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TRUSTEES OF THE BERKSHIRE MUSEU M FinancialStatements June30, 2017 Table of Contents   Page Independent

TRUSTEES OF THE BERKSHIRE MUSEU M

FinancialStatements

June30, 2017

Table of Contents

 

Page

Independent Auditors' Report

2- 3

Statement of Financial Position

4

Statement of Activities

5

Statement of Cash Flows

6

Statement of Functional Expenses

7

Notes to Financial Statements

8- 21

5 Statement of Cash Flows 6 Statement of Functional Expenses 7 Notes to Financial Statements 8-
5 Statement of Cash Flows 6 Statement of Functional Expenses 7 Notes to Financial Statements 8-

Page 2

Page 2 Adelson & Company PC CERTIFIED PuBu c AccouNTAl'\TS Established 1938 INDEPENDENT A UDITORS'REPORT To

Adelson & Company PC

CERTIFIED PuBuc AccouNTAl'\TS

Established 1938

INDEPENDENT A UDITORS'REPORT

To the Board of Trustees of the

TRUSTEES OF THEBERKSHIRE MUSEUM

Pittsfield, MA 01201

Reporton the FinancialStatements

Pittsfield, MA 01201 Reporton the FinancialStatements Richard F. LaFleche, CPA Vincent T. Viscuso, CPA Gary J.

Richard F. LaFleche, CPA

Vincent T. Viscuso, CPA Gary J. 1\loynihan, CPA

Carol Leihinger-Healey, CPA

David M. Irwin, Jr., CPA

We have audited the accompanying financial statements of Trustees of the Berkshire Museum (a nonprofit organization), which comprise the statement of financial position as of June 30, 2017, and the related statements of activities, functional expenses, changes in net assets, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibilityfor the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

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Page 3

Opinion

In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial position of Trustees of the Berkshire Museum as of June 30, 2017, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Reporton Su m marizedCo mparati ve In for mation

We have previously audited the Trustees of the Berkshire Museum's 2016 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated November 8, 2016. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30,2016, is consistent, in all material respects, with the audited financial statements from which it has been derived.

financial statements from which it has been derived. ADELSON & COMPANY PC Pittsfield, MA May 25
financial statements from which it has been derived. ADELSON & COMPANY PC Pittsfield, MA May 25

ADELSON & COMPANY PC Pittsfield, MA

May25 ,2018

ADELSON & COMPANY PC Pittsfield, MA May 25 ,2018 Adelson & Company PC CERTIFIED PuBLIC A

Adelson & Company PC

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ADELSON & COMPANY PC Pittsfield, MA May 25 ,2018 Adelson & Company PC CERTIFIED PuBLIC A

Page4

TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF FINANCIAL POSITION

June 30,

Comparative

 

2017

2016

 

ASSETS

Current assets

Cash and equivalents

$

630,794

$

426,268

Short-term investments

15,637

486,672

Accounts receivable

49,964

63,000

Unconditional promises to give

352,167

492,517

Inventories - museum shop

19,787

14,690

Prepaid expenses

122,556

52,601

Total current assets

1,190,905

1,535,748

Cash restricted-endowment

34,505

47,277

Unconditional promises to give, long-term

1,011,805

1,262,811

Long-term investments

6,913,994

6,919,357

Property and equipment, net

9,789,534

9,965,015

9,789,534 9,965,015
TOTAL ASSETS $ 18,940,743 $ 19,730,208 LIABILITIES AND NET ASSETS Current liabilities Accounts payable $
TOTAL ASSETS
$
18,940,743
$
19,730,208
LIABILITIES AND NET ASSETS
Current liabilities
Accounts payable
$
275,575
$
298,630
Accrued payroll
82,934
75,300
Notes payable due within one year
1,852,426
1,777,426

Deferred income

Total current liabilities

1,777,426 Deferred income Total current liabilities 56,050 36,713 2,266,985 2,188,069 TOTAL LIABILITIES

56,050

36,713

2,266,985 2,188,069
2,266,985
2,188,069

TOTAL LIABILITIES

2,266,985

2,188,069

Net assets

Unrestricted

14,690,923

15,094,241

Temporarily restricted

1,636,731

2,120,321

Permanently restricted

TOTAL NET ASSETS

TOTAL LIABILITIES AND NET ASSETS

See notes to financial statements.

346,104

327,577

16,673,758 17,542,139
16,673,758
17,542,139

$

18,940,743

$

19,730,208

Page 5

TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF ACTIVITIES

For the Year Ended June 30,

REVENUE, GAINS AND OTHER SUPPORT Contributed income Government grants Foundations and corporations Special events, net Memberships Annual appeal Other contributions

In-kind contributions

Total contributed income

Earned income Admissions Bank interest Museum shop (net of$45,146 cost of goods sold) Facility rental

Adult programs

Education programs

Traveling exhibitions

Other earned income

Total earned income

 

Comparative

Permanently

 

Total

Total

 

Restricted

2017

2016

$

---

$

23,568

$

27,302

 

373,263

431,246

159,013

45,143

226,310

211,938

76,766

129,050

157,402

147,225

8,696

985

Temporarily

Restricted

$

---

Unrestricted

$

23,568

373,263

159,013

226,310

76,766

157,402

8,696

1,025,018 1,025,018 992,889
1,025,018
1,025,018
992,889
186,907 186,907 174,928 1,848 1,848 48,933 48,933 53,736 3,250 3,250 5,858 85,189 85,189 100,321 77,486
186,907
186,907
174,928
1,848
1,848
48,933
48,933
53,736
3,250
3,250
5,858
85,189
85,189
100,321
77,486
77,486
85,293
50,000
50,000
15,000
3,781
3,781
5,258
457,394
457,394
440,394

Investment support for operating activities

TOTAL REVENUE, GAINS AND

OTHER SUPPORT

1,272,558

1,272,558

755,255

2,754,970 2,754,970 2,188,538
2,754,970
2,754,970
2,188,538
EXPENSES Program Services Management and General 2,149,742 2,149,742 2,174,030 387,180 387,180 385,719 271,700
EXPENSES
Program Services
Management and General
2,149,742
2,149,742
2,174,030
387,180
387,180
385,719
271,700
271,700
Fund-raising
330,973
2,808,622
2,808,622
TOTAL EXPENSES
2,890,722
Change in net assets from operating activities
(53,652)
(53,652)
(702,184)
NON-OPERATING ACTIVITIES
Investments used in excess of operating support
(686,825)
27,527
(659,298)
(797,259)
Berkshire Museum Board Endowment contributions 15,597
15,597
33,463

Capital contributions

Strategic planning grant

Strategic planning expense

Endowment contribution

Release endowment spending

Reclassify temporarily restricted to board endowment

Releases of capital contributions

TOTAL NON-OPERATING ACTIVITIES

CHANGE IN NET ASSETS

Net assets, beginning

NET ASSETS, ENDING

77,865 77,865 511,670 18,050 18,050 239,517 (266,943) (266,943) (142,006) 2,000 9,000 (9,000) 89,333 (89,333)
77,865
77,865
511,670
18,050
18,050
239,517
(266,943)
(266,943)
(142,006)
2,000
9,000
(9,000)
89,333
(89,333)
490,172
(490,172)
(349,666)
(483,590)
18,527
(814,729)
(152,615)
(403,318) (483,590) 18,527 (868,381) (854,799) 15,094,241 2,120,321 327,577 17,542,139 18,396,938 $ 14,690,923
(403,318)
(483,590)
18,527
(868,381)
(854,799)
15,094,241
2,120,321
327,577
17,542,139
18,396,938
$
14,690,923
$
1,636,731
$
346,104
$
16,673,758
$
17,542,139

See notes to financial statements.

Page 6

TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF CASH FLOWS

For the Year Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES CHANGE IN NET ASSETS Adjustments to reconcile change in net assets to net cash provided (used) by operating activities:

Depreciation Bad debts Realized and unrealized (gains) losses on investments (Increase) decrease in operating assets:

Accounts receivable Unconditional promises to give Inventories - museum shop Prepaid expenses Increase (decrease) in operating liabilities:

Accounts payable Accrued payroll Deferred income Contributions restricted for long-term purpose:

Endowment Contributions for long-term capital projects

Berkshire Museum Board Endowment contributions

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in short-term investments (Increase) decrease in cash restricted-endowment Purchases of long-term investments Proceeds from sales of long-term investments

Additions to property and equipment

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term debt

Collections of contributions restricted for long-term purposes

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

INCREASE (DECREASE) IN CASH AND EQUIVALENTS

Cash and equivalents, beginning

CASH AND EQUIVALENTS, ENDING

SUPPLEMENTAL OATA

Interest paid

See notes to financial statements.

Comparative

 

2017

2016

$

(868,381)

$

(854,799)

515,065

502,268

 

4,857

 

(504,229)

 

179,381

13,036

(8,622)

391,356

59,579

(5,097)

 

9,029

(69,955)

(12,129)

(23,055)

(74,361)

7,634

9,224

19,337

10,713

 

(2,000)

 

(20,000)

 

(425,000)

(101,299)

(75,534)

 

(645,588)

 

(677,394)

 

471,035

(308,451)

12,772

(24,118)

(10,596,541)

 

(1,343,087)

11,106,133

2,144,618

(339,584)

 

(4,080)

 

653,815

464,882

 

75,000

121,299

502,534

 

196,299

502,534

204,526

290,022

426,268

136,246

$

630,794

$

426,268

$

50,055

$

42,992

Page7

TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF FUNCTIONAL EXPENSES

For the Year Ended June 30,

Program

Management

Fund-

Total

Comparative

Total

Services and General raising 2017 2016
Services
and General
raising
2017
2016

Compensation and Related Expenses Salaries Employee benefits

Payroll taxes

Total

Bad Debt Contracted services Dues and subscriptions Event related Exhibition costs Committed grants Fees Institutional advancement Interest Marketing and advertising Occupancy Postage Printing Professional development Professional services Rental Revenue share Service contracts Shipping and handling Supplies Travel

Depreciation

TOTAL EXPENSES

$

754,666

$

262,208

$

165,254

$

1,182,128

$

1,211,681

66,248

34,354

18,729

119,331

124,985

56,451

16,814

12,462

85,727

87,808

877,365 313,376 196,445 1,387,186 1,424,474 4,857 6,546 9,988 16,534 25,509 2,657 6,936 1,015 10,608 10,877
877,365
313,376
196,445
1,387,186
1,424,474
4,857
6,546
9,988
16,534
25,509
2,657
6,936
1,015
10,608
10,877
3,490
8,657
12,147
20,820
60,059
60,059
124,495
99,670
99,670
24,324
 

199

20,234

 

595

21,028

28,740

898

136

1,870

2,904

801

48,424

1,137

 

494

50,055

42,992

81,122

879

82,001

85,390

244,813

16,265

 

3,288

264,366

284,166

6,453

276

3,924

10,653

15,970

21,954

612

16,711

 

39,277

46,031

5,057

35

5,092

1,054

23,868

18,425

 

400

42,693

46,479

28,084

37

11,561

 

39,682

44,567

4,735

8,569

8,569

4,735

4,863

66,731

8,512

3,458

1,137

 

78,758

8,512

78,462

19,667

52,966

2,010

56,113

51,395

1,376

108

1,484

2,521

504,763

5,151

 

5,151

515,065

502,268

$

2,149,742

$

387,180

$

271,700

$

2,808,622

$

2,890,722

$ 2,149,742 $ 387,180 $ 271,700 $ 2,808,622 $ 2,890,722 See notes to financial statements.

See notes to financial statements.

Page 8

TRUSTEES OF THEBERKSHIRE MUSEU M

NOTES TO FINANCIAL STATEMENTS

June 30, 2017

NOTE1-NATURE OF ACTIVITIES AN D SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES

Nature of Acti vities

The Trustees of the Berkshire Museum (the Museum) is a not-for-profit corporation organized under Chapter 180 of the laws of the Commonwealth of Massachusetts. The Museum acquires exhibits and preserves art, natural science, and local history collections. The Museum also provides special performances of the arts, concerts, lectures, educational movies, classes, bus trips, and various special events to patrons and benefactors primarily from Berkshire County, Massachusetts.

Income Taxes

The Museum is exempt from federal taxes under Section 501(c)(3) of the Internal Revenue Code and state taxes under Massachusetts law. In addition, the Museum qualifies for the charitable contribution deduction under Section 170(b)(I)(A)(vi) and has been classified as an organization that is not a private foundation under Section

509(a)(l).

Management has evaluated significant tax positions against the criteria established by professional standards and believes there are no such tax positions requiring accounting recognition. The Museum's tax returns are subject to examination by taxing authorities for all years ending on or after June 30, 2014.

Basis of AccountingandFinancial Statement Presentation

The financial statements of the Museum have been prepared on the accrual basis of accounting. The Museum is required to report information regarding its financial position and activities according to three classes of net assets:

unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

Contributions

The Museum accounts for contributions received as increases in unrestricted, temporarily restricted, or permanently restricted net assets, depending on the existence or nature of any donor restrictions. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

of activities as net assets released from restrictions. Promises to Gi ve Unconditional promises to give

Promises to Gi ve

Unconditional promises to give are recognized as contribution revenue in the period received as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Promises to give are recorded at net realizable value if expected to be collected in one year and at fair value if expected to be collected in more than one year. Conditional promises to give are recognized when the conditions on which they depend are substantially met. The Museum uses an allowance method for promises to give based upon management's analysis of the accounts and prior collection experience.

ContributedServices

Volunteers contribute services to the Museum in all aspects of its programs, for which no value has been recognized in the financial statements because these services did not meet the criteria for recognition under generally accepted accounting principles.

because these services did not meet the criteria for recognition under generally accepted accounting principles.
NOTE 1 - (Continued) Page 9 In-KindSupport The Museum records various types of in kind

NOTE 1 - (Continued)

Page 9

In-KindSupport

The Museum records various types of in kind support including professional services, advertising and materials. Contributed professional services are recognized at fair market value if the services received (a) create or enhance long-lived assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Contributions of tangible assets are recognized at fair market value when received. The amounts reflected in the accompanying financial statements as in kind support are offset by like amounts included in expenses or property and equipment.

CashandEquivalents

For the purpose of the statement of cash flows, the Museum considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

AccountsReceivable

Accounts receivable are stated at the amount management expects to collect from balances outstanding at year-end. Based on management's assessment of the credit history with customers having outstanding balances and current relationships with them, it has concluded that realization losses on balances outstanding at year-end will be immaterial.

Inventory

Inventory is stated at the lower of acquisition cost or net realizable value and consists of general shop merchandise. Cost is determined by the first-in, first-out method.

In vest ments

Investments are presented in the financial statements at fair value. Unrealized gains and losses are included in the change in net assets. Restricted gains and investment income whose restrictions are met in the same period are recognized and reported as unrestricted revenue and gains.

PropertyandEquip ment

The Organ i zation capitalizes all expenditures for property and equipment with a useful life greater than one year and in excess of $ 2,500. Depreciation of buildings and equipment is provided over the estimated useful lives of the assets using the straight-line method. Purchased equipment is recorded at cost. Donated equipment is recorded at fair market value at the date of the donation.

De ferredInco me

Program fees and traveling exhibit income received in advance for services to be rendered in the next fiscal year are not recognized until earned.

Advertising

The Museum expenses advertising costs as incurred. Advertising expense was $75,009 and $69,304 for the years ended June 2017 and 2016.

$75,009 and $69,304 for the years ended June 2017 and 2016. Subsequent Events Management has evaluated

Subsequent Events

Management has evaluated subsequent events through May 25, 2018, the date which the financial statements were available to be issued, and has determined that there are no additional adjustments or disclosures required other than those events reported in Note 21.

determined that there are no additional adjustments or disclosures required other than those events reported in

Page 10

NOTE1 - (Continued)

Use of Esti mates

The preparation of fmancial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Su m marizedCo mparative Financial In for mation

The fmancial information for the year ended June 30, 2016, presented for comparative purposes, is not intended to be a complete financial statement presentation. Certain items in the comparative prior year totals may have been reclassified to conform to the current year presentation.

NOTE 2-CONCENTRATION OF CRE DIT RISK

Financial instruments, which potentially subject the Museum to concentrations of credit risk, consist principally of cash. The Museum maintains its cash in various bank deposit accounts, which at times may exceed federally insured limits. Bank deposits at June 30, 2017 were $492,081, of which $416,762 was insured and collateralized and $75,319 was uninsured. The Museum has not experienced any losses in such accounts.

Page 11

NOTE 3-INVESTMENTS

Investments are comprised of the following groups and reported at fair value:

Short-term investments Cash and equivalents Money market Total short-term investments

Cash-restricted

Long-term investments Marketable equity securities Bonds and notes Total long-term investments

Total investments

Comparative

 

2017

 

2016

 
 

Fair

Fair

Value

Cost

 

Value

Cost

 
 

$

15,637

$

15,637

$

486,672

$

486,672

15,637 15,637 486,672 486,672
15,637
15,637
486,672
486,672

34,505

34,505

47,277

47,277

15,637 15,637 486,672 486,672 34,505 34,505 47,277 47,277 4,853,374 2,060,620 4,092,565 2,050,325 4,523,918 2,395,439

4,853,374

2,060,620

4,092,565

2,050,325

4,523,918

2,395,439

3,736,318

2,324,873

6,913,994 6,142,890 6,919,357 6,061,191
6,913,994
6,142,890
6,919,357
6,061,191

$

6,964,136

$

6,193,032

$

7,453,306

$

6,595,140

The following summarizes the relationship between fair values and the cost of investment assets:

 

Fair

Unrealized

Value

Cost

Gain (Loss)

Balance at end of year

$

6,964,136

$

6,193,032

$

771,104

Balance at

beginning of year

7,453,306

6,564,192

889,114

Current year unrealized gains

$ (118,010)
$
(118,010)

Investments held in the above accounts were comprised of restricted and unrestricted amounts at June 30:

Unrestricted Board endowment Permanently restricted

Total

Comparative

2016

Permanently restricted T o t a l Comparative 2016 2017 $ 5,938,629 $ 6,594,308 679,403 531,421

2017

$

5,938,629

$

6,594,308

679,403

531,421

346,104

327,577

$

6,964,136

$

7,453,306

2017 $ 5,938,629 $ 6,594,308 679,403 531,421 346,104 327,577 $ 6,964,136 $ 7,453,306

Page 12

NOTE 3 - (Continued)

Investment income and its classification in the statement of activities consisted of the following for the years ended June 30:

2017

Comparative

2016

Interest and dividends

$

150,785

$

183,813

Realized gains

622,239

162,974

Investment fees

(41,754) (46,436)
(41,754)
(46,436)

Current net earnings and realized gains

731,270

300,351

Unrealized gains (losses)

(118,010)
(118,010)

(342,355)

Investment income (losses), net

613,260

(42,004)

Investment support for operating activities

1,272,558

755,255

Investments used in excess of operating support *

$ {659,298) $ {797,259)
$
{659,298)
$
{797,259)

* During the years ended June 30, 2017 and 2016, the Organization used investment principal to support operations.

Spending Policy

The Board, as part of approving the annual budget, follows a spending policy to utilize a portion of the net asset value of the investment portfolio to support operating and program expenses, major maintenance, capital expenditures, and for securing, protecting and preserving the Museum's collections. The annual funding needs of the Museum are determined by the amount of the operating deficit in the fiscal year's budget that is approved by the Board of Trustees. If subsequent operating or funding demands require that an amount over the approved annual budget is needed, it would require a super-majority (2/3) vote of the Trustees to authorize the additional funding needs over the approved amount.

require a super-majority (2/3) vote of the Trustees to authorize the additional funding needs over the
NOTE 4- PROPERTY AND EQUIPMENT Property and equipment consisted of the following at June 30:

NOTE 4-PROPERTY ANDEQUIPMENT

Property and equipment consisted of the following at June 30:

Page 13

Comparative

 

2017

2016

Work in progress Land Equipment Aquarium tank Building and improvements Auditorium improvements Galleries and exhibits Universal access

$

339,582

$

56,971

56,971

567,194

567,194

16,049

16,049

12,950,061

12,950,060

56,234

56,234

764,219

764,219

306,770

306,770

Total property and equipment Accumulated depreciation

15,057,080

14,717,497

(5,267,546) (4,752,482)
(5,267,546)
(4,752,482)

Property and equipment, net

$ 9,789,534

$

9,965,015

Depreciation expense was $515,065 and $502,268 for the years ended June 30, 2017 and 2016.

Work in progress consisted of conceptual and schematic design costs incurred towards the proposed renovation of the facility.

NOTE 5 - UNCONDITIONALPROMISES TO GIVE

Unconditional promises to give at June 30, 2017 are expected to be realized in the following periods:

In one year or less Between one year and five years

Total

Unamortized discount Allowance for uncollectibles

Net Realizable

Portion to be realized within one year

Unconditional promises to give, long-term

$ 352,167

1,207,000

1,559,167

(185,195)

(10,000)

1,363,972

(352,167)

$ 1,011,805

Unconditional promises to give at June 30, 2017 were restricted for the 21st Century Campaign and Master Plan. Funds are for the purposes of improving the facility, maintaining the integrity of programs and to ensure financial sustainability into the future.

Page 14

NOTE 6-SHORT TE RM NOTE

The Museum has a $2,000,000 bank line of credit with variable interest payable monthly at the LIBOR (London Interbank Offered Rate) one-month rate for U.S. Dollar deposits plus 2.0% (3.22% at June 30, 2017). The note is collateralized by investments. The outstanding balances on the line of credit at June 30, 2017 and June 30, 2016 were $ 1,852,426 and $1,777,426, respectively.

8 5 2 , 4 2 6 a n d $1,777,426, respectively. NOTE 7- UNRESTRI CTED

NOTE 7-UNRESTRI CTED NET ASSETS

Unrestricted net assets have been designated by the Board of Directors to be used for the following purposes:

UndesignatedFund

Funds available for and used in day-to-day operations.

AnnualOperations Fund

Funds available for annual operating needs as designated by the Board of Trustees. The Annual Operations fund was exhausted during the year ended June 30, 2017.

Keep Crane Fund

Funds available for the enhancement, care, preservation and protection of collections.

Operations Fund

Funds available to support operations as designated by the Board of Trustees.

Berkshire Museu m Endow ment Fund

Funds available for program and building needs as designated by the Board of Trustees.

Unrestricted net assets as designated by the Board of Directors were as follows at June 30:

Undesignated Annual Operations Fund Keep Crane Fund Operations Fund Berkshire Museum Endowment Fund

Total

Comparative

 

2017

2016

 
 

$

7,650,600

$

7,476,583

 

534,749

 

6,077,438

6,268,446

168,623

223,555

794,262

590,908

$

14,690,923

$

15,094,241

  6,077,438 6,268,446 168,623 223,555 794,262 590,908 $ 14,690,923 $ 15,094,241

Page 15

NOTE 7 - (Continued)

Changes in board designated endowments for the year ended June 30:

Board designated endowment net assets, beginning of year

Contributions

Investment return:

Investment income Realized and unrealized gains Total investment return

Reclassify temporarily restricted to board endowment (Note 8) Interfund transfer of contributions designated to board endowment (Note 8)

Board designated endowment net assets, end of year

2017

Comparative

2016

$ 590,908 $ 272,177
$
590,908
$
272,177

15,597

33,463

6,961

46,797

6,167

4,254

53,758 10,421 89,333 44,666 274,847 $ 794,262 $ 590,908
53,758
10,421
89,333
44,666
274,847
$
794,262
$
590,908

During the year ended June 30, 2017, restrictions on a previous year pledge were reviewed to clarify the intent of the donor. As a result, $133,999 of that pledge was reclassified to unrestricted board designated endowment:

$89,333 from temporarily restricted net assets and $44,666 from undesignated net assets.

NOTE 8-TEMPORARILYRESTRICTED NET ASSETS

Temporarily restricted net assets were available for the following purposes or periods at June 30:

Purpose restriction:

Aquarium Change Capital Feigenbaum Hall oflnnovation (FHOI) Theater Upgrade Education Program Endowment Master Planning Process Time restriction:

21st Century Campaign - operations

Total

Comparative

2017

2016

$ 20,000

$

149,083

300,000

104,610

108,880

125,000

125,000

22,000

133,333

900

97,511

1,215,138

1,355,597

$ 1,636,731

$

2,120,321

1,215,138 1,355,597 $ 1,636,731 $ 2,120,321 E d u c a t i o n P

Education Program Endowment funds of $89,333 were reclassified to board endowment in fiscal 2017 (Note 7).

Page 16

NOTE 9 -NET ASSETS RELEASE D FROM RESTRICTION

Net assets were released from donor restrictions during the years ended June 30 by incurring expenses satisfying the following restricted purposes specified by the donors.

21st Century Energy Project Change Capital Education Program Feigenbaum Hall oflnnovation (FHOI) Master Planning Process Boraski Endowment

Total

NOTE 10-ENDOWMENTS

2017

Comparative

2016

$

198,323

$

200,000

150,917

1 5 0 , 9 1 7

22,000

4,270

4,500

114,662

142,006

3,200

0 0 1 1 4 , 6 6 2 1 4 2 , 0 0 6

$

490,172

$

349,706

The Museum's endowment consists of individual funds established for a variety of purposes. Its endowment includes donor restricted endowment funds (Note 12) and funds designated by the Board of Trustees (Note 8). It does not include the unrestricted funds designated by the Board. As required by U.S. generally accepted accounting principles, net assets associated with endowment funds, are classified and reported based on the existence or absence of donor-imposed restrictions.

on the existence or absence of donor-imposed restrictions. Chapter 180A Uniform Prudent Management of Institutional

Chapter 180A Uniform Prudent Management of Institutional Funds (MA UPMlFA), which except for gift instruments stating otherwise, allows an organization to spend below the fund's historical dollar value and eliminates the 7% spending limitation. It sanctions application of a reasonable spending rate to all endowment funds.

The Board of Trustees of the Museum has interpreted the MA 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, the Museum classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. In accordance with MA UPMIFA, the Museum considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donor-restricted endowment funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6) other resources of the Museum, and (7) the Museum's investment policies.

Page 17

NOTE 1 0- ( Continued)

Investment Return Objectives, Risk Parameters and Strategies.

The Museum has adopted investment and spending policies, approved by the Board of Trustees, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also maintaining the purchasing power of those endowment assets over the long-term.

Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, which exceeds the annual distribution with acceptable levels of risk. Endowment assets are invested in a well-diversified asset mix that is intended to result in a consistent inflation­ protected rate of return that has sufficient liquidity to make an annual distribution of 5%, while growing the funds if possible. Actual returns in any given year may vary from this amount. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk. The Museum's investment spending policy is disclosed in Note

3.

NOTE 11 - PERMANENTLY REST RICTED NET ASSETS

Permanently restricted net assets at June 30 include the following donor restricted principal in perpetuity, the revenue of which is expendable as provided by the donor:

Ruth P. Boraski Children's Fund Nash Endowment

Total

Endowment net assets, beginning of year

Investment gain Investment income Realized and unrealized gains Total investment gain

Contributions

Appropriation of endowment expenditure

Endowment net assets, end of year

NOTE12 -IN-KINDCONT RIBUTION

Comparative

2017 20 16

$ 234,385 $ 224,638 111,719 102,939 $ 346, 104 $ 327,577 Comparative 2017 2016 $
$
234,385
$
224,638
111,719
102,939
$
346, 104
$
327,577
Comparative
2017
2016
$
327,577
$
323,667
2,760
4,449
24,767
66 1
27,527
5,110
2,000
 

(9,000)

(3,200)

$

346,104

$

327,577

During the years ended June 30, 20 17 and 2016, the Museum received in-kind contributions of engineering services amounting to $8,696 and $985, respectively.

Page 18

NOTE 31

-DEFINED CONTRIBUTION PLAN

The Museum maintains a defined contribution retirement plan for all eligible employees. Contributions are voluntarily made by employees. The plan allows for discretionary matching contributions as determined by the Museum. The Museum elected to match 3% of employees' contributions for the years ended June 30, 2017 and 2016, which amounted to $19,844 and $21,000, respectively.

Participants have the option of having contributions to their accounts deposited in either the Teachers Insurance and Annuity Association (TIAA) or the College Retirement Equities Fund (CREF). At the time of an employee's retirement, an individual annuity is purchased with the proceeds accumulated in the employee's account.

NOTE 14-OPERATINGLEASE

In October 2014, the Museum entered into a 60-month lease agreement for a new copier with monthly payments of $565. Lease payments were $6,774 for the years ended June 30, 2017 and 2016.

Approximate future lease commitments payable during the years ending June 30, are as follows:

2018

$ 6,774

2019

6,774

2020

1,129

Total

$ 14,677

NOTE15-COLLECTIONS

The Museum follows a practice of not capitalizing its ,collections. The collections carry a significant value in connection with the Museum's mission of enriching, educating and entertaining patrons. The collections consist of permanent collections of art, natural science, costume, decorative arts, ancient civilizations, historical objects and exotic marine life.

The art collection consists of approximately 508 paintings, 125 sculptures, 2,061 decorative art objects, more than 399 prints and works on paper, and more than 2,000 photographs from both American and European artists from the fifteenth through the twentieth centuries.

The ancient civilization collections feature art and artifacts of Babylonia, Assyria, Egypt, Greece, Rome and China.

The natural history collection consists of exotic shells, gemstones, minerals, flowers, mushrooms, fossils, mounted birds and animals, a live aquarium consisting of animals from around the world, as well as dioramas of animals in their natural habitat.

Interdisciplinary changing exhibitions are either produced in house by staff or rented by the Museum. Recent exhibits have included "Finding Raven"; "Something Scary"; "Tell Me More", and "Guitars".

Scary"; "Tell Me More", and "Guitars". In July 2017, the board voted to deaccession 40 art

In July 2017, the board voted to deaccession 40 art works from its collection (see Note 20)

Page 19

NOTE 16-FAIR VALUE MEASUREMENTS

Page 19 NOTE 16- FAIR VALUE MEASUREMENTS The following methods and assumptions were used by the

The following methods and assumptions were used by the Museum in estimating its fair value disclosures for financial instruments:

Long-term investments:

investments (Level 1) .

The fair values of investments are based on quoted market prices for those or similar

Long-term unconditional promises to give: The fair value of promises to give that are due in more than one year is estimated, at the time of the pledge, by calculating the present value of the future expected payments from the donors (Level 3) and applying an allowance for uncollectibles.

Fair values of assets measured on a recurring basis at June 30, 2017 are as follows:

Investment Unconditional promises to give

Total

Quoted

Significant

Prices in

Unobservable

Active Markets

(Level l)

Inputs

(Level 3)

Fair value

$

1,363,972 1,363,972
1,363,972
1,363,972

$

6,964,136

6,964,136

$

$

8,328,108

$

6,964,136

$

1,363,972

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level3inputs):

The table below presents information about unconditional promises to give at June 30 2017:

Unconditional promises to give measured at fair value Promised cash flows Change in discount included in contribution revenue in the statement of activities

$

1,559,167

$

63,760

Fair value (carrying amount) of long-term unconditional promises

$

1,011,805

Unconditional promises to give, due within one year (net realizable value) Carrying amount

352,167

Net realizable unconditional promises to give (Note 5)

$

1,363,972

The table below presents information about the changes in unconditional promises to give for the year ended June 30,

2017:

Balance July 1, 2016 New promises Collections Contribution revenue (reduction) for discount and allowance charge Balance June 30, 2017

$ 1,755,328

421,015

(876,131)

63,760

$ 1,363,972

Page 20

NOTE 17- RELATEDPARTY

A company owned by one of the board members provided $115,171 and $1,428 of engineering services to the Museum during the years ended June 30, 2017 and 2016, respectively.

The Museum incurred legal expenses from two firms where a board member was employed as an attorney. Services provided by these firms during the period the board member was an employee totaled $3,575 and $725 for the years ended June 30, 2017 and 2016, respectively.

NOTE 18-SPECIAL EVENTS ACTIVITIES FORTHE YEARENDED JUNE30WEREAS FOLLOWS:

2017

Comparative

2016

Special event revenues Ticket sales Auction Revenues Sponsorship and contributions

$

23,266

$

30,145

197,912

118,189

125,425

86,105

Total

346,603

234,439

Less contributions

152,699

146,684

Total special event revenues

193,904

87,755

Direct benefit to donors:

Reception

33,111

40,562

Entertainment

1,780

2,050

Total direct benefits to donors

34,891

42,612

Special events revenue, net

$

159,013

$

45,143

NOTE19-COMMITMENTS ANDCONTINGENT LIABILITIES

The Museum receives some of its support from state and federal contracts. The contracts permit audits of both the financial operation of the programs and compliance with the terms of the agreements. Such audits could result in the disallowance of some costs charged to the contract and, therefore, create a liability to the funding source. Liabilities resulting from these audits, if any, will be recorded in the period in which the amount of the liability is ascertained.

Grants, bequests, and endowments require the fulfillment of certain conditions as set forth in the instrument of grant. Failure to fulfill the conditions, or in the case of endowments, failure to continue to fulfill them, could result in the return of the funds to grantors. Although that is a possibility, the Museum's Board deems the contingency remote, since by accepting the gifts and their terms, it has accommodated the objectives of the provisions of the gift.

Page 21

NOTE 20 - SUBSEQUENT EVENTS

Deaccessioning and Art sale

In 2015, the Berkshire Museum Board of Trustees and leadership staff began a master planning process designed to outline a strategy to address the Museum's programmatic, financial, demographic, and competitive challenges and ensure that the organization is sustainable and relevant for its current and future audiences.

The Museum announced the results of the Master Plan as its New Vision in July 2017. The announcement included the fact that the Museum had removed (deaccessioned) 40 art works from its collection, and intended to sell the works at auction and use the proceeds, coupled with additional fundraising, to establish a sufficient endowment and make improvements in its facilities and visitor experience.

Within weeks of the announcement, some community members voiced opposition to the sale, and the Massachusetts Attorney General's Office (AGO) began an investigation of the Museum's planning process. In October 2017, lawsuits were filed by two groups of private parties opposed to selling works from the Museum's collection. The AGO, citing its need to continue its investigation, joined the lawsuit.

In February 2018, following the conclusion of the AGO's investigation, the AGO and the Museum announced a resolution of the matter under which the Museum would be permitted to go forward with the sale of certain works, subject to agreed limitations and conditions, if approved by the Massachusetts Supreme Judicial Court (SJC).

The Museum, with the AGO's support, petitioned the SJC for equitable relief authorizing the Museum to proceed with a sale subject to the agreed limitations and conditions. In April 2018, the SJC granted the Museum's petition and entered judgment allowing the Museum to sell the deaccessioned artworks subject to the agreed limitations and conditions.

On April 10, 2018, the Museum announced its intention to pursue the sale of 14 works of art in conformance with the SJC's judgment.

The Museum has sold 13 works to date, and expects to receive net proceeds of $47 million after deducting legal fees and other costs incurred in connection with the de-accession.

Line of Credit

incurred in connection with the de-accession. Line of Credit The Organization paid off its line of

The Organization paid off its line of credit (Note 6) balance of $1,852,426 in April 2018.