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| Notes to Financial Statements | |||
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1. Organization The Grotto Foundation, Inc. was established in 1964. The mission of the Grotto Foundation is to benefit society by improving the education and the economic, physical, and social well-being of citizens, with a special focus on families and culturally diverse groups. The Foundation is further interested in increasing public understanding of American cultural heritage, the cultures of nations, and the individual's responsibility to fellow human beings. The organization accomplishes its mission through direct financial support in the form of grants; consultative services provided to charitable organizations in areas of program planning, administration and reporting; and direct programming related to the Grotto Foundation Native Language Revitalization Initiative and the collaborative Marbrook Foundation/Grotto Foundation American Indian Family Empowerment Program. | |||
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2. Summary of Significant Accounting Policies Cash and Cash Equivalents For purposes of the Statements of Cash Flows, the Foundation considers all highly liquid investment instruments purchased with an original maturity of three months or less, other than those held for investment purposes under custodial and management agreements, to be cash equivalents. | |||
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Receivables No allowance for uncollectible amounts has been provided since all amounts are deemed collectible. | |||
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Contributions Receivable Contributions receivable represents the estimated net present value of the Foundation's interest in an irrevocable annuity trust held by a third party. The Foundation will receive the trust assets following the death of the second of two income beneficiaries. The net present value of the receivable was determined using investment returns consistent with the composition of the asset portfolio, life expectancies from Internal Revenue Service tables, and a discount rate of 8%. | |||
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Investments Investments are reported at fair values using quoted market prices at year-end. Purchases and sales are recorded on the trade-date basis. Interest and dividend income are recorded on the accrual basis, and dividends are recognized as income on the ex-dividend date. | |||
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Timber Rights In 1996, the Foundation was the beneficiary of timber rights from the Louis W. Hill Jr. estate. Timber rights were recorded at their July 1, 1995, appraised value, which has been reduced by the value applicable to timber sold. Approximately 70% of the timber had been sold through April 30, 2002. The remaining timber rights were appraised as of July 1, 2000, and the recorded value was adjusted to the lower appraised amount. Accordingly, the accompanying Statements of Unrestricted Activities for the year 2001 reflect an unrealized holding loss of $511,369 related to the timber rights. Any gain or loss on the sale of timber is recognized and reflected as such on the Statements of Unrestricted Activities; no timber was sold during the years ended April 30, 2002 and 2001. The timber harvest plan is subject to the harvest constraints of the Oregon Forest Practice Act, which limits the number of acres that can be harvested at one time. The current intent is to harvest the remaining timber in 2002. The appraised value reflects a discount for the time-related financial risks associated with the harvest limitations. | |||
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Grants Grants are recorded as expenses in the period they are authorized by the Board of Directors. Significant grants payable one year or more from April 30 are discounted to their present value and shown as liabilities on the Statements of Financial Position. | |||
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Income Taxes The Foundation is organized and operated as a private foundation and is exempt from income taxes under Internal Revenue Code Section 501(c)(3). The Foundation is subject to federal excise taxes on net investment income. | |||
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Property and Equipment Property and equipment are stated at cost less accumulated depreciation. The Foundation depreciates property and equipment over their estimated useful lives of three to ten years, using the straight-line method. | |||
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Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, ultimate results could differ from those estimates. | |||