anti-defamation league of b’nai b’rith and … · b’rith and anti-defamation league...

ANTI-DEFAMATION LEAGUE OF B’NAI B’RITH AND ANTI-DEFAMATION LEAGUE FOUNDATION

Consolidated Financial Statements and Schedules

December 31, 2009 and 2008

(With Independent Auditors’ Report Thereon)

Independent Auditors’ Report

National Commission Anti-Defamation League of B’nai B’rith and Board of Trustees Anti-Defamation League Foundation:

We have audited the accompanying consolidated balance sheets of Anti-Defamation League of B’nai B’rith and Anti-Defamation League Foundation (collectively referred to as ADL) as of December 31, 2009 and 2008, and the related consolidated statements of activities and cash flows for the years then ended. These consolidated financial statements are the responsibility of ADL’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of ADL’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Anti-Defamation League of B’nai B’rith and Anti-Defamation League Foundation as of December 31, 2009 and 2008, and the changes in their net assets and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

Our audits were performed for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The 2009 consolidating schedules and other supplementary information included in schedules 1 through 6 are presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position, changes in net assets, and cash flows of the individual organizations and are not a required part of the basic consolidated financial statements. The 2009 consolidating schedules and other supplementary information have been subjected to the auditing procedures applied in the audit of the 2009 basic consolidated financial statements and, in our opinion, are fairly stated in all material respects in relation to the 2009 basic consolidated financial statements taken as a whole.

August 11, 2010

KPMG LLP 345 Park Avenue New York, NY 10154

KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity.

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ANTI-DEFAMATION LEAGUE OF B’NAI B’RITH ANDANTI-DEFAMATION LEAGUE FOUNDATION

Consolidated Balance Sheets


Assets 2009 2008

Cash and cash equivalents $ 8,713,193 8,909,998 Contributions receivable, net (note 4) 12,189,214 14,479,749 Prepaid expenses and other assets 3,395,836 2,502,685 Investments (note 3) 131,148,894 115,100,945 Property and equipment, net (note 5) 14,746,036 16,333,278

Total assets $ 170,193,173 157,326,655

Liabilities and Net Assets

Liabilities:Accounts payable and accrued expenses $ 8,970,255 10,665,064 Borrowings under lines of credit (note 8) 8,000,000 4,000,000 Deferred revenue 613,614 529,329 Deferred rent (note 8) 7,607,220 7,497,841 Liabilities under charitable trusts and annuity agreements 10,034,513 9,941,004 Accrued pension obligation (note 6) 27,839,751 25,610,329

Total liabilities 63,065,353 58,243,567

Commitments and contingencies (note 8)

Net assets:Unrestricted:

Available for operations 51,934,382 47,271,163 Accrued pension obligation (27,839,751) (25,610,329)

Total unrestricted 24,094,631 21,660,834

Temporarily restricted (note 7) 26,234,596 22,205,835 Permanently restricted (note 7) 56,798,593 55,216,419

Total net assets 107,127,820 99,083,088 Total liabilities and net assets $ 170,193,173 157,326,655

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Activities

Years ended December 31, 2009 and 2008

2009 2008

Changes in unrestricted net assets:Operating expenses (note 6):

Program services:Regional operations $ 23,587,344 25,494,506 Education 6,781,430 7,193,281 Civil rights 5,891,088 7,255,831 International affairs and interfaith programs 2,866,314 3,893,841 Leadership 2,673,626 2,766,595 Marketing and communications 4,122,306 4,873,548

45,922,108 51,477,602

Supporting services:Administration 7,682,935 8,424,445 Development 9,395,356 10,141,481

17,078,291 18,565,926

Total operating expenses 63,000,399 70,043,528

Operating revenues:Contributions (including special events revenue of $17,768,012

and $19,674,890, respectively) 44,717,181 47,860,151 Less:

Provision for uncollectible contributions receivable (993,192) (1,672,517) Direct special events expenses (5,140,801) (6,402,561)

Investment return appropriated (note 3) 2,511,878 2,607,860 Other income 1,102,084 980,952 Net assets released from restrictions 11,599,098 13,012,451

Total operating revenues 53,796,248 56,386,336

Excess of operating expenses over operating revenues (9,204,151) (13,657,192)

Nonoperating activities:Investment return greater (less) than amount appropriated (note 3) 13,745,076 (30,284,761) Other, net (10,998) (4,681) Pension charge other than net periodic benefit cost (note 6) (2,096,130) (9,491,484) Pension liability upon assumption of sponsorship (note 6) — (17,490,382)

Total nonoperating activities 11,637,948 (57,271,308)

Increase (decrease) in unrestricted net assets 2,433,797 (70,928,500)

Changes in temporarily restricted net assets:Contributions (note 7) 9,068,340 8,521,208 Change in the value of charitable trust and annuity agreements (664,946) (10,913) Investment return (note 3) 7,224,465 (12,758,523) Net assets released from restrictions (11,599,098) (13,012,451)

Increase (decrease) in temporarily restricted net assets 4,028,761 (17,260,679)

Change in permanently restricted net assets:Contributions (note 7) 1,582,174 1,606,882

Increase in permanently restricted net assets 1,582,174 1,606,882

Increase (decrease) in net assets 8,044,732 (86,582,297)

Net assets at beginning of year 99,083,088 185,665,385 Net assets at end of year $ 107,127,820 99,083,088


4 13231/rev/07/31/10/OT


Consolidated Statements of Cash Flows

Years ended December 31, 2009 and 2008

2009 2008

Cash flows from operating activities:Increase (decrease) in net assets $ 8,044,732 (86,582,297) Adjustments to reconcile increase (decrease) in net assets to net

cash used in operating activities:Pension charge other than net periodic benefit cost 2,096,130 9,491,484 Pension liability upon assumption of sponsorship — 17,490,382 Contributions of permanently restricted net assets (1,582,174) (1,606,882) Net (appreciation) depreciation in fair value of investments (21,743,322) 42,939,047 Provision for uncollectible contributions receivable 993,192 1,672,517 Depreciation and amortization 1,804,234 2,148,261 Change in the value of charitable trust and annuity agreements 664,946 10,913 Changes in operating assets and liabilities:

Contributions receivable 1,170,387 (1,194,990) Prepaid expenses and other assets (893,151) 515,168 Accounts payable and accrued expenses (1,694,809) (1,469,442) Deferred revenue 84,285 (112,286) Deferred rent 109,379 (966) Accrued pension obligation 133,292 (1,371,537)

Net cash used in operating activities (10,812,879) (18,070,628)

Cash flows from investing activities:Proceeds from sale of investments 58,516,888 32,855,109 Purchase of investments (52,821,515) (27,430,447) Acquisition of property and equipment (216,992) (1,363,493)

Net cash provided by investing activities 5,478,381 4,061,169

Cash flows from financing activities:Contributions of permanently restricted net assets 1,582,174 1,606,882 Change in contributions receivable restricted for permanent

investment 126,956 3,971,960 Payments to annuitants (1,098,371) (1,265,781) Proceeds from charitable trusts and annuity gifts in excess of

amounts recognized as contributions 526,934 505,773 Borrowings under lines of credit 4,000,000 4,000,000

Net cash provided by financing activities 5,137,693 8,818,834

Net decrease in cash and cash equivalents (196,805) (5,190,625)

Cash and cash equivalents at beginning of year 8,909,998 14,100,623 Cash and cash equivalents at end of year $ 8,713,193 8,909,998



Notes to Consolidated Financial Statements


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(1) Organization

The Anti-Defamation League of B’nai B’rith (the League) is a nonprofit organization formed in 1913 for the purpose of defending democratic ideals and eliminating anti-Semitism and bigotry in the United States and around the world, while providing knowledgeable leadership on a national level for the American Jewish community.

The Anti-Defamation League Foundation (the Foundation) was established in 1976 to assist the League in its principal objectives and to encourage and administer endowments.

Both the League and the Foundation (collectively referred to as ADL) are exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code, except for tax on unrelated business income, if applicable.

The following functional classifications have been established to account for the program services of ADL.

(a) Regional Operations

Supervises and coordinates the League’s coast-to-coast network of regional offices. Field staff and regional boards reach out to local communities with the substance of the League’s programs. The regional offices provide local data, information about trends, and the perspective to help develop the League’s policy and programs.

(b) Education

Furthers the League’s mission through the design and delivery of intergroup, Holocaust, anti-bias, and other educational programs and materials for use in P-12 classrooms, on college campuses, and with community groups, corporations, civic associations, religious organizations, youth movements, and other nontraditional learning contexts. Assists groups in responding to identified concerns and bias-motivated incidents, educating people to respect diversity, remember and learn from the Holocaust, and eradicate anti-Semitism, racism, and bigotry of all kinds. This work is undertaken through the Education Division’s departments: the A WORLD OF DIFFERENCE® Institute, operating in the United States and abroad; the Braun Holocaust Institute; Campus Affairs and Confronting Anti-Semitism; the Training and Curriculum Department; and the Administration Department.

(c) Civil Rights

Monitors, exposes, and counteracts groups and individuals that promote hate, extremism, anti-Semitism, and racism; combats bias-motivated criminal conduct and religious, racial, and other forms of discrimination through litigation, legislation, coalition-building, and educational efforts and by providing assistance to victims; and protects and defends the First Amendment rights of Jews and all Americans in the area of religious freedom. The Civil Rights Division’s Center on Extremism works to gather, analyze, and provide the public, especially law enforcement, with information about anti-Semitism and extremism, producing important reports on such issues as hate on the Internet and the threat posed by the organized hate movement. The Legal Affairs Department develops model legislation and other strategies to respond to the extremist threats, and also assists in formulating and




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implementing the League’s agenda in the areas of church-state separation, hate crimes, discrimination, affirmative action, and cyber-hate. The Civil Rights Division also has a Policy Planning Center based in Washington, D.C. that helps formulate long-range strategies, and a number of regional area counsel and investigative researchers who work closely with the League’s regional operations staff to gather information and to address specific local concerns about issues related to the League’s civil rights agenda. The Civil Rights Division also includes the Library and Research Center, which archives all ADL’s documents as well as mainstream and extremist publications, and which provides research for the League on nonextremist-related topics.

(d) International Affairs and Interfaith Programs

Maintains contacts throughout Europe, Latin America, the Mideast, and the United States from which information is gathered relating to political and social movements that impact anti-Semitism and bigotry. Observes trends in Europe, Israel, and the Mideast. Prepares and disseminates reports and data concerning the Mideast affecting the image of Israel and anti-Semitism in the United States. Initiates educational programs regarding Mideast and Israeli affairs through which information is channeled to the national office. Develops programs of cooperation on intergroup understanding and human relations with Catholic and Protestant religious groups at community, regional, and national levels. Participates in educational and action programs in interfaith efforts. Organizes training programs and curriculum development for seminars and religious-oriented educational institutions.

(e) Leadership

Recruits and develops new leadership through special programmatic meetings and dissemination of programmatic materials.

(f) Marketing and Communications

Presents the public face of ADL. Manages the League’s awareness through a comprehensive institutional and issues advertising campaign in The New York Times and other general and ethnic press outlets, pro bono ads, television public announcements, and videos; produces the national newsletter ADL on the Frontline; and handles Direct Marketing as well as the ADL Web site on the Internet. Prepares audiovisual and print materials on ADL issues, goals, and objectives; writes, edits, and produces materials for all ADL divisions (reports, brochures, displays, invitations, newsletters, periodicals, journals, ads, and special publications); and handles special projects such as exhibits.




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(2) Summary of Significant Accounting Policies

The consolidated financial statements have been prepared on the accrual basis of accounting and include the accounts of the League and the Foundation. All significant interorganizational balances and transactions have been eliminated in consolidation.

(a) Basis of Presentation

ADL’s net assets and revenues, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows:

Unrestricted net assets – Net assets not subject to donor-imposed restrictions.

Temporarily restricted net assets – Net assets subject to donor-imposed restrictions that will be met either by actions of ADL and/or the passage of time.

Permanently restricted net assets – Net assets subject to donor-imposed stipulations that they be maintained permanently by ADL. The donors of these assets may specify the use of the income earned.

The significant accounting policies followed are described below in order to enhance the usefulness of the consolidated financial statements to the reader.

i. Contributions, including unconditional promises to give, are recorded as contributions in the accompanying consolidated statements of activities when pledged, less an estimated amount for contributions deemed uncollectible. Contributions are considered to be available for unrestricted use unless restricted by donors to specific operating purposes. Conditional contributions, including promises to give, are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met.

ii. ADL reports gifts of cash and other assets as temporarily restricted contributions if they are received with donor stipulations that limit their use. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying consolidated statements of activities as net assets released from restrictions.

iii. Contributions of assets placed in trusts in which ADL has a remainder interest and charitable gift annuities are recorded at the date the assets are received after recording liabilities for the actuarial present value of the estimated payments to be made to the donors and/or other beneficiaries. Such contributions are recorded as increases in temporarily restricted net assets in the accompanying consolidated statements of activities. The liabilities are adjusted annually for changes in the value of the assets and changes in the estimates of future benefits. The adjustments are recorded as change in the value of charitable trust and annuity agreements in the accompanying consolidated statements of activities.




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iv. Cash and cash equivalents represent short-term investments with maturities of three months or less at the time of purchase, except for those short-term investments managed by ADL’s investment managers as part of their long-term investment strategies, which are included in investments in the accompanying consolidated balance sheets.

v. Donated assets and contributed services that meet the criteria for recognition are recorded at fair market value at date of gift. The fair value of readily marketable donated assets is based upon published market prices. The fair value of all other assets is based on independent appraisal or estimates of proceeds to be received upon disposition.

vi. Property and equipment are stated at cost except those assets received by gift, which are stated at appraised value at date of gift. Property and equipment are depreciated over their estimated useful lives using the straight-line method.

vii. Investments in short-term instruments, fixed income securities, mutual funds, and equity securities are carried at fair value based on published market prices. Investments in absolute return funds, limited partnerships, and other nonpublicly traded investments are stated at estimated fair value which, as a practical expedient, is the net asset value as provided by the investment managers, and evaluated for reasonableness by ADL.

viii. Deferred revenue includes revenue from special events, which have not yet occurred.

ix. The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in the preparation of the financial statements include fair value of alternative investments, net realizable value of contributions receivable, pension assumptions, and functional expense allocation. Actual results could differ from those estimates.

x. Operations include all expenses incurred and unrestricted revenues, except for investment return greater (less) than the amount appropriated for spending, pension charges other than net periodic benefit cost, and other nonrecurring items.

(b) New Accounting Pronouncements

Effective December 31, 2009, ADL adopted Accounting Standards Codification (ASC) No. 855-10, Subsequent Events (ASC 855-10). ASC 855-10 establishes principles and requirements for subsequent events and applies to accounting for and disclosure of subsequent events not addressed in other applicable generally accepted accounting principles. ADL evaluated events subsequent to December 31, 2009 through August 11, 2010, the date on which the consolidated financial statements were available for issuance. The adoption of ASC 855-10 had no impact on ADL’s consolidated financial statements.




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In 2009, ADL adopted the disclosure requirements of Accounting Standards Update (ASU) No. 2009-12, Fair Value Measurements and Disclosures – Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), with respect to investments within its scope. ADL had adopted the measurement provisions of this guidance in 2008.

In 2009, ADL adopted ASU 2009-06, Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities, in conjunction with its adoption of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (now included in ASC Subtopic 740-10, Income Taxes – Overall). FASB Interpretation No. 48 addresses the accounting for uncertainties in income taxes recognized in an organization’s financial statements and prescribes a threshold of more-likely-than-not for recognition and derecognition of tax positions taken or expected to be taken in a tax return. There was no significant impact to ADL’s consolidated financial statements as a result of the adoption of this guidance.

(3) Investments

Investments, stated at estimated fair value, consist of the following at December 31, 2009 and 2008:

2009 2008

Invested cash and short-term investments $ 7,046,753 2,521,790 Fixed income securities 11,113,521 16,397,728 Mutual funds – equities 8,721,381 13,086,234 Mutual funds – fixed income 14,880,079 9,071,812 Common stocks 4,463,258 3,514,127 Absolute return funds 69,773,945 58,047,851 Limited partnerships 14,749,957 12,061,403 Other 400,000 400,000

Total $ 131,148,894 115,100,945

Investments include charitable trust and annuity funds of approximately $14.1 million and $12.9 million at December 31, 2009 and 2008, respectively.




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Investment return for the years ended December 31, 2009 and 2008 is summarized as follows:

2009 2008

Interest and dividends $ 1,738,097 2,503,623 Net appreciation (depreciation) in fair value of investments 21,743,322 (42,939,047)

Total investment return $ 23,481,419 (40,435,424)

Reported in the consolidated statements of activities as follows:Unrestricted – operating $ 2,511,878 2,607,860 Unrestricted – nonoperating 13,745,076 (30,284,761) Temporarily restricted 7,224,465 (12,758,523)

Total $ 23,481,419 (40,435,424)

Assets and liabilities reported at fair value are required to be classified within a fair value hierarchy which gives preference to the use of observable inputs over unobservable inputs. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three levels of the fair value hierarchy are as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that a reporting entity has the ability to access at the measurement date.

• Level 2 inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability.

Classification of those investments carried at estimated fair value based upon net asset value per share (or its equivalent) is classified within the fair value hierarchy based on ADL’s ability to redeem its interest at or near the balance sheet date.

Most investments classified as Levels 2 and 3 consist of shares or units in investment funds as opposed to direct interests in the funds’ underlying holdings, which may be marketable. Because the net asset value reported by each fund is used as a practical expedient to estimate the fair value of ADL’s interest therein, its classification in Level 2 or 3 is based on ADL’s ability to redeem its interest at or near the balance sheet date. If the interest can be redeemed in the near term, the investment is classified in Level 2. The classification of investments in the fair value hierarchy is not necessarily an indication of the risks, liquidity, or degree of difficulty in estimating the fair value of each investment’s underlying assets and liabilities.




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The following table presents the fair value hierarchy of investments as of December 31, 2009:

Fairvalue Level 1 Level 2 Level 3

Invested cash and short-terminvestments $ 6,442,053 6,442,053 — —

Fixed income securities – government 11,718,221 6,113,521 5,604,700 — Mutual funds – equities:

Domestic 2,474,408 2,474,408 — — International 6,246,973 6,246,973 — —

Mutual funds – fixed income:Domestic 12,848,019 12,848,019 — — International 2,032,060 2,032,060 — —

Common stocks – domestic 4,463,258 4,463,258 — — Absolute return funds:

Multi-strategy hedge funds 38,694,607 — 19,290,904 19,403,703 Global opportunities hedge funds 9,502,245 — 4,668,372 4,833,873 Equity long/short hedge funds 15,020,390 — — 15,020,390 Distressed debt hedge funds 6,556,703 — 3,207,546 3,349,157

Limited partnerships:Long only securities 11,641,524 — 11,641,524 — Real estate 2,366,000 — — 2,366,000 Other 742,433 — — 742,433

Other 400,000 — — 400,000

Total $ 131,148,894 40,620,292 44,413,046 46,115,556




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The following table presents the fair value hierarchy of investments as of December 31, 2008:



Fixed income securities – government 16,445,828 11,397,728 5,048,100 — Mutual funds – equities:

Domestic 5,722,026 5,722,026 — — International 7,364,208 7,364,208 — —

Mutual funds – fixed income:Domestic 8,872,254 8,872,254 — — International 199,558 199,558 — —

Common stocks – domestic: 3,514,127 3,514,127 — — Absolute return funds:

Multi-strategy hedge funds 37,276,547 — 18,864,885 18,411,662 Global opportunities hedge funds 8,348,199 — 4,373,987 3,974,212 Equity long/short hedge funds 10,584,376 — — 10,584,376 Distressed debt hedge funds 1,838,729 — — 1,838,729

Limited partnerships:Long only securities 8,589,725 — 8,589,725 — Real estate 2,828,019 — — 2,828,019 Other 643,659 — — 643,659

Other 400,000 — — 400,000

Total $ 115,100,945 39,543,591 36,876,697 38,680,657

The following table presents a reconciliation of Level 3 investments for the years ended December 31, 2009 and 2008:

2009 2008

Balance at beginning of year $ 38,680,657 53,886,357 Total net realized and unrealized gain (loss) 9,088,375 (15,117,675) Sales (1,778,172) (88,025) Purchases 605,018 — Reclassification to Level 2 (480,322) —

Balance at end of year $ 46,115,556 38,680,657




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Information with respect to the strategies and redemption provisions of those investment funds which are reported at estimated fair value based upon net asset value per share (or its equivalent) is as follows (amounts included are as of December 31, 2009):

Multi-strategy hedge funds ($38,694,607) – includes investments in funds that pursue multiple investment strategies to diversify risks and reduce volatility. Capital allocated to each of the strategies, as well as geographical areas, varies depending on market opportunities.

Global opportunities hedge funds ($9,502,245) – includes investments in funds that invest primarily in equity securities of Asian-Pacific and emerging market companies. A portion of the investment focuses on event driven investing while also using other hedging strategies.

Equity long/short hedge funds ($15,020,390) – includes investments in funds that invest both long and short primarily in U.S. equities. Investments are also made in fixed income securities and funds, depending on market conditions and opportunities to increase capital allocation to investments in foreign markets.

Distressed debt hedge funds ($6,556,703) – includes investments in funds that invest opportunistically in troubled companies. Investments encompass distressed debt, private equity, real estate, high yield bonds, and a number of hedge fund strategies.

Long only securities ($11,641,524) – includes investments in companies that have overlooked value as well as event driven stocks selling at discounts to their intrinsic values. Investments are in long positions predominately in developed markets.

Real estate ($2,366,000) – includes a 13.69% noncontrolling, limited partnership interest in a closely held real estate investment company.

Other ($742,433) – includes investments in a domestic limited partnership which invests in short-term liquid assets, stocks, and bonds. The partnership may also buy and sell put and call options for hedging purposes.

Redemption period Amount

Next day $ 4,718,178 Monthly 7,423,424 Quarterly 30,228,896 Semi-annual 5,160,910 Annual 22,267,475 Subject to lock-ups (a) 15,125,019

Total $ 84,923,902




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(a) Amounts subject to redemption lock-ups are anticipated to be realized and/or freed from lock-up as follows:

Fiscal year Amount

2010 $ 2,505,018 2011 – 2015 10,254,001 2016 and beyond 2,366,000

Total $ 15,125,019

(4) Contributions Receivable

Contributions receivable at December 31, 2009 and 2008 are scheduled to be collected as follows:

2009 2008

Within one year $ 11,839,605 14,258,291 One to five years 2,015,200 2,119,536 More than five years 1,410,000 835,000

15,264,805 17,212,827

Discount to present value, at rates from 1.55% to 4.70% (613,591) (383,078) Allowance for uncollectible contributions receivable (2,462,000) (2,350,000)

$ 12,189,214 14,479,749

(5) Property and Equipment

The components of property and equipment and their estimated useful lives at December 31, 2009 and 2008 are as follows:

2009 2008 Useful lives

Land $ 1,150,224 1,150,224 N/ABuildings 4,150,445 4,150,445 30 yearsLeasehold and building improvements 14,243,210 14,193,507 2 – 18 yearsFurniture and equipment 6,939,436 6,904,191 5 yearsArtwork 304,870 304,870 N/A

Total 26,788,185 26,703,237

Less accumulated depreciationand amortization (12,042,149) (10,369,959)

Net property and equipment $ 14,746,036 16,333,278




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(6) Employee Benefit Plans

On June 16, 2008, ADL entered into a spin-off agreement with B’nai B’rith International (BBI) under which it was agreed that effective July 1, 2008, BBI would (i) withdraw from the B’nai B’rith Retirement Plan (the Former Plan) with assets and liabilities related to BBI active, terminated, vested, and retired participants transferred to a newly created defined benefit plan sponsored by BBI and (ii) transfer sponsorship of the Former Plan to ADL. Accordingly, on July 1, 2008, ADL assumed sponsorship of the Former Plan, which was renamed the Anti-Defamation League Retirement Plan (the Plan). Due to the change in sponsorship, ADL recognized a nonoperating charge of $17,490,382 as of July 1, 2008. This prior service cost will be recognized as part of net periodic benefit cost over the average future working lifetime of active employees.

Under the Plan, ADL provides pension benefits that cover substantially all of the League’s and Foundation’s full-time employees. Benefits are based on years of service, retirement age, and compensation level. The Plan is administered by a trustee, and plan assets, which are held by such trustee, are stated at fair value.

Since ADL assumed sponsorship of the Plan as of July 1, 2008, ADL is required to reflect the Plan’s funded status on its consolidated balance sheet. ADL is required to recognize any gains or losses, prior service costs or credits, and transition assets or obligations that have not yet been included in net periodic pension cost in the ending balance of unrestricted net assets. Actuarial gains and losses are not recognized as net periodic pension cost in the period in which they occur but are recognized as a component of the change in net assets. Those amounts will subsequently be amortized and reflected as a separate component of net periodic pension cost.

The following tables provide information with respect to the Plan as of December 31, 2009 and 2008, and for the year ended December 31, 2009 and the six-month period ended December 31, 2008:

2009 2008

Projected benefit obligation $ 60,020,509 53,205,579 Plan assets, at fair value 32,180,758 27,595,250

Funded status $ (27,839,751) (25,610,329)

Net periodic benefit cost $ 3,638,594 1,599,583 Employer contributions 3,505,302 2,971,120 Benefits paid 2,778,500 1,387,359

The discount rate used to determine the pension benefit obligation was 5.93% and 6.5% at December 31, 2009 and 2008, respectively.

The rate of compensation increase used to determine the pension benefit obligation was 4.0% at December 31, 2009 and 2008. This rate represents the expected increase in future salaries, on average, across all plan participants and reflects three underlying components: inflation, merit increases, and promotion.




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Weighted average assumptions used to determine net periodic benefit cost at December 31, 2009 and 2008 were as follows:

2009 2008

Discount rate 6.50% 7.00%Expected return on plan assets 8.00 8.00Rate of compensation increases 4.00 4.00

As of December 31, 2009, the Plan’s targeted and actual asset allocation are as follows:

Target Actual

Invested cash and short-term investments —% 3%Fixed income securities 25 35Mutual funds – equities 35 33Absolute return funds 20 21Real assets 20 8

Total 100% 100%

The following table presents the fair value hierarchy of the Plan’s assets as of December 31, 2009:


Invested cash and short-terminvestments $ 900,049 900,049 — —

Fixed income securities:Domestic 9,916,860 9,916,860 — — International 1,508,929 1,508,929 — —

Mutual funds – equities:Domestic 5,390,746 5,390,746 — — International 5,380,598 5,380,598 — —

Absolute return funds:Multi-strategy hedge funds 3,292,757 — — 3,292,757 Equity long/short hedge funds 3,301,049 — — 3,301,049

Limited partnership – real estate 2,489,770 — 2,489,770 —

Total $ 32,180,758 23,097,182 2,489,770 6,593,806




17 (Continued)

The following table presents the fair value hierarchy of the Plan’s assets as of December 31, 2008:



Fixed income securities:Corporate 128,916 128,916 — — Mutual funds 12,809,022 12,809,022 — —

Mutual funds – equities:Domestic 6,454,123 6,454,123 — — International 5,808,402 5,808,402 — —

Total $ 27,595,250 27,595,250 — —

The following table presents a reconciliation of Level 3 assets for the year ended December 31, 2009:

Beginning balance $ — Purchases 5,650,000 Total net realized and unrealized gains 943,806

Ending balance $ 6,593,806

Information with respect to the strategies and redemption provisions of the Plan’s assets which are reported at estimated fair value based upon net asset value per share (or its equivalent) is as follows (amounts included are as of December 31, 2009):

Multi-strategy hedge funds ($3,292,757) – includes investments in funds that pursue multiple investment strategies to diversify risks and reduce volatility. Capital allocated to each of the strategies, as well as geographical areas, varies depending on market opportunities.

Equity long/short hedge funds ($3,301,049) – includes investments in long and short equity hedge funds with diversified portfolios of stocks rather than portfolios with large commitments to relatively few names.

Limited partnership ($2,489,770) – includes investments in real estate securities. Depending on market conditions and opportunities, investments can shift between geographical regions to enhance returns.

Redemption period Amount

Monthly $ 2,489,770 Subject to lock-up 6,593,806

Total $ 9,083,576




18 (Continued)

The amount subject to redemption lock-up of $6,593,806 is set to expire in 2010.

Plan benefits, reflecting expected future service, are anticipated to be paid as follows:

2010 $ 3,633,000 2011 3,714,000 2012 3,809,000 2013 3,958,000 2014 4,028,000 2015 – 2019 21,426,000

ADL expects to contribute $3,729,000 to the Plan in 2010.

As of December 31, 2009 and 2008, amounts charged to unrestricted net assets but not yet recognized as a component of net periodic benefit cost total $29,077,996 and $26,981,866, respectively. The estimated net actuarial loss and prior service cost that will be amortized into net periodic benefit cost during 2010 is $351,835 and $1,565,836, respectively.

(7) Temporarily Restricted and Permanently Restricted Net Assets

Temporarily restricted net assets at December 31, 2009 and 2008 are available for the following purposes or periods:

2009 2008

Regional operations $ 5,166,149 4,739,944 Education 9,363,411 8,565,235 Civil rights 942,377 534,073 International affairs and interfaith programs 2,963,613 2,328,666 Leadership 267,629 83,871 Other 1,748,028 1,202,579 Future periods 5,783,389 4,751,467

$ 26,234,596 22,205,835




19 (Continued)

Permanently restricted net assets at December 31, 2009 and 2008 are restricted to investment in perpetuity, the income from which is expendable to support the following:

2009 2008

Regional operations $ 13,358,384 13,006,280 Education 10,380,629 10,307,451 Civil rights 3,405,585 3,296,090 International affairs and interfaith programs 6,112,478 6,112,478 Leadership 3,160,000 3,050,000 General activities of ADL 20,381,517 19,444,120

$ 56,798,593 55,216,419

The Foundation’s endowment consists of individual donor-restricted endowment funds established for a variety of purposes. ADL has no board-designated endowment funds. Net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

The Foundation classifies as permanently restricted net assets the original value of gifts to the permanent endowment, as well as accumulations to the permanent endowment made at the direction of the donor. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted is classified as either unrestricted or temporarily restricted net assets depending upon donor intent.

The following tables present the changes in the Foundation’s donor-restricted endowment funds, inclusive of pledges, for the years ended December 31, 2009 and 2008:

2009Temporarily Permanently

Unrestricted restricted restricted Total

Endowment net assets atJanuary 1, 2009 $ (7,876,928) 439,009 55,216,419 47,778,500

Investment income 303,763 501,328 — 805,091 Net appreciation (realized and

unrealized) 6,851,664 3,437,881 — 10,289,545 Contributions — — 1,582,174 1,582,174 Appropriation for expenditure (84,854) (2,427,024) — (2,511,878)

Endowment net assets atDecember 31, 2009 $ (806,355) 1,951,194 56,798,593 57,943,432




20 (Continued)

2008Temporarily Permanently

Unrestricted restricted restricted Total

Endowment net assets atJanuary 1, 2008 $ 685,730 9,467,597 53,609,537 63,762,864

Investment income 6,614 846,310 — 852,924 Net depreciation (realized and

unrealized) (8,569,272) (7,267,038) — (15,836,310) Contributions — — 1,606,882 1,606,882 Appropriation for expenditure — (2,607,860) — (2,607,860)

Endowment net assets atDecember 31, 2008 $ (7,876,928) 439,009 55,216,419 47,778,500

(a) Funds with Deficiencies

From time to time, the fair value of assets associated with an individual donor-restricted endowment fund may fall below the level that the donor or the Uniform Management of Institutional Funds Act requires the Foundation to retain as a fund for perpetual duration. These deficiencies aggregated $1,437,091 and $8,537,518 at December 31, 2009 and 2008, respectively, and are recorded in unrestricted net assets.

(b) Return Objective and Risk Parameters

ADL has adopted investment policies for its endowment that attempt to provide a level of support, as determined by ADL’s spending policy, while seeking to preserve the real value of the endowment assets over time. ADL relies on a total return strategy under which investment returns are achieved through both appreciation (realized and unrealized) and yield (interest and dividends). Investments are diversified by asset class, as well as by investment manager and style, with a focus on achieving long-term return objectives within prudent risk constraints.

(c) Spending Policy

The Foundation has a policy of appropriating investment return on the endowment funds for spending at a rate of 5% of the fair value of the endowment, unless otherwise explicitly stipulated by the donor.




21

(8) Commitments and Contingencies

(a) Operating Leases

ADL occupies its National and New York regional office space in New York City under a lease agreement that expires in 2027. The agreement includes landlord incentives, escalation clauses, and a renewal option. Office space occupied by ADL’s other regional offices is under lease agreements expiring at various dates through 2017. The leases are accounted for on a straight-line basis. Certain regional office leases include rent escalations and periods of free rent. The deferred landlord incentives (which are being recognized over the life of the New York lease) and the difference between straight-lining the rental charges and actual payments are reported as deferred rent on the accompanying consolidated balance sheets. Total rent expense approximated $5.125 million and $5.3 million for the years ended December 31, 2009 and 2008, respectively. Minimum annual rentals are as follows:

Year ending December 31:2010 $ 4,883,000 2011 4,731,000 2012 4,542,000 2013 4,353,000 2014 4,043,000 2015 and thereafter 43,944,000

$ 66,496,000

(b) Lines of Credit

The League and the Foundation each have a $4 million line of credit with a financial institution, which was increased on April 6, 2009 from an aggregate of $4 million. Through April 6, 2009, the interest rate on borrowings was either LIBOR plus 40 basis points or the financial institution’s cost of funds plus 50 basis points. Since April 6, 2009, the interest rate on all borrowings is either LIBOR plus 70 basis points or prime rate. As of December 31, 2009, the League and the Foundation each had an outstanding balance of the full $4 million from these lines. The League and the Foundation borrowed a total of $4 million as of December 31, 2008. These lines are secured by certain of the Foundation’s investments.

22

Schedule 1ANTI-DEFAMATION LEAGUE OF B’NAI B’RITH AND

ANTI-DEFAMATION LEAGUE FOUNDATION

Consolidating Schedule – Balance Sheet Information

December 31, 2009

ConsolidatedAssets League Foundation Eliminations total

Cash and cash equivalents $ 7,890,763 822,430 — 8,713,193 Contributions receivable, net 9,289,649 2,899,565 — 12,189,214 Prepaid expenses and other assets 1,481,590 1,914,246 — 3,395,836 Investments 715,281 130,433,613 — 131,148,894 Property and equipment, net 11,317,028 3,429,008 — 14,746,036 Due from the Foundation 3,693,604 — (3,693,604) —

Total assets $ 34,387,915 139,498,862 (3,693,604) 170,193,173

Liabilities and Net Assets

Liabilities:Accounts payable and accrued expenses $ 8,206,729 763,526 — 8,970,255 Borrowings under lines of credit 4,000,000 4,000,000 — 8,000,000 Deferred revenue 613,614 — — 613,614 Deferred rent 7,607,220 — — 7,607,220 Liabilities under charitable trusts and

annuity agreements — 10,034,513 — 10,034,513 Due to the League — 3,693,604 (3,693,604) — Accrued pension obligation 25,055,776 2,783,975 — 27,839,751

Total liabilities 45,483,339 21,275,618 (3,693,604) 63,065,353

Net assets (accumulated deficits):Unrestricted:

Available for operations 4,456,472 47,477,910 — 51,934,382 Accrued pension obligation (25,055,776) (2,783,975) — (27,839,751)

Total unrestricted (20,599,304) 44,693,935 — 24,094,631

Temporarily restricted 9,503,880 16,730,716 — 26,234,596 Permanently restricted — 56,798,593 — 56,798,593

Total (accumulated deficits) net assets (11,095,424) 118,223,244 — 107,127,820 Total liabilities and net assets $ 34,387,915 139,498,862 (3,693,604) 170,193,173

See accompanying independent auditors’ report.

23



Consolidating Schedule – Statement of Activities Information

Year ended December 31, 2009

ConsolidatedLeague Foundation Eliminations total

Changes in unrestricted net assets:Operating expenses:

Program services $ 45,141,090 1,025,518 (244,500) 45,922,108 Administration 5,573,618 2,109,317 — 7,682,935 Development 6,054,631 3,340,725 — 9,395,356

Total operating expenses 56,769,339 6,475,560 (244,500) 63,000,399

Operating revenues:Contributions (including the League’s special

events revenue of $17,768,012) 40,256,156 4,461,025 — 44,717,181 Less:

Provision for uncollectible contributionsreceivable (993,192) — — (993,192)

Direct special events expenses (5,140,801) — — (5,140,801) Rental income from the League — 244,500 (244,500) — Investment return appropriated — 2,511,878 — 2,511,878 Other income 1,099,079 3,005 — 1,102,084 Net assets released from restrictions 11,492,718 106,380 — 11,599,098 Transfer to the League from the Foundation 9,125,726 (9,125,726) — —

Total operating revenues (loss) 55,839,686 (1,798,938) (244,500) 53,796,248

Excess of operating expenses overoperating revenues (929,653) (8,274,498) — (9,204,151)

Nonoperating activities:Investment return greater than

amount appropriated 13,217 13,731,859 — 13,745,076 Other, net — (10,998) — (10,998) Pension charge other than net periodic benefit cost (1,886,517) (209,613) — (2,096,130) Transfer to the League from the Foundation 152,586 (152,586) — —

Total nonoperating activities (1,720,714) 13,358,662 — 11,637,948

(Decrease) increase in unrestricted net assets (2,650,367) 5,084,164 — 2,433,797

Changes in temporarily restricted net assets:Contributions 8,771,747 296,593 — 9,068,340 Change in the value of charitable trust and

annuity agreements — (664,946) — (664,946) Investment return 222 7,224,243 — 7,224,465 Net assets released from restrictions (11,492,718) (106,380) — (11,599,098) Transfer to the League from the Foundation 3,187,349 (3,187,349) — —

Increase in temporarily restrictednet assets 466,600 3,562,161 — 4,028,761

Change in permanently restricted net assets:Contributions — 1,582,174 — 1,582,174

Increase in permanently restrictednet assets — 1,582,174 — 1,582,174

(Decrease) increase in net assets (2,183,767) 10,228,499 — 8,044,732

(Accumulated deficits) net assets at beginning of year (8,911,657) 107,994,745 — 99,083,088 (Accumulated deficits) net assets at end of year $ (11,095,424) 118,223,244 — 107,127,820


24



Schedule of Functional Operating Expenses


Program services Supporting servicesInternationalaffairs and Total Total

Regional Civil interfaith Marketing and program supporting Totaloperations Education rights programs Leadership communications services Administration Development services expenses

Salaries $ 10,827,619 2,131,599 2,969,754 995,258 574,625 1,673,430 19,172,285 2,089,701 5,272,020 7,361,721 26,534,006 Staff relocation and severance pay 504,365 55,433 2,929 — — 8,000 570,727 52,278 81,500 133,778 704,505 Personnel welfare and

other related expenses 4,684,427 780,511 1,179,158 435,739 248,681 723,989 8,052,505 830,474 1,908,635 2,739,109 10,791,614

Total salaries andrelated expenses 16,016,411 2,967,543 4,151,841 1,430,997 823,306 2,405,419 27,795,517 2,972,453 7,262,155 10,234,608 38,030,125

Projects and functions 2,094,242 2,614,996 162,831 796,250 83,980 466,781 6,219,080 525,449 593,760 1,119,209 7,338,289 Office services and occupancy 4,623,258 774,815 1,071,242 441,314 334,850 1,159,163 8,404,642 2,528,613 604,153 3,132,766 11,537,408 Travel, meetings, and conferences 720,843 381,155 355,064 104,082 1,407,866 41,073 3,010,083 181,924 111,687 293,611 3,303,694 Research materials 34,633 932 112,386 8,431 — 39,877 196,259 10,630 299,785 310,415 506,674 Legal and financial 7,418 — — 14,655 — — 22,073 729,593 115,270 844,863 866,936 All other 90,539 41,989 37,724 70,585 23,624 9,993 274,454 734,273 408,546 1,142,819 1,417,273

Total $ 23,587,344 6,781,430 5,891,088 2,866,314 2,673,626 4,122,306 45,922,108 7,682,935 9,395,356 17,078,291 63,000,399


25



Schedule of Functional Expenses – Operating forAnti-Defamation League of B’nai B’rith




Salaries $ 10,651,138 1,999,242 2,921,222 993,934 495,209 1,670,342 18,731,087 1,114,939 3,626,661 4,741,600 23,472,687 Staff relocation and severance pay 504,365 55,433 2,929 — — 8,000 570,727 52,278 31,500 83,778 654,505 Personnel welfare and

other related expenses 4,613,528 727,798 1,159,643 435,282 216,976 722,763 7,875,990 440,936 1,231,239 1,672,175 9,548,165

Total salaries andrelated expenses 15,769,031 2,782,473 4,083,794 1,429,216 712,185 2,401,105 27,177,804 1,608,153 4,889,400 6,497,553 33,675,357

Projects and functions 2,034,712 2,568,746 146,974 795,791 57,180 465,922 6,069,325 525,449 593,760 1,119,209 7,188,534 Office services and occupancy 4,705,083 735,540 1,015,142 441,314 334,850 1,159,163 8,391,092 2,027,096 454,582 2,481,678 10,872,770 Travel, meetings, and conferences 720,843 381,155 355,064 104,082 1,407,866 41,073 3,010,083 153,351 64,528 217,879 3,227,962 Research materials 34,633 932 112,386 8,431 — 39,877 196,259 10,630 7,181 17,811 214,070 Legal and financial 7,418 — — 14,655 — — 22,073 642,581 19,801 662,382 684,455 All other 90,539 41,989 37,724 70,585 23,624 9,993 274,454 606,358 25,379 631,737 906,191

Total $ 23,362,259 6,510,835 5,751,084 2,864,074 2,535,705 4,117,133 45,141,090 5,573,618 6,054,631 11,628,249 56,769,339


26



Schedule of Functional Expenses – Operating forAnti-Defamation League Foundation




Salaries $ 176,481 132,357 48,532 1,324 79,416 3,088 441,198 974,762 1,645,359 2,620,121 3,061,319 Staff relocation and severance pay — — — — — — — — 50,000 50,000 50,000 Personnel welfare and

other related expenses 70,899 52,713 19,515 457 31,705 1,226 176,515 389,538 677,396 1,066,934 1,243,449

Total salaries andrelated expenses 247,380 185,070 68,047 1,781 111,121 4,314 617,713 1,364,300 2,372,755 3,737,055 4,354,768

Projects and functions 59,530 46,250 15,857 459 26,800 859 149,755 — — — 149,755 Office services and occupancy 162,675 39,275 56,100 — — — 258,050 501,517 149,571 651,088 909,138 Travel, meetings, and conferences — — — — — — — 28,573 47,159 75,732 75,732 Research materials — — — — — — — — 292,604 292,604 292,604 Legal and financial — — — — — — — 87,012 95,469 182,481 182,481 All other — — — — — — — 127,915 383,167 511,082 511,082

Total $ 469,585 270,595 140,004 2,240 137,921 5,173 1,025,518 2,109,317 3,340,725 5,450,042 6,475,560


27



Consolidating Schedule – Statement of Cash Flows Information


ConsolidatedLeague Foundation Eliminations total

Cash flows from operating activities:(Decrease) increase in net assets $ (2,183,767) 10,228,499 — 8,044,732 Adjustments to reconcile (decrease) increase in net assets

to net cash provided by (used in) operating activities:Pension charge other than net periodic benefit cost 1,886,517 209,613 — 2,096,130 Contributions of permanently restricted net assets — (1,582,174) — (1,582,174) Net appreciation in fair value of investments — (21,743,322) — (21,743,322) Provision for uncollectible contributions receivable 993,192 — — 993,192 Depreciation and amortization 1,643,019 161,215 — 1,804,234 Change in the value of charitable trust and

annuity agreements — 664,946 — 664,946 Changes in operating assets and liabilities:

Contributions receivable 809,542 360,845 — 1,170,387 Prepaid expenses and other assets (700,552) (192,599) — (893,151) Accounts payable and accrued expenses (1,788,357) 93,548 — (1,694,809) Deferred revenue 84,285 — — 84,285 Deferred rent 109,379 — — 109,379 Accrued pension obligation 119,963 13,329 — 133,292

Net cash provided by (used in) operating activities 973,221 (11,786,100) — (10,812,879)

Cash flows from investing activities:Proceeds from sale of investments — 58,516,888 — 58,516,888 Purchase of investments (510,278) (52,311,237) — (52,821,515) Acquisition of property and equipment (197,205) (19,787) — (216,992)

Net cash (used in) provided byinvesting activities (707,483) 6,185,864 — 5,478,381

Cash flows from financing activities:Contributions of permanently restricted net assets — 1,582,174 — 1,582,174 Change in contributions receivable restricted for

permanent investment — 126,956 — 126,956 Payments to annuitants — (1,098,371) — (1,098,371) Proceeds from charitable trusts and annuity gifts in

excess of amounts recognized as contributions — 526,934 — 526,934 Borrowings under lines of credit 2,000,000 2,000,000 — 4,000,000 Amounts due from the Foundation (1,346,222) — 1,346,222 — Amounts due to the League — 1,346,222 (1,346,222) —

Net cash provided by financing activities 653,778 4,483,915 — 5,137,693

Net increase (decrease) in cash and cash equivalents 919,516 (1,116,321) — (196,805)

Cash and cash equivalents at beginning of year 6,971,247 1,938,751 — 8,909,998 Cash and cash equivalents at end of year $ 7,890,763 822,430 — 8,713,193


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