TRUSTEES OF THE BERKSHIRE MUSEU M

FinancialStatements

June30
, 20
17

Table of Contents

Page

Independent Auditors' Report 2- 3

Statement of Financial Position 4

Statement of Activities 5

Statement of Cash Flows 6

Statement of Functional Expenses 7

Notes to Financial Statements 8- 21

 Page 2

Adelson & Company PC

Richard F. LaFleche, CPA
Vincent T. Viscuso, CPA
Gary J. 1\loynihan, CPA
CERTIFIED PuBuc AccouNTAl'\TS
Carol Leihinger-Healey, CPA
Established 1938
David M. Irwin, Jr., CPA

INDEPENDENT A UDITORS' REPORT

To the Board of Trustees of the

TRUSTEES OF THEBERKSHIRE MUSEUM
Pittsfield, MA 01201

Reporton the FinancialStatements

We have audited the accompanying financial statements of Trustees of the Berkshire Museum (a nonprofit
organization), which comprise the statement of financial position as of June 30, 2017, and the related statements of
activities, functional expenses, changes in net assets, and cash flows for the year 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 financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit 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 financial statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.

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

100 NORTH STREET, PITTSFIELD. Ml\ 01201. PHONE (413) 443-6408, FAX (413) 443-7838
32 MAHAIWE STREET, GREAT BARRINGTON. MA 01230, PHONE (413) 528-5699, FAX (413) 528-5626
WWW.ADELSONCI'A.COM • EMAIL: INFO@ADELSONCP A .COM

�IE�IBF:RS: AM�;RICi\N INSTITUTE OF C�RTIFIED PUBLIC ACCOUNTANTS. :\IASSACHUSE'rl'S SOCIETY OF CERTIFIED PUBLIC ACCOllYI'ANTS
 Page 3

Opinion
In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial
position of Trustees of the Berkshire Museum as of June 30, 2017, and the changes in its net assets and its cash
flows for the year then ended in accordance with accounting principles generally accepted in the United States of
America.

Reporton Su m marized Co mparati ve In for mation

We have previously audited the Trustees of the Berkshire Museum's 2016 financial statements, and we expressed
an unmodified audit opinion on those audited financial statements in our report dated November 8, 2016. In our
opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2016, is
consistent, in all material respects, with the audited financial statements from which it has been derived.

ADELSON & COMPANY PC

Pittsfield, MA

May 25,2018

Adelson & Company PC

CERTIFIED PuBLIC AccouNTANTS
 Page4

TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF FINANCIAL POSITION

June 30,

Comparative

2017 2016
ASSETS

Current assets

Cash and equivalents $ 630,794 $ 426,268

Short-term investments 15,637 486,672
Accounts receivable 49,964 63,000
Unconditional promises to give 352,167 492,517
Inventories - museum shop 19,787 14,690
Prepaid expenses 122,556 52,601
Total current assets 1,190,905 1,535,748

Cash restricted-endowment 34,505 47,277

Unconditional promises to give, long-term 1,011,805 1,262,811
Long-term investments 6,913,994 6,919,357
Property and equipment, net 9,789,534 9,965,015

TOTAL ASSETS $ 18,940,743 $ 19,730,208

LIABILITIES AND NET ASSETS

Current liabilities

Accounts payable $ 275,575 $ 298,630

Accrued payroll 82,934 75,300
Notes payable due within one year 1,852,426 1,777,426
Deferred income 56,050 36,713
Total current liabilities 2,266,985 2,188,069

TOTAL LIABILITIES 2,266,985 2,188,069

Net assets

Unrestricted 14,690,923 15,094,241

Temporarily restricted 1,636,731 2,120,321
Permanently restricted 346,104 327,577
TOTAL NET ASSETS 16,673,758 17,542,139

TOTAL LIABILITIES AND NET ASSETS $ 18,940,743 $ 19,730,208

See notes to financial statements.

 Page 5

TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF ACTIVITIES

For the Year Ended June 30,

Comparative
Temporarily Permanently Total Total
Unrestricted Restricted Restricted 2017 2016

REVENUE, GAINS AND OTHER SUPPORT

Contributed income
Government grants $ 23,568 $ ---
$ ---
$ 23,568 $ 27,302
Foundations and corporations 373,263 373,263 431,246
Special events, net 159,013 159,013 45,143
Memberships 226,310 226,310 211,938
Annual appeal 76,766 76,766 129,050
Other contributions 157,402 157,402 147,225
In-kind contributions 8,696 8,696 985

Total contributed income 1,025,018 1,025,018 992,889

Earned income
Admissions 186,907 186,907 174,928
Bank interest 1,848 1,848
Museum shop (net of$45,146 cost of goods sold) 48,933 48,933 53,736
Facility rental 3,250 3,250 5,858
Adult programs 85,189 85,189 100,321
Education programs 77,486 77,486 85,293
Traveling exhibitions 50,000 50,000 15,000
Other earned income 3,781 3,781 5,258

Total earned income 457,394 457,394 440,394

Investment support for operating activities 1,272,558 1,272,558 755,255

TOTAL REVENUE, GAINS AND

OTHER SUPPORT 2,754,970 2,754,970 2,188,538

EXPENSES
Program Services 2,149,742 2,149,742 2,174,030
Management and General 387,180 387,180 385,719
Fund-raising 271,700 271,700 330,973

TOTAL EXPENSES 2,808,622 2,808,622 2,890,722

Change in net assets from operating activities (53,652) (53,652) (702,184)

NON-OPERATING ACTIVITIES
Investments used in excess of operating support (686,825) 27,527 (659,298) (797,259)
Berkshire Museum Board Endowment contributions 15,597 15,597 33,463
Capital contributions 77,865 77,865 511,670

Strategic planning grant 18,050 18,050 239,517

Strategic planning expense (266,943) (266,943) (142,006)

Endowment contribution 2,000

Release endowment spending 9,000 (9,000)

Reclassify temporarily restricted to board endowment 89,333 (89,333)

Releases of capital contributions 490,172 (490,172)

TOTAL NON-OPERATING ACTIVITIES (349,666) (483,590) 18,527 (814,729) (152,615)

CHANGE IN NET ASSETS (403,318) (483,590) 18,527 (868,381) (854,799)

Net assets, beginning 15,094,241 2,120,321 327,577 17,542,139 18,396,938

NET ASSETS, ENDING $ 14,690,923 $ 1,636,731 $ 346,104 $ 16,673,758 $ 17,542,139

See notes to financial statements.

 Page 6
TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF CASH FLOWS

For the Year Ended June 30,

Comparative
2017 2016

CASH FLOWS FROM OPERATING ACTIVITIES

CHANGE IN NET ASSETS $ (868,381) $ (854,799)
Adjustments to reconcile change in net assets to
net cash provided (used) by operating activities:
Depreciation 515,065 502,268
Bad debts 4,857
Realized and unrealized (gains) losses on investments (504,229) 179,381
(Increase) decrease in operating assets:
Accounts receivable 13,036 (8,622)
Unconditional promises to give 391,356 59,579
Inventories - museum shop (5,097) 9,029
Prepaid expenses (69,955) (12,129)
Increase (decrease) in operating liabilities:
Accounts payable (23,055) (74,361)
Accrued payroll 7,634 9,224
Deferred income 19,337 10,713
Contributions restricted for long-term purpose:
Endowment (2,000)
Contributions for long-term capital projects (20,000) (425,000)
Berkshire Museum Board Endowment contributions (101,299) (75,534)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (645,588) (677,394)

CASH FLOWS FROM INVESTING ACTIVITIES

(Increase) decrease in short-term investments 471,035 (308,451)
(Increase) decrease in cash restricted-endowment 12,772 (24,118)
Purchases of long-term investments (10,596,541) (1,343,087)
Proceeds from sales of long-term investments 11,106,133 2,144,618
Additions to property and equipment (339,584) (4,080)

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 653,815 464,882

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term debt 75,000
Collections of contributions restricted for long-term purposes 121,299 502,534

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 196,299 502,534

INCREASE (DECREASE) IN CASH AND EQUIVALENTS 204,526 290,022

Cash and equivalents, beginning 426,268 136,246

CASH AND EQUIVALENTS, ENDING $ 630,794 $ 426,268

SUPPLEMENTAL OATA
Interest paid $ 50,055 $ 42,992

See notes to financial statements.

 Page7

TRUSTEES OF THE BERKSHIRE MUSEUM

STATEMENT OF FUNCTIONAL EXPENSES

For the Year Ended June 30,

Comparative
Program Management Fund- Total Total
Services and General raising 2017 2016
Compensation and Related Expenses
Salaries $ 754,666 $ 262,208 $ 165,254 $ 1,182,128 $ 1,211,681
Employee benefits 66,248 34,354 18,729 119,331 124,985
Payroll taxes 56,451 16,814 12,462 85,727 87,808
Total 877,365 313,376 196,445 1,387,186 1,424,474

Bad Debt 4,857

Contracted services 6,546 9,988 16,534 25,509
Dues and subscriptions 2,657 6,936 1,015 10,608 10,877
Event related 3,490 8,657 12,147 20,820
Exhibition costs 60,059 60,059 124,495
Committed grants 99,670 99,670 24,324
Fees 199 20,234 595 21,028 28,740
Institutional advancement 898 136 1,870 2,904 801
Interest 48,424 1,137 494 50,055 42,992
Marketing and advertising 81,122 879 82,001 85,390
Occupancy 244,813 16,265 3,288 264,366 284,166
Postage 6,453 276 3,924 10,653 15,970
Printing 21,954 612 16,711 39,277 46,031
Professional development 5,057 35 5,092 1,054
Professional services 23,868 18,425 400 42,693 46,479
Rental 28,084 37 11,561 39,682 44,567
Revenue share 4,735 4,735 4,863
Service contracts 66,731 3,458 8,569 78,758 78,462
Shipping and handling 8,512 8,512 19,667
Supplies 52,966 1,137 2,010 56,113 51,395
Travel 1,376 108 1,484 2,521
Depreciation 504,763 5,151 5,151 515,065 502,268

TOTAL EXPENSES $ 2,149,742 $ 387,180 $ 271,700 $ 2,808,622 $ 2,890,722

See notes to financial statements.

 Page 8

TRUSTEES OF THEBERKSHIRE MUSEU M

NOTES TO FINANCIAL STATEMENTS

June 30, 20
17

NOTE1-NATURE OF ACTIVITIES AN D SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES

Nature o f Acti vities

The Trustees of the Berkshire Museum (the Museum) is a not-for-profit corporation organized under Chapter 180 of
the laws of the Commonwealth of Massachusetts. The Museum acquires exhibits and preserves art, natural science,
and local history collections. The Museum also provides special performances of the arts, concerts, lectures,
educational movies, classes, bus trips, and various special events to patrons and benefactors primarily from Berkshire
County, Massachusetts.

Income Taxes
The Museum is exempt from federal taxes under Section 501(c )(3) of the Internal Revenue Code and state taxes
under Massachusetts law. In addition, the Museum qualifies for the charitable contribution deduction under
Section 170(b )(I)(A)(vi) and has been classified as an organization that is not a private foundation under Section
509(a)(l).

Management has evaluated significant tax positions against the criteria established by professional standards and
believes there are no such tax positions requiring accounting recognition. The Museum's tax returns are subject
to examination by taxing authorities for all years ending on or after June 30, 2014.

Basis o f AccountingandFinancial Statement Presentation

The financial statements of the Museum have been prepared on the accrual basis of accounting. The Museum is
required to report information regarding its financial position and activities according to three classes of net assets:
unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

Contributions
The Museum accounts for contributions received as increases in unrestricted, temporarily restricted, or
permanently restricted net assets, depending on the existence or nature of any donor restrictions. When a
restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished),
temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of
activities as net assets released from restrictions.

Promises to Gi ve
Unconditional promises to give are recognized as contribution revenue in the period received as assets, decreases of
liabilities, or expenses depending on the form of the benefits received. Promises to give are recorded at net realizable
value if expected to be collected in one year and at fair value if expected to be collected in more than one year.
Conditional promises to give are recognized when the conditions on which they depend are substantially met. The
Museum uses an allowance method for promises to give based upon management's analysis of the accounts and prior
collection experience.

Contributed Services
Volunteers contribute services to the Museum in all aspects of its programs, for which no value has been recognized
in the financial statements because these services did not meet the criteria for recognition under generally accepted
accounting principles.
 Page 9

NOTE 1 - (Continued)

In-Kind Support
The Museum records various types of in kind support including professional services, advertising and materials.
Contributed professional services are recognized at fair market value if the services received (a) create or enhance
long-lived assets or (b) require specialized skills, are provided by individuals possessing those skills, and would
typically need to be purchased if not provided by donation. Contributions of tangible assets are recognized at fair
market value when received. The amounts reflected in the accompanying financial statements as in kind support are
offset by like amounts included in expenses or property and equipment.

CashandEquivalents
For the purpose of the statement of cash flows, the Museum considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.

Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from balances outstanding at year-end.
Based on management's assessment of the credit history with customers having outstanding balances and current
relationships with them, it has concluded that realization losses on balances outstanding at year-end will be
immaterial.

Inventory
Inventory is stated at the lower of acquisition cost or net realizable value and consists of general shop merchandise.
Cost is determined by the first-in, first-out method.

In vest ments
Investments are presented in the financial statements at fair value. Unrealized gains and losses are included in the
change in net assets. Restricted gains and investment income whose restrictions are met in the same period are
recognized and reported as unrestricted revenue and gains.

PropertyandEquip ment
The Organization capitalizes all expenditures for property and equipment with a useful life greater than one year and
in excess of $2,500. Depreciation of buildings and equipment is provided over the estimated useful lives of the assets
using the straight-line method. Purchased equipment is recorded at cost. Donated equipment is recorded at fair
market value at the date of the donation.

De ferred Inco me
Program fees and traveling exhibit income received in advance for services to be rendered in the next fiscal year
are not recognized until earned.

Advertising
The Museum expenses advertising costs as incurred. Advertising expense was $75,009 and $ 69,304 for the years
ended June 2017 and 2016.

Subsequent Events
Management has evaluated subsequent events through May 25, 2018, the date which the financial statements were
available to be issued, and has determined that there are no additional adjustments or disclosures required other than
those events reported in Note 21.
 Page 10

NOTE1 - (Continued)

Use o f Esti mates

The preparation of fmancial statements in conformity with U.S. 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.

Su m marized Co mparative Financial In for mation

The fmancial information for the year ended June 30, 2016, presented for comparative purposes, is not intended to be
a complete financial statement presentation. Certain items in the comparative prior year totals may have been
reclassified to conform to the current year presentation.

NOTE 2- CONCENTRATION OF CRE DIT RISK

Financial instruments, which potentially subject the Museum to concentrations of credit risk, consist principally of
cash. The Museum maintains its cash in various bank deposit accounts, which at times may exceed federally insured
limits. Bank deposits at June 30, 2017 were $492,081, of which $ 416,762 was insured and collateralized and $75,319
was uninsured. The Museum has not experienced any losses in such accounts.
 Page 11

NOTE 3- INVESTMENTS

Investments are comprised of the following groups and reported at fair value:

Comparative
2017 2016
Fair Fair
Value Cost Value Cost
Short-term investments
Cash and equivalents
Money market $ 15,637 $ 15,637 $ 486,672 $ 486,672
Total short-term investments 15,637 15,637 486,672 486,672

Cash-restricted 34,505 34,505 47,277 47,277

Long-term investments
Marketable equity securities 4,853,374 4,092,565 4,523,918 3,736,318
Bonds and notes 2,060,620 2,050,325 2,395,439 2,324,873
Total long-term investments 6,913,994 6,142,890 6,919,357 6,061,191

Total investments $ 6,964,136 $ 6,193,032 $ 7,453,306 $ 6,595,140

The following summarizes the relationship between fair values and the cost of investment assets:

Fair Unrealized
Value Cost Gain (Loss)
Balance at end of year $ 6,964,136 $ 6,193,032 $ 771,104
Balance at beginning of year 7,453,306 6,564,192 889,114

Current year unrealized gains $ (118,010)

Investments held in the above accounts were comprised of restricted and unrestricted amounts at June 30:

Comparative
2017 2016
Unrestricted $ 5,938,629 $ 6,594,308
Board endowment 679,403 531,421
Permanently restricted 346,104 327,577

Total $ 6,964,136 $ 7,453,306

 Page 12

NOTE 3 (Continued)
-

Investment income and its classification in the statement of activities consisted of the following for the years ended
June 30:

Comparative

2017 2016
Interest and dividends $ 150,785 $ 183,813
Realized gains 622,239 162,974
Investment fees (41,754) (46,436)

Current net earnings and realized gains 731,270 300,351

Unrealized gains (losses) (118,010) (342,355)

Investment income (losses), net 613,260 (42,004)

Investment support for operating activities 1,272,558 755,255

Investments used in excess of operating support * $ {659,298) $ {797,259)

*During the years ended June 30, 2017 and 2016, the Organization used investment principal to support operations.

Spending Policy

The Board, as part of approving the annual budget, follows a spending policy to utilize a portion of the net asset
value of the investment portfolio to support operating and program expenses, major maintenance, capital
expenditures, and for securing, protecting and preserving the Museum's collections. The annual funding needs of
the Museum are determined by the amount of the operating deficit in the fiscal year's budget that is approved by
the Board of Trustees. If subsequent operating or funding demands require that an amount over the approved
annual budget is needed, it would require a super-majority (2/3) vote of the Trustees to authorize the additional
funding needs over the approved amount.
 Page 13

NOTE 4-PROPERTY ANDEQUIPMENT

Property and equipment consisted of the following at June 30:

Comparative
2017 2016
Work in progress $ 339,582 $
Land 56,971 56,971
Equipment 567,194 567,194
Aquarium tank 16,049 16,049
Building and improvements 12,950,061 12,950,060
Auditorium improvements 56,234 56,234
Galleries and exhibits 764,219 764,219
Universal access 306,770 306,770

Total property and equipment 15,057,080 14,717,497

Accumulated depreciation (5,267,546) (4,752,482)

Property and equipment, net $ 9,789,534 $ 9,965,015

Depreciation expense was $515,065 and $502,268 for the years ended June 30, 2017 and 2016.

Work in progress consisted of conceptual and schematic design costs incurred towards the proposed renovation of the
facility.

NOTE 5 - UNCONDITIONALPROMISES TO GIVE

Unconditional promises to give at June 30, 2017 are expected to be realized in the following periods:

In one year or less $ 352,167

Between one year and five years 1,207,000

Total 1,559,167

Unamortized discount (185,195)

Allowance for uncollectibles (10,000)

Net Realizable 1,363,972

Portion to be realized within one year (352,167)

Unconditional promises to give, long-term $ 1,011,805

Unconditional promises to give at June 30, 2017 were restricted for the 21st Century Campaign and Master Plan.
Funds are for the purposes of improving the facility, maintaining the integrity of programs and to ensure financial
sustainability into the future.
 Page 14

NOTE 6-SHORT TE RM NOTE

The Museum has a $2,000,000 bank line of credit with variable interest payable monthly at the LIBOR (London
Interbank Offered Rate) one-month rate for U.S. Dollar deposits plus 2.0% (3.22% at June 30, 20 17). The note is
collateralized by investments. The outstanding balances on the line of credit at June 30, 2017 and June 30, 2016
were $1,852,426 and $1,777,426, respectively.

NOTE 7-UNRESTRI CTED NET ASSETS

Unrestricted net assets have been designated by the Board of Directors to be used for the following purposes:

UndesignatedFund
Funds available for and used in day-to-day operations.

AnnualOperations Fund
Funds available for annual operating needs as designated by the Board of Trustees. The Annual Operations fund was
exhausted during the year ended June 30, 2017.

Keep Crane Fund

Funds available for the enhancement, care, preservation and protection of collections.

Operations Fund
Funds available to support operations as designated by the Board of Trustees.

Berkshire Museu m Endow ment Fund

Funds available for program and building needs as designated by the Board of Trustees.

Unrestricted net assets as designated by the Board of Directors were as follows at June 30:

Comparative
2017 2016
Undesignated $ 7,650,600 $ 7,476,583
Annual Operations Fund 534,749
Keep Crane Fund 6,077,438 6,268,446
Operations Fund 168,623 223,555
Berkshire Museum Endowment Fund 794,262 590,908

Total $ 14,690,923 $ 15,094,241

 Page 15

NOTE 7 (Continued)
-

Changes in board designated endowments for the year ended June 30:

Comparative
2017 2016
Board designated endowment net assets, beginning of year $ 590,908 $ 272,177

Contributions 15,597 33,463

Investment return:
Investment income 6,961 6,167
Realized and unrealized gains 46,797 4,254
Total investment return 53,758 10,421

Reclassify temporarily restricted to board endowment (Note 8) 89,333

Interfund transfer of contributions designated to board endowment (Note 8) 44,666 274,847

Board designated endowment net assets, end of year $ 794,262 $ 590,908

During the year ended June 30, 2017, restrictions on a previous year pledge were reviewed to clarify the intent of
the donor. As a result, $133,999 of that pledge was reclassified to unrestricted board designated endowment:
$89,333 from temporarily restricted net assets and $44,666 from undesignated net assets.

NOTE 8-TEMPORARILYRESTRICTED NET ASSETS

Temporarily restricted net assets were available for the following purposes or periods at June 30:

Comparative
2017 2016

Purpose restriction:
Aquarium $ 20,000 $
Change Capital 149,083 300,000
Feigenbaum Hall oflnnovation (FHOI) 104,610 108,880
Theater Upgrade 125,000 125,000
Education Program Endowment 22,000 133,333
Master Planning Process 900 97,511
Time restriction:
21st Century Campaign - operations 1,215,138 1,355,597

Total $ 1,636,731 $ 2,120,321

Education Program Endowment funds of $89,333 were reclassified to board endowment in fiscal 2017 (Note 7).
 Page 16

NOTE 9 -NET ASSETS RELEASE D FROM RESTRICTION

Net assets were released from donor restrictions during the years ended June 30 by incurring expenses satisfying the
following restricted purposes specified by the donors.

Comparative
2017 2016
21st Century Energy Project $ 198,323 $ 200,000
Change Capital 150,917
Education Program 22,000
Feigenbaum Hall oflnnovation (FHOI) 4,270 4,500
Master Planning Process 114,662 142,006
Boraski Endowment 3,200

Total $ 490,172 $ 349,706

NOTE 10-ENDOWMENTS

The Museum's endowment consists of individual funds established for a variety of purposes. Its endowment
includes donor restricted endowment funds (Note 12) and funds designated by the Board of Trustees (Note 8). It
does not include the unrestricted funds designated by the Board. As required by U.S. generally accepted accounting
principles, net assets associated with endowment funds, are classified and reported based on the existence or absence
of donor-imposed restrictions.

Chapter 180A Uniform Prudent Management of Institutional Funds (MA UPMlFA), which except for gift
instruments stating otherwise, allows an organization to spend below the fund's historical dollar value and eliminates
the 7% spending limitation. It sanctions application of a reasonable spending rate to all endowment funds.

The Board of Trustees of the Museum has interpreted the MA UPMIFA as requiring the preservation of the fair
value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor
stipulations to the contrary. As a result of this interpretation, the Museum classifies as permanently restricted net
assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent
gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with
the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. In
accordance with MA UPMIFA, the Museum considers the following factors in making a determination to
appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various
funds, (2) the purposes of the donor-restricted endowment funds, (3) general economic conditions, (4) the possible
effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6)
other resources of the Museum, and (7) the Museum's investment policies.
 Page 17

NOTE 1 0- ( Continued)

Investment Return Objectives, Risk Parameters and Strategies.

The Museum has adopted investment and spending policies, approved by the Board of Trustees, for endowment
assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds
while also maintaining the purchasing power of those endowment assets over the long-term.

Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment
income as well as capital appreciation, which exceeds the annual distribution with acceptable levels of risk.
Endowment assets are invested in a well-diversified asset mix that is intended to result in a consistent inflation­
protected rate of return that has sufficient liquidity to make an annual distribution of 5%, while growing the funds
if possible. Actual returns in any given year may vary from this amount. Investment risk is measured in terms of
the total endowment fund; investment assets and allocation between asset classes and strategies are managed to
not expose the fund to unacceptable levels of risk. The Museum's investment spending policy is disclosed in Note
3.

NOTE 11 - PERMANENTLY REST RICTED NET ASSETS

Permanently restricted net assets at June 30 include the following donor restricted principal in perpetuity, the revenue
of which is expendable as provided by the donor:

Comparative
20 17 20 16
Ruth P. Boraski Children's Fund $ 234,385 $ 224,638
Nash Endowment 111,719 102,939

Total $ 346, 104 $ 327,577

Comparative
2017 2016
Endowment net assets, beginning of year $ 327,577 $ 323,667

Investment gain
Investment income 2,760 4,449
Realized and unrealized gains 24,767 66 1
Total investment gain 27,527 5,110

Contributions 2,000

Appropriation of endowment expenditure (9,000) (3,200)

Endowment net assets, end of year $ 346,104 $ 327,577

NOTE12 -IN-KIND CONT RIBUTION

During the years ended June 30, 20 17 and 2016, the Museum received in-kind contributions of engineering services
amounting to $8,696 and $985, respectively.
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NOTE 3
1 -DEFINED CONTRIBUTION PLAN

The Museum maintains a defined contribution retirement plan for all eligible employees. Contributions are
voluntarily made by employees. The plan allows for discretionary matching contributions as determined by the
Museum. The Museum elected to match 3% of employees' contributions for the years ended June 30, 2017 and
2016, which amounted to $19,844 and $21,000, respectively.

Participants have the option of having contributions to their accounts deposited in either the Teachers Insurance and
Annuity Association (TIAA) or the College Retirement Equities Fund (CREF). At the time of an employee's
retirement, an individual annuity is purchased with the proceeds accumulated in the employee's account.

NOTE 14- OPERATING LEASE

In October 2014, the Museum entered into a 60-month lease agreement for a new copier with monthly payments of
$565. Lease payments were $6,774 for the years ended June 30, 2017 and 2016.

Approximate future lease commitments payable during the years ending June 30, are as follows:

2018 $ 6,774
2019 6,774
2020 1,129

Total $ 14,677

NOTE15-COLLECTIONS

The Museum follows a practice of not capitalizing its ,collections. The collections carry a significant value in
connection with the Museum's mission of enriching, educating and entertaining patrons. The collections consist of
permanent collections of art, natural science, costume, decorative arts, ancient civilizations, historical objects and
exotic marine life.

The art collection consists of approximately 508 paintings, 125 sculptures, 2,061 decorative art objects, more than
399 prints and works on paper, and more than 2,000 photographs from both American and European artists from the
fifteenth through the twentieth centuries.

The ancient civilization collections feature art and artifacts of Babylonia, Assyria, Egypt, Greece, Rome and China.

The natural history collection consists of exotic shells, gemstones, minerals, flowers, mushrooms, fossils, mounted
birds and animals, a live aquarium consisting of animals from around the world, as well as dioramas of animals in
their natural habitat.

Interdisciplinary changing exhibitions are either produced in house by staff or rented by the Museum. Recent
exhibits have included "Finding Raven"; "Something Scary"; "Tell Me More", and "Guitars".

In July 2017, the board voted to deaccession 40 art works from its collection (see Note 20)
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NOTE 16-FAIR VALUE MEASUREMENTS

The following methods and assumptions were used by the Museum in estimating its fair value disclosures for
financial instruments:

Long-term investments: The fair values of investments are based on quoted market prices for those or similar
investments (Level 1) .

Long-term unconditional promises to give: The fair value of promises to give that are due in more than one year is
estimated, at the time of the pledge, by calculating the present value of the future expected payments from the
donors (Level 3) and applying an allowance for uncollectibles.

Fair values of assets measured on a recurring basis at June 30, 2017 are as follows:

Quoted Significant
Prices in Unobservable
Active Markets Inputs
Fair value (Level l) (Level 3)
Investment $ 6,964,136 $ 6,964,136 $
Unconditional promises to give 1,363,972 1,363,972

Total $ 8,328,108 $ 6,964,136 $ 1,363,972

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level3inputs):

The table below presents information about unconditional promises to give at June 30 2017:

Unconditional promises to give measured at fair value

Promised cash flows $ 1,559,167
Change in discount included in contribution revenue
in the statement of activities $ 63,760

Fair value (carrying amount) of long-term unconditional promises $ 1,011,805

Unconditional promises to give, due within one year (net realizable value)
Carrying amount 352,167
Net realizable unconditional promises to give (Note 5) $ 1,363,972

The table below presents information about the changes in unconditional promises to give for the year ended June 30,
2017:

Balance July 1, 2016 $ 1,755,328

New promises 421,015
Collections (876,131)
Contribution revenue (reduction) for discount and allowance charge 63,760
Balance June 30, 2017 $ 1,363,972
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NOTE 17- RELATED PARTY

A company owned by one of the board members provided $115,171 and $1,428 of engineering services to the
Museum during the years ended June 30, 2017 and 2016, respectively.

The Museum incurred legal expenses from two firms where a board member was employed as an attorney. Services
provided by these firms during the period the board member was an employee totaled $3,575 and $725 for the years
ended June 30, 2017 and 2016, respectively.

NOTE 18-SPECIAL EVENTS ACTIVITIES FORTHE YEARENDED JUNE30WEREAS FOLLOWS:

Comparative
2017 2016

Special event revenues

Ticket sales $ 23,266 $ 30,145
Auction Revenues 197,912 118,189
Sponsorship and contributions 125,425 86,105

Total 346,603 234,439

Less contributions 152,699 146,684

Total special event revenues 193,904 87,755

Direct benefit to donors:

Reception 33,111 40,562
Entertainment 1,780 2,050

Total direct benefits to donors 34,891 42,612

Special events revenue, net $ 159,013 $ 45,143

NOTE19-COMMITMENTS AND CONTINGENT LIABILITIES

The Museum receives some of its support from state and federal contracts. The contracts permit audits of both the
financial operation of the programs and compliance with the terms of the agreements. Such audits could result in the
disallowance of some costs charged to the contract and, therefore, create a liability to the funding source. Liabilities
resulting from these audits, if any, will be recorded in the period in which the amount of the liability is ascertained.

Grants, bequests, and endowments require the fulfillment of certain conditions as set forth in the instrument of
grant. Failure to fulfill the conditions, or in the case of endowments, failure to continue to fulfill them, could
result in the return of the funds to grantors. Although that is a possibility, the Museum's Board deems the
contingency remote, since by accepting the gifts and their terms, it has accommodated the objectives of the
provisions of the gift.
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NOTE 20 - SUBSEQUENT EVENTS

Deaccessioning and Art sale

In 2015, the Berkshire Museum Board of Trustees and leadership staff began a master planning process designed
to outline a strategy to address the Museum's programmatic, financial, demographic, and competitive challenges
and ensure that the organization is sustainable and relevant for its current and future audiences.
The Museum announced the results of the Master Plan as its New Vision in July 2017. The announcement
included the fact that the Museum had removed ( deaccessioned) 40 art works from its collection, and intended to
sell the works at auction and use the proceeds, coupled with additional fundraising, to establish a sufficient
endowment and make improvements in its facilities and visitor experience.

Within weeks of the announcement, some community members voiced opposition to the sale, and the
Massachusetts Attorney General's Office (AGO) began an investigation of the Museum's planning process. In
October 2017, lawsuits were filed by two groups of private parties opposed to selling works from the Museum's
collection. The AGO, citing its need to continue its investigation, joined the lawsuit.

In February 2018, following the conclusion of the AGO's investigation, the AGO and the Museum announced a
resolution of the matter under which the Museum would be permitted to go forward with the sale of certain works,
subject to agreed limitations and conditions, if approved by the Massachusetts Supreme Judicial Court (SJC).

The Museum, with the AGO's support, petitioned the SJC for equitable relief authorizing the Museum to proceed
with a sale subject to the agreed limitations and conditions. In April 2018, the SJC granted the Museum's petition
and entered judgment allowing the Museum to sell the deaccessioned artworks subject to the agreed limitations
and conditions.

On April 10, 2018, the Museum announced its intention to pursue the sale of 14 works of art in conformance with
the SJC's judgment.

The Museum has sold 13 works to date, and expects to receive net proceeds of $47 million after deducting legal
fees and other costs incurred in connection with the de-accession.

Line of Credit

The Organization paid off its line of credit (Note 6) balance of $ 1,852,426 in April 2018.