Cash and cash equivalents are held in twenty accounts with six different financial institutions. Balances in these accounts may periodically exceed federally insured limits.
As of December 31, 2024, investments consist of equity securities measured at level 1 of the fair value hierarchy. There were no investments as of December 31, 2023.
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. Pledges payable over multiple years are recorded net of a discount rate ranging from 7.50% to 8.50%. Pledges receivable at December 31 consist of the following: As of December 31, 2024, 78% of gross pledges receivable were due from four donors. As of December 31, 2023, 48% of gross pledges receivable were due from three 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. During 2023, 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.
The Organization had a line of credit with a bank with a credit limit of $650,000, which matured in September 2025 and bore interest at prime plus 0.25% (7.75% and 8.75% at December 31, 2024 and 2023, respectively). There were no balances outstanding at December 31, 2024 or 2023. The Organization is in active communication with their bank regarding the renewal of their line of credit; however, as of the date of this report, the renewal has not yet been finalized. As the Organization is currently in good standing with the bank, management expects the line of credit to be successfully renewed in the coming months with terms comparable to their prior line updated for applicable market changes.
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 $4,565 to $5,877 and mature at various dates through July 2027. The maturities of lease liabilities as of December 31, 2024 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:
The Organization’s donor restricted net assets as of December 31, 2024 and 2023 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.
As of December 31, 2024, the Organization reported net assets with donor restrictions totaling $15,979,045. However, the Organization’s liquid assets available to support these donor-restricted net assets were insufficient, resulting in a deficit of $1,359,810. This deficit arose due to the following factors: • Certain donor-restricted funds were expended for purposes not yet fulfilled, pending future reimbursement or fulfillment of donor conditions. • A portion of donor-restricted net assets is invested in long-term or illiquid assets, which are not readily available to meet current obligations. • Timing differences between the recognition of restricted contributions and the availability of corresponding resources. Management is actively monitoring the situation and has implemented the following corrective actions: • Enhanced tracking of donor restrictions and related expenditures. • Improved cash flow forecasting to ensure alignment of liquid assets with donor-imposed restrictions. • Engaging with donors to clarify restrictions and, where appropriate, seek release or modification of terms. The Organization believes that the deficit does not impair its ability to fulfill donor intentions and is committed to resolving the shortfall in the upcoming fiscal year.
The following represents Wellspring's financial assets at December 31, 2024 and 2023, 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.
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.