Avenues for Justice, Inc.

Independent Auditor’s Report and Financial Statements

December 31, 2021 and 2020
 Avenues for Justice, Inc.
December 31, 2021 and 2020

Contents

Independent Auditor’s Report ............................................................................................. 1

Financial Statements
Statements of Financial Position ........................................................................................................ 3
Statements of Activities ...................................................................................................................... 4
Statements of Functional Expenses .................................................................................................... 5
Statements of Cash Flows .................................................................................................................. 7
Notes to Financial Statements ............................................................................................................ 8
 Independent Auditor’s Report

Board of Directors
Avenues for Justice, Inc.
New York, New York

Opinion

We have audited the financial statements of Avenues for Justice, Inc., which comprise the statements of
financial position as of December 31, 2021 and 2020, and the related statements of activities, functional
expenses, and cash flows for the years then ended, and the related notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of Avenues for Justice, Inc. as of December 31, 2021 and 2020, and the changes in its net
assets and its cash flows for the years then ended in accordance with accounting principles generally
accepted in the United States of America.

Basis for Opinion

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

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.

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

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a
material misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
Board of Directors
Avenues for Justice, Inc.
Page 2

In performing an audit in accordance with GAAS, we:

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

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

• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of Avenues for Justice, Inc.’s internal control. Accordingly, no such
opinion is expressed.

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

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

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

(Formerly BKD, LLP)

New York, New York

August 16, 2022
 Avenues for Justice, Inc.
Statements of Financial Position
December 31, 2021 and 2020

2021 2020

Assets

Current Assets
Cash and cash equivalents $ 834,364 $ 646,114
Investments 1,627,681 1,420,181
Contributions receivable, due within one year 164,056 234,641
Prepaid expenses and other assets 30,803 30,734

Total current assets 2,656,904 2,331,670

Security deposit 14,850 14,850

Property and equipment, net 242,205 325,790

Total assets $ 2,913,959 $ 2,672,310

Liabilities and Net Assets

Current Liabilities
Accounts and accrued expenses payable $ 30,509 $ 26,036
Accrued salaries and vacations payable 34,733 44,704

Total current liabilities 65,242 70,740

Deferred rent 11,491 7,866

Total liabilities 76,733 78,606

Net Assets
Without donor restrictions
Undesignated 2,570,021 2,222,914
Invested in property and equipment 242,205 325,790

Total net assets without donor restrictions 2,812,226 2,548,704

With donor restrictions 25,000 45,000

Total net assets 2,837,226 2,593,704

Total liabilities and net assets $ 2,913,959 $ 2,672,310

See Notes to Financial Statements 3

 Avenues for Justice, Inc.
Statements of Activities
Years Ended December 31, 2021 and 2020

2021 2020
Without Donor With Donor Without Donor With Donor
Restrictions Restrictions Total Restrictions Restrictions Total

Revenues, Gains, and Other Support

Individuals $ 486,708 $ - $ 486,708 $ 513,797 $ 20,000 $ 533,797
Foundations 1,109,790 25,000 1,134,790 1,193,120 25,000 1,218,120
Special events $ 267,607 $ 167,991
Less direct costs of special events (34,427) (23,364)
Net revenues from special events 233,180 - 233,180 144,627 - 144,627
Government grants 268,872 - 268,872 227,500 - 227,500
Net investment return 44,377 - 44,377 1,823 - 1,823
In-kind contributions 32,554 - 32,554 30,380 - 30,380
Net assets released from restrictions 45,000 (45,000) - - - -

Total revenues, gains and,

other support 2,220,481 (20,000) 2,200,481 2,111,247 45,000 2,156,247

Expenses
Program services
Court advocacy 1,136,905 - 1,136,905 1,129,404 - 1,129,404
Community services 518,756 - 518,756 426,512 - 426,512

Total program services 1,655,661 - 1,655,661 1,555,916 - 1,555,916

Supportive services
Management and general 211,048 - 211,048 253,678 - 253,678
Fundraising 90,250 - 90,250 74,665 - 74,665

Total expenses 1,956,959 - 1,956,959 1,884,259 - 1,884,259

Change in Net Assets 263,522 (20,000) 243,522 226,988 45,000 271,988

Net Assets, Beginning of Year 2,548,704 45,000 2,593,704 2,321,716 - 2,321,716

Net Assets, End of Year $ 2,812,226 $ 25,000 $ 2,837,226 $ 2,548,704 $ 45,000 $ 2,593,704

See Notes to Financial Statements 4

 Avenues for Justice, Inc.
Statements of Functional Expenses
Years Ended December 31, 2021 and 2020

2021
Program Services Supporting Services
Direct Costs
Court Community Management of Special Total
Advocacy Services Total and General Fundraising Events Total Expenses

Salaries $ 597,950 $ 252,234 $ 850,184 $ 48,223 $ - $ - $ 48,223 $ 898,407

Employee health and retirement benefits 113,269 47,779 161,048 9,134 - - 9,134 170,182
Payroll taxes 46,232 19,502 65,734 3,729 - - 3,729 69,463

Total salaries and related expenses 757,451 319,515 1,076,966 61,086 - - 61,086 1,138,052

Professional fees and contract service payments 67,126 - 67,126 15,355 70,500 - 85,855 152,981
Supplies 6,373 2,549 8,922 883 10,858 - 11,741 20,663
Rent - 62,779 62,779 26,100 - - 26,100 88,879
Telephone 27,645 - 27,645 3,072 - - 3,072 30,717
Utilities - 23,908 23,908 - - - - 23,908
Postage 5,038 - 5,038 630 687 - 1,317 6,355
Travel and conferences 1,625 - 1,625 - - - - 1,625
Direct assistance to clients 119,288 - 119,288 - - - - 119,288
Bookkeeping and payroll services - - - 69,051 - - 69,051 69,051
Printing and publications 2,064 1,835 3,899 688 - - 688 4,587
Insurance 13,517 29,287 42,804 2,253 5,400 - 7,653 50,457
Repairs and maintenance 95,897 4,979 100,876 - - - - 100,876
Catering and facility rental - - - - - 34,427 34,427 34,427
In-kind 21,667 9,140 30,807 1,747 - - 1,747 32,554
Depreciation and amortization 18,504 64,764 83,268 9,252 - - 9,252 92,520
Office expenses - - - 17,201 - - 17,201 17,201
Miscellaneous 710 - 710 3,730 2,805 - 6,535 7,245

Total expenses 1,136,905 518,756 1,655,661 211,048 90,250 34,427 335,725 1,991,386

Less expenses deducted from revenues on the

statements of activities
Direct costs of special events - - - - - (34,427) (34,427) (34,427)

Total expenses reported by function

on the statements of activities $ 1,136,905 $ 518,756 $ 1,655,661 $ 211,048 $ 90,250 $ - $ 301,298 $ 1,956,959

See Notes to Financial Statements 5

 Avenues for Justice, Inc.
Statements of Functional Expenses (Continued)
Years Ended December 31, 2021 and 2020

2020
Program Services Supporting Services
Direct Costs
Court Community Management of Special Total
Advocacy Services Total and General Fundraising Events Total Expenses

Salaries $ 620,951 $ 176,395 $ 797,346 $ 54,716 $ - $ - $ 54,716 $ 852,062

Employee health and retirement benefits 152,118 43,212 195,330 13,404 - - 13,404 208,734
Payroll taxes 44,719 12,703 57,422 3,941 - - 3,941 61,363

Total salaries and related expenses 817,788 232,310 1,050,098 72,061 - - 72,061 1,122,159

Professional fees and contract service payments 35,063 - 35,063 28,479 62,920 - 91,399 126,462
Supplies 8,739 3,610 12,349 2,704 6,207 - 8,911 21,260
Rent - 64,939 64,939 26,200 - - 26,200 91,139
Telephone 27,153 - 27,153 3,017 - - 3,017 30,170
Utilities - 24,902 24,902 - - - - 24,902
Postage 2,871 - 2,871 359 416 - 775 3,646
Travel and conferences 97 - 97 - 272 - 272 369
Direct assistance to clients 133,411 - 133,411 - - - - 133,411
Bookkeeping and payroll services - - - 66,450 - - 66,450 66,450
Printing and publications 2,409 2,142 4,551 803 - - 803 5,354
Insurance 11,275 24,429 35,704 1,879 4,850 - 6,729 42,433
Repairs and maintenance 49,274 2,986 52,260 - - - - 52,260
Catering and facility rental - - - - - 23,364 23,364 23,364
In-kind 22,140 6,289 28,429 1,951 - - 1,951 30,380
Depreciation and amortization 18,544 64,905 83,449 9,272 - - 9,272 92,721
Office expenses - - - 38,111 - - 38,111 38,111
Miscellaneous 640 - 640 2,392 - - 2,392 3,032

Total expenses 1,129,404 426,512 1,555,916 253,678 74,665 23,364 351,707 1,907,623

Less expenses deducted from revenues on the

statements of activities
Direct costs of special events - - - - - (23,364) (23,364) (23,364)

Total expenses reported by function

on the statements of activities $ 1,129,404 $ 426,512 $ 1,555,916 $ 253,678 $ 74,665 $ - $ 328,343 $ 1,884,259

See Notes to Financial Statements 6

 Avenues for Justice, Inc.
Statements of Cash Flows
Years Ended December 31, 2021 and 2020

2021 2020

Operating Activities
Change in net assets $ 243,522 $ 271,988
Items not requiring (providing) operating cash flows
Depreciation and amortization 92,520 92,721
Net realized and unrealized (gains) losses on investments (25,368) 25,996
Changes in
Contributions receivable 70,585 75,870
Government grants receivable - 40,000
Prepaid expenses and other assets (69) (4,019)
Accounts and accrued expenses payable 4,473 4,557
Accrued salaries and vacations payable (9,971) (10,114)
Deferred rent 3,625 2,683

Net cash provided by operating activities 379,317 499,682

Investing Activities
Purchase of property and equipment (8,935) (10,032)
Purchase of investments (186,559) (243,799)
Proceeds from sale of investments 4,427 174,037

Net cash used in investing activities (191,067) (79,794)

Net Increase in Cash and Cash Equivalents 188,250 419,888

Cash and Cash Equivalents, Beginning of Year 646,114 226,226

Cash and Cash Equivalents, End of Year $ 834,364 $ 646,114

See Notes to Financial Statements 7

 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Note 1: Nature of Organization and Summary of Significant Accounting Policies

As one of the first Alternative to Incarceration (ATI) programs for youth in the country, for 40+
years, Avenues for Justice, Inc. (AFJ) has diverted thousands of African American and Hispanic
youth and young adults, ages 13 to 24, across New York City from a punitive criminal justice
system to a supportive program designed to help them avoid future crime and lead successful lives.
AFJ’s key program is ongoing court advocacy to prevent court-involved youth from being
incarcerated. AFJ then provides multiple programs for job training, educational success and mental
health wellness to these Participants and to those at-risk of involvement in the criminal justice
system. In 2021, only 5% of our court-involved Participants were reconvicted of a new crime
within three years of enrolling in our program.
AFJ was incorporated in 1979 following several years of service led by Lower East Side residents,
Robert Siegal and Angel Rodriguez, and has been continuously Hispanic led for over 40 years by
Co-founder and Executive Director, Angel Rodriguez. 100% of AFJ’s Participants and 77% of
AFJ’s staff are African American or Hispanic.

Who We Serve

AFJ serves youth and young adults across New York City, ages 13 to 24, in these categories:
1. Court-Involved: Includes Alternative to Incarceration (ATI), Diversion (short-term ATI
for younger Participants in Family Court), and Re-entry.
2. At-Risk: AFJ’s doors are always open to any youth in need for long-term engagement or
short-term assistance and referrals.
Program Locations: AFJ serves youth across New York City both online and also onsite at
Community Centers in underserved areas in New York City where many of Participants live,
providing community-based safe spaces for services. Many of AFJ’s Court Advocates are life-long
residents of those very communities and know them well, including how to enlist local volunteers,
businesses, and resources to support AFJ’ Participants. In turn, the communities know and trust
AFJ with their young people.
1. Headquarters inside Manhattan Criminal Courthouse: AFJ maintains headquarters
inside the Manhattan Criminal Courthouse so that staff can respond quickly when youth
and young adults enter for a court date.
2. Robert Siegal Community Center – Lower East Side: Our flagship site has served
Participants continuously since the 1980s. In 2022, New York City Council and
Community Board 3 co-named the block, “Avenues for Justice Way”.
3. Harlem Community Center: In the 1990s, AFJ replicated its program to more easily
serve Participants across Upper Manhattan, Harlem, and Washington Heights.
4. Program can also be accessed via a hybrid in-person and virtual platform.

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Programs

Court Advocacy: By basing our headquarters inside the Manhattan Criminal Courthouse, staff
can respond quickly when youth and young adults enter for a court date, assess their needs prior to
trial and advocate to a judge that they be mandated to AFJ’s services instead of detention or prison.
Participants are then assigned to one of AFJ’s Community Centers in Harlem or the Lower East
Side for our wraparound HIRE UP services, which are also available online via a hybrid platform.
Court Advocates stay on call 24/7 to mentor both the Participants and their families, and handle
crises as they arise. The Court Advocate collaborates with each Participant to co-create a
comprehensive Individual Action Plan. The Individual Action Plan does not address a crime. It
addresses a person with a specific set of needs, risks and strengths and, therefore, is more likely to
succeed in preventing future crime and changing behavior than a uniform approach. Further, when
possible, the Individual Action Plan addresses and enlists the participant’s family as well.
Wraparound HIRE UP Services: At AFJ's community centers, and also online, Participants
access mentoring, case management, and workshops for digital literacy with certification, OSHA
construction safety, job readiness and financial literacy led by Corporate partners, Legal Rights and
Responsibilities to help them avoid re-arrests, mental health wellness that includes Art Therapy and
both group and individual sessions, and communications training in social media, videography, and
other media. AFJ also works with Participants to assist them with reenrolling and graduating from
school, matching them up with our bank of 60 volunteers, including tutors.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally

accepted in the United States of America requires management to make estimates and assumptions
that affect the 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 period. Actual results could differ from those estimates.

Cash and Cash Equivalents

AFJ considers all liquid investments with original maturities of three months or less to be cash
equivalents. Uninvested cash and cash equivalents included in investment accounts are not
considered to be cash and cash equivalents. At December 31, 2021 and 2020, cash equivalents
consisted primarily of money market accounts.
At December 31, 2021, AFJ’s cash accounts exceeded federally insured limits by approximately
$366,000.

Investments and Net Investment Return

AFJ measures securities at fair value.

9
 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Investment return includes dividend, interest and other investment income; realized and unrealized
gains and losses on investments carried at fair value; and realized gains and losses on other
investments, less external and direct internal investment expenses. Gains and losses on the sale of
securities are recorded on the trade date and are determined using the specific identification
method. Investment return that is initially restricted by donor stipulation and for which the
restriction will be satisfied in the same year is included in net assets without donor restrictions.
Other investment return is reflected in the statements of activities with or without donor restrictions
based upon the existence and nature of any donor or legally imposed restrictions.
Investments have been classified as current based on the availability of these investments to fund
current operations as needed.

Property and Equipment

Property and equipment costing in excess of $1,000 with estimated useful lives of greater than one
year are stated at cost, less accumulated depreciation and amortization. Depreciation is provided on
the straight-line method over the estimated useful lives of the assets. Amortization of leasehold
improvements is provided on the straight-line method over the lesser of the term of the lease or their
estimated useful lives.
The estimated useful lives for each major depreciable classification of property and equipment are
as follows:
Building 40 years
Building improvements 20 years
Equipment 3-6 years
Leasehold improvements 4 years

Long-Lived Asset Impairment

AFJ evaluates the recoverability of the carrying value of long-lived assets whenever events or
circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested
for recoverability and the undiscounted estimated future cash flows expected to result from the use
and eventual disposition of the asset are less than the carrying amount of the asset, the asset cost is
adjusted to fair value and an impairment loss is recognized as the amount by which the carrying
amount of a long-lived asset exceeds its fair value. No asset impairment was recognized during the
years ended December 31, 2021 and 2020.

Net Assets

Net assets, revenues, gains and losses are classified based on the existence or absence of donor
restrictions.
Net assets without donor restrictions are available for use in general operations and not subject to
donor restrictions. Undesignated fund net assets also includes funds budgeted for capital expansion
and renovation projects in the Lower East Side and Harlem.

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

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

Income Taxes

AFJ is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and a
similar provision of state law. However, AFJ is subject to federal income tax on any unrelated
business taxable income.
AFJ files tax returns in the U.S. federal jurisdiction.

Contributions

Contributions are provided to AFJ either with or without restrictions placed on the gift by the
donor. Revenues and net assets are separately reported to reflect the nature of those gifts – with or
without donor restrictions. The value recorded for each contribution is recognized as follows:
Nature of the Gift Value Recognized

Conditional gifts, with or without restriction

Gifts that depend on AFJ overcoming a Not recognized until the gift becomes
donor-imposed barrier to be entitled to the unconditional, i.e., the donor-imposed
funds barrier is met
Unconditional gifts, with or without restriction
Received at date of gift – cash and other assets Fair value
Received at date of gift – property, equipment Estimated fair value
and long-lived assets
Expected to be collected within one year Net realizable value
Collected in future years Initially reported at fair value determined
using the discounted present value of
estimated future cash flows technique
In addition to the amount initially recognized, revenue for unconditional gifts to be collected in
future years is also recognized each year as the present-value discount is amortized using the level-
yield method.
When a donor-stipulated time restriction ends or purpose restriction is accomplished, net assets
with donor restrictions are reclassified to net assets without donor restrictions and reported in the
statements of activities as net assets released from restrictions. Absent explicit donor stipulations
for the period of time that long-lived assets must be held, expirations of restrictions for gifts of
land, buildings, equipment and other long-lived assets are reported when those assets are placed in
service.

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Gifts and investment income that are originally restricted by the donor and for which the restriction
is met in the same time period are recorded as revenue without donor restrictions.
Conditional contributions having donor stipulations which are satisfied in the period the gift is
received are recorded as revenue and net assets without donor restrictions.
As of December 31, 2021, AFJ had $70,000 of conditional contributions pertaining to a
contribution whose conditions had not yet been met to recruit a specific number of young people to
AFJ’s program.

Special Events

AFJ conducts special events in which a portion of the gross proceeds paid by the participant
represents payment for the direct cost of the benefits received by the participant at the event.
All proceeds received are recorded as special events revenue in the accompanying statements of
activities.

In-Kind Contributions

In addition to receiving cash contributions, AFJ receives in-kind contribution of space. It is the
policy of AFJ to record the estimated fair value of certain in-kind donations as an expense in its
financial statements, and similarly increase contribution revenue by the same amount. For the
years ended December 31, 2021 and 2020, $32,554 and $30,380, respectively, were received in in-
kind contributions.

Rent Expense

Rent expense is recorded on the straight-line basis over the term of the lease.

Functional Expenses

The costs of providing AFJ’s services have been summarized on a functional basis. The costs of
providing services have been summarized on a functional basis in the statements of activities.
Certain costs have been allocated among the programs and supporting services benefited based on
actual expenditures, estimated time spent and other methods.

Revisions

Certain immaterial revisions have been made to the 2020 presentation of deferred rent to reflect it
as a long-term liability on the statement of financial position. In addition, the 2020 purchases and
sales of investments have been adjusted to omit certain transactions on cash accounts. As a result,
purchases and sales have both been reduced by $1,847,465. These revisions had no effect on the
change in net assets.

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Note 2: Revenue from Contracts with Special Event Attendees

Special Events Revenue

Revenue from special events is reported at the amount that reflects the consideration to which AFJ
expects to be entitled in exchange for the direct cost of the benefits received by the participant at
the event.

Performance Obligations and Transaction Price Allocated to Remaining Performance

Obligations

Performance obligations are determined based on the nature of the services provided by AFJ.
Revenue for performance obligations satisfied at a point in time is generally recognized when
goods are provided to donors at a single point in time and AFJ does not believe it is required to
provide additional goods or services related to that sale.

Transaction Price

AFJ determines the transaction price based on standard charges for goods and services provided.
For the years ended December 31, 2021 and 2020, AFJ recognized revenue of $45,000 and
$22,669, respectively, from goods and services that transfer to the attendee over time.

Note 3: Fair Value Measurements and Disclosures

Fair value is the price that would be received to sell an asset in an orderly transaction between
market participants at the measurement date. Fair value measurements must maximize the use of
observable inputs and minimize the use of unobservable inputs. The hierarchy comprises three
levels of inputs that may be used to measure fair value:
Level 1 Quoted prices in active markets for identical assets
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets,
quoted prices in markets that are not active, or other inputs that are observable or can
be corroborated by observable market data for substantially the full term of the assets
or liabilities
Level 3 Unobservable inputs supported by little or no market activity and that are significant
to the fair value of the assets
The following is a description of the valuation methodologies and inputs used for assets measured
at fair value on a recurring basis and recognized in the accompanying statements of financial
position, as well as the general classification of such assets pursuant to the valuation hierarchy.
There have been no significant changes in the valuation techniques during the years ended
December 31, 2021 and 2020.

13
 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Investments

Where quoted market prices are available in an active market, securities are classified within
Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are
estimated by using quoted prices of securities with similar characteristics or independent asset
pricing services and pricing models, the inputs of which are market-based or independently sourced
market parameters, including, but not limited to, yield curves, interest rates, volatilities,
prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in
Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not
available, securities are classified within Level 3 of the hierarchy.
The methods described above may produce a fair value calculation that may not be indicative of
net realizable value or reflective of future fair values. Furthermore, while AFJ believes its
valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.

Recurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying
statements of financial position measured at fair value on a recurring basis and the level within the
fair value hierarchy in which the fair value measurements fall at December 31, 2021 and 2020:
2021
Level 1 Level 2 Total

Mutual funds
Small cap $ 4,252 $ - $ 4,252
Large cap 67,212 - 67,212
Foreign 19,371 - 19,371
Emerging markets 5,881 - 5,881
Real assets 15,120 - 15,120
Alternatives 8,846 - 8,846
Hedge funds 66,830 - 66,830
REITS 2,404 - 2,404

Total mutual funds 189,916 - 189,916

Fixed income - 251,347 251,347

Total investments reported

on the fair value hierarchy $ 189,916 $ 251,347 441,263

Cash and cash equivalents 1,186,418

Total investments $ 1,627,681

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

2020
Level 1 Level 2 Total

Mutual funds
Small cap $ 3,774 $ - $ 3,774
Large cap 49,243 - 49,243
Foreign 17,562 - 17,562
Emerging markets 5,752 - 5,752
Real assets 18,968 - 18,968
Alternatives 5,734 - 5,734
Hedge funds 55,204 - 55,204
REITS 3,336 - 3,336

Total mutual funds 159,573 - 159,573

Fixed income - 258,074 258,074

Total investments reported

on the fair value hierarchy $ 159,573 $ 258,074 417,647

Cash and cash equivalents 1,002,534

Total investments $ 1,420,181

Note 4: Property and Equipment

Property and equipment at December 31, 2021 and 2020 consist of:
2021 2020

Land $ 20,000 $ 20,000

Building 301,211 301,211
Building improvements 464,644 464,644
Equipment 164,639 155,704
Leasehold improvements 469,518 469,518

1,420,012 1,411,077
Accumulated depreciation
and amortization (1,177,807) (1,085,287)

$ 242,205 $ 325,790

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Note 5: Net Assets with Donor Restrictions

Net Assets with Donor Restrictions

Net assets with donor restrictions at December 31, 2021 and 2020 are restricted for the following
purposes or periods:
2021 2020

Subject to expenditure for specified purpose

Long-term survey follow-up $ - $ 20,000

Subject to the passage of time 25,000 25,000

$ 25,000 $ 45,000

Net Assets Released from Restrictions

Net assets were released from donor restrictions by incurring expenses satisfying the restricted
purposes or by occurrence of other events specified by donors.
2021 2020

Long-term survey follow-up $ 20,000 $ -

Time restrictions 25,000 -

$ 45,000 $ -

Note 6: Paycheck Protection Program (PPP) Loan

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act). AFJ and has elected to account for the funding as a conditional
contribution by applying Accounting Standards Codification Topic 958-605, Revenue Recognition.
Revenue is recognized when conditions are met, which include meeting FTE and salary reduction
requirements and incurring eligible expenditures. Paycheck Protection Program (PPP) loans are
subject to audit and acceptance by the U.S. Department of Treasury, Small Business
Administration (SBA), or lender; as a result of such audit, adjustments could be required to the
recognition of revenue. On April 25, 2020 AFJ received a loan in the amount of $175,000 pursuant
to the PPP. On January 11, 2021, the SBA authorized full forgiveness of AFJ’s first loan. The full
amount of the loan was recognized into revenue during 2020.

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

On December 27, 2020, the Consolidated Appropriations Act of 2021 was signed into law and,
among other things, established a new “Second Draw” Paycheck Protection Program. On
February 9, 2021, AFJ received a second PPP loan of $195,772 pursuant to the Paycheck
Protection Program Second Draw. On December 12, 2021, AFJ’s Second Draw PPP loan of
$195,772 was approved for full forgiveness and therefore was recognized into revenue during
2021.

Note 7: Pension

AFJ has a 401(k) defined contribution retirement plan which covers all eligible full-time and part-
time employees. Pension expense was $22,185 and $23,482 for 2021 and 2020, respectively.

Note 8: Operating Lease

AFJ entered into a lease agreement for the East Harlem Community Center. The lease was
renewed in June 2018 and extended the original lease beginning on December 1, 2018 and ending
on November 30, 2023. Lease incentives received by AFJ, such as free rent periods, and escalating
rent provisions are deferred and amortized on a straight-line basis over the term of the lease
agreement and are recorded as a reduction of rent expense. AFJ also has a lease agreement in 2020
with a landlord that was agreed to on a month-to-month basis. Rent expense for the years ended
December 31, 2021 and 2020 were $88,879 and $91,139, respectively.
Future minimum lease payments are as follows:
Year Payment

2022 $ 67,336
2023 63,981

$ 131,317

Note 9: Line of Credit

AFJ obtained a $500,000 line of credit from First Republic Bank in March 2018 that is secured by
all the investments of AFJ. Interest is accrued at the Variable Rate, which was 3.25% at both
December 31, 2021 and 2020. The line of credit was set to expire in April 2022 and was
subsequently extended until April 2023. As of December 31, 2021 and 2020, there was no balance
outstanding.

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Note 10: Liquidity and Availability

Financial assets available for general expenditure, that is, without donor or other restrictions
limiting their use, within one year of December 31, 2021 and 2020, comprise the following:
2021 2020

Financial assets at year-end

Cash and cash equivalents $ 834,364 $ 646,114
Investments 1,627,681 1,420,181
Contributions receivable, due within one year 164,056 234,641

Total financial assets 2,626,101 2,300,936

Less funds with donor restrictions (25,000) (45,000)

Financial assets available to meet cash needs for

general expenditures within one year $ 2,601,101 $ 2,255,936

AFJ manages its liquidity following three guiding principles: operating within a prudent range of
financial soundness and stability, maintaining adequate liquid assets to fund near-term expenditures
and operating needs and maintaining sufficient liquidity to provide reasonable assurance that any
long-term obligations will be discharged. AFJ monitors liquidity and cash flows on an ongoing
basis to ensure an appropriate amount of cash and cash equivalents are available to meet current
claim payment and expenditure needs. AFJ maintains cash balances to cover all current liabilities
and invests in investments which can be easily converted to cash if necessary. AFJ also has a line
of credit available for any unanticipated liquidity needs.

Note 11: Significant Estimates and Concentrations

Accounting principles generally accepted in the United States of America require disclosure of
certain significant estimates and current vulnerabilities due to certain concentrations. Those
matters include the following:

Contributions

Approximately, 30% and 33% of all contributions were received from one donor in 2021 and 2020,
respectively.

Investments

AFJ invests in various investment securities. Investment securities are exposed to various risks
such as interest rate, market and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in the values of investment
securities will occur in the near-term and that such changes could materially affect the amounts
reported in the accompanying statements of financial position.

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 Avenues for Justice, Inc.
Notes to Financial Statements
December 31, 2021 and 2020

Note 12: Subsequent Events

Subsequent events have been evaluated through August 16, 2022, which is the date the financial
statements were available to be issued.

Note 13: Future Changes in Accounting Principles

Accounting for Leases

The Financial Accounting Standards Board amended its standard related to the accounting for
leases. Under the new standard, lessees will now be required to recognize substantially all leases
on the statements of financial position as both a right-of-use asset and a liability. The standard has
two types of leases for statements of activities recognition purposes: operating leases and finance
leases. Operating leases will result in the recognition of a single lease expense on a straight-line
basis over the lease term similar to the treatment for operating leases under existing standards.
Finance leases will result in an accelerated expense similar to the accounting for capital leases
under existing standards. The determination of lease classification as operating or finance will be
done in a manner similar to existing standards. The new standard also contains amended guidance
regarding the identification of embedded leases in service contracts and the identification of lease
and nonlease components in an arrangement. The new standard is effective for annual periods
beginning after December 15, 2021 and any interim periods within annual reporting periods that
begin after December 15, 2022.

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