U.S.-JAPAN COUNCIL
FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021

U.S.-JAPAN COUNCILTABLE OF CONTENTSDECEMBER 31, 2022 AND 2021
Pages
Independent Auditor’s Report .................................................................................................

3-4

Financial Statements
Statements of Financial Position ...........................................................................................

5-6

Statements of Activities and Changes in Net Assets ..............................................................

7-8

Statements of Functional Expenses ....................................................................................... 9-10
Statements of Cash Flows.....................................................................................................

11

Notes to Financial Statements .............................................................................................. 12-25

7910 WOODMONT AVENUESUITE 500
BETHESDA, MD 20814(T) 301.986.0600

Independent Auditor’s Report
The Board of Directors
U.S.-Japan Council
Washington, D.C.
OpinionWe have audited the accompanying financial statements of U.S. Japan Council (USJC), which comprisethe statements of financial position as of December 31, 2022 and 2021, and the related statements ofactivities, functional expenses, and cash flows for the years then ended, and the related notes to thefinancial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of USJC as of December 31, 2022 and 2021, and the changes in its net assets andits cash flows for the years then ended in accordance with accounting principles generally acceptedin the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica. 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
USJC 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.
Emphasis of Matter
As discussed in Note 2 of the financial statements, USJC adopted Financial Accounting Standards
Board’s (FASB) Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). Our opinion is not
modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in the United States of America, and forthe design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation 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 USJC’s ability to continue
as a going concern within one year after the date that the 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 arefree 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
COUNCILOR, BUCHANAN & MITCHELL, P.C. – CPAs AND BUSINESS ADVISORS
www.cbmcpa.com | (F) 301.986.0432

The Board of Directors
U.S.-Japan Council

Auditor’s Responsibilities for the Audit of the Financial Statements (Continued)
therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing
standards 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, theywould influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, 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 tofraud 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 proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of USJC’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 thefinancial statements.

•

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,that raise substantial doubt about USJC’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.

Bethesda, Maryland
June 12, 2023

Certified Public Accountants-4-U.S.-JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2022
Without Donor
Restrictions

With Donor
Restrictions

Total

AssetsCurrent Assets
Cash and Cash Equivalents
Investments
Promises to Give
Prepaid Expenses$

Total Current Assets$

3,966,058
21,011,083
204,999
5,434$

6,942,240
21,011,083
326,612
20,227

3,112,588

25,187,574

28,300,162

277,780-

277,780

9,353

-

9,353

970

-

970

$

3,400,691$ 25,187,574$ 28,588,265$

29,23568,9395,325
131,285
115,053
275,000$$

Operating Lease Asset
Finance Lease Asset, Net of
Accumulated Amortization of $5,388
Property and Equipment, Net
Total Assets

2,976,182
121,613
14,793Liabilities and Net Assets
Current Liabilities
Accounts Payable
Operating Lease Liability
Finance Lease Liability
Accrued Expenses
Accrued Vacation
Deferred Revenue
Total Current Liabilities
Operating Lease Liability, Net of Current Portion
Finance Lease Liability, Net of Current Portion
Total Liabilities
Net Assets
Without Donor Restrictions
With Donor Restrictions
Total Net Assets$

Total Liabilities and Net Assets

See accompanying Notes to Financial Statements.
-5--29,23568,9395,325
131,285
115,053
275,000

624,837-

624,837

231,706
4,028-

231,706
4,028

860,571-860,571

2,540,120-

25,187,574

2,540,120
25,187,574

2,540,120

25,187,574

27,727,694

3,400,691$ 25,187,574$ 28,588,265

U.S.-JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2021
Without Donor
Restrictions

With Donor
Restrictions

Total

$

3,097,459
357,710
143,545
105,076$ 3,129,793
15,058,164
450,000-$ 6,227,252
15,415,874
593,545
105,076

Total Current Assets

3,703,790

18,637,957

22,341,747

Property and Equipment, Net

22,345-22,345$

3,726,135$ 18,637,957$ 22,364,092$

31,726
46,76591,482
38,24910,001$$

AssetsCurrent Assets
Cash and Cash Equivalents
Investments
Promises to Give
Prepaid Expenses

Total Assets
Liabilities and Net Assets
Current Liabilities
Accounts Payable
Accrued Expenses
Accrued Vacation
Due to USJC - Japan
Deferred Revenue-

31,726
46,76591,482
38,24910,001

Total Current Liabilities

218,223-

218,223

Net Assets
Without Donor Restrictions
With Donor Restrictions

3,507,912-

18,637,957

3,507,912
18,637,957

3,507,912

18,637,957

22,145,869

3,726,135$ 18,637,957$ 22,364,092

Total Net Assets
Total Liabilities and Net Assets$

See accompanying Notes to Financial Statements.
-6-

U.S.-JAPAN COUNCIL
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEAR ENDED DECEMBER 31, 2022

Operating Activities
Revenue
Program Revenue
Contributions
GrantsAdministrative Fees
Other Income
Donated Services
Net Assets Released from Restrictions

Without Donor
Restrictions

With Donor
Restrictions

Total

$

1,940,549
310,751
267,349
1,600
26,134
117,150
1,462,879$ 1,196,740
10,000,000(1,462,879)$ 3,137,289
10,310,751
267,349
1,600
26,134
117,150-

4,126,412

9,733,861

13,860,273

3,165,756
619,845-

3,165,756
619,845

1,021,354
438,377-

1,021,354
438,377

5,245,332-

5,245,332(1,118,920)

9,733,861

8,614,941

151,128(3,184,244)(3,033,116)

151,128(3,184,244)(3,033,116)

3,507,912

18,637,957

22,145,869

2,540,120$ 25,187,574$ 27,727,694

Total Revenue
Expenses
Program Services
General Education
TOMODACHI
Supporting Services
General and Administration
Fundraising
Total Expenses
Change in Net Assets from Operations
Nonoperating Activities
Investment Return, Net
Total Nonoperating Activities
Net Assets, Beginning of YearNet Assets, End of Year$

See accompanying Notes to Financial Statements.
-7-

U.S.-JAPAN COUNCIL
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEAR ENDED DECEMBER 31, 2021
Without Donor
Restrictions

With Donor
Restrictions

Total

$

603,180
383,998
1,627,243
12,50074
32,086
1,443,235$ 1,951,932
6,645(1,443,235)$ 2,555,112
383,998
1,627,243
12,5006,719
32,086-

4,102,316

515,342

4,617,658

1,705,835
695,205-

1,705,835
695,205

668,938
501,927-

668,938
501,927

3,571,905-

3,571,905

Change in Net Assets from Operations

530,411515,342

1,045,753

Nonoperating Activities
Investment Return, Net(10,470)

975,610965,140(10,470)

975,610965,140

2,987,971

17,147,005

20,134,976

3,507,912$ 18,637,957$ 22,145,869

Operating Activities
Revenue
Program Revenue
Contributions
GrantsAdministrative Fees
Other Income
Donated Services
Net Assets Released from Restrictions
Total Revenue
Expenses
Program Services
General Education
TOMODACHI
Supporting Services
General and Administration
Fundraising
Total Expenses

Total Nonoperating Activities
Net Assets, Beginning of YearNet Assets, End of Year$

See accompanying Notes to Financial Statements.
-8-

U.S.-JAPAN COUNCIL
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2022

General
Education

Salaries and Benefits
Professional Services
Facilities and Equipment
Grant Expense
Scholarships
Program Implementation Fees
General and Office Expenses
Telecommunication
Travel and Meetings
In-Kind
Bank and Other Fees
Depreciation and Amortization
Insurance
Total

TOMODACHI

Total
ProgramServices

General and
Administration

FundraisingTotal$ 1,099,755
212,561
52,137
334,670
322,296
35,86862,7597,057
899,460
95,85013,251
16,325
13,767$

128,138
1,909
10,256
2,762
404,940
31,08933,941
413
3,212
3,185

$ 1,227,893
214,470
62,393334,670
325,058
440,808
93,848
7,057
933,401
95,85013,664
19,537
16,952$

728,749
157,778
16,2393,415
48,437
18,43421,30017,865
5,085
4,052

$

402,041
192
6,838
2,877
2,592
12,199
7,791
2,141
1,706

$ 2,358,683
372,440
85,470334,670
325,058
440,808
100,140
58,086
964,034
117,150
39,32026,76322,710$ 3,165,756$

619,845$ 3,785,601$ 1,021,354$

438,377$ 5,245,332

See accompanying Notes to Financial Statements.
-9-U.S.-JAPAN COUNCIL
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2021

General
Education

Salaries and Benefits
Professional Services
Facilities and Equipment
Grant Expense
Scholarships
Program Implementation Fees
General and Office Expenses
Telecommunication
Travel and Meetings
In-Kind
Bank and Other Fees
Depreciation and Amortization
Insurance
Total

TOMODACHI

Total
ProgramServices

General and
Administration

FundraisingTotal$ 1,022,187
260,42564,806
162,801
82,38544,352
14,78021,455
12,2094,076
10,054
6,305$

261,329
98,28742,587
166,440
70,47841,873
2,996
684
6,607
3,924

$ 1,283,516
358,712
107,393
166,440
162,801
152,863
86,225
14,78024,451
12,2094,760
16,661
10,229$294,639
178,688
46,29055,70433,266
7,840
19,877
20,854
7,181
4,599

$

430,251
6,462
31,477
1,451
12,565
5,629
6,309
4,883
2,900

$ 2,008,406
543,862
185,160
166,440
162,801
152,863
143,380
60,61137,92032,08631,92328,725
17,728$ 1,705,835$

695,205$ 2,401,040$

668,938$

501,927$ 3,571,905

See accompanying Notes to Financial Statements.
- 10 -

U.S.-JAPAN COUNCIL
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

2022

2021

$ 5,581,825$ 2,010,893

26,763
3,575,409
87,48328,725(421,142)-

266,933(38,249)
84,849(525,122)
70,833(82,921)(2,491)
84,52023,571
264,999(64,618)

11,161(17,252)
2,650-

9,890,994

1,077,825(10,049,728)
879,110(23,953,834)
23,794,868(9,170,618)(158,966)

Cash Flows from Financing Activities
Principal Payments on Finance Lease Liability(5,388)-Net Cash Used in Financing Activities(5,388)-Net Increase in Cash and Cash Equivalents

714,988918,859

Cash and Cash Equivalents, Beginning of Year

6,227,252

5,308,393

Cash and Cash Equivalents, End of Year$ 6,942,240$ 6,227,252$$

Cash Flows from Operating Activities
Change in Net Assets
Adjustments to Reconcile Change in Net Assets to
Net Cash Provided by Operating Activities
Depreciation and Amortization(Gain) Loss on Investments
Operating Lease Expense(Increase) Decrease in Assets
Promises to Give
Due to/from USJC - Japan
Prepaid Expenses
Increase (Decrease) in Liabilities
Accounts Payable
Accrued Expenses
Accrued Vacation
Deferred Revenue
Operating Lease Liability
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities
Purchases of Investments
Sales of Investments
Net Cash Used in Investing Activities

Noncash Transactions from Investing Activities
Establishment of Right-of-Use Operating Lease Asset
Establishment of Right-of-Use Finance Lease Asset
Establishment of Operating Lease Liability
Establishment of Finance Lease Liability
See accompanying Notes to Financial Statements.
- 11 -

277,780
9,353
72,967
9,353-

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
1.

ORGANIZATION
U.S.-Japan Council (USJC) is a not-for-profit corporation incorporated in the State of California in
December 2008 that contributes to strengthening U.S.-Japan relations by bringing together diverse
leadership, engaging stakeholders, and exploring issues that benefit communities, businesses,
and government entities on both sides of the Pacific. USJC promotes people-to-people relations
as crucial to a strong U.S.-Japan relationship. USJC has offices in Washington, D.C., and Los
Angeles, California.
In 2012, the U.S.-Japan Council (Japan) (USJC-J) was created to support the administration of
the TOMODACHI Initiative (see Note 10) and is a Public Interest Corporation (Koeki Zaidan
Hojin). USJC-J maintains an office in Tokyo, Japan.
USJC is supported primarily by contributions and contract revenue related to its programs.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe following is a summary of accounting policies followed in the preparation of USJC’s financial
statements.
Basis of Accounting
The financial statements are prepared on the accrual basis of accounting. Under the accrual
method, revenues are recognized when earned and expenses are recognized when incurred.
Adoption of Accounting Standards Update 2016-02
During the year ended December 31, 2022, USJC adopted the Financial Accounting Standards
Board’s (FASB) Accounting Standard Update (ASU) 2016-02, Leases (Topic 842), which supersedes
the leasing guidance in Topic 840. USJC also adopted the following ASUs, which amend andclarify Leases (Topic 842): ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842;
ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11, Leases (Topic 842):
Targeted Improvements; ASU 2018-20, Narrow-scope Improvements for Lessors; ASU 2019-01, Leases(Topic 842): Codification Improvements; ASU 2021-05, Leases (Topic 842): Lessors - Certain Leases
with Variable Lease Payments; and ASU 2021-09, Leases (Topic 842): Discount Rate for Lessees That Are
Not Public Business Entities. The most significant change in the new lease guidance is the requirement
to recognize right-of-use assets and lease liabilities for operating leases on the statement of financial
position.
USJC adopted the leasing standards effective January 1, 2022, using the modified retrospective
approach with January 1, 2022, as the initial date of application. Management has elected toapply all practical expedients available under the new guidance.
The most significant impact was the recognition of right-of-use assets and lease liabilities for
all leases with terms greater than twelve months. Accordingly, an operating lease asset andlease liability totaling approximately $338,000 and $338,000, respectively, was recognized as ofJanuary 1, 2022. In addition, a finance lease asset and lease liability totaling approximately$15,000 and $15,000, respectively, was recognized as of January 1, 2022.
- 12 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Statement Presentation
USJC has presented its financial statements in accordance with U.S. Generally Accepted Accounting
Principles. Under those principles, USJC is required to report information regarding its financial
position and activities according to two classes of net assets:•

Net Assets Without Donor Restrictions - resources that are available for general operations andresources designated by USJC’s Board of Directors for approved expenditures.

•

Net Assets With Donor Restrictions - resources that are subject to donor-imposed restrictions;
temporary or permanent. Temporary restrictions are those that expire either by passage oftime or fulfillment of purpose by actions of USJC. Permanent restrictions are that neither
expire by passage of time nor fulfillment of purpose.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally acceptedin 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.
Income Taxes
USJC is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code (theCode) and has been determined by the Internal Revenue Service not to be a private foundation
within the meaning of Section 509(a) of the Code.
USJC requires that a tax position be recognized or derecognized based on a “more-likely-thannot” threshold. This applies to positions taken or expected to be taken in a tax return. USJC does
not believe its financial statements include, or reflect, any uncertain tax positions.
USJC’s IRS Form 990, Return of Organization Exempt from Income Tax, is subject to examinationby the taxing authorities, generally for three years after filing.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and other highly liquid instruments with initial
maturities of less than three months when purchased.
Promises to Give
Promises to give consist primarily of amounts due from organization and individual pledges thatwere not received by USJC at year end. Management reviews the collectability of the accounts
on a regular basis. No reserve for doubtful accounts is deemed necessary as all amounts are
deemed to be fully collectible.

- 13 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments
Marketable equity securities consist of investments in equity and fixed income mutual funds,
and other investment funds. Investments in equity securities and investment funds with readily
determinable fair values and all investments in debt securities are carried at their fair values inthe statements of financial position.
USJC invests non-marketable equity securities which consists of an investment in one privately
held company with no readily determinable market value. USJC accounts for this non-marketable
equity security at cost less impairment, with realized gains and losses on non-marketable securities
sold or impaired recognized in the statements of activities and changes in net assets as increases
or decreases in net assets. As of December 31, 2021, non-marketable securities accounted forunder the method had a carry value of $350,000.
USJC invests in other investment funds that follow a fund of funds format. These funds are valued
at fair value as practical expedient.
In 2022, USJC drew funds from non-marketable investments and other investment funds andtransferred the funds to marketable equity securities. As of December 31, 2022, all investments
are maintained in money market fund, equity funds, and fixed income mutual funds.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation iscomputed using the straight-line method over the estimated useful lives of three years for furniture,
fixtures, and office equipment. USJC capitalizes all furniture and equipment purchases over $500.
Repairs and maintenance which do not significantly add to the value of assets are expensed as
incurred.
Right-of-Use Assets and Lease Liabilities
The determination of whether an arrangement is a lease is made at the lease’s inception. Under
the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) 2016-02,
Leases (Topic 842), a contract is (or 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 under
the standard as having both the right to obtain substantially all of the economic benefits fromuse 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.
Lease liabilities are initially measured at the present value of minimum lease payments using arisk-free rate that approximates the remaining term of the lease. The right-of-use asset is thelease liability adjusted for other lease-related accounts. Management considers the likelihoodof exercising renewal or termination clauses (if any) in measuring USJC’s right-of-use assets andlease liabilities. Operating lease expense and finance lease amortization expense is allocated over
the remaining lease term on a straight-line basis. Finance lease interest expense is calculated using
a risk-free rate that approximates the remaining term of the lease multiplied by the outstanding
finance lease liability.
- 14 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Right-of-Use Assets and Lease Liabilities (Continued)
USJC considers leases with initial terms of twelve months or less, and no option to purchase theunderlying asset, to be short-term leases. Accordingly, short-term lease costs are expensed over
the remaining lease term, with no corresponding right-of-use asset or lease liability. In addition,
USJC does not separate non-lease components from lease components (if any) when determining
the payments for leases of office equipment.
Donated Services
Donated services are recognized as contributions, at fair value, if the services (a) create nonfinancial
assets or (b) require specialized skills, are performed by people with those skills, and would
otherwise be purchased by USJC.
Grants and Contributions
Grants and contributions are recognized when a donor makes an unconditional promise to giveor when a donor makes a conditional promise to give, and the condition is met. Grants andcontributions received are recorded as net assets with donor restrictions or net assets without
donor restrictions depending on the existence or nature of any donor restrictions. When a donor
restriction expires, that is, when a stipulated time restriction ends, or the purpose restriction isaccomplished, net assets with donor restrictions are reclassified to net assets without donor
restrictions and reported in the statements of activities and changes in net assets as net assets
released from restrictions.
Contributions received with donor-imposed conditions and restrictions that are met in the same
reporting period are reported as support without donor restrictions and increase net assets without
donor restrictions.
Functional Allocation of Expenses
The costs of providing the various programs and other activities have been summarized ona functional basis in the statements of activities and changes in net assets and the statements offunctional expenses. Accordingly, certain costs have been allocated among the programs andsupporting services benefited. These expenses require allocation on a reasonable basis that is
consistently applied. The expenses that are allocated include compensation, benefits, and general
expenses, which are allocated on the basis of estimates of time and effort by employees. Expenses
directly identifiable to specific programs and supporting activities are allocated accordingly.
Reclassification
Certain reclassifications have been made to the December 31, 2021 financial statements to makethem comparable with the December 31, 2022 financial statements.

3.

LIQUIDITY AND AVAILABILITY OF RESOURCES
USJC’s cash flows have seasonal variations due to the timing of grants, contributions, program
revenues, and vendor payments. USJC manages its liquidity to meet general expenditures, liabilities,
and other obligations as they become due.
- 15 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
3.

LIQUIDITY AND AVAILABILITY OF RESOURCES (CONTINUED)
The following reflects USJC’s financial assets as of December 31, 2022 and 2021, reduced byamounts not available for general operating expenditure within one year:
Description
Cash and Cash Equivalents
Investments
Promises to Give within One YearDue from USJC - Japan
Less Amount Restricted by Donors for Purpose (including Endowment)
Plus Amount Expected to be Appropriated by the Endowment Fund
Financial Assets and Liquidity Resources Available to Meet
Cash Needs for General Expenditures within One Year

4.

2021

2022
$ 6,942,240
21,011,083
326,612(25,187,574)
453,000$

6,227,252
15,415,874
593,545(18,637,957)
436,687$ 3,545,361$

4,035,401

CONCENTRATIONSUSJC maintains cash balances at financial institutions in the Washington, D.C., metropolitanarea, California, and Tokyo, Japan. The accounts at the U.S. institutions are insured by theFederal Deposit Insurance Corporation (FDIC) up to the maximum amount allowed by law.
While the amounts, at times, exceed the amount insured by federal agencies and, therefore, bearsome risk, USJC has not experienced, nor does it anticipate, any loss of funds.
USJC invests in professionally managed portfolios that contain mutual funds. Such investments
are exposed to various risks such as interest rate, market, and credit. Due to the level of risk
associated with such investments and the level of uncertainty related to changes in the value ofsuch investments, it is at least reasonably possible that changes in risks in the near term would
materially affect investment balances and the amount reported in the financial statements.

5.

INVESTMENTS AND FAIR VALUE MEASUREMENTS
USJC has categorized its financial instruments based on fair value hierarchy as follows:
Level 1 - values are based on quoted prices for identical assets in an active market.
Level 2 - values are based on quoted prices for similar assets in active or inactive markets.
Level 3 - values are based on unobservable inputs to measure fair value to the extent that observable
inputs are not available, thereby allowing for situations in which there is little, if any, market
activity for the asset or liability at the measurement date. The fair value measurement objective isto determine an exit price from the perspective of a market participant that holds the asset or owes
the liability. Therefore, unobservable inputs reflected USJC’s judgment about the assumptions thatmarket participants would use in pricing the asset or liability (including assumptions about risk).
Unobservable inputs are developed based on the best information available in the circumstances,which might include USJC’s own data.
Following is a description of the valuation methodologies used for assets measured at fair value
on a recurring basis as of December 31, 2022 and 2021.
Registered investment companies (Mutual Funds): Valued at the net asset value (NAV) of shares heldby USJC at year end.
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U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
5.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)
Other Investment Funds: Value at the fair market value of the underlying assets of the fund as
determined by the fund managers. USJC invests in other investment funds that follow a fund-offunds format. The investment funds are described as follows:Global Equity Opportunities Fund: Allows investors to gain global equity exposure through anefficient and diversified structure. The fund seeks to generate higher risk-adjusted returns thanbroad global equity markets by investing in skilled managers along with fewer constraints in
portfolio construction. The fund is diversified across regions, market capitalizations, and styles
among a concentrated group of managers.
Diversified Income Fund: Allows investors to gain global fixed income exposure through an efficientand diversified structure. The fund seeks to achieve higher returns than broad fixed-income
markets by investing in skilled managers and applying fewer constraints in portfolio construction.
The fund is diversified across regions and sectors among a concentrated group of managers.
Absolute Return Fund: Allows investors to gain hedge fund exposure through an efficient anddiversified structure. The goal of the fund is to generate superior risk-adjusted returns with moderate
volatility by investing in funds sponsored by historically successful managers pursuing a crosssection of absolute return strategies, mitigate losses in failing markets, exhibit relatively low
correlation to traditional asset classes, and provide a range of exposure across sectors, regions,strategies, and managers.
USJC utilizes Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent), to value the investments in these funds(collectively referred to as Other Investment Funds). This standard allows those assets measured
using NAV to be excluded from the fair value hierarchy table. The total invested in these funds
is $-0- and $13,889,983 for 2022 and 2021, respectively.
The preceding methods described may produce a fair value estimate that may not be indicativeof net realizable value or reflective of future fair values. Furthermore, although USJC believes
its valuation methods are appropriate and consistent with other market participants, the use ofdifferent methodologies or assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.
Fair values of assets at December 31, 2022, are as follows:
2022
Fair Value
Money Market Fund
Equity Funds
Fixed Income Funds
Total Investments Measured at Fair Value

Level 1

Level 2

Level 3$

582,594
14,298,233
6,130,256$

582,594
14,298,233
6,130,256

$

-

$

-

$

21,011,083$

21,011,083

$

-

$

-

- 17 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
5.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)
Fair values of assets at December 31, 2021, are as follows:
2021
Fair Value
Money Market Fund
Equity Funds
Fixed Income Funds

Level 2

Level 3581,3319,216,495
3,806,867$

581,3319,216,495
3,806,867

$

-

$

-

Total Investments Measured at Fair Value

13,604,693$

13,604,693

$

-

$

-

Other Investment Funds
Non-Marketable Investments Valued at Cost

1,461,181
350,000

Total Investments$

Level 1$

15,415,874

Other investment funds activity for the years ended December 31, 2022 and 2021, is as follows:
Other Investment Funds

2021

2022

Balance at January 1
Transfer of Funds
Realized and Unrealized (Loss) Gain
Balance at December 31$

1,461,181(1,461,181)-$

13,889,983(11,465,276)(963,526)$-$

1,461,181

USJC recognizes transfers into and out of levels within the fair value hierarchy at the end of thereporting period.
Investment return for the years ended December 31, 2022 and 2021, is as follows:
Description

2021

2022

Interest and Dividends
Realized and Unrealized (Losses) Gains on Investments, Net
Investment Fees
Total Investment Return$

721,529(3,706,969)(47,676)$543,289472,793(50,942)$(3,033,116)$

965,140

For the year ended December 31, 2022, realized and unrealized losses include unrealized lossesof $3,575,409.
Investment securities are exposed to various risks such as interest rates, 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 thatsuch changes could materially affect the amounts reported in the accompanying financial statements.
6.

CONTRIBUTIONS AND PROMISES TO GIVE
Unconditional promises to give are recorded as receivables and revenue when received. USJC
distinguishes promises to give between each net asset category in accordance with donor-imposed
restrictions. Promises to give which have not been received are recorded after being discounted
to the anticipated net present value of the future cash flows.

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U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
6.

CONTRIBUTIONS AND PROMISES TO GIVE (CONTINUED)
Certain contributions are restricted for use for the TOMODACHI program. Promises to give
included $-0- and $450,000 of pledges restricted for this purpose as of December 31, 2022 and
2021, respectively.
As of December 31, 2022 and 2021, promises to give are expected to be realized in the following
periods:
Description
In One Year or Less
Within Two Years

7.

2021

2022
$

326,612-$493,545
100,000$

326,612$593,545

ANNUAL CONFERENCE
In 2022, U.S.-Japan Council (US) and U.S. Japan Council (Japan) held a joint Annual Conferencein Tokyo, Japan. Given the threat and impact of the coronavirus pandemic, USJC did not hostthe in-person Annual Conferences in 2021. Total event revenue, expenses, and net proceeds wereshared between the two entities based on the ratio of revenue received and expenses paid whichwere agreed by both U.S.-Japan Council (US) and U.S.-Japan Council (Japan).

8.

PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 2022 and 2021:
Description
Furniture and Fixtures
Office Equipment$

39,342
142,109

$

Net

$

970

39,342
142,109
181,451(159,106)

181,451(180,481)

Less Accumulated Depreciation

9.

2021

2022

$

22,345NET ASSETS WITH DONOR RESTRICTIONS
Net assets with donor restrictions were available for the following purposes at December 31, 2022
and 2021:
Description

2021

2022

With Temporary Donor Restrictions
TOMODACHI
Watanabe Endowment Fund - Scholarships
Silicon Valley Japan Platform (SVJP)
With Permanent Donor Restrictions
Watanabe Endowment Fund - Scholarships
Total Net Assets With Donor Restrictions- 19 -$

2,629,503
535,945
2,022,126$

10,000,000

20,000,000$ 25,187,574

2,709,622
4,624,575
1,303,760$

18,637,957

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
9.

NET ASSETS WITH DONOR RESTRICTIONS (CONTINUED)
The temporarily restricted portion of the Watanabe Endowment Fund reflects the accumulation ofmarket activity over time; the decrease is driven by the unrealized market losses in 2022.
Net assets were released from donor restrictions during 2022 and 2021 as follows:
Description
TOMODACHI
Watanabe Endowment Fund - Scholarships
Silicon Valley Japan Platform (SVJP)
Total

10.

2021

2022
$

237,779
895,465
329,635$

559,274
181,728702,233$

1,462,879$

1,443,235

TOMODACHIUSJC and the U.S. Embassy in Tokyo, with support from the government of Japan, formed apublic-private partnership (TOMODACHI), to support the long-term recovery of Japan following
the March 11, 2011 Great East Japan Earthquake. TOMODACHI supports programs in educational
exchange and leadership development that invest in the next generation of young Japaneseand Americans in ways that deepen the friendship between the United States and Japan.
TOMODACHI raises funds from contributors in the U.S. and Japan. Donors have the optionof contributing to the U.S.-Japan Council (US) or to a separate and independent public benefit
corporation, U.S.-Japan Council (Japan). Management and program services are provided to
U.S.-Japan Council (US) through a Management Agreement to support TOMODACHI activities
in Japan.

11.

SILICON VALLEY JAPAN PLATFORM
The Silicon Valley Japan Platform (SVJP) is an initiative of USJC and the International Houseof Japan. SVJP aims to connect the technological dynamism of the Silicon Valley with current andfuture needs of economic revitalization in Japan. The SVJP holds regular programs featuring
speakers on cutting-edge topics and organizes meetings with corporate leaders to discuss future
trends and opportunities for partnerships between Japan and the Silicon Valley.

12.

DONOR RESTRICTED ENDOWMENTS
USJC’s endowment consists of the donor-restricted Toshizo Watanabe Endowed Scholarship
Fund and the TOMODACHI Toshizo Watanabe Leadership Program (together, the Funds).
The Funds were created to provide study abroad scholarships to American and Japanese students
who demonstrate leadership potential and financial need. The scholarships assist in supportingthe cost of tuition and/or living expenses for a student’s academic study in Japan and theUnited States. The scholarship program seeks to promote cross-cultural education between thetwo countries.
As required by generally accepted accounting principles, net assets associated with endowment
funds, including funds designated by the Board of Directors to function as endowments, areclassified and reported based on the existence or absence of donor-imposed restrictions.
- 20 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
12.

DONOR RESTRICTED ENDOWMENTS (CONTINUED)
The Board of Directors of USJC has interpreted the Uniform Prudent Management of Institutional
Funds Act (UPMIFA) as adopted by the District of Columbia as requiring the preservation of thefair value of the original gift as of the gift date of the donor-restricted endowment funds absent
explicit donor stipulations to the contrary. As a result of this interpretation, USJC classifies as
net assets with permanent donor restrictions (a) the original value of gifts donated to the permanentendowment, (b) the original value of subsequent gifts to the permanent endowment, and (c)accumulations to the permanent endowment made in accordance with the direction of the applicable
donor gift instrument at the time the accumulation is added to the Fund. The remaining portion of
the donor-restricted endowment fund that is not classified in net assets with permanent donor
restrictions are classified as net assets with temporary donor restrictions until those amounts
are appropriated for expenditure by USJC in a manner consistent with the standard of prudenceprescribed by UPMIFA.
In accordance with UPMIFA, USJC considers the following factors in making a determination
to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservationof the various funds, (2) the purposes of the donor-restricted endowment funds, (3) general
economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total returnfrom income and the appreciation of investments, (6) other resources of USJC, and (7) USJC’s
investment policies.
Investment Return Objectives, Risk Parameters, and Strategies: USJC has adopted investment andspending policies for endowment assets that attempt to provide a predictable stream of funding
to programs supported by its endowment assets. Endowment assets shall exist into perpetuity
and therefore be invested with the objective of preserving its long-term real purchasing power
while providing for the annual spending distribution. The primary investment objective of theFund, measured over five to seven rolling periods, is to earn an annualized return of at least
4.0 percent, net of fees.
The secondary investment objective of the Fund is to be competitive over the long term (defined as
five- to seven-year rolling periods) relative to its market benchmark. The Fund will also be reviewed
relative to a peer universe of endowment funds with recognition that the Fund is likely to have a
different total return and risk profile than many of the endowments in universe comparisons.
In December 2019, the USJC Investment Committee discussed and approved change to theEndowment spending policy. The distribution shall be based on the average of the prior three
years’ investment portfolio, times the approved spending rate. The average will be calculatedusing the past 12 quarter ending balances as of September 30 of the year; the spending rate will
be 4%, unless changed by action of the Board.

- 21 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
12.

DONOR RESTRICTED ENDOWMENTS (CONTINUED)
Composition and changes in endowment net assets for the years ended December 31, 2022 and
2021, were as follows:
With Donor Restrictions
With
With
PurposePermanently
Restricted
Restricted
Endowment Net Assets, January 1, 2021
Investment Return
Appropriation of Endowment Assets for Expenditure$

Endowment Net Assets, December 31, 2021
Investment Return
Contributions
Appropriation of Endowment Assets for Expenditure
Endowment Net Assets, December 31, 2022

13.

$

Total

3,832,161
974,143(181,729)$ 10,000,000-$ 13,832,161
974,143(181,729)

4,624,575

10,000,000

14,624,575(3,193,165)(900,465)

10,000,000-(3,193,165)
10,000,000(900,465)

530,945$ 20,000,000$ 20,530,945

DONATED SERVICES
The value of donated services and facilities and the corresponding functional expense categories
for the years ended December 31, 2022 and 2021, are as follows:
Description
General Education
Contributed Flights
Services
Meetings
Facilities and Equipment
Total

14.

2021

2022
$

75,35020,5004,500
16,800$10,00012,086
10,000$117,150$

32,086

RELATED PARTY TRANSACTIONS
Board members of USJC made contributions to support USJC. USJC obtained insurance policies
through an insurance brokerage of which the owner is a board member of USJC. These transactions
occurred in the normal course of USJC business and the members did not receive economic benefits
in return of the transactions.

15.

RETIREMENT PLAN
USJC has a 401(k) retirement plan (the Plan). Employees may elect to defer a portion ofcompensation by enrolling in the Plan. All employees over the age of 21 and completing threemonths of service are eligible to receive an employer matching contribution equal to 100% of
their deferrals up to 6% of their compensation. Employees’ and USJC’s contributions to the Planare 100% vested upon participation. During the years ended December 31, 2022 and 2021, USJC’scontributions to the Plan were $107,355 and $75,352, respectively.

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U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
16.

LEASES
Operating Lease under Topic 842
USJC is obligated under a non-cancelable operating lease for office space. The office leasecommenced in February 2019 as a fourth amendment to the lease, and it was scheduled to expire
in January 2022. The lease was amended in December 2021, commenced on February 1, 2022,
and expires on January 31, 2027. The lease includes a 2.5% annual rent escalation and four monthsof rent abatement. The lease contains an option to extend the lease term for an additional 5-year
period or terminate the lease at the end of 2027. Neither option is considered reasonably certain
for the calculation of the related right-of-use asset and lease liability, which are presented in thestatement of financial position as of December 31, 2022.
Under accounting principles generally accepted in the United States of America (GAAP),
operating lease expense is recognized on a straight-line basis over the remaining lease term.
Operating lease expense for the year ended December 31, 2022, was approximately $65,000
and is included in facilities and equipment on the statement of functional expenses.
Maturity of the operating lease liability as of December 31, 2022, is as follows:
For the Years Ending December 31,
2023
2024
2025
2026
2027
Thereafter$

Total Undiscounted Minimum Lease Payments
Less Discount to Present Value
Total Operating Lease Liability

73,22775,06776,951
78,877
6,587
310,709(10,064)$

300,645$

64,618
5 Years
1.63%

The supplementary qualitative operating lease information is as follows:
Supplementary Qualitative Operating Lease Information
Cash Paid for Amounts Included in the Measurement of
Operating Lease Liabilities - Operating Cash Flows
Weighted-Average Remaining Lease Term
Weighted-Average Discount Rate

Operating Lease under Topic 840
Under accounting principles generally accepted in the United States of America (GAAP), all rental
payments, including fixed rent increases, are recognized on a straight-line basis over the termof the lease. Lease incentives are amortized over the life of the lease on a straight-line basis as
an offset to rent expense. The difference between the GAAP rent expense and the required lease
payments, as well as any unamortized lease incentives, are reflected as deferred rent and lease
incentive in the accompanying statement of financial position as of December 31, 2021.

- 23 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
16.

LEASES (CONTINUED)
Operating Lease under Topic 840 (Continued)
As previously disclosed in our 2021 audited financial statements and under the previous leaseaccounting, future minimum lease payments as of December 31, 2021, were as follows:
For the Years Ending December 31,

Amount

2022
2023
2024
2025
2026
2027
Total Future Minimum Lease Payments$

61,221
78,61580,45578,74778,877
6,587$

384,502

Finance Lease under Topic 842
USJC is obligated under a non-cancelable finance lease for office equipment commencing
January 2022 through September 2024. Amortization on the finance right-of-use asset totaled$5,388 and is included in depreciation and amortization expense on the statement of functional
expenses for the year ended December 31, 2022. The accumulated amortization on the financeright-of-use asset was approximately $5,400 as of December 31, 2022. Interest expense on thefinance lease liability totaled $114 for the year ended December 31, 2022.
Maturity of the finance lease liability as of December 31, 2022, is as follows:
For the Years Ending December 31,
2023
2024

$

Total Undiscounted Minimum Lease Payments
Less Discount to Present Value
Total Operating Lease Liability

5,388
4,041
9,429
(76)

$

9,353

$

114

The supplementary qualitative finance lease information is as follows:
Supplementary Qualitative Finance Lease Information
Cash Paid for Amounts Included in the Measurement of
Finance Lease Liabilities - Operating Cash Flows
Cash Paid for Amounts Included in the Measurementof Finance Lease Liabilities - Financing Cash Flows
Weighted-Average Remaining Lease Term
Weighted-Average Discount Rate

- 24 -

5,388
2.75 Years
0.97%

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
17.

COMMITMENTS AND CONTINGENCIES
Future Commitments
As businesses return to normalcy in 2022, USJC entered into various contracts for events andprograms in 2023. In case of cancellations, USJC would be responsible for certain fees. USJC
has future commitments as follows:
For the Year Ending December 31,
Event Management
Event Venue
Climate and Sustainability Initiative Promotion
Leadership Delegation Services
Future Commitments in 2023$

13,800294,800
5,000
45,300$358,900

COVID-19 Pandemic
The spread of COVID-19 (coronavirus disease) has had a disruptive impact on the daily life andoperations of individuals, businesses, and companies around the world. There is uncertainty
about financial and economic impacts in all sectors of the economy. The financial markets haveexperienced significant volatility, and this may continue for an extended period of time. In light ofthese circumstances, management continues to assess how best to adapt to changed circumstances.
18.

PAYCHECK PROTECTION PROGRAM LOAN
USJC has received Small Business Administration (SBA) loans under the Paycheck Protection
Program (PPP) in the amount of $406,440 in 2021. PPP provides up to eight weeks of cash-flow
assistance through 100% federally guaranteed loans to eligible recipients to maintain payroll
during the COVID-19 (coronavirus disease) public health emergency and cover certain otherexpenses. The first loan payment is deferred for six months. If USJC maintains its workforce, up to
100% of the loan is forgivable by the SBA if the loan proceeds are used to cover the first eightweeks of payroll, and certain other expenses. The Treasury Department anticipates that no morethan 25% of the forgiven amount may be for non-payroll costs. Also, if USJC does not retain its
entire workforce, the level of forgiveness is reduced by the percentage of the decrease. Loans
under PPP have an interest rate of 1% and a maturity of two years.
USJC accounted the SBA loan as revenue since repayments have been waived as ofDecember 31, 2021, as such, the proceeds are reflected in grants in the statements of activities andchanges in net assets.

19.

SUBSEQUENT EVENTS
Subsequent to December 31, 2022, USJC entered various agreements for future events, of which
the financial commitments are disclosed in Note 17.
USJC has evaluated subsequent events through June 12, 2023, the date on which the financial
statements were available to be issued.
- 25 -