U.S.-JAPAN COUNCIL
FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019

U.S.-JAPAN COUNCILTABLE OF CONTENTSDECEMBER 31, 2020 AND 2019
Pages
Independent Auditors’ Report................................................................................................

3-4

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............................................................................................ 12-23

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
comprise the statements of financial position as of December 31, 2020 and 2019, and the related
statements of activities and changes in net assets, functional expenses, and cash flows for the years
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; thisincludes the design, implementation, and maintenance of internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatement, whether due tofraud 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 disclosuresin 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 proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the 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
for our audit opinion.
OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of U.S.-Japan Council (USJC) as of December 31, 2020 and 2019, and the changes
in its net assets and its cash flows for the years then ended in accordance with accounting principles
generally accepted in the United States of America.

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

To the Board of Directors
U.S.-Japan Council

Correction of Error
As described in Note 18 to the financial statements, an error resulted in the failure to recognize certain
payables and expenses in the financial statements for the year ended December 31, 2019. Accordingly,
the financial statements as of and for the year ended December 31, 2019, have been restated to reflect
this adjustment. Our opinion is not modified with respect to this matter.

Bethesda, Maryland
March 30, 2021

Certified Public Accountants-4-U.S.-JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2020
Without Donor
Restrictions

With Donor
Restrictions

$

$

Total

AssetsCurrent Assets
Cash and Cash Equivalents
Investments
Promises to Give
Due from USJC - Japan
Prepaid Expenses

2,639,362
357,792
68,42332,584
22,1552,669,031
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$

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

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

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.
-5-

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

With Donor
Restrictions

$

$

Total
(Restated)

AssetsCurrent Assets
Cash and Cash Equivalents
Investments
Promises to Give
Due from USJC - Japan
Prepaid Expenses
Total Current Assets

2,093,373
350,000
493,564
20,1491,294,500
12,796,597
1,177,812-$

3,387,873
13,146,597
1,177,812
493,564
20,1492,957,086

15,268,909

18,225,995

Promises to Give98,167-

98,167

Property and Equipment, Net

82,643-82,643$

3,137,896$ 15,268,909$ 18,406,805$

494,336
349,494
128,622
20,501$$

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

494,336
349,494
128,622
20,501

Total Current Liabilities

992,953-

992,953

Net Assets
Without Donor Restrictions
With Donor Restrictions

2,144,943-

15,268,909

2,144,943
15,268,909

2,144,943

15,268,909

17,413,852

3,137,896$ 15,268,909$ 18,406,805

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, 2020

Revenue
Program Revenue
Contributions
Grants and Contributions
Investment Income, Net
Administrative Fees
Other Income
Net Assets Released from Restrictions

Without Donor
Restrictions

With Donor
Restrictions$$

Total Revenue

1,409,404
634,745
406,400
2,987
217,496
9,204
1,863,795

1,466,579
2,255,236
20,076(1,863,795)

Total

$

2,875,983
634,745
406,400
2,258,223
217,496
29,280-4,544,031

1,878,096

6,422,127

1,405,032
1,476,939-

1,405,032
1,476,939

507,457
311,575-

507,457
311,575

Total Expenses

3,701,003-

3,701,003

Change in Net Assets

843,028

1,878,096

2,721,124

2,144,943

15,268,909

17,413,852

2,987,971$ 17,147,005$ 20,134,976

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

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, 2019 (RESTATED)

Revenue
Program Revenue
Contributions
Investment Income, Net
Administrative Fees
Other Income
Donated Services
Net Assets Released from Restrictions

Without Donor
Restrictions

With Donor
Restrictions$$

Total Revenue

2,861,915
418,01740,728218,348
7,645
151,111
1,993,338

1,852,723
1,828,917(1,993,338)

Total(Restated)$

4,714,638
418,017
1,869,645
218,348
7,645
151,111-

5,691,102

1,688,302

7,379,404

3,339,376
2,307,448-

3,339,376
2,307,448

312,625
192,216-

312,625
192,216

Total Expenses

6,151,665-

6,151,665

Change in Net Assets(460,563)

1,688,302

1,227,739

Net Assets, Beginning of Year2,605,506

13,580,607

16,186,113

2,144,943$ 15,268,909$ 17,413,852

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

Net 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, 2020

General
Education
Salaries and Benefits
Program Services
Grant Expense
Professional Services
Facilities and Equipment
General and Office Expenses
Travel and Meetings
Depreciation and Amortization
Telecommunication
Credit Card and Other Service Charges
Insurance
Total

Total
ProgramServices

TOMODACHI

General and
Administration

Fundraising

Total

$

913,754
307,661
115,425
31,235
10,373
6,792
6,015
5,104
4,516
4,157

$

374,261445,564
500,000
17,85164,87445,043
1,092
11,767
8,476
1,188
6,823

$

1,288,015
753,225500,000
133,276
96,10955,417
7,884
17,782
13,5795,704
10,980$339,157
131,590
22,518
2,769
4,097
3,006
2,997
968
355

$

278,115
1,538
15,107
2,991
919
2,749
2,017
6,128
2,011

$

1,905,287
753,225500,000
266,404
133,734
61,176
12,90023,537
18,594
12,801
13,346$

1,405,032$

1,476,939$

2,881,971$

507,457$

311,575$

3,701,003

See accompanying Notes to Financial Statements.
-9-U.S.-JAPAN COUNCIL
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2019 (RESTATED)

General
Education
Salaries and Benefits
Program Services
Office Expenses
Travel and Meeting
Professional Services
Depreciation and Amortization
Facilities and Equipment
Telecommunications
Credit Card and Other Service Charges
Insurance
Total

Total
ProgramServices

TOMODACHI

General and
Administration

Total(Restated)

Fundraising$

1,169,794
1,787,352
76,710135,587
24,121
12,01858,90052,12916,603
6,162$

315,319
1,892,799
14,094
5,897
13,146
7,169
40,815
10,086
3,180
4,943

$

1,485,113
3,680,151
90,804141,484
37,267
19,187
99,71562,215
19,783
11,105$

265,732
10,149
6,462
5,243
2,758
14,956
3,862
1,703
1,760

$

163,976
4,936
6,887
2,622
1,379
7,477
1,931
2,128
880

$

1,914,821
3,680,151
105,889
154,833
45,132
23,324
122,148
68,00823,614
13,745$

3,339,376$

2,307,448$

5,646,824$

312,625$

192,216$

6,151,665

See accompanying Notes to Financial Statements.
- 10 -

U.S.-JAPAN COUNCIL
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (RESTATED)

2020

2019
(Restated)$ 2,721,124$ 1,227,739

31,362
3,077(2,253,332)

16,865(1,818,594)

1,207,556
460,980(2,006)361,686(420,848)
45,794(473,771)(285,477)(39,790)(10,500)

401,701
178,618
11,762(62,049)

1,359,223(57,326)(2,866)(29,225)
593,388(72,087)(7,498,207)
7,896,525

561,297

326,231

Net Increase in Cash and Cash Equivalents

1,920,520

268,905

Cash and Cash Equivalents, Beginning of Year3,387,873

3,118,968

Cash and Cash Equivalents, End of Year$ 5,308,393$ 3,387,873

Cash Flows from Operating Activities
Change in Net Assets
Adjustments to Reconcile Change in Net Assets to
Net Cash Provided by (Used in) Operating Activities
Depreciation and Amortization
Loss on Disposals
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 Provided by (Used in) Operating Activities
Cash Flows from Investing Activities
Purchases of Fixed Assets
Purchases of Investments
Sales of Investments
Net Cash Provided by Investing Activities

See accompanying Notes to Financial Statements.
- 11 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
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 andliabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimates.

- 12 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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, 2020 and 2019, 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.
- 13 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment (Continued)
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.
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.
Reclassifications
Certain reclassifications have been made to the December 31, 2019 financial statements tomake them comparable with the December 31, 2020 financial statements.

3.

ADOPTION OF ACCOUNTING STANDARDSFor the year ended December 31, 2019, USJC adopted Financial Accounting Standards Board(FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts 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 torecognize the amount of revenue to which it expects to be entitled for the transfer of promised- 14 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
3.

ADOPTION OF ACCOUNTING STANDARDS (CONTINUED)
goods or services to customers. The updated standard replaces most existing revenue recognition
guidance in U.S. GAAP. This change in accounting principle was adopted for the year ended
December 31, 2019.
For the year ended December 31, 2019, USJC adopted Financial Accounting Standards Board(FASB) Accounting Standards Update (ASU) 2018-08, Not-for-Profit Entities (Topic 958): Clarifying
the Scope and the Accounting Guidance for Contributions Received and Contributions 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 exchange (reciprocal) transactions (subject
to ASC 606); and (2) distinguishing between conditional and unconditional contributions.
Management believes that the adoption of this ASU 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 years
ended December 31, 2020 and 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, 2020 and 2019, 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
Total Financial Assets and Liquidity Resources Available within One Year

5.

2020

2019

$ 5,308,393
14,835,766
68,42332,584(17,147,005)
385,000$ 3,387,873
13,146,597
1,177,812
493,564(15,268,909)
430,000$ 3,483,161$ 3,366,937

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.
- 15 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
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 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
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 theassumptions 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, 2020 and 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-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 withmoderate volatility by investing in funds sponsored by historically successful managers pursuinga 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 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 $13,889,983 and $11,545,070 for 2020 and 2019, respectively.
- 16 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
6.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)
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, 2020 and 2019, are as follows:
2020
Fair Value
Money Market Fund
Equity Funds
Exchange Traded 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 323,561
572,222$

23,561
572,222

$

-

$

-

595,783$595,783

$

-

$

-

13,889,983
350,000$ 14,835,766

2019
Fair Value
Money Market Fund
Equity Funds
Exchange Traded Funds
Fixed Income Funds

Level 2

Level 3

195,683
1,044
1,054,800$

195,683
1,044
1,054,800

$

-

$

-

Total Investments Measured at Fair Value

1,251,527$

1,251,527

$

-

$

-

Other Investment Funds
Non-Marketable Investments Valued at Cost

11,545,070
350,000

Total Investments$

Level 1$

13,146,597

Other Investment Funds activity for the years ended December 31, 2020 and 2019, is asfollows:
Other Investment Funds

2019

2020

Balance at January 1
Purchases of Investments
Transfer of Funds
Sales of Investments
Net Investment Income,Attributable to Assets Held at Year End$ 11,545,070
50,000-$1,267,875

2,294,913

Balance at December 31$ 13,889,983- 17 -

4,657,195
7,025,000(1,405,000)$

11,545,070

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
6.

INVESTMENTS AND FAIR VALUE MEASUREMENTS (CONTINUED)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 years ended
December 31, 2020 and 2019.
Investment income for the years ended December 31, 2020 and 2019, is as follows:
Description

2019

2020

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

$

4,891
2,310,507(57,175)$ 2,258,223

$

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

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.
7.

CONTRIBUTIONS AND PROMISES TO GIVEUSJC has been awarded major contributions, which included conditional contributions andunconditional promises to give.
A 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 atthat time. The conditional promises to give are not recorded as revenue until the conditions
are met. In 2020, the TOMODACHI program was disrupted by the coronavirus pandemic.
Although USJC reconfigured the activities to adapt the disruption, the conditions were notachieved to receive the remaining promises to give. The balances of conditional promises togive are approximately $-0- and $1,700,000 as of December 31, 2020 and 2019, respectively.
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 donorimposed 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.
As of December 31, 2020 and 2019, contribution receivables are expected to be realized in thefollowing periods:
Description

2020

In One Year or Less
Between One Year and Five Years- 18 -

2019$

68,423-$ 1,177,812
98,167$68,423$ 1,275,979

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 20198.

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 canceled the in-person Annual Conference in 2020. In lieu of a traditional inperson Annual Conference this year, USJC hosted series of virtual events and engagements
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 twoentities based on the ratio of revenue received and expenses paid which were agreed by both
U.S.-Japan Council (US) and U.S.-Japan Council (Japan).

9.

PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 2020 and 2019:
Description
Furniture and Fixtures
Office Equipment$

39,342
142,109$

Net$

51,07039,342
142,916
182,258(99,615)

181,451(130,381)

Less Accumulated Depreciation

10.

2019

2020

$

82,643

NET ASSETS WITH DONOR RESTRICTIONS
Net assets with donor restrictions were available for the following purposes at December 31, 2020
and 2019:
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

2020

2019

$ 2,243,885
3,832,161
1,070,959$ 3,550,130
1,718,779-

10,000,000

10,000,000$ 17,147,005$ 15,268,909

Net assets were released from donor restrictions during 2020 and 2019 as follows:
Description
TOMODACHI
Watanabe Endowment Fund - Scholarships
Silicon Valley Japan Platform (SVJP)
Total- 19 -

20202019$ 1,575,837
124,439
163,519$ 1,540,026
453,312-$ 1,863,795$ 1,993,338

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 201911.

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
Japanese and Americans in ways that deepen the friendship between the United States andJapan.
TOMODACHI raises funds from contributors in the U.S. and Japan. Donors have the option ofcontributing 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.

12.

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.

13.

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 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 theapplicable 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 thestandard of prudence prescribed by UPMIFA.
- 20 -

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 201913.

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
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 $200,000 to approximately 4.0 percent of the market value of the Fund.
In December 2019, the USJC Investment Committee discussed and approved change to theEndowment spending policy. The distribution shall be based on the average of the prior three
years’ investment portfolio, times the approved spending rate. The average will be calculatedusing the past 12 quarter ending balances as of September 30 of the year; the spending rate will
be 4%, unless changed by action of the Board.
Composition and changes in endowment net assets for the years ended December 31, 2020
and 2019, were as follows:
With Donor Restrictions
With
With
PurposePermanently
Restricted
Restricted
Endowment Net Assets, January 1, 2019
Investment Return
Appropriation of Endowment Assets for Expenditure$

Endowment Net Assets, December 31, 2019, Restated
Investment Return
Appropriation of Endowment Assets for Expenditure
Endowment Net Assets, December 31, 2020$

- 21 -

400,218
1,771,873(453,312)

$

Total

10,000,000-$

10,400,218
1,771,873(453,312)

1,718,779

10,000,000

11,718,779

2,237,821(124,439)-

2,237,821(124,439)

3,832,161$ 10,000,000$ 13,832,161

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 201914.

DONATED SERVICES
The value of donated services and facilities and the corresponding functional expense categories
for the years ended December 31, 2020 and 2019, are as follows:
Description
General Education
Supplies
TravelPrinting
Meetings
Facilities and Equipment
Total

15.

2019

2020
$

-

$

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

$

-

$

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 the Planare 100% vested upon participation. During the years ended December 31, 2020 and 2019,
USJC’s contributions to the Plan were $57,906 and $90,055, respectively.

16.

LEASES
Office Equipment Lease
USJC has entered into a lease of certain office equipment and is obligated under the leasethrough April 2025.
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,
2021
2022
2023
2024
2025
Total Future Minimum Lease Payments- 22 -$

179,372
19,467
5,388
5,388
14,528$224,143

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 201917.

PAYCHECK PROTECTION PROGRAM LOAN
USJC has received a Small Business Administration (SBA) loan under the Paycheck Protection
Program (PPP) in the amount of $406,400. PPP provides up to eight weeks of cash-flow assistancethrough 100% federally guaranteed loans to eligible recipients to maintain payroll during the
COVID-19 (coronavirus disease) public health emergency and cover certain other expenses. The
first loan payment is deferred for six months. If USJC maintains its workforce, up to 100% of theloan 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 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 repayment has been waived as ofDecember 31, 2020, as such, the proceeds are reflected in grants and contributions in thestatements of activities and changes in net assets.

18.

RESTATEMENT OF FINANCIAL STATEMENTS
USJC restated its financial statements as of and for the year ended December 31, 2019, toreflect expenses incurred prior to December 31, 2019, which were not recorded in that period.
The adjustment, which increased accounts payable and expenses, resulted in a decrease intotal net assets of $485,917 to $17,413,852 at December 31, 2019.

19.

SUBSEQUENT EVENTSThe 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 of these circumstances, management continues to assess how best to adapt to changed
circumstances
On February 2, 2021, USJC was approved for a second draw Small Business Administration(SBA) loan under the Paycheck Protection Program (PPP) in the amount of $365,520.
USJC has evaluated subsequent events through March 30, 2021, the date on which the financial
statements were available to be issued.

- 23 -