SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
FINANCIAL STATEMENTSYEARS ENDED MARCH 31, 2018 AND 2017

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
FOR THE YEARS ENDED MARCH 31, 2018 AND 2017

Table of Contents

Page
Independent Accountant's Review Report

1-2

Financial Statements
Statements of financial position

3

Statements of activities

4Statements of cash flows

5

Notes to financial statements

6 - 13

INDEPENDENT ACCOUNTANT'S REVIEW REPORTTo the Board of Directors
Sasakawa Peace Foundation USA, Inc.
We have reviewed the accompanying financial statements of Sasakawa Peace Foundation USA, Inc. (anonprofit organization) (the "Foundation"), which comprise the statements of financial position as ofMarch 31, 2018 and 2017, and the related statements of activities and cash flows for the years thenended, and the related notes to the financial statements. A review includes primarily applying analyticalprocedures to management's financial data and making inquiries of Foundation management. A review
is substantially less in scope than an audit, the objective of which is the expression of an opinion
regarding the financial statements as a whole. Accordingly, we do not express such an opinion.
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.
Accountant's Responsibility
Our responsibility is to conduct the review engagements in accordance with Statements on Standards
for Accounting and Review Services promulgated by the Accounting and Review Services Committeeof the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis
for reporting whether we are aware of any material modifications that should be made to the financial
statements for them to be in accordance with accounting principles generally accepted in the UnitedStates of America. We believe that the results of our procedures provide a reasonable basis for ourconclusion.
Accountant's Conclusion
Based on our reviews, we are not aware of any material modifications that should be made to theaccompanying financial statements in order for them to be in accordance with accounting principles
generally accepted in the United States of America.

Report on Restatement Adjustments to 2017 Financial Statements
As part of our review of the 2018 financial statements, we also reviewed the adjustments described in
Note 10 that were applied to restate the 2017 financial statements. Based on our review, we are notaware of any material modifications that should be made to the adjustments that were applied to restate
the 2017 financial statements in order for them to be in accordance with accounting principles generally
accepted in the United States of America.

Bethesda, Maryland
July 30, 2018

2

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
STATEMENTS OF FINANCIAL POSITIONMARCH 31, 2018 AND 2017
2018

2017
(Restated)

ASSETS
Current assets:
Cash and cash equivalents
Grants receivable
Tenant rents and other receivable
Prepaid expenses$

849,102 $16,972
76,042
20,781

304,303
100,607
29,03943,570Total current assets

962,897

477,519

Property and equipment, net

4,312,579

4,422,980

303,204

252,144

2,703
64,186

10,90688,965370,093352,015

5,645,569 $

5,252,514

250,328 $120,000
49,86624,232
678-

102,092
101,996
31,204
1,706
8,635

Total current liabilities

445,104

245,633

Long-term liabilities:
Deferred rent liabilities
Tenant security deposits

278,933
63,443294,29085,083

Total long-term liabilities

342,376

379,373

Total liabilities

787,480625,006

Unrestricted net assets

4,858,089

4,627,508

5,645,569 $

5,252,514

Other assets:
Deferred leasing commissions, net of accumulated amortization of$439,142 in 2018 and $378,300 in 2017
Website development costs, net of accumulated amortization of$42,697 in 2018 and $34,494 in 2017
Restricted cash - tenant security deposits
Total other assets$

TOTAL ASSETSLIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable
Grant refundable
Credit card payable
Accrued vacation
Accrued taxes
Deferred income

TOTAL LIABILITIES AND NET ASSETS$$

See independent accountant's review report and accompanying notes to financial statements.
3

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
STATEMENTS OF ACTIVITIESFOR THE YEARS ENDED MARCH 31, 2018 AND 20172018
Revenues:
Grant income
Rental income
Contributions
Interest and dividends
Loss on asset disposals$

2017(Restated)

3,993,867 $
1,606,770
800
238
-

3,750,799
1,704,757
2,983
104(7,732)5,601,675

5,450,911

2,441,948
154,607
1,075,741
339,553
1,359,245

3,047,291
148,896
538,524
278,383
1,401,527

Total expenses

5,371,094

5,414,621

Change in net assets

230,581

36,290Unrestricted net assets - beginning, as previously reported

4,627,508

4,885,131-(293,913)

4,627,508

4,591,218

4,858,089 $

4,627,508

Total revenues
Expenses:
Programs:
Policy research and education
JUMP
GrantsGeneral and administrative
Rental operations

Prior-period adjustment - error in recognizing rental income inprior years (Note 10)
Unrestricted net assets - beginning, as restated
UNRESTRICTED NET ASSETS - ENDING$

See independent accountant's review report and accompanying notes to financial statements.
4

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED MARCH 31, 2018 AND 20172018
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 asset disposals
Changes in assets and liabilities:
Grants receivable
Reimbursements receivable
Tenant rents and other receivable
Prepaid expenses
Prepaid federal excise tax
Deferred leasing commissions
Restricted cash - tenant security deposits
Accounts payable
Grant refundable
Credit card payable
Accrued vacation
Accrued taxes
Deferred income
Deferred rent liabilities$

2017(Restated)

230,581 $36,290345,193-

330,429
7,732

83,635(47,003)
22,789(111,902)
24,779148,236
120,000(52,130)(6,972)(1,028)(8,635)(15,357)(56,141)
16,25570,041
17,765
1,191(46,147)(45)(138,943)(9,498)
3,463
1,706
5,669
377

732,186

240,144

Cash used in investing activities:
Acquisitions of property and equipment(165,747)(183,397)

Cash flows from financing activities:
Receipts of tenant security deposits
Repayments of tenant security deposits

72,000(93,640)-

Net cash used in financing activities(21,640)-

Net increase in cash and cash equivalents

544,799

56,747

Cash and cash equivalents - beginning

304,303

247,556

849,102 $304,303

Net cash provided by operating activities

CASH AND CASH EQUIVALENTS - ENDING$

See independent accountant's review report and accompanying notes to financial statements.
5

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 1.

ORGANIZATION AND NATURE OF BUSINESS
Sasakawa Peace Foundation USA, Inc. (the "Foundation") was incorporated on
September 24, 1990, as a not-for-profit private foundation and commenced operationsin March 1991. The Foundation is dedicated to strengthening U.S.-Japan relations
through education, programs and research. To foster this mission, the Foundation's
research programs focus on security, diplomacy, economics, business, trade, technology
and other matters of common concern. The Foundation's education programs aredesigned to facilitate people-to-people exchange and dialogue on these issues with
American and Japanese policymakers, influential citizens and the broader public.
Upon its formation, the Foundation received a grant from its founder, the Sasakawa
Peace Foundation Japan ("SPF-Japan"), to acquire a building in Washington, D.C., tohouse a library of research, survey and other noncommercial publications, and an art
gallery dedicated for the purpose of fostering a better understanding of contemporary
Japan in the United States. After extensive renovations to the property, the Foundation
opened the library and art gallery on December 2, 1992. In October 1996, after
reevaluating its activities, the Foundation terminated the art gallery operations andinitiated new programs to promote better understanding and dialogue between the
United States and Asia. The library operations were discontinued during 2014, and therelated assets were donated to other educational and charitable organizations.
Subsequently, the Foundation expanded its research, educational, and grant programs
on U.S.-Japan relations with additional grants. The Foundation is currently renting
space in the building to unrelated commercial tenants and uses the income from therental activities to maintain the building and support the Foundation's activities.

NOTE 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of presentation
The accompanying financial statements have been prepared in accordance withaccounting principles generally accepted in the United States of America ("GAAP").
Accordingly, the Foundation follows Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 958, Not-for-Profit Entities, which requires
the Foundation to distinguish between contributions that increase permanently
restricted net assets (subject to perpetual funding source-imposed restrictions),
temporarily restricted net assets (funding source-imposed restrictions have not beenmet) and unrestricted net assets (not subject to funding source-imposed restrictions orwhose funding source-imposed restrictions have been met). Contributions with donorimposed restrictions that are met in the same accounting period are recorded as
unrestricted revenue. At March 31, 2018 and 2017, the Foundation had no temporarilyor permanently restricted net assets.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosures 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.
See independent accountant's review report.
6

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition
The Foundation recognizes rental revenue on the straight-line basis over the terms of
the respective leases. Revenue from contributions and grants is recognized as income
when it is unconditionally promised. Revenue from conditional grants is recognizedwhen the Foundation has complied with substantially all of the conditions set forth in
the grant agreement. Contributions received with temporary restrictions that are met in
the same reporting period are reported as unrestricted support and increase unrestricted
net assets.
Contributions of non-cash assets are recorded at their fair values in the period received.
Contributions of services that create or enhance non-financial assets or that require
specialized skills, are provided by individuals possessing those skills, and would typicallyneed to be purchased if not provided by donation, are recorded at their fair values in the
period received. For the years ended March 31, 2018 and 2017, there were nocontributions of non-cash assets or contributed services meeting the requirements forrecognition in the financial statements.
Cash and cash equivalents
Cash and cash equivalents consist primarily of cash on deposit and money market
accounts that are readily convertible into cash.
Restricted cash
Tenant security deposits are held in a separate bank account in accordance withapplicable state laws and disbursed in accordance with the lease agreements.
Receivables
Receivables consist of grant commitments, expense reimbursements and tenant-related
income, and are stated at the amounts that management expects to collect.
Management evaluates such receivables and establishes an allowance for doubtful
accounts based on a history of write-offs and collections and current credit conditions.
The Foundation charges off uncollected receivables when management determines thatit has exhausted all collection efforts. Management has determined that, at March 31,2018 and 2017, all of its receivables were collectible, and that no allowance for doubtful
accounts was required.
Income taxes
The Foundation is classified as a private foundation as described in Section 501(c)(3) of
the Internal Revenue Code (the "Code") and is exempt from federal income taxes on its
exempt income under Sections 509(a)(3) and 170(b)(1)(A)(vi) of the Code.
Contributions to the Foundation are deductible to the extent permitted by law. The
Foundation is subject to certain excise taxes on any net investment income. The
Foundation is also exempt from the District of Columbia's income and franchise,personal property, and sales and use taxes.

See independent accountant's review report.
7

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income taxes (continued)
As a result of the enactment of the Tax Cuts and Jobs Act in 2017, effective January 1,
2018, the Foundation is subject to income tax on unrelated business income arisingfrom nontaxable qualified transportation benefits provided by the Foundation to its
employees. Income tax on unrelated business income activity amounted to $1,200 for
the year ended March 31, 2018.
Uncertain tax positions
The Foundation follows accounting requirements associated with uncertainty in income
taxes using the provisions of FASB ASC 740, Income Taxes. Using that guidance, tax
positions initially need to be recognized in the financial statements when it is more likely
than not that the positions will be sustained upon examination by the taxing authorities.
It also provides guidance for derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.
The Foundation files income tax returns in the U.S. federal jurisdiction. As of March
31, 2018 and 2017, management has determined that the Foundation had no uncertain
tax positions that qualified for either recognition or disclosure in the financial
statements.
Deferred leasing commissions
Deferred leasing commissions consist of commissions due to the property managementcompany for locating tenants for the Foundation's rental property. Such costs areamortized over the terms of the respective lease agreements using the straight-line
method. For the years ended March 31, 2018 and 2017, amortization of the leaseacquisition costs totaled $60,842 and $47,387, respectively.
Website development costs
The Foundation classifies and accounts for costs incurred for website development inthree stages. During the initial or planning stage, the costs incurred are expensed. Costs
incurred during the second or development stage are capitalized and then amortizedwhen the website is ready for its intended use. The third stage consists of postimplementation activity and adding additional upgrades and features. Postimplementation costs are expensed as incurred; costs incurred for additional upgrades
and features once the website is launched are capitalized if the upgrades andenhancements furnish additional functionality; otherwise, they are expensed as incurred.
The Foundation amortizes its capitalized website development costs over three years
using the straight-line method. During the years ended March 31, 2018 and 2017,amortization expense related to capitalized website development costs totaled $8,203
and $12,799, respectively.

See independent accountant's review report.
8

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and equipment
Acquisitions of property and equipment, including improvements and replacements, arerecorded at cost. Depreciation is provided using the straight-line and various accelerated
methods over the estimated useful lives of five to 39 years for buildings andimprovements and three to seven years for furniture and equipment. Maintenance andrepairs that do not improve or extend the lives of the assets are charged to expense as
incurred. When assets are sold or retired, their cost and related accumulated
depreciation are removed from the accounts and any gain or loss reported in thestatements of activities.
Long-lived assets
Management assesses whether indicators of impairment of long-lived assets, such as
property, equipment and intangible assets, are present. If such indicators are present,
recoverability of these assets is determined based upon expected undiscounted future
net cash flows from the operations to which the assets relate utilizing management's
best estimates, appropriate assumptions and projections at the time. If the carrying
value is determined not to be recoverable from future operating cash flows, the asset
would be deemed impaired and an impairment loss would be recognized to the extent
the carrying value exceeded the estimated fair value of the asset. Management
determined that there was no impairment to its long-lived assets during the years ended
March 31, 2018 or 2017.
Functional allocation of expenses
The costs of providing the various programs and other activities have been summarized
on a functional basis in the accompanying statements of activities. Accordingly, certain
costs have been allocated among the programs and supporting services benefited basedon management's estimates.
A description of the significant program activities of the Foundation are as follows:
Policy Research and Education - addressing issues of importance to the United States andJapan requiring greater attention, coordination and cooperation; organizing programs
that improve understanding of U.S.-Japan relations in the United States throughdialogue, exchanges and outreach; engaging the American public through the news
media and our own social media
Japan-U.S. Military Program ("JUMP") - conducting seminars, conferences, andoutreach through social media to inform and connect Americans who have served orare serving in the U.S. military in Japan to facilitate their contributions tostrengthening the U.S.-Japan relationship.
Grants - awarding grants to other organizations to strengthen the U.S.-Japan
relationship.

See independent accountant's review report.
9

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent accounting pronouncement
In June 2018, FASB issued Accounting Standards Update ("ASU") No. 2018-08, Not-forProfit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions
Received and Contributions Made. This update assists not-for-profit (NFP) and other entitiesin (1) evaluating whether transactions should be accounted for as contributions (i.e.,
non-reciprocal transactions) within the scope of FASB ASC Topic 958, Not-for-Profit
Entities, or as exchange (i.e., reciprocal) transactions subject to other GAAP guidance(e.g., FASB ASC 606, Revenue from Contracts with Customers), and (2) distinguishing
between conditional and unconditional contributions. ASU 2018-08 is effective foryears beginning after December 15, 2018, with early adoption permitted. The effect of
adopting this new guidance on the Foundation's financial statements and related
disclosures has not yet been determined.
Subsequent events
Management has evaluated subsequent events through July 30, 2018, the date on whichthese financial statements were available to be issued. There were no material
subsequent events that required recognition or additional disclosure in these financial
statements.

NOTE 3.

PROPERTY AND EQUIPMENTThe Foundation's property and equipment consisted of the following at March 31, 2018and 2017:
2018
Land
Building and improvements
Furniture and equipment
Total costLess: accumulated depreciation
Property and equipment, net

2017$ 1,200,000 $ 1,200,000
6,188,890
6,030,153
153,380
147,342
7,542,270

7,377,495

3,229,691

2,954,515$ 4,312,579 $ 4,422,980

Depreciation expense was $276,148 and $270,243 for the years ended March 31, 2018and 2017, respectively.

See independent accountant's review report.
10

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 4.

FOUNDING GRANT AND ONGOING SUPPORTIn March 1991, the Foundation received an initial grant from SPF-Japan (Tokyo) in theamount of $21,655,122 (2,970,000,000 Japanese Yen) for the purpose of acquiring an
office building at 1819 L Street in Washington, D.C. The building was acquired in May
1991 at a cost of $19,074,660. The remaining proceeds were used to renovate thebuilding and to fund the initial operations of the Foundation.
In 1996, the Foundation recorded an impairment loss on the building in the amount of$14,630,058, as management determined that the carrying amount of the property
exceeded the estimated future cash flows expected to be received from the operationsof the property.
For the years ended March 31, 2018 and 2017, the Foundation received grants totaling$3,673,867 and $3,469,801, respectively, from SPF-Japan (Tokyo) to assist with
operating activities. Grants receivable from SPF-Japan (Tokyo) were $16,972 and$100,607 at March 31, 2018 and 2017, respectively.

NOTE 5.

RENTAL INCOME
The Foundation is the lessor of commercial space under operating leases expiring
periodically through 2026. Certain of the lease agreements include renewal periods at
the Foundation's option, as well as rent holidays and scheduled rent increases. Rental
income is recognized on the straight-line method over the terms of the respective leases.
Future minimum lease payments expected to be received under the leases at March 31,
2018, are as follows:Year ending March 31:
2019
2020
2021
2022
2023
Thereafter

Amount$ 1,650,069
1,081,353
883,172
810,229
650,848652,344$ 5,728,015

The Foundation's board of directors has approved that the rental income be applied tofund current operations of the Foundation.
At March 31, 2018 and 2017, the cost of the property subject to rental operations
amounted to $7,388,890 and $7,230,153, respectively. At March 31, 2018 and 2017, theaccumulated depreciation for the rental property amounted to $3,135,057 and$2,878,333, respectively.

See independent accountant's review report.
11

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 6.

GRANTSThe Foundation awarded the following grants during the years ended March 31, 2018and 2017, to support projects with a purpose to promote dialogue and strengthen the
U.S.-Japan relationship:
2018

2017

127,729 $76,393871,619

101,170
82,102355,252$ 1,075,741 $

538,524

Strengthening the U.S.-Japan Relationshipfrom U.S. Perspectives$
JUMP
Other grants
Total

The following are descriptions of the grants awarded by the Foundation:
Strengthening the U.S.-Japan Relationship from U.S. Perspectives - Grants were awarded toorganize programs and offer opportunities for students, policy experts, congressional
staff and practitioners to learn more about, and strengthen their ties to, Japan. There
were 12 and five grant recipients for the years ended March 31, 2018 and 2017,
respectively.
JUMP - Two grants, for each of the years ended March 31, 2018 and 2017, wereawarded to organize events and networking activities in the United States andYokosuka, Japan, for Americans who have served or are serving in the U.S. militaryin Japan to update them on U.S.-Japan relations and enhance their ties to Japan.
Other grants - Grants were awarded to support projects to organize events anddelegation trips to Japan for congressional members and staff. There were two grantrecipients and one grant recipient for the years ended March 31, 2018 and 2017,
respectively.
NOTE 7.

CONCENTRATIONSThe Foundation places its cash and cash equivalents, which may at times be in excess ofFederal Deposit Insurance Corporation ("FDIC") insurance limits of up to $250,000,
with high credit quality financial institutions. The amount in excess of FDIC insurance
was $508,562 as of March 31, 2018.
The Foundation receives rental income from office space leased in Washington, D.C.,
and is subject to the normal fluctuations and risk associated with the real estate market
in this area.
The Foundation receives a significant portion of its grant income from SPF-Japan(Tokyo) (see Note 4).

See independent accountant's review report.
12

SASAKAWA PEACE FOUNDATION USA, INC.
(A Nonprofit Organization)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
NOTE 8.

FEDERAL EXCISE TAXThe Foundation is subject to federal excise tax on net investment income. During theyears ended March 31, 2018 and 2017, the Foundation earned net investment income of$247,763 and $294,634, respectively. Federal excise tax incurred during the years ended
March 31, 2018 and 2017, amounted to $2,478 and $2,946, respectively.
Additionally, the Code requires minimum qualifying distributions of funds related totheir exempt purpose. During the years ended March 31, 2018 and 2017, theFoundation made qualifying distributions of $3,953,811 and $4,127,728, respectively,
which were in excess of the minimum distributable amounts of $767,357 and $796,716,
respectively. The Code allows for excess distributions to be carried forward to reducethe minimum distributions required in future years. At March 31, 2018, the Foundation
had excess distribution carryforwards of $13,698,957.

NOTE 9.

RETIREMENT PLAN
The Foundation has a defined contribution 401(k) plan. Substantially all employees are
eligible to participate. The Foundation made contributions of $124,970 and $83,461 forthe years ended March 31, 2018 and 2017, respectively.

NOTE 10.

RESTATEMENTThe Foundation had previously recognized rental income as rent payments were due inaccordance with the respective lease agreements. However, certain of the leaseagreements contain provisions for periods of free rent and future rent increases. In such
instances, GAAP requires rental payments to be recognized on the straight-line method
over the term of the respective lease.
Accordingly, the Foundation restated its statement of activities for the year ended
March 31, 2017, by reducing rental income and its changes in unrestricted net assets by$377. Additionally, unrestricted net assets at April 1, 2016, were reduced by $293,913 toreclassify and defer excess rental income recognized in prior years.
The following sets forth the previously reported and restated amounts of selected items
within the statement of financial position as of March 31, 2017 and within thestatements of activities and cash flows for the year ended March 31, 2017:
As previously
reported
Selected financial position data:
Deferred rent liabilities
Unrestricted net assets
Selected activities data:
Rental income
Change in net assets
Unrestricted net assets - beginning
Selected cash flows data:
Change in net assets$

As restated$294,290
4,921,798
4,627,508
1,705,134
36,667
4,885,131

1,704,757
36,2904,591,218

36,66736,290See independent accountant's review report.
13