Goodwill Industries

International, Inc.
and Related Entities
Consolidated Financial Report
December 31, 2022
 Contents

Independent auditor’s report 1-2

Financial statements

Consolidated statements of financial position 3

Consolidated statements of activities 4

Consolidated statements of functional expenses 5-6

Consolidated statements of cash flows 7

Notes to consolidated financial statements 8-21

 Independent Auditor’s Report

Board of Directors
Goodwill Industries International, Inc.

Report on the Audit of the Financial Statements

Opinion
We have audited the consolidated financial statements of Goodwill Industries International, Inc. and
Related Entities (the Organization), which comprise the consolidated statements of financial position as of
December 31, 2022 and 2021, the related consolidated statements of activities, functional expenses, and
cash flows for the years then ended, and the related notes to the consolidated financial statements
(collectively, the financial statements).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Organization as of December 31, 2022 and 2021, and the changes in their net assets and
their cash flows for the years then ended in accordance with accounting principles generally accepted in
the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States
of America (GAAS) and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are required to be independent of the Organization
and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating
to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for 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.

In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the Organization’s ability to
continue as a going concern within one year after the date that the financial statements are issued or
available to be issued.

1
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government
Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.

 Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.

 Obtain an understanding of internal control relevant to the audit 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, no such opinion is expressed.

 Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.

 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the Organization’s ability to continue as a going concern for a
reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated April 19, 2023,
on our consideration of the Organization’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters.
The purpose of that report is solely to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the
effectiveness of internal control over financial reporting or on compliance. That report is an integral part of
an audit performed in accordance with Government Auditing Standards in considering Goodwill Industries
International, Inc.’s internal control over financial reporting and compliance.

Gaithersburg, Maryland
April 19, 2023

2
Goodwill Industries International, Inc. and Related Entities

Consolidated Statements of Financial Position

December 31, 2022 and 2021
2022 2021
Assets

Cash and cash equivalents $ 14,619,591 $ 35,808,905

Investments 37,695,675 16,994,783
Accounts receivable, net 1,834,522 1,777,286
Grants receivable 5,089,243 5,154,157
Promises to give, net 379,100 320,113
Prepaid expenses and other assets 1,796,583 1,024,096
Right of use asset for operating lease 55,616 -
Property and equipment, net 4,598,144 5,239,531
Investments held for endowment 1,930,143 2,229,735

Total assets $ 67,998,617 $ 68,548,606

Liabilities and Net Assets

Liabilities:
Accounts payable $ 7,025,797 $ 5,793,764
Accrued expenses 3,348,052 3,453,799
Deferred revenue 2,285,396 668,286
Lease liability for operating lease 57,263 -
Total liabilities 12,716,508 9,915,849

Commitments and contingencies (Note 13)

Net assets:
Without donor restrictions 43,112,102 43,708,013
With donor restrictions 12,170,007 14,924,744
Total net assets 55,282,109 58,632,757

Total liabilities and net assets $ 67,998,617 $ 68,548,606

See notes to consolidated financial statements.

3
Goodwill Industries International, Inc. and Related Entities

Consolidated Statements of Activities

Years Ended December 31, 2022 and 2021

2022 2021
Activities without donor restrictions:
Revenue and support:
Federal awards $ 26,224,904 $ 26,309,177
Membership dues 23,918,486 21,269,926
Program service fees 1,880,815 1,195,707
Legacies and bequests 981,532 1,135,478
Contributions 485,840 1,001,027
Rental 291,740 291,133
Net investment return—operations 198,198 86,573
Other income 71,707 23,758
Paycheck Protection Program loan forgiveness - 2,908,300
Net assets released from restrictions 10,400,625 6,494,855
Total revenue and support 64,453,847 60,715,934

Expenses:
Program services:
Sponsored programs and grants 35,895,676 32,629,187
Direct services to membership 19,400,095 16,492,698
Support services to membership 1,506,239 1,224,052
Total program services 56,802,010 50,345,937

Administration and development:

General and administrative 5,828,009 4,196,607
Resource development 1,258,445 947,039
Total administration and development 7,086,454 5,143,646

Total expenses 63,888,464 55,489,583

Change in net assets without

565,383 5,226,351
donor restrictions from operations

Net investment (loss) return—non-operating (1,161,294) 278,418

Change in net assets without donor restrictions (595,911) 5,504,769

Activities with donor restrictions:

Contributions 7,945,303 12,098,807
Net investment (loss) return—donor restricted (299,415) 141,043
Net assets released from restrictions (10,400,625) (6,494,855)
Change in net assets with donor restrictions (2,754,737) 5,744,995

Change in net assets (3,350,648) 11,249,764

Net assets:
Beginning 58,632,757 47,382,993

Ending $ 55,282,109 $ 58,632,757

See notes to consolidated financial statements.

4
Goodwill Industries International, Inc. and Related Entities

Consolidated Statement of Functional Expenses

Year Ended December 31, 2022

Program Services Administration and Development

Sponsored Direct Support Total General and
Programs Services to Services to Program Administrative Resource
and Grants Membership Membership Services Services Development Total

Salaries $ 2,991,437 $ 7,836,299 $ 722,774 $ 11,550,510 $ 2,116,512 $ 831,621 $ 14,498,643

Employee benefits 714,722 1,393,954 133,319 2,241,995 326,577 137,431 2,706,003
Payroll taxes 262,412 553,025 53,819 869,256 145,497 56,445 1,071,198
Personnel expenses 3,968,571 9,783,278 909,912 14,661,761 2,588,586 1,025,497 18,275,844
Awards and grants 29,847,786 181,730 187,812 30,217,328 299,063 12,573 30,528,964
Professional fees 1,598,625 5,580,533 315,075 7,494,233 1,095,712 162,148 8,752,093
Rental and maintenance 47,992 1,170,494 2,511 1,220,997 415,406 95 1,636,498
Conferences and conventions 65,013 1,022,886 16,611 1,104,510 144,363 12,133 1,261,006
Travel and agency vehicles 161,322 612,507 15,155 788,984 73,875 37,690 900,549
Real estate related expenses 33,310 99,794 24,638 157,742 618,699 860 777,301
Depreciation and amortization - 344,629 - 344,629 296,758 - 641,387
Printing, publications, and advertising - 249,007 - 249,007 - - 249,007
Supplies 83,860 74,234 1,124 159,218 69,194 411 228,823
Telephone and communications 48,711 81,997 11 130,719 92,434 3 223,156
Professional dues 460 105,600 27,496 133,556 2,534 1,088 137,178
Employee relations 2,793 41,037 2,992 46,822 26,453 2,310 75,585
Bank service charges 2,841 12,060 2,403 17,304 47,812 1,597 66,713
Seminar and training fees 33,503 19,610 406 53,519 2,190 2,015 57,724
Bad debt expense - - - - 48,907 - 48,907
Postage and shipping 889 20,699 93 21,681 6,023 25 27,729
$ 35,895,676 $ 19,400,095 $ 1,506,239 $ 56,802,010 $ 5,828,009 $ 1,258,445 $ 63,888,464

See notes to consolidated financial statements.

5
Goodwill Industries International, Inc. and Related Entities

Consolidated Statement of Functional Expenses

Year Ended December 31, 2021

Program Services Administration and Development

Sponsored Direct Support Total General and
Programs Services to Services to Program Administrative Resource
and Grants Membership Membership Services Services Development Total

Salaries $ 2,112,026 $ 6,904,685 $ 648,990 $ 9,665,701 $ 1,822,403 $ 689,538 $ 12,177,642

Employee benefits 513,167 1,309,643 108,632 1,931,442 231,775 103,623 2,266,840
Payroll taxes 165,051 505,180 46,611 716,842 118,923 49,041 884,806
Personnel expenses 2,790,244 8,719,508 804,233 12,313,985 2,173,101 842,202 15,329,288
Awards and grants 27,903,223 603,110 - 28,506,333 - - 28,506,333
Professional fees 1,391,233 4,577,070 197,966 6,166,269 625,622 88,104 6,879,995
Rental and maintenance 35,912 750,362 40,563 826,837 170,661 - 997,498
Depreciation and amortization - 517,585 7,420 525,005 328,253 - 853,258
Real estate related expenses 26,765 64,121 18,743 109,629 524,986 849 635,464
Professional dues 207,348 302,617 61,040 571,005 4,984 714 576,703
Conferences and conventions 5,050 388,501 57,426 450,977 83,273 4,041 538,291
Supplies 132,504 97,173 9,855 239,532 95,750 1,431 336,713
Travel and agency vehicles 25,158 205,057 7,822 238,037 21,001 8,508 267,546
Telephone and communications 33,972 104,928 11,195 150,095 44,779 - 194,874
Seminar and training fees 72,241 29,125 3,106 104,472 11,463 207 116,142
Printing, publications, and advertising 175 103,290 31 103,496 221 3 103,720
Bad debt expense - - - - 74,824 - 74,824
Employee relations 2,119 19,000 2,079 23,198 13,677 413 37,288
Bank service charges 1,571 5,972 2,312 9,855 18,306 530 28,691
Postage and shipping 1,672 5,279 261 7,212 5,706 37 12,955
$ 32,629,187 $ 16,492,698 $ 1,224,052 $ 50,345,937 $ 4,196,607 $ 947,039 $ 55,489,583

See notes to consolidated financial statements.

6
Goodwill Industries International, Inc. and Related Entities

Consolidated Statements of Cash Flows

Years Ended December 31, 2022 and 2021

2022 2021
Cash flows from operating activities:
Change in net assets $ (3,350,648) $ 11,249,764
Adjustments to reconcile change in net assets
to net cash provided by operating activities:
Realized and unrealized loss (gain) on investments 1,481,947 (330,251)
Bad debt expense 48,907 74,824
Amortization of right of use assets 1,175 -
Depreciation and amortization 641,387 853,258
Paycheck Protection Program loan forgiveness - (2,908,300)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (106,143) (773,401)
Promises to give (58,987) (320,113)
Grants receivable 64,914 (1,056,268)
Prepaid expenses and other assets (772,487) (357,774)
Right of use assets (56,791)
Increase (decrease) in:
Accounts payable 1,232,033 (70,164)
Accrued expenses (105,747) 1,209,680
Deferred revenue 1,617,110 221,283
Lease liability for operating lease 57,263 -
Net cash provided by operating activities 693,933 7,792,538

Cash flows from investing activities:

Proceeds from sales of investments 7,809,256 3,784,585
Purchases of investments (29,692,503) (6,815,648)
Purchases of property and equipment - (196,906)
Net cash used in investing activities (21,883,247) (3,227,969)

Cash flows from financing activities:

Proceeds from Paycheck Protection Program loan - 1,000,000
Net cash provided by financing activities - 1,000,000

Net (decrease) increase in cash and cash equivalents (21,189,314) 5,564,569

Cash and cash equivalents:

Beginning 35,808,905 30,244,336

Ending $ 14,619,591 $ 35,808,905

Supplemental schedule of non-cash financing activities:

Extinguishment of debt (Paycheck Protection Program loan) $ - $ 2,908,300

Supplemental schedule of cash flow information:

Right of use asset recorded at commencement date $ 57,146 $ -

See notes to consolidated financial statements.

7
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 1. Nature of Activities and Significant Accounting Policies

Nature of activities: Goodwill Industries International, Inc. (GII) was incorporated in the Commonwealth
of Massachusetts. GII functions as a member association comprised of a network of independent
community-based Goodwill organizations in the United States and Canada and international affiliates. GII
works to enhance the dignity and quality of life of individuals and families by strengthening communities,
eliminating barriers to opportunity, and helping people in need reach their full potential through learning
and the power of work. GII facilitates member-to-member sharing, knowledge transfer and direct and
supportive services to assist members in providing local community mission services. Each local Goodwill
organization is an autonomous member of GII that operates as a nonprofit corporation. This independence
affords local Goodwill organizations the flexibility to respond to community needs and opportunities. GII
also advocates on behalf of its membership with the federal government, corporate, foundation, and
international entities.

15810 Indianola Drive, LLC (the LLC) was organized under the laws of the state of Delaware. The LLC
operates, uses, develops, improves, renovates, maintains, manages, leases and, when applicable, sells,
exchanges or otherwise disposes of real, personal and mixed property. The LLC is a single-member
limited liability company owned entirely by GII.

Goodwill Mission and Job Creation Services, Inc. (GMJCS) was organized under the laws of the District
of Columbia. GMJCS advances the creation of jobs and services for people with disabilities and economic
disadvantages by providing funds and working capital to Goodwill member organizations with terms that
are more beneficial than Goodwill organizations could obtain from conventional commercial lending
sources. GMJCS is controlled by GII through sole corporate membership.

Program services: Program services descriptions are as follows:

Sponsored programs and grants: Sponsored programs and grants includes efforts to equip autonomous
local Goodwill organizations to enhance career navigation, skills training, credentialing, financial wellness
and diversity, inclusion and equitable outcomes services; to connect persons served to improved job
and career opportunities; to develop higher quality job opportunities for people with disabilities and
disadvantages; to improve workforce development systems for diverse populations, and to build family
economic success.

Direct services to membership: Direct services to membership includes consultations, executive

professional development, training seminars, events such as the annual meeting of the Conference of
Executives and the Delegate Assembly, data processing and analysis, assistance in the development of
national and local communications materials.

Support services to membership: Support services to membership include international activities,

government relations and strategic sourcing.

Administration and development: Administration and development descriptions are as follows:

General and administrative: The general and administrative services include expenditures related to
administrative and governance activities, maintaining the building and managing the financial responsibilities
of the entities.

Resource development: The resource development services include expenditures that encourage and
secure financial support for the Organization and its members.

8
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 1. Nature of Activities and Significant Accounting Policies (Continued)

A summary of the Organization’s significant accounting policies follows:

Principles of consolidation: The consolidated financial statements include the accounts of GII, the LLC,
and GMJCS (collectively referred to as the Organization). Significant inter-entity accounts and transactions
have been eliminated in consolidation.

Basis of presentation: The financial statement presentation follows the Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC). As required by the Not-For-Profit Entities Topic
of the FASB ASC, the Organization is required to report information regarding its financial position and
activities according to two classes of net assets: without donor restrictions and with donor restrictions.

Net assets with donor restrictions: Net assets with donor restrictions consist of assets whose use is
limited by donor-imposed time and/or purpose restrictions. The Organization reports gifts of cash and
other assets as support with donor restrictions if they are received with donor stipulations that limit the
use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction
ends or purpose restriction is accomplished, the net assets are reclassified as net assets without donor
restrictions and reported in the consolidated statement of activities as net assets released from
restrictions. Endowment net assets with donor restrictions include a stipulation that assets provided be
maintained in perpetuity while permitting the Organization to expend the income generated by the assets
in accordance with the provisions of additional donor-imposed stipulations.

Net assets without donor restrictions: Net assets without donor restrictions include those net assets
whose use is not restricted by donors, even though their use may be limited in other respects, such as by
board designation.

Use of estimates: The preparation of consolidated financial statements in accordance with generally
accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.

Income taxes: GII is exempt from the payment of income taxes on its exempt activities under Section
501(c)(3) of the Internal Revenue Code and is classified by the Internal Revenue Service as other than a
private foundation within the meaning of Section 509(a)(1) of the Internal Revenue Code. As a single-
member limited liability company, the LLC is treated as a disregarded entity for income tax purposes.
Therefore, the LLC’s financial activity is reported in conjunction with GII’s federal income tax filings.

GMJCS is exempt from the payment of income taxes on its exempt activities under Section 501(c)(3) of
the Internal Revenue Code and is classified by the Internal Revenue Service as other than a private
foundation within the meaning of Section 509(a)(3) of the Internal Revenue Code.

The Organization is subject to income tax on its unrelated business activities, such as income from the
virtual member marketplace and rental income, which was debt financed. However, the Organization has
generated net operating loss carry-forwards resulting from these taxable activities. The net operating loss
carry-forwards, which may be applied against future years’ taxable income, approximated $500,000 at
December 31, 2022. The net operating loss carry-forwards will expire at various dates through 2042. A
deferred tax asset has not been recognized due to the uncertainty of realizing a benefit from the net
operating loss carry-forwards.

9
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 1. Nature of Activities and Significant Accounting Policies (Continued)

Cash and cash equivalents: The Organization classifies demand deposits as cash and cash equivalents.
Cash, money market funds, and certificates of deposit held within the investment portfolio are not
included in cash and cash equivalents because they are held for investment purposes.

Investments: Investments with readily determinable fair values are reflected at fair value. To adjust the
carrying value of these investments, the change in fair value is charged or credited to investment return
net of related fees.

Financial risk: The Organization maintains its cash in bank deposit accounts and money market funds.
At times, certain balances held within these accounts may not be fully guaranteed or insured by the U.S.
government. The Organization has not experienced any losses in such accounts. The Organization
believes it is not exposed to any significant financial risk on cash.

The Organization invests in a professionally managed portfolio that contains various marketable securities.
Such investments are exposed to various risks, such as market and credit. Due to the level of risk
associated with such investments and the level of uncertainty related to changes in the value of such
investments, it is at least reasonably possible that changes in risk in the near term could materially affect
investment balances and the amounts reported in the consolidated financial statements.

Accounts receivable: Accounts receivable includes revenue that is owed to the Organization primarily
related to membership dues and other programs. Accounts receivable are recorded at the gross, or face
amount, less an allowance for doubtful accounts. The allowance is determined based on management's
experience and collection efforts. Balances that remain outstanding after the Organization has used
reasonable collection efforts are written off.

Contract balances: The timing of revenue recognition may not align with the right to invoice the
customer. The Organization records accounts receivable when it has the unconditional right to issue an
invoice and receive payment, regardless of whether revenue has been recognized. If revenue has not yet
been recognized, a contract liability (deferred revenue) also is recorded. If revenue is recognized in
advance of the right to invoice, a contract asset (unbilled receivable) is recorded. Opening contract
balances as of January 1, 2021, included accounts receivable of $1,078,709 and deferred revenue of
$447,003.

Promises to give: GII records unconditional promises to give that are expected to be collected within
one year at net realizable value. GII provides for probable losses on promises to give using the allowance
method. The allowance is determined based on management's experience and collection efforts.
Balances that remain outstanding after GII has used reasonable collection efforts are written off.
Promises to give that are collectable in over a year are recorded at a discount.

Grants receivable: Grants receivable relate to amounts due to GII from federal government agencies
and other grantors resulting from allowable costs incurred under conditional grants. All grants receivable
are due to be collected within one year. Management periodically reviews the status of all grants
receivable for collectability. Each balance is assessed based on management’s knowledge of and
relationship with the U.S. government agency or grantor, and the age of the receivable balance. As a
result of these reviews, balances deemed to be uncollectible are charged directly to bad debt expense.
Management believes that the use of the direct write-off method approximates the results that would be
presented if an allowance for doubtful accounts had been recorded. GII has not written off grants
receivable during either of the years ended December 31, 2022 and 2021.

10
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 1. Nature of Activities and Significant Accounting Policies (Continued)

Property and equipment: Acquisitions of property and equipment greater than $3,000 are recorded at
cost and depreciated using the straight-line method over the following estimated useful lives: building—
30 years; building improvements—10 years; and furniture, equipment and software—three to five years.
Land and artwork are not depreciated.

Valuation of long-lived assets: The Organization accounts for the subsequent measurement of certain
long-lived assets in accordance with subsections of the FASB ASC Topic, Property, Plant and Equipment
that address impairment or disposal of long-lived assets. The accounting standard requires that
property, plant and equipment and certain identifiable intangible assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of
the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are
impaired, the impairment to be recognized is measured by the amount by which the carrying amount of
the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reportable at the
lower of carrying amount or fair value, less costs to sell. During the years ended December 31, 2022 and
2021, management did not consider the value of any property or equipment to be impaired.

Revenue: The Organization’s activities are primarily supported through federal grants, membership dues,
program service fees and contributions from individual, corporate and foundation donors. Prices for
membership dues and program service fees are specific to distinct performance obligations and do not
consist of multiple transactions. Economic factors are driven by consumer confidence, employment,
inflation and other world events that impact the timing and level of cash received and revenue recognized
by the Organization. Periods of economic downturn resulting from any of the above factors may result in
declines in future cash flows and recognized revenue of the Organization.

The Organization did not have any impairment or credit losses on any receivables or contract assets
arising from contracts with customers. There are also no incremental costs of obtaining a contract and no
significant financing components. Finally, there are no significant changes in the judgments affecting the
determination of the amount and timing of revenue from contracts with customers.

Federal awards: GII receives awards from federal agencies. Such award instruments are to be used for
specific programs in accordance with compliance requirements. Federal grants are typically considered
conditional contributions and the recognition of grant revenue is deferred until barriers and/or rights of
return imposed under the grant document are met by GII. Revenue is recognized as the related qualifying
expenses are incurred as allowable by the grants. Federal awards are recognized to net assets without
donor restrictions if no time or purpose restrictions remain to be satisfied at the time conditions had been
met.

Membership dues: Membership dues are billed annually for the membership period, which coincides
with the calendar year. Member benefits include use of the Goodwill brand and trademarks; protection of
the Goodwill brand and trademarks; access to consultation services for donated goods retail, business
services, board development and strategic planning; access to participate in GII national grant programs;
access to an online library of resources; and access to member-only conferences and training
opportunities. All member benefits are considered one performance obligation and revenue is recognized
ratably over the calendar year as the delivery of the member benefits are provided.

Program service fees: Conference and event registrations and their related sponsorships are
recognized over the period of time that the related meeting or event takes place. Registration and
sponsorships are generally collected in advance of the conference or event and recorded as deferred
revenue until the conference or event occurs.

11
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 1. Nature of Activities and Significant Accounting Policies (Continued)

Total conference and event registrations and sponsorships recognized over a period of time were
$1,198,084 and $774,114, for the years ended December 31, 2022 and 2021, respectively. Total case
management fees recognized over a period of time were $0 and $421,593 for the years ended
December 31, 2022 and 2021, respectively.

Rental: GII rents part of its headquarters building to an unrelated tenant. Rental revenue is recognized on
a straight-line basis over the life of the lease.

Contributions, legacies and bequests: Unconditional contributions (including those received through
bequests and legacies) are recorded to net assets with or without donor restrictions, depending on the
existence and/or nature of any donor restrictions. Contributions, including unconditional promises to give
cash or other assets, are reported at fair value at the date that there is sufficient verifiable evidence
documenting that a promise was made by the donor and received by the Organization. Conditional
promises to give are recognized only when the conditions on which they depend are substantially met
and the promises become unconditional. Assets received in connection with conditional promises are
reported as refundable advances until such time the conditions are substantially met.

Functional allocation of expenses: The costs of providing various program and supporting services
have been summarized on a functional basis in the accompanying consolidated statement of activities.
Expenses that can be identified with a specific program or support service are charged directly, according
to their natural expenditure classification. Accordingly, certain costs primarily associated with personnel,
professional fees, rental and maintenance, supplies, and telephone and communication have been
allocated among the program and supporting services provided to the members on the basis of the labor
costs utilized by each area.

Measure of operations: The Organization does not include net investment return—non-operating in the
change in net assets without donor restrictions from operations.

Recent accounting pronouncements adopted: In February 2016, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which
supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to
recognize lease assets and lease liabilities on the statements of financial position for all leases with terms
longer than 12 months. Leases will be classified as either finance or operating with classification affecting
the pattern of recognition in the statements of activities. The Organization adopted the standard on
January 1, 2022. The Organization’s leases are disclosed in Note 14.

In September 2020, the FASB issued ASU 2020-07, Not-for-Profit Entities (Topic 958), Presentation and
Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. The ASU improves
transparency of contributed nonfinancial assets for not-for-profit (NFP) entities though enhancements to
presentation and disclosure. The Organization adopted ASU 2020-07 during the year ended
December 31, 2022. The adoption of the standard had no impact on the Organization’s consolidated
financial statements for the years ended December 31, 2022 and 2021.

Reclassifications: Certain 2021 amounts have been reclassified to conform to the 2022 presentation
with no effect on the previously reported total change in consolidated net assets.

Subsequent events: The Organization has evaluated subsequent events through April 19, 2023, the
date on which the consolidated financial statements were available to be issued.

12
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 2. Liquidity and Availability

The Organization strives to maintain liquid financial assets sufficient to meet its general operating
expenditures. The Organization has investments to cover its reserve needs per its target reserve policy.
The purpose of the target reserve policy is to ensure that the Organization has the financial means to
continue to provide critical support to the membership in both the short- and long-term and to develop
products and services in support of members. The Organization reassesses the adequacy of its reserves
on an annual basis.

The following table reflects the Organization’s financial assets as of December 31, 2022 and 2021,
reduced by amounts that are not available to meet general expenditures within one year of the
consolidated statement of financial position date because of loan covenants or internal board
designations. Amounts not available include a board-designated special projects fund that is intended to
fund special board initiatives not considered in the annual operating budget. In the event the need arises
to utilize the board-designated funds for liquidity purposes, the reserves could be drawn upon through the
board target reserve policy. Amounts not available to meet general expenditures within one year also
include net assets with donor restrictions. However, such funds are in highly liquid investments in order to
preserve capital and are available to support sponsored programs once the purpose restrictions are met.

2022 2021

Cash and cash equivalents $ 14,619,591 $ 35,808,905

Investments 39,625,818 19,224,518
Accounts receivable, net and grants receivable 6,923,765 6,931,443
Promises to give, net 379,100 320,113
Accounts payable to subrecipients (4,812,304) (4,465,961)
Net assets with donor restrictions (12,170,007) (14,924,744)
Board-designated special projects fund (955,370) (955,370)
Financial assets available to meet cash needs
for general expenditure within one year $ 43,610,593 $ 41,938,904

Note 3. Investments and Fair Value Measurements

The Fair Value Measurement Topic of the ASC defines fair value 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, and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority
to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). Inputs are broadly defined under this topic as assumptions market
participants would use in pricing an asset or liability.

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting
entity has the ability to access at the measurement date. As required by the Fair Value
Measurement Topic, the Organization does not adjust the quoted prices for these investments
even in situations where the Organization holds a large position and a sale could reasonably
impact the quoted price.

Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either
directly or indirectly, and fair value is determined through the use of models or other valuation
methodologies. A significant adjustment to a Level 2 input could result in the Level 2
measurement becoming a Level 3 measurement.

13
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 3. Investments and Fair Value Measurements (Continued)

Level 3: Inputs are unobservable for the asset or liability and include situations where there is little, if
any, market activity for the asset or liability. The inputs into the determination of fair value are
based upon the best information in the circumstances and may require significant management
judgment or estimation. Investments that are included in this category are investments where
fair value is not based on a net asset value practical expedient. There were no Level 3 inputs
for any assets or liabilities held by the Organization at December 31, 2022 and 2021.

The Organization’s investments in mutual funds and common stocks are classified as Level 1 items as
they are traded on a public exchange. Corporate bonds, municipal bonds, and U.S. government
obligations are classified as Level 2 investments as there are no quoted market prices in active markets
for identical assets.

Investments recorded at cost include cash. Investments recorded at cost are not required to be classified
in one of the levels prescribed by the fair value hierarchy.

Investments consist of the following at December 31, 2022 and 2021 :

2022
Total Level 1 Level 2 Level 3
Investments, at fair value:
U.S. government obligations $ 20,810,131 $ - $ 20,810,131 $ -
Equity mutual funds 2,281,307 2,281,307 - -
Money market funds 1,436,210 1,436,210 - -
Corporate bonds 1,308,629 - 1,308,629 -
Fixed income mutual funds 968,559 968,559 - -
Municipal bonds 423,627 - 423,627 -
Investments carried at fair value 27,228,463 $ 4,686,076 $ 22,542,387 $ -
Investments, at cost:
Cash 12,397,355
Total investments $ 39,625,818

2021
Total Level 1 Level 2 Level 3
Investments, at fair value:
Equity mutual funds $ 3,165,091 $ 3,165,091 $ - $ -
Corporate bonds 1,741,497 - 1,741,497 -
Fixed income mutual funds 1,084,465 1,084,465 - -
U.S. government obligations 778,707 - 778,707 -
Municipal bonds 444,096 - 444,096 -
Money market funds 146,437 146,437 - -
Diversifying assets 27,649 27,649
Investments carried at fair value 7,387,942 $ 4,423,642 $ 2,964,300 $ -
Investments, at cost:
Cash 11,836,576
Total investments $ 19,224,518

14
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 4. Employee Benefit Plans

Defined contribution: The Organization has a defined contribution 403(b) thrift plan that is available to
all full-time employees who have completed six months of service. The plan contains provisions for
employer matching and discretionary contributions for eligible participants. The Organization’s
contributions to the plan, excluding applicable forfeitures, totaled $652,684 and $569,225 for the years
ended December 31, 2022 and 2021, respectively.

Note 5. Accounts Receivable

Accounts receivable consist of the following at December 31, 2022 and 2021 :

2022 2021

Membership dues $ 1,240,220 $ 1,601,522

Services and supplies 212,851 42,410
Case management 341,283 202,998
Interest receivable 246,026 21,011
Member agreements* 223,151 223,151
Other receivables 116,779 257,374
2,380,310 2,348,466
Less allowance for doubtful accounts receivable (545,788) (571,180)
Net accounts receivable $ 1,834,522 $ 1,777,286

* Member agreements represent payment plans for certain members in order for them to pay overdue
membership dues within a negotiated time period. The allowance for doubtful accounts receivable
related to member agreements totaled $0 and $193,000 at December 31, 2022 and 2021,
respectively.

Note 6. Promises to Give

Unconditional promises to give consist of the following at December 31, 2022 and 2021:

2022 2021

Amounts due in less than one year $ 422,459 $ 89,819

Amounts due in one to five years - 250,857
422,459 340,676
Less discount to net present value - (20,563)
Less allowance for doubtful promises to give (43,359) -
$ 379,100 $ 320,113

Note 7. Conditional Promises to Give

The Organization has conditional grants with both private foundations and federal agencies that are
contingent upon the Organization meeting donor-imposed barriers which include carrying out certain
activities and incurring qualified expenditures stipulated by the grants. As of December 31, 2022 and
2021, the unearned conditional grant commitments are estimated to be $18,389,000 and $26,325,000,
respectively.

15
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 8. Grants Receivable

Grants receivable consist of the following at December 31, 2022 and 2021:

2022 2021
U.S. Department of Labor:
Senior Community Service:
Employment Program (SCSEP) $ 3,752,778 $ 3,591,929
Reentry Employment Opportunities (LifeLaunch) 768,910 654,382
U.S. Department of Agriculture:
Food and Nutrition Services (SNAP) 102,555 227,398
Subtotal—federal grants receivable 4,624,243 4,473,709
Private grants:
Indeed grants 465,000 680,448
$ 5,089,243 $ 5,154,157

Note 9. Property and Equipment

Property and equipment consisted of the following at December 31, 2022 and 2021:

2022 2021

Land $ 1,500,000 $ 1,500,000

Building and improvements 8,468,768 8,468,768
Furniture and equipment 3,009,621 3,009,621
Software 5,123,327 5,123,327
Artwork 60,000 60,000
18,161,716 18,161,716
Less accumulated depreciation and amortization (13,563,572) (12,922,185)
$ 4,598,144 $ 5,239,531

Note 10. Debt Obligations

Paycheck Protection Program loan: In April 2020, the Organization applied for and received approval
for a $2,908,300 loan through the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act). Under the terms of the agreement, monthly payments would
continue until either the lending institution receives communication of loan forgiveness from the Small
Business Administration (SBA) or May 2022, whichever is earlier. The loan bears interest at a fixed rate of
1% per annum. The loan and related accrued interest are forgivable after 24 weeks if the Organization
uses the loan proceeds for eligible purposes as defined in the agreement. The unforgiven portion of the
PPP loan is payable over two years, with a deferral of payments for the first six months. The loan is not
secured by any property of the Organization.

The Organization drew down $1,908,300 during the year ended December 31, 2020, and the remaining
$1,000,000 during the year ended December 31, 2021. The Organization elected to account for the loan
as a financial liability under ASC 470 until the time at which forgiveness is received. The Organization
received forgiveness for the full amount of $2,908,300 on August 16, 2021, which is reflected as
Paycheck Protection Program loan forgiveness on the consolidated statement of activities for the year
ended December 31, 2021.

16
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 11. Net Assets

Net assets without donor restrictions consisted of the following at December 31, 2022 and 2021:

2022 2021

Undesignated—general activities $ 42,156,732 $ 42,752,643

Designated by the board for:
International activities 955,370 955,370
$ 43,112,102 $ 43,708,013

GII’s net assets with donor restrictions consisted of the following at December 31, 2022 and 2021:

2022 2021
Specified purpose:
Private foundation funds $ 9,532,169 $ 12,111,894
Operations funds 694,532 569,952
International funds 13,163 13,163
Endowment:
Endowment accumulated contributions* 1,375,063 1,629,016
Endowment accumulated earnings* 555,080 600,719
$ 12,170,007 $ 14,924,744
* See discussion of endowments in Note 12.

GII’s net assets released from restrictions consisted of the following during the years ended December 31,
2022 and 2021:

2022 2021
Private foundation funds $ 10,400,625 $ 6,468,455
Operations funds - 25,272
Endowment earnings - 1,128
$ 10,400,625 $ 6,494,855

Note 12. Endowments

The Organization’s endowments consist of donor-restricted endowment funds which are classified within
net assets with donor restrictions. As required by generally accepted accounting principles, net assets
associated with endowment funds are classified and reported based on the existence or absence of
donor-imposed restrictions.

Interpretation of relevant law: The Organization has interpreted the Commonwealth of Massachusetts’
enacted version of the Uniform Prudent Management of Institutional Funds (UPMIFA) law related to the
donor-restricted endowment funds as requiring the preservation of the fair value of the original gift. As a
result of this interpretation, the Organization retains in perpetuity: (1) the original value of gifts donated to
the permanent endowment, (2) the original value of subsequent gifts to the permanent endowment and
(3) accumulations to the permanent endowment made in accordance with the direction of the applicable
donor gift instrument at the time the accumulation is made to the fund. Absent explicit direction from the
donor regarding the classification of investment income from the permanently restricted endowments,
investment income is recorded in net assets with donor restrictions until appropriated for spending.

17
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 12. Endowments (Continued)

Interpretation of relevant law: The Organization has interpreted the Commonwealth of Massachusetts’
enacted version of the Uniform Prudent Management of Institutional Funds (UPMIFA) law related to the
donor-restricted endowment funds as requiring the preservation of the fair value of the original gift. As a
result of this interpretation, the Organization retains in perpetuity: (1) the original value of gifts donated to
the permanent endowment, (2) the original value of subsequent gifts to the permanent endowment and
(3) accumulations to the permanent endowment made in accordance with the direction of the applicable
donor gift instrument at the time the accumulation is made to the fund. Absent explicit direction from the
donor regarding the classification of investment income from the permanently restricted endowments,
investment income is recorded in net assets with donor restrictions until appropriated for spending.

Return objectives and risk parameters: The Organization has adopted investment and spending
policies for endowment assets that attempt to provide a predictable stream of funding to programs
supported by its endowment while seeking to maintain the purchasing power of the endowment assets.
Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner
that is intended to produce results that achieves constant growth of the distribution amount and the
corpus. Actual returns in any given year may vary from this amount.

Strategies employed for achieving objectives: To satisfy its long-term objectives, the Organization
relies on a total return strategy in which investment returns are achieved through both capital appreciation
(realized and unrealized) and current yield (interest and dividends). The Organization targets a diversified
asset allocation that places more emphasis on fixed income securities than equity securities to achieve its
long-term return objectives within prudent risk constraints.

Spending policy and how investment objectives relate to spending policy: The Organization has
adopted investment and spending policies for endowment assets that attempt to provide a predictable
stream of funding to programs supported by the endowment funds while seeking to maintain the
purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted
funds that the Organization must hold in perpetuity or for donor-specified periods. Under this policy, as
approved by the Board of Directors, the endowment assets are invested in a balanced portfolio comprised
of cash, money market funds, fixed income securities, and equity securities.

Funds with deficiencies: From time to time, the fair value of assets associated with individual donor-
restricted endowment funds may fall below the level that the donor originally contributed as an
endowment fund to the Organization. In accordance with generally accepted accounting principles,
deficiencies of this nature would be reported within net assets with donor restrictions. However, there
were no funds with deficiencies at December 31, 2022 and 2021.

GII’s endowment funds consisted of the following at December 31, 2022 and 2021:

2022
With Donor Restrictions
Accumulated Accumulated
Earnings Contributions Total
Operations funds:
Kenneth K. King Training Trust * $ 161,947 $ 952,992 $ 1,114,939
Richard and Lois England* 31,365 159,178 190,543
Frank F. Flegal Education and Training 143,374 34,562 177,936
International funds:
Gerald Clore Training 197,327 100,000 297,327
Barker Education 10,367 123,131 133,498
Sioux City 10,700 5,200 15,900
$ 555,080 $ 1,375,063 $ 1,930,143

18
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 12. Endowments (Continued)

2021
With Donor Restrictions
Accumulated Accumulated
Earnings Contributions Total
Operations funds:
Kenneth K. King Training Trust * $ 137,403 $ 1,162,342 $ 1,299,745
Richard and Lois England* 27,868 203,781 231,649
Frank F. Flegal Education and Training 176,078 34,562 210,640
International funds:
Gerald Clore Training 237,934 100,000 337,934
Barker Education 8,675 123,131 131,806
Sioux City 12,761 5,200 17,961
$ 600,719 $ 1,629,016 $ 2,229,735

* The gift instruments for these endowment funds include donor instructions indicating that investment
appreciation (depreciation) should be accumulated to amounts perpetual in nature.

Changes in GII’s endowment funds consisted of the following for the years ended 2022 and 2021:

2022
With Donor Restrictions
Accumulated Accumulated
Earnings Contributions Total

Endowment funds, beginning $ 600,719 $ 1,629,016 $ 2,229,735

Investment loss, net (45,639) (253,953) (299,592)
Appropriations - - -
Endowment funds, ending $ 555,080 $ 1,375,063 $ 1,930,143

2021
With Donor Restrictions
Accumulated Accumulated
Earnings Contributions Total

Endowment funds, beginning $ 534,209 $ 1,555,611 $ 2,089,820

Investment return, net 67,638 73,405 141,043
Appropriations (1,128) - (1,128)
Endowment funds, ending $ 600,719 $ 1,629,016 $ 2,229,735

19
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 13. Commitments and Contingencies

Litigation: From time to time, the Organization may be involved in litigation. At present, management
does not believe that the outcome of any litigation will have a material impact on the Organization’s
financial position.

Government grants: Federal award revenue provided to GII by U.S. government agencies in relation to
expenditures incurred under grant agreements may be subject to audit or adjustment by the government
agencies. The expenditures which may be disallowed as a result of an audit cannot be determined at this
time, although management expects such amounts, if any, to be immaterial.

Conditional payables: The Organization makes conditional promises to give which are contingent upon
the subrecipient meeting grant imposed barriers which include carrying out certain activities and incurring
qualified expenditures stipulated by the grants. Thus, a payable related to these grants is only recognized
as the subrecipient submits qualified grant-related expenditures to the Organization for reimbursement.
As of December 31, 2022 and 2021, conditional grant commitments to subrecipients are estimated to be
$17,275,885 and $22,914,000, respectively.

Note 14. Leases

Operating lease: In November 2022, GII commenced a lease for computers. The lease expires in
November 2025. Lease expense for the year ended December 31, 2022 was $1,647. The weighted-
average discount rate for the computer lease is 3.74% which is based on the risk-free rate at the time of
the lease commencement. The weighted-average remaining lease term is 2.97 years. Future minimum
cash basis lease payments are as follows:

Year ending December 31,

2023 $ 19,764
2024 19,764
2025 19,764
59,292
Discount to net present value (2,029)
$ 57,263

Tenant lease: The LLC has an operating lease agreement to provide general office and showroom space
in its building to an unrelated tenant which expires December 31, 2023. The tenant has an option to
extend the lease through December 31, 2024, if written notice is received by July 1, 2023. The LLC holds
a security deposit from the tenant of $0. Rental revenue totaled $0 and $0 for the years ended
December 31, 2022 and 2021, respectively. Future minimum cash basis rental receipts are expected to
be as follows:

Year ending December 31,

2023 $ 298,416
2024 305,868
$ 604,284

20
Goodwill Industries International, Inc. and Related Entities

Notes to Consolidated Financial Statements

Note 15. Expenditures to Subrecipients

The following chart summarizes GII’s expenditures of federal awards, including expenditures to
subrecipients, for the years ended December 31, 2022 and 2021:

2022 2021

Expenditures to subrecipients $ 24,431,722 $ 24,358,061

Expenditures used directly 1,793,182 1,951,116
$ 26,224,904 $ 26,309,177

21