U.S.-JAPAN COUNCIL
FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020

U.S.-JAPAN COUNCILTABLE OF CONTENTSDECEMBER 31, 2021 AND 2020
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 .............................................................................................. 12-22

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 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, 2021 and 2020, 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, 2021 and 2020, 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 UnitedStates of America. 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 issufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements 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
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with 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
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)
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. Misstatements, including omissions, are considered material if there is a substantial likelihood
that, individually or in the aggregate, they would influence the judgment made by a reasonable user
based on the financial statements.
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
March 22, 2022

Certified Public Accountants-4-U.S.-JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2021
Without Donor
Restrictions

With Donor
Restrictions

Total

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

$

$

$

AssetsTotal 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-

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.
-5-

U.S.-JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2020
Without Donor
Restrictions

With Donor
Restrictions

Total

Current Assets
Cash and Cash Equivalents
Investments
Promises to Give
Due from USJC - Japan
Prepaid Expenses$ 2,639,362
357,792
68,42332,584
22,155$ 2,669,031
14,477,974-$ 5,308,393
14,835,766
68,42332,584
22,155

Total Current Assets

3,120,316

17,147,005

20,267,321

Property and Equipment, Net

51,070-51,070$ 3,171,386$ 17,147,005$ 20,318,391

$

$

$

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

20,56564,017
88,832
10,001-

20,56564,017
88,832
10,001

Total Current Liabilities

183,415-

183,415Net Assets
Without Donor Restrictions
With Donor Restrictions

2,987,971-

17,147,005

2,987,971
17,147,005

2,987,971

17,147,005

20,134,976$ 3,171,386$ 17,147,005$ 20,318,391

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, 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 Income, Net(10,470)

975,610965,140(10,470)

975,610965,140

Net Assets, Beginning of Year2,987,971

17,147,005

20,134,976

Net Assets, End of Year$ 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

See accompanying Notes to Financial Statements.
-7-

U.S.-JAPAN COUNCIL
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEAR ENDED DECEMBER 31, 2020
Without Donor
Restrictions

With Donor
Restrictions

Total$ 1,409,404
634,745
406,400
217,496
9,204
1,863,795$ 1,466,579
20,076(1,863,795)$ 2,875,983
634,745
406,400
217,496
29,280-4,541,044(377,140)

4,163,904

1,405,031
1,476,939-

1,405,031
1,476,939

507,457
311,576-

507,457
311,576

3,701,003-

3,701,003

840,041(377,140)

462,901

2,987

2,255,236

2,258,223

2,987

2,255,236

2,258,223

Net Assets, Beginning of Year2,144,943

15,268,909

17,413,852

Net Assets, End of Year$ 2,987,971$ 17,147,005$ 20,134,976

Operating Activities
Revenue
Program Revenue
Contributions
Grants and Contributions
Administrative Fees
Other Income
Net Assets Released from Restrictions
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 Income, Net
Total Nonoperating Activities

See accompanying Notes to Financial Statements.
-8-

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.
-9-U.S.-JAPAN COUNCIL
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2020

General
Education

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

$

913,754239,169
66,354
31,23562,034
10,37359,770
6,015
5,104
4,157
7,066

$ 1,405,031

TOMODACHI$

Total
ProgramServices

General and
Administration

FundraisingTotal

374,261
500,000
124,701
335,527
64,874
1,092
47,746
11,767
8,476
6,823
1,672

$ 1,288,015
500,000
363,870
401,881
96,10963,126
58,11959,77017,782
13,58010,9808,738$

339,157
131,590
22,518
355
2,769
4,097
3,006
2,997
968

$

278,115
1,538
15,108
919
2,991
2,749
2,017
2,011
6,128

$ 1,905,287
500,000
496,998
401,881
133,735
64,40063,87959,77024,62818,603
15,98815,834$ 1,476,939$ 2,881,970$

507,457$

311,576$ 3,701,003

See accompanying Notes to Financial Statements.
- 10 -

U.S.-JAPAN COUNCIL
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

2021

2020

$ 2,010,893$ 2,721,124

28,725(421,142)

31,362
3,077(2,253,332)(525,122)
70,833(82,921)

1,207,556
460,980(2,006)

11,161(17,252)2,650-(473,771)(285,477)(39,790)(10,500)

1,077,825

1,359,223(23,953,834)
23,794,868(2,866)(29,225)
593,388(158,966)

561,297

918,859

1,920,520

Cash and Cash Equivalents, Beginning of Year

5,308,393

3,387,873

Cash and Cash Equivalents, End of Year$ 6,227,252$ 5,308,393

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
Loss on Disposals(Gain) Loss on Investments(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
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities
Purchases of Fixed Assets
Purchases of Investments
Sales of Investments
Net Cash (Used in) Provided by Investing Activities
Net Increase in Cash and Cash Equivalents

See accompanying Notes to Financial Statements.
- 11 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
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 11) 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 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.
- 12 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
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 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.
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 and 2020, non-marketable securities accounted
for under 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.
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.
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.
- 13 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, 2020 financial statements to makethem comparable with the December 31, 2021 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.
The following reflects USJC’s financial assets as of December 31, 2021 and 2020, reduced byamounts not available for general operating expenditure within one year:
Description

2021

Cash and Cash Equivalents$ 6,227,252
Investments
15,415,874
Promises to Give within One Year593,545
Due from USJC - Japan
Less Amount Restricted by Donors for Purpose (including Endowment) (18,637,957)
Plus Amount Expected to be Appropriated by the Endowment Fund
436,687
Financial Assets and Liquidity Resources Available to Meet
Cash Needs for General Expenditures within One Year

- 14 -$ 4,035,401

2020$ 5,308,393
14,835,766
68,42332,584(17,147,005)
385,000$ 3,483,161

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
4.

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 thatobservable inputs are not available, thereby allowing for situations in which there is little, ifany, 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.
Following is a description of the valuation methodologies used for assets measured at fair value
on a recurring basis as of December 31, 2021 and 2020.
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-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.
- 15 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
5.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)
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 $1,461,181 and $13,889,983 for 2021 and 2020, respectively.
The preceding methods described may produce a fair value estimate that may not be indicativeof net realizable value or reflective of future fair values. Furthermore, although USJC believes
its valuation methods are appropriate and consistent with other market participants, the use ofdifferent methodologies or assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.
Fair values of assets at December 31, 2021 and 2020, are as follows:
2021
Fair Value
Money Market Fund
Equity Funds
Fixed Income Funds$

Total Investments Measured at Fair Value
Other Investment Funds at NAV
Non-Marketable Investments
Total Investments

Level 1

Level 2

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

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

$

-

$

-

13,604,693
1,461,181
350,000$ 13,604,693

$

-

$

-

$ 15,415,874

2020
Fair Value
Money Market Fund
Fixed Income Funds
Total Investments Measured at Fair Value
Other Investment Funds
Non-Marketable Investments Valued at Cost
Total Investments$

Level 1

Level 2

Level 323,561
572,222$

23,561
572,222

$

-

$

-

595,783
13,889,983
350,000$

595,783

$

-

$

-

$ 14,835,766- 16 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
5.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)
Other Investment Funds activity for the years ended December 31, 2021 and 2020, is as follows:
Other Investment Funds
Balance at January 1
Transfer of Funds
Realized and Unrealized (Loss) Gain
Balance at December 31

2021

2020

$ 13,889,983(11,465,276)(963,526)$ 11,545,070
50,0002,294,913$ 1,461,181$ 13,889,983

USJC recognizes transfers into and out of levels within the fair value hierarchy at the end of
the reporting period.
Investment income for the years ended December 31, 2021 and 2020, is as follows:
Description

2020

2021

Interest and Dividends
Realized and Unrealized Gains on Investments, Net
Investment Fees
Total Investment Income$

543,289472,793(50,942)$

4,891
2,310,507(57,175)$

965,140$ 2,258,223

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.
Certain contributions are restricted for use for the TOMODACHI program. At December 31, 2021,
promises to give included $450,000 of pledges restricted for this purpose.
As of December 31, 2021 and 2020, promises to give are expected to be realized in the following
periods:
Description

2020

2021

In One Year or Less
Within Two Years- 17 -$

493,545
100,000$

68,423-$

593,545$

68,423

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
7.

ANNUAL CONFERENCE
Traditionally U.S.-Japan Council (US) and U.S. Japan Council (Japan) hold a joint Annual
Conference either in United States or Japan. Given the threat and impact of the coronavirus
pandemic, USJC did not host the in-person Annual Conferences in 2020 and 2021. In lieu of a
traditional in-person Annual Conference this year, USJC hosted series of virtual events andengagements throughout the remainder of the year to provide insights and exclusive content
to the members and supporters. Total event revenue, expenses, and net proceeds were shared
between the two entities based on the ratio of revenue received and expenses paid which wereagreed 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, 2021 and 2020:
Description
Furniture and Fixtures
Office Equipment$

39,342
142,109$

Net$

22,34539,342
142,109
181,451(130,381)

181,451(159,106)

Less Accumulated Depreciation

9.

2020

2021

$

51,070

NET ASSETS WITH DONOR RESTRICTIONS
Net assets with donor restrictions were available for the following purposes at December 31, 2021
and 2020:
Description
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

2021

2020

$ 2,709,622
4,624,575
1,303,760$ 2,243,885
3,832,161
1,070,959

10,000,000

10,000,000$ 18,637,957$ 17,147,005

Net assets were released from donor restrictions during 2021 and 2020 as follows:

Description

2021

TOMODACHI
Watanabe Endowment Fund - Scholarships
Silicon Valley Japan Platform (SVJP)

559,274
181,728702,233$ 1,575,837
124,439
163,519$ 1,443,235$ 1,863,795

$

Total

- 18 -

2020

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
10.

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 Asia Pacific Initiative.
SVJP aims to connect the technological dynamism of the Silicon Valley with current and futureneeds 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 andopportunities 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 (the Fund). The Fund was created to provide study abroad scholarships to American andJapanese students who demonstrate leadership potential and financial need. The scholarships assistin supporting the cost of tuition and/or living expenses for a student’s academic study in Japanand 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 of Institutional
Funds Act (UPMIFA) as adopted by the District of Columbia as requiring the preservation 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 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.
- 19 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
12.

DONOR RESTRICTED ENDOWMENTS (CONTINUED)
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.
Composition and changes in endowment net assets for the years ended December 31, 2021 and2020, were as follows:
With Donor Restrictions
With
With
PurposePermanently
Restricted
Restricted
Endowment Net Assets, January 1, 2020
Investment Return
Contributions
Appropriation of Endowment Assets for Expenditure
Endowment Net Assets, December 31, 2020, Restated
Investment Return
Expenditures of Endowment Assets
Endowment Net Assets, December 31, 2021

- 20 -$ 1,718,779
2,237,821$ 10,000,000-

Total$ 11,718,779
2,237,821(124,439)-(124,439)

3,832,161

10,000,000

13,832,161

974,143(181,729)-

974,143(181,729)$ 4,624,575$ 10,000,000$ 14,624,575

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
13.

DONATED SERVICES
The value of donated services and facilities and the corresponding functional expense categories
for the years ended December 31, 2021 and 2020, are as follows:
Description
General Education
Services
Meetings
Facilities and Equipment
Total

14.

2020

2021
$

10,00012,086
10,000$-$32,086$-

RELATED PARTY TRANSACTIONS
Board members of USJC made contributions in the aggregated amount of approximately $338,000
and $152,000 to support USJC in the years ended December 31, 2021 and 2020, respectively.
The members did not receive economic benefits in return of the contributions.

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, 2021 and 2020, USJC’scontributions to the Plan were $75,352 and $90,055, respectively.

16.

COMMITMENTS AND CONTINGENCIES
Office Equipment Lease
USJC has entered into a lease of certain office equipment and is obligated under the lease throughApril 2025.
Office Lease
On December 13, 2022, USJC entered into a non-cancellable office lease agreement which
commences on February 1, 2022, and expires on January 31, 2027. The agreement contains anabatement of the first four calendar months after the commencement date, a provision of tenant
improvement allowance by the landlord, an annual increase of rent amounts, and additional
payments for operating charges.

- 21 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
16.

COMMITMENTS AND CONTINGENCIES (CONTINUED)
Office Lease (Continued)
The minimum future lease payments under the above leases are as follows:

For the Years Ending December 31,
2022
2023
2024
2025
2026
2027
Total Future Minimum Lease Payments$

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

384,502

COVID-19 Pandemic
The spread of COVID-19 (coronavirus disease) has had a disruptive impact on the daily life
and operations 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.
17.

PAYCHECK PROTECTION PROGRAM LOAN
USJC has received Small Business Administration (SBA) loans under the Paycheck Protection
Program (PPP) in the amount of $365,520 and $406,440 in 2020 and 2021, respectively. PPP
provides up to eight weeks of cash-flow assistance through 100% federally guaranteed loans toeligible recipients to maintain payroll during the COVID-19 (coronavirus disease) public healthemergency and cover certain other expenses. 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 eight weeks of payroll, and certain other expenses. The
Treasury Department anticipates that no more than 25% of the forgiven amount may be fornon-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 amaturity of two years.
USJC accounted the SBA loan as revenue since repayments have been waived as ofDecember 31, 2021 and 2020, as such, the proceeds are reflected in grants in the statementsof activities and changes in net assets in each year.

18.

SUBSEQUENT EVENTSUSJC has evaluated subsequent events through March 22, 2022, the date on which the financial
statements were available to be issued.

- 22 -