U.S. - JAPAN COUNCIL
FINANCIAL STATEMENTS
DECEMBER 31, 2019

U.S. - JAPAN COUNCILTABLE OF CONTENTSDECEMBER 31, 2019
Pages
Independent Auditors’ Report .................................................................................................

3

Statement of Financial Position ............................................................................................

4

Statement of Activities .........................................................................................................

5

Statement of Functional Expenses ........................................................................................

6

Statement of Cash Flows ......................................................................................................

7

Notes to Financial Statements .............................................................................................. 8-17

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

1150 18TH STREET, NW
SUITE 550
WASHINGTON, DC 20036(T) 202.822.0717

Independent Auditors’ Report
To the Board of Directors
U.S. - Japan Council
Washington, D.C.
We have audited the accompanying financial statements of U.S. - Japan Council (USJC), which comprisethe statement of financial position as of December 31, 2019, and the related statements of activities,functional expenses, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includes
the 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.
Auditors’ 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 accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness 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 to provide a basis forour audit opinion.
OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of U.S. - Japan Council as of December 31, 2019, and the changes in its net assets andits cash flows for the year then ended in accordance with accounting principles generally accepted in the
United States of America.

Bethesda, Maryland
February 24, 2020

Certified Public Accountants

COUNCILOR, BUCHANAN & MITCHELL, P.C. – CPAs AND BUSINESS ADVISORS
www.cbmcpa.com | (F) 301.986.0432

U.S. - JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2019
Without Donor
Restrictions

With Donor
Restrictions

Total

Current Assets
Cash and Cash Equivalents
Investments
Promises to Give
Due from USJC - Japan
Prepaid Expenses$ 2,331,027
350,000
98,167493,564
20,149$ 1,056,846
12,796,597
1,184,959-$ 3,387,873
13,146,597
1,283,126
493,564
20,149Total Current Assets

3,292,907

15,038,402

18,331,309

Property and Equipment, Net

82,643-82,643$ 3,375,550$ 15,038,402$ 18,413,952

$

$

$

AssetsTotal Assets
Liabilities and Net Assets
Current Liabilities
Accounts Payable
Accrued Expenses
Accrued Vacation
Deferred Revenue

15,566
349,494
128,622
20,501-

15,566
349,494
128,622
20,501

Total Current Liabilities

514,183-

514,183

Net Assets
Without Donor Restrictions
With Donor Restrictions

2,861,367-

15,038,402

2,861,367
15,038,402

2,861,367

15,038,402

17,899,769$ 3,375,550$ 15,038,402$ 18,413,952

Total Net Assets
Total Liabilities and Net Assets

See accompanying Notes to Financial Statements.
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U.S. - JAPAN COUNCIL
STATEMENT OF ACTIVITIESFOR THE YEAR ENDED DECEMBER 31, 2019

Revenue
Grants and Contributions
TOMODACHI Contributions
Program Revenue
Annual Conference
Investment Income
Foreign Exchange Gain (Loss)
Miscellaneous Income
Donated Services
Net Assets Released from Restrictions

Without Donor
Restrictions

With Donor
Restrictions$$

Total Revenue

425,164
37,6801,653,697
1,388,886
40,728(3,580)
11,225
151,1112,223,845

1,852,723
1,828,917(2,223,845)

Total

$

425,164
1,890,403
1,653,697
1,388,886
1,869,645(3,580)
11,225
151,111-

5,928,756

1,457,795

7,386,551

3,309,326
1,858,725-

3,309,326
1,858,725

312,626
192,218-

312,626
192,218

Total Expenses

5,672,895-

5,672,895

Change in Net Assets

255,861

1,457,795

1,713,656

Net Assets, Beginning of Year2,605,506

13,580,607

16,186,113

Net Assets, End of Year$ 2,861,367$ 15,038,402$ 17,899,769

Expenses
Program Services
General Education
TOMODACHI
Supporting Services
General and Administration
Fundraising

See accompanying Notes to Financial Statements.
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U.S. - JAPAN COUNCIL
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2019

General
Education
Salaries and Benefits
Program Implementation Services
Office Expenses
TravelMeetings
Business and License Fees
Professional Services
Depreciation and Amortization
Rent
Facilities and Equipment
Computer Hosting and MaintenanceSupplies
Telecommunications
Printing
Insurance
Dues and Subscriptions
Fees
Education and Training
Total

TOMODACHI

Total
ProgramServices

General and
Administration

FundraisingTotal$ 1,169,794
1,769,791
6,422
80,91944,152
1,743
23,6398,690
53,5807,898
21,72624,824
52,12917,4296,162
3,522
11,047
5,859$

315,319
1,444,828
1,759
2,398
1,122
13,146
5,184
41,727
323
4,728
2,128
10,086
4,202
4,943
153
3,180
3,499

$ 1,485,113
3,214,619
8,181
83,31744,152
2,865
36,785
13,87495,307
8,221
26,454
26,95262,215
21,631
11,105
3,675
14,227
9,358$

265,732
1,033
2,540
2,255
747
5,243
1,994
15,309
411
3,976
2,587
3,862
1,807
1,760
1,703
1,667

$

163,976
94
6,054
2,622
997
7,654
205
1,988
1,539
1,931
947
880
370
2,128
833

$ 1,914,821
3,214,619
9,308
91,911
46,4073,612
44,65016,865
118,270
8,837
32,41831,07868,00824,385
13,745
4,045
18,058
11,858$ 3,309,326$ 1,858,725$ 5,168,051$

312,626$

192,218$ 5,672,895

See accompanying Notes to Financial Statements.
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U.S. - JAPAN COUNCIL
STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2019
Cash Flows from Operating Activities
Change in Net Assets
Adjustments to Reconcile Change in Net Assets to
Net Cash Used in Operating Activities
Depreciation and Amortization
Gain on Investments(Increase) Decrease in Assets
Promises to Give
Due from USJC - Japan
Prepaid Expenses
Increase (Decrease) in Liabilities
Accounts Payable
Accrued Expenses
Accrued Vacation
Deferred Revenue
Net Cash Used in Operating Activities$ 1,713,656

16,865(1,818,594)
354,539(420,848)
45,794(77,069)
178,618
11,762(62,049)(57,326)

Cash Flows from Investing Activities
Purchases of Fixed Assets
Purchases of Investments
Sales of Investments(72,087)(7,498,207)
7,896,525

Net Cash Provided by Investing Activities

326,231

Net Increase in Cash and Cash Equivalents

268,905

Cash and Cash Equivalents, Beginning of Year

3,118,968

Cash and Cash Equivalents, End of Year$ 3,387,873

See accompanying Notes to Financial Statements.
-7-

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
1.

ORGANIZATION
U.S. - Japan Council (USJC) is a not-for-profit corporation incorporated in the State ofCalifornia in December 2008 that contributes to strengthening U.S. - Japan relations bybringing 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 administrationof 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.
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
accepted in the United States of America requires management to make estimates andassumptions 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.
-8-

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes (Continued)
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 withinitial maturities of less than three months when purchased.
Promises to Give
Promises to give consist primarily of amounts due from organization and individual pledges
that were not received by USJC at year end. Management reviews the collectability of theaccounts on a regular basis. No reserve for doubtful accounts is deemed necessary as allamounts are deemed to be fully collectible.
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 statement 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 thisnon-marketable equity security at cost less impairment, with realized gains and losses on nonmarketable securities sold or impaired recognized in the statement of activities as increases ordecreases in net assets.
As of December 31, 2019, non-marketable equity securities accounted for under the method
had a carrying value of $350,000.
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 forfurniture, 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.

-9-

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 togive or when a donor makes a conditional promise to give, and the condition is met. Grants
and contributions 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 is accomplished, net assets with donor restrictions are reclassified to net
assets without donor restrictions and reported in the statement of activities as net assets
released from restrictions.
Contributions received with donor-imposed conditions and restrictions that are met in thesame 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 on afunctional basis in the statement of activities and the statement of functional expenses.
Accordingly, certain costs have been allocated among the programs and supporting 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.

3.

ADOPTION OF ACCOUNTING STANDARDSFor the year ended December 31, 2019, the Organization adopted Financial AccountingStandards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue fromContracts with Customers. Management believes that the adoption of this standard provides
better consistency and comparability across non-profit and for-profit entities. The standard
requires an entity to recognize the amount of revenue to which it expects to be entitled for thetransfer of promised goods or services to customers. The updated standard replaces mostexisting revenue recognition guidance in U.S. GAAP. This change in accounting principle wasadopting the standard on January 1, 2019.
For the year ended December 31, 2019, the Organization adopted Financial AccountingStandards Board (FASB) Accounting Standards Update (ASU) 2018-08, Not-for-Profit Entities(Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received andContributions Made. The ASU provides additional guidance in (1) evaluating whether
transactions should be accounted for as contributions (within the scope of ASC 958) or as- 10 -

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
3.

ADOPTION OF ACCOUNTING STANDARDS (CONTINUED)
exchange (reciprocal) transactions (subject to ASC 606); and (2) distinguishing between
conditional and unconditional contributions. Management believes that the adoption of thisASU enhances the comparability of financial information among not-for-profit entities.
These new principles did not have a significant effect on the financial statements for the year
ended December 31, 2019.

4.

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.
The following reflects USJC’s financial assets as of December 31, 2019, reduced by amounts
not available for general operating expenditure within one year:
Description

AmountCash 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 Appropriated by Endowment Fund
Total Financial Assets and Liquidity Resources Available within One Year5.

$

3,387,873
13,146,597
1,637,665
493,564(15,038,402)
430,000$

4,057,297

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). At times during the year, USJC’s cash balances
exceeded the FDIC insurance amounts. Management believes the risk in these situations to beminimal.

6.

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 thatobservable 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 is to 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 that market 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.
- 11 -

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
6.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)
Following is a description of the valuation methodologies used for assets measured at fair value
on a recurring basis as of December 31, 2019.
Registered investment companies (Mutual Funds): Valued at the net asset value (NAV) of shares heldby USJC at year end.
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-of-funds 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 anefficient and diversified structure. The fund seeks to achieve higher returns than broad fixedincome 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 withmoderate volatility by investing in funds sponsored by historically successful managers
pursuing a cross-section of absolute return strategies, mitigate losses in failing markets, exhibit
relatively low correlation to traditional asset classes, and provide a range of exposure acrosssectors, regions, strategies, and managers.
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.

- 12 -

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
6.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)
Fair values of assets at December 31, 2019, are as follows:
Fair Value
Money Market Fund
Equity Funds
Fixed Income Funds
Global Opportunities Equity Fund
Diversified Income Fund
Absolute Return Fund$Level 1

Level 2

Level 3

195,683
1,044
1,054,800
7,994,441
2,518,694
1,031,935$

195,683
1,044
1,054,800
-

$

-

$

7,994,441
2,518,694
1,031,935

Total Investments Measured at Fair Value

12,796,597$

1,251,527$-$

11,545,070

Non-Marketable Investments Valued at Cost

350,000

Total Investments$

13,146,597

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
are as follows:
Other
Investment
Funds
Balance at January 1, 2019
Purchases of Investments
Sales of Investments
Net Investment Income, Attributable to Assets Held at Year End
Balance at December 31, 2019$

4,657,195
7,025,000(1,405,000)
1,195,640$ 11,472,835

USJC recognizes transfers into and out of levels within the fair value hierarchy at the endof the reporting period. There were no transfers between levels during the year ended
December 31, 2019.
Investment income for the year ended December 31, 2019, is as follows:
Description

AmountInterest and Dividends
Realized and Unrealized Gains on Investments
Investment Fees
Total Investment Income

7.

$

3,375
1,920,843(54,573)$ 1,869,645

CONTRIBUTIONS AND PROMISES TO GIVEUSJC was awarded major contributions, which included conditional contributions andunconditional promises to give.
One contribution is conditioned for measurable performance related to TOMODACHI
program and right of release of the contributor from its obligation. The fund is given to USJC
annually after the program performance is approved by the donor and is recorded as a promise
to give at that time. This conditional promise to give is approximately $1,700,000 as ofDecember 31, 2019, and will not be recorded as revenue until the conditions are met.
- 13 -

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 20197.

CONTRIBUTIONS AND PROMISES TO GIVE (CONTINUED)
Two unconditional promises to give are recorded as receivables and revenue when received.
USJC distinguishes promises to give between each net asset category in accordance withdonor-imposed restrictions. Promises to give which have not been received is recorded after
being discounted to the anticipated net present value of the future cash flows.
Contribution receivables are expected to be realized in the following periods:
Description

AmountIn One Year or Less
Between One Year and Five Years$ 1,184,959
98,167$ 1,283,126

8.

PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of December 31, 2019:
Description

AmountFurniture and Fixtures
Office Equipment$

182,258(99,615)

Less Accumulated Depreciation
Net

9.

39,342
142,916$

82,643

NET ASSETS WITH DONOR RESTRICTIONS
Net assets with donor restrictions were available for the following purposes at December 31, 2019:
Description

AmountWith Temporary Donor Restrictions
TOMODACHI
Watanabe Endowment Fund - Scholarships
With Permanent Donor Restrictions
Watanabe Endowment Fund - Scholarships
Total Net Assets With Donor Restrictions$

3,297,651
1,740,751
10,000,000$ 15,038,402

Net assets were released from donor restrictions during 2019 as follows:
Description

AmountTOMODACHI
Watanabe Endowment Fund - Scholarships
Total

10.

$

1,792,505
431,340$

2,223,845

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 Japanfollowing the March 11, 2011 Great East Japan Earthquake. TOMODACHI supports- 14 -

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 201910.

TOMODACHI (CONTINUED)
programs in educational exchange and leadership development that invest in the next
generation of young Japanese and 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 publicbenefit corporation, U.S. - Japan Council (Japan). Management and program services areprovided to U.S. - Japan Council (US) through a Management Agreement to support
TOMODACHI activities in Japan.

11.

ANNUAL CONFERENCE
In 2019, U.S. - Japan Council (US) and U.S. Japan Council (Japan) held a joint Annual
Conference in Los Angeles, California. Total conference revenue, expenses, and net proceeds
were shared between the two entities based on the ratio of revenue received and expenses paid
which were 70% (US) and 30% (Japan). These distributions were approved by both Boards of
Directors.

12.

DONOR RESTRICTED ENDOWMENTS
USJC’s endowment consists of the donor-restricted Toshizo Watanabe Endowed Scholarship
Fund (the Fund). The Fund was created to provide study abroad scholarships to American andJapanese students who demonstrate leadership potential and financial need. The scholarships
assist in supporting the cost of tuition and/or living expenses for a student’s academic study inJapan and the United States. The scholarship program seeks to promote cross-cultural education
between the two 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.
The Board of Directors of USJC has interpreted the Uniform Prudent Management ofInstitutional Funds Act (UPMIFA) as adopted by the District of Columbia as requiring thepreservation of the fair 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 thisinterpretation, USJC classifies as net assets with permanent donor restrictions (a) the originalvalue of gifts donated to the permanent endowment, (b) the original value of subsequent gifts tothe permanent endowment, and (c) accumulations to the permanent endowment made inaccordance with the direction of the applicable donor gift instrument at the time theaccumulation 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 prudence prescribed 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- 15 -

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
12.

DONOR RESTRICTED ENDOWMENTS (CONTINUED)
preservation of 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 return from 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 fundswith recognition that the Fund is likely to have a different total return and risk profile thanmany of the endowments in universe comparisons.
Spending Policy: The Fund’s annual minimum distribution requirement is $200,000, less certain
administrative fees. The Board has discretion to establish a prudent spending policy in excessof the minimum requirement. In any given year, the spending policy may range from not lessthan $200,000 to approximately 4.0 percent of the market value of the Fund.
Composition and changes in endowment net assets for the year ended December 31, 2019,were as follows:
With Donor Restrictions
PurposePermanently
Restricted
Restricted
Donor-Restricted Endowment Fund

$ 1,740,751$ 10,000,000

With Donor Restrictions
With
With
PurposePermanently
Restricted
Restricted
Endowment Net Assets, Beginning of Year
Investment Return
Contributions
Appropriation of Endowment Assets for Expenditure
Endowment Net Assets, End of Year- 16 -$

Total$ 11,740,751

Total

400,218
1,771,873(431,340)$ 10,000,000-$ 10,400,218
1,771,873(431,340)$ 1,740,751$ 10,000,000$ 11,740,751

U.S. - JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 201913.

DONATED SERVICES
The value of donated services and facilities and the corresponding functional expense
categories for the year ended December 31, 2019, are as follows:
General
Education

Description
Supplies
TravelPrinting
Meetings
Facilities and Equipment
Total

14.

TOMODACHI

Generaland
Administration

Fundraising

Total

$

22,20775,00035,00011,070
7,834

$

-

$

-

$

-

$

22,20775,00035,00011,070
7,834$

151,111

$

-

$

-

$

-

$

151,111RETIREMENT 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 thePlan are 100% vested upon participation. During the year ended December 31, 2019, USJC’scontribution to the Plan was $57,906.

15.

LEASES
Office Equipment Lease
USJC has entered into a lease of certain office equipment and is obligated under the leasethrough April 2020.
Office Lease
USJC has a non-cancellable office lease that expires on January 31, 2022. The lease contains
an annual increase of rent amounts and additional payments for operating charges.
The minimum future lease payments under the above leases are as follows:
For the Years Ending December 31,
2020
2021
2022
Total Future Minimum Lease Payments

16.

$

170,510
173,984
14,528$359,022SUBSEQUENT EVENTS
Subsequent events were evaluated through February 24, 2020, which is the date the financial
statements were available to be issued.

- 17 -