WhyHunger, Inc.

FINANCIAL STATEMENTS

December 31, 2018 and 2017

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 TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FINANCIAL STATEMENTS:

STATEMENTS OF FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

STATEMENTS OF ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

STATEMENTS OF FUNCTIONAL EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

NOTES TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

 437 Madison Avenue, 23rd Floor
New York, NY 10022 • 212.962.4470

165 Orinoco Drive, Brightwaters, NY 11718

631.665.7040 • Fax: 631.665.7014

15 South Bayles Avenue, Port Washington, NY 11050

516.883.5510 • Fax: 516.767.7438

A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS www.sheehancpa.com

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors

WhyHunger, Inc.

We have audited the accompanying financial statements of WhyHunger, Inc., (a non-profit

organization) which comprise the statements of financial position as of December 31, 2018 and
2017 and the related statements of activities, functional expenses and cash flows for the years
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 audits. We
conducted our audits 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 entity'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 entity'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.

An Independent Member of the BDO Alliance USA

To the Board of Directors
WhyHunger, Inc.
Page 2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of WhyHunger, Inc. as of December 31, 2018 and 2017 and the changes in
its net assets and its cash flows for the years then ended in accordance with accounting principles
generally accepted in the United States of America.

Effect of Adopting New Accounting Standard

As discussed in Note 2, WhyHunger, Inc. adopted the provisions of Financial Accounting

Standards Board Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic
958): Presentation of Financial Statements of Not-for-Profit Entities as of and for the year ended
December 31, 2018. The requirements of ASU 2016-14 have been retrospectively applied to all
periods presented. Our opinion is not modified with respect to this matter.

Brightwaters, New York

April 11, 2019
 WhyHunger, Inc.
STATEMENTS OF FINANCIAL POSITION

For the Years Ended December 31, 2018 and 2017

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ASSETS

2018 2017

Current assets:
Cash and cash equivalents $ 251,662 $ 427,035
Investments at fair value 627,262 676,645
Contributions receivable, current 1,093,786 780,913
Prepaid and other assets 92,014 96,811
Total current assets 2,064,724 1,981,404

Long-term assets:
Fixed assets, net 7,054 5,020
Intangible assets, net 6,974 25,059
Contributions receivable, long-term 6,000 13,000
Total long-term assets 20,028 43,079
Total assets $ 2,084,752 $ 2,024,483

LIABILITIES AND NET ASSETS

Liabilities:
Accounts payable and other liabilities $ 224,054 $ 174,770
Grants payable 52,163 49,377
Total current liabilities 276,217 224,147

Net assets:
Without donor restriction:
Undesignated 321,072 402,189
Designated by the Board for endowment 534,219 567,459
Total without donor restriction 855,291 969,648

With donor restriction:

Purpose restricted 844,244 709,688
Time restricted for future periods 9,000 21,000
Perpetual in nature 100,000 100,000
Total with donor restriction 953,244 830,688
Total net assets 1,808,535 1,800,336
Total liabilities and net assets $ 2,084,752 $ 2,024,483
The accompanying notes are an integral
part of these financial statements
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 WhyHunger, Inc.
STATEMENT OF ACTIVITIES

For the Year Ended December 31, 2018

____

Without Donor With Donor

Restriction Restriction Total

Revenue and support:

Individual contributions $ 227,285 $ 19,333 $ 246,618
Foundation grants and corporate donations 1,115,648 732,579 1,848,227
Artists Against Hunger and Poverty/Hungerthon 1,038,532 - 1,038,532
Special events, gross 478,073 - 478,073
Royalty income 330 494 824
Realized and unrealized gains (losses)
on investments (34,245) (7,661) (41,906)
Interest and other income (expense), net
investment fees 1,287 (288) 999
Net assets released from restrictions 621,901 (621,901) -
Total revenue and support 3,448,811 122,556 3,571,367

Expenses:
Program services:
Grassroots Action Network 69,051 - 69,051
Artists Against Hunger and Poverty/Hungerthon 550,198 - 550,198
Nourish 906,444 - 906,444
Global Movements 906,143 - 906,143
General Media for Program Services 529,379 - 529,379
Total program services 2,961,215 - 2,961,215
Support services:
Fundraising 314,415 - 314,415
Costs of direct benefit to donors 132,525 - 132,525
Management and general 155,013 - 155,013
Total support services 601,953 - 601,953
Total expenses 3,563,168 - 3,563,168

Change in net assets (114,357) 122,556 8,199

Net assets, beginning of year 969,648 830,688 1,800,336
Net assets, end of year $ 855,291 $ 953,244 $ 1,808,535

The accompaying notes are an integral

part of these financial statements
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 WhyHunger, Inc.
STATEMENT OF ACTIVITIES

For the Year Ended December 31, 2017

____

Without Donor With Donor

Restriction Restriction Total

Revenue and support:

Individual contributions $ 272,934 $ 19,827 $ 292,761
Foundation grants and corporate donations 539,454 557,418 1,096,872
Artists Against Hunger and Poverty/Hungerthon 1,185,254 - 1,185,254
Special events, gross 499,410 - 499,410
Royalty income 8,585 11,009 19,594
Realized and unrealized gains
on investments 83,603 18,828 102,431
Interest and other income (expense), net
investment fees 2,026 (226) 1,800
Net assets released from restrictions 612,153 (612,153) -
Total revenue and support 3,203,419 (5,297) 3,198,122

Expenses:
Program services:
Grassroots Action Network 54,199 - 54,199
Artists Against Hunger and Poverty/Hungerthon 532,874 - 532,874
Nourish 709,384 - 709,384
Global Movements 936,245 - 936,245
General Media for Program Services 412,757 - 412,757
Total program services 2,645,459 - 2,645,459
Support services:
Fundraising 239,507 - 239,507
Costs of direct benefit to donors 125,082 - 125,082
Management and general 131,187 - 131,187
Total support services 495,776 - 495,776
Total expenses 3,141,235 - 3,141,235

Change in net assets 62,184 (5,297) 56,887

Net assets, beginning of year 907,464 835,985 1,743,449
Net assets, end of year $ 969,648 $ 830,688 $ 1,800,336

The accompaying notes are an integral

part of these financial statements
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 WhyHunger, Inc.
STATEMENT OF FUNCTIONAL EXPENSES

For the Year Ended December 31, 2018

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Program Services Supporting Services
Artists Against General Costs of
Grassroots Hunger and Media for Total Direct Total
Action Poverty/ Global Program Program Benefit Management Supporting
Network Hungerthon Nourish Movements Services Services Fundraising to Donors and General Services Total
Salaries and related expenses:
Salaries $ 29,979 $ 294,150 $ 274,378 $ 271,496 $ 236,873 $ 1,106,876 $ 149,603 $ - $ 92,088 $ 241,691 $ 1,348,567
Payroll taxes and employee benefits 6,281 62,393 67,350 64,118 47,319 247,461 38,383 - 17,791 56,174 303,635
Total salaries and related expenses 36,260 356,543 341,728 335,614 284,192 1,354,337 187,986 - 109,879 297,865 1,652,202
Other expenses:
Professional and contract 2,227 42,041 44,597 18,610 169,292 276,767 34,596 16,809 3,174 54,579 331,346
Postage and shipping 20 15,025 380 317 213 15,955 962 1,247 45 2,254 18,209
Supplies and other office expenses 454 5,278 5,010 4,998 8,776 24,516 17,756 995 831 19,582 44,098
Telephone and internet 380 3,862 4,223 3,711 3,465 15,641 2,659 - 737 3,396 19,037
Occupancy 2,773 33,121 35,730 31,121 29,712 132,457 22,801 - 6,317 29,118 161,575
Staff travel 5,907 2,005 17,009 13,213 4,527 42,661 3,969 - 248 4,217 46,878
Printing and publications 1,547 7,584 47 3,994 - 13,172 1,136 2,543 - 3,679 16,851
Equipment rentals 165 1,971 2,126 1,852 1,768 7,882 1,357 - 376 1,733 9,615
Dues, fees and subscription 1,035 230 1,509 1,224 11,569 15,567 1,651 - 42 1,693 17,260
Conference and meetings 4,700 1,329 24,158 63,133 976 94,296 2,645 - 207 2,852 97,148
Grants, awards and donations 11,874 - 308,214 409,805 - 729,893 - - - - 729,893
Bank charges and interest 204 9,986 2,625 2,756 2,183 17,754 7,396 - 464 7,860 25,614
Taxes, fines and penalties 152 1,814 1,957 1,704 1,627 7,254 3,499 30,183 33,682 40,936
Insurance 408 4,527 4,648 4,221 3,916 17,720 2,840 - 1,057 3,897 21,617
Advertising 5 55 101,937 52 190 102,239 15,144 - 11 15,155 117,394
Repairs and maintenance 124 1,486 1,603 1,396 1,333 5,942 1,023 - 283 1,306 7,248
Program supplies - 42,335 - - - 42,335 2,440 - - 2,440 44,775
Event venue and audiovisual expenses - - - - - - - 110,931 - 110,931 110,931
Meals and entertainment 196 3,952 1,091 3,301 924 9,464 912 - 157 1,069 10,533
Miscellaneous 248 7,606 3,053 941 726 12,574 581 - 154 735 13,309
Bad debt expense - 5,000 - - - 5,000 - - - - 5,000
Total expenses before depreciation
and amortization 68,679 545,750 901,645 901,963 525,389 2,943,426 311,353 132,525 154,165 598,043 3,541,469
Depreciation and amortization 372 4,448 4,799 4,180 3,990 17,789 3,062 - 848 3,910 21,699
Total expenses $ 69,051 $ 550,198 $ 906,444 $ 906,143 $ 529,379 $ 2,961,215 $ 314,415 $ 132,525 $ 155,013 $ 601,953 $ 3,563,168
The accompanying notes are an integral
part of these financial statements
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 WhyHunger, Inc.
STATEMENT OF FUNCTIONAL EXPENSES

For the Year Ended December 31, 2017

____
Program Services Supporting Services
Artists Against General Costs of
Grassroots Hunger and Media for Total Direct Total
Action Poverty/ Global Program Program Benefit Management Supporting
Network Hungerthon Nourish Movements Services Services Fundraising to Donors and General Services Total
Salaries and related expenses:
Salaries $ 29,010 $ 276,517 $ 259,200 $ 266,332 $ 223,270 $ 1,054,329 $ 109,047 $ - $ 94,204 $ 203,251 $ 1,257,580
Payroll taxes and employee benefits 5,992 59,183 64,675 61,118 46,948 237,916 25,683 - 17,351 43,034 280,950
Total salaries and related expenses 35,002 335,700 323,875 327,450 270,218 1,292,245 134,730 - 111,555 246,285 1,538,530

Other expenses:
Professional and contract 2,291 39,158 110,087 21,175 70,828 243,539 38,572 9,594 3,257 51,423 294,962
Postage and shipping 69 23,237 1,130 915 597 25,948 911 650 181 1,742 27,690
Supplies and other office expenses 499 10,139 6,525 8,025 12,142 37,330 20,579 1,781 1,213 23,573 60,903
Telephone and internet 449 4,803 5,667 5,094 3,887 19,900 2,189 - 1,178 3,367 23,267
Occupancy 3,087 33,023 38,963 34,856 26,727 136,656 15,048 - 8,103 23,151 159,807
Staff travel 1,627 3,218 27,762 19,065 3,669 55,341 4,052 - 317 4,369 59,710
Printing and publications 153 - 278 235 - 666 1,314 2,278 - 3,592 4,258
Equipment rentals 107 2,093 1,348 1,206 925 5,679 521 - 280 801 6,480
Dues, fees and subscription 717 2,921 3,449 3,381 8,557 19,025 2,038 - 560 2,598 21,623
Conference and meetings 521 468 33,874 14,990 439 50,292 163 - 88 251 50,543
Grants, awards and donations 7,841 145 68,308 478,066 117 554,477 66 - 36 102 554,579
Bank charges and interest 157 13,464 1,988 2,572 1,363 19,544 8,608 - 413 9,021 28,565
Insurance 413 4,259 4,708 4,372 3,450 17,202 1,862 - 1,174 3,036 20,238
Advertising 2 19 67,030 20 408 67,479 8 - 5 13 67,492
Repairs and maintenance 110 1,176 1,387 1,241 951 4,865 536 - 288 824 5,689
Program supplies - 46,874 - - - 46,874 2,170 - - 2,170 49,044
Event venue and audiovisual expenses - - - - - - - 110,779 - 110,779 110,779
Meals and entertainment 229 1,949 1,190 3,144 425 6,937 933 - 114 1,047 7,984
Miscellaneous 67 854 990 754 628 782 326 - 175 501 1,283
Bad debt expense - 199 - - - 199 700 - - 700 899
Total expenses before depreciation
and amortization 53,341 523,699 698,559 926,561 405,331 2,604,980 235,326 125,082 128,937 489,345 3,094,325
Depreciation and amortization 858 9,175 10,825 9,684 7,426 37,968 4,181 - 2,250 6,431 44,399
Total expenses $ 54,199 $ 532,874 $ 709,384 $ 936,245 $ 412,757 $ 2,645,459 $ 239,507 $ 125,082 $ 131,187 $ 495,776 $ 3,141,235
The accompanying notes are an integral
part of these financial statements
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 WhyHunger, Inc.
STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2018 and 2017

____

2018 2017
Cash flows from operating activities:
Change in net assets $ 8,199 $ 56,887
Adjustments to reconcile change in net assets to net
cash used by operating activities:
Depreciation and amortization 21,699 44,399
Realized gain on sale of investments (37,527) (34,826)
Unrealized loss (gain) on investments 79,434 (67,605)
Donated stocks (93,478) (296,757)
Decrease (increase) in assets:
Contributions receivable (305,873) 197,703
Prepaid and other assets 4,797 (19,956)
Increase (decrease) in liabilities:
Accounts payable and other liabilities 49,284 36,671
Grants payable 2,786 (128,566)
Net cash used by operating activities (270,679) (212,050)

Cash flows from investing activities:

Proceeds from sales of investments 204,683 421,118
Purchases of investments (103,729) (126,334)
Purchases of fixed assets (5,648) (877)
Net cash provided by investing activities 95,306 293,907

Cash flows from financing activities:

Proceeds from line of credit 609,000 417,000
Principal payments of line of credit (609,000) (417,000)
Net cash used by financing activities - -

Net increase (decrease) in cash and cash equivalents (175,373) 81,857

Cash and cash equivalents, beginning of year 427,035 345,178
Cash and cash equivalents, end of year $ 251,662 $ 427,035

Supplemental disclosure of cash flow information:

Cash paid for interest $ 6,663 $ 3,964

The accompanying notes are an integral

part of these financial statements
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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

1. Nature of the Organization:

WhyHunger, Inc. (WhyHunger) was founded in 1975 by singer/songwriter Harry Chapin

and the former Executive Director, Bill Ayres, as World Hunger Year, Inc. On April 24,
2015, WhyHunger amended its certificate of incorporation to change its name from
World Hunger Year, Inc. to WhyHunger, Inc.

WhyHunger believes a word without hunger is possible. WhyHunger provides critical

resources to support grassroots movements and fuel community solutions rooted in
social, environmental, racial and economic justice. WhyHunger is working to end hunger
and advance the human right to nutritious food in the United States of America and
around the world. WhyHunger programs include Grassroots Action Network, Artists
Against Hunger and Poverty/Hungerthon, Nourish, Global Movements and General
Media for Program Services.

2. Summary of significant accounting policies:

Basis of presentation: The financial statements of WhyHunger have been prepared on

the accrual basis of accounting.

Financial statement presentation: The classification of a not-for-profit organization's

net assets and its support, revenue and expenses is based on the existence or absence of
donor-imposed restrictions. It requires that the amounts for each of the classes of net
assets be displayed in the Statements of Financial Position and that the amounts of
change in each of those classes of net assets be displayed in the Statements of Activities.

In accordance with U.S. generally accepted accounting principles (U.S. GAAP),

WhyHunger reports information regarding its financial position and activities according
to two classes of net assets: net assets without donor restriction and net assets with donor
restriction.

Net assets without donor restriction - net assets available for general use to support
operations. The only limits on the use of net assets without donor restriction are broad
limits resulting from the nature of WhyHunger, the environment in which it operates, and
the purposes specified in its corporate documents.

The WhyHunger Board of Directors has designated a portion of net assets without donor
restrictions as a board designated endowment fund for the purpose of securing
WhyHunger's long-term financial viability. Refer to Note 11 for more information.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

2. Summary of significant accounting policies (continued):

Financial statement presentation (continued):

Net assets with donor restriction - net assets subject to donor-imposed restrictions. Some
donor-imposed restrictions are temporary in nature, such as those that will be met by the
passage of time or programmatic purposes specified by the donor. Other donor-imposed
restrictions are perpetual in nature, where the donor stipulates that resources be
maintained in perpetuity.

Cash and cash equivalents: WhyHunger considers all cash and highly liquid
investments available for current use with an initial maturity of three months or less to be
cash equivalents.

Investments at fair value: Investments consist of common stocks which are adjusted to
their fair market value at the Statement of Financial Position date, resulting in either an
unrealized gain or loss.

Investment income is recognized when earned and consists of interest and dividends.
Dividends are recorded on the ex-dividend date. Purchases and sales are recorded on a
trade-date basis.

Fair value measurements and disclosures: Accounts Standards Codification (ASC)

820, Fair Value Measurement, clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional disclosures
about the use of fair value measurements.

ASC 820 defines fair value as the price to sell an asset or transfer a liability (i.e., the exit
price) in an orderly transaction between market participants. Additionally, ASC 820
establishes a hierarchy for inputs used in measuring fair value that maximizes the use of
observable inputs and minimizes the use of unobservable inputs by requiring that the
most observable inputs be used when available. Observable inputs are inputs that market
participants would use in pricing the asset developed based on market data obtained from
sources independent of WhyHunger. Unobservable inputs are inputs that reflect
WhyHunger's assumptions about the assumptions market participants would use in
pricing the asset based on the best information available in the circumstances. The
hierarchy is broken down into three levels based on the reliability of inputs as follows:

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

2. Summary of significant accounting policies (continued):

Fair value measurements and disclosures (continued):

Level 1 - Observable inputs are unadjusted, quoted prices for identical assets or
liabilities in active market at the measurement date. Level 1 securities include
highly liquid U.S. Treasury securities, certain commons stocks and mutual funds.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are
observable for the asset or liability through corroboration with market data at the
measurement date. Most debt securities, preferred stocks, certain equity securities,
short-term investments and derivatives are model priced using observable inputs
and are classified as Level 2.

Level 3 - Unobservable inputs that reflect management's best estimate of what

market participants would use in pricing the asset or liability at the measurement
date. Examples of Level 3 assets include investments in limited partnerships.

There are no financial assets or liabilities classified as Level 2 or 3 other than the
intangible assets described in Note 8 that are designated as Level 3 assets under the fair
value hierarchy described above.

The following table presents the changes in Level 3 software and technology investments
measured at fair value on a non-recurring basis as of December 31:

2018 2017

Balance, net, January 1 $ 25,059 $ 65,413

Amortization (18,085) (40,354)
Balance, net, December 31 $ 6,974 $ 25,059

Endowment: The New York Prudent Management of Institutional Funds Act

(NYPMIFA) applies to the WhyHunger endowment fund. NYPMIFA provides guidance
and authority to charitable organizations concerning the management and investment of
endowment funds held. WhyHunger classifies as net assets with donor restrictions (to be
held in perpetuity) the original value of the gifts donated to the donor restricted
endowment and the original value of any subsequent gifts to the donor restricted
endowment. Investment income from the donor restricted endowment is classified as net
assets with donor restrictions (a purpose restriction) until those amounts are appropriated
for expenditure by WhyHunger in a matter consistent with the donor stipulated purposes
within the standard of prudence established by NYPMIFA.
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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

2. Summary of significant accounting policies (continued):

Underwater endowment: WhyHunger considers its endowment to be underwater if the

fair value is less than the sum of (1) the original value of initial and subsequent gift
amounts donated to the endowment and (2) any accumulations to the endowment
required to be held in perpetuity per donor direction. WhyHunger has no underwater
endowment funds at December 31, 2018 or 2017.

Contributions and promises to give: Contributions received, including unconditional

promises to give, if any, are reported at their net realizable values. Gifts of cash and other
assets are reported as with donor restriction if they are received with donor stipulations
that limit their use or if they are intended to support activities in future periods.

Contributions restricted by donors are reported as increases in net assets without donor
restrictions if the restrictions expire (that is, when a stipulated time restriction ends or
purpose restriction is accomplished) in the same reporting period in which the revenue is
recognized. All other donor-restricted contributions are reported as increases in net assets
with donor restrictions, depending on the nature of the restrictions. When a restriction
expires, net assets with donor restrictions are reclassified to net assets without donor
restrictions and reported in the statements of activities as net assets released from
restrictions.

Conditional promises to give are recognized only when the conditions on which they
depend are substantially met and the promises become unconditional.

Provisions for doubtful accounts: All receivables, as stated in the financial statements,
are deemed by WhyHunger's management to be fully collectible. Accordingly, no
allowance for doubtful accounts has been established at December 31, 2018 or 2017.

Revenue recognition and royalty income: Revenue is recognized when earned and
consists primarily of royalty income earned by WhyHunger from non-related parties.
These royalties include funds raised for WhyHunger by the sale of certain merchandise.

Donated services and materials: Donated stock is recorded at its fair market value at the
time of the donation. Where measurable, gifts in-kind are recorded at their fair market
value. During the years ended December 31, 2018 and 2017, WhyHunger received
donated radio air time in connection with its Hungerthon event. The fair market value of
this donated air time was not measurable and, therefore the donation is not recognized in
the accompanying Statements of Activities.

-12-
 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

2. Summary of significant accounting policies (continued):

Donated services and materials (continued):

Donated services are recognized as contributions if the services (a) create or enhance
nonfinancial assets or (b) require specialized skills, are performed by people with those
skills, and would otherwise be purchased. Volunteers provided various services
throughout the year to WhyHunger that are not recognized as contributions in the
financial statements since the recognition criteria were not met.

Advertising: Advertising is charged to expense as incurred. At December 31, 2018 and

2017, WhyHunger received donated web-based advertising valued at $101,852 and
$66,958, respectively.

Fixed assets: Fixed assets are stated at cost. WhyHunger capitalizes expenditures for
additional renewals and betterments. Depreciation is computed over the estimated useful
lives of the assets by the straight-line method for financial reporting as follows:

Furniture and fixtures 5-7 years

Computer and office equipment 5 years
Leasehold improvements 5 years

Leasehold improvements are depreciated over the shorter of the lease term or the
estimated useful lives of the related assets.

Long-lived assets: Long-lived assets are calculated for impairment when events or
changes in circumstances indicate that the carrying amount of the assets may not be
recoverable through estimated undiscounted future cash flows from the use of these
assets. When any such impairment exists, the related assets will be written down to fair
value. No such impairment losses have been necessary through December 31, 2018.

Intangible assets: Intangible assets subject to amortization include software and

technology assets, which are being amortized on a straight-line method over five years.

Grants payable: Grants authorized but unpaid at year-end are reported as liabilities. All
grants payable are classified as current on the Statements of Financial Position.

Deferred revenue: Revenue related to receipts collected prior to the occurrence of

special events is deferred and recognized in the period in which the special event is held.
WhyHunger recorded no deferred revenue at December 31, 2018 or 2017.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

2. Summary of significant accounting policies (continued):

Functional allocation of expenses: The Statements of Activities reports expenses by

both natural and functional classification. Certain categories of expenses are attributed to
more than one program or supporting function. Therefore, expenses require allocation on
a reasonable basis that is consistently applied. Costs are directly applied to the related
program or supporting service category when identifiable and possible. General operating
costs across nearly all natural categories are allocated on the basis of estimates of time
and effort.

Income taxes: WhyHunger was incorporated in the State of New York and is exempt
from federal, state and local income taxes under Section 501(c)(3) of the Internal
Revenue Code (the Code) and, therefore, has made no provision for income taxes in the
accompanying financial statements. In addition, WhyHunger has been determined by the
Internal Revenue Service (IRS) not to be a "private foundation" within the meaning of
Section 509(a) of the Code.

WhyHunger offers employees the opportunity to pay for qualified transportation fringe
benefits on a pre-tax basis. Under section 512 (a)(7) of The Tax Cuts and Jobs Act of
2017, effective in 2018 this benefit is considered Unrelated Business Income (UBI)
subject to tax for WhyHunger. Unrelated business income tax related to this benefit is
estimated at $5,382 for 2018, and is reflected within taxes, fines and penalties on the
2018 Statement of Functional Expenses. There was no unrelated business income for the
year ended December 31, 2017.

ASC 740 requires that organizations must recognize the tax impact of a tax position taken
on a tax return when it is more likely than not that the position will not be sustained on
audit, based on the technical merits of the position. WhyHunger does not believe there
are any material uncertain tax positions and, accordingly, has not recognized any liability
for unrecognized tax benefits. WhyHunger has filed for and received income tax
exemptions in the jurisdictions where it is required to do so. Additionally, WhyHunger
has filed Internal Revenue Service Form 990 tax returns, as required. During 2018,
WhyHunger received notification from the IRS of amounts owed related to a late filed
payroll tax return with related interest from a prior tax period. A dispute has been duly
filed with the IRS and WhyHunger is awaiting a ruling. A total of $29,965 is reflected
within taxes, fines and penalties on the 2018 Statement of Functional Expenses and is
accrued. During the year ended December 31, 2017, there were no interest or penalties
recorded.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

2. Summary of significant accounting policies (continued):

Use of estimates: In preparing financial statements in conformity with generally

accepted accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of

Concentration of credit risk: Financial instruments, which potentially subject

WhyHunger to concentration of credit risk, consist primarily of cash and cash
equivalents. At times, WhyHunger has cash deposits at financial institutions which
exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits.

Change in accounting principle: In August 2016, The Financial Accounting Standards

Board (FASB) issued ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of
Financial Statements of Not-for-Profit Entities. ASU 2016-14 amends the current
reporting model for non-profit organizations and enhances their required disclosures. The
major changes impacting WhyHunger include: (1) requiring the presentation of only two
classes of net assets now titled "net assets with donor restriction" and "net assets without
donor restriction", (2) requiring that all non-profits present an analysis of expenses by
function and nature in either the statement of activities, a separate statement, or in the
notes and disclose a summary of the allocation methods used to allocate costs, (3)
requiring the disclosure of quantitative and qualitative information regarding liquidity
and availability of resources, (4) presenting investment return net of external investment
expenses, and (5) modifying other financial statement reporting requirements and
disclosures intended to increase the usefulness of non-profit financial statements.
WhyHunger has adopted ASU 2016-14 as of and for the year ended December 31, 2018,
with retrospective application for the 2017 financial statements. As a result, investment
expenses are netted against investment return (loss) on the Statements of Activities,
without disclosure of the investment expense amount. WhyHunger also changed its
presentation of net asset classes and expanded footnote disclosures as required by ASU
2016-14.

Reclassifications: Certain reclassifications of amounts previously reported have been

made to the accompanying financial statements to maintain consistency between periods
presented. The reclassifications had no impact on previously reported net assets.

Subsequent events: Subsequent events have been evaluated through April 11, 2019,
which is the date the financial statements were available to be issued.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

3. Investments at fair value:

Investments at December 31, 2018 at fair value are summarized below:

Cost Fair Value

Common stocks $531,523 $627,262

Investments at December 31, 2017 at fair value are summarized below:

Cost Fair Value

Common stocks $501,471 $676,645

The fair value of the investments detailed above is determined by reference to market
quotations at December 31, 2018 and 2017.

The investments are managed by professional investment advisors and managers.

WhyHunger's holdings in equities consist entirely of common stock securities which are
carried at their aggregate market values as determined by the quoted market prices at the
end of each business day. WhyHunger includes these prices in the amounts disclosed in
Level 1 of the hierarchy. The following tables present WhyHunger's assets at December
31, 2018 and 2017 that are measured at fair value on a recurring basis and are categorized
using the fair value hierarchy.

Quoted Prices Significant

In Active Other Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs
Total (Level 1) (Level 2) (Level 3)

2018

Common stocks $627,262 $627,262 $ - $ -

2017

Common stocks $676,645 $676,645 $ - $ -

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

3. Liquidity and availability:

2018 2017
Total financial assets at year-end:
Cash and cash equivalents $ 251,662 $ 427,035
Investments at fair value 627,262 676,645
Contributions receivable 1,099,786 793,913
Total financial assets at year-end $1,978,710 $1,897,593

Less amounts not available to be used within

one year:
Contributions receivable, long-term $ (6,000) $ (13,000)
Donor-restricted endowment (100,000) (100,000)
Internal Board designated endowment (534,219) (567,459)
Total amounts not available to be used
within one year $ (640,219) $ (680,459)
Financial assets available to meet cash
needs for general expenditures within
one year $1,338,491 $1,217,134

WhyHunger receives significant contributions and promises to give restricted by donors,

and considers contributions restricted for programs which are ongoing, major, and central
to its annual operations to be available to meet cash needs for general expenditures.

In 1995 certain members of the WhyHunger governing board established a Board

designated fund for the benefit of WhyHunger. In June 2016, the Board established this
fund as the WhyHunger Harry Chapin Endowment Fund. A portion of the income and/or
gain earned by the Board designated endowment fund, after the fund reaches an intended
goal of $600,000, may be distributed as general support revenue for WhyHunger's
programs. The board designated endowment did not exceed this threshold at December
31, 2018 or 2017.

WhyHunger manages its liquidity and reserves following three guiding principles:
operating within a prudent range of financial soundness and stability, maintaining
adequate liquid assets to fund near-term operating needs, and maintaining sufficient
reserves to provide reasonable assurance that long-term obligations will be discharged.
WhyHunger operates with a balanced budget and anticipates collecting sufficient revenue
to cover general expenditures not covered by donor-restricted resources. Further, the
WhyHunger investment portfolio consists of common stocks which are not subject to

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

4. Liquidity and availability (continued):

any constraints limiting WhyHunger's ability to respond quickly to changes in market

conditions.

WhyHunger also has a line of credit available to meet short-term needs. See Note 9 for
information about this arrangement.

5. Contributions receivable:

Conditional promises to give are not recognized in the financial statements until the
underlying conditions are substantially met. In April 2014, WhyHunger received a five-
year conditional promise to give totaling $750,000. During the years ending December
31, 2018 and 2017, WhyHunger recognized contributions of $175,000 and $165,000,
respectively, related to this promise. To date, total contributions of $750,000 have been
recognized related to this promise as the underlying administrative conditions were
substantially met.

Unconditional promises to give that are expected to be collected in more than one year
are recorded at fair value, which is measured as the present value of their future cash
flows. The present value of future cash flows of the WhyHunger long-term receivables
mirrors face value, accordingly no discount is recorded. Unconditional promises to give
recorded at December 31, 2018 and 2017, along with the expected maturity date of the
gifts, are as follows:
2018 2017

Unconditional promises to give $1,099,786 $793,913

Amounts due in:

Less than one year $1,093,786 $780,913
One to five years 5,000 11,000
More than five years 1,000 2,000
Total $1,099,786 $793,913

At December 31, 2018, unconditional promises to give from two donors comprised
approximately 26% of the total receivable balance. At December 31, 2017, an
unconditional promise to give from one donor comprised approximately 21% of the total
receivable balance. In addition, during the year ended December 31, 2018 support from
one separate donor comprised approximately 13% of WhyHunger's total annual revenue
and support.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

6. Prepaid and other assets:

Included in prepaid and other assets are various autographed musical instruments and
other memorabilia for future fundraising auction donations, security deposits and prepaid
insurance. At December 31, 2018 and 2017, the total balance of prepaid and other assets
was $92,014 and $96,811, respectively. Of this amount, $55,356 and $62,030 at
December 31, 2018 and 2017, respectively, pertains to autographed musical instruments
and other memorabilia.

7. Fixed assets, net:

Fixed assets, net consist of the following at December 31:

2018 2017

Furniture and fixtures $ 81,041 $ 81,041

Computer and office equipment 69,342 63,694
Leasehold improvements 20,609 20,609
170,992 165,344
Less accumulated depreciation 163,938 160,324
Fixed assets, net $ 7,054 $ 5,020

Depreciation expense for the years ended December 31, 2018 and 2017 totaled $3,614
and $4,045, respectively, is included within depreciation and amortization on the
Statements of Functional Expenses.

8. Intangible assets, net:

Intangible assets, net consist of the following at December 31:

2018 2017

Software and technology $611,597 $ 611,597

Less accumulated amortization 604,623 586,538
Intangible assets, net $ 6,974 $ 25,059

Amortization expense for the years ended December 31, 2018 and 2017 totaled $18,085
and $40,354 respectively and is included within depreciation and amortization on the
Statements of Functional Expenses.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

8. Intangible assets, net (continued):

Estimated amortization expense over future years is as follows:

Year Ending December 31, Amount

2019 $ 4,650
2020 2,324
Total $ 6,974

9. Line of credit:

WhyHunger has a line of credit with a financial institution in the amount of $750,000
which matures on June 30, 2019. Prior to entering into this line of credit on November 7,
2019, WhyHunger had available a line of credit in the amount of $500,000. The line of
credit is secured by WhyHunger's assets and interest is charged on any outstanding
balances at prime (5.50% at December 31, 2018) plus one percentage point rounded to
the next highest 0.125 and is never to be less than 6.25%. At December 31, 2018 and
2017, outstanding borrowings under this line totaled $-0-.

10. Commitments:

In January 2017, WhyHunger renewed its lease for office space, extending the term
through January 2022. WhyHunger also leases various copier and computer machines
with terms through May 2022. Minimum future annual rentals are approximately as
follows:

Year Ending December 31, Amount

2019 $ 158,000
2020 162,000
2021 161,000
2022 14,000
Total $ 495,000

For the year ended December 31, 2018, rent expense for the WhyHunger office lease was
$161,575, copier rent expense was $1,980 and computer rent expense was $15,527 which
is reflected within occupancy expense, equipment rentals expense, and supplies and other
office expenses, respectively, on the 2018 Statement of Functional Expenses.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

10. Commitments (continued):

For the year ended December 31, 2017 rent expense for the WhyHunger office lease was
$159,807, copier rent expense was $1,797 and computer rent expense was $17,565 which
is reflected within occupancy expense, equipment rentals expense, and supplies and other
office expenses, respectively, on the 2017 Statement of Functional Expenses.

11. Board designated fund:

In 1995, certain members of the Board of Directors, in their individual capacities,

undertook to establish a Board designated fund for the benefit of WhyHunger. In June
2016, the Board established this fund as the WhyHunger Harry Chapin Endowment Fund.
Since this amount resulted from an internal designation and is not donor-restricted, it is
classified and reported as net assets without donor restriction.

12. Net assets with donor restriction:

Net assets with donor restrictions are available for the following purposes or periods at
December 31:

2018 2017
Subject to program expenditure for a specified purpose:
U.S. Food Sovereignty Alliance $ 52,577 $ 36,063
Puerto Rico hurricane victim support - 19,827
La Finca farmer cooperative 36,109 -
Endowment funds subject to appropriation
and expenditure 19,032 26,981
Program expenses, including re-granting of funds 736,526 626,817
Total purpose restriction 844,244 709,688

Subject to the passage of time 9,000 21,000

Subject to be held in perpetuity 100,000 100,000

Total $953,244 $830,688

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

13. Net assets released from restrictions:

During the years ended December 31, 2018 and 2017, net assets with donor restrictions
were released for the following purposes:

2018 2017

Satisfaction of program restrictions:

U.S. Food Sovereignty Alliance $ 36,063 $ 12,338
Puerto Rico hurricane victim support 19,827 -
Program expenses, including re-granting of funds 554,011 593,815
Total satisfaction of program restrictions 609,901 606,153

Expiration of time restrictions 12,000 6,000

Total $621,901 $612,153

14. Endowment:

WhyHunger's endowment consists of donor-restricted and board designated funds. 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.

Donor-restricted endowment net assets of $100,000 are held in perpetuity at December

31, 2018 and 2017, the distributions from which are to be used to the extent available and
necessary to provide support for an annual concert intended to raise awareness about
hunger, health, and other important issues, as well as the work of WhyHunger and its
chosen community partner.

Interpretation of the relevant law: The spending of endowment funds by a not-for-

profit foundation in the State of New York is currently governed by NYPMIFA.
WhyHunger has interpreted NYPMIFA as requiring the preservation of the fair value of
the original gift as of the gift date of the donor restricted endowment funds absent explicit
donor stipulations to the contrary. WhyHunger classifies as net assets with donor
restrictions (to be held in perpetuity) (a) the original value of gifts donated to the donor
restricted endowment, (b) the original value of subsequent gifts to the donor restricted
endowment, and (c) accumulations to the donor restricted endowment made in
accordance with the direction of the applicable donor gift instrument.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

14. Endowment (continued):

Interpretation of the relevant law (continued):

In accordance with NYPMIFA, WhyHunger considers the following factors in making a

determination to appropriate or accumulate donor restricted endowment funds: (1) the
duration and preservation of the various funds, (2) the purposes of WhyHunger and the
donor-restricted endowment funds, (3) general economic conditions, (4) the possible
effect of inflation and deflation, (5) the expected total return from income and the
appreciation of investments, (6) other resources of WhyHunger, (7) where appropriate
and circumstances would otherwise warrant, alternatives to expenditure of the
endowment fund, giving due consideration to the effect that such alternatives may have
on WhyHunger, and (8) the investment policy of WhyHunger.

Investment return objectives, risk parameters, strategies and spending policy:

WhyHunger follows an investment policy, approved for all investments including
endowment assets. According to WhyHunger policy, endowment funds shall be invested
with the objective of preserving the long-term real purchasing power of the funds' assets
while realizing appropriate investment income. Endowment fund assets may be invested
in certificates of deposit, Treasury bills, commercial paper, bankers' acceptances,
repurchase agreements, mutual funds, exchange traded funds, equities (including
common stock, preferred stock, convertible securities and other equities, whether traded
on an exchange or not publicly traded), fixed income securities, real estate, commodities,
natural-resource related stock, hedge funds, derivatives, alternate investment vehicles
and, as to an appropriate portion, cash equivalent investments. The asset allocation of
each of the endowment funds shall be determined from time to time by the Board of
Directors, in consultation with any managers or advisors if desired (unless the Board
delegates such task to an external manager), which allocation shall reflect a proper
balance of the endowment fund's investment objective, any risk tolerance standard and
the need for liquidity.

Investments of each endowment fund are to be diversified to limit the risk of loss
resulting from the concentration of assets in a specific type of investment, specific
maturity, specific issuer or sector unless the Board of Directors prudently determines that,
because of special circumstances, the purposes of the fund are better served without
diversification.

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

14. Endowment (continued):

Investment return objectives, risk parameters, strategies and spending policy

(continued):

The Board of Directors will also review from time to time WhyHunger's arrangements
with any investment managers, investment advisors, custodians and the banks and other
entities with which WhyHunger maintains its financial assets to ensure that the costs and
fees associated with each such arrangement are appropriate and reasonable in relation to
the assets, WhyHunger's purposes and the skills available.

It is understood that spending of the donor-restricted endowment is to be limited to

market appreciation on the original funds contributed. In the event that the endowment
account's market value is below the value of the original amount contributed, spending
will cease until such a time when the account has recovered its original value through
market appreciation. A portion of the income and/or gain earned by the Board designated
endowment fund, after the fund reaches an intended goal of $600,000 and sustained a
value of $600,000 or more for two consecutive quarters, may be distributed as general
support for WhyHunger's programs. On at least an annual basis, the Finance Committee
of the Board of Directors shall recommend an amount to be transferred from the income
and/or gain of the Board designated endowment fund to the general operating fund of
WhyHunger. A percentage of between 1% and 7% would be recommended by the
Finance Committee for distribution based on the Finance Committee's evaluation and
discretion. It is the Board of Director's intention that the value of the Board designated
endowment fund not fall below $600,000 through any distribution.

Endowment net asset composition as of December 31, 2018 is as follows:

Without Donor With Donor

Restriction Restriction Total

Donor-restricted endowment funds $ - $119,032 $119,032

Board-designated endowment funds 534,219 - 534,219
Total funds $534,219 $119,032 $653,251

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

14. Endowment (continued):

Changes in endowment net assets as of December 31, 2018 are as follows:

Without Donor With Donor

Restriction Restriction Total

Endowment net assets,

beginning of year $567,459 $ 126,981 $694,440

Net investment income (expense) 858 (288) 570

Net depreciation (34,098) (7,661) (41,759)
Endowment net assets,
end of year $534,219 $119,032 $653,251

Endowment net asset composition as of December 31, 2017 is as follows:

Without Donor With Donor

Restriction Restriction Total

Donor-restricted endowment funds $ - $126,981 $126,981

Board-designated endowment funds 567,459 - 567,459
Total funds $567,459 $126,981 $694,440

Changes in endowment net assets as of December 31, 2017 are as follows:

Without Donor With Donor

Restriction Restriction Total

Endowment net assets, beginning

of year $482,028 $108,379 $590,407
Net investment income (expense) 1,828 (226) 1,602
Net appreciation 83,603 18,828 102,431
Total funds $567,459 $126,981 $694,440

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

15. Pension plan:

WhyHunger's defined contribution pension plan was established in 1993 under Section
403(b) of the Code. All employees, excluding those who normally work less than 20
hours per week, are eligible to participate in the pension plan upon date of hire.
Participating employees contribute to the plan in the form of semi-monthly contributions
(subject to annual IRS limitations). The plan provision called for an employer
contribution of 5% of compensation after two years of service on a monthly basis.
However, as of September 15, 2013, the plan was amended to change the non-elective
contribution formula to a discretionary contribution. Several other aspects of the Plan
were amended in January 2018. For the years ended December 31, 2018 and 2017,
WhyHunger made a discretionary contribution to the plan totaling $23,629 and $22,897,
respectively.

16. Related parties:

During the year ended December 31, 2017, WhyHunger contracted with a printing
company owned by one Board member and incurred expense $730. No such costs were
incurred during the year ended December 31, 2018. During 2018 and 2017, WhyHunger
also incurred legal expense of $4,150 and $1,615, respectively, to a law firm owned by
another Board member.

At December 31, 2018 and 2017, the Statements of Financial Position reflect pledge
receivables of $14,650 and $3,000, respectively, from a member of the WhyHunger
Board of Directors.

17. Upcoming accounting pronouncements:

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers
(Topic 606). ASU 2014-09 establishes principles for reporting revenue arising from an
organization's contracts with customers. The core principle of ASU 2014-09 requires an
organization to recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the organization expects
to be entitled in exchange for those goods or services. The requirements of ASU 2014-09
are effective for WhyHunger's fiscal year ending December 31, 2019. WhyHunger is
currently evaluating the impact of this pronouncement.

On June 21, 2018, FASB issued ASU 2018-08, Clarifying the Scope and the Accounting
Guidance for Contributions Received and Contributions Made. This standard is intended
to address questions stemming from ASU 2014-09, Revenue from Contracts with

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 WhyHunger, Inc.
NOTES TO FINANCIAL STATEMENTS
____

17. Upcoming accounting pronouncements (continued):

Customers (Topic 606), regarding its implications on grants and contracts of not-for-
profit organizations. The requirements of ASU 2018-08 are effective for WhyHunger's
fiscal year ending December 31, 2019. WhyHunger is currently evaluating the impact of
this pronouncement.

In February 2016, FASB released ASU 2016-02, Leases (ASC 842). Under ASU 2016-
02, lessees will be required to bring substantially all leases onto their balance sheets by
recording a right-of-use asset and lease liability. Expense will be recognized on a
straight-line basis for an operating lease. Recognition of expense for a finance lease will
be similar to the current treatment of capital leases. The requirements of ASU 2016-02
are effective for WhyHunger's fiscal year ending December 31, 2020. WhyHunger is
currently evaluating the impact of this pronouncement.

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