NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION Practising Law Institute (the “Institute”) is a not-for-profit organization founded in 1933 and chartered by the Regents of the University of the State of New York. The Institute provides lawyers and other professionals with continuing professional education through programs, publications and educational software. The Internal Revenue Service has ruled that the Institute is a Section 501(c)(3) organization exempt from federal income taxes under Section 501(a) of the Internal Revenue Code (the “IRC”). The Institute has been classified as a publicly supported charitable organization under Section 509(a)(2) of the IRC. The Institute is also exempt from state and local income taxes. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant accounting policies followed by the Institute in the preparation of the accompanying financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied in the presentation of the accompanying financial statements. Basis of Presentation The classification of the Institute’s net assets, revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, all of the Institute’s net assets are classified as without donor restrictions as they are available for general use and operating activities without any donor- imposed restrictions. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. Cash and Cash Equivalents Cash and cash equivalents include financial instruments with original maturities at the date of purchase of three months or less and exclude cash and cash equivalents held in the Institute’s investment management account, which are considered to be held for long-term purposes. Investments Investments in publicly traded securities are recorded at fair market value generally determined on the basis of quoted market prices. Investments in certain mutual funds are carried at fair value as determined by quoted market prices. The Institute’s alternative investments in certain not-readily-marketable securities consist of certain mutual funds, hedge funds and private equity, for which market values are not readily obtainable. These alternative investments are carried at fair value based upon their stated net asset value (“NAV”). The estimated value provided by these managers may differ from actual values had a ready market for these investments existed. Purchases and sales of securities are reflected on a trade-date basis. Gains and losses on sales of securities are based on average costs and are recorded in the statements of activities in the period in which the securities are sold. Interest is recognized as earned. Dividends are recognized as of the ex-dividend date. Accounts Receivable and Allowance for Credit Losses Accounts receivable relate primarily to program, publication and membership revenue. Management provides an allowance for credit losses for estimated losses that may result from the inability of its customer to make required payments based on the consideration of the type of receivable, responsible party, the known financial condition of the customer, historical collection patterns and comparative aging. These allowances are maintained at a level management considers adequate to provide for subsequent adjustments and potential uncollectible accounts. These estimates are reviewed periodically and if the financial condition of a party changes significantly, the Institute will evaluate the recoverability of any accounts receivable from that customer and write off any amounts that are no longer considered to be recoverable. Any payments subsequently received on such receivables are recorded as income in the period received. Inventories Inventories consist of books in process of approximately $49,000 and $46,000 and completed books of approximately $230,000 and $219,000 at December 31, 2024 and 2023, respectively. The Institute utilizes the weighted average method of capturing inventory costs. Costs include paper, printing, binding, taping and outside editorial costs, and are valued at the lower of average cost or market. Fixed Assets The Institute capitalizes all expenditures for fixed assets in excess of $1,000. Furniture, equipment and computer hardware are stated at cost and are depreciated over periods ranging from five to six years using the straight-line basis. Computer software and website costs are being amortized over a three- to 10-year period from the time the asset is placed into service. Leasehold improvements are amortized over the shorter of their estimated useful lives or terms of the leases. Goodwill Goodwill represents the excess of the consideration paid over the fair value of identifiable assets acquired. The Institute follows guidance allowing not-for-profit entities the option to amortize goodwill on a straight-line basis over 10 years or less, and to test for impairment at the entity or reporting unit level when a triggering event occurs that indicates the fair value of the entity or a reporting unit may be below its carrying amount. The Institute is amortizing the goodwill prospectively over 10 years and will test for impairment at the reporting unit level when a triggering event occurs.
Intangible Assets Intangible assets are recorded at their fair value at the date of acquisition. The Institute accounts for intangible assets, other than goodwill, subsequent to acquisition based on the asset’s useful life. The useful life of the intangible asset is the period over which the asset is expected to contribute directly or indirectly to the Institute’s future cash flows. An asset for which no legal, regulatory, contractual, competitive, economic, or other factors that limit its useful life is considered to have an indefinite useful life. The Institute evaluates the recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The evaluation of asset impairment requires the Institute to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts. If the carrying amount of the long-lived asset (or asset group) exceeds its fair value and the carrying amount is not recoverable, an impairment charge is recognized. An impairment loss is measured as the amount by which the long-lived asset (or asset group) exceeds its fair value. Revenue Recognition The Institute follows guidance whereby revenue is recognized when control of the promised goods or services are transferred to the customers in an amount that reflects the consideration the Institute expects to be entitled to in exchange for those goods or services. The applicable standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. Donated Services Volunteer instructional services provided by attorneys and others in the legal profession have not been reflected in the accompanying financial statements as the nature of these services does not meet the criteria for recognition of contributed services under U.S. GAAP. Scholarships Scholarships given to program participants principally for financial need totaled approximately $23,816,000 and $21,623,000 in 2024 and 2023, respectively. Program, publication and membership revenues on the statements of activities are shown net of these scholarships. There are three ways to apply for a PLI Scholarship: (1) Fill out an on-line application for any program and submit to PLI’s Pro Bono Department for review and approval; (2) Become a Pro Bono Privileged Member; and (3) Register for programs that PLI offers at no cost. For items (1) and (2), PLI assigns a dollar value to its scholarships offered throughout the year. Since approximately 92% of program registrations are at “member rate” vs. approximately 8% of program registrations at “retail rate,” PLI values its Scholarship Program at “member rate” rather than “retail rate.” The member rate is expressed as a percentage of the retail rate calculated based on actual privileged membership revenue as a percentage of retail value. For item (3), PLI values the scholarship at the rate established by the outside pricing consultants. Expense Allocations Direct expenses are assigned to the various programs and supporting services based upon actual costs incurred. Indirect expenses are principally allocated based on headcount. Fair Value Measurements The Institute follows guidance which establishes a framework for measuring fair value, expands disclosures about fair value measurements and provides a consistent definition of fair value, which focuses on an exit price between market participants in an orderly transaction. The guidance also prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information and establishes a three-level hierarchy for fair value measurements based on the transparency of information used in the valuation of an asset or liability as of the measurement date. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The type of investments in Level 1 include listed equities held in the name of the Institute, and exclude listed equities and other securities held indirectly through commingled funds. Level 2 - Pricing inputs, including broker quotes, are generally those other than exchange quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies. Level 3 - Pricing inputs are unobservable for the assets or liability and include situations where there is little, if any, market activity for the assets or liability. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in this category include hedge funds, privately held investments and partnership interests. The Institute follows guidance on measuring the fair value of alternative investments, which offers investors a practical expedient for measuring the fair value of investments in certain entities that calculate NAV. Under this practical expedient, entities are permitted to use NAV without adjustment for certain investments which: (a) do not have a readily determinable fair value; and (b) prepare their financial statements consistent with the measurement principles of an investment company or have the attributes of an investment company. Additionally, investments measured using the NAV practical expedient are exempt from categorization within the fair value hierarchy and related disclosures. Instead, entities are required to separately disclose the required information for assets measured using the NAV practical expedient. Entities are also required to show the carrying amount of investments measured using the NAV practical expedient as a reconciling item between the total
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2024 Annual Report
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