15,672
16,558
15,119
8,256
5,825
7,664
21,673
109,507
20,446
24,159
13,851
11,854
8,484
5,976
4,037
26,110
114,917
-
-
20,446
24,159
13,851
11,854
8,484
5,976
4,037
26,110
114,917
-
8,789
10,314
128,610
11,588
11,320
137,825
-
-
11,588
11,320
137,825
(1,338)
-
(13,994)
2,730
(1,555)
-
1,175
3,554
91
78,883
72,458
5,109
91
77,658
91
$ 64,839
91
78,833
Expenses:
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
Q UI T
Program services:
Broadcasts
Resources
Publications
Correspondence
Public policy awareness
Internet
Events
Other ministries
Net Assets, End of Year
7
$
See Notes to Consolidated Financial Statements
62,532
$
2,216
$
$
75,188
$
3,554
$
2010
201
20
010 F
Focu
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on the
the
h Fam
Family
Fa
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Citiizen
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nnuual
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Reeppor
Rep
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Consolidated Statements of Cash Flows (in thousands)
Year Ended September 30,
2010
2009
Operating Activities:
Change in net assets
Adjustments to reconcile change in net assets
to net cash provided by operating activities:
Depreciation and amortization of property and equipment
Amortization of film production costs
Actuarial change in charitable gift annuity liability
Payments on charitable gift annuities
Gift portion of charitable gift annuities
Realized loss on sale, disposal, and abandonment of assets
Noncash contributions
Net realized and unrealized gains on investments
Changes in operating assets:
Accounts receivable
Inventory
Prepaid expenses
Pledges receivable
Other assets
Changes in operating liabilities:
Accounts payable
Accrued expenses
Deferred revenue
Net Cash Provided (Used) by Operating Activities
$ (13,994)
$
1,175
6,979
2,130
(72)
442
10
(1,907)
(260)
5,728
302
(71)
437
(117)
367
(1,482)
(229)
60
178
(410)
77
(114)
1,535
2,787
1,016
716
(500)
562
426
806
(5,087)
(2,408)
657
1,110
11,023
(5,355)
(230)
2,522
20
(957)
(4,000)
(5,318)
(275)
18,929
18
(1,316)
12,038
(27)
(442)
(469)
(2,000)
275
(77)
(437)
(2,239)
Net Change in Cash and Cash Equivalents
(9,556)
20,822
Cash and Cash Equivalents, Beginning of Year
25,984
5,162
Investing Activities:
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
Q UI T
Purchases of property and equipment
Purchases of investments
Proceeds from sales of investments (contributed and purchased)
Proceeds from sale of assets
Payments for film production
Net Cash Provided (Used) by Investing Activities
Financing Activities:
Net payment on operating line of credit
Issuance of charitable gift annuities
Charitable gift annuity maturities
Payments on charitable gift annuities
Net Cash Used by Financing Activities
Cash and Cash Equivalents, End of Year
8
See Notes to Consolidated Financial Statements
$
16,428
$
25,984
2010
201
20
010 F
Focu
ocu
cuss on
ccu
on the
the
h Fam
Family
Fa
ily an
aand
nd Citi
Citiizen
zzeenLin
inkk Annnu
in
nnuual
al Re
Reeppor
Rep
ortt
Notes to Consolidated
Financial Statements
2010 Focus on the Family and CitizenLink
NE XT PAGE
Annual Report
PREVI OUS PAGE
CO NT E NT S PAGE
QUI T
2010 Focus on the Family and CitizenLink Annual Report
Models used for illustrative purposes only.
Notes to Consolidated Financial Statements
SEPTEMBER 30, 2010 AND 2009
1. Nature of Organizations:
These consolidated financial statements include Focus on
the Family and CitizenLink, previously known as Focus on the
Family Action, Inc., (collectively, referred to as Focus).
Focus on the Family (FOF) is a non-denominational religious organization
whose primary objective is to spread the Gospel of Jesus Christ by helping
to preserve traditional values and the institution of the family. The primary
means of accomplishing these goals are radio broadcasts, periodicals, books,
films, videos, internet and events which share the message with constituents,
schools, churches and the public at large in the United States, as well as around
the world. The primary sources of revenue are contributions from individuals,
businesses and foundations, and sales of books and audio-visual materials.
FOF is organized as a nonprofit religious corporation under the laws of
California and operates under Section 501(c)(3) of the Internal Revenue
Code and is not a private foundation under Section 509(a).
CitizenLink (CL) was organized as a religious corporation on April 2, 2004, and
is not organized for the private gain of any person. It is organized under the
Colorado Nonprofit Corporation Act for religious purposes. CL was formed for
the express purpose of spreading the gospel of Jesus Christ, and to provide an
educational service to parents and others who are concerned with healthy family
living, toward the end of strengthening the family in its varied dimensions.
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
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CL is active in the promotion of social welfare by addressing the Christian
community and the Christian’s responsibility in the public policy arena, both
locally and nationally. CL uses regular media channels, such as radio, television,
periodicals, the internet, and events to discuss critical legislation and policy
matters that significantly impact Christian world view issues. CL is a vehicle
to discuss practical means for Christians to become educated and involved in
public policy matters. CL encourages Christians to be aware of and involved
in their civic duties. CL is a membership organization that is supported by
members who are dedicated to the defense of moral values and the institution
of the family. Membership is open to the public and is attained by the annual
affirmation of joining as a member and paying the annual membership dues of $1.
2. Summary of Significant Accounting Policies:
Focus uses estimates and assumptions in preparing the combined financial
statements in accordance with accounting principles generally accepted in the
United States of America. These estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of any contingent assets and
liabilities, and the reported revenues and expenses. Actual results could vary
from the estimates that were assumed in preparing the consolidated financial
statements. The significant accounting policies followed are described below to
enhance the usefulness of the consolidated financial statements to the reader.
Principles of Consolidation
The consolidated financial statements include the consolidated financial resources
and activities of Focus on the Family and CitizenLink. All material transactions
and balances between the entities have been eliminated in the consolidation.
In 1983, a related entity, Focus on the Family (Canada) Association, was
formed under the nonprofit laws of Canada. In addition, FOF works with
several other related organizations throughout the world. These related
organizations are legally separate from FOF, and each organization is governed
by an independent board of directors; therefore, the assets, liabilities, net
assets and results of their activities have not been included in this report.
Cash and Cash Equivalents
Focus considers all highly liquid investments with a maturity of three months or
less when purchased to be cash equivalents. Cash includes demand deposit
accounts, commercial paper, and money market accounts recorded at cost,
which approximates fair value. These accounts may, at times, exceed federally
insured limits. Focus has not experienced any losses in such accounts.
Investments
Investments are carried at fair market value, with realized and unrealized gains
and losses included as unrestricted revenue in the consolidated statements of
activities. Donated investments are recorded at the fair market value on the date
of donation and thereafter carried in accordance with the above provisions.
CL focuses on policy matters such as: federal and state constitutional
amendments to protect marriage as an institution between one man
and one woman, the protection of human life in all its various forms,
and the appropriate role of state and federal judicial systems as
designed by the founding fathers of the United States of America.
CL operates under Section 501(c)(4) of the Internal Revenue Code. As such,
contributions made to CL are not tax-deductible for federal income tax purposes.
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Notes to Consolidated Financial Statements
SEPTEMBER 30, 2010 AND 2009
2. Summary of Significant Accounting Policies (continued):
Accounts Receivable
Accounts receivable consist primarily of receivables from events, licensees,
trade sales, and related international organizations. Accounts receivable are
net of an allowance for uncollectible accounts of $288,000 and $252,000 as of
September 30, 2010 and 2009, respectively. The allowance for doubtful accounts
is maintained at a level that, in management’s judgment, is adequate to absorb
possible losses. The amount is based upon an analysis of overall trade receivables
by management that includes, but is not limited to, the historical experience of
payment patterns from the customer, financial condition of the customer, other
known facts and circumstances and general economic conditions. This process
is based on estimates, and ultimately losses may vary from current estimates. As
changes in estimates occur, adjustments to the level of the allowance are recorded
in the provision for doubtful accounts in the period in which they become known.
Receivables are written off when all methods of collection have been exhausted.
Inventory
Inventory consists of books, literature, and audio-visual materials, which are
recorded at the lower of cost or market, using the weighted-average cost
method (this method approximates the first-in first-out methodology).
Pledges Receivable
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
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operations for the period. Depreciation and amortization are provided using the
straight-line method over the following estimated useful lives of the assets:
Estimated Useful Lives
Land improvements
Buildings and building improvements
Furniture and equipment
Website
10 years
20-30 years
3-7 years
3 years
Operating Line of Credit
In 2009, FOF established a line of credit with a bank of $15,000,000, expiring
on February 1, 2011. Advances under the agreements bear interest at the
rate of Lender’s Prime Rate (the “Index”), which was 4.0% as of September
30, 2010. The line of credit is collateralized by real property. As of September
30, 2010, there was no outstanding balance on the line of credit and there
were no borrowings during the fiscal year ended September 30, 2010.
Deferred Income
Pledges receivable are unconditional promises to give that are recognized as
assets and support in the period made and are recorded at their estimated net
present value. The recorded value includes an allowance for uncollectible amounts
of $296,000 and $447,000 as of September 30, 2010 and 2009, respectively. This
allowance is calculated based on the historical collectability of the related pledges.
Deferred revenue is recorded for the unearned portion of subscriptions, event
pre-registrations, Focus Leadership InstituteTM tuition, advertising, and the
advance royalties received on book and film resources. Revenue is recognized as
earned; when the related products are fulfilled and classes or events are held.
Film Production Costs
Classes of Net Assets
Film production costs are amortized over the estimated period during which the
related income is expected to be earned (three to five years). At September 30,
2010 and 2009, accumulated amortization was $26,978,000 and $25,684,000,
respectively. Focus periodically reviews film production costs for impairment,
retirement, or abandonment. Upon impairment, retirement, or abandonment,
the cost of the assets disposed of and the related accumulated amortization
are removed from the accounts and any resulting gain or loss is reflected.
The net assets of Focus are reported in the following categories:
Property and Equipment-Net
Property and equipment-net are recorded on the basis of cost, or estimated
fair value if donated. Focus capitalizes most purchases in excess of $2,500,
with lesser amounts expensed in the year purchased. Software purchases are
capitalized if the amount is in excess of $100,000. Upon retirement or sale,
the cost of the assets disposed of and the related accumulated amortization
are removed from the accounts and any resulting gain or loss is reflected in
Unrestricted net assets - amounts currently available for use in the ministries
of Focus and resources invested in property and equipment.
Temporarily restricted net assets - unexpended, donor-restricted contributions
and pledges receivable for special projects and contributions with time
restrictions attached.
Permanently restricted net assets - unexpended endowment fund subject to restriction
of gift instruments requiring that the principal be invested in perpetuity.
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Notes to Consolidated Financial Statements
SEPTEMBER 30, 2010 AND 2009
2. Summary Of Significant Accounting Policies (continued):
Classes of Net Assets, continued
The management of Focus has interpreted the Colorado Uniform
Prudent Management of Institutional Funds Act (UPMIFA) as requiring
the preservation of the fair value of the original gift as of the gift date of
the donor restricted endowment funds absent explicit donor stipulations
to the contrary. As a result of this interpretation, Focus classifies as
permanently restricted net assets (a) the original value of the gifts donated
to the permanent endowment, and (b) the original value of subsequent
gifts to the permanent endowment. Thus the permanently restricted
net assets reflect the historical cost value of the endowment.
Focus has a policy consistent with the intent of the endowment agreement.
The primary investment objective of endowment funds is to follow those
policies that will preserve the principal value, provide predictable income
and, to the extent possible with prudence, increase the principal to
offset the long-term effects of inflation. Accordingly, over the long-term,
Focus expects the current spending policy to allow its endowment to
grow on an annual basis. Actual results in any given year may vary.
Support and Revenue
Contributions are recorded when made, which may be when cash is
received or unconditionally promised, or when ownership of donated assets
is transferred to Focus. Contributions restricted by the donor for a specific
purpose are recorded as support in the temporarily restricted class of net
assets until funds have been expended for the purpose specified. Upon
satisfaction of the purpose restriction, temporarily restricted net assets
are reclassified to unrestricted net assets and reported in the consolidated
statements of activities as net assets released from restrictions.
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
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Focus, through media and various publications, offers ministry-related
materials to the public. These materials are available whether or not
a contribution is made; however, a suggested donation is requested.
During the years ended September 30, 2010 and 2009, material costs of
$717,000 and $2,015,000 were incurred, respectively, and are included
in resources expense in the consolidated statements of activities.
Focus and Christian Book Distributers (CBD) commenced operation of its
Strategic Alliance agreement on January 30, 2009. Under the alliance agreement,
CBD provides ministry resource fulfillment services for catalog, telephone and
online orders for Focus constituents. In connection with the CBD alliance,
Focus has changed to the sales model for ministry resource distribution
which allows Focus to offer a wider range of ministry resources at competitive
prices, while extending discounts, promotions and payment opportunities.
materials sales were $2,016,000 and $2,870,000, for the years ended
September 30, 2010 and 2009, respectively. These costs are included
in resources expense in the consolidated statements of activities.
Functional Allocation of Expenditures
The cost of providing the various programs has been summarized on a functional
basis in the consolidated statements of activities. Accordingly, certain costs have
been allocated among the program services and supporting activities benefited.
Advertising, Promotion, and Circulation Costs
Focus uses advertising, promotion, and circulation costs to distribute
information regarding programs among the audiences served. These
costs, expensed as incurred, are as follows (in thousands):
Year Ended September 30,
2010
2009
Advertising
Promotion
Circulation costs
$
260
947
1,456
$
458
1,414
1,007
$
2,663
$
2,879
Recently Issued Accounting Standards
On October 1, 2009, Focus adopted the new provisions of the Income Tax
Topic of the Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC). These provisions clarify the accounting for
uncertainty in tax positions and prescribe guidance related to the financial
statement recognition and measurement of a tax position taken or expected to
be taken in a tax return. The tax benefit from an uncertain tax position is only
recognized in the consolidated statements of financial position if the tax
position is more likely than not to be sustained upon an examination, based on
the technical merits of the position. Interest and penalties, if any, are included
in expenses in the consolidated statements of activities. As of September 30,
2010, Focus had no uncertain tax positions that qualify for recognition or
disclosure in the consolidated financial statements.
Sales consist primarily of books and audio-visual materials made to Focus
constituents, distributors and institutions. Costs of books and audio-visual
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Notes to Consolidated Financial Statements
SEPTEMBER 30, 2010 AND 2009
3. Fair Value Measurements:
2009
Fair Value Measurements Using (in thousands)
Effective October 1, 2008, Focus adopted the new provisions of the Fair
Value Measurements and Disclosure Topic of the FASB Accounting Standards
Codification. The new provisions have been applied prospectively as of the
beginning of the year. These standards establish a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. This
hierarchy consists of three broad levels: Level 1 inputs consist of unadjusted
quoted prices in active markets for identical assets and have the highest priority,
Level 2 inputs consist of observable inputs other than quoted prices for identical
assets, and Level 3 inputs have the lowest priority. Focus uses appropriate
valuation techniques based on the available inputs to measure the fair value
of its investments. When available, Focus measures fair value using Level 1
inputs because they generally provide the most reliable evidence of fair value.
Level 3 inputs are only used when Level 1 or Level 2 inputs are not available.
The following table presents the fair value measurements of assets recognized in
the accompanying consolidated statements of financial position measured at fair
value on a recurring basis and the level within the fair value hierarchy in which the
fair value measurements fall at September 30:
2010
Fair Value Measurements Using (in thousands)
Fair Value
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
Fair Value
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Investments:
Equities
$
Fixed income securities $
Equity mutual funds
$
1,310
2,487
1,772
$
$
$
1,310
2,487
1,772
$
$
$
-
$
$
$
-
Other assets:
Cash surrender value
of life insurance policy $
4,621
$
-
$
4,621
$
-
Following is a description of the valuation methodologies used in the
accompanying consolidated statements of financial position, as well as the
general classification of such instruments pursuant to the valuation hierarchy.
Level 1 Fair Value Measurements
The fair values of fixed income securities and equity securities are based
on quoted prices in active markets for identical assets or liabilities.
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Investments:
Equities
$
Fixed income securities $
Equity mutual funds
$
1,424
2,425
1,655
$
$
$
1,424
2,425
1,655
$
$
$
-
$
$
$
-
Other assets:
Cash surrender value
of life insurance policy $
4,927
$
-
$
4,927
$
-
Level 2 Fair Value Measurements
The fair values of the cash surrender value of life insurance is based
on observable inputs other than the quoted prices included in Level 1
and thus are based on yields for securities and assets of comparable
maturity, quality, and type as obtained from market makers.
Level 3 Fair Value Measurements
The fair value of items identified as Level 3 is estimated from unobservable inputs.
Focus has no Level 3 assets or liabilities as of September 30, 2010 and 2009.
Q UI T
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Notes to Consolidated Financial Statements
SEPTEMBER 30, 2010 AND 2009
4. Investments:
5. Pledges Receivable:
Investments at estimated fair value consist of (in thousands):
Pledges receivable consist of (in thousands):
September 30,
2010
Equities
$
September 30,
2010
2009
2009
6
$
19
Due in less than one year
Less allowance for uncollectible amounts
National gift annuities:
Fixed income securities
1,971
2,040
Equities
1,418
1,291
Equity mutual funds
1,294
1,382
33
91
4,716
4,804
Equity mutual funds
314
335
Fixed income securities
282
289
Money market accounts
14
18
610
642
Money market accounts
California gift annuities:
Wisconsin gift annuities:
Fixed income securities
109
Money market accounts
NEX T PA G E
$
112
30
28
139
140
5,471
5,47
71
$
5,605
5
,605
5
$
1,306
(296)
$
1,581
(494)
$
1,010
$
1,087
6. Property and Equipment-Net:
Property and equipment-net consists of (in thousands):
September 30,
2010
2009
Land
Land improvements
Buildings and building improvements
Furniture and equipment
Website
Accumulated depreciation
and amortization
$
8,254
3,872
51,881
42,728
3,484
$
(65,738)
44,481
3,132
Construction in progress
$
47,613
8,254
3,900
51,811
50,581
3,055
(69,299)
48,302
965
$
49,267
7. Other Assets:
Other assets consist of (in thousands):
PR E V I O US
PA G E
Investment income consists of (in thousands):
September 30,
2010
2009
Year Ended September 30,
CO N T E N T S
PA G E
2010
Interest and dividends
$
Realized and unrealized gains
Q UI T
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2009
32
$
260
$
292
87
229
$
316
Cash surrender value of life insurance policy
Deferred expenses
Note receivable
$
4,927
19
-
$
4,621
206
5
$
4,946
$
4,832
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Notes to Consolidated Financial Statements
SEPTEMBER 30, 2010 AND 2009
8. Endowment Assets:
10. Temporarily Restricted Net Assets:
Endowment assets consist of (in thousands):
Temporarily restricted net assets consist of the following (in thousands):
September 30,
2010
2009
Fixed income securities
Equity mutual funds
Money market funds
September 30,
2010
2009
$
63
47
5
$
46
55
5
$
115
$
106
Pledges receivable
Sanctity of life programs
Reserve for annuities
Other temporary restrictions
Strengthen family resources
9. Charitable Gift Annuities:
Upon receipt of charitable gift annuities, the actuarially computed present
value of future payments is recognized as a liability, and the difference
between the liability and the face value of the annuity is recognized as an
unrestricted contribution. Subsequently, annuities payable are revalued annually
using the federal mortality rates and discount factors applied at inception.
Assets funding charitable gift annuities are included in investments.
Change in value of charitable gift annuities consists of (in thousands):
Year Ended September 30,
2010
2009
NEX T PA G E
Payments on charitable gift annuities
Actuarial change in charitable
gift annuity liability
Charitable gift annuity maturities
Net investment income
$
CO N T E N T S
PA G E
Q UI T
15
15
$
72
27
367
$
PR E V I O US
PA G E
(442)
24
(437)
71
77
241
$
(48)
$
1,010
636
374
102
94
$
1,087
759
408
566
734
$
2,216
$
3,554
11. Operating Leases:
Focus’ lease agreements cover certain facilities and equipment
requirements. Lease terms generally provide that Focus is to pay, in
addition to the minimum rentals summarized below, taxes, insurance,
maintenance, and utilities associated with the leased properties. Rent
expense under operating leases for the years ended September 30, 2010
and 2009, was $310,000 and $374,000, respectively. Future minimum
lease payments for the year ending September 30, 2011 are $52,000.
12. Retirement Plan:
FOF sponsors a defined contribution retirement plan under section 403(b)
of the Internal Revenue Code covering substantially all regular, full-time
employees meeting certain eligibility requirements. FOF provides a
matching discretionary contribution of 3% to 6% of participant
compensation, depending on years of service. It is FOF’s policy to fund
the retirement plan costs. Total contributions for the years ended September
30, 2010 and 2009, were $1,232,000 and $1,211,000, respectively.
CL sponsors a defined contribution retirement plan under section 401(k) of the
Internal Revenue Code covering substantially all regular, full-time employees
meeting eligibility requirements. CL provides a discretionary matching contribution
from 3% to 6% of participant compensation, depending on years of service. It is
CL’s policy to fund retirement plan costs. Total contributions for the years ended
September 30, 2010 and 2009, were $110,000 and $89,000, respectively.
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Notes to Consolidated Financial Statements
SEPTEMBER 30, 2010 AND 2009
13. Allocation of Joint Costs:
During the years ended September 30, 2010 and 2009, Focus incurred
joint costs for informational materials and activities that included fund-raising
appeals. These programs include various newsletters, magazines, and
constituent relations. Costs associated with the various programs have
been allocated in the consolidated statements of activities according
to their functional classification as follows (in thousands):
Year Ended
September 30,
2010
2009
Program services:
Publications
Resources
Public policy awareness
Other ministries
Certain expenses of FOF’s are reimbursed by a corporation owned by FOF’s
founder and chairman emeritus. Expenses reimbursed under this agreement
amounted to $5,000 and $14,000 for the years ended September 30, 2010
and 2009, respectively. Certain expenses of FOF’s were paid by a corporation
owned by FOF’s founder and chairman emeritus and were reimbursed by
FOF. During the years ended September 30, 2010 and 2009, FOF reimbursed
expenses of $12,000 and $28,000, respectively. In addition, CL pledged a gift of
$1,000,000 to Family Talk, a ministry that FOF founder and cahirman emeritus
founded of which $750,000 was paid during the fiscal year and $250,000
was accrued at September 30, 2010. FOF also donated several previously
broadcasted radio shows to Family Talk which carried no book value.
15. Commitments:
$
Fund-raising
7,118
3,929
1,651
550
13,248
$
1,943
$
15,191
6,887
5,417
1,872
629
14,805
3,255
$
18,060
FOF entered into various pricing agreements with contractors for its
paper and publishing needs to produce periodicals during the year ended
September 30, 2009. As of September 30, 2010, outstanding purchase
commitments under these pricing agreements approximated $800,000.
In addition, FOF has entered into various service agreements with unrelated
third party vendors. Future minimum payments required under these
agreements in effect at September 30, 2010, are as follows (in thousands):
Year Ending September 30,
14. Transactions with Related Parties:
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
Q UI T
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16
FOF offers various books and tapes for distribution that have been written
by employees and members of the board of directors. During the years
ended September 30, 2010 and 2009, approximately $5,000 and $123,000,
respectively, of these materials were purchased from publishers. Focus employees
and members of the board of directors waive their royalties on resources
distributed by Focus that are created during their employment or service.
A former member of the board of directors, serves as the chairman of National
Day of Prayer Task Force (NDPTF). FOF has entered into an agreement with
NDPTF whereby FOF provides certain services (accounting, warehousing,
shipping, etc.). During fiscal 2010, NDPTF utilized FOF staff to perform
its functions. The costs of wages and benefits for staff are reimbursed to
FOF. Additionally, NDPTF reimburses FOF for certain other direct expenses
which are incurred on behalf of NDPTF. This agreement was effectively
terminated on August 31, 2010. During the years ended September 30, 2010
and 2009, NDPTF incurred total costs to FOF of $654,000 and $971,000,
respectively. At September 30, 2010 and 2009, NDPTF had accounts payable
to FOF under this arrangement of $87,000 and $154,000, respectively.
2011
2012
2013
$
4,132
395
302
$
4,829
16. Subsequent Events:
Subsequent events have been evaluated through the report date,
which represents the date the financial statements were available
to be issued. No subsequent events or disclosures were identified.
Subsequent events after that date have not been evaluated.
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Supplemental
Information
2010 Focus on the Family and CitizenLink
Annual Report
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
Q UI T
2010 Focus on the Family and CitizenLink Annual Report
Models used for illustrative purposes only.
www.c
apincro
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2435 R
esearch
Parkway
, Suite 2
00 Co
lorado
Springs,
INDEPE
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INFORM ORT
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amily a
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olorado nLink
Supplemental
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NE XT PAGE
PREVI OUS PAGE
CO NT E NT S PAGE
QUI T
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basic c
financi
dated f
9 throu
been su ge in net asse
onsolid
a
g
i
l
n
h
an
2
ts, and
b
ated fi
respect
cash flo cial statemen 2 is presented
nancial jected to the
s in rel
ts rathe
ws of th
auditin
stateme
ation to
r than
e indivi
g proce
nts and
the bas
to
dual or
dures a
, in ou
ic cons
g
a
p
n
p
r
i
z
l
olidate
i
o
a
e
t
p
d
i
o
i
n
ns.
in the
ion, is
d finan
audits
fairly s
cial sta
of the
tated i
tement
n
s taken
as a wh all material
o
l
e.
Colora
do Spr
i
n
gs,
January
10, 201 Colorado
1
.5910 fa
x
Consolidating Statement of Financial Position
September 30, 2010
CitizenLink
Eliminations
Focus
Total
Assets:
Current assets:
Cash and cash equivalents
Investments
Accounts receivable – net
Inventory
Pledges receivable
Prepaid expenses
$
Property and equipment – net
Film production costs – net
Other assets
Endowment assets
Total Assets
14,096,095
5,470,838
912,693
309,628
1,009,882
2,723,215
24,522,351
$
47,605,204
2,636,942
4,946,128
114,758
2,331,708
149,579
217,113
2,698,400
$
7,549
-
(284,762)
(284,762)
$
-
16,427,803
5,470,838
777,510
309,628
1,009,882
2,940,328
26,935,989
47,612,753
2,636,942
4,946,128
114,758
$
79,825,383
$
2,705,949
$
(284,762)
$
82,246,570
$
4,423,013
5,629,994
3,006,860
442,546
13,502,413
$
659,208
386,855
1,046,063
$
(284,762)
(284,762)
$
4,797,459
6,016,849
3,006,860
442,546
14,263,714
Liabilities and Net Assets:
Current liabilities:
Accounts payable
Accrued expenses
Deferred revenue
Current portion of charitable gift annuity liability
Charitable gift annuity liability – net of current portion
Total liabilities
3,144,102
16,646,515
1,046,063
(284,762)
3,144,102
17,407,816
13,267,074
47,605,204
60,872,278
1,652,337
7,549
1,659,886
-
14,919,411
47,612,753
62,532,164
1,659,886
-
2,215,590
91,000
64,838,754
NEX T PA G E
PR E V I O US
PA G E
Net assets:
Unrestricted:
Operations
Equity in property and equipment
CO N T E N T S
PA G E
Temporarily restricted
Permanently restricted
Total net assets
2,215,590
91,000
63,178,868
Q UI T
Total Liabilities and Net Assets
$ 79,825,383
19
19
$
2,705,949
$
(284,762)
$ 82,246,570
2010
201
20
010 F
Focu
ocu
cuss on
ccu
on the
the
h Fam
Family
Fa
ily an
aand
nd Citi
Citiizen
zzeenLin
inkk Annnu
in
nnuual
al Re
Reeppor
Rep
ortt
Consolidating Statement of Financial Positon
September 30, 2009
CitizenLink
Eliminations
Focus
Total
Assets:
Current assets:
Cash and cash equivalents
Investments
Accounts receivable – net
Inventory
Pledges receivable
Prepaid expenses
$
Property and equipment – net
Film production costs – net
Other assets
Endowment assets
Total Assets
22,246,592
5,604,805
1,058,643
487,343
1,087,194
2,506,481
32,991,058
$
49,257,282
3,809,506
4,832,458
106,399
3,737,236
183,462
22,922
3,943,620
$
9,491
-
(403,873)
(403,873)
$ 25,983,828
5,604,805
838,232
487,343
1,087,194
2,529,403
36,530,805
-
49,266,773
3,809,506
4,832,458
106,339
$ 90,996,703
$
3,953,111
$
(403,873)
$ 94,545,941
$
$
348,478
354,757
703,235
$
(403,873)
(403,873)
$
Liabilities and Net Assets:
Current liabilities:
Accounts payable
Accrued expenses
Deferred revenue
Current portion of charitable gift annuity liability
Charitable gift annuity liability – net of current portion
Total liabilities
4,291,591
5,236,005
2,200,696
429,098
12,157,390
4,236,196
5,590,762
2,200,696
429,098
12,456,752
3,255,849
15,413,239
703,235
(403,873)
3,255,849
15,712,601
22,680,820
49,257,282
71,938,102
3,240,385
9,491
3,249,876
-
25,921,205
49,266,773
75,187,978
3,249,876
-
3,554,362
91,000
78,833,340
NEX T PA G E
PR E V I O US
PA G E
Net assets:
Unrestricted:
Operations
Equity in property and equipment
CO N T E N T S
PA G E
Temporarily restricted
Permanently restricted
Total net assets
3,554,362
91,000
75,583,464
Q UI T
Total Liabilities and Net Assets
$ 90,996,703
20
20
$
3,953,111
$
(403,873)
$ 94,545,941
2010
201
20
010 F
Focu
ocu
cuss on
ccu
on the
the
h Fam
Family
Fa
ily an
aand
nd Citi
Citiizen
zzeenLin
inkk Annnu
in
nnuual
al Re
Reeppor
Rep
ortt
NEX T PA G E
PR E V I O US
PA G E
CO N T E N T S
PA G E
QUIT
21
2010 Focus on the Family and CitizenLink Annual Report
Consolidating Statement of Activities
Year Ended September 30, 2009
Focus
Unrestricted
CitizenLink
Temporarily
Restricted
Permanently
Restricted
$6,931,672
6,931,672
$
Total
Unrestricted
Temporarily
Restricted
Permanently
Restricted
Total
Eliminations
Grand Total
Support and Revenue:
Contributions
$ 112,960,643
Sales
7,772,933
Reimbursement income
1,905,075
Royalty and licensing revenue
1,558,239
Institute income
1,362,802
Investment income
305,329
Event revenue
1,416,627
Membership dues
Other revenue
221,981
Change in value of charitable gift annuities
(48,289)
127,455,340
Net assets released:
Time restrictions
1,652,698
Purpose restrictions
6,834,075
Total Support and Revenue
135,942,113
-
$119,892,315
7,772,933
1,905,075
1,558,239
1,362,802
305,329
1,416,627
221,981
(48,289)
134,387,012
$ 6,415,468
4,280,411
10,458
91,573
10,797,910
$
-
(1,652,698)
(6,834,075)
(1,555,101)
-
134,387,012
10,797,910
-
20,416,285
24,360,506
12,397,787
11,904,429
6,994,394
5,712,466
3,853,559
26,280,764
111,920,190
-
-
20,416,285
24,360,506
12,397,787
11,904,429
6,994,394
5,712,466
3,853,559
26,280,764
111,920,190
825,035
13,688
2,349,710
226,197
3,512,880
515,662
397,489
7,840,661
-
10,966,932
11,144,737
134,031,859
-
-
10,966,932
11,144,737
134,031,859
1,740,622
396,862
9,978,145
1,910,254
(1,555,101)
-
355,153
70,027,848
5,109,463
91,000
$ 71,938,102
$ 3,554,362
91,000
$
-
$ 6,415,468
4,280,411
10,458
91,573
10,797,910
-
$
(6,185,486)
(6,185,486)
$ 126,307,783
7,772,933
1,558,239
1,362,802
315,787
1,416,627
91,573
221,981
(48,289)
138,999,436
10,797,910
(6,185,486)
138,999,436
-
825,035
13,688
2,349,710
226,197
3,512,880
515,662
397,489
7,840,661
(795,428)
(215,481)
(896,791)
(276,209)
(2,023,780)
(251,866)
(213,780)
(170,313)
(4,843,648)
20,445,892
24,158,713
13,850,706
11,854,417
8,483,494
5,976,262
4,037,268
26,110,451
114,917,203
-
-
1,740,622
396,862
9,978,145
(1,119,815)
(222,023)
(6,185,486)
11,587,739
11,319,576
137,824,518
819,765
-
-
819,765
-
1,174,918
75,228,311
2,430,111
-
-
2,430,111
-
77,658,422
$ 75,583,464
$ 3,249,876
-
$ 78,833,340
Expenses:
NEX T PA G E
PR E V I O US
PA G E
Program services:
Broadcasts
Resources
Publications
Correspondence
Public policy awareness
Internet
Events
Other ministries
Supporting activities:
General and administrative
Fund-raising
Total Expenses
Change in Net Assets
CO N T E N T S
PA G E
Q UI T
22
22
Net Assets, Beginning of Year
Net Assets, End of Year
$
$
-
$
-
$ 3,249,876
$
2010
201
20
010 F
Focu
ocu
cuss on
ccu
on the
the
h Fam
Family
Fa
ily an
aand
nd Citi
Citiizen
zzeenLin
inkk Annnu
in
nnuual
al Re
Reeppor
Rep
ortt
We are governed
Board of Directors
by an independent
board of direectors
committed to the
Lordship off Jesus Chrisst
andd His principless
Patrick P. Caruana, M.S.
James D. Daly
Elsa Prince Broekhuizen
Robert E. Hamby, C.P.A.
Chairman of Board of Directors
Chief Executive Officer
Chairman of E.O.P. Management
Former Senior Vice President
Lieutenant General (Ret.), Air Force
President of Focus on the Family
Co., LLC
and CFO of Multimedia, Inc.
R. Albert Mohler Jr., Ph.D.
Paul D. Nelson
Kathleen Nielson, Ph.D.
Eric Pillmore
President of The Southern Baptist
Retired President of Evangelical
Professor, author and women’s
Former Senior Vice President
Theological Seminary
for the success of thhe
Council for Financial Accountability
conference/retreat speaker
of Tyco International
Former Executive Vice President/COO
of Focus on the Family
traditiional family.
Kim A. Robinson
Lee Torrence
Daniel L. Villanueva
Tony Wauterlek
Vice President of Customer Business
Managing Director for IBM,
President, The Villanueva Companies
Founder, Wauterlek and Brown, Inc.
Development, Procter & Gamble
Senior State Executive for Georgia
Executive Leadership
NE XT PAGE
James D. Daly
Clark Miller
Bob Wood
Chief Executive Officer
Chief Strategy Officer
Chief Information Officer
Ken Windebank
Joel Vaughan
Dan Mellema
Chief Development Officer
Chief of Staff
Vice President of Finance, Treasurer
President of Focus on the Family
PREVI OUS PAGE
CO NT E NT S PAGE
QUI T
23
23
Guidelines for Fund-Raising
Here at Focus on the Family we believe that the way an organization handles its finances is a reflection of its integrity and reliability in every arena.
As a result, we have chosen to limit and regulate our methods of money management with great care. Here are the principles and policies that have
guided us through the years:
1. We believe that this ministry belongs to God and that we are merely His managers
and stewards. Our role can be summed up in a single phrase: to stay accountable
to Hisobjectives, interests, and concerns.
2. The Lord gives and the Lord takes away (Job 1:21). As long as He supplies the
means, we will continue to serve others in His name. If He closes the door and cuts
off our support, we will regard this as an indication of His sovereign will. We
understand that the future of His work in the world does not depend upon the
survival of this organization.
3. God sustains this work through the generosity of His people. Focus’s continuation
as a ministry is directly dependent upon their willingness and ability to give.
It follows that our friends need to know about our financial circumstances.
Accordingly, we will not hesitate to provide them with relevant information, both in
the good times and in the bad. But we will not beg or resort to disrespectful or
dishonorable methods of fund-raising, since this would only be to insult their
sensibilities and disavow our confidence in the Lord. Nor will we ever attempt to
raise more money than we need.
4. In the same attitude of high regard for those who make our ministry possible,
we will never sell or rent our donor data base. On the contrary, we will treat our
supporters’ personal information as a solemn trust and maintain the tightest
security on our list of contributors and friends.
P R E V I O US
PA G E
5. In view of the sacrificial nature of the contributions we receive—contributions which,
in many cases, come from families who are struggling to pay the mortgage and
keep food on the table—we are determined to steward our financial resources as
carefully and conservatively as possible. There is no room for extravagant or
unnecessary expenditures in Focus on the Family’s operating budget.
6. For similar reasons, we will resist the temptation to run the ministry at a deficit. If on
occasion it becomes necessary to borrow funds to cover large and unforeseen
expenditures, we will do our best to repay the loans as quickly as possible. When
we make a purchase, we will pay the invoice within 30 days.
7. We believe that a Christian’s first financial obligation is to the church; we have no
desire to come between our friends and the local congregations to which they
belong and from which they derive their spiritual sustenance. As a result, we do not
expect them to contribute to our ministry until after they have supported the work
of God’s kingdom in their own faith communities.
8. We will implement measures to ensure fairness and accountability in all of our
financial interactions with donors and supporters. To be specific, we will receipt
all donations and show the fair market value of any materials requested and sent
in order to help contributors determine the tax-deductible portion of their gifts.
9. As a way of holding ourselves accountable to the principles articulated above,
we will conform to the standards established by the Evangelical Council for
Financial Accountability (ECFA) and Canadian Council of Christian Charities
(CCCC), organizations created to ensure ethical fund-raising and
administration practices.
These, then, are the principles that have defined our philosophy of financial
stewardship and shaped our approach to fund-raising. They are based upon a firm
conviction that everything we are and everything we have comes to us by the
grace of God. Provided we remain faithful, we are confident that the Lord will
sustain us while His purposes for this ministry endure.
CON T E N T S
PA G E
F O C U S O N T H E F A M I LY B E L O N G S T O T H E S E P R O F E S S I O N A L G R O U P S . . .
Q UI T
800-A-FAMILY FocusOnTheFamily.com
(232-6459)
© 2011 Focus on the Family.
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