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CATHOLIC CHARITIES USA
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2010 AND 2009
CATHOLIC CHARITIES USA
TABLE OF CONTENTS
YEARS ENDED DECEMBER 31, 2010 AND 2009
INDEPENDENT AUDITORS’ REPORT 1
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2
CONSOLIDATED STATEMENTS OF ACTIVITIES 3
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES – 2010 4
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES – 2009 5
CONSOLIDATED STATEMENTS OF CASH FLOWS 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
INDEPENDENT AUDITORS’ REPORT
Board of Trustees
Catholic Charities USA
Alexandria, Virginia
We have audited the accompanying consolidated statements of financial position of Catholic Charities USA (“CCUSA”) as
of December 31, 2010 and 2009, and the related consolidated statements of activities, functional expenses, and cash flows
for the years then ended. These financial statements are the responsibility of CCUSA's management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of CCUSA as of December 31, 2010 and 2009, and the changes in its net assets and its cash flows for the years
then ended in conformity with U.S. generally accepted accounting principles.
LarsonAllen LLP
Arlington, Virginia
May 13, 2011
(1)
CATHOLIC CHARITIES USA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2010 AND 2009
2010 2009
ASSETS
Cash and Cash Equivalents $ 26,649,779 $ 6,859,712
Investments 14,629,707 14,384,938
Receivables:
U.S. Government 87,080 5,400,193
Interest and Dividends 41,385 45,651
Other (Net of Allowance of $53,406 and $11,640, Respectively) 117,650 119,450
Total Receivables 246,115 5,565,294
Pledges Receivable, Net 6,972,578 1,975,259
Prepaid Expenses 230,806 219,945
Property and Equipment, Net 1,792,107 5,852,022
Other Assets - 575,386
Total Assets $ 50,521,092 $ 35,432,556
LIABILITIES AND NET ASSETS
LIABILITIES
Accounts Payable and Accrued Expenses $ 642,041 $ 3,080,960
Due to Catholic Charities Member Agencies 66,475 8,655
Grants Payable, Net 3,567,783 5,865,140
Deferred Rent 1,246,956 1,323,011
Tenant Security Deposits and Prepaid Rent - 186,505
Non-Federal Deferred Revenue 2,000 72,751
p Agreements
Split Interest y 136,407 150,276
Total Liabilities 5,661,662 10,687,298
NET ASSETS
Unrestricted:
Board-Designated (See Note 12) 30,514,352 10,625,549
Net Investment in Property and Equipment 1,792,107 5,852,022
Undesignated 10,710,150 6,527,384
Total Unrestricted 43,016,609 23,004,955
Temporarily Restricted 1,727,821 1,625,303
Permanently Restricted 115,000 115,000
Total Net Assets 44,859,430 24,745,258
Total Liabilities and Net Assets $ 50,521,092 $ 35,432,556
See accompanying Notes to Consolidated Financial Statements.
(2)
CATHOLIC CHARITIES USA
CONSOLIDATED STATEMENTS OF ACTIVITIES
YEARS ENDED DECEMBER 31, 2010 AND 2009
2010 2009
Temporarily Permanently Temporarily Permanently
Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total
REVENUE
Membership Dues $ 1,476,743 $ - $ - $ 1,476,743 $ 1,493,345 $ - $ - $ 1,493,345
Federal Grants 1,895,448 - - 1,895,448 1,897,513 - - 1,897,513
Federal Contracts 2,872,176 - - 2,872,176 10,234,088 - - 10,234,088
Contributions:
Disaster Response - 124,709 - 124,709 - 246,375 - 246,375
Combined Federal Campaign 908,646 - - 908,646 1,375,476 - - 1,375,476
Other 27,754,595 230,479 - 27,985,074 7,035,714 187,728 - 7,223,442
Total Contributions 28,663,241 355,188 - 29,018,429 8,411,190 434,103 - 8,845,293
Investment Income:
Disaster Response 35,863 - - 35,863 246,765 - - 246,765
Other 1,598,614 16,626 - 1,615,240 2,705,500 20,196 - 2,725,696
Total Investment Income 1,634,477 16,626 - 1,651,103 2,952,265 20,196 - 2,972,461
Registration and Workshop Fees 488,233 - - 488,233 222,731 - - 222,731
Publications 435 - - 435 205 - - 205
Other Revenue 496,157 81,240 - 577,397 298,384 - - 298,384
1731 King Street LLC Rental 602,375 - - 602,375 620,730 - - 620,730
Gain on Sale of 1731 King Street LLC 1,465,106 - - 1,465,106 - - - -
Net Assets Released from Restrictions 350,536 (350,536) - - 2,373,985 (2,373,985) - -
Total Revenue 39,944,927 102,518 - 40,047,445 28,504,436 (1,919,686) - 26,584,750
EXPENSES
Program Services:
Distributions to Catholic Charities
Service Agencies and Other Non Profits:
Disaster Response 2,389,442 - - 2,389,442 12,435,392 - - 12,435,392
Housing and Other Federal Grants 2,019,311 - - 2,019,311 2,057,407 - - 2,057,407
Member Agencies' Support 947,244 - - 947,244 583,387 - - 583,387
Member Services 1,705,135 - - 1,705,135 101,063 - - 101,063
Other Programs 3,819 - - 3,819 7,000 - - 7,000
Total Distributions 7,064,951 - - 7,064,951 15,184,249 - - 15,184,249
Other Program Services:
Disaster Response 1,225,354 - - 1,225,354 1,596,316 - - 1,596,316
Programs and Services 2,509,796 - - 2,509,796 2,430,028 - - 2,430,028
Social Policy 1,196,653 - - 1,196,653 1,528,303 - - 1,528,303
Member Agencies' Support 21,491 - - 21,491 23,830 - - 23,830
Member Services 3,568,625 - - 3,568,625 1,573,415 - - 1,573,415
Total Other Program Services 8,521,919 - - 8,521,919 7,151,892 - - 7,151,892
Supporting Services:
Management and General 2,912,369 - - 2,912,369 2,532,178 - - 2,532,178
1731 King Street LLC Rental 365,236 - - 365,236 371,437 - - 371,437
Fundraising and External Relations 1,068,798 - - 1,068,798 1,319,085 - - 1,319,085
Total Supporting Services 4,346,403 - - 4,346,403 4,222,700 - - 4,222,700
Total Expenses 19,933,273 - - 19,933,273 26,558,841 - - 26,558,841
CHANGE IN NET ASSETS 20,011,654 102,518 - 20,114,172 1,945,595 (1,919,686) - 25,909
Net Assets - Beginning of Year 23,004,955 1,625,303 115,000 24,745,258 21,059,360 3,544,989 115,000 24,719,349
NET ASSETS - END OF YEAR $ 43,016,609 $ 1,727,821 $ 115,000 $ 44,859,430 $ 23,004,955 $ 1,625,303 $ 115,000 $ 24,745,258
See accompanying Notes to Consolidated Financial Statements.
(3)
CATHOLIC CHARITIES USA
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED DECEMBER 31, 2010
Program Services Supporting Services
Member Management
Disaster Programs and Social Agencies' Member and King Street
Response Services Policy Support Services Total General LLC Fundraising Total Total
Distributions to Catholic Charities Service Agencies $ 1,453,720 $ 2,019,311 $ 3,819 $ 947,244 $ 1,705,135 $ 6,129,229 $ 33,460 $ - $ 52,237 $ 85,697 $ 6,214,926
Distributions to Other Non Profits 935,722 - - - - 935,722 - - - - 935,722
Total Distributions 2,389,442 2,019,311 3,819 947,244 1,705,135 7,064,951 33,460 - 52,237 85,697 7,150,648
OTHER PROGRAM AND
SUPPORTING SERVICES
Salaries 326,514 961,549 433,752 16,760 470,745 2,209,320 1,128,530 - 335,146 1,463,676 3,672,996
Employee Benefits and Payroll Taxes 156,580 435,489 216,237 4,376 176,198 988,880 635,616 - 136,335 771,951 1,760,831
Insurance 12 - - - - 12 28,266 1,044 - 29,310 29,322
Professional Fees 371,693 157,089 189,645 - 1,101,555 1,819,982 542,148 67,709 32,077 641,934 2,461,916
Employee Relations 164 283 - - 110 557 4,529 - 144 4,673 5,230
Web Hosting & Casting Services 7 15,055 4,255 - 18,695 38,012 14,819 - 4,331 19,150 57,162
Direct Mail 26 20 20 - 59 125 67 - 60,152 60,219 60,344
Bank Fees/Charges 4,253 2,703 2,663 - 7,751 17,370 30,707 279 34,463 65,449 82,819
Telecommunications 9,390 23,040 10,102 - 2,872 45,404 41,979 - 3,167 45,146 90,550
Postage/Shipping 13,881 8,226 10,893 11 34,564 67,575 23,518 - 14,048 37,566 105,141
Equipment Maintenance and Rental 3,645 5,717 2,033 - 19,193 30,588 122,171 - 27,790 149,961 180,549
Occupancy 63,640 196,543 91,161 - 49,092 400,436 267,381 115,732 80,419 463,532 863,968
Printing and Promotions 8,485 224,890 10,062 299 158,237 401,973 4,757 - 187,073 191,830 593,803
Travel 161,395 173,429 58,490 45 121,479 514,838 72,055 - 7,973 80,028 594,866
Conferences and meetings 25,024 115,846 18,750 - 1,342,101 1,501,721 32,969 - 467 33,436 1,535,157
Reference Publications 5,001 23,263 5,803 - 4,157 38,224 5,935 - 1,788 7,723 45,947
Interest and Taxes 6 - - - - 6 4,129 15,511 - 19,640 19,646
Overhead 38,147 89,252 43,347 - 16,643 187,389 (225,579) - 38,190 (187,389) -
Depreciation and Amortization 22,015 72,422 31,888 - 21,353 147,678 98,040 159,437 27,759 285,236 432,914
Other Expenses 15,476 4,980 67,552 - 23,821 111,829 46,872 5,524 25,239 77,635 189,464
Total Other Program and
Supporting Service Expenses 1,225,354 2,509,796 1,196,653 21,491 3,568,625 8,521,919 2,878,909 365,236 1,016,561 4,260,706 12,782,625
Total Functional Expenses $ 3,614,796 $ 4,529,107 $ 1,200,472 $ 968,735 $ 5,273,760 $ 15,586,870 $ 2,912,369 $ 365,236 $ 1,068,798 $ 4,346,403 $ 19,933,273
See accompanying Notes to Consolidated Financial Statements.
(4)
CATHOLIC CHARITIES USA
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED DECEMBER 31, 2009
Program Services Supporting Services
Member Management
Disaster Programs and Social Agencies' Member and King Street
Response Services Policy Support Services Total General LLC Fundraising Total Total
Distributions to Catholic Charities Service Agencies $ 7,467,319 $ 2,057,407 $ 7,000 $ 583,387 $ 101,063 $ 10,216,176 $ 5,073 $ - $ 100,953 $ 106,026 $ 10,322,202
Distributions to Other Non Profits 4,968,073 - - - - 4,968,073 - - - - 4,968,073
Total Distributions 12,435,392 2,057,407 7,000 583,387 101,063 15,184,249 5,073 - 100,953 106,026 15,290,275
OTHER PROGRAM AND
SUPPORTING SERVICES
Salaries 404,316 872,535 443,986 18,756 460,965 2,200,558 843,797 - 383,976 1,227,773 3,428,331
Employee Benefits and Payroll Taxes 202,392 439,665 218,573 5,013 232,648 1,098,291 458,490 - 170,409 628,899 1,727,190
Insurance 51 - - - - 51 24,967 569 - 25,536 25,587
Professional Fees 470,898 285,036 428,449 - 98,934 1,283,317 470,065 52,949 39,534 562,548 1,845,865
Employee Relations - - - - - - 678 - - 678 678
Web Hosting & Casting Services 918 18,381 2,805 - 21,194 43,298 7,083 - 7,465 14,548 57,846
Direct Mail - - - - - - - - 155,159 155,159 155,159
Bank Fees/Charges 3,696 2,130 2,061 - 10,622 18,509 29,144 366 26,531 56,041 74,550
Telecommunications 18,671 18,705 13,672 - 6,407 57,455 39,441 - 21,057 60,498 117,953
Postage/Shipping 2,680 5,449 3,972 13 28,736 40,850 22,721 - 93,508 116,229 157,079
Equipment Maintenance and Rental 24,742 25,541 17,292 - 23,735 91,310 132,526 - 46,663 179,189 270,499
Occupancy 65,951 160,378 91,468 - 82,836 400,633 295,126 146,501 67,459 509,086 909,719
Printing and Promotions 60,841 9,481 22,752 - 54,989 148,063 8,414 - 112,974 121,388 269,451
Travel 257,080 204,010 74,767 48 110,679 646,584 96,620 - 10,815 107,435 754,019
Conferences and Meetings 34,918 171,427 30,531 - 329,298 566,174 33,664 - 22,116 55,780 621,954
Reference Publications 6,142 97,155 34,631 - 7,099 145,027 1,452 - 2,737 4,189 149,216
Interest and Taxes 25 - - - - 25 8,629 6,776 - 15,405 15,430
Overhead 17,215 43,360 24,746 - 21,635 106,956 (127,847) - 20,891 (106,956) -
Depreciation and Amortization 23,027 71,283 33,353 - 20,938 148,601 102,548 164,276 34,898 301,722 450,323
Other Expenses 2,753 5,492 85,245 - 62,700 156,190 79,587 - 1,940 81,527 237,717
Total Other Program and
Supporting Service Expenses 1,596,316 2,430,028 1,528,303 23,830 1,573,415 7,151,892 2,527,105 371,437 1,218,132 4,116,674 11,268,566
Total Functional Expenses $ 14,031,708 $ 4,487,435 $ 1,535,303 $ 607,217 $ 1,674,478 $ 22,336,141 $ 2,532,178 $ 371,437 $ 1,319,085 $ 4,222,700 $ 26,558,841
See accompanying Notes to Consolidated Financial Statements.
(5)
CATHOLIC CHARITIES USA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010 AND 2009
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Change in Net Assets $ 20,114,172 $ 25,909
Adjustments to Reconcile Change in Net Assets to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and Amortization 432,916 450,324
Change in Bad Debt Allowance 10,817 336,589
Donated Stock (609,913) (606,585)
Unrealized (Gain) on Investments (619,760) (3,058,799)
Realized (Gain) Loss on Sales of Investments (612,110) 527,462
Gain on Sale of Fixed Assets (1,465,107) -
Deferred Compensation - (62,810)
Change in Present Value Factor to Discount Grants Payable - 77,576
Changes in Assets and Liabilities:
Receivables 5,277,413 (3,855,733)
Pledges Receivable (4,966,370) (1,062,724)
Prepaid Expenses (10,861) (66,223)
Other Assets (9,986) (27,074)
Accounts Payable and Accrued Expenses (2,438,919) 1,393,374
Due to Catholic Charities Member Agencies 57,820 (3,451)
Grants Payable (2,297,357) (7,920,741)
Deferred Rent (76,055) (54,616)
Tenant Security Deposits and Prepaid Rent (186,505) -
Non-Federal Deferred Revenue (70,751) 70,751
Net Cash Provided by (Used in) Operating Activities 12,529,444 (13,836,771)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Property and Equipment (166,629) -
Proceeds from Sale of Fixed Assets 5,844,109 -
Proceeds from Sale of Investments 7,637,295 8,337,202
Purchases of Investments (6,040,283) (8,102,571)
Net Cash Provided by Investing Activities 7,274,492 234,631
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Split-Interest Agreements (13,869) (24,353)
Payment on Deferred Compensation - (21,610)
Net Cash Used in Financing Activities (13,869) (45,963)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 19,790,067 (13,648,103)
Cash and Cash Equivalents - Beginning of Year 6,859,712 20,507,815
CASH AND CASH EQUIVALENTS - END OF YEAR $ 26,649,779 $ 6,859,712
See accompanying Notes to Consolidated Financial Statements.
(6)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 1 ORGANIZATION
Catholic Charities USA (“CCUSA”) is a not-for-profit organization incorporated in 1950 to provide a forum for
discussing the application of Catholic thought in the general field of social welfare and to stimulate action,
research, and the publication of material in this field. Primary sources of funding include public contributions,
membership dues and government grants.
The consolidated financial statements include the assets, liabilities, net assets and activities of CCUSA and the 1731
King Street LLC (the “LLC”). All significant intercompany transactions and balances have been eliminated in
consolidation. The LLC is a limited liability corporation as defined under the Internal Revenue Code and is operated
exclusively for purposes of renting out office space located at 1731 King Street. The LLC, which was incorporated in
the District of Columbia in June 2008, is wholly owned by CCUSA and is therefore consolidated as required under
U.S. GAAP. In December 2010, CCUSA sold the office building located at 1731 King Street (see note 14).
Program services are provided in the following principal areas:
Programs and Services
Local Catholic Charities agencies provide a wide range of human services to millions of people in need each year.
CCUSA provides training, technical assistance and networking opportunities for its membership on a range of
issues of critical importance including aging, housing, emergency services, parish social ministry, child care,
healthcare and Catholic Identity. In addition, CCUSA provides opportunities for leadership development and
consultations to ensure that members remain at the forefront of emerging needs and quality services.
Social Policy
CCUSA provides a national voice for the needs and concerns of its membership and the people they serve.
Working with its membership, CCUSA develops and advocates for just public policies that empower
people and alleviate the conditions that perpetuate poverty. CCUSA also works with its membership
around issues of racial equality and diversity.
Disaster Response
CCUSA provides leadership, coordination, and technical assistance to Catholic Charities and other diocesan
organizations as part of its role as the lead Catholic agency in times of natural disaster. CCUSA support is
provided to not only help organizations and communities respond to disasters, but also to help them
prepare and plan for disasters. Additionally, CCUSA has a contract with the federal government to provide
disaster case management services for individuals and families recovering from natural disasters.
Member Services
CCUSA supports its membership by providing a range of services that promote networking, ongoing
education, and improve their ability to respond to the needs of the poor and vulnerable in their
communities. These services include: an annual gathering, web-based training and information, a quarterly
newsletter and other printed resources. In 2010, CCUSA hosted an event celebrating the 100 year
anniversary of Catholic Charities in the United States.
(7)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 1 ORGANIZATION (CONTINUED)
Programs and Services (Continued)
Federal Grants
CCUSA applies for federal grants to support specific programs on behalf of its membership. These funds
are then transferred to member agencies interested in implementing these programs through a sub-granting
process.
In 2009, CCUSA received a grant from the Division of State Children’s Health Insurance, Centers for
Medicare and Medicaid entitled The Children’s Health Insurance Program Reauthorization Act (CHIPRA),
which assists in enrolling children into healthcare.
In 2008, CCUSA received a grant from the Department of Housing and Urban Development to support
housing counseling programs implemented by local Catholic Charities agencies. Additionally, in 2008,
CCUSA received a grant from Neighborworks America to support foreclosure mitigation counseling
services being provided by twelve local Catholic Charities agencies.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of CCUSA are presented on the accrual basis of accounting. Consequently, revenue is
recognized when earned and expenses when obligations are incurred.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect certain reported amounts
of assets and liabilities and disclosures 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.
Cash and Cash Equivalents
For financial statement purposes, CCUSA considers money market and overnight sweep accounts to be cash
equivalents. However, at times part of the investment portfolio may be held in cash equivalents.
Investments
Investments are recorded at fair value. CCUSA invests in various securities, including U.S. Government securities,
corporate debt securities, and equities. Investment securities, in general, are exposed to various risks, such as
interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the values of investment securities will occur in the near term
and that such changes could materially affect the amounts reported in future statement of activities.
Fair Value of Financial Instruments
CCUSA accounts for a portion of its financial instruments at fair value or considers fair value in their
measurement. CCUSA accounts for certain financial assets and liabilities at fair value under various accounting
literature that establishes a fair value hierarchy.
(8)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Uniform Prudent Management of Institutional Funds Act
During 2008, Virginia enacted the Uniform Prudent Management of Institutional Funds Act (UPMIFA). Also
during 2008, guidance was provided on the classification of endowment fund net assets for states that have
enacted versions of UPMIFA. Under UPMIFA all unappropriated endowment fund assets are considered
restricted.
Pledges Receivable
Pledges receivable are reported at fair value at the date the promise is received. Pledges that are expected to be
collected within one year are recorded at their net realizable value. Pledges that are expected to be collected in
future years are recorded at the present value of the amount expected to be collected. The discounts on those
amounts are computed using an imputed interest rate applicable to the year in which the pledge is expected to be
received.
Property and Equipment
Acquisitions of property and equipment are recorded at cost and depreciated using the straight-line depreciation
method. Depreciation is provided over the estimated useful lives of the assets, which range from 3 - 40 years.
Building improvements are depreciated on a straight-line basis over the lesser of the remaining life of the building
or estimated useful life of the improvement. Leasehold improvements are amortized on a straight-line basis over
the remaining term of the lease agreement. CCUSA capitalizes all property and equipment purchased with a cost
of $5,000 or more.
Net Assets
To ensure the observance of limitations and restrictions placed on the use of resources available to CCUSA, its
net assets and revenue have been classified into net asset groups based on the existence or absence of donor-
imposed restrictions. The classes of net assets are as follows:
Unrestricted: Represents both resources of CCUSA available to support general operations and amounts
invested in property and equipment, net of the mortgage liability. The CCUSA Board of Trustees has
internally designated a portion of its unrestricted net assets (see Note 12).
Temporarily Restricted: Represents resources that result from contributions limited in use by donor-imposed
stipulations. Such restrictions either expire by the passage of time or can be fulfilled and removed by actions of
CCUSA pursuant to those stipulations.
Permanently Restricted: Represents two bequests that established Endowment Funds. The Caritas Endowment
Fund is to be held in perpetuity by CCUSA. Investment income earned is used to support program activities
for Caritas Internationalis and is recorded as temporarily restricted activity. The Tracy Endowment Fund is
to be held in perpetuity by CCUSA. Investment income earned is used to support scholarships granted by
CCUSA and is recorded as temporarily restricted activity.
Membership Dues Revenue
Membership dues are treated as an exchange transaction due to membership benefits offered. Revenue is
recognized in the year to which the membership applies.
(9)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Grants and contracts from U.S. Government
Grant and contract funds are reported as revenue when earned. Revenue is earned when eligible expenditures, as
defined in each grant or contract, are incurred. Funds received but not yet earned are reported as deferred
revenue. Expenditures under government grants and contracts are subject to review by the granting authority. To
the extent, if any, that such a review reduces expenditures allowable under these grants and contracts, CCUSA will
record such disallowance at the time the final assessment is made.
Temporarily Restricted Support
CCUSA’s policy is to generally report all donor-restricted contributions as temporarily restricted support even if
those restrictions are met in the same reporting period the contributions are received.
Grants (Disaster Response)
CCUSA supports various Catholic service agencies in need as a result of catastrophic or disastrous events through
grants. This includes significant support provided in response to Hurricane Katrina and the September 11, 2001
terrorist attacks. These grants are recorded as expenses after grant requests are approved and committed by
CCUSA. For the years ended December 31, 2010 and 2009, disaster response grant expenses totaled $498,272 and
$5,091,372.
Bequests
CCUSA recognizes bequests when the probate court declares the will valid or at such time it becomes apparent
there will be no challenge to the will. At such time the contribution revenue and receivable are recorded at fair
value, unless the promise is conditioned upon future and uncertain events.
Functional Allocation of Expenses
The costs of providing programs and other activities have been summarized on a functional basis in the statement
of activities. Accordingly, indirect expenses have been allocated among the programs and supporting services
benefited that includes an allocation of personnel and overhead expenses based upon the estimated amount of
time worked by employees and space utilized in each functional area.
Income Taxes
CCUSA is exempt from the payment of federal income taxes on activities exempt under Section 501(c)(3) of the
Internal Revenue Code and is classified as an organization that is not a private foundation under Section 509(a) of
the Code. The LLC is a limited liability corporation as defined by the Internal Revenue Service.
CCUSA is not aware of any activities that would jeopardize its tax-exempt status and is not aware of any activities
that are subject to tax on unrelated business income, excise, or other taxes. As of December 31, 2010, there are no
uncertain tax positions. As a church related entity, CCUSA does not file a 990 with the IRS.
Subsequent Events
In preparing these financial statements, CCUSA has evaluated events and transactions for potential recognition or
disclosure through May 13, 2011, the date the financial statements were available to be issued.
(10)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 3 FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Hierarchy
CCUSA has categorized its financial instruments, based on the priority of the inputs to the valuation technique,
into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the
inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is
based on the lowest level input that is significant to the fair value measurement of the instrument.
Financial assets and liabilities recorded on the statement of financial position are categorized based on the inputs
to the valuation techniques as follows:
Level 1
Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or
liabilities in an active market that CCUSA has the ability to access (examples include active exchange-traded
equity securities, listed derivatives, and most U.S. Government and agency securities).
Level 2
Financial assets and liabilities whose values are based on quoted prices in markets that are not active or
model inputs that are observable either directly or indirectly for substantially the full term of the asset or
liability. Level 2 inputs include the following:
• Quoted prices for similar assets or liabilities in active markets (for example, restricted stock);
• Quoted prices for identical or similar assets or liabilities in non-active markets (examples include
corporate and municipal bonds, which trade infrequently);
• Pricing models whose inputs are observable for substantially the full term of the asset or liability
(examples include most over-the-counter derivatives, including interest rate and currency swaps); and
• Pricing models whose inputs are derived principally from or corroborated by observable market data
through correlation or other means for substantially the full term of the asset or liability (examples
include certain residential and commercial mortgage related assets, including loans, securities, and
derivatives).
Level 3
Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs
that are both unobservable and significant to the overall fair value measurement. These inputs reflect
management’s assumptions about how a market participant determines the price of the asset or liability
(examples include certain private equity investments and split interest agreements).
(11)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 3 FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
Fair Value Hierarchy (Continued)
The following tables present CCUSA’s fair value hierarchy for those assets and liabilities measured at fair value on
a recurring basis as of December 31, 2010 and 2009.
December 31, 2010
Level 1 Level 2 Level 3 Total
Assets
Government Obligations and
Corporate Bonds $ 3,176,055 $ - $ - $ 3,176,055
Equities 7,411,526 - - 7,411,526
Mutual Funds (Fixed Income and
Real Estate) 3,227,887 - - 3,227,887
Total Assets $ 13,815,468 $ - $ - $ 13,815,468
Liabilities
Split-Interest Liability $ - $ - $ 136,407 $ 136,407
Total Liabilities $ - $ - $ 136,407 $ 136,407
December 31, 2009
Level 1 Level 2 Level 3 Total
Assets
Government Obligations and
Corporate Bonds $ 3,596,885 $ - $ - $ 3,596,885
Equities 7,346,495 - - 7,346,495
Mutual Funds (Fixed Income and
Real Estate) 2,680,524 - - 2,680,524
Total Assets $ 13,623,904 $ - $ - $ 13,623,904
Liabilities
Split-Interest Liability $ - $ - $ 150,276 $ 150,276
Total Liabilities $ - $ - $ 150,276 $ 150,276
(12)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 3 FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
Fair Value Hierarchy (Continued)
The following table provides a summary of changes in fair value of CCUSA’s Level 3 financial assets and liabilities
for the years ended December 31, 2010 and 2009:
Split-Interest
Liability
Beginning Balance as of January 1, 2009 $ 174,629
Unrealized and Realized Net Gain 13,006
Change in Allowance/PV Discount 1,083
Purchases/(Distributions) (38,442)
Balance as of December 31, 2009 $ 150,276
Beginning Balance as of January 1, 2010 $ 150,276
Unrealized and Realized Net Gain 7,280
Change in Allowance/PV Discount -
Purchases/(Distributions) (21,149)
Balance as of December 31, 2010 $ 136,407
The Reginato trust and charitable gift annuity split-interest liabilities were calculated based upon the Internal
Revenue Service life expectancy tables and an inflation rate assumption of 3.25 percent for the years ended
December 31, 2010 and 2009, respectively.
NOTE 4 CONCENTRATION OF CREDIT RISK
Financial instruments, which subject the Organization to concentrations of credit risk, consist of demand deposits,
overnight repurchase agreements, money market, and mutual funds that are held by financial institutions. Funds in
excess of Federal and other insurance limits are comprised of the following at December 31, 2010 and 2009:
2010 2009
Demand Deposit Accounts $ 1,170,514 $ 2,588,747
Overnight repurchase agreements 1,005,408 -
Principally federal agency obligations - 3,219,511
Money market and mutual funds 22,012,590 261,035
Total Funds $ 24,188,512 $ 6,069,293
(13)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 5 INVESTMENTS
Investments are recorded at fair market value and are comprised of the following at December 31, 2010 and 2009:
2010 2009
Cost Market Cost Market
U.S. Government Obligations
and corporate bonds $ 3,149,769 $ 3,176,055 $ 2,641,660 $ 3,596,885
Equities 5,972,124 7,411,524 6,428,280 7,346,495
Mutual funds 3,086,668 3,227,887 3,566,828 2,680,524
12,208,561 13,815,466 12,636,768 13,623,904
Money market funds 814,241 814,241 761,034 761,034
Total investments $ 13,022,802 $ 14,629,707 $ 13,397,802 $ 14,384,938
Investment income consists of the following for the years ended December 31, 2010 and 2009:
2010 2009
Interest and dividends $ 419,233 $ 441,124
Unrealized gain on investments 619,760 3,058,799
Realized gains on sale of investments 612,110 (527,462)
Total investment income $ 1,651,103 $ 2,972,461
NOTE 6 PLEDGES RECEIVABLE
Pledges receivable at December 31, 2010 and 2009 represent unconditional amounts pledged under various
fundraising campaigns. Pledges expected to be collected in more than one year are reflected at net realizable value.
The net realizable value is estimated by calculating the present value of estimated cash flows. In both 2010 and
2009, all pledges were due within one year; therefore no present value discounting was performed.
The amount of the pledges receivable at December 31, 2010 and 2009 is reflected below:
2010 2009
Receivable in Less than One Year $ 7,297,578 $ 2,331,208
Less: Allowance for Doubtful Pledges (325,000) (355,949)
Net Pledges Receivable $ 6,972,578 $ 1,975,259
During 2010, CCUSA received a bequest for approximately $21,775,000. Approximately $15,861,000 of the
bequest was received in 2010 with the remaining balance of approximately $5,914,000 expected to be received in
2011.
(14)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 7 PROPERTY AND EQUIPMENT
At December 31, 2010 and 2009, property and equipment consisted of the following:
2010 2009
Canal Center:
Leasehold Improvements - Canal Center $ 1,833,338 $ 1,813,026
Equipment and Software 192,675 341,306
Furniture and Fixtures 637,874 637,874
Less: Accumulated Depreciation
and Amortization (871,780) (927,141)
Total Canal Center Property and Equipment 1,792,107 1,865,065
King Street LLC:
Land - 698,206
Building - Condominium Units - 3,273,247
Building and Leasehold Improvements - 876,785
Less: Accumulated Depreciation
and Amortization - (861,281)
Total King Street LLC Property and Equipment - 3,986,957
Net Property and Equipment $ 1,792,107 $ 5,852,022
NOTE 8 DISASTER RESPONSE AND GRANTS PAYABLE
Grants are based on applications submitted and reviewed by the Disaster Response Advisory Committee as part
of the approval process, which requires concurrence by the President of CCUSA. Grants are made for needs
related to a variety of disasters, including Hurricane Katrina, September 11, 2001 terrorist attacks, and other
events.
It is CCUSA’s policy to be reimbursed for actual costs incurred for Disaster Response oversight and
administration. Amounts charged for the administration of the Disaster Response program are determined by
formula based on amounts received and disbursed. An assessment is applied against each Disaster Response
program and is recovered over the period the funds are held, part when contributions are processed, and the
remainder when grants are disbursed. For most disasters, the total assessment is 10%. Total fees assessed for the
Hurricane Katrina program were less than 1%.
Grants payable at December 31, 2010 and 2009 represent approved grants and awards committed to Catholic
service agencies. Grant distributions typically do not exceed three years. Grants expected to be paid in more than
one year are reflected at face value minus a discount. The discount is estimated by calculating the present value of
estimated future cash outflows. The rate used to discount grants payable to their net realizable value at December
31, 2009 was 0.50%. All grants payable as of December 31, 2010 are expected to be paid in one year. These grants
payable at December 31, 2010 and 2009 represent amounts committed in response to Hurricane Katrina,
September 11 terrorist attack, 2004 hurricane disasters, and other events.
(15)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 8 DISASTER RESPONSE AND GRANTS PAYABLE (CONTINUED)
The expected timing of funds to be disbursed is reflected below:
2010 2009
Payable in Less than One Year $ 3,567,783 $ 5,572,237
Payable in One to Three Years - 294,600
3,567,783 5,866,837
Discount of Grants Payable to Present Value - (1,697)
Total Grants Payable $ 3,567,783 $ 5,865,140
NOTE 9 SPLIT INTEREST AGREEMENTS
CCUSA receives contributions pursuant to several charitable gift annuity contracts with donors. The actuarially
determined liability resulting from the annuity gifts was recorded at the date of the gift. The excess of the annuity
gifts over the annuity liabilities is recognized as unrestricted support and has been set aside as a portion of the
Board-designated net assets. The liability amount is adjusted annually based on the latest actuarial information
available. The charitable gift annuity obligations approximated $95,000 and $103,000 at December 31, 2010 and
2009, respectively.
CCUSA also received a contribution of a charitable remainder unitrust in 1998. Under this charitable remainder
unitrust, a donor made a contribution to CCUSA that will remain in trust until a stipulated event, at which time
the remaining trust balance will convey to CCUSA. The unitrust was valued at market value at the time of the gift.
In consideration of the gift, the donors will receive an annuity from the trust based on the lesser of the trust
principal at the beginning of the year at a stated interest rate or the actual earnings of the trust. The liability
amount is adjusted annually based on the latest actuarial information available. The assets of the unitrust are
included in temporarily restricted net assets on the Statement of Activities. The charitable remainder unitrust
obligation approximated $41,000 and $47,000 at December 31, 2010 and 2009, respectively.
NOTE 10 DEFERRED COMPENSATION
CCUSA entered into a deferred compensation agreement with a former Executive Director to fund certain
retirement benefits beginning in 1982 for his lifetime. The individual received an annual amount equal to his
compensation on the date of his retirement increased by the same percentage as increases in salaries of current
CCUSA employees. The present value of the estimated future payments was recorded as deferred compensation
and adjusted as appropriate for changes in the average rate of pay, life expectancy, and interest rates. A payment of
$31,518 related to this obligation was made during the year ended December 31, 2009. The beneficiary died
during 2009. Therefore, the deferred compensation liability was written off in 2009.
(16)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 11 TEMPORARILY RESTRICTED NET ASSETS
Changes in temporarily restricted net assets during the year ended December 31, 2010 are detailed as follows:
Balance Funds Balance
January 1, Funds Released from December 31,
2010 Received Restriction 2010
Cafferty Fellow $ 92,659 $ - $ 500 $ 92,159
Centennial Celebration 15,690 25,100 40,790 -
Children of Children 43,669 - - 43,669
Disaster Response 1,375,292 205,949 100,410 1,480,831
Domestic Trafficking 63 1,063 184 942
Family Strengthening - 200,000 200,000 -
National Religious Partnership 3,842 - - 3,842
Other 21,876 4,316 7,316 18,876
Reginato Trust 61,712 16,626 1,336 77,002
U.S. Catholic Conference Children's
Environmental Health 10,500 - - 10,500
Total $ 1,625,303 $ 453,054 $ 350,536 $ 1,727,821
Changes in temporarily restricted net assets during the year ended December 31, 2009 are detailed as follows:
Balance Funds Balance
January 1, Funds Released from December 31,
2009 Received Restriction 2009
Cafferty Fellow $ 92,659 $ - $ - $ 92,659
Centennial Celebration 251,000 - 235,310 15,690
Children of Children 43,669 - - 43,669
Disaster Response 3,034,063 246,375 1,905,146 1,375,292
Domestic Trafficking - 273 210 63
Family Strengthening - 145,000 145,000 -
National Religious Partnership 9,689 5,000 10,847 3,842
Other 59,748 37,455 75,327 21,876
Reginato Trust 43,661 20,196 2,145 61,712
U.S. Catholic Conference Children's
Environmental Health 10,500 - - 10,500
Total $ 3,544,989 $ 454,299 $ 2,373,985 $ 1,625,303
NOTE 12 UNRESTRICTED NET ASSETS
Unrestricted Net Assets
Unrestricted net assets are available to finance the general operations of Catholic Charities USA. The only limits
on the use of unrestricted net assets are the purposes specified in the organization’s articles of incorporation and
those limitations resulting from the nature of the Organization and the environment in which it operates.
(17)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 12 UNRESTRICTED NET ASSETS (CONTINUED)
Board-Designated Net Assets
Board-designated net assets are based on voluntary resolutions by the Board of Trustees to designate a portion of
net assets for specific purposes and do not result in restricted net assets. Since designations are voluntary and may
be reversed by the Board of Trustees at any time, designated net assets are classified as unrestricted net assets.
During 2004, the Board of Trustees approved a policy to designate for operations unrestricted net assets by
transferring a portion of the Facilities and General Reserve Funds to the Designated for Operations Fund. The
reserve will serve to address the Organization’s financial needs when economic downturns impact Catholic
Charities USA and to address cash flow needs that result from differences in the timing between Catholic
Charities USA expenses and the receipt of revenues. The designated purpose of the Operations Fund is to address
cash flow needs of Catholic Charities USA; therefore the Board believes such funds are not subject to the
Uniform Prudent Management of Institutional Funds Acts (UPMIFA). The appropriations from the fund are
authorized by the Board of Trustees’ resolutions. The investment objectives of this fund are primarily liquidity and
secondarily return and capital preservation.
Board-designated Disaster Response funds are unrestricted net assets resulting primarily from investment income
on contributions designated for general and specific disasters. This fund is measured on each December 31 and is
to equal the total operating expense budget before budgeted distributions to member agencies for the subsequent
year as approved by the Board at its annual December meeting.
At December 31, 2010 and 2009, CCUSA unrestricted net assets were as follows:
2010 2009
Unrestricted and Not Board-Designated $ 10,710,150 $ 6,527,384
Board-Designated:
Disaster Response 2,088,672 2,824,869
Operations Fund 6,650,680 7,800,680
Funds Held for Purchase of
Corporate Headquarters 21,775,000 -
Total Board-Designated 30,514,352 10,625,549
Net Investment in Property and Equipment 1,792,107 5,852,022
Total Unrestricted Net Assets $ 43,016,609 $ 23,004,955
NOTE 13 PENSION PLAN
CCUSA sponsors a defined contribution 401(k) profit sharing plan covering all employees who have reached the
age of twenty-one and have completed one year of continuous employment. Under the terms of the plan, CCUSA
contributes 10% of the employee’s compensation (3% safe harbor and 7% profit share) within statutory limits to
the plan. Pension expense was approximately $356,000 and $286,000 for the years ended December 31, 2010 and
2009, respectively.
(18)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 14 LEASES
Leases – 1731 King Street
Effective July 2008, CCUSA (via 1731 King St LLC) executed a non-cancelable operating lease with another non-
profit organization to rent out office space at 1731 King Street (16,955 square feet) in Alexandria, Virginia. The
lease provided the tenant with an option to acquire the building, if exercised between June 1, 2010 and December
31, 2013. In December 2010, the tenant exercised the option to purchase the building for $5,844,109 resulting in a
gain of $1,465,107 from the sale.
Rental income recognized for the years ended December 31, 2010 and 2009 was $602,375 and $620,730,
respectively.
Leases – 66 Canal Center
In October 2007, CCUSA executed a non-cancelable operating lease for its primary office space (20,866 square
feet) in Alexandria, Virginia for ten years, six months effective through March 31, 2018. Future minimum lease
payments for the years ending December 31 are as follows:
Year Ending December 31, Amount
2011 $ 820,608
2012 843,091
2013 866,200
2014 889,935
2015 914,348
Thereafter 2,151,180
Total Rental Payments $ 6,485,362
CCUSA records rent expense on a straight-line basis over the term of the lease. A deferred rent obligation in the
amount of $526,789 and $503,511 has been recorded at December 31, 2010 and 2009, respectively, that represents
the excess of rent expense over cash payments. CCUSA was provided a leasehold improvement allowance in the
amount of approximately $1,043,000 as an incentive to enter into this lease. The leasehold improvement allowance
is amortized over the term of the lease and has an unamortized balance of $720,167 and $819,500 as of December
31, 2010 and 2009, respectively.
The lease has an option to renew for 5 additional years. Additionally, in lieu of a security deposit CCUSA executed
a letter of credit tied to this lease in the amount of $250,932. With each passing year, the minimum balance
requirement reduces until the sixth anniversary in which minimum requirement is set at $62,598 for the duration
of the lease.
Related rent expense was $735,760 and $739,933 for the years ended December 31, 2010 and 2009, respectively.
NOTE 15 COMMITMENTS AND CONTINGENCIES
Hotel Commitments
CCUSA entered into several agreements with hotels concerning room accommodations for its meetings and
seminars through 2011. These agreements indicate CCUSA is liable for liquidated damages in the event of
cancellation. At December 31, 2010, CCUSA’s commitments for possible liquidated damages were immaterial.
However, a contract was signed subsequent to year end which included a potential liability of $334,000.
(19)
CATHOLIC CHARITIES USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 15 COMMITMENTS AND CONTINGENCIES (CONTINUED)
Federal Grants and Contracts
Under the terms of the Organization’s reimbursable government grants and contracts, CCUSA is entitled to the
reimbursement of direct and indirect costs incurred. These expenses are subject to audit by the cognizant
government agency.
NOTE 16 ENDOWMENT
CCUSA has a donor-restricted endowment fund established for the purposes of providing income to support
specific donor-restricted activities. As required by GAAP, net assets of the endowment fund are classified and
reported based on the existence or absence of donor-imposed restrictions. The board of directors of the
Organization has interpreted Virginia’s Uniform Prudent Management of Institutional Funds Act (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, CCUSA
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. The remaining portion of the donor-restricted endowment fund that is not
classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts
are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence
prescribed by UPMIFA. The Organization considered all amounts earned on the endowment fund to be
appropriated for current use.
NOTE 17 CHANGE IN FISCAL YEAR END
In 2011, CCUSA will change to a fiscal year ending June 30th. CCUSA receives a majority of its contributions in
December, thus the change in year-end to June will move a majority of contribution revenue from the end of the
year to the middle of the year, resulting in better planning and more efficient year-end closings. A June 30th year-
end will also be more consistent with CCUSA’s member agencies year-ends. In addition, the year-end change will
alleviate the current conflict between the annual internal budget and planning process and the annual meeting
hosted by CCUSA for its member agencies. The fiscal period ending June 30, 2011 will be for a six-month period.
NOTE 18 SUBSEQUENT EVENT
In April 2011, CCUSA purchased an unoccupied 72,670 square foot office building in Alexandria, Virginia for
$24,696,000. While most of the payment involved cash, a $3,900,000 bridge loan was also initiated. CCUSA
expects to pay off this loan in 2011 with the bequest pledge disbursement mentioned in Note 6. CCUSA plans on
moving to the new office space, occupying a portion of the building, and leasing the remaining portion. Currently,
CCUSA is planning to sublease the office space at its current location to another tenant after the move to the new
office building. CCUSA plans on financing the cost of improvements to the office building.
(20)
