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AMERICAN INSTITUTE OF GRAPHIC ARTS

FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2016 AND 2015

AND

INDEPENDENT AUDITORS REPORT


AMERICAN INSTITUTE OF GRAPHIC ARTS

TABLE OF CONTENTS

Page

Independent Auditors Report 1

Financial Statements

Statements of Financial Position 3

Statement of Activities for the Year Ended September 30, 2016 4

Statement of Activities for the Year Ended September 30, 2015 5

Statements of Cash Flows 6

Notes to Financial Statements 7


INDEPENDENT AUDITORS REPORT

To the Board of Directors


American Institute of Graphic Arts

We have audited the accompanying financial statements of the American Institute of Graphic Arts
(AIGA), which comprise the statements of financial position as of September 30, 2016 and 2015,
and the related statements of activities and cash flows for the years then ended, and the related notes
to the financial statements.

Managements 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 AIGAs
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 AIGAs 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.

(Continued)

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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 the American Institute of Graphic Arts as of September 30, 2016 and 2015, and
the related statements of activities and cash flows for the years then ended in accordance with
accounting principles generally accepted in the United States of America.

February 17, 2017

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AMERICAN INSTITUTE OF GRAPHIC ARTS

STATEMENTS OF FINANCIAL POSITION

September 30,
2016 2015
ASSETS
Cash and cash equivalents $ 829,121 $ 175,636
Accounts receivable 329,348 136,123
Prepaid expenses and deposits 576,384 676,710
Investments 16,580,347 19,022,383
Property and equipment, net 2,148,927 1,901,733
$ 20,464,127 $ 21,912,585

LIABILITIES AND NET ASSETS


Liabilities
Accounts payable and accrued expenses $ 592,431 $ 548,486
Deferred revenue 2,365,831 2,401,332
Deferred rent 206,390 140,639
3,164,652 3,090,457

Commitments and contingencies

Net assets
Unrestricted
Undesignated 3,798,791 5,115,406
Board designated 13,159,266 13,265,057
16,958,057 18,380,463

Temporarily restricted 241,418 341,665


Permanently restricted 100,000 100,000
Total net assets 17,299,475 18,822,128
$ 20,464,127 $ 21,912,585

See notes to financial statements.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

STATEMENT OF ACTIVITIES

YEAR ENDED SEPTEMBER 30, 2016

Temporarily Permanently
Unrestricted Restricted Restricted Total
Revenues
Membership dues $ 2,709,673 $ - $ - $ 2,709,673
Programs 2,441,249 - - 2,441,249
Grants and contributions 47,377 59,505 - 106,882
Special events (net of direct donor
benefits of $58,960) 201,400 - - 201,400
Investment return 1,704,192 5,714 - 1,709,906
Miscellaneous 239,399 - - 239,399
Net assets released from restrictions 165,466 (165,466) - -
Total revenues 7,508,756 (100,247) - 7,408,509

Expenses
Program services 7,502,035 - - 7,502,035
Management and general 1,081,917 - - 1,081,917
Fund-raising 347,210 - - 347,210
Total expenses 8,931,162 - - 8,931,162

Change in net assets (1,422,406) (100,247) - (1,522,653)


Net assets
Beginning of year 18,380,463 341,665 100,000 18,822,128
End of year $ 16,958,057 $ 241,418 $ 100,000 $ 17,299,475

See notes to financial statements.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

STATEMENT OF ACTIVITIES

YEAR ENDED SEPTEMBER 30, 2015

Temporarily Permanently
Unrestricted Restricted Restricted Total
Revenues
Membership dues $ 2,873,202 $ - $ - $ 2,873,202
Programs 1,447,010 - - 1,447,010
Contributed rent 223,088 - - 223,088
Grants and contributions 16,284 68,383 - 84,667
Special events (net of direct donor
benefits of $92,770) 176,400 - - 176,400
Investment return (444,947) 4,139 - (440,808)
Miscellaneous 238,580 - - 238,580
Net assets released from restrictions 90,802 (90,802) - -
Total revenues 4,620,419 (18,280) - 4,602,139

Expenses
Program services 5,423,083 - - 5,423,083
Management and general 808,426 - - 808,426
Fund-raising 266,591 - - 266,591
Total expenses 6,498,100 - - 6,498,100

Change in net assets (1,877,681) (18,280) - (1,895,961)


Net assets
Beginning of year 20,258,144 359,945 100,000 20,718,089
End of year $ 18,380,463 $ 341,665 $ 100,000 $ 18,822,128

See notes to financial statements.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

STATEMENTS OF CASH FLOWS

Year Ended September 30,


2016 2015
Cash flows from operating activities
Change in net assets $ (1,522,653) $ (1,895,961)
Adjustments to reconcile change in net assets to net cash
provided by (used in) operating activities
Depreciation and amortization 250,199 115,113
Net realized and unrealized (gain) loss on investments (1,303,695) 652,337
Changes in operating assets and liabilities
Accounts receivable (193,225) (22,862)
Prepaid expenses and deposits 100,326 (257,870)
Accounts payable and accrued expenses 43,945 226,248
Deferred revenue (35,501) 1,046,855
Deferred rent 65,751 140,639
Net cash provided by (used in) operating activities (2,594,853) 4,499
Cash flows from investing activities
Proceeds from sale of investments 9,148,378 4,913,697
Purchase of investments (5,402,647) (2,799,548)
Acquisition of property and equipment (497,393) (2,001,843)
Net cash provided by investing activities 3,248,338 112,306
Cash flows from financing activities
Proceeds from loan payable 607,054 183,900
Principal payments on loan payable (607,054) (183,900)
Net cash used in financing activities - -
Net increase in cash and cash equivalents 653,485 116,805
Cash and cash equivalents, beginning of year 175,636 58,831
Cash and cash equivalents, end of year $ 829,121 $ 175,636
Supplemental cash flow disclosure
Cash paid for interest $ 2,429 $ 5,428

See notes to financial statements.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

1 - ORGANIZATION

American Institute of Graphic Arts (AIGA), the professional association for design, was
founded in 1914. Its mission is to advance design as a professional craft, strategic advantage and
vital cultural force. At the national level, AIGA pursues its mission by connecting practitioners,
enthusiasts and patrons through regional, national and global events, and by creating and curating
content that:

Advocates for a greater understanding of the value of designers and design in


government, business, media and the public

Enhances professional development

Defines global standards and ethical practices

Inspires designers and the public

Establishes criteria for design education that meet the needs of the profession

Makes powerful tools and resources available and accessible

Celebrates and enhances the value of design

Mobilizes a global design movement

As of October 1, 2016, AIGA had 24,242 members: 5 Trustees, 235 Design Leaders, 7,253
Sustaining Members, 3,859 Supporters and 12,890 Contributors.

AIGA had 71 chapters as of October 1, 2016. The accompanying financial statements do not
include the financial position or the change in net assets and cash flows of these chapters, each of
which is an autonomous corporation organized under the laws of the state in which it is located.

AIGAs revenues are primarily derived from membership dues and various programmatic
activities. AIGA offered the following programs during its 2016 fiscal year:

AIGA Awards Gala, April 15, 2016, New York City. Five medalists were honored for
their lifes work and overall contribution to design.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

1 - ORGANIZATION (Continued)

AIGA Leadership Retreat, June 9-11, 2016, Raleigh, NC (231 attendees).

Business Perspectives for Creative Leaders offered by AIGA and the Yale School of
Management, July 24-29, 2016, Yale School of Management, New Haven, CT (46
participants graduated). In 13 years, more than 500 participants have graduated from the
program.

Creative Lab a program designed to educate, inspire and future proof the future pool of
creative practitioners within the design community.

AIGA Design Conference, October 8-10, 2015, New Orleans, LA. More than 1,800
designers attended the annual AIGA Design Conference.

Eye on Design, AIGAs online publication, turns a well-trained eye on the best new work
from the worlds leading emerging and established designers. 620 original articles on
issues facing design and designers plus the first two videos in the Where Designers
Work series were published. A bi-weekly newsletter is published and distributed to
90,000 subscribers for a total of 1.5 million unique visitors and 2.6 million page views.

Design for Good In the spring of 2016, designers participated in a focus group in
Raleigh, NC to develop a strategic vision to support and recognize the increasing number
of designers who play a catalytic role in communities through projects that create positive
social impact.

GOTV (Get Out The Vote) campaign 727 posters were submitted from designers aimed
at increasing voter participation, a significant increase in participation since the
campaigns inception in 2000. In collaboration with key members of AIGA board of
directors and actor James Edward Olmos, a GOTV video was produced that went viral,
reaching millions of households, raising AIGAs visibility in the press. Additionally, the
posters adorned bus stops, billboards and other sites across the country.

AIGA Design Archives 75 items from case studies and seven research guides were
added. Over the years, 7,130 items have been gifted to the Denver Art Museum (The
DAM), representing part of the largest and most comprehensive holdings of
contemporary American communication design collections in the world. The materials
reflect design trends from many of the leading design firms and individuals in the U.S.
between 19802012.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

1 - ORGANIZATION (Continued)

Diversity & Inclusion (D&I) AIGA held a D&I initiative in fiscal year 2016, featuring
18 events/programs held at the chapter level across the nation, presentations at the
Leadership Retreat and Design Conference, and the production of five videos.

Deferred revenue and prepaid expenses were recorded for the AIGA Design Conference held in
Las Vegas, NV on October 17-19, 2016.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Presentation


AIGAs net assets, revenues, expenses, gains and losses are classified, based on the existence or
absence of donor-imposed restrictions, into the following three categories:

Unrestricted net assets - Unrestricted net assets represent the portion of expendable funds
available for the support of all AIGAs operations.

Temporarily restricted net assets - Net assets subject to donor-imposed stipulations that may
or will be met, either by action of AIGA and/or the passage of time.

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.

Permanently restricted net assets - Net assets subject to donor-imposed stipulations that must
be maintained permanently by AIGA. Generally, the donors of these assets would permit
AIGA to use all or part of the income earned on any related investments for general or specific
purposes.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America (GAAP) requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents


Cash balances in banks are insured by the Federal Deposit Insurance Corporation subject to
certain limitations. For purposes of the statement of cash flows, AIGA considers all highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents,
except such investments held as part of AIGAs investment portfolio, which is deemed to be for
long-term purposes.

Investments
Investments are stated at fair value. GAAP establishes a framework for measuring fair value.
That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements). Under GAAP, the three levels of the fair value
hierarchy are as follows:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that AIGA has the ability to access.

Level 2: Inputs to the valuation methodology include:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in inactive markets;

Inputs other than quoted prices that are observable for the asset or liability; and

Inputs that are derived principally from or corroborated by observable market


data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be
observable for substantially the full term of the asset or liability.

Level 3: Unobservable inputs that reflect managements own assumptions.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment


Property and equipment are stated at cost or, if donated, at the estimated fair market value of the
assets at the date of donation. Costs for repairs and maintenance are charged to expenses as
incurred. Depreciation is provided on the straight-line method over the estimated useful lives of
five years for furniture, fixtures and equipment and three years for computer equipment. Building
and leasehold improvements are amortized over either the remaining term of the underlying lease
or the useful lives of the improvements, whichever is shorter, using the straight-line method.

Deferred Revenue and Related Expenses


Revenue received and expenses paid in the current period for publications, conferences,
exhibitions, programs and other events scheduled to take place in the subsequent period are
deferred on the statements of financial position. The majority of non-membership deferred
revenue and related expenses relate to the national conference which is held in October,
subsequent to the fiscal year.

Membership dues are allocated to the period to which they relate and are recognized accordingly.
Membership dues billed and received in advance are reflected as deferred revenue in the
statements of financial position.

Donated Materials and Services


Donated materials, generally, printing and paper supplies, are estimated at $132,018 and
$135,568 for the years ended September 30, 2016 and 2015, respectively. In addition, AIGA
received contributed rent in the amount of $223,088 for the year ended September 30, 2015. Such
donations are recorded in the statement of activities as programs revenue, with an offset to
expenses as program services, as donors of such items receive commensurate value in return.

Volunteer officers and committees that serve without remuneration play an important role in the
functioning of AIGA. No amounts have been reflected in the financial statements for such
donated services, as they do not meet the criteria for recognition.

Functional Allocation of Expenses


Expenses have been charged to program or supporting services, either directly when identifiable,
or indirectly based on managements estimation of the services benefited.

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes
AIGA is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code
and is classified as a publicly supported organization as described in Section 509(a).

Subsequent Events
These financial statements were approved by management and available for issuance on
February 17, 2017. Management has evaluated subsequent events through this date.

3 - PREPAID EXPENSES AND DEPOSITS

Prepaid expenses and deposits consisted of the following:

September 30,
2016 2015

AIGA Design Conference $ 396,155 $ 437,245


Security deposits 150,526 150,526
Other prepayments 29,703 88,939
$ 576,384 $ 676,710

4 - INVESTMENTS AND INVESTMENT RETURN

AIGAs investments, which are considered to be Level 1, consisted of the following:

September 30,
2016 2015

Common stock $ 1,666,268 $ 1,472,121


Fixed income 3,886,450 5,320,167
Mutual funds 8,982,909 9,289,460
Corporate and foreign income 634,632 361,679
U.S. government bonds 843,869 797,554
Short-term deposits 566,219 1,781,402
$ 16,580,347 $ 19,022,383

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

4 - INVESTMENTS AND INVESTMENT RETURN (Continued)

The investment return is summarized as follows:

Year Ended September 30,


2016 2015

Interest and dividends $ 406,211 $ 211,529


Net unrealized gain (loss) on investments 1,808,879 (782,865)
Net realized gain (loss) on sale of investments (505,184) 130,528
$ 1,709,906 $ (440,808)

Investment expenses were $103,144 and $79,052 in fiscal 2016 and 2015, respectively. AIGA
invests in various investment securities in accordance with a board-adopted investment risk
strategy. Investment securities are exposed to various risks such as interest rate, market, and
credit risks. Due to the level of risk associated with certain investment securities, it is at least
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 the statements of financial
position.

5 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

September 30,
2016 2015

Leasehold improvements $ 2,269,452 $ 1,801,110


Office machinery and equipment 99,682 116,009
Furniture and fixtures 137,760 134,740
2,506,894 2,051,859
Less - Accumulated depreciation 357,967 150,126
$ 2,148,927 $ 1,901,733

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AMERICAN INSTITUTE OF GRAPHIC ARTS

NOTES TO FINANCIAL STATEMENTS

6 - DEFERRED REVENUE

Deferred revenue consisted of the following:

September 30,
2016 2015

Conferences $ 1,258,303 $ 1,358,607


Membership dues 1,107,528 1,042,725
$ 2,365,831 $ 2,401,332

7 - BOARD DESIGNATED FUNDS

Board designated funds are funds that have been designated by board action to be used for
specific purposes. The AIGA Legacy Fund is intended to be spent on special projects at the
boards request and authorization. Scholarship Funds support AIGA scholarship programs; the
2020 Vision Fund and AIGA Innovate represent funds to be spent on projects that advance
AIGAs strategies for 2020 and encourage innovative programs with the potential for adoption by
many chapters, to be spent prior to 2020. The AIGA Endowment, which is designated and not
restricted, is intended to serve the long-term financial interests of AIGA; funds are not expected
to be appropriated in the foreseeable future.

Board-designated net assets consisted of the following:

Balance, Contributions/ Balance,


October 1, Investment Appropriated September 30,
Program 2015 Return By Board 2016

AIGA Legacy Fund $ 189,332 $ - $ - $ 189,332


Scholarship Funds 55,573 2,814 - 58,387
AIGA Endowment 10,073,931 209,474 - 10,283,405
2020 Fund/AIGA Innovate 2,946,221 9,727 (327,806) 2,628,142
$ 13,265,057 $ 222,015 $ (327,806) $ 13,159,266

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NOTES TO FINANCIAL STATEMENTS

7 - BOARD DESIGNATED FUNDS (Continued)

Balance, Contributions/ Balance,


October 1, Investment Appropriated September 30,
Program 2014 Return By Board 2015

AIGA Legacy Fund $ 189,332 $ - $ - $ 189,332


Scholarship Funds 53,533 2,040 - 55,573
AIGA Endowment - 62,523 10,011,408 10,073,931
2020 Fund/AIGA Innovate - 9,727 2,936,494 2,946,221
$ 242,865 $ 74,290 $12,947,902 $ 13,265,057

8 - TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets consisted of the following:

Balance, Contributions/ Released Balance,


October 1, Investment from September 30,
Program 2015 Return Restrictions 2016

Scholarship Funds $ 55,645 $ 5,714 $ (5,500) $ 55,859


AIGA Legacy Fund 286,020 59,505 (159,966) 185,559
$ 341,665 $ 65,219 $ (165,466) $ 241,418

Balance, Contributions/ Released Balance,


October 1, Investment from September 30,
Program 2014 Return Restrictions 2015

Scholarship Funds $ 56,006 $ 5,139 $ (5,500) $ 55,645


AIGA Legacy Fund 303,939 67,383 (85,302) 286,020
$ 359,945 $ 72,522 $ (90,802) $ 341,665

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NOTES TO FINANCIAL STATEMENTS

9 - PERMANENTLY RESTRICTED NET ASSETS

Permanently restricted net assets are restricted to investments held in perpetuity, the income from
which is expendable to support the Henry Wolf AIGA Scholarships.

10 - RETIREMENT PLAN

AIGA has a defined contribution retirement plan that covers substantially all full-time employees.
Contributions, which are made entirely by AIGA, will vary each year and are determined by the
Executive Director, as part of AIGAs budget, approved annually at the Board of Directors
meeting. Expense for the years ended September 30, 2016 and 2015 was $75,927 and $66,708,
respectively.

11 - RELATED PARTY TRANSACTIONS

AIGA provides management and personnel services to AIGAs New York Chapter. Fees and
expenses billed by AIGA were as follows:

Year Ended September 30,


2016 2015

Management fees $ - $ 4,000


Payroll and related benefits 123,997 119,094
$ 123,997 $ 123,094

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NOTES TO FINANCIAL STATEMENTS

12 - COMMITMENTS AND CONTINGENCIES

On November 6, 2014, AIGA entered into a 125 month operating lease with 233 Broadway
Owners, LLC, pursuant to which AIGA will lease a portion of the 17th floor office space located
at 233 Broadway, New York, New York. The lease contains a rent abatement for five months
which is straight-lined over the life of the lease. Future minimum rental payments, including
escalations, under the operating lease are summarized as follows:

Year Ending
September 30,

2017 $ 414,776
2018 392,315
2019 445,201
2020 456,331
2021 471,624
Thereafter 2,029,993
$ 4,210,240

AIGA maintains a line of credit (Portfolio Loan Agreement or PLA) with a bank. The
amount of the line of credit is based on a percentage of investment assets pledged by AIGA on
which the line of credit is secured. At September 30, 2016, the line of credit amounted to
$1,000,000. The interest rate is determined by a variable rate (Corresponding PLA Index) plus
3.0%. The interest rate at September 30, 2016 was 3.53%. There were no amounts outstanding
under this line of credit at September 30, 2016 and 2015. Interest expense for fiscal 2016 and
2015 was $2,429 and $11,162, respectively.

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