Audit 328897

Title: Cash and Cash Equivalents Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. Cash and cash equivalents are held in twenty accounts with six different financial institutions. Balances in these accounts may periodically exceed federally insured limits.

Title: Fair Value Measurements Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. The following table summarized the Organization’s financial instruments measured at fair value on a recurring basis as of December 31, 2022:

Title: Pledges Receivable Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. Pledges receivable are unconditional promises to give from donors. Promises to give cash are recorded at the present value of future cash flows and promises to give noncash assets are recorded at the future fair value of the underlying asset. For 2023 and 2022, pledges payable over multiple years are recorded net of a discount rate of 8.50% and 7.50%, respectively. Pledges receivable at December 31 consist of the following: As of December 31, 2023, 48% of gross pledges receivable were due from three donors. As of December 31, 2022, 70% of gross pledges receivable were due from two donors. The Organization previously received an unconditional promise to construct 14 tiny homes and a community center that had an estimated fair value of $1,399,790. Subsequent to year end, the donor decommitted from the promise to give the non-financial asset as a result of significant changes to the donor’s organization. As such, the Organization wrote off the pledge receivable and recorded a loss on uncollectable pledges receivable, which has been included in changes in net assets with donor restrictions in the accompanying statements of financial position for the year ended December 31, 2023.

Title: Property and Equipment Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. Property and equipment consisted of the following at December 31:

Title: Line of Credit Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. The Organization has a line of credit with a bank with a credit limit of $650,000, which matures in September 2025 and bears interest at prime plus .25% (8.75% and 7.75% at December 31, 2023 and 2022, respectively). There were no balances outstanding at December 31, 2023 or 2022.

Title: Leases Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. The Organization has operating leases for various properties used to fulfill their mission, which are leased from unrelated parties. These leases require monthly rent payments ranging from $4,150 to $5,636 and mature at various dates through September 2025. The maturities of lease liabilities as of December 31, 2023 were as follows: The following summarizes the components of lease expense for the years ended December 31: The following summarizes additional information related to leases for the years ended December 31:

Title: Net Assets Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. The Organization’s donor restricted net assets as of December 31, 2023 and 2022 consist of contributions that are purpose restricted for long-term purposes, specifically for capital expenditures and improvements to property and equipment. There are no time restrictions associated with these donor restricted contributions.

Title: Liquidity and Availability of Resources Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. The following represents Wellspring's financial assets at December 31, 2023 and 2022, reduced by amounts not available for expenditure within one year. Financial assets are considered unavailable when illiquid or not convertible to cash within one year. As a part of Wellspring's liquidity management, it has a policy to structure its financial assets to be available as general expenditures, liabilities and other obligations become due. Wellspring currently has a line of credit with available funds of $650,000 which it could draw upon in the event of an unanticipated liquidity need.

Title: Subsequent Events – Date of Management Evaluation Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting years. Accordingly, actual results could differ from those estimates. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions – Net assets without donor restrictions are available for use at the discretion of the Board of Directors (the Board) and/or management for general operating purposes. From time to time, the Board designates a portion of these net assets for specific purposes which makes them unavailable for use at management’s discretion. 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. 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 restriction and reported in the statements of activities and changes in net assets as net assets released from restrictions. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include unrestricted cash on hand, demand deposits held by financial institutions and highly liquid investments with original maturities of three months or less. The Organization’s restricted cash balance of $4,535,204 and $2,345,168 as of December 31, 2023 and 2022, respectively, represents donor contributions that are restricted for long-term purposes. This total is included within cash held for long-term purposes in the accompanying statements of financial position. Accounts and Contributions Receivable Accounts and contributions receivable consist of amounts due for unconditional promises to give that have not been received and for services performed in accordance with governmental grants and contracts. Delayed collection of accounts receivable from such agencies are considered past due, however, no interest can be charged to the agencies. Accounts and contributions receivable were $2,300,634 and $1,922,831 as of December 31, 2023 and 2022, respectively, and $1,298,772 as of January 1, 2022. The balances are presented net of estimated allowances for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Amounts are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded in revenue and support when received. Management has determined that the outstanding balances as of December 31, 2023 and 2022 were fully collectible, and therefore, no allowance for doubtful accounts has been recorded. Fair Value Measurements U.S. GAAP established a fair value hierarchy that prioritizes the inputs to measure the fair value of the assets or liabilities being measured. Fair value is defined as the exchange value that would be received on the measurement date to sell an asset or to value the amount paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. The three levels of the fair value hierarchy are as follows: Level 1 Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 1 inputs provide the most reliable measure of fair value as of the measurement date. Level 2 Inputs are based on significant observable inputs, including unadjusted quoted market prices for similar assets and liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are observable for the asset or liability. Level 3 Inputs are significant unobservable inputs for the asset or liability. The level of the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment earnings, including interest and dividend income and realized and unrealized gains and losses, are recorded in net assets without donor restrictions unless their use is restricted by explicit donor stipulation. Investment revenue is presented in the statements of activities and changes in net assets, net of external and direct internal investment expenses. Donated marketable securities are recorded as contributions at the estimated fair value on the date of the receipt. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Wellspring currently uses a capitalization threshold policy of $2,500. Substantial betterment to property is capitalized and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over their estimated useful lives of 5 to 40 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the applicable lease term. The estimated fair market values of the various contributions of used furniture and items for the home fall under the capitalization limit and are therefore not capitalized and not recorded as revenue. Impairment of Assets The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate the amount of the assets may not be recoverable. When an indication of impairment is present and the undiscounted cash flows estimated to be generated by the related assets are less than the assets’ carrying amount, an impairment loss will be recorded based on the difference between the carrying amount of the assets and their estimated fair value. Management determined that no impairment existed at December 31, 2023 or 2022. Leases Pursuant to U.S. GAAP, a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recorded within the accompanying consolidated statements of financial position. Operating leases are included in operating lease right-of-use assets and operating lease liabilities within the Organization’s accompanying consolidated statements of financial position.   ROU assets represent the Organization’s right to use an underlying asset for the lease term, and lease liabilities represent the Organization’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Organization uses the implicit rate when it is readily determinable. If the Organization’s leases do not provide an implicit rate, the Organization elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Organization’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Organization will exercise the option. The Organization has lease agreements with lease and non-lease components, however the Organization has elected the practical expedient to account for the lease and non-lease components as a single lease. Revenue Recognition Contribution Revenue The Organization recognizes contributions, which includes grants and receipts from foundations, when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the contribution. Conditional promises to give – that is, those with a measurable performance or other barrier and a right of return – are not recognized until the conditions on which they depend have been met. The Organization records special events revenue equal to the fair value of direct benefits to donors and contribution income for the excess received when the event takes place. Consequently, at December 31, 2023, contributions approximating $2,463,000 have not been recognized in the accompanying statements of activities and changes in net assets because the condition(s) on which they depend have not been met. These contributions are conditioned on qualifying expenditures being incurred on cost-reimbursement grants. Contributions received are recorded as with or without donor restrictions depending on the existence or nature of any donor restrictions. All unconditional promises to give are recorded as a receivable at the time the promise is made. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and are reported in the statements of activities and changes in net assets as satisfaction of donor restrictions. Contributions whose restrictions expire during the year of the contribution are recognized as revenues without donor restrictions in that year. A portion of the Organization’s contribution revenue is derived from cost-reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contracts or grant provisions. Contributions of Non-financial Assets The Organization receives various forms of gifts-in-kind (GIK) such as materials and supplies, clothing, food, buildings and in-kind services. GIK are reported as contributions based on their estimated fair value at the date of the contribution. GIK are valued based upon estimates of fair market or wholesale values that would be received for selling the goods in their principal market considering their condition and utility for use at the time the goods are contributed by the donor. GIK are not sold and are only distributed for program use. Donated inventory is held only until sold by the Organization at its retail stores. Exchange Transactions Included within service revenues in the statements of activities and changes in net assets are various reciprocal transactions of commensurate value that are considered exchange transactions in accordance with Accounting Standards Codification (ASC) Topic 606. Revenue for these transactions is recognized when a performance obligation has been satisfied by transferring control of promised products or services to customer in an amount that reflects the consideration the Organization expects to receive in exchange for these products and services. Service revenues consist of revenues earned for facility charges, medical care, academic support, therapeutic and other services with commensurate value delivered by the Organization. These are available to the public and are the revenues primary relate to registration fees. Any fees collected prior to performance are recognized as deferred revenue. Revenues or fees for service are recognized over the time period that the service has been provided to the customer. Revenue recognition for these items are recognized using output methods such as time elapsed or units of service provided. Revenues from Wellspring's thrift stores are generated from the sale of donated items. Donated items have been reflected as revenue in the accompanying financial statements at their estimated fair value at date of receipt. Contributed Services Contributed services are reflected on the financial statements at the fair value of the services received. The contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills that are provided by individuals possessing such skills and would typically be purchased if not provided by the donation. Functional Expense Allocation The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of Wellspring. Those expenses including salaries and wages, payroll taxes, office expenses, rent, contract labor, insurance and depreciation, which are allocated on the basis of estimates of time and effort. Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRS), except for unrelated business income as defined by the IRS. Accordingly, no provisions for federal, state or local taxes are included in the financial statements. The Organization performs an annual assessment for any uncertainty in income tax positions which includes an analysis of whether there are any tax positions the Organization takes with regard to unrelated business income, related deductions applied, or other activities that may jeopardize their tax exempt status and thus would meet the definition of an uncertain tax position. No tax liability accrual was recorded as of the years ended December 31, 2023 or 2022 relating to material uncertain positions taken as management believes there are none. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. Management evaluated subsequent events through the date of the Independent Auditor’s Report, which is the date the consolidated financial statements were available to be issued.