Page 34 - 2020 Annual Report

NOTES TO FINANCIAL STATEMENTS
August 31, 2020 and 2019 Modified Cash Basis
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS BASIS OF ACCOUNTING ing receivables, historical collection information and existing economic
Dekko Foundation, Inc. (Foundation) was incorporated as a not-for-profit The financial statements have been prepared on a modified cash basis of conditions (none at August 31, 2020 and 2019). Outstanding notes
foundation in 1981, under the laws of the state of Indiana. The mission of accounting which differs from accounting principles generally accepted pay interest based on the terms of the respective note agreements.
the Foundation is to foster economic freedom through education in the in the United States of America (GAAP) as follows: A note receivable is considered delinquent when the debtor has missed
areas where its founder, Mr. Chester E. Dekko, had an interest. For that three or more payments.
reason, the Foundation focuses its grant making in portions of Alabama, • Cash paid to charitable organizations and vendors is expensed
Florida, Indiana, Iowa and Minnesota. Primary sources of revenue for the when paid, not when the grant is approved or when the obligation INVESTMENTS
Foundation are estate contributions and investment income. Mr. Dekko’s is incurred as required by GAAP. Marketable securities and other investments are recorded at cost or, if do-
intent for his foundation was to give young people the opportunity for • Investments are recorded at cost, not fair value, and investment in- nated, at the fair value at the date of gift. Other investments are comprised
high-quality experiences that would lay the groundwork for the devel- come is recorded when received, not when earned, as required by of nonmarketable securities, such as private partnerships and limited
opment of financial independence. To carry out that mission, the Dekko GAAP. In addition, certain disclosures are not provided regarding liability corporations. Investment gains and losses are recognized upon
Foundation makes grants to not-for-profit organizations that promote the nature of certain investments, as required by GAAP. realization using the specific-identification method.
developmentally appropriate experiences. The Foundation also invests
in the capacity of youth and community development organizations to NET ASSET CLASSIFICATIONS INCOME TAXES
sustain and elevate their work. The following class of net assets is maintained: The Foundation is exempt from income taxes under Section 501(c)(3) of
Net Assets Without Donor Restrictions – The net assets without donor the U.S. Internal Revenue Code and a similar provision of state law. The
USE OF ESTIMATES restrictions class includes general assets and liabilities of the Foundation. Foundation is considered to be a private foundation under Section 509(a)
The preparation of financial statements in conformity with the Founda- The net assets without donor restrictions of the Foundation may be used of the Code. The Foundation is subject to excise tax on investment in-
tion’s modified cash basis of accounting requires management to make at the discretion of management to support the Foundation’s purposes come. In addition, the Internal Revenue Service requires that certain
estimates and assumptions that affect the reported amounts of assets and and operations. minimum distributions be made in accordance with a specified formula.
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of receipts and dis- CASH AND CASH EQUIVALENTS The Foundation files tax returns in the U.S. federal jurisdiction. With a few
bursements and other changes in net assets during the reporting period. The Foundation considers all liquid investments with original maturities exceptions, the Foundation is no longer subject to U.S. federal examina-
Actual results could differ from those estimates. of three months or less to be cash equivalents. At August 31, 2020 and tions by tax authorities for years before 2017.
2019, cash equivalents consisted primarily of money market accounts
with brokers. PROPERTY AND EQUIPMENT
Expenditures for property and equipment and items, which substantial-
At August 31, 2020, the Foundation’s cash accounts exceeded federally ly increase the useful lives of existing assets, are capitalized at cost. The
insured limits by approximately $4,683,000. Foundation provides for depreciation on the straight-line method at rates
designed to depreciate the costs of assets over estimated useful lives as
NOTES RECEIVABLE follows:
Notes receivable are stated at the outstanding principal amount, net of • Furnishings and equipment: 5-7 Years
allowance for uncollectible notes. The Foundation provides an allow- • Buildings and improvements: 15-31 Years
ance for uncollectible notes, which is based upon a review of outstand-

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