Kids for the Kingdom 2018 Independent Financial Audit

KIDS FOR THE KINGDOM, INC. 

FINANCIAL STATEMENTS (REISSUED) 

FOR THE YEAR ENDED 

DECEMBER 31, 2018

This Page Left Intentionally Blank

INTRODUCTORY SECTION



Financial Statements (REISSUED) 

For the Year Ended December 31, 2018 

Table of Contents 

Page 

INTRODUCTORY SECTION 

Table of Contents ........................................................................................................................................... i 

Board of Directors ......................................................................................................................................... ii 

FINANCIAL SECTION 

Independent Auditor's Report .................................................................................................................. 1 

Financial Statements: 

Statement of Financial Position .......................................................................................................... 3 

Statement of Activities ........................................................................................................................ 4 

Statement of Functional Expenses ..................................................................................................... 5 

Statement of Cash Flows ..................................................................................................................... 6 

Notes to Financial Statements ............................................................................................................. 7 

i


BOARD OF DIRECTORS 

December 31, 2018 

Rebecca Love, Chairman 

Wendell Walker, Treasurer 

Valerie Willams, Secretary 

Greg Dabel 

Peter Lundblad 

Melody Miles 

Omar Tannehill 

ii

FINANCIAL SECTION


INDEPENDENT AUDITOR'S REPORT 

To the Board of Directors of the 

Kids for the Kingdom, Inc. 

Sebastopol, California 

We have audited the accompanying financial statements of the Kids for the Kingdom, Inc. (a nonprofit 

organization), which comprise the statement of financial position as of December 31, 2018, and the related 

statements of activities, functional expenses and cash flows for the year 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 audit. We conducted 

our audit 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 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 Organization’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 Organization’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. 

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 Kids for the Kingdom, Inc. as of December 31, 2018, and the changes in its net assets and its 

cash flows for the year then ended in accordance with accounting principles generally accepted in the 

United States of America. 

1

Emphasis of Matters 

Restatement 

As discussed in Note 2N, the Organization restated beginning net assets by $7,257 to correct an 

understatement of accounts payable in the prior period. 

Reissued Financial Statements 

These financial statements were previously released in September 2019, however, in November of 2019, 

management determined that the estimate of its receivable from a bequest could be significantly different 

to the amount it will receive once the related estate affairs have been completed and assets are distributed. 

Therefore, management has deemed it necessary to write down the receivable to the amount that has been 

received as of the time this report is reissued. In addition, management has adjusted the investment 

receivable and related income balance, and has modified verbiage in its footnotes. 

The emphasis of these matters do not constitute a change in our opinion. 

Report on Summarized Comparative Information 

We have previously audited the Kids for the Kingdom, Inc.’s 2017 financial statements, and we expressed 

an unmodified audit opinion on those audited financial statements in our report dated April 10, 2018. In our 

opinion, the summarized comparative information presented herein as of and for the year ended December 

31, 2017 is consistent, in all material respects, with the audited financial statements from which it has been 

derived, other than the restatement discussed above. 

Pleasant Hill, California 

Original Issue Date: September 24, 2019 

Reissued: November 27, 2019 

2


STATEMENT OF FINANCIAL POSITION 

DECEMBER 31, 2018 

WITH COMPARATIVE AMOUNTS AT DECEMBER 31, 2017 

ASSETS 2018 2017 

Current Assets: 

Cash $21,434 $23,254 

Investments 44,917 

Bequest receivable (Note 3) 15,000,000 

Investment income receivable (Note 3) 2,564,239 

Total current assets 17,585,673 68,171 

Computer equipment, less accumulated depreciation 

of $8,719 and $8,484, respectively (Note 2H) 470 705 

Total Assets $17,586,143 $68,876 

LIABILITIES 

Current Liabilities: 

Accounts payable $10,662 $7,257 

Accrued payroll 3,340 

Total Liabilities 14,002 7,257 

NET ASSETS (Note 2A) 

With donor restrictions (Note 5): 

Restricted in perpetuity 15,000,000 

Restricted for time purposes 2,564,239 

Total net assets with donor restrictions 17,564,239 

Without donor restrictions 7,902 61,619 

Total Net Assets 17,572,141 61,619 

Total Liabilities and Net Assets $17,586,143 $68,876 

See accompanying notes to financial statements 

3


STATEMENT OF ACTIVITIES 

FOR THE YEAR ENDED DECEMBER 31, 2018 

WITH SUMMARIZED TOTALS FOR THE YEAR ENDED DECEMBER 31, 2017 

Totals 

Without Donor With Donor 

Restrictions Restrictions 2018 2017 

SUPPORT AND REVENUES 

Contributions $176,397 $176,397 $171,308 

Bequest (Note 3) $15,000,000 15,000,000 

Campaign 26,374 26,374 31,249 

Grants 158,387 158,387 115,865 

In-kind contributions (Note 4) 15,220 15,220 16,920 

Investment income 273 2,564,239 2,564,512 24 

Donated securities 50,244 50,244 118,851 

Unrealized gain (loss) on investments, net (2,172) (2,172) 6,677 

Total Support and Revenues 424,723 17,564,239 17,988,962 460,894 

EXPENSES 

Program 421,553 421,553 405,236 

Management and general 56,887 56,887 51,074 

Fundraising 

Total Expenses 478,440 478,440 456,310 

Changes in Net Assets (53,717) 17,564,239 17,510,522 4,584 

Net Assets at beginning of year, as restated (Note 1N) 61,619 61,619 57,035 

Net Assets at end of year $7,902 $17,564,239 $17,572,141 $61,619 


4


STATEMENT OF FUNCTIONAL EXPENSES 


WITH SUMMARIZED TOTALS FOR THE YEAR ENDED DECEMBER 31, 2017 

Management 

Totals 

and 

Program General Fundraising 2018 2017 

EXPENSES 

Grants and allocations $229,596 $229,596 $202,315 

Advertising (Note 2I) 5,926 5,926 9,771 

Bank service charges $523 523 448 

Credit card processing 1,059 1,059 1,650 

Depreciation 235 235 349 

Dues and subscriptions 579 579 1,133 

Insurance 3,407 3,407 3,193 

Licenses and permits 0 48 

Medical 22,864 22,864 22,313 

Miscellaneous 992 2,074 3,066 1,566 

Payroll 108,248 38,835 147,083 144,099 

Postage, shipping and freight 2,977 21 2,998 5,489 

Printing and publications 5,971 5,971 9,571 

Professional fees 2,088 8,104 10,192 10,083 

Occupancy (Note 4) 11,520 2,880 14,400 14,400 

In-kind expense (Note 4) 820 820 2,520 

Supplies 5,539 600 6,139 5,738 

Telephone 2,106 605 2,711 2,503 

Travel 18,108 18,108 16,386 

Utilities 2,211 552 2,763 2,735 

Total Functional Expenses $421,553 $56,887 $0 $478,440 $456,310 


5


STATEMENT OF CASH FLOWS 


WITH COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2017 

CASH FLOWS FROM OPERATING ACTIVITIES 

2018 2017 

Changes in net assets $17,510,522 $4,584 

Adjustments to reconcile to net cash provided by 

operating activities: 

Depreciation 235 349 

(Increase) in bequest receivable (15,000,000) 

(Increase) in investment income receivable (2,564,239) 

Increase in accounts payable 3,405 7,257 

Increase in accrued payroll 3,340 

Cash Flows (used) provided by operating activities (17,557,259) 7,606 

NET CASH FLOWS (46,737) 12,190 

Cash and cash equivalents at beginning of year 68,171 55,981 

Cash and cash equivalents at end of year $21,434 $68,171 

Financial Statement Presentation: 

Cash $21,434 $23,254 

Investments 44,917 

Cash and investments at end of year $21,434 $68,171 

SUPPLEMENTAL DISCLOSURES 

Non-Cash Activities 

Contribution of goods, rent and services $15,220 $16,920 

No taxes or interest were paid by the Organization during 2018 

and 2017. 


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NOTE 1 – REPORTING ENTITY 

A. Description of the Organization 


NOTES TO THE FINANCIAL STATEMENTS 


Kids for the Kingdom, Inc. (the Organization) is a nonprofit organization whose mission is to 

transform the living conditions and spiritual lives of children and families, especially in third-world 

and war-torn countries, so that they can transform their nation for Christ. 

B. Programs 

The Organization’s primary purposes and objectives are to provide support for Christian nationals 

(indigenous workers) and foreign NGO’s (non-government organizations) committed to meeting 

the physical and spiritual needs of children and families around the world, especially in third 

world countries, war-torn nations, and disaster sites, including such activities as the provision of 

food, medicines, medical services, clothing, blankets, education, schools, Bible training, 

vocational-training, micro-enterprise loans, and the fulfilling of the Great Commission and 

spreading of the Word of God as described in the Bible. 

Program Service Accomplishments 

During the year ended December 31, 2018, the Organization provided funding, logistical support, 

and oversight for the following programs: 

CHINA The organization provided and delivered services to 460 children, widows, and families 

including orphan care, handicapped and widow care services, education and school services, and 

distribution of blankets, medicines, and food. For security reasons exact location of the project 

(interior China) is not published. Total cash grant funding for projects and support in China during 

2018 was $2,200. 

EL SALVADOR The organization provided and delivered services to 403 children, widows, and 

families including feeding and nutrition programs, Bible Clubs, and job-training in San Salvador, 

Cangrejera, and Quezalapa. Total cash grant funding for projects and support in El Salvador 

during 2018 was $2,345. 

GERMANY The organization provided and delivered services to 560 children, widows, and 

families including children’s Bible Clubs, Youth Clubs, community outreach, summer camp 

experience, job-training, food distribution in Hellersdorf-East Berlin. Total cash grant funding for 

projects and support in Germany during 2018 was $2,845. 

GHANA The organization provided and delivered services to 7,750 children, widows, and 

families including feeding programs, job-training programs, Bible Clubs, medical clinic, 

community water project, and micro-enterprise loan program in Accra, Jasikan, and the Volta 

Region. Total cash grant funding for projects and support in Ghana during 2018 was $8,165. 

GUATEMALA The organization provided and delivered services to 92,736 children, widows, 

and families including operation of medical clinics, dental clinics, schools, job-training, feeding 

(breakfast) program, nutrition programs, sports training, family counseling, community pharmacy, 

and eye clinic in Guatemala City and Zacapa. Total cash grant funding for projects and support in 

Guatemala during 2018 was $6,535. 

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NOTE 1 – REPORTING ENTITY (Continued) 




INDIA The organization provided and delivered services to 8,331 children, widows, and families 

including Bible Clubs and hot dinner/lunch feeding programs in sixty-eight locations throughout 

Chennai, Manapakkam, Nandambakkam, Coimbatore, Bhopal, Erode, Salem, and Maduravoil; 

job-training programs, income-generation projects, tuition centers, Christmas outreach programs, 

and outreach to poor and needy. Total cash grant funding for projects and support in India during 


KENYA The organization provided and delivered services to 63,318 children, widows, and 

families including operation and maintenance of community water wells, projects, and systems 

throughout the Nakuru Region; job-training and self-sufficiency programs; feeding programs, 

Bible Clubs, health clinic, immunization programs, mercy projects, and children’s homes in 

Nakuru and Nairobi. Total cash grant funding for projects and support in Kenya during 2018 was 

$43,827. 

MALAWI The organization provided and delivered services to 14,528 children, widows, and 

families including education, feeding, skill-training, and mercy projects in Lilongwe. Total cash 

grant funding for projects and support in Malawi during 2018 was $10,566. 

NICARAGUA The organization provided and delivered services to 930 children, widows, and 

families including orphanages, job-training programs, ethics classes, operation of schools, feeding 

programs, micro-enterprise loan project, business training, mercy projects, and parenting classes 

in Managua, Leon, Los Braziles, La Concha, El Corozal, and Nueva Guinea. Total cash grant 

funding for projects and support in Nicaragua during 2018 was $7,154. 

PAKISTAN The organization provided and delivered services to 207 children, widows, and 

families including orphan care, earthquake relief, distribution of relief supplies, and persecution 

relief. For security reasons the exact location of projects inside Pakistan is not published. Total 

cash grant funding for projects and support in Pakistan during 2018 was $7,159. 

RUSSIA The organization provided and delivered services to 890 children, widows, and families 

including counseling, medical services, food supplies; weekly visits to children’s psychiatric 

hospital in Maikop to provide counseling services, medical intervention, clothing to children; 

provide food and counseling services to babies and toddlers at children’s orphanage in Maikop; 

programming and foods/medicines for children at orphanages in Sevastopol and Krasnodar. Total 

cash grant funding for projects and support in Russia during 2018 was $22,100. 

SOUTH SUDAN The organization provided and delivered services to 1,925 children, widows, 

and families including orphan care, 2 deep water wells, emergency medical care, and distribution 

of flood relief supplies. Total cash grant funding for projects and support in South Sudan during 


ZAMBIA The organization delivered services to 4,385 children, widows, and families affected by 

HIV/AIDS in Lusaka. Total cash support for programs in Zambia during 2018 was $26,279. 

ZIMBABWE The organization provided and delivered services to 1,043 children, widows, and 

families including feeding programs, mercy projects, and job-training. Total cash grant funding 

for projects and support in Zimbabwe during 2018 was $535. 

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Basis of Presentation 

The accompanying financial statements have been prepared on the accrual basis of accounting in 

accordance with accounting principles generally accepted in the United States of America (GAAP). 

The financial statement presentation follows the recommendations of the Financial Accounting 

Standards Board (FASB) in the Accounting Standards Codification (ASC), No. 958, Financial 

Statements of Not-for-Profit Organizations. 

The Organization reports information regarding its financial position and activities according to 

two classes of net assets: 

Net Assets Without Donor Restrictions – Net assets available for use in general operations that are 

not subject to or are no longer subject to donor-imposed restrictions. 

Net Assets With Donor Restrictions – Net assets whose use is limited by donor-imposed time and/or 

purpose restrictions. K4K WoSome donor-imposed restrictions are temporary in nature, such as 

those that will be met by the passage of time or other events specified by the donor. Other donorimposed 

restrictions are perpetual in nature, where the donor stipulates that resources be maintained 

in perpetuity. Donor-imposed restrictions are released when a restriction expires, that is, when the 

stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has 

been fulfilled, or both. 

Revenues are reported as increases in net assets without donor restriction unless use of the related 

assets is limited by donor-imposed restrictions. Expenses are reported as decreases in net assets 

without donor restrictions. Gains and losses on investments and other assets or liabilities are 

reported as increases or decreases in net assets without donor restrictions unless their use is 

restricted by explicit donor stipulation or by law. Expirations of donor restrictions on the net assets 

(i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) 

are reported as reclassifications between the applicable classes of net assets. The Organization has 

adopted a policy to classify donor restricted contributions as without donor restrictions to the extent 

that donor restrictions were met in the year the contribution was received. 

B. Cash and Cash Equivalents 

The Organization considers all unrestricted highly liquid investments with an initial maturity of three 

months or less to be cash equivalents. 

C. Investments 

Investments are reported at their fair values in the statement of financial position using readily 

determinable market values. Net investment return/(loss) is reported in the statement of activities and 

consists of interest and dividend income, realized and unrealized capital gains and losses, less 

external and direct internal investment expenses. 

9




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 

D. Receivables 

Contributions and grants receivable are stated at the amount the Organization’s management expects 

to collect from outstanding balances. Management provides for probable uncollectible amounts 

through a charge to bad debt expense and a credit to a valuation based on its assessment of the 

current status of individual accounts. Management believes the entire balance of receivables is 

collectible, and therefore, no allowance was recorded as of December 31, 2018. 

E. Support and Other Revenue 

Contributions consist of grants and gifts from individuals, corporations, and organization. 

Unconditional promises to give are recognized as revenues or gains in the period received and as 

assets depending on the form of the benefits received. Conditional promises to give are recognized 

only when the conditions on which they depend are substantially met and the promises become 

unconditional. 

F. Functional Allocation of Expenses 

The costs of providing the various programs and activities have been summarized on a functional 

basis in the statement of activities. Those expenses which cannot be specifically identified by 

function type have been allocated to functions based upon management’s best estimate of usage. 

For certain such expenses, such as payroll costs, these estimates are based on time incurred in 

different activities. 

G. Use of Estimates 

The preparation of financial statements, in conformity with generally accepted accounting 

principles requires management to make estimates and assumptions that affect certain reported 

amounts and disclosures. Accordingly, actual results could differ from those estimates. 

H. Computer Equipment 

Computer equipment is stated at cost. Depreciation is computed over the estimated useful lives 

(generally, five years), of the respective assets on a straight-line basis. Expenses for maintenance 

and repairs are charged against operations as incurred. 

I. Advertising Costs 

Advertising costs are expensed as incurred. The Organization spent $8,452 for advertising for the 

year ended December 31, 2018. 

10





J. Income Taxes 

The Organization is exempt from income tax under Section 501(c)(3) of the United States Internal 

Revenue Code. Accordingly, no provision for income taxes has been provided in these financial 

statements. In addition, the Organization qualifies for the charitable contribution deduction under 

Section 170(b)(1)(a) and has been classified as an organization that is not a private foundation 

under Section 509(a)(1). Unrelated business income, if any, may be subject to income tax. The 

Organization paid no taxes on unrelated business income in the year ended December 31, 2018. 

Generally accepted accounting principles require the recognition, measurement, classification, and 

disclosure in the financial statements of uncertain tax positions taken or expected to be taken in 

the organization’s tax returns. Management has determined that the Organization does not have 

any uncertain tax positions and associated unrecognized benefits that materially impact the 

financial statements or related disclosures. Since tax matters are subject to some degree of 

uncertainty, there can be no assurance that the Organization’s tax returns will not be challenged by 

the taxing authorities and that the Organization will not be subject to additional tax, penalties, and 

interest as a result of such challenge. Generally, the Organization’s tax returns remain open for 

federal income tax examination for three years from the date of filing, and California state income 

tax examination for four years from the date of filing. 

K. Fair Value Measurements 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a 

liability in an orderly transaction between market participants at the measurement date. 

Accounting standards set a framework for measuring fair value using a three-tier hierarchy based 

on the extent to which inputs used in measuring fair value are observable in the market. 

Level 1: Quoted prices in active markets for identical assets or liabilities. 

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or 

liabilities, quoted prices in markets that are not active, or inputs (interest rates, currency exchange 

rates, commodity rates and yield curves) that are observable or corroborated by observable market 

data for substantially the full term of the assets or liabilities. 

Level 3: Inputs that are not observable in the market and reflect the management’s judgment about 

the assumptions that market participants would use in pricing the asset or liability. 

L. Prior Year Totals 

The financial statements include certain prior year summarized comparative information in total, 

but not by net asset class. Such information does not include sufficient detail to contribute a 

presentation in conformity with generally accepted accounting principles. Accordingly, such 

information should be read in conjunction with Kids for the Kingdom Inc.’s financial statements 

for the year ended December 31, 2017, from which the summarized information is derived. 

11





M. New Accounting Pronouncement 

During the year ended December 31, 2018, the Organization adopted the requirements of the 

Financial Accounting Standards Board’s (FASB) Accounting Standards Update No. 2016-14, 

Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities 

(ASU 2016-14). The Update addresses the complexity and understandability of net asset 

classification, deficiencies in information about liquidity and availability of resources, and the 

lack of consistency in the type of information provided about expenses and investment return 

between not-for-profit entities. A key change required by ASU 2016-14 is the net asset classes 

used in these financial statements. Amounts previously reported as unrestricted net assets are now 

reported as net assets without donor restrictions and amounts previously reported as temporarily 

restricted net assets and permanently restricted net assets are now reported as net assets with donor 

restrictions. A footnote on liquidity has also been added (see Note 6). 

N. Restatement 

During the year ended December 31, 2018, management determined that accounts payable was 

understated for the year ended December 31, 2017. As a result, a restatement of the prior period 

expenses was recorded, resulting in a decrease of net assets without donor restrictions of $7,257. 

O. Subsequent Events 

Kids for the Kingdom, Inc. evaluated subsequent events for recognition and disclosure through 

September 24, 2019, the date which these financial statements were available to be issued. 

Management concluded that no material subsequent events have occurred since December 31, 2018 

that requires recognition or disclosure in such financial statements. 

NOTE 3 – BEQUEST RECEIVABLE 

During the year ended December 31, 2018, the Organization became entitled to a distribution from 

the Rouse Family Living Trust. As of the date of reissuance of these financial statements, the 

Organization has received $15,000,000, which has been recorded as a receivable as of December 

31, 2018. Management has estimated that the total amount it will receive is approximately $53 

million based on the fair value of the assets held in the trust as of December 31, 2018. Management 

expects to receive distributions from the trust in 2019 and 2020. The amounts received from the 

trust will be placed in an endowment fund to be held in perpetuity. 

In addition to the corpus of the bequest, interest, dividends and capital gains accumulated as of 

December 31, 2018, amounted to $2,564,239, and was recorded as interest receivable as of yearend. 

The Organization will be allowed to utilize the investment earnings from the endowment to advance 

its ministry worldwide. 

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NOTE 4 – IN-KIND DONATIONS 




The Organization is not charged for the use of its office space. Fair value of the office space was 

$14,400 for the year ended December 31, 2018 and is recognized in the accompanying financial 

statements as in-kind donations, offset by expenses for occupancy. 

The Organization also received a one-time donation of clothing. Fair value of the clothing was 

$820 for the year ended December 31, 2018 and is recognized in the accompanying financial 

statements as in-kind donations, offset by in-kind expense. 

NOTE 5 – NET ASSETS WITH DONOR RESTRICTIONS 

As of December 31, 2018, the Organization had $17,564,239 of net assets with donor restrictions. 

This amount consisted solely of the Allison and Dorothy Rouse Endowment discussed in Note 3. 

$15 million is classified as Net Assets with Donor Restrictions – in Perpetuity, as the corpus of the 

bequest is to be held in a permanent endowment. The remaining $2,564,239 relating to the 

investment earnings as of year-end are classified as Net Assets with Donor Restrictions, until such 

time as it is received and spent on programs. 

NOTE 6 – LIQUIDITY AND AVAILABILITY OF RESOURCES 

Financial assets available for general expenditure, that is, without donor or other restrictions 

limiting their use, within one year of the balance sheet date, consisted of cash and cash equivalents 

of $21,434 and interest receivable of $2,564,239, totaling $2,585,673, as of December 31, 2018. 

13

Kids for the Kingdom 2018 Independent Financial Audit

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