Financial Statements Together with Report of Independent ......Sep 30, 2016 · Cash and cash equivalents $ 3,482,970539,717 $ Current portion of contributions receivable 206,9151,007,724

Financial Statements Together with Report of Independent Certified Public Accountants

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER

September 30, 2016 and 2015

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER

TABLE OF CONTENTS

Page(s) Report of Independent Certified Public Accountants 1 - 2 Financial Statements:

Statements of Financial Position as of September 30, 2016 and 2015 3 Statement of Activities for the year ended September 30, 2016 4 Statement of Activities for the year ended September 30, 2015 5 Statement of Functional Expenses for the year ended September 30, 2016 6 Statement of Functional Expenses for the year ended September 30, 2015 7 Statements of Cash Flows for the years ended September 30, 2016 and 2015 8 Notes to Financial Statements 9 - 20

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Trustees National Multiple Sclerosis Society, New York City - Southern New York Chapter:

We have audited the accompanying financial statements of National Multiple Sclerosis Society, New York City – Southern New York Chapter (the “Chapter”), which comprise the statements of financial position as of September 30, 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. Auditor’s 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 our 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 auditor’s 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 Chapter’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 Chapter’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.

Grant Thornton LLP 757 Third Avenue, 9th Floor New York, NY 10017

T 212.599.0100 F 212.370.4520 GrantThornton.com linkd.in/GrantThorntonUS twitter.com/GrantThorntonUS

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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 National Multiple Sclerosis Society, New York City – Southern New York Chapter as of September 30, 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.

New York, New York February 7, 2017

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER Statements of Financial Position As of September 30, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

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2016 2015

ASSETS

CURRENT ASSETSCash and cash equivalents 539,717$ 3,482,970$ Current portion of contributions receivable 1,007,724 206,915 Contributions receivables - due from Home Office 13,535 98,047 Due from Chapters 10,458 11,186 Prepaid expenses and other current assets 293,215 348,095

Total current assets 1,864,649 4,147,213

Interest in National Multiple Sclerosis Society’s pooled investment fund 1,608,588 2,306,404 Contributions receivable, net 148,500 - Property and equipment, net of accumulated depreciation 117,495 142,562 Due from Home Office - interest in split-interest arrangements 184,817 186,848

Total assets 3,924,049$ 6,783,027$

LIABILITIES AND NET ASSETS

CURRENT LIABILITIESAccounts payable and accrued expenses 238,992$ 553,612$ Deferred revenue 1,555,364 2,154,681 Current portion of deferred rent 42,583 23,833 Due to Home Office 210 1,602,861 Due to Chapters 3,778 6,911

Total current liabilities 1,840,927 4,341,898

Deferred rent, net of current portion 209,402 251,985

Total liabilities 2,050,329 4,593,883

NET ASSETSUnrestricted 1,224,671 1,442,855 Temporarily restricted 649,049 746,289

Total net assets 1,873,720 2,189,144

Total liabilities and net assets 3,924,049$ 6,783,027$

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER Statement of Activities For the year ended September 30, 2016

The accompanying notes are an integral part of this financial statement.

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TemporarilyUnrestricted Restricted Total

PUBLIC SUPPORTSpecial events (includes in-kind contributions of $475,395) 8,257,696$ - 8,257,696$ Less: Cost of direct benefits to donors (1,221,719) - (1,221,719)

Net special events 7,035,977 - 7,035,977

Contributions revenue (includes in-kind contributions of$139,392) 1,962,942 49,202 2,012,144

Legacies and bequests 855,539 - 855,539

Total public support 9,854,458 49,202 9,903,660

Other revenue:Investment income 152,212 - 152,212 Service program fees 2,100 - 2,100

Total other revenue 154,312 - 154,312

Net assets released from restrictions 146,442 (146,442) -

Total revenue 10,155,212 (97,240) 10,057,972

EXPENSESProgram services:

Research 2,672,429 - 2,672,429 Client programs 2,180,558 - 2,180,558 Community programs 917,249 - 917,249 Professional education and training 345,760 - 345,760 Public education 1,710,950 - 1,710,950

Total program services 7,826,946 - 7,826,946

Supporting services:Fundraising 1,975,007 - 1,975,007 Management and general 571,443 - 571,443

Total supporting services 2,546,450 - 2,546,450

Total expenses 10,373,396 - 10,373,396

Changes in net assets (218,184) (97,240) (315,424)

Net assets, beginning of year 1,442,855 746,289 2,189,144

Net assets, end of year 1,224,671$ 649,049$ 1,873,720$

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER Statement of Activities For the year ended September 30, 2015


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TemporarilyUnrestricted Restricted Total

PUBLIC SUPPORTSpecial events (includes in-kind contributions of $756,754) 9,275,096$ - $ 9,275,096$ Less: Cost of direct benefits to donors (1,217,164) - (1,217,164)

Net special events 8,057,932 - 8,057,932

Contributions revenue (includes in-kind contributions of$196,597) 1,864,250 (8,589) 1,855,661

Legacies and bequests 1,825,307 100,000 1,925,307

Total public support 11,747,489 91,411 11,838,900

Other revenue:Investment loss (120,860) - (120,860) Service program fees 9,605 - 9,605 Miscellaneous income 141 - 141

Total other (loss) revenue (111,114) - (111,114)

Net assets released from restrictions 131,235 (131,235) -

Total revenue 11,767,610 (39,824) 11,727,786

EXPENSESProgram services:

Research 3,997,049 - 3,997,049 Client programs 2,504,705 - 2,504,705 Community programs 1,006,613 - 1,006,613 Professional education and training 344,384 - 344,384 Public education 1,774,557 - 1,774,557

Total program services 9,627,308 - 9,627,308

Supporting services:Fundraising 2,173,806 - 2,173,806 Management and general 429,843 - 429,843

Total supporting services 2,603,649 - 2,603,649

Total expenses 12,230,957 - 12,230,957

Changes in net assets (463,347) (39,824) (503,171)

Net assets, beginning of year 1,906,202 786,113 2,692,315

Net assets, end of year 1,442,855$ 746,289$ 2,189,144$

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER Statement of Functional Expenses For the year ended September 30, 2016


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Cost ofProfessional Management Total Direct

Client Community Education Public and Programs Benefits to GrandResearch Programs Programs and Training Education Total Fundraising General and Support Donors Total

Salaries - $ 710,285$ 411,781$ 113,028$ 553,440$ 1,788,534$ 572,859$ 128,215$ 2,489,608$ - $ 2,489,608$ Employee benefits - 100,096 58,030 15,928 77,993 252,047 80,729 18,069 350,845 - 350,845 Payroll taxes - 54,820 31,781 8,724 42,715 138,040 44,213 9,896 192,149 - 192,149

Total salaries and related expenses - 865,201 501,592 137,680 674,148 2,178,621 697,801 156,180 3,032,602 - 3,032,602

Printing - 12,875 93 26 16,906 29,900 31,481 29 61,410 - 61,410 Postage and shipping - 3,911 34 9 21,723 25,677 7,384 11 33,072 - 33,072 Telephone - 11,029 569 107 525 12,230 1,886 122 14,238 - 14,238 Supplies - 3,920 2,437 429 2,353 9,139 4,582 487 14,208 67,555 81,763 Dues and memberships - 1,346 303 83 408 2,140 422 94 2,656 - 2,656 Professional and other contract service fees - 219,851 22,776 7,711 19,437 269,775 261,731 4,083 535,589 - 535,589 Donated public service annoucements and advertising - 42,000 - - - 42,000 394,646 - 436,646 - 436,646 Travel - 6,266 6,466 425 2,219 15,376 18,088 548 34,012 306,918 340,930 Meetings - 81,664 2,167 4,828 2,997 91,656 84,014 259 175,929 13,845 189,774 Occupancy - 130,115 75,433 20,705 101,383 327,636 119,515 23,487 470,638 341,556 812,194 Direct financial assistance - 266,823 - - - 266,823 - - 266,823 - 266,823 Prizes and promotional items - 266 - - - 266 - - 266 82,448 82,714 Miscellaneous expense - 17,948 9,695 2,555 12,961 43,159 250,510 2,969 296,638 409,397 706,035 Depreciation & amortization - 7,152 4,146 1,138 5,572 18,008 5,768 1,291 25,067 - 25,067

Total expenses, before Chapter support for Society activities - 1,670,367 625,711 175,696 860,632 3,332,406 1,877,828 189,560 5,399,794 1,221,719 6,621,513

Chapter support for Society activities 2,672,429 510,191 291,538 170,064 850,318 4,494,540 97,179 381,883 4,973,602 - 4,973,602

Total expenses 2,672,429$ 2,180,558$ 917,249$ 345,760$ 1,710,950$ 7,826,946$ 1,975,007$ 571,443$ 10,373,396$ 1,221,719$ 11,595,115

Less: Cost of direct benefits to donors (1,221,719)

Total expenses as reported on the statement of activities 10,373,396$

Program Activities Supporting Services

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER Statement of Functional Expenses For the year ended September 30, 2015


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Cost ofProfessional Management Total Direct

Client Community Education Public and Programs Benefits to GrandResearch Programs Programs and Training Education Total Fundraising General and Support Donors Total

Salaries - $ 792,009$ 436,596$ 116,091$ 572,256$ 1,916,952$ 586,800$ 140,684$ 2,644,436$ - $ 2,644,436$ Employee benefits - 129,876 71,594 19,037 93,840 314,347 96,225 23,070 433,642 - 433,642 Payroll taxes - 64,169 35,374 9,406 46,365 155,314 47,543 11,398 214,255 - 214,255

Total salaries and related expenses - 986,054 543,564 144,534 712,461 2,386,613 730,568 175,152 3,292,333 - 3,292,333

Printing - 22,467 307 1,603 18,862 43,239 42,700 99 86,038 - 86,038 Postage and shipping - 8,053 176 829 21,432 30,490 30,436 57 60,983 - 60,983 Telephone - 20,459 2,102 514 2,532 25,607 5,132 622 31,361 - 31,361 Supplies - 17,573 7,444 1,926 9,857 36,800 12,099 2,478 51,377 56,566 107,943 Dues and memberships - 1,832 526 140 689 3,187 1,572 309 5,068 - 5,068 Professional and other contract service fees - 283,916 138,910 19,209 16,356 458,391 303,281 4,011 765,683 - 765,683 Donated public service announcements and advertising - 66,500 - - - 66,500 596,993 - 663,493 - 663,493 Travel - 9,798 6,819 478 2,211 19,306 17,703 527 37,536 340,957 378,493 Meetings - 154,200 2,375 20,595 3,756 180,926 7,553 391 188,870 6,866 195,736 Occupancy - 132,928 73,277 19,484 96,045 321,734 107,404 23,612 452,750 388,865 841,615 Furniture and equipment - 353 195 52 255 855 262 63 1,180 - 1,180 Direct financial assistance - 359,779 - - - 359,779 - - 359,779 - 359,779 Prizes and promotional items - 162 - - - 162 - 51 213 67,845 68,058 Miscellaneous expense - 16,695 7,573 2,636 9,788 36,692 246,028 2,418 285,138 356,065 641,203 Depreciation and amortization - 8,812 4,858 1,292 6,367 21,329 6,529 1,566 29,424 - 29,424 Contribution to Society - Restricted to research investment 1,550,000 - - - - 1,550,000 - - 1,550,000 - 1,550,000

Total expenses, before Chapter support for Society activities 1,550,000 2,089,581 788,126 213,292 900,611 5,541,610 2,108,260 211,356 7,861,226 1,217,164 9,078,390

Chapter support for Society activities 2,447,049 415,124 218,487 131,092 873,946 4,085,698 65,546 218,487 4,369,731 - 4,369,731

Total expenses 3,997,049$ 2,504,705$ 1,006,613$ 344,384$ 1,774,557$ 9,627,308$ 2,173,806$ 429,843$ 12,230,957$ 1,217,164$ 13,448,121

Less: Cost of direct benefits to donors (1,217,164)

Total expenses as reported on the statement of activities 12,230,957$

Program Activities Supporting Services

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER Statements of Cash Flows For the years ended September 30, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

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2016 2015

CASH FLOWS FROM OPERATING ACTIVITIESChanges in net assets (315,424)$ (503,171)$ Adjustments to reconcile changes in net assets to net cash (used in) provided by operations:

Net realized and unrealized (gain) loss on investments (96,685) 175,003 Depreciation and amortization 25,067 29,424 Change in interest in split-interest arrangements 2,031 8,589 Changes in:

Contributions receivable (949,309) 164,450 Contributions receivable - due from Home Office 84,512 (17,212) Due from Chapters 728 4,363 Prepaid expenses and other assets 54,880 (112,723) Due to Home Office (1,602,651) 1,564,509 Due to Chapters (3,133) 5,909 Accounts payable and accrued expenses (314,620) 16,905 Deferred revenue (599,317) (110,925) Deferred rent (23,833) (21,328)

Net cash (used in) provided by operating activities (3,737,754) 1,203,793

CASH FLOWS FROM INVESTING ACTIVITIESPurchases of furniture, fixtures and equipment - (3,525) Purchases of investments (84,543) (3,189,407) Proceeds from sales of investments 879,044 708,000

Net cash provided by (used in) investing activities 794,501 (2,484,932)

Net decrease in cash and cash equivalents (2,943,253) (1,281,139)

Cash and cash equivalents, beginning of year 3,482,970 4,764,109

Cash and cash equivalents, end of year 539,717$ 3,482,970$

NATIONAL MULTIPLE SCLEROSIS SOCIETY, NEW YORK CITY - SOUTHERN NEW YORK CHAPTER Notes to Financial Statements September 30, 2016 and 2015

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1. ORGANIZATION

The National Multiple Sclerosis Society (the “Society”) is a not-for-profit voluntary health and welfare agency that mobilizes people and resources to drive research for a cure and to address the challenges of everyone affected by MS through a 50-state network of chapters. The New York City-Southern New York Chapter (the “Chapter”) raises funds in the five boroughs of New York City and in the counties of Putnam, Orange, Rockland, Sullivan, and Westchester (the “SNY counties”) to fund cutting-edge research, drive change through advocacy, facilitate professional education, and provide programs and services that help people with MS and their families move their lives forward.

The Chapter qualifies as a charitable organization as defined by Internal Revenue Code (“IRC”) Section 501(c)(3) and, accordingly, is exempt from federal income taxes under IRC Section 501(a). Additionally, since the Chapter is publicly supported, contributions made to the Chapter qualify for the maximum charitable contribution deduction under the IRC. The Chapter is also exempt from New York State and New York City income tax.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

Net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Chapter and changes therein are classified and reported as follows:

Unrestricted net assets - These are fully available funds to be used at the discretion of management and the Board of Trustees (the “Board”). The funds may be used by the Chapter in support of any of its programs or supporting services.

Temporarily restricted net assets - These funds are subject to donor-imposed stipulations that will be met either by actions of the Chapter and/or passage of time.

Permanently restricted net assets - Funds which contain certain donor-imposed restrictions that stipulate that such resources be maintained permanently by the Chapter. The Chapter had no permanently restricted net assets at September 30, 2016 and 2015.

Revenue Recognition

Contributions are recorded as revenue when received or promised (pledged) unconditionally, at their fair value. The fair value of long-term contributions receivable is measured based on the present value of future cash flows, with consideration of expectation about possible variations in the amount and/or timing of the cash flows, the respective donor’s credit risk, and other specific factors that would be considered by market participants. The Chapter recognizes revenue from legacies and bequests when an unassailable right to the gift has been established by the court and the proceeds are measurable. The Chapter records contributions as permanently restricted if the donor stipulates that the resources be held in perpetuity or as temporarily restricted if received with donor stipulations that limit their use either through purpose or by passage of time. When a donor restriction expires (that is, when a time restriction ends or purpose restriction is fulfilled), temporarily restricted net assets are reclassified as unrestricted net assets and reported in the


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statement of activities as net assets released from restrictions. The Chapter’s policy is to record temporarily restricted contributions received and expended in the same accounting period as unrestricted net assets. Conditional contributions are recognized as revenue when the conditions on which they depend have been substantially met.

Deferred Revenue and Costs

Deferred revenue consists of amounts received in advance for special events that are held subsequent to year-end. Such amounts are reflected as special events revenue when the related obligations are satisfied or the respective special event to which the receipts pertain occurs.

Costs directly associated with special events are deferred until such time that the respective event occurs. Accordingly, certain costs incurred during fiscal 2016 and 2015 totaling $293,000 and $348,000, respectively, associated with special events have been deferred and reported within prepaid expenses and other assets as of September 30, 2016 and 2015, respectively. Deferred costs as of September 30, 2016, will be expensed upon occurrence of the respective event in fiscal 2017. The policy of the Chapter further requires that event advertising and promotional costs relative to special events be expensed as incurred and that total deferred event costs may not exceed anticipated event revenues.

Functional Allocation of Expenses

The costs of providing the Chapter’s programs and supporting services have been summarized on a functional basis on the statements of activities and functional expenses.

The following is a description of the Chapter’s programs:

Research – The Chapter provides contributions to National Multiple Sclerosis Society – Home Office (the “Home Office”) to support Society research projects around the world aimed at stopping multiple sclerosis in its tracks, restoring function, and ending the disease forever.

Public Support for Society Activities – Costs associated with funding constituent and community service, public education, and professional education conducted nationwide (beyond the Chapter’s territory) for the benefit of individuals living with multiple sclerosis.

Client Programs – Programs, services and resources provided for people living with multiple sclerosis and affected by multiple sclerosis which facilitate education, recreation, physical and emotional wellness, provide financial resources and a connection for people living with multiple sclerosis.

Community Programs – Costs associated with collaborating with other community organizations, focusing on access to healthcare, rehabilitation, treatments and therapies; long-term care; disability rights issues; vocational training and rehab, wellness and fitness; and, outreach and education to rural and underserved populations.

Professional Education and Training – Activities or programs designed to improve the knowledge, skills and critical judgment of physicians and other healthcare professionals engaged (directly or indirectly) in providing client services by keeping them abreast of new diagnostic techniques and therapies.


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Public Education – Costs associated with educating the public about multiple sclerosis including the Home Office annual multiple sclerosis awareness campaign, public service announcements, Momentum, which is the Home Office’s flagship magazine distributed quarterly to people with multiple sclerosis, healthcare providers, supporters of the Society and more.

Concentration of Credit Risk

The Chapter maintains a portion of its cash and cash equivalents in deposit accounts that at times may exceed federally insured limits. The Chapter has not experienced any losses with respect to such accounts. The Chapter believes it is not exposed to any significant credit risk on its cash and cash equivalents.

Cash Equivalents

The Chapter considers highly liquid investments with original maturities of three months or less from the date purchased, other than those held in the investment portfolio, to be cash equivalents.

Interest in Pooled Investment Fund

During fiscal 2014, the Chapter’s Board approved the liquidation of all of the Chapter’s investments in order to participate in a managed pooled investment account. See footnote 5 for further details. The Chapter’s investments in equity and debt securities are stated at their quoted market prices, with the net change in unrealized gains or losses included in the statement of activities.

Contributions and Other Receivables

Contributions (including unconditional promises to give) are recorded at net realizable value, net of an allowance for uncollectible amounts. The Chapter believes that its pledges receivable are fully collectible. There are no identifiable concentrations of credit risk related to these receivables. Donated securities are liquidated upon receipt and recorded as contributions at their fair value.

Property and Equipment

Property and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization is recorded on the straight-line basis over the estimated useful lives of the assets which range from 3 to 7 years. Equipment acquired under leases is depreciated in accordance with the Chapter’s standard depreciation policy or the term of the lease to which the asset pertains, whichever is shorter. The Chapter capitalizes all equipment purchases exceeding $1,000 with useful lives in excess of one year.

Donated Goods and Services

Donated goods and services, including public service announcements, used by the Chapter in furtherance of its programs, special events, and supporting services are reflected as in-kind contributions and expensed in the financial statements at their estimated fair value at the date of receipt.

A number of volunteers, including members of the Chapter’s Board, have made significant contributions of their time in furtherance of the Chapter’s programs and support functions. The value of this contributed time does not meet the criteria for recognition as contributed services and, accordingly, is not reflected in the accompanying financial statements.


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Donated goods and services are included in special events and contributions revenue on the accompanying statements of activities and consist of the following for the years ended September 30:

2016 2015

Donated goods 40,749$ 98,311$ Donated services 574,038 855,040

Total 614,787$ 953,351$

Public service announcements and donated advertising received in fiscal years 2016 and 2015 totaled approximately $436,646 and $663,493, respectively, and are reflected above as part of donated services and either as cost of direct benefits to donors or fundraising expense in the accompanying statements of activities.

Chapter Support of Society Initiatives (National Programs Expense)

The National Programs Expense (“NPE”) is support from the chapters that funds a large portion of the Society’s budget in areas such as nationwide programs, services, centralized functions, and the Society’s research investments as well as investments in the Society’s unified plan. The Society’s budget is determined through an inclusive budget planning process. The Budget Development Advisory Committee provides consensus advice to the CEO and is comprised of members of the Senior Leadership Team, members of the National Board of Directors, and regional volunteer liaisons responsible for communicating with volunteer leadership in each region. Revenue tiers with progressively higher percentages are used to determine the NPE allocation amounts. For purposes of determining the revenue base, in-kind contributions and investment performance are excluded from the calculation. The percentages are subject to adjustment each year to ensure that the Home Office meets its programmatic goals and that all donor restrictions are honored. The Chapter’s National Programs Expense for fiscal years 2016 and 2015 amounted to $4,973,602 and $4,369,731, respectively. These amounts are reflected as Chapter Support of Society Initiatives in the accompanying statements of functional expenses.

In addition to the remitted National Program Expense for fiscal year 2015, the Chapter made an additional investment in the Society’s research initiatives in the amount of $1,550,000. This amount is reflected as part of research expense in the accompanying 2015 statement of activities and functional expenses. There were no such additional amounts for fiscal year 2016.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and amounts of revenues and expenses during the reporting period. The most significant of which relate to the fair values assigned to certain financial instruments; the collectability of contributions receivable; the fair value of donated advertising, goods and public service announcements; and, the useful lives assigned to property and equipment. Actual results could differ from those estimates.


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Functional expenses that are not specifically attributable to program services or supporting services are allocated by management based on various allocation factors.

Accounting for Uncertainty in Income Taxes

Guidance in the area of “Accounting for Uncertainty in Income Taxes” under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return, including issues relating to financial statement recognition and measurement. This standard provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is “more-likely-than-not” to be sustained, if the position were to be challenged by a taxing authority. The standard also provides guidance on measurement, classification, interest and penalties, and disclosure. The adoption of this standard by the Chapter did not have an impact on its financial statements. The fiscal years ended 2013, 2014, 2015 and 2016 are still open to audit for both federal and state purposes. The Chapter has processes presently in place to ensure the maintenance of its tax-exempt status; to identify and report unrelated income; to determine its filing and tax obligations in jurisdictions for which it has nexus; and, to identify and evaluate other matters that may be considered tax positions. At September 30, 2016 and 2015, there are no amounts accrued related to any uncertain tax positions.

Reclassification

Certain 2015 financial statement amounts have been reclassified to conform to the 2016 financial statement presentation. These reclassifications had no effect on total assets, liabilities, net assets, revenues, or expenses as previously reported.

Subsequent Events

The Chapter evaluated subsequent events through February 7, 2017, the date the financial statements were available for issuance. No subsequent events are required to be recognized or disclosed in these financial statements other than what has been disclosed in Note 11.

3. FAIR VALUE MEASUREMENTS

The Chapter follows guidance for fair value measurements that defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. As required by U.S. GAAP, for fair value measurements, the Chapter uses a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available.


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Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the measurement date. A quoted price for an identical asset or liability in an active market provides the most reliable fair value measurement because it is directly observable to the market.

Level 2 - Pricing inputs other than quoted prices in active market, which are either directly or indirectly observable as of the measurement date. The nature of these securities include investments for which quoted prices are available but traded less frequently and investments that are fair valued using other securities, the parameters of which can be directly observed.

Level 3 - Securities that have little to no pricing observability as of the measurement date. These securities are measured using management’s best estimate of fair value, where the inputs into the determination of fair value are not observable and require significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics and other factors. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by an entity. The Chapter considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Chapter’s perceived risk of that instrument.

The carrying amounts of cash and cash equivalents, contributions receivable, prepaid expenses and other assets, accounts payable and accrued expenses, deferred revenue and other liabilities approximate fair value due to the short-term nature of these financial instruments.

The fair values assigned to the Chapter’s investments, which are on deposit in a pooled investment account managed by the Home Office, and split-interest arrangements are based on the quoted fair values of the underlying securities as of the measurement date.


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The following table provides the fair value hierarchy of the Chapter’s financial instruments as of September 30, 2016 and 2015:

Level 1 Level 2 Level 3 Total

September 30, 2016Investments (Pooled Investment Fund): - $ - $ 1,608,588$ 1,608,588$ Due from Home Office:

Interest in split-interest arrangements - - 184,817 184,817

Total - $ - $ 1,793,405$ 1,793,405$

September 30, 2015Investments (Cash and Cash Equivalents): 5,676$ - $ - $ 5,676$

Investments (Pooled Investment Fund): - - 2,300,728 2,300,728 Due from Home Office:

Interest in split-interest arrangements - - 186,848 186,848 Total 5,676$ - $ 2,487,576$ 2,493,252$

At September 30, 2016 and 2015, the Society’s pooled investment portfolio was classified within the FASB fair value hierarchy as 100% Level 1. While principally all of the underlying fund’s investments are readily marketable, based on quoted fair values, since the Chapter’s share of the Society’s pooled investment fund cannot be priced on an active exchange, its interest in the trust is classified as Level 3.

The following presents the changes in fair value of the Chapter’s interest in the Society’s pooled investment fund and interest in split-interest arrangements for the years ended September 30, 2016 and 2015:

Interest in Interest inPooled Split-Interest

Investment Fund Arrangements

For the year ended September 30, 2014 - $ 195,437$

Purchases/new split-interest arrangements 3,183,731 10,246 Sales/distributions (708,000) - Net realized and unrealized loss (175,003) - Change in fair value of split-interest arrangements - (18,835)

For the year ended September 30, 2015 2,300,728 186,848

Purchases/new split-interest arrangements 90,219 10,000 Sales/distributions (879,044) - Net realized and unrealized loss 96,685 - Change in fair value of split-interest arrangements - (12,031)

For the year ended September 30, 2016 1,608,588$ 184,817$

The Chapter Relations Committee (“CRC”) of the Board of Trustees of the Home Office allocates 100% of the residual assets to the Chapter in a split-interest agreement where a chapter is stipulated as the beneficiary by the donor. The Home Office continues to hold, manage, invest and control the donated assets.


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Changes in fair value of split-interest arrangements held at the Home Office for the Chapter’s benefit, which are measured with Level 3 inputs, together with new agreements, are presented as part of contribution revenue on the accompanying statements of activities.

The contributions attributable to the Chapter under split-interest agreements held by the Home Office, for the years ended September 30, 2016 and 2015 totaled $184,817 and $186,848, respectively, and are reflected as Due from Home Office in the accompanying statements of financial position.

4. CONTRIBUTIONS RECEIVABLE, NET

At September 30, 2016 and 2015, contributions receivable and contribution receivable – due from Home Office, consists of the following:

2016 2015Amounts expected to be collected: In less than one year 1,021,259$ 304,962$ In one to three years 150,000 -

1,171,259 304,962 Less: Discount to present value (at a rate of 1.99%) (1,500) -

1,169,759$ 304,962$

Multi-year pledges received are recorded at the present value of their expected future cash flows using a credit adjusted discount rate which articulates with the collection period of the respective pledge. Discount rates assigned to multi-year pledges in the year of origination are not subsequently adjusted.

5. INTEREST IN POOLED INVESTMENT FUND

The Chapter holds shares of the overall portfolio of the Society’s pooled investment fund rather than in the individual financial instruments and therefore has the same composition of investments as that of the Society’s total pooled investment fund. The Chapter’s share of the Society’s pooled investment fund totaled $1,608,588 and $2,306,404, which represents 3.19% and 3.53%, respectively of the Society’s total pooled investment fund as of September 30, 2016 and 2015.

For the years ended September 30, 2016 and 2015, pooled investment net gains (losses) totaled $152,183 and $(122,572), respectively, which consisted of the following:

2016 2015

Interest and dividends 55,498$ 52,431$

Net realized and unrealized gains (losses) on investments, net of

investment advisory fees of $7,879 and $9,380, respectively 96,685 (175,003)

Total 152,183$ (122,572)$


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6. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consists of the following at September 30, 2016 and 2015:

2016 2015

Furniture, fixtures and equipment 199,960$ 199,960$ Leasehold improvements 318,955 318,955

518,915 518,915

Less: Accumulated depreciation and amortization (401,420) (376,353) Property and equipment, net 117,495$ 142,562$

7. LEASES

The Chapter leases its main offices at the Home Office’s premises in New York City under a non-cancellable sublease agreement with the Home Office, which expires in December 2021. The Chapter also leases office space in White Plains, New York under a non-cancellable lease, which expires in November 2016.

The Chapter recognizes rent expense based on straight-lining the minimum lease payments over the respective terms of the leases and has recorded an accrued rent liability of approximately $252,000 and $276,000 at September 30, 2016 and 2015, respectively. Office rent expense totaled approximately $452,000 and $440,000 for the years ended September 30, 2016 and 2015, respectively.

Future minimum rental commitments under the sublease agreement with the Home Office (including common area maintenance costs and excluding electricity) and the lease agreement for the White Plains office, are as follows:

AmountYear Ending September 30:2017 321,000$ 2018 324,000 2019 324,000 2020 324,000 2021 324,000 Thereafter 81,000

Total 1,698,000$


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8. DEFINED CONTRIBUTION PENSION PLANS

Effective January 1, 2016, the chapter participates in the Society’s Defined Contribution Retirement Plan (the “Society Pension Plan”), which covers substantially all of the Chapter’s employees, based on defined eligibility for covered employees. Temporary employees and independent contractors are not eligible for participation in the Society Pension Plan. Upon the first day of employment, covered employees receive a 100% matching employer contribution for the first 3% of eligible compensation contributed and then 50% on the next 2% of eligible compensation contributed for a maximum of a 4% employer contribution. All employer contributions are 100% vested for participants. Employer contributions to the Society DC Plan are the sole responsibility and expense of the Society.

Prior to January 1, 2016, the Chapter maintained a 401(a) non-contributory defined contribution pension plan (the “Chapter Pension Plan”) available to all eligible employees of the Chapter. Employer contributions into the Chapter Pension Plan for the three months ended December 31, 2015 and fiscal year ended September 30, 2015, was 0.7% and 2.4% of gross annual salary, respectively. In accordance with the Chapter Pension Plans’ provisions, contributions required in any given year are first offset by forfeitures of unvested Chapter contributions for terminated participants. Subsequent to January 1, 2016, the Chapter Pension Plan assets were merged into the Society Pension Plan.

The Chapter’s expense for fiscal 2015 was $63,000 while the retirement expense for fiscal 2016 was incurred by the Society rather than the Chapter.

9. REVENUE SHARING ARRANGEMENT

The Chapter benefits, pursuant to a revenue sharing arrangement, in earnings derived from an endowment gift received by the Home Office in fiscal 2000. The Home Office agreed to share annual earnings from this endowment, in the absence of express donor-imposed restrictions to the contrary, with the Chapter in April 2000, whereas 60% of the earnings would be distributed to the Chapter with the remaining 40% retained by the Home Office. Amounts due from the Home Office related to earnings from this endowment as of September 30, 2016 and 2015 totaled $16,045 and ($3,475), respectively, represent the Chapter’s allocable share of distributable earnings (losses) from this endowment and are included in contributions receivables – due from Home Office on the accompanying statements of financial position.

10. TEMPORARILY RESTRICTED NET ASSETS

In June 2001, the Chapter received a gift from the Lillian Goldman Charitable Trust to establish the Lillian Goldman Fund to Advance the Study and Treatment of Cognitive, Affective and Psychological Symptoms of Multiple Sclerosis. In May 2011, the donor amended the fund to be used to establish and operate the Lillian Goldman Living Well with MS Program and covered all expenses associated with the program implementation, including professional, consultant fees and personnel costs. In July 2014, the donor further amended the fund to support and expand the Wellness Programs over the next three years and to host Jumpstart in Motion during fiscal year 2016.

The Janet Pearce Nursing Fund was established in fiscal year 2000 through temporarily restricted contributions and is used to provide education to nurses who provide services to people with multiple sclerosis.


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Changes in temporarily restricted net assets consists of the following for the years ended September 30, 2016 and 2015:

JanetLillian Interest in Pearce Other Gifts

Goldman Split-Interest Nursing RestrictedFund Arrangements Fund to Programs Total

Balance, September 30, 2014 441,540$ 195,437$ 97,028$ 52,108$ 786,113$

Contributions - (8,589) - 100,000 91,411 Net assets released from restrictions (83,031) - (26,012) (22,192) (131,235)

Balance, September 30, 2015 358,509 186,848 71,016 129,916 746,289

Contributions - (2,031) - 51,233 49,202 Net assets released from restrictions (75,756) - - (70,686) (146,442)

Balance, September 30, 2016 282,753$ 184,817$ 71,016$ 110,463$ 649,049$

11. SOCIETY REALIGNMENT

As the Society continues to become unified, the organization is transitioning to a single Society entity, which will perform one audit and file a single IRS Form 990 under one federal employer’s identification number (EIN) effective October 1, 2016. The transition will better align Society resources so that the organization can maximize its impact. For accounting purposes, the transition will be treated as an acquisition of 100% of the assets and liabilities of the New York City-Southern New York Chapter by the Society. No consideration was given in exchange for the interests.

The assets and liabilities of the New York City-Southern New York Chapter will be recorded by the Society at fair value on the New York City-Southern New York Chapter books as of October 1, 2016.


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The book value of identifiable assets and liabilities of the Chapter on October 1, 2016 are as follows and the difference between fair value and book value will be recorded as an inherent contribution by the Society:

Amount

Cash and cash equivalents 539,717$ Contributions receivable 1,169,759 Due from other Chapters 10,458 Interest in Society’s pooled investment fund 1,608,588 Prepaid expenses and other assets 293,215 Property and equipment, net 117,495 Due from Home Office, charitable gift annuities 184,817 Accounts payable and accrued expenses (238,992) Deferred revenue (1,555,364) Deferred rent (251,985) Due to Home Office and other Chapters (3,988)

Total Net Book Value 1,873,720$

The excess fair value of assets received over liabilities assumed is reported as a contribution received in the acquisition of the New York City-Southern New York Chapter on the statement of activities of the realigned Society entity in fiscal 2017.

Documents

Financial Statements Together with Report of Independent ......Sep 30, 2016 · Cash and cash equivalents $ 3,482,970539,717 $ Current portion of contributions receivable 206,9151,007,724