Sixteen Thirty Fund Financial Statements and Independent Auditor’s Report Years Ended December 31, 2016 and 2015 Sixteen Thirty Fund Contents Independent Auditor’s Report 1 Financial Statements Statements of Financial Position 2 Statements of Activities 3 Statements of Functional Expenses 4 Statements of Cash Flow 5 Notes to Financial Statements 6-11 Independent Auditor’s Report Board of Directors Sixteen Thirty Fund Report on the Financial Statements We have audited the accompanying financial statements of Sixteen Thirty Fund, which comprise the statements of financial position as of December 31, 2016 and 2015, and the related 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 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 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 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sixteen Thirty Fund as of December 31, 2016 and 2015, 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. Washington, D.C. June 30, 2017 Sixteen Thirty Fund Statements of Financial Position December 31, 2016 2015 Assets Cash Accounts receivable Contributions receivable Due from related party Property and equipment, net Total assets $ $ 6,930,610 450,115 320,000 11,200 128,786 7,840,711 $ $ 6,410,908 27,028 10,070 219,539 6,667,545 Liabilities and Net Assets Liabilities: Accounts payable and accrued expenses Grants payable Due to related party Total liabilities $ Net assets: Unrestricted Temporarily restricted Total net assets 467,951 167,391 635,342 $ 325,083 6,880,286 7,205,369 Total liabilities and net assets $ See notes to financial statements. 2 7,840,711 68,108 765,000 226,800 1,059,908 221,128 5,386,509 5,607,637 $ 6,667,545 Sixteen Thirty Fund Statements of Activities Years Ended December 31, Support and revenue: Contributions and grants Consulting revenue Donated (in-kind) professional services Net assets released from restrictions Total support and revenue Unrestricted $ Expenses: Program services Supporting services: General and administration Fundraising Total supporting services Total expenses Change in net assets Net assets at beginning of year Net assets at end of year 2016 Temporarily Restricted $ 102,732 358,807 19,662,083 20,123,622 $ 21,155,860 (19,662,083) 1,493,777 Total $ 21,155,860 102,732 358,807 21,617,399 2015 Temporarily Restricted Unrestricted $ 371,070 8,537,658 8,908,728 $ 5,617,209 (8,537,658) (2,920,449) Total $ 5,617,209 371,070 5,988,279 19,114,989 - 19,114,989 8,782,164 - 8,782,164 848,465 56,213 904,678 - 848,465 56,213 904,678 249,803 249,803 - 249,803 249,803 20,019,667 - 20,019,667 9,031,967 - 9,031,967 103,955 1,493,777 1,597,732 (123,239) (2,920,449) (3,043,688) 221,128 5,386,509 5,607,637 344,367 8,306,958 8,651,325 325,083 $ 6,880,286 See notes to financial statements. 3 $ 7,205,369 $ 221,128 $ 5,386,509 $ 5,607,637 Sixteen Thirty Fund Statements of Functional Expenses Years Ended December 31, Program Grants Professional fees Management services Legal fees Salaries Other expenses Depreciation Travel Information technology Professional fundraising fees Occupancy Accounting fees Total $ 14,584,591 3,219,654 435,712 447,631 142,091 106,753 72,777 66,009 39,771 $ 19,114,989 2016 General and Administrative Fundraising $ $ 789,891 14,439 8,043 125 35,967 848,465 $ $ 56,213 56,213 See notes to financial statements. 4 Total Program $ 14,584,591 3,219,654 789,891 450,151 447,631 150,134 106,753 72,777 66,134 56,213 39,771 35,967 $ 20,019,667 $ 6,768,578 1,189,882 379,107 87,301 8,346 103,753 59,047 9,986 176,164 $ 8,782,164 2015 General and Administrative Fundraising $ $ 218,948 9,029 6,615 15,211 249,803 $ $ - Total $ $ 6,768,578 1,189,882 218,948 388,136 87,301 14,961 103,753 59,047 9,986 176,164 15,211 9,031,967 Sixteen Thirty Fund Statements of Cash Flows Years Ended December 31, Cash flows from operating activities: Change in net assets Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation Changes in current assets and liabilities: (Increase) decrease in assets: Accounts receivable Contributions receivable Due from related party Prepaid expense Increase (decrease) in liabilities: Accounts payable Grants payable Due to related party Net cash provided by (used in) operating activities 2016 $ Cash flows from investing activities: Purchases of property and equipment Net cash used in investing activities Net increase (decrease) in cash 1,597,732 2015 $ 106,753 103,753 (423,087) (320,000) (1,130) - (37,098) 37,500 399,843 (765,000) (59,409) 535,702 35,431 765,000 (247,071) (2,386,173) (16,000) (16,000) (29,500) (29,500) 519,702 Cash: Beginning of year (2,415,673) 6,410,908 $ End of year See notes to financial statements. 5 (3,043,688) 6,930,610 8,826,581 $ 6,410,908 Sixteen Thirty Fund Notes to Financial Statements Note 1. Summary of Significant Accounting Policies Nature of Organization The Sixteen Thirty Fund (the Fund) is a 501(c)(4) social welfare organization. The mission of the Fund is to provide education and build a base of grassroots activism and a national movement to demand the advancement of a new agenda on a broad range of issues important to the welfare of Americans including, but not limited to, healthcare, education, fiscal policy, the environment and energy. The Fund engages a grassroots infrastructure to inform and empower Americans to take ownership of our country’s policy direction and demand that our government ‒ at the federal, state and local levels ‒ enact policy reforms to improve the lives of Americans. It conducts and publicizes research regarding a wide range of subjects and promotes policies that will drive people to action and provide them with the tools and education necessary to enact these policies. Through its efforts, the Fund helps to achieve the realization of a society that benefits all Americans. Programs The Fund engages in a range of activities to ensure the success of innovative policy solutions to address issues facing our country: educational activities designed to create a national environment in which reforms can succeed; direct and grassroots lobbying activities designed to introduce and enact legislation that achieves reforms in these issue areas; and, in limited amounts, political activities designed to support those candidate for public office who share the Sixteen Thirty Fund’s principles and oppose those who hold views contrary to those held by the Fund. The Fund’s activities are focused in three major areas: (a) public communications and education, (b) public engagement, and (c) research and policy analysis. These activities are conducted both directly by the Fund’s staff as well as in concert with nonprofit partner organizations throughout the country. Grant making execution The Fund manages grant portfolios and executes domestic and international grant making programs on issues ranging from global health and development to conservation. A strength of the Fund is its nimble, compressed grants-management process that allows donors and projects to avoid many of the bureaucratic tangles often associated with large philanthropic giving. The Fund operates a streamlined, online grants management process that includes effective due diligence reviews and moves funds to a variety of initiatives and programs quickly and efficiently. The Fund monitors implementation and, at the end of each grant cycle, supports programs in compiling reports that measure impact. The Fund conducts due diligence reviews and moves funds to on-the-ground initiatives and programs in a direct and efficient manner. Basis of accounting The accompanying financial statements are presented in accordance with the accrual basis of accounting, whereby unconditional support is recognized when received, revenue is recognized when earned and expenses are recognized when incurred. Financial statement presentation The Fund follows the Not-for-Profit Entities Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (the Codification). Under this topic, the Fund is required to report 6 Sixteen Thirty Fund Notes to Financial Statements information regarding its financial position and activities according to three net asset classes: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. There were no permanently restricted net assets at December 31, 2016 and 2015. Net assets and revenues, gains, and losses are classified based on donor imposed restrictions. Accordingly, net assets of the Fund and changes therein are classified and reported as follows: Unrestricted - Unrestricted net assets represent contributions and investment income received with no donor-imposed restrictions. Temporarily restricted - Temporarily restricted net assets represent contributions whose use has been limited by donors to a specific purpose or time period. Permanently restricted - Permanently restricted net assets represent restricted contributions that require the principal of the gift to be maintained in perpetuity and provide a permanent source of income. The Fund had no permanently restricted net assets at December 31, 2016 and 2015. Significant concentrations of risk The Fund maintains its cash in bank deposit accounts which, at times, exceed FDIC federally insured limits. The uninsured portions of cash accounts are backed solely by the assets of the underlying institution. As such, the failure of an underlying institution could result in financial loss to the Fund. Management believes that the Fund is not exposed to any significant financial risk on cash. The Fund received 63% and 57% of its total contributions and grants revenue from fewer than five donors in the years ended December 31, 2016 and 2015, respectively. The Fund does not expect the revenue or relationships with the donors to be lost. Use of estimates The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Unconditional contributions and grants receivable Contributions are recognized when the donor makes a written promise to give that is, in substance, unconditional. Grants that are exchange transactions are recorded as receivable as the revenue is earned. Contributions and grants that are expected to be collected within one year are recorded at their net realizable value. Contributions and grants that are expected to be collected in future years are recorded at the present value of the amounts expected to be collected. The discounts on those amounts are computed using an imputed interest rate applicable to the year in which the grant is received. Contributions and grants receivable, which are collectible within one year, have not been discounted. Conditional contributions and similar grants are not recognized as support until such times as the conditions are substantially met. Contributions and grants receivable totaled $320,000 and $0 at December 31, 2016 and 2015, respectively. Further, at December 31, 2016 and 2015, all contributions and grants are receivable within one year. As such, no discounts were recorded. 7 Sixteen Thirty Fund Notes to Financial Statements Provision for doubtful accounts The provision for doubtful accounts is based on management’s evaluation of the collectability of receivables. Management determines the allowance for doubtful accounts by regularly evaluating receivables and considering financial conditions, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. There was no allowance recorded as of December 31, 2016 and 2015. Other receivables Receivables are carried at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Property and equipment Property and equipment is carried at cost, less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets. Software and website related costs are depreciated over three to five years. The Fund capitalizes all property and equipment with a cost basis of $2,000 or more. When assets are sold or otherwise disposed of the asset and related accumulated depreciation and amortization are removed from the accounts and any remaining gain or loss is recognized currently. Repairs and maintenance are charged to expense when incurred. Website development costs are capitalized in accordance with the criteria in Accounting Standards Codification (ASC) Topic 350-50, Website Development Costs. Grants payable The Fund makes grants in support of its mission to other organizations. Assuming there are no conditions contained in the grant agreement, the total grant is expensed and accrued as grants payable upon authorization of payment of the grant by the Fund. The grants are disbursed over the period established in the grant agreement. Grants payable within one year are recorded at net realizable value. Grants payable in future years are recorded at the present value of their estimated future cash flows using discount rates approximating the rate of return on U.S. government securities with similar maturities. Grants payable totaled $0 and $765,000 at December 31, 2016 and 2015, respectively. Further, at December 31, 2015, all grants were payable within one year. As such, no discounts were recorded. Support and revenue The Fund records unconditional contributions and grants received and unconditional promises to give as unrestricted or temporarily restricted support depending on the existence and/or nature of any donor restrictions. Temporarily restricted contributions and grants received that are used according to donor restrictions in the same period are recognized as temporarily restricted contributions, and reclassified as net assets released from restrictions in the same period. Conditional contributions and grants are recognized as support in the period when the conditions have substantially been met. 8 Sixteen Thirty Fund Notes to Financial Statements Donated services Contributions of services are recognized if the services received (a) create or enhance nonfinancial 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. The value of the contributed services recognized as revenues in the accompanying statement of activities for the years ended December 31, 2016 and 2015, were comprised of legal services to support various projects, valued based upon standard billing rates of the law firm. The expense was allocated to program expenses. Functional allocation of expenses The costs of the Fund’s programs, fundraising and administration have been summarized on a functional basis in the Statements of Activities. Expenses are specifically allocated to the various programs and supporting services whenever practical and, when this is impractical, allocations are made on the basis of job descriptions, expense reports, or estimates of management. Income taxes The Fund is exempt from Federal income tax under Section 501(a) of the Internal Revenue Code as an organization described in Section 501(c)(4). The Internal Revenue Service recognizes the Fund’s status as a special welfare organization. The Fund’s income tax returns are subject to review and examination by federal and state authorities. The Fund is not aware of any activities that would jeopardize its tax-exempt status. The Fund is not aware of any activities that are subject to tax on unrelated business income or excise or other taxes. Generally, the Fund is no longer subject to income tax examinations for the U.S. federal, state or local tax authorities for years before December 31, 2013. Recent accounting pronouncement In August, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-14—Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-forProfit Entities. The amendments in this ASU make improvements to the information provided in financial statements and accompanying notes of not-for-profit entities. The amendments set forth the FASB’s improvements to net asset classification requirements and the information presented about a not-for-profit entity’s liquidity, financial performance, and cash flows. The ASU will be effective for fiscal years beginning after December 15, 2017. Earlier adoption is permitted. The changes in this ASU should generally be applied on a retrospective basis in the year that the ASU is first applied. Management has not evaluated the impact of this ASU on the financial statements. 9 Sixteen Thirty Fund Notes to Financial Statements Note 2. Property and Equipment Major classes of property and equipment and accumulated depreciation are as follows at December 31: 2016 Computer software Website $ 293,792 45,500 2015 $ 339,292 (210,506) Less: accumulated depreciation and amortization Net property and equipment $ 128,786 293,792 29,500 323,292 (103,753) $ 219,539 Depreciation expense for the years ended December 31, 2016 and 2015, was $106,753 and $103,753, respectively. Note 3. Related-Party Transactions The Fund has an administrative support agreement with Arabella Advisors (Arabella), a Virginia limited liability company that provides administrative and project management services to nonprofits. The relationship between the Fund and Arabella is purely contractual in nature and approved by board members of the Fund. The Fund is not controlled directly or indirectly by Arabella. The Chairman of the Fund has a direct financial interest in Arabella. Payments under the administrative support agreement with Arabella for the years ended December 31, 2016 and 2015, were $849,331 and $239,288, respectively. Amounts due to Arabella were $167,391 and $143,758 as of December 31, 2016 and 2015, respectively. Amounts due from Arabella were $11,200 and $10,070 as of December 31, 2016 and 2015, respectively. A reclass of $1,666 was made from ‘Due from related party’ to ‘Accounts receivable’ line item on the December 31, 2015 reported Statements of Financial Position line items to reflect the current year financial statement presentation change in identified related parties. Note 4. Temporarily Restricted Net Assets Changes in temporarily restricted net assets are as follows for the year ended December 31, 2016: Purpose restricted Beginning Balance December 31, 2015 Additions $ 21,155,891 $ 5,386,509 Ending Balance Releases December 31, 2016 5,296,509 $ (21,245,891) $ Changes in temporarily restricted net assets are as follows for the year ended December 31, 2015: Purpose restricted Beginning Balance December 31, 2014 8,306,958 $ $ Additions 5,617,209 10 $ Ending Balance Releases December 31, 2015 (8,537,658) $ 5,386,509 Sixteen Thirty Fund Notes to Financial Statements Note 5. Subsequent Events The Fund evaluated subsequent events through June 30 2017, which is the date the financial statements were available to be issued. 11