The NAFCU Journal July - August 2017 - 46

primary fee sources result from marketing agreements between NSC
and third party entities providing services to credit unions.
The National Association of Federal Credit Unions Political Action
Committee (the PAC) was organized to conduct political activities on
behalf of the Association's members.
The National Association of Federal Credit Unions Foundation for
Charitable, Literary, Educational and Humanitarian Purposes (the
Foundation) was incorporated in April 1995 in the Commonwealth
of Virginia. The purpose of the Foundation is to promote charitable,
literary, educational and humanitarian causes of interest to credit
unions and those associated with them.
Income tax status: The Association is exempt from the payment of

income taxes on its exempt activities under Section 501(c)(6) of the
Internal Revenue Code. Under the Code, advertising revenue earned
from the publication of the Association's magazine and other income
earned from transactions with NSC are subject to unrelated business
income taxes.
The PAC is a separate segregated fund as defined under Section
527(f)(3) of the Internal Revenue Code. As such, the PAC is subject
to income taxes on the lesser of its exempt activity expenditures or
investment income.
The Foundation is exempt from the payment of income taxes on its
exempt activities under Section 501(c)(3) of the Internal Revenue
Code. The Foundation has been classified as other than a private
foundation by the Internal Revenue Service.
NSC is a taxable corporation. As such, it pays Federal and State
income taxes on its net taxable income.
Principles of consolidation: The consolidated financial statements
include the accounts of the Association, NSC, the Foundation, and
the PAC. Significant intra-entity accounts and transactions have
been eliminated in consolidation. For purposes of these consolidated
financial statements, the entities are referred to collectively as the
Organization.
Basis of accounting: As required by U.S. generally accepted accounting
principles (GAAP), the Organization prepares its financial statements
on the accrual basis of accounting. Revenue is recognized when earned
and expense is recognized when the obligation is incurred.
Use of estimates: The preparation of financial statements in accordance
with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Actual results could differ from
estimates.

Deferred revenue: Deferred revenue principally consists of membership
dues, subscriptions, and conference/seminar payments received
in advance. Membership dues and subscriptions are recognized as
revenue over the duration of the related membership or subscription.
Conference and seminar registration fees are recognized as revenue
once the related meeting has taken place.
Net assets: For financial statement purposes, net assets are as follows:
Unrestricted: Unrestricted net assets are available for general operations.
Temporarily restricted: Temporarily restricted net assets

represent the portion of net assets that have been
restricted by donors (see Note D).
Contributions: Contributions are recorded as unrestricted or
temporarily restricted support depending upon the existence and/or
nature of any donor restrictions. Support that is not restricted by the
donor is reported as an increase in unrestricted net assets. Donorrestricted support is reported as an increase in temporarily restricted
net assets and then reclassified to unrestricted net assets when the
restriction expires.
Functional reporting of expenses: The Organization reports the direct
costs of operating its programs as "program services" expense on
the statement of activities. All salaries, occupancy, and administrative
costs are reported as supporting services on the statement of activities.
Reclassifications: Certain items in the statement of cash flows relating

to the prior year have been reclassified to conform to the current year
presentation.
Subsequent events: Subsequent events have been evaluated through
March 13, 2017, which is the date the financial statements were
available to be issued.

B. CREDIT RISK AND FLUCTUATIONS IN FAIR VALUE
Credit risk: The Organization maintains demand deposits with federal
credit unions and money market funds with financial institutions. At
times, certain balances held within these accounts may not be fully
guaranteed or insured by the U.S. federal government. The uninsured
portions of cash and money market accounts are backed solely by
the assets of the underlying institution. As such, the failure of an
underlying institution could result in financial loss to the Organization.
Market value risk: The Association also invests in money market funds,
certificates of deposit, mutual funds, and exchange traded funds
(ETFs). Such investments are exposed to market and credit risks.
Thus, the Association's investments may be subject to significant
fluctuations in fair value. As a result, the investment balances
reported in the accompanying financial statements may not be
reflective of the portfolio's value during subsequent periods.

Cash and cash equivalents: For financial statement purposes, the

Organization considers all mutual funds, exchange traded funds
(ETFs), unrestricted money market funds, and certificates of deposit
to be other than cash equivalents.
Accounts receivable: Accounts receivable consist primarily of
amounts owed from NSC Preferred Partners as a result of royalty/
marketing agreements. Accounts receivable are presented at the
gross, or face, amount due to the Organization. The Organization's
management periodically reviews the status of all accounts receivable
balances for collectibility. Each receivable balance is assessed based
on management's knowledge of the customer, the Organization's
relationship with the customer, and the age of the receivable balance.
The Organization has established an allowance for any invoices it
believes may be uncollectable.
Property and equipment: Acquisitions of property and equipment are

recorded at cost. Depreciation is calculated using the straight-line
method over the following useful lives of the various classes of assets:
Building and improvements
5 - 29 years
Furniture and equipment
3 - 7 years

10

46

NAFCU 2016 Annual Report

C. INVESTMENTS
Investments are carried at fair value and consisted of the following as
of December 31,:
Money market funds
Fixed income mutual funds and ETFs
Certificates of deposit
Equity mutual funds and ETFs

2016

2015

$7,110,232
5,192,592
1,500,000
1,368,827
$15,171,651

$5,924,114
3,740,566
1,459,000
2,021,481
$13,145,161

2016
$212,409
250,476
$462,885

2015
$198,498
(83,165)
$115,333

Investment return consists of the following
during the years ended December 31,:
Interest and dividends
Net gain (loss) on investments

D. TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets consist of $1,384,556 and $1,164,452
for the NAFCU PAC Administration fund and for lobbying activities as
of December 31, 2016 and 2015, respectively.

THE NAFCU JOURNAL  JULY-AUGUST 2017



Table of Contents for the Digital Edition of The NAFCU Journal July - August 2017

Our First 50 Years
Events Calendar
From the Chair
Inside NAFCU
The Digital Download
How Secure Is Your Credit Union?
The Bank Secrecy Act
2017 Annual NAFCU Award Winners
2016 NAFCU Annual Report
Getting to Know …
Management Insight
Compliance Central
Inside NAFCU Services
From the President’s Desk
The NAFCU Journal July - August 2017 - Cover1
The NAFCU Journal July - August 2017 - Cover2
The NAFCU Journal July - August 2017 - 1
The NAFCU Journal July - August 2017 - Our First 50 Years
The NAFCU Journal July - August 2017 - Events Calendar
The NAFCU Journal July - August 2017 - From the Chair
The NAFCU Journal July - August 2017 - 5
The NAFCU Journal July - August 2017 - Inside NAFCU
The NAFCU Journal July - August 2017 - 7
The NAFCU Journal July - August 2017 - 8
The NAFCU Journal July - August 2017 - 9
The NAFCU Journal July - August 2017 - 10
The NAFCU Journal July - August 2017 - 11
The NAFCU Journal July - August 2017 - 12
The NAFCU Journal July - August 2017 - 13
The NAFCU Journal July - August 2017 - The Digital Download
The NAFCU Journal July - August 2017 - 15
The NAFCU Journal July - August 2017 - How Secure Is Your Credit Union?
The NAFCU Journal July - August 2017 - 17
The NAFCU Journal July - August 2017 - 18
The NAFCU Journal July - August 2017 - 19
The NAFCU Journal July - August 2017 - 20
The NAFCU Journal July - August 2017 - 21
The NAFCU Journal July - August 2017 - The Bank Secrecy Act
The NAFCU Journal July - August 2017 - 23
The NAFCU Journal July - August 2017 - 24
The NAFCU Journal July - August 2017 - 25
The NAFCU Journal July - August 2017 - 26
The NAFCU Journal July - August 2017 - 27
The NAFCU Journal July - August 2017 - 28
The NAFCU Journal July - August 2017 - 29
The NAFCU Journal July - August 2017 - 2017 Annual NAFCU Award Winners
The NAFCU Journal July - August 2017 - 31
The NAFCU Journal July - August 2017 - 32
The NAFCU Journal July - August 2017 - 33
The NAFCU Journal July - August 2017 - 34
The NAFCU Journal July - August 2017 - 35
The NAFCU Journal July - August 2017 - 36
The NAFCU Journal July - August 2017 - 2016 NAFCU Annual Report
The NAFCU Journal July - August 2017 - 38
The NAFCU Journal July - August 2017 - 39
The NAFCU Journal July - August 2017 - 40
The NAFCU Journal July - August 2017 - 41
The NAFCU Journal July - August 2017 - 42
The NAFCU Journal July - August 2017 - 43
The NAFCU Journal July - August 2017 - 44
The NAFCU Journal July - August 2017 - 45
The NAFCU Journal July - August 2017 - 46
The NAFCU Journal July - August 2017 - 47
The NAFCU Journal July - August 2017 - Getting to Know …
The NAFCU Journal July - August 2017 - 49
The NAFCU Journal July - August 2017 - Management Insight
The NAFCU Journal July - August 2017 - 51
The NAFCU Journal July - August 2017 - Compliance Central
The NAFCU Journal July - August 2017 - 53
The NAFCU Journal July - August 2017 - Inside NAFCU Services
The NAFCU Journal July - August 2017 - 55
The NAFCU Journal July - August 2017 - From the President’s Desk
The NAFCU Journal July - August 2017 - Cover3
The NAFCU Journal July - August 2017 - Cover4
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