1. Art and Diseño

WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
CONSOLIDATED
FINANCIAL STATEMENTS
December 31, 2012, 2011, and 2010
CONTENTS
Independent Auditor's Report...................................................................................................................
1
Consolidated Statements of Financial Position.........................................................
3
Consolidated Statements of Activities............................................................................
4
Consolidated Statements of Functional Expenses...
5
Consolidated Statements of Cash Flows.................................................................................................
7
Notes to Consolidated Financial Statements..................................................
8
Consolidating Schedule of Financial Position................................................................
17
Consolidating Schedule of Activities
18
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Beyond the numbers.™
Wegner CPAs
INDEPENDENT AUDITOR'S REPORT
To the Board of Director
Working Capital for Community Needs, Inc.
Madison, Wisconsin
We have audited the accompanying consolidated financial statements of Working Capital for
Community Needs, Inc., which comprise the consolidated statements of financial position as of
December 31, 2012, 2011, and 2010, and the related consolidated statements of activities, functional
expenses, and cash flows for the years then ended, and the related notes to the financial statements.
Management's Responsibility
for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Working Capital for Community Needs, Inc. as of December 31, 2012,
2011, and 2010, and the changes in its net assets and its cash flows for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
Janesville Office:
101 E. Milwaukee Street
Suite 425
Janesville, WI 53545
P: (608) 756-4020
Baraboo Office:
123 Second Street
P.O. Box 150
Baraboo, WI 53913
P: (608) 356-3966
F: (608) 356-2966
Pewaukee Office:
W239 N3490 Pewaukee Road
Suite 200·
Pewaukee, WI 53072
P: (262) 522-7555
F: (262) 522-7550
Madison Office:
2110 Luann Lane
Madison, WI 53713
P: (608) 274-4020
F: (608) 274-0775
www.wegnercpas.com
[email protected]
(888) 204-7665
Report on Consolidating Information
Our audits were conducted for the purpose of forming an opinion on the consolidated financial
statements as a whole. The consolidating schedules of financial position and activities are presented for
purposes of additional analysis of the consolidated financial statements, rather than to present financial
positions, changes in net assets, and cash flows of the individual organizations, and are not a required
part of the consolidated financial statements. Such information is the responsibility of management and
was derived from and relates directly to the underlying accounting and other records used to prepare
the consolidated financial statements. The consolidating information has been subjected to the auditing
procedures applied in the audit of the consolidated financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the consolidated financial statements or to the consolidated financial
statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, the consolidating information is fairly
stated in all material respects in relation to the consolidated financial statements as a whole.
IAI~~
CRAs,LLf
Wegner ePAs, LLP
Madison, Wisconsin
March 29, 2013
2
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31,2012,2011, and 2010
ASSETS
CURRENT ASSETS
Cash
Accrued interest receivable
Investments
CC Fund notes receivable - current portion
CN LLC notes receivable - current portion
Notes receivable fair value - current portion
Prepaid expenses
Unconditional promises to give
Other receivables
$ 2,684,021
269,306
$
6,876,563
205,230
10,200
50,000
Total current assets
2010
2011
2012
10,095,320
674,918
201,785
615,628
5,221,562
1,481,477
215,315
39,579
$
88,599
158,600
1,533,339
5,299,478
1,067,000
13,608
600
19,415
8,450,864
8,180,039
743
Equipment - net
OTHER ASSETS
CC Fund notes receivable less current portion
Notes receivable fair value less current portion
3,410,002
790,133
2,997,844
985,376
3,054,229
Total assets
$ 14,295,455
$ 12,434,084
$ 11,235,011
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Current portion of notes payable
Accounts payable
Derivatives fair value
Deferred revenue
Accrued interest payable - current portion
Grants payable
$ 2,958,427
25,658
70,691
5,600
139,018
86,400
$
2,933,581
28,398
45,200
22,539
126,076
$ 3,244,706
24,826
3,285,794
3,155,794
3,406,976
40,650
8,834,190
22,671
7,207,383
5,863,973
12,160,634
10,385,848
9,270,949
1,885,037
249,784
1,797,009
251,227
1,713,585
250,477
2,134,821
2,048,236
1,964,062
$ 14,295,455
$ 12,434,084
$ 11,235,011
Total current liabilities
LONG-TERM LIABILITIES
Accrued interest payable less current portion
Notes payable less current portion
Total liabilities
NET ASSETS
Unrestricted
Temporarily restricted
Total net assets
Total liabilities and net assets
See accompanying notes.
3
137,444
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
CONSOLIDATED STATEMENTS OF ACTIVITIES
Years ended December 31,2012, 2011, and 2010
2012
UNRESTRICTED NET ASSETS
SUPPORT AND REVENUE
Investment return
Contributions
Loan fees
Tour fees
Sales
Other
$
Total unrestricted support and revenue
EXPENSES
Program servíces
Microfinance
Educational and other
Supporting activities
Management and general
Fundraising
Total expenses
2010
2011
611
8,818
928,913
72,105
63,500
3,875
785
1,428
1,339,803
1,102,409
1,070,606
839,288
194,520
792,750
70,674
791,568
81,225
183,656
35,754
118,414
37,147
130,780
39,803
1,253,218
1,018,985
1,043,376
1,067,471
149,636
93,593
22,539
1,461
5,103
$
905,135
99,673
88,172
$
Net assets released from restrictions
1,443
Change in unrestricted net assets
88,028
TEMPORARIL Y RESTRICTED NET ASSETS
Contributions
Net assets released from restrictions
{1,443~
Change in temporarily restricted net assets
{1,443~
Change in net assets
86,585
84,174
27,980
2,048,236
1,964,062
1,936,082
Net assets - beginning of year
Net assets - end of year
$ 2,134,821
See accompanying notes.
4
1,000
83,424
$
28,230
750
750
{1,OOO~
750
{250~
2,048,236
$
1,964,062
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES
Years ended December 31,2012,2011, and 2010
Prof.:!ramServices
Educational
Microfinance
and other
Management
and General
Personnel
Interest on investor loans
Consultants
Legal
Grants and allocations
Office expense
Accounting
Resources
Insurance
Bank and investment fees
Occupancy
Travel and training
Conferences and meetings
Provision for loan losses
Marketing
Other
$
$
Total expenses
$
2011
Prof.:!ramServices
Educational
Microfinance
and other
Management
and General
Personnel
Interest on investor loans
Consultants
Legal
Office expense
Accounting
Resources
Insurance
Bank and investment fees
Occupancy
Travel and training
Conferences and meetings
Provision for loan losses
Marketing
Other
$
$
Total expenses
$
2012
See accompanying notes.
172,031
406,657
109,539
30,468
$
9,474
2,500
10,164
35,186
22,951
5,699
25,438
260
1,212
150
2,772
2,696
35,901
1,872
14,682
17,890
133
5,815
17,108
5,782
1,465
6,963
14,738
239
279
1,163
50
272
35,754
$ 1,253,218
93
$
178,143
372,807
97,515
24,657
7,058
200
7,992
2,700
11,215
37,768
22,205
8,661
19,932
864
1,033
$
792,750
$
194,520
28,034
$
2,538
209
10,966
183,656
70,310
393
28
44
3,114
9,699
1,431
545
2,615
9,663
12,895
653
5,755
197
7,465
1,347
2,551
14,151
67
998
3,420
70,674
5
$
118,414
29,062
$
5,775
3,179
99,434
8,859
103,422
$
333,358
406,657
117,309
33,647
99,434
34,022
17,890
10,003
8,315
27,272
46,809
60,317
14,534
25,438
15,327
2,886
1,845
7,709
839,288
28,843
Total
Fundraisinf.:!
303
3,145
$
Total
Fundraisinf.:!
$
27,938
58
25
304,425
372,807
101,556
27,481
30,254
13,095
9,714
8,483
12,692
51,981
33,251
12,698
19,932
16,071
4,545
37,147
$ 1,018,985
958
2,567
676
1,236
3,634
55
$
$
WORKING
CAPITAL
FOR COMMUNITY
NEEDS,
INC.
CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES (continued)
Years ended December 31,2012,2011, and 2010
2010
Personnel
Interest on investor loans
Consultants
Legal
Grants and allocations
Office expense
Accounting
Resources
Insurance
Bank and investment fees
Occupancy
Travel and training
. Conferences and meetings
Provision for loan losses
Marketing
Other
Management
and General
$
$
notes.
141,511
374,638
76,250
25,392
$
$
30,904
3,292
75
6,877
7,573
197
5,348
12,933
136
4,855
595
6,605
211
3,176
9,252
65
296
2,480
765
644
$
91,856
Total
Fundraisin9
1,000
1,289
750
8,625
9,447
2,700
13,611
24,801
19,888
8,886
85,498
487
60
791,568
44,147
3,020
8,399
$
Total expenses
See accompanying
Pro9ram Services
Educational
Microfinance
and other
81,225
6
$
130,780
119
903
3,811
9
$
39,803
$
308,418
374,638
80,270
26,681
750
25,664
12,933
10,346
7,555
15,184
42,094
27,672
12,268
85,498
10,800
2,605
$ 1,043,376
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,2012,2011, and 2010
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,2012,2011, and 2010
Working Capital for Community Needs, Inc. (WCCN) partners with individuals and organizations in Latin
America and the United States of America to build sustainable economic opportunities that help people
work their way out of poverty. WCCN provides low-income Latin American entrepreneurs and small
farmers access to financing through various microfinance agencies and producer cooperatives to help
them strengthen and grow their operations. To facilitate its activities in the greater Latin America area,
WCCN formed a separate limited liability company, Community Needs, LLC during 2009. The LLC may
further WCCN's purposes by participating in models that differ from WCCN's traditional avenues for
promoting economic development.
Located in Madison, Wisconsin, WCCN is supported primarily through interest from its loan fund and
donor contributions. The following summary of significant accounting policies is presented to enhance the
usefulness of the consolidated financial statements to the reader.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of WCCN and Community Needs, LLC, of
which WCCN is the sole member. All significant inter-organizational transactions and accounts have been
eliminated.
Basis of Presentation
WCCN is required to report information
classes of net assets:
regarding its financial position and activities according to three
Unrestricted net assets-Net assets that are not restricted by donors. Designations are voluntary boardapproved segregations of unrestricted net assets for specific purposes, projects, or investments.
Temporarily restricted net assets-Net
assets whose use has been limited by donor-imposed
time
restrictions or purpose restrictions.
Permanently restricted net assets-Net
assets that have been restricted by donors to be maintained by
WCCN in perpetuity.
Investments
WCCN carries all investments at fair value. Realized and unrealized gains and losses are included in the
change in net assets in the accompanying consolidated statements of activities.
Notes Receivable
Notes receivable consist
of amounts
due from microfinance
organizations
and producer
cooperatives/associations in Latin America. Interest income is accrued on a monthly basis. The allowance
for loan loss reserve is estimated based on an analysis of the risk criteria for each borrower in the
portfolio and excludes notes carried at fair value. A percentage of the loan amount is set aside in the
allowance account based on the risk assessment. The aggregate of those assessments is used as a
means to estimate the amount needed in the allowance account. For notes carried at fair value, the fair
value is determined by discounting the future cash flows, using the current rates at which similar loans
would be made to borrowers with similar credit ratings and for the same remaining maturities, of such
loans. WCCN considers any loans 90 days or more past due delinquent unless the loan is restructured
and puts them in nonaccrual status.
8
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,2012,2011, and 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Derivatives
WCCN uses derivatives as fair value hedges for the notes receivable carried at fair value for the foreign
exchange risk so that the return on these notes are similar to the other notes receivable. Derivates used
include cross currency swaps and forward contracts which are measured at fair value. Changes in fair
value are recorded when they occur in the statement of activities.
Equipment
Purchases of equipment in excess of $3,000 are capitalized and depreciated over the asset's useful life
using the straight-line method.
Notes Payable
WCCN borrows funds from individuals and organizations at interest rates that averaged 3.71%, 3.91%,
and 4.04% at December 31,2012,2011,
and 2010. While less than the rates charged by commercial
lenders, these rates approximate the prevailing rate in the community credit market. Accordingly, notes
payable are recorded at their face value.
.
Contributions
Contributions are recognized when the donor makes a promise to give that is, in substance,
unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net
assets if the restrictions expire in the year in which the contributions are recognized. All other donorrestricted contributions are reported as increases in temporarily or permanently restricted net assets
depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets
are reclassified to unrestricted net assets.
Expense Allocation
The costs of providing the various programs and other activities have been summarized on a functional
basis in the consolidated statements of activities and in the consolidated statements of functional
expenses. Accordingly, certain costs have been allocated among the program services and supporting
activities benefited.
Income Tax Status
WCCN is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. In
addition, WCCN qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has
been classified as an organization other than a private foundation under Section 509(a)(2). Community
Needs, LLC is observed as a "disregarded entity" and therefore all activity of this entity is reported on the
informational return of WCCN. WCCN's federal exempt organization information is subject to examination
by the Internal Revenue Service, generally for three years after they are filed. With few exceptions,
WCCN is no longer subject to such examinations for years before 2009.
9
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December31, 2012, 2011, and 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Estimates
The preparation of consolidated financial statements in conformity with 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.
Date of Management's Review
Management has evaluated subsequent events through March 29, 2013, the date which the consolidated
financial statements were available to be issued.
NOTE 2 - RETIREMENT PLAN
WCCN has a SIMPLE IRA plan in which employees with prior year earnings of $3,000 or more are
eligible to participate. Employer contributions to the plan are 3% of the employee's annual compensation.
Retirement expense was $8,670, $7,902, and $8,267 for 2012,2011, and 2010.
NOTE 3 - OPERATING LEASE
WCCN rents office space in Madison, Wisconsin under an annual lease agreement that requires monthly
payments of $2,117. Lease expense was $24,427, $25,954, and $25,404 in 2012, 2011, and 2010.
Community Needs, LLC rents office space adjacent to WCCN under an annual lease agreement that
requires monthly payments of $463. Lease expense for the LLC was $5,120 and $6,199 for 2012 and
2011.
NOTE 4 - RELATED PARTIES
WCCN had notes payable to board members totaling $93,249, $112,183, and $112,122 at December 31,
2012, 2011 and 2010. The interest rates on the notes range from 0% to 3.5% and the notes mature on
various dates between August 2014 and January 2017.
NOTE 5 - OTHER RECEIVABLES
During 2010, WCCN was
receivable which is included
The outstanding balance on
accounts was $360,550 and
at December 31,2012.
assigned receivables of one of the borrowers in exchange for its note
in the other receivables on the consolidated statements of financial position.
the receivables was $361,150, and $388,300 and the allowance for doubtful
$368,885 at December 31, 2011 and 2010. There were no other receivables
NOTE 6 - INVESTMENTS
Investments at December 31,2012,2011,
and 2010 consisted of the following:
2012
2011
2010
Money fund
Mutual funds
$
$
564,980
50,648
$
1,252,605
280,734
Investments
$
$
615,628
$
1,533,339
10
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December31, 2012, 2011, and 2010
NOTE 6 -INVESTMENTS
(continued)
Investment return consisted of the following:
2012
Interest and dividends
$
2010
2011
1,114,086
$
954,746
10,838
(2,062)
Loss on hedging of interest
(26,634)
(4,755)
Change in fair value
(30,819)
(42,794)
Unrealized and realized gains (losses)
Investment return
$
1,067,471
$
905,135
$
939,180
(10,267)
$
928,913
NOTE 7 - DERIVATIVE FINANCIAL INSTRUMENTS
To manage fluctuations of foreign currency values related to loans denominated in foreign currencies,
WCCN entered into one cross currency interest swap agreement and one forward foreign exchange
contract, which mature in concert with the outstanding foreign currency notes receivable. WCCN does not
enter into derivative financial instrument agreements for trading or speculative purposes.
A cross currency interest swap is a foreign exchange agreement between two parties to exchange
principal and fixed rate interest payments on a loan in one currency for principal and fixed rate interest
payments on an equal loan in another currency. As a result of the currency swap agreement, WCeN has
eliminated its currency risk that the value of the loan repayments would be less or greater than the
original loan amounts. A forward foreign exchange contract is an agreement between two parties to
exchange one currency for another at a future date. Embedded in the cross currency interest rate swap is
a forward contract which creates the obligation for both parties to close the swap agreement at the
agreed upon maturity date.
Both of the derivative instruments are designated as fair value hedges to hedge the notes receivable
measured at fair value. The fair value of the derivatives is presented gross in the statement of financial
position.
The following gains and losses are reported in the consolidated statements of activities for the derivative.
instruments designated and qualifying as hedging instruments in fair value hedges and related hedged
items designated and qualifying in fair value hedge for the year ended December 31, 2012 and 2011:
Gain (loss) on
the derivative.
Gain (loss) on
the hedged Item
Total
Cross currency interest swap
Forward foreign exchange
$
(18,891)
{6,600~
$
20,702
{26,030~
$
1,811
{32,630~
Total gain (loss) - 2012
$
(25,491)
$
{5,328)
$
(30,819)
Cross currency interest swap
Forward foreign exchange
$
(25,171)
{20,029~
$
18,919
{16,513}
$
(6,252)
{36,542}
Total gain (loss) - 2011
$
(45,200)
$
2,406
$
(42,794)
11
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012,2011, and 2010
NOTE 8 - NOTES RECEIVABLE
Capital for Communities Fund (CC Fund, formerly known as the NICA Fund)
During 2012, WCCN held loan agreements with 13 non-governmental organizations, six cooperatives, 5
private institutions, and one financial institution in Latin America. These organizations use borrowed funds
under the terms of the loan agreements for various projects in Latin America. The loans are for terms of
three months to three years at interest rates ranging from 9% to 11%. Interest payments are generally
due quarterly and principal payments are due semi-annually. Since the loans are considered to be at a
market rate of interest, no additional discounting is deemed necessary. There were no past due notes
receivable at year end.
Notes receivable for the CC Fund at December 31, 2012, 2011, and 2010 consisted of the following:
CC Fund notes receivable
Less loan loss reserve
2012
2011
2010
$ 10,627,938
$ 8,473,613
$ 8,616,711
341,373
254,207
263,004
10,286,565
6,876,563
8,219,406
5,221,562
8,353,707
5,299,478
$ 3,410,002
$ 2,997,844
$ 3,054,229
CC Fund notes receivable - net
Less current portion
CC Fund notes receivable less current portion
Community Needs, LLC (eN LLC)
WCCN maintains an agreement with Community Needs, LLC for services related to communications and
payment collections on the receivables of the Community Needs, LLC. During 2012, Community Needs,
LLC held loan agreements with three agricultural cooperatives and two microfinance organizations in
Latin America. Since the loans are considered to be at market rate of interest, no additional discounting
is deemed necessary. There were no past due notes receivable at year-end.
Notes receivable for the CN LLC at December 31,2012,2011,
and 2010 consisted of the following:
2011
2010
$ 1,543,205
$ 1,100,000
61,728
33,000
1,481,477
1,481,477
1,067,000
1,067,000
2012
CN LLC notes receivable
Less loan loss reserve
$
CN LLC notes receivable - net
Less current portion
CN LLC notes receivable less current portion
=$======
12
$
$
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December31, 2012,2011, and 2010
NOTE 8 - NOTES RECEIVABLE (continued)
Community Needs, LLC elected the fair value option for its notes receivable denominated in foreign
currencies. Electing the fair value option allows Community Needs, LLC to carry these notes receivable at
fair value, which is more consistent with management's view of the underlying economics and the manner
in which they are managed. In addition, accounting for these notes receivable at fair value reduces the
accounting asymmetry that would otherwise result from carrying them at historical cost, like the other
notes receivable Community Needs, LLC holds, and the related derivatives at fair value.
The contractual payments on the two notes receivable translated in U.S. dollars at December 31,2012
and 2011 were $992,693 and $1,204,673. The fair value on these notes totaled $995,363 and
$1,200,691, $2,670 higher and $3,982 lower than the contractual payments. The amounts of gains
(losses) in changes in fair value for the assets the fair value option were elected totaled ($5,328) and
$2,406 for the year ended December 31,2012 and 2011 and are reported under the investment return
line in the consolidated statements of activities. Gains (losses) included in changes in net assets during
2012 and 2011 attributable to changes in instrument-specific credit risk totaled $2,100 and ($12,128).
These gains and losses were determined based on the risk assessment on the credit riskiness of the
. borrower.
NOTE 9 - NOTES PAYABLE
Capital for Communities Fund (CC Fund)
Through the Capital for Communities Fund, WCCN accumulates funds from lenders in the United States
and in turn lends in larger amounts to various organizations in Latin America that operate loan programs
serving low-income borrowers. As of December 31, 2012, 2011, and 2010, there were approximately
4300 notes executed each year with cumulative unpaid principal of $11,792,617, $10,140,964, and
$9,108,679. Interest rates on the notes range from 0% to 6% with maturities of one to five years. Since
the loans are considered to be at a market rate of interest in the community credit market, no additional
discounting is deemed necessary.
Notes payable for the CC Fund consisted of the following at December 31 í 2012, 2011, and 2010:
2012
2011
Notes payable
Less current portion
$ 11,792,617
2,958,427
$ 10,140,964
2,933,581
$
9,108,679
3,244,706
Notes payable less current portion
$
$
$
5,863,973
2013
2014
2015
2016
2017
$
2,958,427
2,506,356
2,750,492
2,390,104
1,187,238
Total
$ 11,792,617
8,834,190
7,207,383
2010
Principal maturities of the notes payable for the years ending December 31 are as follows:
13
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December31, 2012, 2011, and 2010
NOTE 9 - NOTES PAYABLE (continued)
Community Needs, LLC Fund (CN LLC)
Community Needs, LLC is capitalized only with contributions from WCCN.
NOTE 10 - TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets are available for the following purposes:
2011
2012
2010
CC Equity Fund
Various Projects in Latin America
$
249,784
$
249,784
1,443
$
249,784
693
Temporarily restricted net assets
$
249,784
$
251,227
$
250,477
NOTE 11 - CONCENTRATION
OF CREDIT RISK
The amounts loaned by WCCN to organizations in Latin America ("borrowing agencies") are in turn lent to
small enterprises and individuals in Latin America. WCCN has disbursed such loans in Nicaragua, EI
Salvador, Guatemala, Ecuador, Honduras, and Peru. The majority of the loans are disbursed in
Nicaragua. Notes executed between WCCN and the borrowing agencies are generally collateralized by
assets of limited value. The nature of the loans and the limited value of collateral constitute a significant
concentration of credit risk for WCCN. Since this portion of WCCN's assets is concentrated outside the
United States, it is reasonably possible that operations could be interrupted in the near term. All notes
payable and notes receivable are denominated solely in United States dollars except for the notes
receivable measured at fair value and hedged using derivatives, so there is no direct currency risk to
WCCN from these financial instruments.
The notes from lenders to WCCN hold WCCN harmless for default on repayment if borrowing agencies
default on notes to WCCN. If these hold harmless clauses are legally enforceable, then WCCN's losses
on the borrowing agencies' default on their notes would not be significant. If the hold harmless clauses
are not enforceable, then WCCN could be held liable for any outstanding unpaid balances on its notes
with lenders. Under such circumstances, WCCN's other assets may not be sufficient to repay the original
lenders.
Fondo de Garantia de Depositos de las Instituciones Financieras insures Nicaragua bank accounts up to
$20,000. WCCN's deposits in excess of this limit were $17,774 at December 31, 2012. There were no
deposits in excess of this limit at December 31, 2011 and 2010.
14
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2011, 2010, and 2009
NOTE 12 - FAIR VALUE MEASUREMENTS
Fair values of assets and liabilities measured on a recurring basis at December 31,2012,2011
are as follows:
and 2010
Fair Value
Quoted
Prices in
Active Markets
for Identical
Assets
~LeveI1}
Derivative - liability
Notes receivable
$
70,691
995,363
$
$
$
70,691
995,363
2012
$
1,066,054
$
$
$
1,066,054
Money fund
Mutual funds
Derivative - liability
Notes receivable
$
564,980
50,648
45,200
1,200,691
$
$
$
2011
$
1,861,519
$
615,628
$
$
Money fund
Mutual funds
$
1,252,605
280,734
$
1,252,605
280,734
$
$
2010
$
1,533,339
$
1,533,339
$
$
564,980
50,648
Significant
Other
Observable
Inputs
{LeveI2}
Significant
Unobservable
Inputs
{LeveI3}
45,200
1,218,907
1,264,107
Fair values for money funds and mutual funds are determined by reference to quoted market prices and
other relevant information generated by market transactions. Fair values of notes receivable is
determined by discounting the future cash flows, using the current rates at which similar loans would be
made to borrowers with similar credit ratings and for the same remaining maturities, of such loans. Fair
value of the derivatives is determined by the present value of future expected cash flows by using the
estimated forward currency rates at the time of the measurement.
15
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2012, 2011, and 2010
NOTE 12 - FAIR VALUE MEASUREMENTS
(continued)
For fair value measurements using Level 3 inputs, a reconciliation of the beginning and ending balances
are as follows:
Notes
Receivable
Derivatives
$
$
Balance - December 31,2010
Total
$
Issuances
Unrealized gain (loss) included
in changes in net assets
{45,200}
2,406
Balance - December 31,2011
(45,200)
1,200,691
1,198,285
Settlements
Unrealized gain (loss) included
in changes in net assets
1,198,285
~42,794}
1,155,491
(200,000)
{25,491}
$
Balance - December 31,2012
16
(70,691}
(200,000)
~5,328}
$
995,363
~30,819}
$
924,672
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
CONSOLIDATING
SCHEDULE OF FINANCIAL POSITION
December 31, 2012
ASSETS
CURRENT ASSETS
Cash
Accrued interest receivable
Investments
CC Fund notes receivable - current portion
CN LLC notes receivable - current portion
Notes receivable fair value - current portion
Prepaid expenses
Unconditional promises to give
Other receivables
Community
Needs, LLC
WCCN
$
1,645,063
148,876
$
1,038,958
120,430
Eliminations
$
Total
$
6,876,563
6,876,563
205,230
Total current assets
2,684,021
269,306
205,230
10,200
50,000
10,200
50,000
16,596
14,897
{31,493)
8,747,298
1,379,515
(31,493)
10,095,320
Equipment - net
OTHER ASSETS
CC Fund notes receivable less current portion
Notes receivable fair value less current portion
Investment in CN, LLC
Total assets
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Current portion of notes payable
Accounts payable
Derivatives fair value
Deferred revenue
Accrued interest payable - current portion
Grants payable
3,410,002
2,082,361
{2,082,361 )
$
14,239,661
$
$
2,958,427
40,555
$
3,127,820
LONG-TERM LIABILITIES
Accrued interest payable less current portion
Notes payable less current portion'
$
(2,113,854)
$
16,596
70,691
(31,493)
87,287
(31,493)
$
14,295,455
$
2,958,427
25,658
70,691
5,600
36,838
86,400
3,183,614
142,830
8,834,190
Total liabilities
142,830
8,834,190
12,104,840
NET ASSETS
Unrestricted
Temporarily restricted
Member equity
87,287
(31,493)
12,160,634
1,885,037
249,784
Total net assets
and net assets
2,169,648
5,600
36,838
86,400
Total current liabilities
Total liabilities
3,410,002
790,133
790,133
1,885,037
249,784
2,134,821
$
14,239,661
17
$
2,082,361
{2,082,361 )
2,082,361
{2,082,361 )
2,169,648
$
{2,113,854)
2,134,821
$
14,295,455
WORKING CAPITAL FOR COMMUNITY NEEDS, INC.
CONSOLIDATING SCHEDULE OF ACTIVITIES
Year ended December 31,2012
WCCN
UNRESTRICTED NET ASSETS
SUPPORT AND REVENUE
Investment return
Contributions
Loan fees
Tour fees
Sales
Other
$
Total unrestricted support and revenue
EXPENSES
Personnel
Interest on investor loans
Consultants
Legal
Grants and allocations
Office expense
Accounting
Resources
Insurance
Bank and investment fees
Occupancy
Travel and training
Conferences and meetings
Provision for loan losses
Marketing
Other
Total expenses
Net assets released from restrictions
Change in unrestricted
1,089,488
149,636
93,593
22,539
1,461
5,103
Community
Needs, LLC
$
164,140
Eliminations
$
(186,157)
Total
$
1,361,820
164,140
321,093
406,657
110,582
32,405
99,434
32,523
15,832
9,701
7,690
26,183
41,688
54,664
13,420
87,166
14,196
2,001
12,265
1,499
2,058
302
625
1,089
5,121
5,653
1,114
(61,728)
1,131
885
333,358
406,657
117,309
33,647
99,434
34,022
17,890
10,003
8,315
27,272
46,809
60,317
14,534
25,438
15,327
2,886
1,275,235
(22,017)
1,253,218
(186,157)
1,339,803
6,727
1,242
1,443
net assets
1,067,471
149,636
93,593
22,539
1,461
5,103
1,443
88,028
186,157
(186,157)
88,028
TEMPORARIL y RESTRICTED NET ASSETS
Net assets released from restrictions
(1,443)
(1,443)
Change
(1,443)
(1,443)
in temporarily
Change in net assets
restricted
net assets
$
86,585
18
$
186,157
$
(186,157)
$
86,585