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HomeMy WebLinkAboutJefferson Land Trust Sponsor Information 2022 JEFFERSON LAND TRUST ORGANIZATIONAL CHART ➢ BOARD OF DIRECTORS ➢ RICHARD TUCKER - Executive Director ➢ SARAH SPAETH- Director of Conservation and Strategic Partnerships ➢ ERIK KINGFISHER- Stewardship Director CARRIE CLENDANIEL- Preserve Manager VACANT – Stewardship Assistant ➢ KATE GODMAN- Director of Philanthropy SARAH ZABLOCKI-AXLING- Development Manager ELOISE STEERE – Development & Administrative Assistant RIC BREWER- Community Relations & Events Manager STEPHANIE WIEGAND- Communications Manager LILLY SCHNEIDER– Communications Coordinator ➢ PAULA McNEES- Finance Manager ➢ BLAISE SULLIVAN- Conservation & Stewardship Coordinator (Matrixed to Conservation and Stewardship) ➢ CRISTINA VILLALOBOS – Administrative & Preserve Assistant (Matrixed to Stewardship) Jefferson Land Trust Board of Directors 2022 Brian Rogers Board President Chancellor of University of Alaska Fairbanks, retired System’s Finance Vice President, retired Nan Evans Vice President City of Port Townsend Planning Commission The Nature Conservancy, retired Lucas Hart Vice President Executive Director Northwest Straits Commission Craig Britton Treasurer General Manager for Midpeninsula Regional Open Space District, retired Historic Preservation Committee, City of Port Townsend Sherry Moller Secretary Plan Manager Washington FAIR Plan David Brownell Executive Director North Olympic History Center Barry Mitzman Reporter, retired Strategic communications director, retired Tom Sanford Executive Director North Olympic Land Trust Marcia Schwendiman Health policy analyst, retired Rick York Botanist and Biologist, retired Ed Thompson Attorney and land conservation professional, retired Julie Lockhart Educator and nonprofit professional, retired Tim Lawson Former director of Port Townsend School of Woodworking JEFFERSON LAND TRUST 2022 OPERATING BUDGET INCOME Restricted Funds Federal, State & County Grants 82,685 Foundation Grants 80,000 Donor Restricted 315,250 Investment 28,000 Operations Income Annual Contributions 305,400 Special Events 200,000 Fee for Service 132,000 Investment Income - Other/Release from Restriction 658,205 Foundation Grants/Unrestricted 23,480 Total Income 1,825,020 EXPENSE Direct Program 76,675 Acquisition & Conveyance 394,500 Land/Easement Holding 109,700 Professional Services 68,430 General & Administrative 1,152,322 Total Expense 1,801,627 Net Income 23,393 JEFFERSON LAND TRUST AND SUBSIDIARY Consolidated Financial Statements For the Years Ended December 31, 2020 and 2019 TABLE OF CONTENTS Independent Auditor’s Report .......................................................................................................... 1 Consolidated Financial Statements: Consolidated Statement of Financial Position ...................................................................... 3 Consolidated Statement of Activities and Changes in Net Assets-2020 .............................. 5 Consolidated Statement of Activities and Changes in Net Assets-2019 .............................. 6 Consolidated Statement of Functional Expenses-2020 ......................................................... 7 Consolidated Statement of Functional Expenses-2019 ......................................................... 8 Consolidated Statement of Cash Flows ................................................................................ 9 Notes to the Consolidated Financial Statements ................................................................... 11 1 MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND WASHINGTON SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS Independent Auditor’s Report To the Board of Directors Jefferson Land Trust & Subsidiary Port Townsend, WA Report on the Financial Statements We have audited the accompanying consolidated financial statements of Jefferson Land Trust and Subsidiary (collectively, JLT, a nonprofit organization), which comprise the consolidated statement of financial position as of December 31, 2020 and 2019, and the related consolidated statements of activities and changes in net assets, functional expenses, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for 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. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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 auditor’s 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the JLT as of December 31, 2020 and 2019, and changes in net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 2 Aiken & Sanders, Inc., PS Certified Public Accountants & Consultants August 17, 2021 Montesano, WA Jefferson Land Trust and Subsidiary A Washington Not For Profit Organization Consolidated Statement of Financial Position As of December 31, 2020 and December 31, 2019 Assets 2020 2019 Current Assets: Cash and cash equivalents 1,021,656$ 652,279$ Accounts receivable 2,991 43,746 Current pledges receivable 96,431 128,500 Note receivable-current portion 5,650 5,148 Prepaid expenses - 5,425 Total Current Assets 1,126,728 835,098 Land and Conservation Easements: Habitat land 5,700,364 5,380,364 Working land 97,728 97,728 Open space land 332,761 332,761 Conservation easements 66 63 Total Land and Conservation Easements 6,130,919 5,810,916 Fixed Assets: Furniture, equipment, and improvements 97,146 87,009 Less: Accumulated depreciation (68,497) (60,668) Fixed assets, net 28,649 26,341 Other Assets: Long term pledges receivable 18,949 15,422 Long term note receivable 41,577 44,159 Land hold fee-net 24,999 33,332 Investments 926,253 962,669 Total Other Assets 1,011,778 1,055,582 Total Assets 8,298,074$ 7,727,937$ The accompanying notes are an integral part of these financial statements 3 Jefferson Land Trust and Subsidiary A Washington Not For Profit Organization Consolidated Statement of Financial Position As of December 31, 2020 and December 31, 2019 Liabilities & Net Assets 2020 2019 Current Liabilities: Accounts payable 17,289$ 9,849$ Accrued liabilities and deferred revenue 83,864 47,916 Total Current Liabilities 101,153 57,765 Long-Term Liabilities: Note payable 119,740 175,000 Total Liabilities 220,893 232,765 Net Assets: Without donor restrictions Undesignated 430,554 271,776 Board designated 6,294,385 5,902,649 6,724,939 6,174,425 With donor restrictions 1,352,242 1,320,747 Total Net Assets 8,077,181 7,495,172 Total Liabilities & Net Assets 8,298,074$ 7,727,937$ The accompanying notes are an integral part of these financial statements 4 Jefferson Land Trust and Subsidiary A Washington Not For Profit Organization Consolidated Statement of Activities and Changes in Net Assets For the Year Ended December 31, 2020 Without Donor With Donor Total Restrictions Restrictions 2020 Support and Revenues: Gifts and contributions 686,232$ 227,560$ 913,792$ Grants and contracts 1,315,167 - 1,315,167 Special events income, net of expenses of $9,782 26,116 - 26,116 Net investment return 89,846 594 90,440 Net assets released from restriction 196,659 (196,659) - Total Support and Revenue 2,314,020 31,495 2,345,515 Expenses: Program services 1,233,983 - 1,233,983 Management and general 205,689 - 205,689 Fundraising 323,834 - 323,834 Total Expenses 1,763,506 - 1,763,506 Change in Net Assets 550,514 31,495 582,009 Net Assets, Beginning of Year 6,174,425 1,320,747 7,495,172 Net Assets, End of Year 6,724,939$ 1,352,242$ 8,077,181$ The accompanying notes are an integral part of these financial statements 5 Jefferson Land Trust and Subsidiary A Washington Not For Profit Organization Consolidated Statement of Activities and Changes in Net Assets For the Year Ended December 31, 2019 Without Donor With Donor Total Restrictions Restrictions 2019 Support and Revenues: Gifts and contributions 950,094$ 432,938$ 1,383,032$ Fair value of easement acquisitions 490,000 - 490,000 Grants and contracts 3,740,199 - 3,740,199 Special events income, net of expenses of $27,297 29,724 - 29,724 Net investment return 130,665 1,132 131,797 Net assets released from restriction 91,568 (91,568) - Total Support and Revenue 5,432,250 342,502 5,774,752 Expenses: Program services 4,551,652 - 4,551,652 Management and general 190,391 - 190,391 Fundraising 221,351 - 221,351 Total Expenses 4,963,394 - 4,963,394 Change in Net Assets 468,856 342,502 811,358 Net Assets, Beginning of Year 5,705,569 978,245 6,683,814 Net Assets, End of Year 6,174,425$ 1,320,747$ 7,495,172$ The accompanying notes are an integral part of these financial statements 6 Jefferson Land Trust and SubsidiaryA Washington Not For Profit OrganizationConsolidated Statement of Functional Expenses For the Year Ended December 31, 2020Management Fund- Total Programand GeneralRaising2020Salaries 271,807$ 125,383$ 186,789$ 583,979$ Payroll taxes 22,341 10,306 15,353 48,000 Employee benefits 36,806 16,979 25,293 79,078 Value of conservation easements written down 621,997 - - 621,997 Professional fees 117,181 6,898 24,503 148,582 Land and stewardship expenses 78,044 - - 78,044 Rent 27,145 4,219 1,623 32,987 Public awareness 2,145 40 3,171 5,356 Dues and subscriptions 1,819 17,664 8,706 28,189 Insurance 7,117 3,283 4,891 15,291 Postage and printing 436 159 17,262 17,857 Other 15,444 1,121 17,757 34,322 Interest expense - 3,507 - 3,507 Travel and seminars 5,176 2,095 1,562 8,833 Office supplies 19,276 1,454 8,151 28,881 Telephone 123 57 85 265 Depreciation and amortization 1,800 6,029 - 7,829 Utilities 4,813 6,022 144 10,979 Web design and maintenance 352 - 100 452 Bank fees 161 473 8,444 9,078 Total Expenses 1,233,983$ 205,689$ 323,834$ 1,763,506$ The accompanying notes are an integral part of these financial statements.7 Jefferson Land Trust and SubsidiaryA Washington Not For Profit OrganizationConsolidated Statement of Functional Expenses For the Year Ended December 31, 2019Management Fund- Total Programand GeneralRaising2019Salaries 241,915$ 107,553$ 139,408$ 488,876$ Payroll taxes 20,782 9,144 11,638 41,564 Employee benefits 35,232 15,502 19,730 70,464 Value of conservation easements written down 3,894,997 - - 3,894,997 Professional fees 189,103 18,477 956 208,536 Land and stewardship expenses 76,361 - - 76,361 Rent 23,636 4,025 13,596 41,257 Public awareness 1,385 1,091 12,340 14,816 Dues and subscriptions 4,430 6,359 487 11,276 Insurance 19,498 3,174 - 22,672 Postage and printing 5,602 101 10,304 16,007 Other 11,082 8,423 7,535 27,040 Travel and seminars 10,461 3,383 2,785 16,629 Office supplies 4,485 2,944 2,276 9,705 Telephone 253 19 45 317 Depreciation and amortization 1,800 6,306 - 8,106 Utilities 5,657 921 - 6,578 Web design and maintenance 1,075 75 75 1,225 Bank fees 3,898 2,894 176 6,968 Total Expenses 4,551,652$ 190,391$ 221,351$ 4,963,394$ The accompanying notes are an integral part of these financial statements8 2020 2019 Cash flows from operating activities: Cash received from grantors, donors and customers 2,348,926$ 4,881,091$ Cash paid to suppliers and employees (1,704,808) (4,475,617) Cash paid for interest (3,507) - Cash received from interest 7,130 4,975 Net cash provided (used) by operating activities 647,741 410,449 Cash flows from investing activities: Cash paid for investments (151,728) (125,643) Cash received from investments 249,544 15,826 Proceeds from notes receivable 2,080 4,828 Cash paid for land (323,000) (685) Net cash provided (used) by investing activities (223,104) (105,674) Cash flows from financing activities: Cash paid to loans (175,000) - Cash received from loans 119,740 - Net cash provided (used) by financing activities (55,260) - Net increase (decrease) in cash & cash equivalents 369,377 304,775 Cash & cash equivalents at beginning of year 652,279 347,504 Cash & cash equivalents at end of year 1,021,656$ 652,279$ The accompanying notes are an integral part of these financial statements Jefferson Land Trust and Subsidiary A Washington Not For Profit Organization Consolidated Statement of Cash Flows 9 For the Years Ended December 31, 2020 and December 31, 2019 2020 2019 Reconciliation of increase (decrease) in net assets to net cash provided (used) by operating activities: Increase (decrease) in net assets: 582,009$ 811,358$ Adjustments: Depreciation and amortization 7,829 8,380 Land hold fee amortization (adjustment) 8,331 8,331 Realized and unrealized losses (gains) on investments (68,538) (115,971) Donated land - (185,000) Changes in assets and liabilities: (Increase) decrease in accounts receivable 40,755 (33,249) (Increase) decrease in pledges receivable 28,542 (87,212) (Increase) decrease in prepaid expense 5,425 194 Increase (decrease) in accounts payable 7,440 7,064 Increase (decrease) in accrued expenses and deferred revenue 35,948 (3,446) Net cash provided (used) by operating activities 647,741$ 410,449$ The accompanying notes are an integral part of these financial statements Jefferson Land Trust and Subsidiary A Washington Not For Profit Organization Consolidated Statement of Cash Flows For the Years Ended December 31, 2020 and December 31, 2019 10 Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 11 A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Organization-- Jefferson Land Trust (The Land Trust) is a Washington not-for-profit corporation formed on April 7, 1989. The Land Trust’s purpose is to acquire, preserve and manage open space lands and easements for land conservation purposes benefitting the public. The Land Trust also provides information and materials to the public on land conservation issues. The Land Trust serves Jefferson County on the Olympic Peninsula in Washington State. The Land Trust has been accredited by the national Land Trust Alliance since August 5, 2009. On September 5, 2007, JLT Resources, LLC was formed with the Land Trust as its only member. JLT Resources, LLC was formed for the purpose of purchasing and holding land for conservation purposes. Principles of Consolidation-- These financial statements consolidate the statements of Jefferson Land Trust and JLT Resources, LLC (collectively, “JLT”). Inter-organization balances and transactions have been eliminated in consolidation. Basis of accounting-- The consolidated financial statements of JLT have been prepared on the accrual basis of accounting. Basis of presentation— JLT follows accounting prescribed by the Financial Accounting Standards Board in its Accounting Standards Codification (ASC) 958 Not-for Profit Entities. Under ASC 958, JLT is required to report information regarding its financial position and activities according to two classes of net assets: with donor restrictions, and without donor restrictions. With Donor Restrictions: Net assets that result from contributions whose use by JLT is restricted by donor imposed stipulations that may expire with the passage of time or can be fulfilled or otherwise removed by actions of JLT. Without Donor Restrictions: Net assets that are not restricted by donor stipulation. Gifts of goods and equipment are reported as without donor restrictions unless explicit donor stipulations specify how the donated assets must be used. Property and Fixed Assets-- Improvements, furniture and equipment are capitalized at cost if purchased, or, if donated, at the approximate fair value at the date of donation. When retired or otherwise disposed of, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference, less any amount realized from disposition, is reflected in earnings. Maintenance and repairs are charged to expense as incurred. Costs of significant improvements are capitalized. JLT provides for depreciation using the straight-line method over the estimated useful lives of the assets of five to ten years. JLT records acquisitions of land at cost if purchased. Land acquired through donation is recorded at fair value, with fair values generally based on independent professional appraisals. These assets fall into two primary categories: Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 12 Conservation Lands- Real property with significant ecological value for habitat, open space, or working lands. Stewardship programs of JLT manage these properties to protect the natural biological diversity of the property. JLT manages its working timberland as a Forest Stewardship Council-Certified, managed forest. Conservation Easements- Voluntary legal agreements between a landowner and a land trust or government agency to permanently protect the identified natural features and conservation values of the property. These easements may be sold or transferred to others so long as the assignee agrees to carry out, in perpetuity, the conservation purposes intended by the original grantor. Conservation easements owned by JLT protect habitat, open space and working lands, such as family farms, through its stewardship programs. Easements acquired represent numerous restrictions over the use and development of land not owned by JLT. Since the benefits of such easements accrue to the public upon acquisition, the fair market value of easements acquired is shown in the year of acquisition as an addition to net assets to record the donation of the easement, and unless conveyed to a public agency for consideration, shown as a reduction in net assets to record the value of the public’s benefit and to recognize that these easements have no marketable value once severed from the land and held by JLT. Easements held by JLT are carried on the consolidated statement of financial position at $1 each for tracking and accounting purposes. A total of $66 is recorded in the financial records for the nominal value of easements acquired. JLT has preserved a total of 4,235 acres of land with 66 current easements. The original acquisition cost of the easements, expensed when acquired, was in excess of $18,000,000. Portions of two easements with a value of $490,000 were donated to JLT during 2019. Accordingly, $490,000 of contribution revenue and $490,000 of related write down expense have been reported on the consolidated statements of activities for the year ended December 31, 2019. Estimates-- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Expense Allocation-- The costs of providing various programs and other activities have been summarized on a functional basis in the consolidated statement of functional expense. Program expenses represent expenses incurred to fulfill JLT’s exempt purposes. Management and general expenses support that exempt purpose while fundraising expenses are incurred to raise resources to carry out program activities. Expenses are recorded, when appropriate, to the function receiving direct benefit. When expenses benefit more than one function, an allocation is made based on relative benefits provided to each function. Cash and Cash Equivalents-- For reporting purposes, JLT considers all unrestricted highly liquid investments with a purchased maturity of three months or less to be cash and cash equivalents. Concentrations-- JLT maintains its cash in bank deposit accounts with three financial institutions. JLT’s cash balances may, at times, exceed federally insured limits. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 13 At December 31, 2020, three donor’s pledges represented approximately 52% of pledges receivable. At December 31, 2019, two donor’s pledge represented approximately 83% of pledges receivable. Investments-- Investments in marketable securities with readily determinable fair values are valued at their fair values in the consolidated statement of financial position. Certificates of deposit are carried at cost plus accrued interest in the consolidated statement of financial position. Unrealized gains and losses are included in the change in net assts. Grants and Contracts-- JLT receives grants and contracts from federal, state, and local agencies, as well as from private organizations, to be used for specific programs or land purchases. The excess of grants receivable over reimbursable expenditures to-date is recorded as deferred revenue. Federal Income Taxes-- The Internal Revenue Service has determined Jefferson Land Trust and JLT Resources, LLC (a disregarded entity) to be exempt from federal income taxes under Internal Revenue Code Section 501(c)(3).Contributions to JLT are deductible as allowed under IRC Section 170(b)(I)(A)(vi). During the year ended December 31, 2012, the Land Trust elected the provisions of Section 501(h), relating to expenditures to influence legislation. Contributions-- Contributions are recognized when received or when a donor makes an unconditional promise to give to JLT. Contributions that are restricted by the donor are reported as increases in net assets without donor restrictions if the restrictions expire in the year in which the contributions are recognized. All other donor restricted contributions are reported as increases in net assets with donor restrictions. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions. Unconditional promises to give (pledges receivable) are recognized as revenues in the period the pledge is received. Long term pledges (collection expected in greater than one year) are discounted to the net present value of future cash flows. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promise becomes unconditional. Subsequent Events-- On March 11, 2020, the World Health Organization officially declared COVID-19, the disease caused by the novel coronavirus, a pandemic. COVID-19 has required JLT to make adjustments to operating practice and delivery of services. JLT has continued its work. Management is closely monitoring the evolution of this pandemic, including how it may affect the economy and the general population.. JLT has evaluated subsequent events through August 17, 2021, the date on which the consolidated financial statements were available to be issued. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 14 B. LIQUIDITY AND AVAILABILITY OF FINANCIAL ASSETS: JLT, although it expects to receive current support to fund operations for 2021 and later years, has $290,844 and $135,556 of financial assets available within one year of the statement of financial position dates on December 31, 2020 and 2019, respectively, to meet cash needs for general operating expenditures. JLT also has $423,194 and $351,461, of board designated assets as of December 31, 2020 and 2019, respectively, that can be reallocated for general expenditures if needed. Financial assets available within one year consist of the following: 2020 2019 Financial assets at year end $ 2,107,857 $ 1,851,923 Donor restricted to purpose (1,333,293) (1,305,325) Long term (60,526) (59,581) Board designations (423,194) (351,461) Financial assets available to meet cash needs within one year $ 290,844 $ 135,556 C. NET ASSETS COMPOSITION: JLT’s net assets with donor restrictions consisted of the following at December 31, 2020 and 2019: 2020 2019 Purpose Restriction: For stewardship of Bullis Forest Preserve $ 53,750 $ 64,805 Fite 44,639 47,929 Campaign Readiness Fund 108,289 118,578 Stewardship funding 766,304 699,311 Cross Foundation 53,457 100,000 Gateway/Shorts Forest Campaign 2,084 29,189 Other program restrictions 129,878 36,221 1,158,401 1,096,033 Time Restriction: Outstanding pledges 125,770 157,237 Permanent Restriction Endowment Fund 68,071 67,477 Total Net Assets With Donor Restrictions $ 1,352,242 $ 1,320,747 Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 15 Net assets without donor restrictions consisted of the following at December 31, 2020 and 2019: 2020 2019 Designated: Quimper Wildlife Corridor $ 473,103 $ 473,103 Chimacum Creek 388,347 388,347 Duckabush Riparian Forest 492,800 492,800 Duckabush Hacheney 90,000 - Donovan Creek 270,000 270,000 Duckabush Wetlands & Oxbow 530,000 530,000 Bulis Forest Preserve 125,240 125,240 Upper Snow Creek Forest 340,000 340,000 Snow Creek Uncas Preserve 260,000 260,000 Chimacum Commons 90,850 90,850 Snow Creek Estuary 86,000 86,000 Snow Creek-Hopkins 95,000 - Silver Reach 125,000 125,000 Gateway 85,000 85,000 Kilham Corner 71,202 71,202 Fite & Fissler 182,226 182,226 Valley View 1,710,000 1,710,000 Discovery Bay 311,358 176,358 Longmire 145,000 145,000 Stewardship Fund 204,411 124,307 CP Operations Reserve 9,653 5,522 Karen Mckee Board Fund 114,283 124,283 Operations Reserve 94,846 97,348 Conservation easements 66 63 Total Designated 6,294,385 5,902,649 Undesignated 430,554 271,776 Total Net Assets Without Donor Restrictions: $ 6,724,939 $ 6,174,425 Net assets of $165,192 and $66,705, respectively, were released from donor restrictions by incurring expenses satisfying the purpose restriction specified by the donor, and net assets of $31,467 and $24,863, respectively, were released due to the expiration of time restrictions for the years ended December 31, 2020 and 2019. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 16 D. PROMISSORY NOTE: JLT was subject to a promissory note dated December 27, 2018, in connection with the acquisition of the Mraz Discovery Bay parcel. The note was secured by the acquired land. The original note balance of $175,000 bore interest at a rate of 2% per year. The note required a balloon payment of principal plus accrued interest on June 28, 2021. JLT paid the note in full during 2020. E. ENDOWMENTS: The JLT endowment consists of one fund established to support general operations. As required by U.S. GAAP, net asset associated with endowment funds are classified and reported based on the existence or absence of donor- imposed restrictions. Nature of Endowments and Interpretation of Relevant Laws- JLT’s Board of Directors has reviewed the Washington State Prudent Management of Institutional Funds Act (PMIFA) and, having considered its rights and obligations thereunder, has determined that it is desirable to preserve, on a long-term basis, 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 determination, JLT classifies as nets assets with donor restrictions (a) the original value of gifts donated to the permanent endowment, and (b) the original value of subsequent gifts 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. The remaining portion of the donor-restricted endowment fund that is not classified in net assets with permanent donor restrictions is classified as net assets with donor restrictions until those amounts are appropriated for expenditure by JLT in a manner consistent with the standard of prudence prescribed by PMIFA. However, JLT has informed donors of its spending policy which states that no distributions will be made during the first five years of the fund’s existence or until it reaches a threshold balance of $400,000. Since these milestones have not yet been reached, JLT adds all amounts earned to the permanently restricted balance. In accordance with PMIFA, JLT 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 JLT, and (7) JLT’s investment policies. Endowment net assets, all permanently restricted, totaled $68,071 and $67,477, respectively, at December 31, 2020 and 2019. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 17 Changes in endowment net assets for the year ended December 31, 2020 are as follows: Temporary Permanent Donor Restrictions Donor Restrictions Total Endowment Net Assets 1/1/2020 $ - $ 67,477 67,477 Contributions - - - Investment Income - 594 594 Net Appreciation (Depreciation) - - - Endowment Net Assets 12/31/20 $ - $ 68,071 $ 68,071 Changes in endowment net assets for the year ended December 31, 2019 are as follows: Temporary Permanent Donor Restrictions Donor Restrictions Total Endowment Net Assets 1/1/2019 $ - $66,345 $ 66,345 Contributions - - - Investment Income - 1,132 1,132 Net Appreciation (Depreciation) - - - Endowment Net Assets 12/31/19 $ - $67,477 $ 67,477 Funds with Deficiencies- From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or PMIFA requires JLT to retain as a fund of perpetual duration. In accordance with U.S. GAAP, deficiencies of this nature are reported in net assets with donor restrictions. There were no such deficiencies as of December 31, 2020 or 2019. Return Objectives and Risk Parameters- JLT has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that JLT must hold in perpetuity or for donor-specified periods as well as board-designated funds. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of a custom Policy Index made up of various indices. The composition of the custom Policy Index is based upon the strategic asset allocation of the investment portfolio and assumes a moderate level of investment risk. The investment objectives of the Operations Endowment Fund include maintenance of principal, timely liquidity, and preservation of purchasing power over time. Strategies Employed for Achieving Objectives- To satisfy its long-term rate-of-return objective, JLT notes that for funds earmarked for capital appreciation, appropriate investments include intermediate term bond funds/ETF’s, equity mutual funds, equity ETF’s, and unconstrained bond funds. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 18 Spending Policy and How the Investment Objectives Relate to the Spending Policy- JLT’s spending policy intends that no distributions shall be made from the Operations Endowment Fund for the first five years of its existence or until it reaches a threshold balance of $400,000, whichever shall first occur. After a five-year period which ended in December of 2014, or after achieving the $400,000 threshold, distributions shall be made on an annual basis as determined by the Board. Regular disbursements should be limited to a maximum of 5% of the value of the portfolio at the beginning of each fiscal year, or one-half of the income generated by the fund for the most recent fiscal year, whichever is less. At no time will the distribution of the spendable amount result in the invasion of the original amounts donated. F. ACCOUNTS RECEIVABLE: Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Historically, bad debts have been immaterial. During 2020 and 2019, there were bad debts of $0 and $0, respectively. As of December 31, 2020, management estimated that all accounts receivable were collectible. JLT had no material amounts past due at December 31, 2020. G. PLEDGES RECEIVABLE: JLT received promises to give from a number of donors in 2020 and in years prior to 2020. JLT has provided an allowance for uncollectible amounts based on its assessment of the current status of individual pledges and has discounted pledges to current value using a rate of .15%. Pledges receivable at December 31, 2020 are to be received as follows: Less than one year $ 96,431 Two to five years 25,320 Thereafter - 121,751 Less discount to present value (171) Less allowance for uncollectible (6,200) $ 115,380 JLT has implemented a new development strategy that will result in a significant reduction of pledge receivables over the next 5 years. This planned reduction is in response to several changes in JLT’s constituency – an increase in foundation grants, an increase in an operating reserve that will provide emergency working cash equivalent to 6 months of operational expenses, and a desire by our donors to not request commitments that are relatively inflexible. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 19 H. NOTE RECEIVABLE: On February 15, 2008, JLT granted a loan to an individual in relation to one of the pieces of conservation land owned by JLT. A promissory noted was received in exchange. The promissory note is for the amount of $93,750 and is to be paid in monthly installments of approximately $600. The note matures on January 15, 2028 with an annual interest rate of 5%. Future expected amounts to be received at December 31, 2020 are as follows: 2021 5,650 2022 5,939 2023 6,243 2024 6,562 2025 6,898 Thereafter 15,935 $ 47,227 I. FURNITURE, EQUIPMENT, AND IMPROVEMENTS: Furniture, Equipment, and Improvements consist of the following at December 31, 2020 and 2019: 2020 2019 Furniture & Equipment, and Software $ 57,157 $ 57,157 Accumulated Depreciation and Amortization (50,586) (45,742) 6,571 11,415 Leasehold Improvements 39,989 29,852 Accumulated Depreciation (17,911) (14,926) 22,078 14,926 Fixed Assets-Net $ 28,649 $ 26,341 Accumulated Depreciation and Amortization was $68,497 and $60,668 at December 31, 2020 and 2019, respectively. J. ECONOMIC DEPENDENCY: For 2020 and 2019, grant funding was primarily provided by the State of Washington Recreation and Conservation Office, State of Washington Department of Commerce, and Jefferson County. A reduction in this level of support, if it were to occur, could have a significant impact on JLT’s operations. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 20 K. RETIREMENT PLAN: JLT maintains a Simplified Employee Pension – Individual Retirement Accounts Contribution Benefit Plan (“the Plan”). Eligible employees may join the Plan after one year of service. There were employer contributions of $14,576 and $12,372, respectively, for 2020 or 2019. L. LAND AND CONSERVATION EASEMENTS: Land and conservation easements at December 31 are summarized as follows: 2020 2019 Quimper Wildlife Corridor $ 476,101 $ 476,101 Chimacum Creek 385,348 385,348 Duckabush Riparian Forest 492,800 492,800 Duckabush-Hacheney 90,000 - Donovan Creek 205,000 205,000 Duckabush Wetlands & Oxbow 530,000 530,000 Bulis Forest Preserve 125,240 125,240 Upper Snow Creek Forest 340,000 340,000 Snow Creek Uncas Preserve 325,000 325,000 Chimacum Commons 90,850 90,850 Snow Creek Estuary 86,000 86,000 Silver Reach 125,000 125,000 Gateway 85,000 85,000 Kilham Corner 38,930 38,930 Valley View 2,002,000 2,002,000 Discovery Bay 418,583 283,583 Fissler 75,000 75,000 Longmire 145,000 145,000 Snow Creek-Hopkins 95,000 - Conservation easements 66 63 Total Unrestricted Net Assets $ 6,130,919 $ 5,810,916 M. LEASE AGREEMENTS: On June 21, 2012, JLT entered into an operating lease as lessee for its administrative office in Port Townsend, Washington. The lease expired in June of 2014 and is now on a month to month basis. The agreement calls for monthly payments of $2,235 plus utilities, which includes an additional adjacent space for 2020. JLT also rents a storage unit on a month to month basis. Rent expense totaled $32,455 and $26,221, for the years ended December 31, 2020 and 2019, respectively. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 21 N. INCOME TAX & UNCERTAIN TAX POSITIONS: Jefferson Land Trust and JLT Resources, LLC (a disregarded entity) are tax exempt non-profit organizations under the Internal Revenue Code Section 501(c)(3) and are not classified as a private foundation. Accordingly, the financial statements do not include any provision for income taxes. JLT files income tax returns in the U.S. federal jurisdiction. The Trust is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2017. Currently, there is no examination or pending examination with the Internal Revenue Service (IRS) or any other state or federal taxing authorities. JLT adopted the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes, on January 1, 2009. As of December 31, 2020, there are no tax positions for which the deductibility is certain but for which there is uncertainty regarding the timing of such deductibility. O. INVESTMENTS AND FAIR VALUE MEASUREMENTS: JLT follows U.S. GAAP which establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 Measurements) and the lowest priority to unobservable inputs (Level 3 Measurements). The three levels of the fair value hierarchy under ASC 958 are described as follows: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Trust has the ability to access. Level 2: Inputs to valuation methodology include: Quoted prices for similar assets or liabilities in active markets. Quoted prices for identical or similar assets or liabilities in inactive markets. Inputs other than quoted prices that are observable for the asset or liability. Inputs that are principally from or corroborated by observable market data by correlation or other means. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2020. Stocks: Valued at quoted market prices in active markets for identical assets. Mutual Funds: Valued at quoted market prices in active markets, which represent the net asset value (NAV) of shares held by the JLT at year end. Certificates of Deposit: Valued at original investment plus received and accrued interest. Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 22 The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Trust believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table sets forth by level, within the fair value hierarchy, JLT’s assets at fair value as of December 31, 2020: Assets at Fair Value as of December 31, 2020 Level 1 Level 2 Level 3 Total Mutual funds $ 760,592 $ - $ - $ 760,592 Total Assets at Fair Value: $ 760,592 $ - $ - $ 760,592 Certificates of deposit, held at cost plus accrued interest 165,661 Total Investments $ 926,253 The following table sets forth by level, within the fair value hierarchy, JLT’s assets at fair value as of December 31, 2019: Assets at Fair Value as of December 31, 2019 Level 1 Level 2 Level 3 Total Mutual funds $ 671,978 $ - $ - $ 671,978 Total Assets at Fair Value: $ 671,978 $ - $ - $ 671,978 Certificates of deposit, held at cost plus accrued interest 290,691 Total Investments $ 962,669 Jefferson Land Trust and Subsidiary Notes to Consolidated Financial Statements December 31, 2020 and 2019 23 Investment return for the years ended December 31 consisted of the following: 2020 2019 Interest & dividend income $ 21,902 $ 15,826 Realized/unrealized (loss) gain 68,538 115,971 Total $ 90,440 $ 131,797 P. LAND PURCHASE AND HOLD FEE: JLT signed a purchase and sale agreement with a third party during 2015 for the purchase of approximately 850 acres of forest land in Jefferson County. The terms of the agreement, dated March 17, 2015, required JLT to purchase the property for an amount not to exceed the appraised fair market value of the property. The terms of the agreement required the payment of a $100,000 non-refundable hold fee to the third party to allow time for the purchase process to be completed and for JLT to raise the necessary funding to complete the purchase. The hold fee agreement was to expire on March 17, 2019. During 2016, JLT signed an amended agreement that resulted in the refund of $25,000 of the $100,000 hold fee and extended the agreement to nine year from the original five years, now expiring in 2023. JLT adjusted amortization of the hold fee to the new life of the agreement which resulted in an increase to the hold fee asset of $8,331 in 2016. Amortization expense of $8,331 was recognized during 2020 and 2019. Q. PAYCHECK PROTECTION PROGRAM LOAN: In April of 2020, JLT received a loan of $119,740 from Kitsap Bank. The loan was part of the Paycheck Protection Program, which is a United States Government program intended to mitigate the economic impact of the Covid-19 Pandemic. The loan was guaranteed by the United States Small Business Administration and carried a stated interest rate of 1%. The loan term was two years from inception, with interest payments starting on the 7th month following origination. However, the loan was eligible for forgiveness if the loan proceeds were used to subsidize payroll and certain occupancy costs of JLT. JLT used the loan proceeds for eligible expenses during 2020 and will recognize grant income on loan forgiveness, which occurred in 2021.