project management institute educational … · in our opinion, the 2014 financial statements...

PROJECT MANAGEMENT INSTITUTE EDUCATIONAL FOUNDATION

FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

PROJECT MANAGEMENT INSTITUTE EDUCATIONAL FOUNDATION

TABLE OF CONTENTS

Page

INDEPENDENT AUDITORS' REPORT 1 - 2

FINANCIAL STATEMENTS

Statements of Financial Position 3

Statements of Activities 4 - 5

Statements of Cash Flows 6

Notes to Financial Statements 7 - 15

INDEPENDENT AUDITORS' REPORT

To the Board of DirectorsProject Management Institute Educational FoundationNewtown Square, Pennsylvania

Report on the Financial Statements

We have audited the accompanying financial statements of Project Management Institute EducationalFoundation which comprise the statement of financial position as of December 31, 2014, and the relatedstatements of activities, and cash flows for the year then ended, and the related notes to the financialstatements.

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 includesthe 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 orerror.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity'spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accounting estimatesmade by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Opinion

In our opinion, the 2014 financial statements referred to above present fairly, in all material respects, thefinancial position of Project Management Institute Educational Foundation as of December 31, 2014 andthe results of its activities and its cash flows for the year then ended in conformity with accountingprinciples generally accepted in the United States of America.

Prior Period Financial Statements

The financial statements as of December 31, 2013 and for the year then ended, were audited by Elko &Associates Ltd, who merged with Wipfli LLP as of January 1, 2015, and whose report dated April 15,2014, expressed an unmodified opinion on those statements.

Wipfli LLP

Media, PennsylvaniaApril 8, 2015

PROJECT MANAGEMENT INSTITUTE EDUCATIONAL FOUNDATIONSTATEMENTS OF FINANCIAL POSITION

DECEMBER 31,

2014 2013

ASSETS

Cash and cash equivalents $ 259,218 $ 335,065

Cash restricted for endowment use 214,207 194,485

Investments 2,022,008 1,904,032

Accounts receivable - Project Management Institute 66,740 -

Promises to give - net of discount and allowance 43,827 98,333

Prepaid expenses 11,250 11,250

Website development - net of accumulated amortization of$72,700 and $-, respectively 218,100 255,800

Computer software - net of accumulated amortization of $13,218and $-, respectively 39,653 -

TOTAL ASSETS $ 2,875,003 $ 2,798,965

LIABILITIES AND NET ASSETS

LIABILITIES

Accounts payable $ 116,106 $ 242,418

Grants payable 796,641 442,306

Total Liabilities 912,747 684,724

NET ASSETS

Unrestricted net assets (422,916) (134,716)

Temporarily restricted net assets 532,437 493,338

Permanently restricted net assets 1,852,735 1,755,619

Total Net Assets 1,962,256 2,114,241

TOTAL LIABILITIES AND NET ASSETS $ 2,875,003 $ 2,798,965

The accompanying Notes are an integral part of these statements.

PROJECT MANAGEMENT INSTITUTE EDUCATIONAL FOUNDATIONSTATEMENT OF ACTIVITIES

FOR THE YEAR ENDED DECEMBER 31, 2014

UNRESTRICTEDTEMPORARILYRESTRICTED

PERMANENTLYRESTRICTED TOTAL

REVENUES

Contributions $ 2,973,722 $ 1,142,302 $ 74,802 $ 4,190,826

Recovery of uncollectible losses - 22,438 22,314 44,752

Investment income 9,858 83,962 - 93,820

Net realized and unrealized gains oninvestments 604 12,362 - 12,966

Net assets released from restriction 1,221,965 (1,221,965) - -

Total Revenues 4,206,149 39,099 97,116 4,342,364

EXPENSES

Accounting 25,470 - - 25,470

Awards/scholarships 498,036 - - 498,036

Consultant fees 700,079 - - 700,079

Depreciation and amortizationexpense 85,918 - - 85,918

Management fee 1,331,617 - - 1,331,617

Marketing/promotion 30,448 - - 30,448

Miscellaneous 2,411 - - 2,411

Office supplies and expenses 165,328 - - 165,328

Printing and copying expenses 10,382 - - 10,382

Program development 1,246,957 - - 1,246,957

State registration fees 7,997 - - 7,997

Travel and meeting expenses 389,706 - - 389,706

Total Expenses 4,494,349 - - 4,494,349

CHANGE IN NET ASSETS (288,200) 39,099 97,116 (151,985)

NET ASSETS - BEGINNING OF YEAR (134,716) 493,338 1,755,619 2,114,241

NET ASSETS - END OF YEAR $ (422,916) $ 532,437 $ 1,852,735 $ 1,962,256


PROJECT MANAGEMENT INSTITUTE EDUCATIONAL FOUNDATIONSTATEMENT OF ACTIVITIES

FOR THE YEAR ENDED DECEMBER 31, 2013

UNRESTRICTEDTEMPORARILYRESTRICTED

PERMANENTLYRESTRICTED TOTAL

REVENUES

Contributions $ 2,712,336 $ 926,061 $ 103,711 $ 3,742,108

Uncollectible losses (15,000) (22,438) (22,314) (59,752)

Investment income 8,541 59,722 - 68,263

Net realized and unrealized gains oninvestments 9,015 114,814 - 123,829

Net assets released from restriction 1,028,663 (1,028,663) - -

Total Revenues 3,743,555 49,496 81,397 3,874,448

EXPENSES

Accounting 27,138 - - 27,138

Awards/scholarships 645,474 - - 645,474

Consultant fees 896,147 - - 896,147

Management fee 943,302 - - 943,302

Marketing/promotion 59,277 - - 59,277

Miscellaneous 2,196 - - 2,196

Office supplies and expenses 109,432 - - 109,432

Printing and copying expenses 19,404 - - 19,404

Program development 1,032,066 - - 1,032,066

State registration fees 15,044 - - 15,044

Travel and meeting expenses 312,653 - - 312,653

Total Expenses 4,062,133 - - 4,062,133

CHANGE IN NET ASSETS (318,578) 49,496 81,397 (187,685)

NET ASSETS - BEGINNING OF YEAR 183,862 443,842 1,674,222 2,301,926

NET ASSETS - END OF YEAR $ (134,716) $ 493,338 $ 1,755,619 $ 2,114,241


PROJECT MANAGEMENT INSTITUTE EDUCATIONAL FOUNDATIONSTATEMENTS OF CASH FLOWS

FOR THE YEARS ENDEDDECEMBER 31,

2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets $ (151,985) $ (187,685)

Adjustments to reconcile change in net assets to net cash

provided by (used in) operating activities:Depreciation and amortization 85,918 -Gain on sales of investments (36,288) (3,889)Amortization of discount:

Unconditional promises to give restricted for long-termpurposes (2,060) (1,552)

Other unconditional promises to give - (3,231)Provision for uncollectible pledges - other unconditional

promises to give (22,438) 37,438Unconditional promises to give restricted for long-term

purposes (22,314) 22,314Change in unrealized (gains) losses on investments 23,322 (119,940)Other unconditional promises to give restricted for long-term

purposes (72,742) (102,159)(Increase) decrease in assets:

Accounts receivable - Project Management Institute (66,740) 31,151Other unconditional promises to give 22,920 24,535

Increase (decrease) in liabilities:Accounts payable (126,312) 62,005Grants payable 354,335 442,306

Net Adjustments 137,601 388,978

Net Cash Provided by (Used in) Operating Activities (14,384) 201,293

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments (856,740) (329,776)

Proceeds from sale of investments 751,730 251,286

Purchases of computer software (52,871) -

Website development (35,000) (255,800)

Net Cash Used in Investing Activities (192,881) (334,290)

CASH FLOWS FROM FINANCING ACTIVITIES

Contributions restricted for long-term purposes 151,140 153,660

NET CHANGE IN CASH AND CASH EQUIVALENTS (56,125) 20,663

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 529,550 508,887

CASH AND CASH EQUIVALENTS - END OF YEAR $ 473,425 $ 529,550


PROJECT MANAGEMENT INSTITUTE EDUCATIONAL FOUNDATIONNOTES TO FINANCIAL STATEMENTS


NOTE A - Summary of Significant Accounting Policies

Nature of Organization - The Project Management Institute Educational Foundation(“Foundation”) is organized and operated exclusively as an independent nonprofit charitable“supporting organization” of Project Management Institute (“PMI”) within the meaning ofSection 501(c)(3) and Section 509(a)(3) of the United States of America Internal RevenueCode. The Foundation carries out the charitable purposes of PMI and fosters projectmanagement research, education and application throughout society on a global basis byproviding educational resources, grants, scholarships and awards.

Basis of Presentation - The Foundation reports information regarding its financial position andactivities according to three classes of net assets: unrestricted net assets, temporarilyrestricted net assets, and permanently restricted net assets.

Donor-restricted support is reported as an increase in temporarily or permanently restricted netassets, depending on the nature of the restriction. When a restriction expires (that is, when astipulated time restriction ends or purpose restriction is accomplished) temporarily restrictednet assets are reclassified to unrestricted net assets and reported in the statements ofactivities as net assets released from restrictions.

Use of Estimates - The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reporting period. Actual results coulddiffer from those estimates.

Cash and Cash Equivalents - For purposes of the statements of cash flows, the Foundationconsiders all highly-liquid investments with an initial maturity of three months or less to be cashequivalents.

Fair Value Measurements - Fair value is defined as the price that would be received to sell anasset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date. Fair value should be based on assumptions that market participants woulduse, including a consideration of non-performance risk.

Management assesses the inputs used to measure fair value using a three-tier hierarchybased on the extent to which inputs used in measuring fair value are observable in the market.Level 1 inputs are quoted market prices for identical instruments in an active market that theentity has the ability to access and are the most observable. Level 2 inputs include quotedmarket prices for similar assets and observable inputs such as interest rates, currencyexchange rates, commodity rates, and yield curves. Level 3 inputs are not observable in themarket and include management's judgments about the assumptions market participantswould use in pricing the asset or liability.

All investments held by the Foundation are based on quoted market prices in active marketsand are therefore considered as Level 1 measurements.



NOTE A - Summary of Significant Accounting Policies - continued

Investments - The Foundation records investments in marketable securities with readilydeterminable fair values and all investments in debt securities at fair values in the statementsof financial position. Realized and unrealized gains and losses are included in the statementsof activities as increases or decreases in unrestricted net assets unless their use is restrictedby explicit donor stipulation or law.

The Foundation invests in various marketable securities (corporate stocks, mutual equityfunds). These investment securities are exposed to various risks such as interest rate, marketand credit risks. Due to the level of risk associated with certain investment securities, it is atleast reasonably possible that changes in the values of investment securities will occur in thenear term and that such changes could materially affect the balances and the amountsreported in the statements of financial position and statements of activities.

Investment Pools - The Foundation maintains master investment accounts for its donor-restricted endowment investments. Realized and unrealized gains and losses from securitiesin the master investment accounts are allocated monthly to the individual accounts based onthe relationship of the beginning cost value of each investment to the total cost value of themaster investment accounts, as adjusted for additions to or deductions from those accounts.

Net Investment Income - Net investment income is reported as an increase in unrestricted netassets. Net investment income on donor-restricted endowments is reported as an increase intemporarily restricted net assets.

Accounts Receivable - Accounts receivable are stated at the amount management expects tocollect from outstanding balances. No allowance was required at December 31, 2014 and2013.

Promises to Give - Unconditional promises to give are reported at the amounts managementexpects to collect on balances outstanding at year end. Changes in the allowance foruncollectible amounts are reported as uncollectible losses or recoveries and changes in theamount of discount are netted against contributions, both in the statements of activities.Management closely monitors outstanding balances and writes off, as of year end, all balancesthat are not considered collectible. Unconditional promises to give, less an allowance foruncollectible accounts, are recognized as revenue or gains in the period received and asassets, decreases of liabilities, or expenses, depending on the form of the benefits received.Conditional promises to give are not recognized until they become unconditional; that is, in theperiod in which the conditions on which they depend are substantially met. The allowance foruncollectible accounts was $- and $44,752 as of December 31, 2014 and 2013, respectively.

In-Kind Contributions - The Foundation records the value of contributed goods when there isan objective basis available to measure their value. Contributed materials and equipment arereported as revenue in the accompanying statements at their estimated values at date ofreceipt. Management's estimates and assumptions affect the reported contributed revenuesand corresponding expenses. For the years ended December 31, 2014 and 2013, contributedgoods of $589,810 and $624,077, respectively, have been recorded.



NOTE A - Summary of Significant Accounting Policies - continued

The Foundation recognizes donated services, if any, that create or enhance nonfinancialassets or that require specialized skills, are provided by individuals possessing those skills,and would typically need to be purchased if not provided by donation. For the years endedDecember 31, 2014 and 2013, no donated services have been recognized. A substantialnumber of volunteers donated significant amounts of their time to assist in the Foundation'sactivities, which do not meet the recognition criteria described above and have accordingly notbeen reflected in the accompanying financial statements.

Website Development - Website development costs are amortized on a straight-line basis overtheir estimated useful lives. Website costs are amortized over three years.

Computer Software - Computer software is recorded at cost. Amortization is calculated usingthe straight-line method over the estimated useful life of three years.

Grants Expense/Payables - Unconditional grants are recorded as expense during the year ofapproval. Grants subject to certain conditions are recorded as expense during the year inwhich the conditions are substantially met, or the possibility that the conditions will not be metis remote, as determined by management. Grants payable within one year are recorded at fairvalue at the date of authorization. Grants payable in more than one year are recorded at thepresent value of the future cash outflows using a risk-free rate of return.

Concentration of Credit Risk - The Foundation maintains cash balances at one financialinstitution. The account is insured by the Federal Deposit Insurance Corporation (FDICinsured) up to $250,000. The Foundation has not experienced any losses in such accounts.As of December 31, 2014, the uninsured balance is approximately $125,000. The Foundationbelieves it is not exposed to any significant credit risk on its cash balances.

Functional Expenses - The costs of providing the various programs and other activities havebeen summarized on a functional basis. Accordingly, the expenses directly related to theprogram are combined with allocations of certain common costs of the Foundation which havebeen allocated based on estimates made by management. These costs were allocated asfollows:

2014 2013

Program $ 2,918,459 $ 2,667,227Fund raising 858,707 968,464Management and general 717,183 426,442

$ 4,494,349 $ 4,062,133

Advertising Costs - The Foundation expenses advertising costs as incurred. Advertising costsfor the years ended December 31, 2014 and 2013 totaled $20,031 and $15,828, respectively.



NOTE B - Investments2014 2013

Cost Fair Value Cost Fair Value

Mutual funds - equity $ 690,511 $ 836,636 $ 635,842 $ 803,533

Mutual funds - bonds 883,959 892,893 778,411 789,196

Stocks 214,281 292,479 233,250 311,303

Total Investments $ 1,788,751 $ 2,022,008 $ 1,647,503 $ 1,904,032

The following schedules summarize the investment return and its classifications in thestatements of activities for the years ended December 31, 2014 and 2013.

2014

UnrestrictedTemporarilyRestricted Total

Interest and dividend income $ 9,858 $ 83,962 $ 93,820

Net realized and unrealized gains 604 12,362 12,966

Total Investment Income $ 10,462 $ 96,324 $ 106,786

2013

UnrestrictedTemporarilyRestricted Total

Interest and dividend income $ 8,541 $ 59,722 $ 68,263

Net realized and unrealized gains 9,015 114,814 123,829

Total Investment Income $ 17,556 $ 174,536 $ 192,092

NOTE C - Promises to Give

In 2006, the Board of Directors authorized a capital campaign for the purpose of raising fundsfor educational programs, scholarships and the proposed Center for Disaster Reconstruction.The goal of the campaign was to raise approximately $10 million from individual and corporatecontributions and pledges.



NOTE C - Promises to Give - continued

Pledges are expected to be realized in the following periods:

December 31,

2014 2013

In one year or less $ 35,128 $ 121,446

Between one year and five years 10,000 25,000

45,128 146,446

Less:

Unamortized discount (5.75%) (1,301) (3,361)

Allowance for uncollectible promises receivable - (44,752)

Total Net Promises to Give $ 43,827 $ 98,333

Additionally, the Foundation has received conditional promises to give (in-kind services,primarily related to educational programs and scholarships) up to a value of $2,066,000 inconnection with the capital campaign. The promises are conditional upon obtaining therequired enrollment for the scholarships.

NOTE D - Website Development

At December 31, 2014, the gross carrying amount and accumulated amortization of intangibleassets subject to amortization are as follows:

Gross AssetsAccumulatedAmortization Net

Website development $ 290,800 $ (72,700) $ 218,100

Amortization expense for the year ended December 31, 2014 was $72,700 and amortizationexpense is expected to be $96,933 per year for 2015 and 2016 and $24,234 for 2017.

NOTE E - Grants Payable

Grants payable include amounts that will be paid more than one year after the date of thefinancial statements. The fair values of grants payable, using a discount rate equal to the risk-free rate of return on the date of grant approval, were as follows:

December 31,

2014 2013

Payable in one year or less $ 796,641 $ 352,978

Payable in one year to five years - 90,583

Total amount granted 796,641 443,561

Unamortized discount (.7%) - (1,255)

Grants Payable $ 796,641 $ 442,306



NOTE F - Income Taxes

The Foundation is exempt from federal and state income taxes under provisions ofSection 501(c) (3) of the Internal Revenue Code.

The Foundation's federal and state income tax returns for 2011, 2012 and 2013 are subject toexamination by federal, state and local taxing authorities, generally for three years after theyare filed.

NOTE G - Related Party Transactions

The Foundation receives administrative services from Project Management Institute. Thecosts for these administrative services were $1,088,532 and $793,976 for the years endedDecember 31, 2014 and 2013, respectively. The Foundation also receives in-kind donationsfrom Project Management Institute. The in-kind donations for facilities, information technologyand human resource costs were $243,085 and $149,327 for the years ended December 31,2014 and 2013, respectively.

In 2014, the Project Management Institute Board of Directors approved up to $3,300,000 incontributions for general operations and for the Vision Driven Project. The Foundationreceived $2,145,219 and $1,083,484 for general operations and the Vision Driven Project,respectively.

As of December 31, 2014, $66,740 is included in accounts receivable.

In 2013, the Project Management Institute Board of Directors approved up to $2,800,000 incontributions for general operations and for the Vision Driven Project. The Foundationreceived $1,879,819 and $845,155 for general operations and the Vision Driven Project,respectively.

NOTE H - Net Assets

Temporarily restricted net assets are available to provide scholarships, awards, and boardapproved educational initiatives.

Permanently restricted net assets consist of endowment fund assets to be held in perpetuity.The income from these assets is to be used to provide scholarships and awards.

NOTE I - Endowment Fund

Accounting standards for the classification and disclosure of endowments of not-for-profitorganizations provide guidance on the net asset classification of donor-restricted endowmentfunds for a not-for-profit organization that is subject to an enacted version of the UniformPrudent Management of Institutional Funds Act of 2006 (UPMIFA) and disclosures about anorganization’s endowment funds. As of December 31, 2014, Pennsylvania has not adoptedUPMIFA. The following disclosures are made as required by the accounting standards.

The endowment of the Foundation consists of approximately 30 funds established for variouspurposes. Its endowment includes donor-restricted endowment funds. As required byaccounting principles generally accepted in the United States of America, net assetsassociated with endowment funds, including funds designated by the Board of Directors tofunction as endowments, are classified and reported based on the existence or absence ofdonor-imposed restrictions.



NOTE I - Endowment Fund - continued

Management has interpreted Pennsylvania law for investment of trust funds (PA Law) asrequiring the preservation of the fair value of the original gift as of the gift date absent explicitdonor stipulations to the contrary. As a result of this interpretation, the Foundation classifiesas permanently restricted net assets (a) the original value of gifts donated to the permanentendowment, (b) the original value of subsequent gifts to the permanent endowment and (c)accumulations to the permanent endowment made in accordance with the direction of theapplicable donor gift instrument at the time the accumulation is added to the fund. Theremaining portion of the donor-restricted endowment that is not classified in permanentlyrestricted assets is classified as temporarily restricted net assets until those amounts areappropriated for expenditure by the Foundation in a manner consistent with the standard ofprudence prescribed by PA law. In accordance with PA Law, the Foundation considers thefollowing factors in making a determination to appropriate or accumulate donor-restrictedendowment funds:

(1) the duration and preservation of the fund

(2) the purposes of the Foundation and the donor-restricted endowment fund

(3) general economic conditions

(4) the possible effect of inflation and deflation

(5) the expected total return from income and the appreciation of the investments

(6) other resources of the Foundation

(7) the investment policies of the Foundation

Composition of Endowment Net Assets

Endowment net assets composition by type of fund at December 31, 2014 is as follows:

TemporarilyRestricted

PermanentlyRestricted Total

Donor-restricted endowment funds $ 293,672 $ 1,825,949 $ 2,119,621




Changes in endowment net assets for the year ended December 31, 2014 are as follows:



Endowment net assets, beginning of year $ 263,693 $ 1,674,810 $ 1,938,503

Contributions - 144,539 144,539

Investment income 83,962 - 83,962

Net realized and unrealizedappreciation 12,362 - 12,362

Amounts appropriated for expenditure (66,345) - (66,345)

Transfers - 6,600 6,600

Endowment net assets, end of year $ 293,672 $ 1,825,949 $ 2,119,621

Endowment net assets composition by type of fund at December 31, 2013 is as follows:



Donor-restricted endowment funds $ 263,693 $ 1,674,810 $ 1,938,503

Changes in endowment net assets for the year ended December 31, 2013 are as follows:



Endowment net assets, beginning of year $ 332,351 $ 1,521,149 $ 1,853,500

Contributions - 153,661 153,661

Investment income 59,722 - 59,722

Net realized and unrealizedappreciation 114,814 - 114,814

Amounts appropriated for expenditure (58,490) - (58,490)

Transfers (184,704) - (184,704)

Endowment net assets, end of year $ 263,693 $ 1,674,810 $ 1,938,503

Permanently Restricted Funds with Deficiencies

At times, the fair value of the assets associated with individual donor-restricted endowmentfunds may fall below the level that the donor or PA Law requires the Foundation to retain as afund of perpetual duration.




Deficiencies of this nature are reported in temporarily restricted net assets, which were zero asof December 31, 2014 and 2013. Deficiencies result from unfavorable market fluctuations thatoccur shortly after the investment of new permanently restricted contributions and continuedappropriation for certain programs that were deemed prudent by the Board of Directors.

Return Objectives and Risk Parameters

The Foundation has adopted investment and spending policies for endowment assets thatattempt to provide a source of funding for specific program activities of the Foundation,including Scholarships and Awards, while attempting to maintain the purchasing power of theendowment assets. Endowment assets include those assets that the Foundation must hold inperpetuity or for a donor-specified period of time. The primary long-term managementobjective is to preserve the real (inflation adjusted) purchasing power of the endowment, bothrestricted and unrestricted, before gifts. This objective should be achieved over a 3-5 yearperiod.

Strategies Employed for Achieving Objectives

To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategyin which investment returns are achieved through both capital appreciation (realized andunrealized) and current yield (interest and dividends). The primary investment objective of theendowment is to earn an average real total return of 8.3%.

Spending Policy and How the Investment Objectives Relate to Spending Policy

The Foundation has a policy of appropriating for distribution each year 5% of its endowmentfund’s average value over the prior 12 quarters through the calendar year end preceding thefiscal year in which the distribution is planned. In establishing this policy, the Foundationconsiders the long-term expected return on its endowment.

The target spending rate is that which, as part of the total return, satisfies these conditions –(a) Permits reinvestment of enough total return to preserve the real purchasing power ofcurrent funds (b) Permits a level of consistency and stability in the scholarship, academic andhumanitarian programs of the Foundation (c) Is sustainable over time regardless of periodicvariations in the levels required to satisfy (a) and (d) Recognizes that circumstances maypreclude achievement of all three objectives in any one year.

NOTE J - Subsequent Events

In preparing these financial statements, the Foundation has evaluated events and transactionsfor potential recognition or disclosure through April 8, 2015, the date the financial statementswere available to be issued.

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