Creative

Commons#ion
CorporaFinancial Statements
Year Ended31, 2 12

DecemberCreative Commons Corporation
Table of Contents
Page
Independent Auditors' Report1

Financial Statements:
Statement of Financial Posi#ion

3

Statement of Activities

4

S#atement of Functional Expenses

5

Statement of ~a~h Flows6

Notes to Financial Statements7~~

O~V~+~'~" LL.P
CERTIFIED PUBLIC ACCOUNTANTS
Partners
Daniel J. Harrington, CPA
Bruce J. Wright, CPA
Michael J. Ellingson, CPA
Principal
Mitchell Richstone, CPA

Independent Auditors' Report

Board of Directors
Creative Commons Corporation
We have audited the accompanying financial statements of Creative Commons
Corporation (a nonprofit organization), which comprise the Statement of Financial
Position as of December 31, 2012, and the related Statements of Activities, Functional
Expenses, and Cash Flows for the year then ended, and the related notes to thefinancial statements. The prior year summarized comparative information has been
derived from the Organization's 2011 financial statements.and, in our report dated April
26, 2012, we expressed an unqualified opinion on those financial statements.
Management's Responsibility for the Financial Stater»ents
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the UnitedStates of America; this includes the design, implementation, and maintenance ofinternal control relevant to the preparation and fair presentation of financial statementsthat are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with auditing standards generally acceptedin the United States of America. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on theauditor's judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparationand fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control.
Page 1 of 13
P.O. Box 271 •262 Grand Avenue •South San Francisco, CA 94083-0271(650)872-7600 •FAX(650)872-7615 www.gfllp.com

Independent Auditors' Rept~r#{Ct~n~inued)
Accordingly, we express no such opinion. An audi# also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
OpinionIn our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Creative Commons Corporation as of December 31,
2012, and the changes in i#s net assets and its cash flows for the year then ended inconformity with accounting principles generally accepted in the United States ofAmerica.

South San Francisco, California
April 30, 2013

ood
r~.~
_

l'owle~;~Lp
CERTIFIED PUBLIG ACCOUNTANTS

Page 2 of 13

Creative Commons Corporation
Statement of Financial Position
December 31, 2012
{With Comparative Totals at December 31, 2011)

X012

2011

2, 92,944 $
2,557,988~0,08~
30 98~
4,732,003

3,~00,4~4
4,079,67~ X2,922
72 552
7,915,~9

7,161,932
5,263
78,29180,793
1,326,279

2,~1 ~,819
2,088
85,395
100,391
2,503,693

ASSETS.CURRENT ASSETS
dash
Grants Receivable
Contributions and Other Receivables
Prepaid Expenses
Tc~ta1 Curren~ Assets$

NONCURRENT ASSETS
Grants Receivable
Investments
Security Deposi#
Proper#y and Equipment -Net
Total Noncurrent Assets
Total Assets$~,0~8,282 $ 10,4~ 9,288

LIABILITIES AND NET ASSETSCURRENT LIABILITIES
Accounts Payable
Accrued Expenses
Total ~iabiiities$

NET ASSETS
Unrestricted (Deficit)
Temporarily Restricted
Total Net Assets~ 29,23fl $22,438361,:668(505,956)
x,202,570~,~96,614

Total Liabilities and Net Assets$

852,823
8,675,~ 73
9,527,996

6,058,282 $ 10,419,288

See Notes to Financial Statements
Pan~,~a ~ of 1

7 8,989
10~,303891,292

Creative Commons Corporation
Statement of Ac#ivities
Year Ended December 31, 2012
(With Comparative Totals for the Year Ended December 37, 2011)

Total
2012

Total
2011

797,95 $277,680
192,930
21,08031
350
1,057
31,862
1,322,955

9,328,440
414,424
135,61421,081_(1,398)(1,061)
83,946
9,981,046

1,322,955

9,981,446

3,894,860

3,894,880

4,844,156

77~,~6~484,105,1 ~4,~37-775,~67
484,310 '5,~ 54,337

721,768`
3~2,7G4
5,928,688(1,358,779){2,472,603)(3,831,382)

4,052,358

Unrestricted
REVENUE AND GAINSFoundation Grants
Contributions!n-Kind Contributions
Contrac#s
In#erest income
Foreign Currency Translation Gain (Loss)
Net Realized and Unrealized Gain {Loss) on Investments
Other Income$

NET ASSETS RELEASED FROM RESTRICTIONSSaris€action ofi Program Restrictions
Total Revenue and Gains

Temporarily
Restricted

47,965 $93,G80~ 92,930
21,08031
350
1,057
31,862388,955
3,40 ,603
3,795.,558

EXPENSES
Program Services
Supporting Services
Management and General Expenses
Fundraising Expenses
Total Expenses
CHANGE IN NET ASSETSBEFORE OTHER ITEM

750,000 $184,00934,U00(3,406,G03){2,472,603

Write-off of Receivables(306,000)

CHANGE IN NET ASSETS{1,358,'779)(2,472,603){3,831,382)

3,746,358

852,823

8,675,173

9,527,996

5,781,638(505,956) $6,202,570 $

5,696,14 $

9,57,996

NET ASSETS; BEGINNING OF YEARNET ASSETS(DEFICIT), END OF YEAR$

See Notes to Financial Statements
D~y~ ,,~I,r, ~fTraining
Bank Charges _Printing
Moving Expenses~
Licenses &Fees
Board Cultivation &Meetings
Publicity and Communication
Total Expenses~
Recruiting
Depreciation
Telephone
Professional Services
Accounting Fees
Supplies
Website Development and Hosting
Technolo9Y
Membership and Dues

Consulting and Design
Contract Services
Travel and Conferences
Occupancy
legal Fees.
Special Events
Insurance

Salaries
Payroll Taues
Employee Benefits

$

$

667.
579
315
139
87
60
313,153 $

980
851
462
205
128
89
400,150 $

1,087
`943
513
227
142
98

1,316
1,142
621
275
172
119
726,800 $

3,020
2,622
1,425
630
396
273.

1,723,278 $

433,384 $

-

2,820
2,472
1,805
1,587
1,516
1,316
1,176
941890

2,517
2,206
1,611
1,417
1,353
1,174
1,050
840
794

3,698
3,242 2,367
2,082
1,989
1,726
1,542
1,235
1..,167

4,099
3,593
2,626
2,307
2,204
1,913
1,710
1,368
1,294

4,964
4,352
3,177
2,794
2,669
2,31fi
2,070
1,657
1:,566

11,393
9,988
7,292
6,413
6,127
5,316
4,751
3,803
3,595

74? `
649
353
156
98
68

See Notes to Financial Statements
Page 5 of 13-

29,49125,853'
18,87816,60015,85813,761
12,2999,844
9,306

316,728460,229
338,202275,298
202,080
34,34633,{~3~-775,167 $

1,656
1,438
781
346
217
150

6,248
5,477
3,999
3,517
3,360
2,909
2,606
2,086
1,972

71,64858,32142,8107,276
8,998

114,647

365,691 $
25,65845,356436,705

484,310 $

444
386
210
93
58
40

1,67?
1,470
1,073.
944
902
782
699
560
529

183,809123,249
19,227
15,650
11,488
1,953
1,878

98,133 $6,885
12,171
117,189

37,41632,80023,95021,061
20,12017,452
15,604
12,49011,807615,184
583,478
429,077
349,269
256,378
43,57541,9072,190,015 $
153,658
271,623
2,615,296

2012
Total
Expenses

2,700
9,917
1,824
8,610
4,680
991
439
2,071
2?5
1,298
190
897
1,259,477 $ 5,154,337 $

7,925
6,947
5,072
4,461 `
4,262
3,691
3,305
2,646
2,50'1

288,456
123,249
90,87573,97154,2989,229
8,876

463,824 $
32,54357,521
553,894.

Supporting Services
Managementi
Total
and
Fund
Supporting
GeneralRaisingServices

1,726,191 $
121,115
214,096
2,061,402

Tatai
ProgramServices

7,817
6,786
3,689
1,632
1,023
707
298,095 $ 3,894,860 $

32,33526,32019,3203,284
3,158

42,411
34,52325,341
4;307
4,142

47,009:38;26628,0894,774
4,591

56,92746;33934,0155,781
5,560

201,987 `68,500450,229
130,659
106,357
78,07013,26912,761

239,937 $
16,83529,759' 286,531
37,08010,04028,861
23,493
17,2452,931
2,819

290,558 $
20,38636,037
346,981666,885 $
46,791
82,713.
796,389
9,161

Culture~Science
165,036 $
11,57920,469197,084

Technology `147,309 $10,336
1827Q
175,915

legal
216,466 $15,18826,848258,502

Education

InternatianaU
Affiliates

Program Services

Creative Commons Corporation
Statement of Functional Expenses
Year Ended December 31, 2012
(With Comparative Totals for the Year Ended December 31, 2011)

7,441
10,185
8,796
158,847
12,85968,20526,9485,928,688

2,138
21,56028,695
20,616
21,88324,161
14,08912,646
4,785

692,692
1,338,882
460,683
262,256
160,865
51,60046,012

2,058,540
148,174
265,170
2,471,884

2011
Total
ExpensesCreative Commons Corporation
Statement of Cash Flows
Year Ended December 31, 2012
(With Comparative Totals for the Year Ended December 3'1, 2011)

Zfl12
CASH FLOWS FRC'~M OPERATING ACTIVITIESchange in Net Assets
Adjus#rnen#s to Reconcile change in Net Assets to
Net Cash I~rov ded {lased) by operating Ac#ivit es
Deprecia#ion
Donated investments
Net Realised and Unrealised {Gain) Loss on Investments{:Increase) Decrease in Operating Assets
Grants Receivable
Contributions and Other Receivables
Prepaid Expenses
Security Deposit
Increase (Decrease) in t)perating ~iabli#ies
Accounts Payable
Accrued Expenses
Net Cash Provided (Used] by Operating Activities$ X3,831,382) $X011
3,74 ,358

32,800~2 'I ~ 8)
{1,057)

21,5601,C~2,675,567
112,834
41,5687,1 Q~4{3,158,923){22,709)~28,6~3)~~8,29U){645,58} 115,9~~{1,49 3fl9)74,347{38,985)
1,19~,~26{13,2 1)
{13,201)

X104,544)
x'104,544)

NET INCREASE tDECREASE)IN CASH

(1,507,510)

1,91,182

CASH, BEGINNING OF YEAR

3,~00,45~~,509,2~2

2,92,944 $

3,600,454

SASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Proper#y and Equipment
Net Cash Used) by Investing Activ #ies

CASH,END OF YEAR$

See Notes to Financial Statements
Pa~~ ~ of 1

Creative commons.Corporation
Notes to Financial Statements
December 3~ , 2~~2
1.

+organization
Creative commons Ct~rporation {Creative Commons)is a Massach~se#ts
charitable corpora#ion that develops, suppt~rts, and stewards legal and. technicalinfrastructure that maximizes digital creativity, sharing, and.. innovation. ~r~a~ive
Commons' vision is to realize the full potential of the In#ernet- universal accessto research and education, participatory culture, and driving the new era o~development, growth, and produc#ivy#y. Exis#ing copyright laws were es#ablishedlong before the emergence of the Internet, and can make it difficult #o legally."dothings" we take for granted on the network: copy, paste, edit source, and post to
the Web. Because i# can be expensive and burdensome to secure 1~egal
permission to use a copyrighted work published to the V1/eb, Creative Commons
provides a set of free copyright licenses and public domain tools that enable
everyone, from individual creators to large companies and institutions; a simple,
standardized way to grant copyright permissions to their creative work in
advance. Creative Gornmons' public domain tools allow creators to waive allrights to a work and place it in th+e public domain, or to mark a work that isalready in the public domain as such.
Creative Commons plays an instrumental role in furthering scientific research:and innovation by enabling open access journals and the open exchange flf
scientific data. The world's largest Open Access publishers use Creative
Commons' licenses to publish their content online. Creative Commons' licenses
and: public domain tools are also used to make data and databases freely
available. The NCO public domain dedication tool is used to remove copyright
restrictions that could otherwise limit the dissemination and reuse of scien#ifc
and government data in the taxonomic:, energy, genomics, disease research,geospa#ial, polar, and bilbit~metric disciplines.
Creative Commons also provides the legal infrastructure that powers Open
Educational Resources(OER),free resources that are developed by institutions,communities, and individuals to further universal access to education. Creative
Commons-licensed t~ER, such as textbooks and lesson plans, are easy to find,easy to share, and easy to customise and combine. Creative ~omrnons' licenses
enable collaboration on linguistic and cultural translations of quality educational
resources for use around the world. Creative Commons is also developing
so#~ware and m~~adata standards .to improve search and discovery ofeducational resources.

Page 7 of 13

Creative Commons ~orporatian
Notes to Financial Statements
December 31, 2Q~2
(Continued)
1.

t~rganization ~con~inued
Creative Comrnor~s' licenses and tools have been developed in consul#anon withlegal +experts anr~ Creative Commons affiliate institutions in over 70 jurisdictions.
fiver ~0~ million ~Crea#ive Commons-licensed works have been published bytheir authors on the Internet, Creative Commons is a major player in the "freeculture,,,"open access,,,"open +~duca~ion," and "open government" env~ironrnents
worldwide.
In 20~ ~ a Canada subsidiary, Q941176 B.C. LTD,:was established to enable CC
to engage the services of a Canadian-based individual. Creative Commons is the::sole shareholder of the subsidiary. A management services agreement is inplace between the organizations and provides the structure for provision of thoseservices to CC by the subsidiary through its employee. Consolidated financial
statemen#s are included for the year ended December 31,- 2012.

~.

Summary of Significant Accounting Policies
Basis of Accounting —The accompanying financial statements have been
prepared on the accrual basis of accounting in accordance with generally
accepted accounting principles.
Basis of Presentation -Creative Commons is required to report infa►rmation
regarding its financial position and activities a~~o►rding to three classes of net
assets:. unrestricted net assets, temporarily restricted net assets, andpermanently restricted .net:assets. The Organization has no permanently
restricted net assets.
Estimates - Management uses estimates and assume#ions in preparing financial
statements. Those estimates and assumptions affect the reported amounts ~fasset and liabilities, the disclosure of continent assets:and liabilities, and thereported revenues and expenses. Actual results cc~uid differ from thoseestimates.
Cash and Cash Equivalents -For purposes of the Statement of Cash Flows,
Creative Commons considers all unrestricted highly liquid investments with an-initial maturity of #hree months or less to be cash equivalents. Grants Receivable - No allowance for doubtful accounts is considerednecessary since the receivables relate primarily to foundations and corporations.
.• - :•

Creative Commons Corporation
Notes to Financial Statements
December ~1, 20~ 2{Continued)
2.

-

Summary of Significant Accoun# ng Policies {icon#inued)
Contributions Receivable — Uncon~ tic~nal receivables are recognized asrevenue in the period received and as assets, decreases of liabilities, flr
expenses depending on the form of the benefits received. Unconditional
receivables are recorded a# net realizable value if ~xpect~d to be collected in one
year and at fair value if expected to be collected in more than one year. No
allowance for uncollectible receivables has been recorded based o►nrnan~gement'S evaluation of G~IleCtio►ns.
Investments — Investmen#s, consisting of nationally traded securities, wi#h
readily determinable.fair values are.s#ated at fair value in the statemen# of
financial position.
Property and Equipm~n#-Creative:Commons capitalizes all expenditures fQr
property and equipment in excess $1,000. Purchased proper#y end equipment
are carried at cost: Donated property and equipment ire carried at theapproximate fair value at the date of donation. Depreciation is conr~pu#~d using
the straight-line method over the estimated useful lives on the property andequipment.
Restricted and Unrestricted Revenue — Contributions received are recorded asincreases in unrestricted, #empo►rarily restricted, o►r permanently restricted net
assets, depending an the existence andlor nature of any donor restrictions.
When a do~nQr-specified restriction expires {that is when a stipulated time
restriction ends or purpose restriction is accomplished), the temporarily restric#ed
net assets are reclassified to unrestricted net assets and reported in theStatement of Ac#iv ties as Net Asse#s Released from Restrictions.
Donated Services —The financial statements reflect $192,930 for donated legal
services to evaluate ongoing tax, trademark, and copyright implications of its new
programs and existing services.
Fair Value of Financial Instruments -The carrying amount of cash, grants
receivable, contributions and +other receivables, prepaid expenses, security
deposit, accounts payable, and accrued liabilities, none of which are held for
trading purposes, approximate the fair value due to the short-term maturities of
those instruments.

:Page 9 of 13

Creative commons ~arporation
Notes to Financial Statements
December 31, 2012
(Continued)
2.

Summary of Significant Accounting Policies {continued)
Income Taxes — Crea# ve commons is exempt from income #axes under internal
Revenue Section 5~1{c){~), Creative ~flmrnons qualifies for the charitable
contribution deduction ~r~d~r Section 170{b){1)CA) and has been classified as anc~rganizati~n that is no# a private foundation under Section 5~0~{a){1).
Creative Commons recognizes the effect of income tax positions only if thosepositions are more than not to be sustained. Management continuously evaluates
tax positions reflected in the Creative Commons'tax filings and does not believethat any material uncertain tax positions exist.
The Organization's federal and state income ta~c returns are generally subject toexamination by federal and state taxing authorities for three and four years,
respectively, after filing.

Functional Allocation of Expenses -Costs of providing programs and otheractivities are accumulated in#o separate groupings as either direc# or indirect.
indirect or shared cos#s are allocated to the p~rograrns and supporting services bya method which best measured the relative degree of benefit. Accordingly,
certain costs have been allocated be#ween the program and the supporting
services in reasonable ratios determined by management.
Reclassifications — Certain accounts in the prior year financial statements havebeen reclassified .for comparative purposes to conform to the presentation in thecurrent year financial s#atem~nts.

Comparative Totals —The financial statements include certain prier year
summarized comparative information in total but not by net asset class. Suchinformation dies not include sufficient detail to constitute a presentation in
conformity with generally accepted accounting principles. Accordingly, suchinformation should be read in conjunction with Creative Commons'financial
statements for the year ended December 31, 2411 from which the summarized
information was derive.

Page 10 of 13

Creative Commons Corporation
Notes to Financial Statements
December ~1, 20~2
Continued)
3.

~oncen#ration of Creel #Risk
Creative ~ommt~ns manta r~s gash balances a# several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $ 50,000. Moreover, the ~rgani~zation's banks take part in the
FDIC's Transaction Account Guarantee Program, wh`i~h provides unlimited
deposit insurance coverage for non-interest bearing accounts until December 31
2fl1 ~. At December 31, 2012, the Organiza#ifln had no uninsured cash balances.

4

Grants Receivable

Grants Receivable includes the following unconditional promises #o give:To#al Tempt~rarly Restricted Promises to Give

$ 3,719,920

Receivable in less than one year
Receivable in one to five years
Total uncondi#i~nal promises to give$ 2,557,988
1,1X1,932
3,719,20

Net ~n+~onditi~nal promises to give at De~cernb~er 31, 2012

$ 3,719,92

Promises to give receivable in more than one year are discounted at .25%0, whenmaterial.
5.

Property and Equipment
Computer Equipment
Furniture and Equipment
Leasehold Improvements
Subto#al
Less; Accumulated Depreciation$ 64,299
12,05084,314
1~0,6+~3
79 870~.~__)

Property and Equipment -Net

$ 80,793

Depreciation expense for year ended December 31,212 was ~3~,800.

Page 1 ~ of 13

Creative Cc~mmc~ns Corporation
Notes ~o Financial Statements
December 31, 2~~ ~{Continued~.

Temporarily Res#rioted Ne# Assets
Restricted as #o purpose and time:
5upporf for DOL Trade. Adjustment ~~t grantees
Education
Learning Resource M~#adata Initiative
OER Technology Develo~rnent and strategic Policy
General Support
Science Commons
Total

7.

$ 4,334,973
8~6,7~~
5 6,280
755,484
150,000
129,06~$ +~,~20~,570

Operating Leases
creative Commons leases office space and office equipment under noncancelable operating leases expiring through May 2016. The equipment lease
expires June 2014. The office space in San Francisco was subleased efi~ective
April 1, 2011 and expired concurrently with the master lease on April 15, 2012.
The second lease for office space in Mountain View expires May 2016, withannual escalation of rental payments. Under this lease, the Company received
two► (2) months of free rent which will be amartiZed over the entire Iife of the Leasetin astraight-line basis. Accounting principles also requires that the total rent
commitment be recognized on a straight-line basis over the term of the lease.
For the year ended December 3~ , 2412, total ren# expense under the leases was$3~'~,494
Minimum future lease payments are as follows:
Fiscal Year Ending December 31,
2013
X014
X015
2016
Total

$ 280,788
290,899
300,375
127,474$ 9~9,536.

Page 12 of 13

Creative Commons corporation
Notes to Financial Statements
December 3~ , X012
~Continu+~d)8.

Pension Plan
Creative Commons has a Tax Sheltered Annuity under 1R~ Section 4~3~b),which allows all.. employees to contribute through payroll deductions. creative
Commons provides discretionary matching contributions of 5°,!o cif annual salary
for all ~mploye~s who work 2U hours or more per week. Crea#ive Cornm~n's
con#rib~tit~ns made during the year ending December 31, 2072 #otaled $1~5 1 ~~.

9.

Subsequent Evens
Management has evaluated subsequent events through April 30 2013, the date
which the financial statements were avail~bie to be issued and determined thatno reportable events occurred.

Page 13 of 13