Collective Impact in New Hanover County 6-30-2022 - FS
COLLECTIVE IMPACT IN NEW HANOVER
COUNTY, INC.
COMBINED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Table of Contents
Page No.
Independent Auditor's Report ……………………………………………………………1
Financial Statements
Combined Statement of Financial Position …………………………………………3
Combined Statement of Activities and Changes in Net Assets ……………………4
Combined Statement of Cash Flows ………………………………………………5
Notes to Financial Statements ………………………………………………………6
Supplemental Combining Information
Combining Statement of Financial Position ………………………………………15
Combining Statement of Activities and Changes in Net Assets ……………………16
Combining Statement of Cash Flows ………………………………………………17
Independent Auditor's Report
To the Board of Directors
Collective Impact in New Hanover County, Inc.
Wilmington, North Carolina
Opinion
We have audited the accompanying combined financial statements of the Collective Impact in New
Hanover County,Inc.(the "Organization") and affiliates,which comprise the combined statement of
financial position as of June 30, 2022,and the related combined statements of activities and changes in
net assets, and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion,the accompanying combined financial statements referred to above present fairly,in all
material respects,the financial position of the Collective Impact in New Hanover County,Inc.as of
June 30,2022,and the changes in its net assets,functional expenses and its cash flows for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America.Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of Financial Statements section of our report.We are required to be
independent of the Organization, and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements relating to our audits.We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
Responsibility of Management for the Combined Financial Statements
Management is responsible for the preparation and fair presentation of these combined financial
statements in accordance with accounting principles generally accepted in the United States of America,
and for the design,implementation,and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free from material misstatement,whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Organization's ability to
continue as a going concern within one year after the date that the combined financial statements are
available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the combined financial statements as a
whole are free from material misstatement,whether due to fraud or error,and to issue an auditor's report
that includes our opinion.Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards
generally accepted in the United States of America will always detect a material misstatement when it
exists.
Page 1
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the financial statements,whether due to
fraud or error,and design and perform audit procedures responsive to those risks.Such procedures
include examining,on a test basis,evidence regarding the amounts and disclosures in the financial
statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the
effectiveness of the Association's internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management,as well as evaluate the overall presentation of the
financial statements.
•Conclude whether,in our judgment,there are conditions or events,considered in the aggregate,that
raise substantial doubt about the Association's ability to continue as a going concern for a
reasonable period of time.
Raleigh, North Carolina
May 18, 2023
Our audit was conducted for the purpose of forming an opinion on the combined financial statements
as a whole.The accompanying combining statements on pages 15 -17 ("supplementary information"),
which is the responsibility of management,is presented for purposes of additional analysis and is not a
required part of the combined financial statements.The supplementary information was derived from
and relates directly to the underlying accounting and other records used to prepare the combined
financial statements.That information has been subjected to the auditing procedures applied in the
audit of the financial statements and certain additional procedures,including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare
the combined financial statements or to the combined financial statements themselves,and other
additional procedures in accordance with U.S.GAAP.In our opinion,the supplementary information
is fairly stated in all material respects in relation to the combined financial statements as a whole.
Auditor's Responsibilities for the Audit of the Financial Statements (Continued)
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error,as fraud may involve collusion,forgery,intentional omissions,misrepresentations,or the
override of internal control.Misstatements are considered material if there is a substantial likelihood
that,individually or in the aggregate,they would influence the judgment made by a reasonable user
based on the financial statements.
We are required to communicate with those charged with governance regarding,among other matters,
the planned scope and timing of the audit,significant audit findings,and certain internal control related
matters that we identified during the audit.
In performing an audit in accordance with auditing standards generally accepted in the United States of
America, we:
Report on Combining Supplementary Information
Page 2
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Combined Statement of Financial Position
June 30, 2022
Current Assets:
Cash and cash equivalents 2,790,384$
Accounts receivable 5,513
Pledge receivables 37,500
Prepaid expenses 57,482
Receivable, joint venture 6,705
Total current assets 2,897,584
Other assets:
Restricted cash:
Funds held by Property Management Company 31,057
Tenant security deposits held by Property Management Company 75,600
Total restricted cash 106,657
Utility deposits 3,481
Investment in joint venture 4,835
114,973
Property, equipment and software, net of accumulated
depreciation and amortization 15,008,637
Total assets 18,021,194$
Current Liabilities:
Accounts payable and accrued expenses 85,424$
Accrued salaries and wages 26,434
Accrued interest 14,250
Deferred revenue, current 95,652
Refundable advances, grants 341,667
Total current liabilities 563,427
Noncurrent Liabilities:
Tenant security deposits 75,600
Deferred revenue 78,083
Note payables 1,850,000
Total noncurrent liabilities 2,003,683
Total liabilities 2,567,110
Net Assets and Unrestricted Members' Equity:
Without donor restrictions:
Net assets without donor restrictions 836,654
Unrestricted members' equity, non-controlling interest 14,579,930
Total net assets without donor restrictions 15,416,584
With donor restrictions - Collective Impact in New Hanover County 37,500
Total net assets and members' equity 15,454,084
Total liabilities and net assets 18,021,194$
Assets
Liabilities and Net Assets
See Notes to Combined Financial Statements
Page 3
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Combined Statement of Activities and Changes in Net Assets
Year Ended June 30, 2022
Without Donor With Donor
Restrictions Restrictions Total
Revenues
Contributions 317,458$ -$ 317,458$
Service contracts 810,861 - 810,861
Management fees 2,600 - 2,600
Rent income 562,343 - 562,343
Interest income 579 - 579
Equity in net earnings of joint venture (5,165) - (5,165)
Net assets released from restriction 335,000 (335,000) -
Total revenues without donor restrictions 2,023,676 (335,000) 1,688,676
Expenses:
Salaries and benefits 1,121,622 - 1,121,622
Professional services 36,076 - 36,076
Advertising and promotion 16,512 - 16,512
Office expenses 5,204 - 5,204
Information technology 71,295 - 71,295
Occupancy 1,200 - 1,200
Travel and meetings 13,392 - 13,392
Contract services 113,953 - 113,953
Community programs 7,763 - 7,763
Professional development 13,858 - 13,858
Healthy opportunity pilot expenses 30,323 - 30,323
Bank fees 514 - 514
COVID response fees 1,318 - 1,318
Other expenses 10,491 - 10,491
Other administrative expenses 44,491 - 44,491
Operating and maintenance 223,977 - 223,977
Property taxes and insurance 115,310 - 115,310
Depreciation 215,547 - 215,547
Interest expense 25,250 - 25,250
Total expenses 2,068,096 - 2,068,096
Other Income (Expenses):
Gain on sale of asset 15,399 - 15,399
Total other income 15,399 - 15,399
Change in net assets before other changes (29,021) (335,000) (364,021)
Other Changes in Net Assets:
Capital contributions from Class B members unaffiliated 11,100,000 - 11,100,000
Total other changes in net assets 11,100,000 - 11,100,000
Total change in net assets 11,070,979 (335,000) 10,735,979
Net assets - beginning 4,345,605 372,500 4,718,105
Net assets - ending 15,416,584$ 37,500$ 15,454,084$
See Notes to Combined Financial Statements
Page 4
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Combined Statement of Cash Flows
Year Ended June 30, 2022
Cash flows from operating activities:
Change in net assets before other changes (364,021)$
Adjustments to reconcile change in net assets to net cash provided by
operating activities:
Equity in income from joint venture 5,165
Depreciation 215,547
Gain on sale of asset (15,399)
(Increase) decrease in:
Accounts and pledges receivables 376,029
Prepaid expenses (36,165)
Receivable, joint venture (6,705)
Utility deposits 653
Increase (decrease) in:
Accounts payable and accrued expenses 1,872
Accrued salaries and wages 13,848
Accrued interest 14,250
Tenant security deposits 60,965
Deferred revenue 173,735
Refundable advances, grants 341,667
Net cash provided by operating activities 781,441
Cash flows from financing activities:
Capital contributions, non-controlling interest 11,100,000
Proceeds from note payables 1,850,000
Net cash provided by financing activities 12,950,000
Cash flows from investing activities:
Acquisition of property, equipment and software (11,622,017)
Proceeds from sale of property 90,894
Investment in joint venture (10,000)
Net cash used in investing activities (11,541,123)
Increase in cash, cash equivalents, and restricted cash 2,190,318
Cash, cash equivalents, and restricted cash - beginning 706,723
Cash, cash equivalents, and restricted cash - ending 2,897,041$
Reconciliation of cash, cash equivalents, and restricted cash reported on the combined statement
of financial position to cash, cash equivalents, and restricted cash shown above:
Cash and cash equivalents 2,790,384$
Restricted deposits and funded reserves 106,657
Cash and cash equivalents 2,897,041$
Supplemental disclosures of cash flow information:
Cash payments for interest 11,000$
See Notes to Combined Financial Statements
Page 5
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
Organization
Collective Impact in New Hanover County, Inc.
Cape Fear Collective Ventures, LLC
Cape Fear Collective Impact Opportunity 1, LLC
Cape Fear Collective Impact Opportunity 2, LLC
Cape Fear Collective Capital, LLC
Cape Fear Affordable Housing, LLC
Mission Driven Motors, LLC
NOTE 1 -NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The Collective Impact in New Hanover County,Inc.("Cape Fear Collective"or the "Organization")
was organized in North Carolina in 2019 as a nonprofit 501(c)(3)organization.The Organization was
formed to drive equitable systemic change in Southeastern North Carolina by collaborating with
community partners to leverage local assets,illuminate actionable insights,and catalyze innovative
programming.The Organization established the following entities in order to utilize private sector
capital to further the tax-exempt, charitable purpose of the Organization:
Cape Fear Collective Capital,LLC is a North Carolina limited liability company.Cape Fear Collective
is the sole member.
Cape Fear Collective Impact Opportunity 2,LLC is a North Carolina limited liability company
organized for the purpose of investing in the acquisition,rehabilitation,or new construction of
Qualified Housing Projects in New Hanover and Pender County,North Carolina.The Company has
Class A and Class B membership interests.Class B members are nonvoting except as set forth in the
operating agreement.Cape Fear Collective Ventures,which is wholly owned by Cape Fear Collective,
is the sole Class A member.
Cape Fear Collective Impact Opportunity 1,LLC is a North Carolina limited liability company
organized for the purpose of investing in the acquisition,rehabilitation,or new construction of
Qualified Housing Projects in New Hanover and Pender County,North Carolina.The Company has
Class A and Class B membership interests.Class B members are nonvoting except as set forth in the
operating agreement. Cape Fear Collective is the sole Class A member.
Cape Fear Collective Ventures,LLC is a North Carolina limited liability company.Cape Fear
Collective is the sole member.
Cape Fear Affordable Housing,LLC is a North Carolina limited liability company.Cape Fear
Collective Capital, which is wholly owned by Cape Fear Collective, is the sole member.
Mission Driven Motors,LLC is a North Carolina limited liability company.Cape Fear Collective
Capital, which is wholly owned by Cape Fear Collective, is the sole member.
Page 6
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
Basis of Presentation
•Collective Impact in New Hanover County, Inc.
•Cape Fear Collective Ventures, LLC
•Cape Fear Collective Impact Opportunity 1, LLC
•Cape Fear Collective Impact Opportunity 2, LLC
•Cape Fear Collective Capital, LLC
•Cape Fear Affordable Housing, LLC
•Mission Driven Motors, LLC
Net Assets
Cash, Cash Equivalents, Restricted Cash and Funded Reserves
For purposes of reporting the statements of cash flows,the Organization includes all cash investments
and certificates of deposit with a maturity of three months or less as cash,cash equivalents,restricted
cash and funded reserves.Restricted cash includes funds held by property management company,and
tenant security deposits.
The financial statements are prepared on the accrual basis of accounting in accordance with U.S.
generally accepted accounting principles.The accrual method records revenue when earned and
expenses when incurred.As a result,receivables are recorded as assets,and obligations due are shown
as liabilities.
The Organization reports information regarding its financial position and activities according to two net
asset categories as follows:
The accompanying combined financial statements incorporate the accounts of the following entities
(collectively "the Organizations"):
NOTE 1 -NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
The above listed entities are related through common ownership or management.The interest owned
by the unaffiliated members is referred to in the accompanying combined financial statements as the
non-controlling interest and represents the unaffiliated members'proportionate share of equity and net
results from operations.All significant inter-organization balances and transactions have been
eliminated.
Net assets without donor restrictions:Net assets that are not subject to donor‐imposed restrictions and
may be expended for any purpose in performing the primary objectives of the Organization.The
Organization’s board may designate assets without restrictions for specific operational purposes from
time to time.
Net assets with donor restrictions:Net assets subject to stipulations imposed by donors and grantors.
Some donor restrictions are temporary in nature;those restrictions will be met by actions of the
Organization or by the passage of time.Other donor restrictions may be perpetual in nature,whereby
the donor has stipulated the funds be maintained in perpetuity.
Page 7
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
Investment in Joint Venture
Accounts Receivable
Pledges Receivable
Refundable Advances, Grants
Property and Equipment
Computer equipment 3 years
Buildings and building improvements 5-27.5 years
Accounts receivable are primarily comprised of amounts due to the Organization for program services
and tenant rent.The Organization determines the past due status of receivables based on the
contractual terms of the original agreement or invoice,timing for payment and past due amounts,
collection history,and other economic factors.Interest is not normally charged on overdue accounts.
The Organization writes off receivables when they become uncollectible.As of June 30,2022,
accounts receivable were considered to be collectible.
Accounting principles generally accepted in the United States of America require that long-lived assets
and certain identifiable tangible assets held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amounts of an asset may not be
recoverable.The Organization did not identify any long-lived assets as being impaired during the year
ended June 30, 2022.
Depreciation is provided over the estimated useful lives of the individual assets by the straight-line
method. The estimated useful lives used in the computation of depreciation are as follows:
NOTE 1 -NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Pledges receivable represents donors' unconditional promises to give at a later time.
In January 2022,Cape Fear Collective Capital,LLC entered into an agreement with Brick Capital
Community Development Corporation to form a joint venture,Brick Capital and Cape Fear Collective
Housing Initiative,LLC,to further the tax-exempt,charitable purposes of the joint venture's members
by promoting affordable housing to low-income individuals in the Lee County region of North Carolina
and to engage in other charitable activities consistent with the charitable mission of its members.The
Organization has a 50%member interest in the joint venture and accounts for its investment in the joint
venture using the equity method.
Conditional grants are recognized as revenue at the time the conditions of the grant are substantially
met.Any conditional grant amounts received for which the conditions have not yet been met are
recorded as refundable advances.
The Organization capitalizes acquisitions of property and equipment,including software purchases,at
cost.The cost of maintenance and repairs is expensed as incurred.Expenditures which materially
increase the property lives of the assets are capitalized.Upon retirement or other disposition of
depreciable properties,the cost and related accumulated depreciation are removed from the property
accounts and any gain or loss is reflected in income.
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COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
Revenue Recognition
Management fees -The Organization provides company management services for the LLCs in which
the Organization is a member.Revenue is recognized based on the period for which services are
provided.Unearned revenue amounts are reported as deferred revenue.Management fees between the
combined entities have been eliminated.
Service contracts -The Organization provides data science expertise and support services.Revenue is
recognized based on the identified performance obligations within the agreement.Unearned revenue
amounts are reported as deferred revenue.
Contributions and promises to give are reported as increases in net assets with or without donor
restrictions,depending on the existence and/or nature of any donor restrictions.Support that is
restricted by the donor is reported as an increase in net assets without donor restrictions if the
restriction expires in the reporting period in which the support is recognized.All other donor‐restricted
support is reported as an increase in net assets with donor restrictions.When a restriction expires (that
is,when a stipulated time restriction ends or purpose restriction is accomplished),net assets with donor
restrictions are reclassified to net assets without donor restrictions and reported in the statement of
activities and changes in net assets as net assets released from restrictions.
Grant revenues that are nonreciprocal and unconditional are recognized as support revenue upon the
awarding of the grant as increases in net assets with or without donor restrictions,depending on the
existence and/or nature of any donor restrictions.When the time restriction expires or the Organization
incurs expenditures in compliance with purpose restrictions,revenues are released from restriction.
Conditional grants are recognized as revenue at the time the conditions of the grant are substantially
met.Any conditional grant amounts received for which the conditions have not yet been met are
recorded as refundable advances.
NOTE 1 -NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
The Organization presents its financial statements using the accrual basis of accounting,recognizing
revenue when earned and expenses when incurred.The Organization derives revenue from grants,
contributions,service contracts,management fees,and rental income.Program service revenue is
recognized when the services are performed.Contributions are recognized when cash,securities or
other assets,unconditional promise to give,or notification of a beneficial interest is received.Grants
are reported as contributions if the transaction is unreciprocal and as program revenues if the
transaction is reciprocal.Conditional promises to give are not recognized until the conditions on which
they depend have been substantially met.
Rental income is recognized as rentals become due.Rental payments secured in advance are deferred
until earned. All leases between the Company and the tenants are short-term operating leases.
Deferred revenue consists of monies received for exchange activities that have been received for a
future period,but not yet recognized as revenue based on the Organization's revenue recognition
policy.The Organization records deferred revenues when cash has been received,but the
corresponding revenue has not yet been earned.
Program services have identified performance obligation(s)or are satisfied over time.Payment is due
as services are rendered. Program revenues collected in advance are reported as deferred revenue.
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COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
Use of Estimates
Income Tax Status
NOTE 2 - CONCENTRATION OF CREDIT RISK
Collective Impact in New Hanover County, Inc.550,860$
Cape Fear Collective Impact Opportunity 1, LLC 63,274
Cape Fear Collective Impact Opportunity 2, LLC 202,354
Cape Fear Collective Capital, LLC 1,156,199
1,972,687$
NOTE 3 - SERVICE CONTRACTS
June 30, 2022 July 1, 2021
Receivables 3,991$ 13,210$
Deferred revenue (advances and deposits)173,735$ -$
NOTE 1 -NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
The Organization provides data science expertise,including data analytic dashboards and related
support services.Revenue is recognized when the performance obligations of providing the services
are met.Unearned revenue amounts are reported as deferred revenue.The beginning and ending
contract balances were as follows:
The Organization occasionally maintains deposits in excess of federally insured limits.The
Organization maintains its cash balances in reputable financial institutions in the United States of
America,and accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 at
each financial institution. At June 30, 2022, the Organizations' uninsured cash balances were:
It is the Organization's policy to evaluate all tax positions to identify any that may be considered
uncertain.All identified material tax positions are assessed and measured by a more-likely-than-not
threshold to determine if the tax position is uncertain and what,if any,the effect of the uncertain tax
position may have on the financial statements.No material uncertain tax positions were identified for
2022. Any changes in the amount of a tax position will be recognized in the period the change occurs.
The Organization is a not-for-profit organization that is exempt from federal and state income taxes
under Section 501(c)(3)of the Internal Revenue Code and the North Carolina Department of Revenue.
Contributions to the Organization are tax deductible.Any federal or state income taxes associated with
the combined LLCs are the responsibility of the individual members.Therefore,no provision for
income taxes has been made in the accompanying financial statements.
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
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COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
NOTE 3 - SERVICE CONTRACTS (Continued)
NOTE 4 - PROPERTY, EQUIPMENT, AND SOFTWARE
Cape Fear
Collective LLCs Total
Land -$ 5,205,106$ 5,205,106$
Buildings - 9,461,102 9,461,102
Building improvements - 459,394 459,394
Office equipment 2,214 - 2,214
Software 125,000 - 125,000
Total 127,214 15,125,602 15,252,816
Less accumulated depreciation (8,517)(235,662)(244,179)
Total property and equipment, net 118,697$ 14,889,940$ 15,008,637$
NOTE 5 - LIQUIDITY
Cape Fear
Collective LLCs Total
Cash and cash equivalents 806,034$ 1,984,350$ 2,790,384$
Accounts receivable 3,991 1,522 5,513
Pledge receivables 37,500 - 37,500
Receivable, joint venture 2,600 4,105 6,705
Total financial assets available to meet expenditures within the next 12 months 850,125$ 1,989,977$ 2,840,102$
NOTE 6 - PROMISES TO GIVE
Amounts due in:
Less than one year $ 25,000
One to five years 12,500
Total $ 37,500
The Organization’s financial assets available for general expenditure,that is,without donor or other
restrictions limiting their use,within one year of the statements of support,revenues,and expenses
date, are as follows:
Depreciation expense was $215,547 for the year ended June 30, 2022.
Property and equipment consisted of the following as of June 30, 2022:
As of June 30,2022,the unconditional promises to give totaled $37,500,due in 18 monthly
installments of $2,083. Uncollectible promises are expected to be insignificant.
As of June 30,2022,deferred service contract revenue totaling $95,652 is current and expected to be
earned within the year ending June 30, 2023.
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COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
NOTE 7 - NET ASSETS
Effective January 25,2022,Class B members made all scheduled contributions per the operating
agreement.As of June 30,2022,all 11,100 scheduled Class B units have been issued and all Class B
members' contributions totaling $11,100,000 have been made.
As of June 30,2022,net assets with donor restrictions as to purpose or the passage of time consisted
of $37,500 of pledges receivable.During the year ended June 30,2022,pledges receivable totaling
$335,000 was released from donor restrictions.
Cape Fear Collective Impact Opportunity 1, LLC
Cape Fear Collective Impact Opportunity 2, LLC
During the year ended June 30,2022,no additional Class B member units were issued.As of June 30,
2022,all 3,750 scheduled Class B units have been issued and all Class B members contributions
totaling $3,750,000 have been made.
Preferred return -Class B member interests include a preferred return.The preferred return means,
with respect to each holder of Class B Units,an amount equal to twenty dollars ($20)per Class B Unit
on or before December 1,2021,and accruing after December 1,2021,at a rate of two percent (2%)per
annum (prorated for any partial year),compounding quarterly,on the initial Capital Contribution per
Class B Unit of $1,000 plus any accrued but unpaid Preferred Return.The Preferred Return with
respect to any Capital Contribution shall accrue from and after the date the associated Capital
Contribution is made to the Company.
Redemption rights-Class B member interests include redemption rights based on a quarterly
redemption schedule starting March 1,2021.The redemption price per Class B unit starts at $1,020
and after December 1,2021,increases by 0.05%each quarter.On any redemption date prior to
December 1,2023,the Company may,but is not required to,redeem any or all of the Class B units at
the applicable redemption price.Beginning on December 1,2023 and on each redemption date
thereafter,ending on December 1,2025,the Company must use any and all available cash to redeem
Class B units.Available cash means the aggregate amount of unrestricted cash in excess of $250,000,
excluding any amounts restricted with respect to its permissible use under the terms of an agreement.
As of June 30, 2022, no Class B units have been redeemed.
Both Cape Fear Collective Impact Opportunity 1,LLC and Cape Fear Collective Impact Opportunity 2,
LLC have Class A and B membership interests with Cape Fear Collective as the sole Class A member,
which is combined and included in net assets without donor restrictions within the accompanying
financial statements.Class B members are nonvoting except as set forth in the respective operating
agreements.Class B member interests are shown as non-controlling interests within the accompanying
financial statements.
Equity transactions
Net assets with donor restrictions
Page 12
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
NOTE 7 - NET ASSETS (Continued)
NOTE 8 - DEBT
NOTE 9 - INVESTMENT IN JOINT VENTURE
Total assets 519,978$
Total liabilities 510,308
Net assets 9,670$
Revenues -$
Net income (10,330)$
The Organization's interest is as follows:
Share of net income (5,165)$
Cape Fear Collective Impact Opportunity 2, LLC (Continued)
Preferred return -Class B member interests include a preferred return.The preferred return means,
with respect to each holder of Class B Units,an amount equal to twenty dollars ($20)per Class B Unit
on or before January 31,2023,and accruing after January 31,2023,at a rate of two percent (2%)per
annum (prorated for any partial year),compounding quarterly,on the initial Capital Contribution per
Class B Unit of $1,000 plus any accrued but unpaid Preferred Return.The Preferred Return with
respect to any Capital Contribution shall accrue from and after the date the associated Capital
Contribution is made to the Company.
Redemption rights-Class B member interests include redemption rights based on a quarterly
redemption schedule starting March 1,2021.The redemption price per Class B unit starts at $1,020
and after January 31,2023,increases by 0.05%each quarter.On any quarterly redemption date,the
Company may,but is not required to,redeem any or all of the Class B units at the applicable
redemption price;provided,however,on the redemption dates of January 31,2025,January 31,2027,
and January 31,2029,the Company must use any and all available cash to redeem Class B units.
Available cash means the aggregate amount of unrestricted cash on hand or in bank,money market,or
similar accounts of the Company in excess of an amount equal to ten percent (10%)of the book value
of all Company property (not reduced for depreciation or amortization),including cash,as of each
applicable date that available cash must be determined.As of June 30,2022,no Class B units have
been redeemed.
During the year ended June 30,2022,the Organizations issued multiple promissory notes,under
Collective Capital,LLC,totaling $1,850,000.The promissory notes have a term of 5 years with
maturity dates ranging from August to December 2026.Interest accrues on the principal amount of the
notes in an amount of 2%per annum,payable semi-annually.During the year ended June 30,2022,
interest expense on the note payables totaled $25,250.As of June 30,2022,accrued interest totaled
$14,250. The principal amount of the notes are payable at maturity in the year ending June 30, 2027.
The following summarizes the condensed financial activity of the Joint Venture as of and for the year
ended June 30, 2022:
Page 13
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.
Notes to Combined Financial Statements
NOTE 10 - PAID TIME OFF (PTO)
NOTE 11 - FUNCTIONAL EXPENSES
Administrative Fundraising Program Total
Salaries and benefits 168,243$ 33,649$ 919,730$ 1,121,622$
Professional services 36,076 - - 36,076
Advertising and promotion 12,232 - 4,280 16,512
Office expenses 5,204 - - 5,204
Information technology 12,753 - 58,542 71,295
Occupancy 180 36 984 1,200
Travel and meetings 1,180 1,180 11,032 13,392
Contract services 2,929 1,953 109,071 113,953
Community programs - - 7,763 7,763
Professional development 13,858 - - 13,858
Healthy opportunity pilot - - 30,323 30,323
Bank fees 514 - - 514
COVID response fees - - 1,318 1,318
Other expenses 10,491 - - 10,491
Other administrative expenses 44,491 - - 44,491
Operating and maintenance - - 223,977 223,977
Property taxes and insurance 6,645 212 108,453 115,310
Depreciation 184 - 215,363 215,547
Interest expense - - 25,250 25,250
314,980$ 37,030$ 1,716,086$ 2,068,096$
NOTE 12 - SUBSEQUENT EVENTS
The Organization's policy does not allow employees to accrue time-off with no compensation for PTO
upon termination.
Management has evaluated events and transactions for potential recognition or disclosure through May
18,2023,which is the date the financial statements were available to be issued.No material
subsequent events required recognition or additional disclosure in these combined financial statements.
The costs of providing the various programs and activities have been summarized below on a
functional basis.Accordingly,certain costs have been allocated among program and supporting
services.Expenses that can be identified with a specific program and support service are allocated
directly.Other expenses are allocated by function based on estimates of employees’time incurred and
usage of resources.
Supporting Services
Page 14
SUPPLEMENTARY INFORMATION
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.Combining Statement of Financial PositionJune 30, 2022
Cape FearCollective Affordable Mission Driven Collective Impact Impact Collective Eliminating501(c) 3 Housing Motors Capital Opportunity 1 Opportunity 2 Ventures Sub-total Entries Total
Current Assets:
Cash and cash equivalents 806,034$ 36$ -$ 1,155,667$ 313,274$ 515,323$ 50$ 1,984,350$ -$ 2,790,384$ Accounts receivable 3,991 - - 1,522 - - - 1,522 - 5,513 Pledges receivable 37,500 - - - - - - - - 37,500
Prepaid expenses 1,038 - - - 13,837 42,607 - 56,444 - 57,482
Receivable, joint venture 2,600 - - 4,105 - - - 4,105 - 6,705 Interfund receivables (payables)256,982 (567,817) (3,086) 645,941 (87,278) (195,470) (49,272) (256,982) - - Total current assets 1,108,145 (567,781) (3,086) 1,807,235 239,833 362,460 (49,222) 1,789,439 - 2,897,584
Other assets:Restricted cash:Funds held by Property Management Company - 1,000 - - 3,690 26,367 - 31,057 - 31,057
Tenant security deposits held by Property
Management Company - - - - 12,535 63,065 - 75,600 - 75,600
Total restricted cash - 1,000 - - 16,225 89,432 - 106,657 - 106,657 Utility deposits - - - - 3,426 55 - 3,481 - 3,481 Investment in joint venture - - - 4,835 - - - 4,835 - 4,835
- 1,000 - 4,835 19,651 89,487 - 114,973 - 114,973
Property, equipment and software, net ofaccumulated depreciation and amortization 118,697 545,267 - - 3,534,238 10,810,435 - 14,889,940 - 15,008,637
Total assets 1,226,842$ (21,514)$ (3,086)$ 1,812,070$ 3,793,722$ 11,262,382$ (49,222)$ 16,794,352$ -$ 18,021,194$
Current Liabilities:Accounts payable and accrued expenses 11,611$ 924$ 6,308$ 4,598$ 5,605$ 56,378$ -$ 73,813$ -$ 85,424$
Accrued salaries and wages 26,434 - - - - - - - - 26,434
Accrued interest - - - 14,250 - - - 14,250 - 14,250 Deferred revenue, current 95,652 - - - - - - - - 95,652 Refundable advances, grants 341,667 - - - - - - - - 341,667
Total current liabilities 475,364 924 6,308 18,848 5,605 56,378 - 88,063 - 563,427
Noncurrent Liabilities:Tenant security deposits - - - - 12,535 63,065 - 75,600 - 75,600
Deferred revenue 78,083 - - - - - - - - 78,083
Note payables - - - 1,850,000 - - - 1,850,000 - 1,850,000
Total noncurrent liabilities 78,083 - - 1,850,000 12,535 63,065 - 1,925,600 - 2,003,683
Total liabilities 553,447 924 6,308 1,868,848 18,140 119,443 - 2,013,663 - 2,567,110
Net Assets and Unrestricted Members' Equity:Without donor restrictions:
Net assets without donor restrictions 635,895 (22,438) (9,394) (56,778) 288,623 49,968 (49,222) 200,759 - 836,654
Unrestricted members' equity, non-controlling interest - - - - 3,486,959 11,092,971 - 14,579,930 - 14,579,930
Total net assets without donor restrictions 635,895 (22,438) (9,394) (56,778) 3,775,582 11,142,939 (49,222) 14,780,689 - 15,416,584 With donor restrictions - Collective Impact in New Hanover County 37,500 - - - - - - - - 37,500 Total net assets and members' equity 673,395 (22,438) (9,394) (56,778) 3,775,582 11,142,939 (49,222) 14,780,689 - 15,454,084
Total liabilities and net assets 1,226,842$ (21,514)$ (3,086)$ 1,812,070$ 3,793,722$ 11,262,382$ (49,222)$ 16,794,352$ -$ 18,021,194$
Assets
Liabilities and Net Assets
Limited Liability Companies
See Independent Auditor's Report
Page 15
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.Combining Statement of Activities and Changes in Net Assets
Year Ended June 30, 2022
Without Donor With Donor Affordable Mission Driven Collective Impact Impact Collective Eliminating CombinedRestrictionsRestrictionsSub-total Housing Motors Capital Opportunity 1 Opportunity 2 Ventures Sub-total Entries TotalsRevenuesContributions317,458$ -$ 317,458$ -$ -$ -$ -$ -$ -$ -$ -$ 317,458$ Service contracts 810,861 - 810,861 - - - - - - - - 810,861 Management fees 206,717 - 206,717 - - - - - - - (204,117) 2,600 Rent income - - - 4,958 - - 190,169 367,216 - 562,343 - 562,343 Interest income 428 - 428 - - 103 39 9 - 151 - 579 Equity in net earnings of joint venture - - - - - (5,165) - - - (5,165) - (5,165) Net assets released from restriction 335,000 (335,000) - - - - - - - - - - Total revenue, gains and other support 1,670,464 (335,000) 1,335,464 4,958 - (5,062) 190,208 367,225 - 557,329 (204,117) 1,688,676
Expenses:
Salaries and benefits 1,121,622 - 1,121,622 - - - - - - - - 1,121,622
Professional services 36,076 - 36,076 - - - - - - - - 36,076
Advertising and promotion 16,512 - 16,512 - - - - - - - - 16,512
Office expenses 5,204 - 5,204 - - - - - - - - 5,204
Information technology 71,295 - 71,295 - - - - - - - - 71,295
Occupancy 1,200 - 1,200 - - - - - - - - 1,200
Travel and meetings 13,392 - 13,392 - - - - - - - - 13,392
Contract services 113,953 - 113,953 - - - - - - - - 113,953 Community programs 7,763 - 7,763 - - - - - - - - 7,763 Professional development 13,858 - 13,858 - - - - - - - - 13,858 Healthy opportunity pilot expenses 30,323 - 30,323 - - - - - - - - 30,323 Bank fees 514 - 514 - - - - - - - - 514 COVID response fees 1,318 - 1,318 - - - - - - - - 1,318 Other expenses 10,491 - 10,491 - - - - - - - - 10,491 Management fee, company administration - - - 6,500 3,900 19,800 81,000 92,917 - 204,117 (204,117) - Other administrative expenses - - - 1,264 6,494 5,666 19,228 11,617 222 44,491 - 44,491 Operating and maintenance - - - 3,547 - - 113,721 106,709 - 223,977 - 223,977 Property taxes and insurance 7,070 - 7,070 9,710 - - 38,626 59,904 - 108,240 - 115,310 Depreciation 8,517 - 8,517 7,375 - - 96,516 103,139 - 207,030 - 215,547 Interest expense - - - - - 25,250 - - - 25,250 - 25,250 Total expenses 1,459,108 - 1,459,108 28,396 10,394 50,716 349,091 374,286 222 813,105 (204,117)2,068,096
Other Income (Expenses):
Gain on sale of asset - - - - - - 15,399 - - 15,399 - 15,399
Total other income (expenses)- - - - - - 15,399 - - 15,399 - 15,399
Change in net assets before other changes 211,356 (335,000) (123,644) (23,438) (10,394) (55,778) (143,484) (7,061) (222) (240,377) - (364,021)
Other changes in net assetsTransfers to affiliates (251,950) - (251,950) - - (2,000) - - (50,000) (52,000) 303,950 - Transfers from affiliates, Class A member - - - 1,000 1,000 1,000 250,000 50,000 950 303,950 (303,950) - Capital contributions from Class B members
unaffiliated - - - - - - - 11,100,000 - 11,100,000 - 11,100,000
Total other changes in net assets (251,950) - (251,950) 1,000 1,000 (1,000) 250,000 11,150,000 (49,050) 11,351,950 - 11,100,000
Total change in net assets (40,594) (335,000) (375,594) (22,438) (9,394) (56,778) 106,516 11,142,939 (49,272) 11,111,573 - 10,735,979
Net assets - beginning 676,489 372,500 1,048,989 - - - 3,669,066 - 50 3,669,116 - 4,718,105
Net assets - ending 635,895$ 37,500$ 673,395$ (22,438)$ (9,394)$ (56,778)$ 3,775,582$ 11,142,939$ (49,222)$ 14,780,689$ -$ 15,454,084$
Cape Fear Collective 501(c) 3 Limited Liability Companies
See Independent Auditor's Report
Page 16
COLLECTIVE IMPACT IN NEW HANOVER COUNTY, INC.Combining Statement of Cash FlowsYear Ended June 30, 2022
Cape Fear Affordable Mission Driven Collective Impact Impact Collective Eliminating Combined
Collective Housing Motors Capital Opportunity 1 Opportunity 2 Ventures Sub-total Entries Totals
Cash flows from operating activities:Change in net assets before other changes (123,644)$ (23,438)$ (10,394)$ (55,778)$ (143,484)$ (7,061)$ (222)$ (240,377)$ -$ (364,021)$ Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities:
Equity in income from joint venture - - - 5,165 - - - 5,165 - 5,165
Depreciation 8,517 7,375 - - 96,516 103,139 - 207,030 - 215,547
Gain on sale of asset - - - - (15,399) - - (15,399) - (15,399)
(Increase) decrease in:
Accounts and pledges receivables 377,551 - - (1,522) - - - (1,522) - 376,029
Prepaid expenses 39 - - - 6,403 (42,607) - (36,204) - (36,165) Receivable, joint venture (2,600) - - (4,105) - - - (4,105) - (6,705) Utility deposits - - - - 708 (55) - 653 - 653 Increase (decrease) in:
Accounts payable and accrued expenses (4,747) 924 6,308 4,598 (61,589) 56,378 - 6,619 - 1,872
Accrued salaries and wages 13,848 - - - - - - - - 13,848
Accrued interest - - - 14,250 - - - 14,250 - 14,250
Tenant security deposits - - - - (2,100) 63,065 - 60,965 - 60,965
Deferred revenue 173,735 - - - - - - - - 173,735 Refundable advances, grants 341,667 - - - - - - - - 341,667 Net cash provided by (used in) operating activities 784,366 (15,139) (4,086) (37,392) (118,945) 172,859 (222) (2,925) - 781,441
Cash flows from financing activities:
Capital contributions, non-controlling interest - - - - - 11,100,000 - 11,100,000 - 11,100,000
Proceeds from note payables - - - 1,850,000 - - - 1,850,000 - 1,850,000
Interfund receivables (payables)(231,420) 567,817 3,086 (645,991) 61,766 195,470 49,272 231,420 - -
Transfers to (from) affiliates (251,950) 1,000 1,000 (1,000) 250,000 50,000 (49,050) 251,950 - - Net cash provided by (used in) financing activities (483,370) 568,817 4,086 1,203,009 311,766 11,345,470 222 13,433,370 - 12,950,000
Cash flows from investing activities:
Acquisition of property, equipment and software (127,214) (552,642) - - (28,587) (10,913,574) - (11,494,803) - (11,622,017)
Proceeds from sale of property - - - - 90,894 - - 90,894 - 90,894
Investment in joint venture - - - (10,000) - - - (10,000) - (10,000)
Net cash provided by (used in) investing activities (127,214) (552,642) - (10,000) 62,307 (10,913,574) - (11,413,909) - (11,541,123)
Increase in cash, cash equivalents, and restricted cash 173,782 1,036 - 1,155,617 255,128 604,755 - 2,016,536 - 2,190,318 Cash, cash equivalents, and restricted cash - beginning 632,252 - - 50 74,371 - 50 74,471 - 706,723 Cash, cash equivalents, and restricted cash - ending 806,034$ 1,036$ -$ 1,155,667$ 329,499$ 604,755$ 50$ 2,091,007$ -$ 2,897,041$
Reconciliation of cash, cash equivalents, and restricted cash reported on the combined statement of financial position
to cash, cash equivalents, and restricted cash shown above:
Cash and cash equivalents 806,034$ 36$ -$ 1,155,667$ 313,274$ 515,323$ 50$ 1,984,350$ -$ 2,790,384$
Restricted deposits and funded reserves - 1,000 - - 16,225 89,432 - 106,657 - 106,657
Cash and cash equivalents 806,034$ 1,036$ -$ 1,155,667$ 329,499$ 604,755$ 50$ 2,091,007$ -$ 2,897,041$
Supplemental disclosures of cash flow information:
Cash payments for interest -$ -$ -$ 11,000$ -$ -$ -$ 11,000$ -$ 11,000$
Limited Liability Companies
See Independent Auditor's Report
Page 17