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The Beacon of Downtown Houston (an Outreach Ministry of Christ Church Cathedral)

Notes to Financial Statements for the years ended December 31, 2020 and 2019

NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization - The Beacon of Downtown Houston (The Beacon) was established by Christ Church Cathedral (the Cathedral) to provide outreach services to the community. The Beacon’s mission is to provide essential and next step services to restore hope and help end homelessness in Houston. The Beacon’s Board of Directors is appointed by the Vestry of the Cathedral. The Beacon operated as Cathedral Health and Outreach Ministries until April 2017 when the name was formally changed.

The Beacon serves the Houston homeless community through daily services, civil legal aid, counseling and mentoring, and access to housing in the following programs.

· Day Center - offers hot meals, private shower and lavatory facilities, laundry services, case management, and pastoral outreach and care.

· Beacon Law - provides pro-bono legal services to low-income individuals.

· Coordinated Access - is part of The Way Home Coordinated Access system that provides housing assessments and navigation for homeless men and women.

· Brigid’s Hope - provides support and assistance for homeless women in transition from Texas prisons and jails. This intensive year-long program includes single-room occupancy housing, case management, material support, licensed counseling, volunteer mentor support, and supportive service coordination.

· COMPASS - became a program of The Beacon in April 2019 and provides mailbox privileges, transportation assistance, ID assistance, access to comprehensive healthcare through partnership with the Harris Health System, walk-up case management and referral, and housing navigation through Coordinated Access referral.

· Federal income tax status – The Beacon is exempt from federal income tax under §501(c)(3) of the Internal Revenue Code and is classified as a public charity under §509(a)(1) and §170(b)(1)(A)(vi).

· Cash – At times, bank deposits exceed the federally insured limit per depositor per institution.

· Contributions and grants receivable - that are expected to be collected within one year are reported at net realizable value. Amounts expected to be collected in future years are discounted, if material, to the present value of their estimated future cash flows. An allowance for contributions and grants receivable is provided when it is believed balances may not be collected in full. The Beacon’s policy is to write off balances against the allowance when management determines the receivable will not be collected. Contributions and grants receivable at December 31, 2020 are expected to be collected within one year.

· Property - With an original cost or fair value, if contributed, of $5,000 or more and an estimated useful life of more than one year is capitalized. Depreciation is provided on a straight-line basis over estimated useful lives of 30 years for leasehold improvements and 5 years for furniture, fixtures, and equipment.

· Net asset classification – Net assets, revenue, gains, and losses are classified based on the existence or absence of donor-imposed restrictions, as follows:

· Net assets without donor restrictions are not subject to donor-imposed restrictions even though their use may be limited in other respects such as by contract or board designation.

· Net assets with donor restrictions are subject to donor-imposed restrictions. Restrictions may be temporary in nature, such as those that will be met by the passage of time or use for a purpose specified by the donor, or may – 10 – be perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. Net assets are released from restrictions when the stipulated time has elapsed, or purpose has been fulfilled, or both. Contributions of long-lived assets and of assets restricted for acquisition of long-lived assets are released when those assets are placed in service.

Contributions and grants - are recognized as revenue at fair value when an unconditional commitment is received from the donor. Contributions and grants received with donor stipulations that limit their use are classified as with donor restrictions. Conditional contributions and grants are subject to one or more barriers that must be overcome before The Beacon is entitled to receive or retain funding and are recognized when the conditions are met. Funding received before conditions are met is reported as refundable contributions and grants.

In-kind contributions - are recognized at fair value as contributions when an unconditional commitment is received from the donor. The related expense is recognized as materials and facilities are used. Contributions of services are recognized when services received a) create or enhance nonfinancial assets or b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.

Special event – Contributions and ticket sales represent the amounts paid by donors, sponsors, and attendees of a fundraising event. Ticket sales include elements of both contributions and exchange transactions and are recognized when an event occurs. Cost of direct donor benefits represent the costs of goods and services provided in exchange for the amount paid by event attendees.

Functional allocation of expenses– Expenses are reported by their functional classification. Program services are the direct conduct or supervision of activities that fulfill the purposes for which the organization exists. Fundraising activities include the solicitation of contributions of money, securities, materials, facilities, other assets, and volunteer time. Management and general activities are not directly identifiable with specific program or fundraising activities. Expenses that are attributable to more than one activity are allocated among the activities benefitted. Salaries and related costs are allocated on the basis of estimated time and effort expended. Depreciation, insurance, information technology, and occupancy costs are allocated based on square footage.

Estimates – Management must make estimates and assumptions to prepare financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, the amounts of reported revenue and expenses, and the allocation of expenses among various functions. Actual results could vary from the estimates that were used.