UNIVERSITY OF SOUTH CAROLINA
EDUCATIONAL FOUNDATION
_____________________________________
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
_____________________________________
YEARS ENDED JUNE 30, 2015 AND 2014
WITH
INDEPENDENT AUDITORS REPORT
UNIVERSITY OF SOUTH CAROLINA
EDUCATIONAL FOUNDATION
______________________________________
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
______________________________________
YEARS ENDED JUNE 30, 2015 AND 2014
CONTENTS
Independent Auditors Report .................................................................................................................1
Audited Financial Statements
Statements of Financial Position............................................................................................................3
Statement of Activities - Year Ended June 30, 2015 .............................................................................4
Statement of Activities - Year Ended June 30, 2014 .............................................................................5
Statements of Cash Flows ......................................................................................................................6
Notes to Financial Statements................................................................................................................8
Other Financial Information
Schedule of Functional Expenses - Year Ended June 30, 2015...........................................................28
Schedule of Functional Expenses - Year Ended June 30, 2014...........................................................30
THE BRITTINGHAM GROUP, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
501 STATE STREET
POST OFFICE BOX 5949
WEST COLUMBIA, SOUTH CAROLINA 29171
PHONE: (803) 739-3090
FAX: (803) 791-0834
INDEPENDENT AUDITORS REPORT
Board of Directors
University of South Carolina Educational Foundation
1027 Barnwell Street
Columbia, South Carolina 29208
We have audited the accompanying financial statements of the University of South Carolina
Educational Foundation (the “Foundation”), which comprise the statements of financial position as
of June 30, 2015 and 2014 and the related statements of activities and cash flows for the years then
ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit 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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made 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
for our audit opinion.
1
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the University of South Carolina Educational Foundation as of June 30, 2015
and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance
with accounting principles generally accepted in the United States of America.
Other Matter
Our audit was conducted for the purpose of forming an opinion on the financial statements as a
whole. The schedules of functional expenses on pages 28-29 (2015) and 30-31 (2014) are presented
for purposes of additional analysis and are not a required part of the financial statements. Such
information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the financial statements. The information
has been subjected to the auditing procedures applied in the audit of the financial statements and
certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the financial statements or to the financial
statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, the information is fairly stated in
all material respects in relation to the financial statements as a whole.
West Columbia, South Carolina
September 15, 2015
2
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
STATEMENTS OF FINANCIAL POSITION
June 30,
2015
Assets
Cash and cash equivalents
Accounts receivable:
University of South Carolina
University of South Carolina Development Foundation
Other (net of allowance for doubtful accounts at $14,241
at June 30, 2015 and 2014)
Notes receivable
University of South Carolina Alumni Association
Other
Investments
Assets held in trust by others
Assets held in trust by the Foundation
Other assets
Contributions receivable, net
Total assets
Liabilities and Net Assets
Liabilities:
Accounts payable:
University of South Carolina
Other
Accrued interest payable:
University of South Carolina
University of South Carolina Alumni Association
University of South Carolina Business Partnership Foundation
Funds held for others:
Educational Foundation of USC Lancaster
Other
Annuity obligations
Notes payable:
University of South Carolina
University of South Carolina Alumni Association
University of South Carolina Business Partnership Foundation
Other
Total liabilities
$
$
$
8,819,346
2014
$
7,153,730
1,961,920
750,000
2,284,037
-
246,265
1,597,676
2,000,000
423,891
346,714,600
66,714,159
745,053
704,028
43,049,096
472,128,358
613,180
338,617,540
68,971,722
801,228
1,250
35,733,376
455,773,739
5,023,856
1,365,371
$
$
6,431,982
684,083
11,115
89,881
23,847
13,578
45,510
8,441,382
120,182
2,384,895
7,809,556
71,319
2,571,108
2,157,226
5,000,000
15,000,000
39,593,908
6,445,101
756,518
5,000,000
29,852,602
62,055,650
5,136,494
72,103,748
4,759,289
87,221,807
64,748,007
82,433,542
67,005,070
211,406,340
1,966,152
432,534,450
472,128,358
197,653,336
1,966,152
425,921,137
455,773,739
Contingencies (Note 8 )
Net assets:
Unrestricted:
Undesignated
Designated - quasi-endowments
Temporarily restricted:
Held by the Foundation
Held in trust by others
Permanently restricted:
Held by the Foundation
Held in trust by others
Total net assets
Total liabilities and net assets
See accompanying notes.
$
$
3
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2015
Temporarily
Restricted
Unrestricted
Revenue, gains, and other support
Contributions:
Received
Change in pledges receivable
Other receipts
Income on investments
Net gains on investments
Net assets released from restrictions:
Satisfaction of program restrictions
Expiration of time restrictions
Total revenue, gains and other support
$
18,460,285
1,653,655
3,053,884
2,892,941
$
5,893,438
8,798,597
40,752,800
Expenses
Scholarships, tuition reimbursements
and awards
Salary, supplements and benefits
Support and operational costs
Fundraising and advancement
Other program services
Total expenses
10,313,379
4,745,440
3,608,792
1,066,989
30,689,093
50,423,693
Change in net assets
Net assets, beginning of year
Net assets, end of year
(9,670,893)
76,863,037
67,192,144
$
Permanently
Restricted
4,641,186
7,315,720
163
2,648,953
6,750,264
$
(6,012,541)
(12,812,543)
2,531,202
$
Total
9,619,955
-
$
32,721,426
7,315,720
1,653,818
5,702,837
9,643,205
119,103
4,013,946
13,753,004
57,037,006
-
-
10,313,379
4,745,440
3,608,792
1,066,989
30,689,093
50,423,693
2,531,202
149,438,612
151,969,814
13,753,004
199,619,488
213,372,492
6,613,313
425,921,137
432,534,450
$
$
See accompanying notes.
4
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2014
Temporarily
Restricted
Unrestricted
Revenue, gains, and other support
Contributions:
Received
Change in pledges receivable
Other receipts
Income on investments
Net gains on investments
Net assets released from restrictions:
Satisfaction of program restrictions
Expiration of time restrictions
Total revenue, gains and other support
$
25,505,927
958,878
2,786,559
19,159,876
$
Permanently
Restricted
12,569,847
2,384,546
134,750
2,521,857
28,485,576
$
Total
9,555,664
-
$
47,631,438
2,384,546
1,093,628
5,308,416
47,645,452
4,887,683
7,875,125
61,174,048
(7,798,025)
(11,572,780)
26,725,771
2,910,342
3,697,655
16,163,661
104,063,480
Expenses
Scholarships, tuition reimbursements
and awards
Salary, supplements and benefits
Support and operational costs
Fundraising and advancement
Other program services
Total expenses
9,142,461
4,150,265
2,931,993
732,754
16,490,532
33,448,005
-
-
9,142,461
4,150,265
2,931,993
732,754
16,490,532
33,448,005
Change in net assets
Net assets, beginning of year
Net assets, end of year
27,726,043
49,136,994
76,863,037
26,725,771
122,712,841
149,438,612
16,163,661
183,455,827
199,619,488
70,615,475
355,305,662
425,921,137
$
$
$
$
See accompanying notes.
5
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2015 AND 2014
2015
2014
Cash flows from operating activities:
Change in net assets
$
6,613,313
$
70,615,475
Adjustments to reconcile change in net assets to
net cash from operating activities:
Net gains on investments
(9,643,205)
Interest expense not paid (or paid in excess of amount earned)
Actuarial gain on annuity obligations
18,061
(186,213)
Bad debt expense
-
Contributions restricted to endowment:
Temporarily restricted
(47,645,452)
(2,829,137)
(441,125)
7,394
(2,976,828)
(3,165,106)
(9,619,955)
(9,555,664)
Accounts receivable
Note receivable
Other assets
923,528
(1,810,711)
(702,778)
108,460
(98,873)
-
Contributions receivable
(7,315,720)
(2,384,546)
Permanently restricted
Changes in certain assets and liabilities:
Accounts payable
Funds held for others
Net cash flows from operating activities
(726,838)
5,719,428
680,689
1,223,168
(24,746,657)
11,554,022
66,688,637
27,140,927
(65,142,493)
(39,160,833)
1,546,144
(12,019,906)
Cash flows from investing activities:
Proceeds from sale of investments
Purchase of investments
Net cash flows from investing activities
(CONTINUED)
6
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
STATEMENTS OF CASH FLOWS
(CONTINUED)
2015
2014
Temporarily restricted
2,976,828
3,165,106
Permanently restricted
Other financing activities:
Proceeds from notes payable
9,619,955
9,555,664
16,956,903
-
Payments on notes payable
(7,001,295)
(3,453,595)
2,257,564
56,174
24,866,129
(5,779,375)
(79,292)
3,408,508
1,665,616
7,153,730
2,942,624
4,211,106
Cash flows from financing activities:
Proceeds from contributions restricted for investment in endowment:
Change in split interest agreements
Change in annuity and trust obligations
Net cash flows from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
$
8,819,346
$
7,153,730
Gifts of real estate and equipment
$
1,080,000
$
846,450
Interest paid
$
294,237
$
3,434,232
Supplemental data for noncash investing and
financing activities:
See accompanying notes.
7
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015
1. Summary of Significant Accounting Policies
The University of South Carolina Educational Foundation (the “Foundation”) is a South Carolina
eleemosynary corporation operating for the benefit and support of the University of South
Carolina (the “University”). Its objectives include the establishment and implementation of long
range fundraising programs to assist in the expansion and improvement of the educational
functions of the University.
The financial statements of the Foundation are presented in accordance with accounting
principles generally accepted in the United States of America and are prepared on the accrual
basis of accounting. Consequently, the net assets of the Foundation are reported in the following
three classifications:
Unrestricted
The Foundation reports that part of its net assets that is neither temporarily nor permanently
restricted by donor-imposed stipulations as unrestricted net assets. The Foundation’s governing
board has internally earmarked portions of its unrestricted net assets as designated for quasi
endowments (board designated). The principal of such funds is invested to provide income for
operations.
Temporarily Restricted
The Foundation reports gifts of cash and other assets as restricted support if they are received
with donor stipulations that limit the use of the donated assets. When a donor restriction expires,
that is, when the stipulated time restriction ends or purpose restriction is accomplished,
temporarily restricted net assets are reclassified to unrestricted net assets or permanently
restricted net assets and reported in the Statement of Activities as net assets released from
restrictions. Donor-restricted contributions whose restrictions are met in the same reporting
period are reported as unrestricted support. All contributions receivable are considered
temporarily restricted until received by the Foundation. Once the funds have been received, they
are then reclassified to other net asset classifications.
Permanently Restricted
Permanently restricted net assets consist of that part of the Foundation’s net assets resulting from
contributions and other inflows of assets whose use by the Foundation is limited by donorimposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise be
removed by actions of the Foundation. Presently, these net assets represent the permanent
endowed funds established by donors for the benefit of the Foundation’s programs. Gifts and
contributions designated by such trust agreements are permanently invested, with the income
derived therefrom being accumulated or expended in accordance with the donor-imposed
restrictions.
— CONTINUED —
8
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
1. Summary of Significant Accounting Policies (Continued)
Other significant accounting policies are as follows:
Revenue, Gains and Other Support, and Expenses and Losses
Contributions received and unconditional promises to give are measured at their fair values and
are reported as an increase in net assets.
A contribution is deemed to have been received when the cash or other assets including
securities, land, buildings, use of facilities, materials and supplies, intangible assets, services or
unconditional promise to give such items in the future is received. An unconditional promise to
give is a promise which is not dependent on the occurrence of a specified future and uncertain
event to bind the promisor.
The Foundation reports gifts of goods and equipment as unrestricted support unless explicit donor
stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit
restrictions that specify how the assets are to be used and gifts of cash or other assets that must be
used to acquire long-lived assets are reported as restricted support. Absent explicit donor
stipulations about how long those long-lived assets must be maintained, the Foundation reports
expirations of donor restrictions when the donated or acquired long-lived assets are placed in
service.
Expenses are recorded when incurred in accordance with the accrual basis of accounting.
Donated Services, Goods, and Facilities
A substantial number of volunteers have donated an undetermined number of hours to the
Foundation’s program services and fund-raising campaigns during the year; however, these
donated services are not reflected in the financial statements since the services do not require
specialized skills. Donated professional services (which include accounting and legal services)
would be reflected in the statement of activities at their fair value. No donated professional
services were received during the year.
Materials and other assets received as donations are recorded and reflected in the accompanying
financial statements at their fair values at the date of receipt.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposit, money market, and other deposit accounts
with financial institutions. The Foundation considers all cash and highly liquid debt securities
with an initial maturity of three months or less not held in its investment pools to be cash
equivalents.
9
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
1. Summary of Significant Accounting Policies (Continued)
Concentrations of Credit and Market Risk
Financial instruments that potentially expose the Foundation to concentrations of credit and
market risk consist primarily of cash equivalents and investments. Cash equivalents are
maintained at high-quality financial institutions. At June 30, 2015, the bank balance of cash and
cash equivalents totaled $9,635,813, of which $8,747,574 was not covered by federal deposit
insurance. The Foundation has not experienced any losses on its cash equivalents. Management
monitors the risk of exposure to loss through monitoring the performance of the financial
institutions through publicly available rating agencies.
Management believes that the Foundation’s investments do not represent significant
concentrations of market risk because the Foundation’s investment portfolio is adequately
diversified among issuers and management believes that the Foundation has the ability to hold its
investment portfolio during periods of temporary market declines.
Investments
Investments consist of money market funds, certificates of deposits, marketable equity and debt
securities carried at fair value and alternative investments (including venture capital funds and
funds of funds), which are carried at capital account value. Cash and money market funds held in
the investment portfolio are a part of the diversification strategies established by the investment
policy. Management determines the portion of the investment portfolio to be held in money
market funds based on projected cash needs by beneficiaries. Investment income or loss
(including gains and losses on investments, interest, and dividends) is included in the statement of
activities as increases or decreases in unrestricted net assets unless the income or loss is
specifically restricted by donor or law. Securities or other investments donated are recorded at
their market value at the date of the gift. Donated life insurance policies are carried at their
current respective cash surrender values. Property held for sale is measured at the lower of cost
or market.
Assets Held in Trust
Assets held in trust consist of split-interest agreements that name the Foundation as a beneficiary.
By the Foundation
Trust agreements that name the Foundation as trustee are held in trust accounts that are
measured at fair value in the statement of financial position. Changes in fair value are
included in the statement of activities as changes in contributions received in the
temporarily restricted net assets unless the income or loss is permanently restricted by the
donor. Distributions from the trust accounts are recognized as expenses in the statement of
activities. Distributions to the Foundation during the life of the agreement are recognized
as reductions in the investment earnings in the appropriate net asset classification in
accordance with the donor’s wishes.
10
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
1. Summary of Significant Accounting Policies (Continued)
By Others
Trust agreements under which the Foundation has no control over the investment of assets
are valued using multiple methods. The Charitable Lead Annuity Trusts (CLAT) held by
others are valued using the present value of future cash flows. The Charitable Remainder
Uni-Trusts (CRUT) held by others (majority of Held by Others) are valued at the fair value
of the investments held as reported by the custodians. The discount rate used to determine
the present value is determined at the date of the gift and remains constant throughout the
life of the trust. Changes in the value of the assets are included in the statement of
activities as increases and decreases to contributions received. Distributions to the
Foundation during the life of the agreement are recognized as contributions received in the
appropriate net asset classification in accordance with the donor’s wishes.
Annuity Obligations
The amounts reported as annuity obligations represent amounts due to donors and others under
various split-interest agreements and trust agreements. The related assets are reported together
with other assets (investments or assets held in trust) of the Foundation, as there is no legal
requirement to maintain these separately. Discount rates and actuarial assumptions vary by type
of agreement.
Other information relating to these split-interest agreements is as follows:
2015
Contributions
Actuarial gain
Payments made
$
$
$
175,000
186,213
(466,840)
2014
$
$
$
441,125
(488,058)
A portion of the annuity obligations are reinsured by a reinsurance contract. This reinsurance is
included in Other Assets on the Statement of Financial Position and is valued at $702,778 as of
June 30, 2015.
Fixed Assets
Fixed asset purchases are recorded at cost. Donated fixed assets are recorded at fair value on the
date of the gift. Assets are capitalized if the value at acquisition exceeds $5,000 and the
estimated useful life exceeds three years. Depreciation is provided over the estimated useful life
computed on the straight-line method.
Funds Held for Others
Funds held for others consist of funds held for investment purposes from affiliated entities,
primarily other Foundations within the University system.
11
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
1. Summary of Significant Accounting Policies (Continued)
Income Taxes
The Foundation has received a determination letter from the Internal Revenue Service stating that
it is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code (the
“IRC”). However, it would be subject to tax on income unrelated to its exempt purposes (unless
that income is otherwise excluded by the IRC). The tax years ending June 30, 2015, 2014, 2013,
and 2012 are still open to audit for both federal and state purposes. The Foundation is not
classified as a private foundation.
Expense Allocation
The costs of providing various programs and activities have been summarized on a functional
basis in the Statements of Activities. Certain shared costs have been allocated among the
programs and supporting services benefited.
Reclassifications
Certain items have been reclassified from prior year amounts to conform to the current year
presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America 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 financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates are used in the determination of allowance for doubtful accounts, discount
rates used in net present value calculations, and the useful lives of property and equipment.
Present value calculations are used in the valuation of contributions receivable, funds held in
trust, and annuity liabilities.
2. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each
classification within the financial statements:
 Cash and notes payable - Fair value approximates carrying value due to the short
maturity of these financial instruments.
 Contributions receivable - The fair value of promises to give that are due in one year
or more is estimated by discounting the estimated future cash flows using an estimate
of the Foundation’s earnings rate.
12
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
2. Fair Value of Financial Instruments (Continued)
 Investments - The fair value of debt and equity security investments are estimated
based on quoted market prices. For other investments for which there are no quoted
market prices, a reasonable estimate of fair value could not be made without
incurring excessive costs. It was not practical to estimate the fair value of the
alternative investments. These investments are carried at the capital account value.
 Assets Held in Trust – The fair value is estimated using multiple methods. The
CLAT’s held by others are valued using the present value of future cash flows. The
CRUT’s held by others (majority of Held by Others) are valued at the fair value of
the investments held as reported by the custodian.
 Annuity obligations - These liabilities are carried at actuarially determined present
value, which approximate fair value.
When quoted market prices are not available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash flows. In that regard,
the derived fair value estimates cannot be substantiated by comparison to independent markets
and, in many cases could not be realized in immediate settlement of the instrument.
The following levels of input for measurement of fair value have been defined to assist the user
in evaluating the fair value disclosure information:
Level 1
Level 2
Level 3
Quoted prices in an active market for identical assets or liabilities.
Other quoted prices in active markets for similar assets or
liabilities, quoted prices for identical assets or liabilities in markets
that are not active for transactions or availability of information,
other observable sources of information, and information derived
principally from or corroborated from observable sources of
information.
Unobservable sources of information, primarily management’s
assumptions about potential market participants.
13
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
2. Fair Value of Financial Instruments (Continued)
The estimated fair values of the Foundation’s financial instruments are as follows and are
included in the statement of financial position under similar descriptions for both June 30, 2015
and 2014:
Description
Financial assets requiring
fair value disclosure:
Cash and cash equivalents
Investments
Assets held in trust by others
Assets held in trust by
the Foundation
Contributions receivable
$
$
Financial liabilities requiring
fair value disclosure:
Annuity obligations
Notes payable
$
$
8,819,346
346,714,600
66,714,159
$
745,053
43,049,096
466,042,254
745,053
$ 319,803,451
$
$
8,819,346
304,282,159
5,956,893
$
60,757,266
$
$ 60,757,266
(2,384,895) $ (2,384,895) $
(22,157,226)
(22,157,226)
(24,542,121) $ (24,542,121) $
Description
June 30, 2014
Financial assets requiring
fair value disclosure:
Cash and cash equivalents
$
7,153,730
Investments
338,617,540
68,971,722
Assets held in trust by others
Assets held in trust by
the Foundation
801,228
Contributions receivable
35,733,376
$
451,277,596
Financial liabilities requiring
fair value disclosure:
Annuity obligations
Notes payable
Fair Value Measurements at Reporting Date Using
(Level 1)
(Level 2)
(Level 3)
June 30, 2015
42,432,441
-
43,049,096
$ 85,481,537
-
$
$
-
Fair Value Measurements at Reporting Date Using
(Level 1)
(Level 2)
(Level 3)
$
$
(2,571,108) $
(12,201,619)
(14,772,727) $
7,153,730
297,243,307
6,090,032
801,228
311,288,297
$
$
(2,571,108) $
(12,201,619)
(14,772,727) $
62,881,690
62,881,690
-
$
$
$
$
41,374,233
35,733,376
77,107,609
-
14
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
2. Fair Value of Financial Instruments (Continued)
$
Hedge
Funds
13,905,685
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
Hedge
Private
Preferred/
Fund
Equity
Restricted
Contributions
of Funds
Partnership
Stock
Receivable
$ 19,068,700 $ 6,300,019 $
252,783 $
33,348,830
Ending balance-June 30, 2013
Total dividends included
in changes in net assets
Total gains or losses
(realized/unrealized) included
in changes in net assets
Purchases, issuances, and
settlements
Return of capital
Cash out of dividend/
realized gain
Change in contributions
receivable
Ending balance-June 30, 2014
Total dividends included
in changes in net assets
Total gains or losses
(realized/unrealized) included
in changes in net assets
Purchases, issuances, and
settlements
Return of capital
Cash out of dividend/
realized gain
Change in contributions
receivable
Ending balance-June 30, 2015
$
34,908,534
$
-
$
The amount of total gains or
losses for the year ended
June 30, 2015 included in
changes in net assets attributable
to the change in gains or losses
relating to assets still held at
June 30, 2015
$
1,456,717
$
-
$
-
-
110,801
-
-
110,801
-
4,199,001
1,143,038
1,226,030
805,655
18,403,094
-
(20,294,730)
-
1,895,039
(1,636,519)
-
-
3,403
(1,636,519)
-
(829,640)
-
-
(829,640)
-
6,645,355
-
28,675
-
463,501
-
-
1,957,273
(1,142,975)
-
-
(1,098,253)
33,451,817
-
1,456,717
6,853,576
1,024,278
Total
72,876,017
$
1,277,061
2,384,546
35,733,376
-
-
28,675
-
1,313,488
-
-
1,957,273
(1,142,975)
-
-
(1,098,253)
(606,730)
$
(606,078) $
2,384,546
77,107,609
670,331
$
(606,730) $
7,315,720
43,049,096
-
7,315,720
$ 85,481,537
$
243,909
15
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
2. Fair Value of Financial Instruments (Continued)
The investments reported as level 3 methods for determining fair value consist of Private Equity
Partnerships, Hedge Funds, Preferred/Restricted Stock and Contributions Receivable for which
the ownership terms and conditions restrict the marketability of the investments resulting in the
valuation method previously described. The following describes the restrictions to assist in the
assessment of the investment holdings:
Private Equity Partnerships – The Foundation holds ownership positions in four partnerships with
investment strategies of investing in private equity (distressed companies) and private
energy funds. The Foundation cannot redeem its investment in these funds until the final
liquidation of the partnerships. The distressed equities fund is in the late stage of its life
and has an estimated three (3) years left until the majority of the capital has been returned.
This partnership is valued at $3,958,023 at June 30, 2015. The amount of unfunded
commitments related to this investment is $238,113. One private energy fund is in the
early stage of its life and has an estimated seven and one-half (7.5) years left until the
majority of the capital has been returned. This partnership is valued at $2,183,140 at June
30, 2015. The amount of unfunded commitments related to this investment is $1,404,338.
The other private energy fund is in the early stage of its life and has an estimated nine and
one-half (9.5) years left until the majority of the capital has been returned. This
partnership is valued at $132,647 at June 30, 2015. The amount of unfunded
commitments is $2,973,334. The final private energy fund is in the early stage of its life
and has an estimated nine and one-half (9.5) years left until the majority of the capital has
been returned. This partnership is valued at $579,766 at June 30, 2015. The amount of
unfunded commitments related to this investment is $2,509,756.
Hedge Funds – The Foundation holds ownership shares in several hedge funds with investment
strategies including fund to fund long/short equity managers. The funds’ requirements for
liquidity/withdrawals range from 15 days written notice for monthly liquidation to 95
days written notice for quarterly liquidation and contributions/purchases are accepted
either monthly, quarterly, or annually with some having a minimum deposit/withdrawal
up to $250,000. Management believes that the investment strategies employed and
availability of other Foundation resources allow the Foundation to be unaffected by the
liquidity restrictions.
Restricted Stocks – The Foundation held ownership of 2,093,543 shares of EKF Diagnostics
Holdings PLC restricted stock valued at $.32 per share as of June 30, 2015. This stock
has a lock-up period - no shares may be sold, transferred or disposed of for 6 months
following the EKF Diagnostics merger with Selah Genomics, Inc., and no shares may be
sold, transferred or disposed of in months 7 through 24 following the merger without the
consent of the nominated advisor of EKF Diagnostics. EKF Diagnostics is traded on AIM
- the London Stock Exchange, and is not traded on any US exchange Therefore, to
liquidate its shares, the Foundation will be required to trade through an international trade
desk.
16
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
2. Fair Value of Financial Instruments (Continued)
Contributions Receivable – Contributions receivable represent the fair value of promises to
give that are due in one year or more. The fair value is determined by discounting
the estimated future cash flows using an estimate of the Foundation’s earnings
rate. No public or secondary market exists for contributions receivable.
3. Investments
The following summarizes the fair values of investments by investment pool at June 30, 2015 and
2014:
Years Ended June 30,
2015
2014
Fair Value
Readily Marketable
University Foundations Pool
Other Donor - Restricted
Endowments - Not Readily
Marketable
$
24,061,989
317,152,315
5,500,296
$ 346,714,600
Fair Value
$
23,777,609
308,953,835
5,886,096
$ 338,617,540
Investments are composed of the following:
Years Ended June 30,
2015
2014
Fair Value
Money Funds
Fixed Income Mutual Funds
Stocks and equity mutual funds
Real Estate
Other/Alternative Investments
$
3,350,574
57,424,923
238,648,725
1,814,646
45,475,732
$ 346,714,600
Fair Value
$
3,489,404
56,208,327
232,936,541
2,384,646
43,598,622
$ 338,617,540
17
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
3. Investments (Continued)
The Foundation’s participation in a pooling of investments program with other foundations of the
University, collectively known as the University Foundations, consisted of the following:
June 30, 2015
University Foundations
Portion Owned by
Pooled Investments
USC Educational Foundation
Fair Value
Fair Value
Investment Pools:
Money Funds
Stocks
Equity Mutual Funds
Fixed Income Mutual Funds
Other/Alternative Investments
Total Investment Pools
$
4,317,236
175,938,797
124,745,734
45,331,492
55,370,929
$
3,346,446
136,837,303
96,474,208
38,732,249
41,762,109
$
405,704,188
$
317,152,315
June 30, 2014
University Foundations
Portion Owned by
Pooled Investments
USC Educational Foundation
Fair Value
Fair Value
Investment Pools:
Money Funds
Stocks
Equity Mutual Funds
Fixed Income Mutual Funds
Other/Alternative Investments
Total Investment Pools
$
4,489,201
161,331,573
129,095,903
45,152,572
53,214,991
$
3,488,883
125,475,227
101,310,562
38,581,991
40,097,172
$
393,284,240
$
308,953,835
Investment income from cash equivalents and investments is comprised of the following for the
years ended June 30, 2015 and 2014:
Temporarily
Restricted
Permanently
Restricted
$ 3,053,884
2,892,941
$
2,648,953
6,750,264
$
-
$
5,702,837
9,643,205
$ 5,308,416
47,645,452
$ 5,946,825
$
9,399,217
$
-
$ 15,346,042
$ 52,953,868
Unrestricted
Dividends and interest
Gains
Totals
2015
2014
18
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
4. Assets Held in Trust
Assets held in trust are comprised of the following at fair value as reported by the custodian or
trustee:
June 30,
2015
2014
Held by others:
Temporarily restricted
Permanently restricted
Held by the Foundation:
Temporarily restricted
Total assets held in trust
$ 64,748,007
1,966,152
$ 67,005,570
1,966,152
66,714,159
68,971,722
745,053
745,053
801,228
801,228
$ 67,459,212
$ 69,772,950
Changes in funds held in trust are comprised of the following for the years ended June 30, 2015
and 2014, respectively, and are reported as increases/decreases in contributions received.
Temporarily
Restricted
Unrestricted
Held by Foundation
Held by others
$
$
-
$
$
(6,497)
228,131
221,634
Permanently
Restricted
$
$
Totals
2015
-
$
$
(6,497)
228,131
221,634
2014
$
138,823
6,744,768
$ 6,883,591
Distributions received from funds held in trust by others were recognized as temporarily
restricted contributions in the amount of $2,695,288 and $2,806,733 for the years ended June 30,
2015 and 2014, respectively.
Distributions and other expenses paid from funds held in trust by the Foundation are included as
expenses on the financial statements and totaled $7,530 and $90,590 for the years ended June 30,
2015 and 2014, respectively.
19
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
5. Contributions Receivable
The Foundation has recognized unconditional promises to give as contributions receivable due to
be collected as follows as of:
June 30,
2015
2014
Receivable in less than one year
Receivable in one to five years
Receivable in six to ten years
Receivable in more than ten years
$
Less, allowance for uncollectible pledges
Less, discount for time value of money
Contributions receivable, net
(5,605,695)
(13,133,141)
$ 43,049,096
3,847,360
51,322,473
5,551,092
1,067,007
61,787,932
$
3,015,891
43,793,287
4,613,175
273,834
51,696,187
(4,471,625)
(11,491,186)
$ 35,733,376
The discount to net present value was calculated using the estimated earnings rate of 8.32% as of
June 30, 2015 and 2014.
6. Notes Payable
In the prior years, the Foundation had an agreement with the University of South Carolina that
calls for the University to loan a portion of its endowment funds to the Foundation whereby the
Foundation will invest these funds. The agreement stipulates that the Foundation is to pay the
University a required return equal to the amount that could have been earned at the South
Carolina State Treasurers Office. Principal amounts and accrued interest are payable to the
University upon demand with not less than 30 days notice. Any excess earnings over the required
return are restricted to be used by the Foundation for scholarships. This note was paid off during
the year ended June 30, 2015. The principal balance on this note was $6,445,101, at June 30,
2014. Accrued interest payable totaled $23,847 at June 30, 2014, and is included in accrued
interest payable on the Statement of Financial Position.
Additionally, the Foundation entered into an agreement with the University of South Carolina
Alumni Association (the “Association”) to invest up to $2,450,000 at guaranteed rates up to 1.5%
until the Association requests the funds. The Foundation owed $2,157,226 and $756,518 at June
30, 2015 and 2014, respectively, under this agreement. Accrued interest payable totaled $11,115
and $13,578 at June 30, 2015 and 2014, respectively, and is included in accrued interest payable
on the Statement of Financial Position.
20
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
6. Notes Payable (Continued)
Also, the Foundation entered into an agreement with the University of South Carolina Business
Partnership Foundation (the “BPF”) to invest up to $5,000,000 at guaranteed rates up to 1.0%
until the BPF requests the funds. The Foundation owed $5,000,000 and $5,000,000 at June 30,
2015 and 2014, respectively, under this agreement. Accrued interest payable totaled $89,881 and
$45,510 at June 30, 2015 and 2014, respectively, and is included in accrued interest payable on
the Statement of Financial Position.
On June 25, 2015, the Foundation obtained a line of credit with a bank in the amount of
$20,000,000 with a floating interest rate equal to the 30 day LIBOR rate plus 1.20%. Interest
only payments are due beginning August 2, 2015. The entire outstanding principal balance, along
with any outstanding accrued interest is due on June 25, 2017. As of June 30, 2015, the
outstanding balance was $15,000,000.
As a result of these agreements, the Foundation recognized interest expense of $312,298 and
$597,649 for the years ended June 30, 2015 and 2014, respectively.
7. Funds Held for Others
The Foundation had $8,561,564 and $7,880,875 for the years ended June 30, 2015 and 2014,
respectively, for funds held for affiliated entities.
8. Debt Guaranties/Contingencies/Commitments
The Foundation has agreed to be a guarantor for the repayment of a total of $19,135,000 of bonds
issued by the University of South Carolina Development Foundation (the “Development
Foundation”). At June 30, 2015 the outstanding balance on these bonds was $11,266,075.
The Foundation has guarantied under a guaranty agreement the repayment of an $8,500,000 line
of credit taken out by the Development Foundation. As of June 30, 2015, the outstanding
principal balance was $8,075,000.
The Foundation has guarantied under a guaranty agreement the repayment of a $15,000,000 line
of credit taken out by the Development Foundation. As of June 30, 2015, the outstanding
principal balance was $13,175,076.
As reported in Note 2, the Foundation has committed to invest an additional $7,125,541 in Private
Equity Holdings. This money is payable upon demand.
21
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
8. Debt Guaranties/Contingencies/Commitments (continued)
During the current fiscal year, the Development Foundation entered into a bond financing
agreement for the construction of a new dormitory. The total debt under this agreement will be
$92,700,000. The current outstanding balance was $43,691,893 as of June 30, 2015. The USC
Educational Foundation is providing a guaranty on portions of this debt that will be reduced once
certain benchmarks are reached, as set forth below. The Development Foundation is paying the
Educational Foundation a 1% annual guarantor’s fee, as set forth below. In addition, the
Development Foundation is agreeing with the Educational Foundation that, in the event of a
default on the financing and enforcement by the lenders of the guaranties, any guaranty payment
to the lenders will be made first by the Development Foundation to its $15 million limit before
the Educational Foundation has to pay on its guaranty, and the Development Foundation will
repay the Educational Foundation with interest for any guaranty payment made by the
Educational Foundation.
a.
b.
c.
d.
e.
f.
Guaranty Benchmarks, Limits and Fees:
At bond closing (July 31, 2014)
At completion of Phase 1 (Estimated to be July 31, 2015)
At completion of Phase 1A (Estimated to be July 31, 2016)
One year after meeting 1.2 Debt Service Coverage Ratio (DSCR)
(Estimated to be September 1, 2017)
Two consecutive years at 1.2 DSCR (Estimated to be September 1, 2018)
Three consecutive years at 1.2 DSCR (Estimated to be September 2019)
Total guaranty fees to be paid to the Foundation
Limit of
Guaranty
$75 million
$50 million
$25 million
Guaranty
Fee
$750,000
500,000
250,000
$15 million
$10 million
$0
150,000
100,000
$1,750,000
9. Board Designated Funds
Quasi-Endowments have been designated totaling $5,136,494 and $4,759,289 at June 30, 2015
and 2014, respectively. Quasi-endowments are established from time to time in an effort to
manage the use of funds received without donor restrictions. The quasi-endowments may be
created to fund an established program or project of one of the Colleges or Departments.
Additionally, quasi-endowments may be established to provide funding for new and/or changing
initiatives.
22
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
10. Temporarily Restricted Net Assets
At June 30, 2015, temporarily restricted net assets are available for the following specific
program services:
$ 43,049,096
Contributions receivable
Awaiting full endowment level and temporary
investment earnings
Annuity and Life Trust Agreements
38,059,351
70,861,367
$ 151,969,814
Net assets released from donor restrictions by incurring expenses, satisfying the restricted
purposes, or by occurrence of other events specified by donors were $18,825,084 and
$19,370,805 for the years ended June 30, 2015 and 2014, respectively.
11. Permanently Restricted Assets
Permanently restricted net assets of $213,372,492 at June 30, 2015 are restricted to investment in
perpetuity, the income from which is expendable to support the Foundation’s objectives.
During the normal course of business, investment losses may cause a temporary invasion of
corpus for certain permanently restricted endowments. These negative balances amounted to
$1,263,441 and $564,658 at June 30, 2015 and 2014, respectively. Management believes that
these declines are temporary.
12. Operating Lease
During the year ended June 30, 2014, the Foundation entered into an operating lease for certain
equipment to be used for teaching and research at the McNair Center at the University of South
Carolina. Future payments under this lease are as follows:
Year Ending June 30,
2016
2017
2018
2019
2020
Amount
$
400,000
212,500
212,500
212,500
212,500
$ 1,250,000
23
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
13. Endowments
The Foundation’s endowment consists of approximately 2,000 individual funds established for
various purposes. It includes donor-restricted contributions and other amounts as required by
GAAP. Net assets associated with the endowment are classified and reported based on the
existence or absence of donor-imposed restrictions.
Interpretation of Relevant Law
The Board of Directors of the Foundation has interpreted the South Carolina Uniform Prudent
Management of Institutional Funds Act (SCUPMIFA) as requiring the preservation of the fair
value of the original gift as of the gift date of the donor-restricted endowment funds absent
explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation
classifies as permanently restricted net assets (a) the original value of gifts donated to the
permanent endowment, (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 the
applicable donor gift instrument at the time the accumulation is added to the fund. The remaining
portion of the donor-restricted endowment fund that is not classified in permanently restricted net
assets is classified as temporarily restricted net assets until those amounts are appropriated for
expenditure by the Foundation in a manner consistent with the standard of prudence prescribed
by
SCUPMIFA. In accordance with SCUPMIFA, the Foundation considers the following factors in
making a determination to appropriate or accumulate donor-restricted endowment funds:
1)
2)
3)
4)
5)
6)
7)
The duration and preservation of the fund.
The purposes of the Foundation and the donor-restricted endowment fund.
General economic conditions.
The possible effect of inflation and deflation.
The expected total return from income and the appreciation of investments.
Other resources of the Foundation.
The investment policies of the Foundation.
Endowment composition by type of net asset consists of the following as of June 30, 2015:
Unrestricted
Total net assets
less, Board designated quasi endowments
less, other funds not meeting endowment
definition
Total endowment
Temporarily
Restricted
$ 67,192,144 $ 151,969,814
(5,136,494)
-
Permanently
Restricted
Totals
$ 213,372,492
-
$ 432,534,450
(5,136,494)
(40,611,627)
(115,855,567)
(2,033,511)
(158,500,705)
$ 21,444,023 $ 36,114,247 $ 211,338,981 $ 268,897,251
24
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
13. Endowments (Continued)
Changes in endowment net assets for the year ended June 30, 2015 and June 30, 2014 are as
follows:
Beginning endowment net asset balance - July 1, 2013
Investment return
Contributions
Other revenue
Net assets released from restrictions
Appropriation of endowment assets
for expenditures
Ending endowment net asset balance - June 30, 2014
Reclassifications by management
Investment return
Contributions
Other revenue
Net assets released from restrictions
Appropriation of endowment assets
for expenditures
Ending endowment net asset balance - June 30, 2015
Unrestricted
Temporarily
Restricted
$ 11,451,342
5,005,082
3,111,430
96,635
8,650,421
$ 18,122,744 $ 181,516,668
30,436,454
3,165,106
9,555,664
(15,461,185)
6,458,911
(6,266,087)
22,048,823
1,606,444
172,803
106,101
4,485,805
(6,975,953)
$ 21,444,023
36,263,119
8,976,257
2,976,828
(12,101,957)
$ 36,114,247
Permanently
Restricted
Totals
$ 211,090,754
35,441,536
15,832,200
96,635
(351,853)
197,531,243
54,733
9,619,955
4,133,050
(6,266,087)
255,843,185
54,733
10,582,701
12,769,586
106,101
(3,483,102)
$ 211,338,981
(6,975,953)
$ 268,897,251
During the year ended June 30, 2015, management reclassified certain net assets for UPMIFA
reporting purposes only. These reclassifications resulted in a net increase in UPMIFA net assets of
$54,733 as noted above.
Funds with Deficiencies
From time to time, the fair value of assets associated with individual donor-restricted endowment
funds may fall below the level that the donor or SCUPMIFA requires the Foundation to retain as
a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature that are
reported in unrestricted net assets were ($2,451,990) and ($2,050,822) as of June 30, 2015 and
June 30, 2014, respectively. These deficiencies resulted from unfavorable market fluctuations and
continued appropriation for certain programs that were previously approved and were critical
initiatives deemed prudent by the Board of Directors.
Return Objectives and Risk Parameters
The Foundation has adopted investment and spending policies for endowment assets that attempt
to provide a predictable stream of funding to programs supported by its endowment while seeking
to maintain the purchasing power of the endowment assets. Endowment assets include those
assets of donor-restricted funds that the Foundation must hold in perpetuity or for donor-specified
periods. Under this policy, as approved by the Board of Directors, the endowment assets are
invested in a manner that is intended to produce investment returns at least equal to inflation as
measured by the Consumer Price Index plus a 4.5% pay out and 1.5% for associated fees while
assuming a moderate level of investment risk.
25
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
13. Endowments (Continued)
Strategies Employed for Achieving Objectives
To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy
in which investment returns are achieved through both capital appreciation (realized and
unrealized gains and losses) and current yield (interest and dividends). The Foundation targets a
diversified asset allocation that places a greater emphasis on equity-based investments to achieve
its long-term return objectives within prudent risk constraints.
Spending Policy and How the Investment Objectives Relate to Spending Policy
The Foundation has a policy of appropriating for distribution each year 4.5 percent of its
endowment fund’s average fair value over the prior 5 quarters through the calendar year-end
proceeding the fiscal year in which the distribution is planned. In establishing this policy, the
Foundation considered the long-term expected return on its endowment. Accordingly, over the
long term, the Foundation expects the current spending policy to allow its endowment to grow at
an average of 7 to 8 percent annually. This is consistent with the Foundation’s objective to
maintain the purchasing power of the endowment assets held in perpetuity or for a specified term
as well as to provide additional real growth through new gifts and investment return.
14. Related Party Transactions
The Foundation provided direct support to the University of South Carolina for general
departmental expenditures, scholarships, equipment purchases, and construction of buildings
which totaled $35,037,077 and $24,144,057 for the years ended June 30, 2015 and 2014,
respectively. The Foundation had accounts payable to USC in the amount of $5,023,856 and
$6,431,982 for the years ended June 30, 2015 and 2014, respectively.
The Foundation has entered into the following agreements with USC and its affiliated entities:
University Specialty Clinics
Salary supplements for certain University employees were paid in the amount of $423,916 and
$324,814 for 2015 and 2014, respectively.
USC Development Foundation
The Foundation paid the USC Development Foundation for building occupancy cost in the
amount of $186,000 and $170,500 for the years ended June 30, 2015 and 2014, respectively.
The USC Development Foundation paid the Foundation $282,213 and $232,105 in fiscal years
2015 and 2014, respectively for various operational costs, including salary support, equipment,
investment advisory fees, etc.
As of June 30, 2015 the USC Development Foundation owed the Foundation $750,000 in Debt
Guaranty fees.
26
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
— CONTINUED —
14. Related Party Transactions (Continued)
USC Loan Fund
The provisions of the USC Loan Fund are described in Note 6.
Short-term Library Advance
Under this agreement, the Foundation has agreed to advance up to $3,000,000 to the USC Library
for construction costs and interior furnishing with an interest rate of 2%. The library owed
$1,961,920 and $2,284,037 to the Foundation for the years ended June 30, 2015 and 2014,
respectively. These funds will be repaid over time by the USC Library.
Alumni Association Loan Fund
The provisions of the Alumni Association Loan Fund are described in Note 6.
BPF Loan Fund
The provisions of the BPF Loan Fund are described in Note 6.
Funds Held for the Educational Foundation of USC Lancaster
At June 30, 2015 and 2014, the Foundation held for the Educational Foundation of USC
Lancaster $8,441,382 and $7,809,556, respectively.
Guaranties of Debt of the USC Development Foundation
The provisions of the Guaranties of the Debt of the USC Development Foundation are described
in Note 8.
15. Subsequent events
Subsequent events were evaluated through September 15, 2015, which is the date the financial
statements were available for issue. Events occurring after that date have not been evaluated to
determine whether a change in the financial statements would be required.
27
OTHER FINANCIAL INFORMATION
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
SCHEDULE OF FUNCTIONAL EXPENSES
YEAR ENDED JUNE 30, 2015
Scholarships,
Tuition
Reimbursements
and Awards
Scholarships and tuition
reimbursements
Salary, supplements and benefits
Contributions
Contractual services and professional fees
Rent (office, telephone, copier)
Food supplies
Printing and advertising
Fundraising
Construction costs, office equipment
and maintenance
Office supplies
Postage and freight
Telephone
Insurance
Other program supplies and sundries
Plaques, engraving and framing
Grants, awards and honoraria
Conferences and travel
$
Salary,
Supplements
and Benefits
10,313,379
-
$
Support and
Operational
Costs
4,629,626
-
-
-
-
115,814
-
-CONTINUED-
$
1,639,935
1,200
1,110,402
8,684
7,748
458,491
24,020
2,020
57,712
11,368
4,855
7,227
Fundraising
and
Advancement
$
5,400
254,737
975
20,287
334
601,398
113,335
267
1,003
13,196
9,038
456
3,326
13,399
Other
Program
Services
$
1,636,369
1,424,944
1,018,943
1,062,298
201,629
21,275,739
266,361
15,787
13,189
551,450
196,654
38,534
359,752
665,498
Total
$
10,313,379
6,269,561
1,642,969
2,790,083
1,028,602
1,090,333
201,963
601,398
21,847,565
290,648
18,810
26,385
609,162
217,060
38,990
483,747
686,124
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
SCHEDULE OF FUNCTIONAL EXPENSES
YEAR ENDED JUNE 30, 2015
(CONTINUED)
Scholarships,
Tuition
Reimbursements
and Awards
Salary,
Supplements
and Benefits
Support and
Operational
Costs
Fundraising
and
Advancement
-
-
275,064
66
-
9,371
5,074
15,393
-
4,745,440
$ 3,608,792
Property and use tax
Fees, subscriptions and dues
Instructional materials
Housing, room costs and moving expenses
Trust and annuity expenses
Interest expense - USC Endowment Funds loan
Interest expense - USC Alumni Association loan
Interest expense - USC Business Partnership loan
Total Expenses
$
10,313,379
$
$
1,066,989
Other
Program
Services
Total
46,193
528,783
124,331
342,960
607,381
246,759
21,168
44,371
$
30,689,093
55,564
808,921
124,331
358,419
607,381
246,759
21,168
44,371
$
50,423,693
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
SCHEDULE OF FUNCTIONAL EXPENSES
YEAR ENDED JUNE 30, 2014
Scholarships,
Tuition
Reimbursements
and Awards
Scholarships and tuition
reimbursements
Salary, supplements and benefits
Contributions
Contractual services and professional fees
Rent (office, telephone, copier)
Food supplies
Printing and advertising
Fundraising
Construction costs, office equipment
and maintenance
Office supplies
Postage and freight
Telephone
Insurance
Travel
Other program supplies and sundries
Plaques, engraving and framing
Grants, awards and honoraria
Conferences and travel
$
9,128,881
13,580
-
Salary,
Supplements
and Benefits
$
3,831,423
318,842
-
-CONTINUED-
Support and
Operational
Costs
$
1,593,851
13,025
965,334
178,652
7,652
89,584
23,122
1,600
30,475
1,820
9,397
86
65
6,556
Fundraising
and
Advancement
$
6,000
41,580
6,763
33,625
260
579,034
7,863
595
12,855
1,305
4,101
8,197
401
3,249
4,856
Other
Program
Services
$
1,683,657
1,000,804
196,038
1,013,415
274,392
9,440,094
152,968
23,838
14,612
220,293
546,238
173,695
76,805
357,655
67,787
Total
$
9,128,881
5,425,274
1,702,682
2,007,718
381,453
1,054,692
274,652
579,034
9,537,541
176,685
25,438
27,467
252,073
552,159
191,289
77,292
693,391
79,199
UNIVERSITY OF SOUTH CAROLINA EDUCATIONAL FOUNDATION
SCHEDULE OF FUNCTIONAL EXPENSES
YEAR ENDED JUNE 30, 2014
(CONTINUED)
Scholarships,
Tuition
Reimbursements
and Awards
Salary,
Supplements
and Benefits
Support and
Operational
Costs
Fundraising
and
Advancement
-
-
1,262
18,255
4,150,265
$ 2,931,993
Property and use tax
Fees, subscriptions and dues
Instructional materials
Housing, room costs and moving expenses
Trust and annuity expenses
Interest expense - USC Endowment Funds loan
Interest expense - USC Alumni Association loan
Interest expense - USC Business Partnership loan
Bad debt expense
Total Expenses
$
9,142,461
$
9,209
303
-
Other
Program
Services
75,154
151,621
112,687
256,803
46,933
540,141
13,578
43,930
7,394
3,815
-
-
$
732,754
Total
$
16,490,532
76,416
179,085
112,687
260,921
46,933
540,141
13,578
43,930
7,394
$
33,448,005