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Financial Statements


NOTE 11 – TEMPORARILY RESTRICTED NET ASSETS


Temporarily restricted net assets are donor-restricted for specifi c purposes. At Dec. 31, 2011 and 2010, the restricted purposes were as follows:


2011


Overseas Graves Decoration Fund Samsung scholarships Legacy Scholarship Fund National Emergency Fund Boy Scouts


Operation Comfort Warriors Others


$ 1,084,917 2,101,778 6,461,292 3,103,583 467,899 251,149


185,349 $ 13,655,967 NOTE 12 – NET ASSETS RELEASED FROM RESTRICTION


Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes, or by the occurrence of other events specifi ed by donors. 2011


Purpose restrictions accomplished Overseas graves decoration


Scholarships and grants (including relief aid)


Veterans Aff airs & Rehabilitation and Children & Youth programs


NOTE 13 – PERMANENTLY RESTRICTED NET ASSETS


Permanently restricted net assets represent donor-restricted gifts that have been invested and are to be maintained in perpetuity. Income from the Samsung Scholarship Fund is to be used to fund undergraduate scholarships for descendents of Korean War veterans and other wars in which U.S. servicemembers participated. Income from the American Legion Endowment Fund is to be used to support the Veterans Aff airs & Rehabilitation and Children & Youth activities of the Legion.


At Dec. 31, 2011 and 2010, the permanently restricted net assets were as follows: 2011


Samsung scholarships American Legion Endowment Fund NOTE 14 – ENDOWMENT COMPOSITION


The Legion’s endowments include donor-restricted endowment funds and are comprised of two separate funds: the American Legion Endowment Fund and the Samsung Scholarship Fund. In accordance with GAAP, net assets associated with endowment funds, including funds designated by the National Executive Committee to function as endowments, are classifi ed and reported based on the existence or absence of donor-imposed restrictions.


Interpretation of Relevant Law: The National Executive Committee has interpreted the 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, the Legion classifi es 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 governing documents of the Legion. The remaining portion of the donor-restricted endowment fund not classifi ed in permanently restricted net assets is classifi ed as temporarily restricted net assets until those amounts are appropriated for expenditure by the Legion in a manner consistent with the standard of prudence prescribed by UPMIFA.


$ 5,000,000 7,663,433


$ 12,663,433 2010


$ 5,000,000 7,409,095


$ 12,409,095 2010


$ 27,657 $ 24,300 965,745


236,021


833,278 257,634


$ 1,229,423 $ 1,115,212 2010


$ 1,074,023 1,821,311 5,272,950 2,905,160 467,899 268,723


192,146 $ 12,002,212


In accordance with UPMIFA, the Legion considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:


(1) The duration and preservation of the fund (2) The purposes of the Legion and of the donor-restricted endowment fund (3) General economic conditions (4) The possible eff ects of infl ation and defl ation (5) The expected total return from income and the appreciation of investments (6) Other resources of the Legion (7) The investment policies of the Legion Endowment net asset composition by type of fund as of Dec. 31, 2011 and 2010:


Endowment net asset composition by type of fund as of Dec. 31, 2011: Unrestricted


Temporarily restricted


Donor-restricted endowment funds


Permanently restricted


Endowment net asset composition by type of fund as of Dec. 31, 2010: Unrestricted


Temporarily restricted


Donor-restricted endowment funds


Changes in endowment net assets for the year ended Dec. 31, 2011: Unrestricted


Temporarily restricted


Net assets, beginning of year


Investment return


Investment income, net of fees


Net appreciation (realized and unrealized)


Total investment return New gifts


Appropriation of endowment assets for expenditure


Net assets, end of year $


- -


495,931 298,457


- - 169,800 84,538


495,931 468,257


- $ 794,388 $ 169,800 $ 964,188 -


84,538 - (513,921) - (513,921) - $ 2,101,778 $ 12,663,433 $ 4,765,211 $ Total $ - $ 2,101,778 $ 12,663,433 $ 14,765,211


Permanently restricted


Total $ - $ 1,821,311 $ 12,409,095 $ 14,230,406


Permanently restricted


Total - $ 1,821,311 $ 12,409,095 $ 14,230,406


50 T e American Legion Annual Report | 2012


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