FOUNDATIONFORINDIVIDUALRIGHTS

INEDUCATION,INC.

FINANCIALSTATEMENTS

SIXMONTHPERIODENDEDJUNE30,2013

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
TABLEOFCONTENTS
SIXMONTHPERIODENDEDJUNE30,2013

INDEPENDENTAUDITORSREPORT

FINANCIALSTATEMENTS
STATEMENTOFFINANCIALPOSITION

STATEMENTOFACTIVITIES

STATEMENTOFFUNCTIONALEXPENSES

STATEMENTOFCASHFLOWS

NOTESTOFINANCIALSTATEMENTS

INDEPENDENTAUDITORSREPORT

BoardofDirectors
FoundationforIndividualRightsinEducation,Inc.
Philadelphia,Pennsylvania

WehaveauditedtheaccompanyingfinancialstatementsofFoundationforIndividualRightsinEducation,Inc.(a
nonprofitorganization),whichcomprisethestatementoffinancialpositionasofJune30,2013,andtherelated
statements of activities, functional expenses, and cash flows for the sixmonth period then ended, and the
relatednotestothefinancialstatements.
ManagementsResponsibilityfortheFinancialStatements
Managementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordance
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
financialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
AuditorsResponsibility
Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.Weconductedour
auditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Thosestandards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statementsarefreefrommaterialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors judgment, including the assessment of
therisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthose
riskassessments,theauditorconsidersinternalcontrolrelevanttotheentityspreparationandfairpresentation
ofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,but
notforthepurposeofexpressinganopinionontheeffectivenessoftheentitysinternalcontrol.Accordingly,we
expressnosuchopinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedand
thereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverall
presentationofthefinancialstatements.

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

An independent member of Nexia International

(1)

BoardofDirectors
FoundationforIndividualRightsinEducation,Inc.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Foundation for Individual Rights in Education, Inc. as of June 30, 2013, and the changes in its net
assetsanditscashflowsforthesixmonthperiodthenendedinaccordancewithaccountingprinciplesgenerally
acceptedintheUnitedStatesofAmerica.

CliftonLarsonAllenLLP

PlymouthMeeting,Pennsylvania
November8,2013

(2)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
STATEMENTOFFINANCIALPOSITION
JUNE30,2013

ASSETS
CURRENTASSETS
CashandCashEquivalents
CertificatesofDeposit
PledgeReceivable
PrepaidExpenses
TotalAssets

$1,724,183
750,000
300,000
22,603
2,796,786

EQUIPMENTANDWEBSITEDESIGN

23,610

OTHERASSETS
SecurityDeposit
PledgeReceivable,NetofCurrentPortion

21,770
144,620

TotalAssets

$2,986,786
LIABILITIESANDNETASSETS

CURRENTLIABILITIES
AccountsPayableandAccruedExpenses
DeferredRent
TotalCurrentLiabilities

$38,590
49,538
88,128

NETASSETS
Unrestricted
TemporarilyRestricted
PermanentlyRestricted

1,668,242
1,207,120
23,296

TotalNetAssets

2,898,658

TotalLiabilitiesandNetAssets

$2,986,786

SeeaccompanyingNotestoFinancialStatements.
(3)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
STATEMENTOFACTIVITIES
SIXMONTHPERIODENDEDJUNE30,2013

Unrestricted

Temporary
Restricted

Permanently
Restricted

Total

$511,147
4,498

$1,285,620

$
1

$1,796,767
4,499

(844)
6,775
521,576

1,285,620

(844)
6,775
1,807,197

245,300

(245,300)

TotalSupportandRevenue

EXPENSES
ProgramServices
AdministrativeServices
Development
TotalExpenses

766,876

1,040,320

1,807,197

938,134
108,720
132,496
1,179,350

938,134
108,720
132,496
1,179,350

CHANGEINNETASSETS

(412,474)

1,040,320

627,847

NetAssetsBeginningofYear

2,080,716

166,800

23,295

2,270,811

NETASSETSENDOFPERIOD

$1,668,242

$1,207,120

$23,296

$2,898,658

SUPPORTANDREVENUE
ContributionsandGrants
InterestIncome
RealizedLosseson
StockDonations
OtherIncome
Total
NetAssetsReleasedfrom
Restrictions

SeeaccompanyingNotestoFinancialStatements.
(4)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
STATEMENTOFFUNCTIONALEXPENSES
SIXMONTHPERIODENDEDJUNE30,2013

AwardsandScholarships
BusinessInsurance
Communications
ComputerandNetworkCosts
Depreciation
DuesandSubscriptions
LecturesandConferences
Occupancy
OfficeExpenses
PostageandDelivery
PrintingandReproduction
ProfessionalFees
PublicityandAdvertising
Research
StaffTrainingandDevelopment
TaxesandLicenses
TravelandEntertainment
Wages,PayrollTaxesandBenefits
Total

Individual
RightsDefense
Program

ProgramServices
Individual
Campus
RightsEducation
Freedom
Program
Network

$22
1,067
3,020
4,234

433
671
15,509
2,518
2,986
7,970
25,316
1,600
1,301
1,730
2
19,814
163,636
$251,829

$ 17
911
2,541
3,547

370
571
13,216
2,084
2,487
6,808
21,575
1,358
1,112
1,445
2
14,938
139,826
$212,808

$ 12
546
1,560
2,192

222
344
7,949
1,303
1,552
4,079
12,856
822
666
897
1
6,972
83,729
$125,702

Policy
Reform

Total
Program
Services

Management
and
General

Development

Total

$29
1,487
4,180
5,848

604
934
21,597
3,459
4,113
11,112
35,207
2,224
1,814
2,386
3
24,520
228,278
$347,795

$ 80
4,011
11,301
15,821

1,629
2,520
58,271
9,364
11,138
29,969
94,954
6,004
4,893
6,458
8
66,244
615,469
$ 938,134

$10
501
1,411
1,975
2,659
204
315
7,275
2,865
1,391
3,742
11,854
250

806
1
2,407
71,054
$108,720

$ 11
496
1,417
1,992

201
313
7,221
1,743
1,410
3,705
11,736
248

815
1
8,275
92,912
$ 132,496

$101
5,008
14,129
19,788
2,659
2,034
3,148
72,767
13,972
13,939
37,416
118,544
6,502
4,893
8,079
10
76,926
779,435
$ 1,179,350

SeeaccompanyingNotestoFinancialStatements.
(5)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
STATEMENTOFCASHFLOWS
SIXMONTHPERIODENDEDJUNE30,2013

CASHFLOWSFROMOPERATINGACTIVITIES
ChangeinNetAssets
AdjustmentstoReconcileChangeinNetAssets
toNetCashProvidedbyOperatingActivities
Depreciation
(Increase)Decreasein:
PledgeReceivable
PrepaidExpenses
Increase(Decrease)in:
AccountsPayableandAccruedExpenses
DeferredRent
NetCashProvidedbyOperatingActivities

$627,847

2,659
(444,620)
(10,107)
(18,960)
(6,664)
150,155

CASHFLOWFROMINVESTINGACTIVITIES
RedemptionofCertificateofDeposit
WebsiteDesign
NetCashProvidedbyInvestingActivities

250,000
(19,264)
230,736

NETINCREASEINCASHANDCASHEQUIVALENTS

380,891

CashandCashEquivalentsBeginningofYear

1,343,292

CASHANDCASHEQUIVALENTSENDOFPERIOD

$1,724,183

SeeaccompanyingNotestoFinancialStatements.
(6)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
NOTESTOFINANCIALSTATEMENTS
JUNE30,2013

NOTE1

SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
NatureofOperations
TheFoundationforIndividualRightsinEducation,Inc.(theFoundation)wasincorporatedonApril
8, 1999. The Foundation is a Massachusetts nonprofit corporation, based in Philadelphia,
Pennsylvania, whose mission is to defend and sustain individual rights at Americas colleges and
universities.Theserightsincludefreedomofspeech,legalequality,dueprocess,religiousliberty,
and sanctity of conscience the essential qualities of individual liberty and dignity. The
Foundationscoremissionistoprotecttheunprotectedandtoeducatethepublicandcommunities
of concerned Americans about threats to these rights on our campuses and about the means to
preservethem.TheFoundationissupportedthroughprivatecontributionsandgrants.

BasisofPresentation
Theaccompanyingfinancialstatementshavebeenpreparedontheaccrualbasisofaccounting.

ChangeinFiscalYear
EffectiveJanuary1,2013,theFoundationchangedfromacalendaryearendofDecember31toa
fiscal year end of June 30. These financial statements are a sixmonth fiscal transition period of
January1,2013throughJune30,2013.

ClassificationofNetAssets
Resources in the accompanying financial statements are classified for accounting and reporting
purposesintothreeclassesofnetassetsaccordingtotheexistenceorabsenceofdonorimposed
restrictionsasfollows:

PermanentlyRestrictedNetAssets
Netassetsthataresubjecttodonorimposedrestrictionsthataretobemaintainedpermanently
by the Foundation or used to account for funds which have been accepted with donor
stipulationsthatprincipalbemaintainedintactinperpetuity.AtJune30,2013,theFoundation
hadpermanentlyrestrictednetassetsof$23,296.

TemporarilyRestrictedNetAssets
Netassetsthataresubjecttodonorimposedrestrictionsrelatingtouseand/orthepassageof
time. When a restriction expires, temporarily restricted net assets are reclassified to
unrestrictednetassetsandreportedinthestatementofactivitiesasnetassetsreleasedfrom
restriction. At June 30, 2013, the Foundation had temporarily restricted net assets of
$1,207,120.

UnrestrictedNetAssets
Netassetsthatarenotsubjecttodonorimposedrestrictions.

(7)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
NOTESTOFINANCIALSTATEMENTS
JUNE30,2013

NOTE1

SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
ClassificationofNetAssets(Continued)
Revenues are reported as increases in unrestricted net assets unless use of the related assets is
limitedbydonorimposedrestrictions.Expensesaregenerallyreportedasdecreasesinunrestricted
netassets.Expirationsofdonorimposedstipulationsthatsimultaneouslyincreaseoneclassofnet
assetsanddecreaseanotherarereportedasnetassetsreleasedfromrestrictions.

UseofEstimates
Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciples
require management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclose of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Actualresultscoulddifferfromthoseestimates.

CashandCashEquivalents
TheFoundationconsidersallhighlyliquidinvestmentsintraditionalbankaccounts,moneymarket
funds, and certificates of deposit with a maturity of three months or less when purchased to be
cashequivalents.

PledgesReceivable
Unconditional promises to give are recognized as revenue and pledges receivable in the period
received.Conditionalpromisestogivearerecognizedwhentheconditionsonwhichtheydepend
aresubstantiallymet.

Property,EquipmentandDepreciation
Assetspurchasedarestatedatcostanddepreciatedovertheestimatedusefullivesoftherelated
assets. Depreciation is computed over the estimated useful lives. Maintenance and repairs are
charged to the operations when incurred. Significant betterments and renewals are capitalized.
Whenpropertyandequipmentaresoldorotherwisedisposedof,theassetaccountsandrelated
accumulateddepreciationaccountsarerelieved,andanygainorlossisincludedinoperations.

FurnitureandFixtures
5Years

OfficeEquipment
510Years

LeaseholdImprovements
7Years

Contributions
Allcontributionsareconsideredtobeavailableforunrestricteduseunlessspecificallyrestrictedby
the donor. Amounts received that are designated for future use or restricted by the donor for
specific purposes are reported as temporarily restricted or permanently restricted support that
increasesthosenetassetclasses.Whenatemporaryrestrictionexpires,temporarilyrestrictednet
assetsarereclassifiedtounrestrictednetassetsandreportedinthestatementofactivitiesasnet
assetsreleasedfromrestrictions.Thesecontributionsconsistoffundsreceivedfromcorporations,
foundationsandothernonprofitorganizationsforvariousactivitiesprovidedbytheFoundation.

(8)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
NOTESTOFINANCIALSTATEMENTS
JUNE30,2013

NOTE1

NOTE2

SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
DonatedSecurities
The Foundation will receive, onoccasion,donatedsecuritiesfromitsdonors.Onceasecurityhas
been received, the Foundation will immediately sell at the securities fair market value with the
proceedsbeingusedbasedonthedonorsstipulations.Allrealizedgainsandlossesatthetimeof
thesaleareincludedintheFoundationsstatementofactivities.

FunctionalAllocationofExpenses
ThecostsofprovidingtheFoundationsprogramsandotheractivitieshavebeensummarizedona
functional basis. Accordingly, certain costs have been allocated among the programs and
supportingservicesbenefited.Expenses,whichcannotbedirectlyidentifiedwithspecificfunctions,
areallocatedbasedonestimatesofstaffhoursdevotedtovariousfunctions.

IncomeTaxes
The Foundation is a nonprofit organization as described in Section 501(c)(3) of the Internal
Revenue Code and is exempt from federal and state income taxes. Accordingly, there is no
provisionforincometaxes.TheFoundationisnotawareofanyactivitiesthatwouldjeopardizeits
taxexempt status, nor is it aware of any of its activities that are subject to tax on unrelated
businessincometaxes.

The Foundation follows the guidance in the income tax standard regarding the recognition and
measurement of uncertain tax positions. The guidance clarifies the accounting for uncertainty in
income taxes recognized in an entitys financial statements. The guidance further prescribes
recognitionandmeasurementoftaxprovisionstakenorexpectedtobetakenonataxreturnthat
arenotcertaintoberealized.TheapplicationofthisstandardhadnoimpactontheFoundations
financialstatements.

TheFoundationsincometaxreturnsaresubjecttoreviewandexaminationbyfederal,stateand
localauthorities.Thetaxreturnsfortheyears2010,2011and2012areopenforfederalandstate
taxexaminations.

SubsequentEvents
Inpreparingthesefinancialstatements,theFoundationhasevaluatedeventsandtransactionsfor
potential recognition or disclosure through November 8, 2013, the date the financial statements
wereavailabletobeissued.

CONCENTRATIONOFRISK
The Foundation maintains cash balances at a financial institution. The Federal Deposit Insurance
Corporationinsuresbalancesupto$250,000ateachinstitutionfortheyearendedJune30,2013.
TheFoundationscashbalanceswereapproximately$453,705inexcessoftheinsuredamountsat
June30,2013.
(9)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
NOTESTOFINANCIALSTATEMENTS
JUNE30,2013

NOTE2

CONCENTRATIONOFRISK(CONTINUED)
The Foundation maintains cash and cash equivalent balances at a brokerage firm. The Securities
InvestorProtectionCorporation(SPIC)insuresbalancesupto$500,000ateachbrokeragehouseas
of June 30, 2013. The Foundations cash balances were approximately $512,606 in excess of the
insuredamountsatJune30,2013.

NOTE3

PLEDGERECEIVABLE
TheFoundationreceivesgiftsfromtimetotimeintheformofpledges,whicharetobereceivedin
theupcomingyears.Amountsreceivedinexcessofoneyearhavebeendiscountedtonetpresent
valueat2.47%atJune30,2013.Managementbelievestheentireamountsofthepledgereceivables
from these donors are fully collectible and, accordingly, has not provided an allowance on such
receivables.Pledgereceivablesareasfollows:

ReceivableinLessThanOneYear
ReceivableOnetoThreeYears
TotalPledgeReceivable
Less:
DiscounttoNetPresentValue
NetPledgeReceivable

NOTE4

$300,000
150,000
450,000
(5,380)
$444,620

PROPERTYANDEQUIPMENT

PropertyandequipmentasofJune30,2013isrecordedatcostasfollows:

ComputerEquipment
FurnitureandFixtures
LeaseholdImprovements
WebsiteDesign
Total
Less:AccumulatedDepreciation
TotalEquipmentandWebsiteDesign

$ 46,339
92,823
7,650
19,263
$166,075
142,465
$ 23,610

DepreciationexpenseforthesixmonthperiodendedJune30,2013was$2,659.

(10)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
NOTESTOFINANCIALSTATEMENTS
JUNE30,2013

NOTE5

TEMPORARILYRESTRICTED
TemporarilyrestrictednetassetsareavailableforthefollowingpurposesasofJune30,2013:

VideoFellow
iPhoneApplication
LegislativeandPolicyProject
CampusFreeSpeechLegalRestorationProject
EssayContest
Total

$ 20,000
25,000
97,500
1,054,620
10,000
$ 1,207,120

TemporarilyrestrictednetassetsreleasedfromrestrictionsforthesixmonthperiodendedJune30,
2013areasfollows:

SpotlightWebsiteProgram
LegislativeandPolicyProject
JacksonFellowship
VideoFellow
PublicPolicyInnovationProject
FIREInternshipProgram
CampaignFreedomofthePress
2013VideoInitiativeMatchingGrant
Total

NOTE6

$ 75,000
32,500
61,800
10,000
45,000
1,000
5,000
15,000
$245,300

PERMANENTLYRESTRICTED

Endowment
The Foundations endowment consists of one individual fund established primarily to fund
operations. The endowment includes only donorrestricted endowment funds. As required by
GAAP, net assets associated with endowment funds are classified and reported based on the
existenceofdonorimposedrestrictionsorPennsylvaniaLaw.

TheFoundationhasadoptedinvestmentandspendingpoliciesforendowmentassetsthatattempt
toprovideapredictablestreamoffundingtoprogramssupportedbyitsendowmentwhileseeking
tomaintainthepurchasingpoweroftheendowmentassets.Underthispolicy,asapprovedbythe
BoardofTrustees,theendowmentassetsareinvestedinaUSTreasuryMoneyMarketFund.

Thefinancialactivityoftheendowmentfundisreflectedonthestatementofactivitiesunderthe
headingpermanentlyrestricted.

(11)

FOUNDATIONFORINDIVIDUALRIGHTS
INEDUCATION,INC.
NOTESTOFINANCIALSTATEMENTS
JUNE30,2013

NOTE7

OPERATINGLEASES
TheFoundationleasesofficespaceinPhiladelphiaundera126monthlease.Theleasecommenced
on September 1, 2005 and expires in 2016. Rent expense incurred under this lease for the six
monthperiodendedJune30,2013was$71,093.

Minimumfuturerentalpaymentsundernoncancelableoperatingleasehavinginitialorremaining
termsinexcessofoneyearasofJune30,2013areasfollows:

YearEndingJune30,
2014
2015
2016
Total

Amount
$154,978
158,096
107,298
$ 420,372

NOTE8

PENSIONPLAN

NOTE9

TheFoundationhasadefinedcontributionsalarydeferralplan(403(b)plan),coveringsubstantially
all employees. The Foundation matched, dollarfordollar, employees contributions up to a
maximum of $2,000 per year per employee. The total pensionexpenseforthesixmonthperiod
endedJune30,2013was$13,080.

RELATEDPARTYTRANSACTIONS
During the sixmonth period ended June30,2013,theFoundationpaid$834totheFoundations
Vice Presidents wife, who performed various program and administrative functions. In addition,
the Foundation paid $3,325 during the sixmonth period ended June 30, 2013 to the Director of
LegalandPublicAdvocacyswife,whoprovidedgraphicaldesignservicestheFoundation.

(12)