Every year since I’ve worked at ARDC, in addition to publishing our audited tax returns and financial statements on our website, we’ve done a blog post offering an overview of these documents and how our finances and spending compare to prior year. Every year, I wonder if this exercise is at all useful to people. And every year, somewhat to my surprise, I get notes from people thanking us for living up to our value of transparency with these posts.

It helps to know that folks actually read these – thank you for letting me know! It also means that I get to write:

Back by popular demand, our yearly blog post outlining audited financials from the prior year!

Still from Monty Python and the Holy Grail

Here’s where you can find the relevant documents and follow along:

• 2025 Audited Financial Statements
• 2025 Tax Return (IRS Form 990-PF)

Cash vs. Accrual

As you look at some of the comparisons below, you’ll see some items listed as cash and some as accrual.

• Accrual totals show expenses approved in a given year (such as an invoice received from a vendor or an approved grant). Often, these liabilities get paid within the same year that they were approved, though some may be paid in the following year.
  
• Cash totals show expenses that were actually paid in a given year. When the IRS calculates our required minimum 5% distribution, they are looking at these numbers.

The IRS Form 990-PF shows both cash and accrual totals, while the audited financial statements primarily show accrual totals in their analysis.

Grants & Gifts

The chart below outlines our grants spending over the years:

As in 2024, in 2025 we saw a smaller amount spent on grants and gifts than in most prior years. As was true in 2024, this reduction in spending was a conscious decision in service of reducing our excess distribution. Though it does mean a reduction in expenditures in the short term (including grants), it’s a decision that will ideally lend itself to greater stability in the long term. Thus, in 2025, we decided to target a 4.5% distribution, landing at about 3.6%. This allowed us to reduce our excess distribution by about $1.2M, as detailed in a later section.

Statement of Functional Expenses

Functional expenses look at our overall expenses, separating the program expenses (directly related to carrying out our programs) from management and administration.

Statement of Functional Expenses, which can be seen in text format on Page 7 of our 2025 Financial Statements.

Looking at this view of our finances, you can see how different parts of our expenses directly serve our programs (44Net as well as Grants & Gifts) versus general administrative overhead. This view also provides a comparison to the previous year so that the public can see changes between years.

Total Expenses: 990-PF

Another way of looking at our expenses in 2024 is to look at the total expenses versus the grants paid as outlined in Part I of the 990-PF. Note that, in this view, operating expenses include all expenses excluding grants and gifts. So, 44Net, salaries, legal fees – all go into the Operating Expenses category, whereas in our Statement of Functional Expenses, salaries and overhead are categorized based on the percentage that they serve our programs.

Beginning-of-Year vs. End-of-Year vs. Average Assets

Part II of the 990-PF outlines our balance sheets, which show our total assets and liabilities at the beginning and end of the year:

• Beginning-of-year: $128,192,418
• End-of-year: $142,886,749

Our month-by-month average assets are used to determine our required distribution for the year. In 2024, our average assets were $134,652,456 (see Part IX of the 990-PF).

Qualifying Distribution Balance

So where does all of this leave us in terms of our required 5% distribution balance? This information is outlined in Parts IX, X, XI, and XII of the 990-PF.

• Parts IX and X calculate the amount of our qualifying distribution (5% of our average assets minus fees like our 2025 income taxes),
• Part XI lists the qualifying distribution (same amount as the cash total of expenses in Part I), and
• Part XII outlines our remaining distributions from prior years, our minimum distribution amount for 2025, and the remainder based on our 2025 qualifying distribution. Since we spent more than required, this remainder will be carried over toward our 2025 distribution.

Here is the excess distribution calculation for 2025:

And here is how 2024’s distribution balance affects our cumulated distribution balance:

It’s worth noting that we like having some excess distribution on the books. That said, as noted above, we entered 2025 aiming to curb our spending for a few years in service of the long-term health of our endowment. Amid a fluctuating market, it also makes sense to spend conservatively.

Thank you!

Thank you to Redwitz CPAs, who conducted the audit, along with the team of people at ARDC who put hard work into making sure it all happened thoroughly and on time:

• Audit Committee: Bob Witte K0NR, Keith Packard K7WQ, Dave Ginsberg N3BKV (extra thanks to Dave – historically this work is conducted solely by board members; this year Dave – who is on the GAC – stepped up to the plate. “I was glad to help with the audit process and get a closer look at how it all comes together,” said Dave. “It was reassuring to see how much care the ARDC team puts into accuracy, accountability, and transparency.”)
• Staff: Merideth Stroh KK7BKI (main wrangler extraordinaire), along with Chelsea Párraga KF0FVJ and Adam Zimmel W0ZML.
• J7 Bookkeepers: Lena Wilder and Jade Seven. (Jade will want me to highlight Lena for taking the lead here, which she did, and so she is duly highlighted).

Go team!