Financial Statements and Report of Independent
Certified Public Accountants
University of Nevada, Reno Foundation
June 30, 2015
Contents
Page
Report of Independent Certified Public Accountants
3
Management’s Discussion and Analysis
6
Basic Financial Statements
11
Statement of Net Position
12
Statement of Support and Revenue, Expenses and Changes in Net Position
13
Statement of Cash Flows
14
Notes to Financial Statements
16
Supplemental Information
25
Unrestricted Fund – Alumni and University Program Expenses
26
Unrestricted Fund – Administrative and Fundraising Expenses
27
Compliance Section
Report of Independent Certified Public Accountants on Internal Control
over Financial Reporting and on Compliance and Other Matters Required
by Government Auditing Standards
28
29
Report of Independent Certified Public Accountants
Grant Thornton LLP
100 W Liberty Street, Suite 770
Reno, NV 89501-1965
T 775.786.1520
F 775.786.7091
www.GrantThornton.com
Board of Trustees
University of Nevada, Reno Foundation
Report on the financial statements
We have audited the accompanying financial statements of the University of Nevada, Reno Foundation (a
nonprofit organization) (the “Foundation”), which comprise the statements of net position as of June 30,
2015, and the related statements of support, revenues, expenses and changes in net position 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 and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States. 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 Foundation’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 Foundation’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.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the net
position of the University of Nevada, Reno Foundation as of June 30, 2015, and the changes in its net
position and its cash flows for the years then ended in accordance with accounting principles generally
accepted in the United States of America.
Grant Thornton LLP
U.S. member firm of Grant Thornton International Ltd
3
Required supplementary information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis on pages 6 through 10, respectively, be presented to supplement the basic financial
statements. Such information, although not a required part of the basic financial statements, is required by
the Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. This required supplementary information is the responsibility of management. We have applied
certain limited procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America. These limited procedures consisted of inquires of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Supplementary information
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole.
The Unrestricted Fund – Alumni and University Program Expenses and Unrestricted Fund –
Administrative and Fundraising Expenses on page 26 and 27, respectively, are presented for purposes of
additional analysis and is not a required part of the financial statements. Such supplementary 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. These
additional procedures included comparing and reconciling the 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 supplementary information is fairly stated, in all material
respects, in relation to the financial statements as a whole.
Report on 2014 summarized comparative information
We have previously audited the Foundation’s 2014 financial statements (not presented herein), and we
expressed an unmodified audit opinion on those audited financial statements in our report dated
September 22, 2014. In our opinion, the accompanying summarized comparative information as of and for
the year ended June 30, 2014 is consistent, in all material respects, with the audited financial statements
from which it has been derived.
Other reporting required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report, dated (report date), on
our consideration of the Foundation’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Foundation’s internal control over
financial reporting and compliance.
Reno, Nevada
October 7, 2015
Grant Thornton LLP
U.S. member firm of Grant Thornton International Ltd
4
MANAGEMENT’S DISCUSSION AND ANALYSIS
5
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended June 30, 2015
This section of the University of Nevada, Reno Foundation’s (“the Foundation”) annual financial report
presents management’s discussion and analysis of the financial performance of the Foundation for the fiscal
year ended June 30, 2015. This discussion and analysis has been prepared by management along with the
accompanying financial statements and footnotes and should be read in conjunction with the accompanying
financial statements and footnotes.
Reporting Entity
The University of Nevada, Reno Foundation is a nonprofit corporation whose mission is to facilitate the
solicitation and management of gift revenues and endowments on behalf of the University of Nevada
(“University”). The Foundation was established by the Nevada System of Higher Education (“NSHE”), which
is the sole owner of the Foundation. Additionally, the appointment to the Foundation Board of Trustees is the
responsibility of the NSHE. As such, the Foundation is considered to be a component of both the University
and NSHE. Transactions with the University relate primarily to the disbursement of gift funds to the University
and receipt of support from the University to fund administrative expenses of the Foundation.
Financial Statements
The basic financial statements of the Foundation are the Statement of Net Position; Statement of Support and
Revenue, Expenses and Changes in Net Position; and the Statement of Cash Flows. The Statement of Net
Position presents the financial position of the Foundation as of June 30, 2015. The Statement of Support and
Revenue, Expenses and Changes in Net Position summarizes the Foundation’s financial activity for the year
ended June 30, 2015. The Statement of Cash Flows reflects the effects on cash that result from the Foundation’s
operating activities, investing activities, and capital and related financing activities for the year ended June 30,
2015. The schedules that follow the notes to the financial statements are prepared from the Foundation’s basic
financial statements.
Statement of Net Position
This statement is presented with four major categories: assets, liabilities, deferred inflows of resources and net
position. The assets are classified between current and non-current. The current assets include cash and cash
equivalents, investments, due from University of Nevada, due from endowment fund, other current assets, and
the current portion of pledges receivable (net) and notes receivable. The non-current assets include investments,
pledges receivable (net), notes receivable, real property held for investment, residual interests in irrevocable
trusts, other assets and equipment, less accumulated depreciation.
Liabilities are also classified between current and non-current. Current liabilities include the amount due to the
University of Nevada, due to restricted fund and accounts payable. Non-current liabilities consist of accrued
compensation and unearned revenue. Deferred inflow of resources include endowment pledge donations (net).
Total assets increased by $21.3 million during the year ended June 30, 2015. This increase in total assets is due
to increases in cash of $11.3 million and investments of $14.6 million. The increase is off-set by the sale of real
property of $4.1 million and a decrease in pledge receivables of $0.5 million.
6
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2015
Statement of Net Position – Continued
Current liabilities decreased by $1.8 million and are attributable to the amount owed to the University of Nevada
at June 30, 2015 versus June 30, 2014. Net position increased by $22.9 million for the year ended June 30, 2015.
The following is a comparison of the Statement of Net Position at June 30, 2015 and 2014.
Statement of Net Position
2015
2014
$ 199,490,260
60,125,430
$ 182,130,422
56,174,657
259,615,690
238,305,079
6,431,463
2,090,560
8,230,441
1,885,941
Total liabilities
8,522,023
10,116,382
Deferred inflow of resources
3,872,897
3,877,720
75,400
16,409,231
98,985,550
131,750,589
47,892
16,162,053
82,590,021
125,511,011
$ 247,220,770
$ 224,310,977
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Net position
Invested in capital assets
Unrestricted
Restricted – expendable
Restricted – nonexpendable
Total net position
7
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2015
Net Position
Total net position was $247.2 million at June 30, 2015, of which $16.4 million is available for the unrestricted
purposes of the Foundation. Included in the unrestricted net position are Quasi Endowment and other
designated funds of $10.4 million. The Quasi Endowment, which is not a donor designated endowment, is a
board directed endowment which the board has set aside for specific designated purposes.
The restricted expendable endowment represents the market value of the non-expendable endowment that
exceeds its corpus. Although this is considered expendable, the Foundation’s policy precludes spending these
funds; they will continue to be invested to retain the purchasing power of the endowment for future generations.
Components of Net Position
2015
Invested in capital assets
Unrestricted
Undesignated
Quasi Endowment and other
designated funds
Restricted – expendable
Restricted – expendable endowment
Restricted – nonexpendable endowment
$
Total net position
75,400
2014
$
47,892
5,997,990
6,566,241
10,411,241
83,812,680
15,172,870
131,750,589
9,595,812
70,342,993
12,247,028
125,511,011
$ 247,220,770
$ 224,310,977
Statement of Support and Revenue, Expenses and Changes in Net Position
This statement reflects the results of the Foundation’s operations on net position for the year ended June 30,
2015. The statement is broken down into three categories: Operating Support and Revenues, Operating
Expenses and Investment Income.
Operating support and revenues include donor contributions, university support, special events and other
income. These revenues decreased from the prior year by $347 thousand.
Investment income decreased by $17.3 million for the year ended June 30, 2015. Interest and dividends
remained consistent with the prior year, but both realized and unrealized gains were significantly down from
the prior year. The global public securities markets and the commodity markets were volatile and that affected
our returns.
Operating expenses consist of alumni programs, capital projects, university programs, university scholarships,
and administrative and fundraising expenses. Operating expenses increased by $2.7 million for the year ended
June 30, 2015 when compared to prior year. University programs were up $1.9 million from the prior year
mainly due to the Nevada Protemics Center and the transfer of a piece of property on Center Street to the
University.
8
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2015
Statement of Support and Revenue, Expenses and Changes in Net Position - Continued
The following is a comparison of the Net Position for the years ended June 30:
2015
Operating support and revenues
Donor contributions
University support
Special events and other income
$
2014
29,437,539
3,066,661
4,201,953
$ 32,555,530
2,539,199
1,958,818
36,706,153
37,053,547
3,497,944
(2,595,972)
2,602,243
2,815,650
11,334,204
6,715,247
670,805
713,181
(956,054)
451,824
704,676
(750,704)
3,932,147
21,270,897
40,638,300
58,324,444
362,212
1,640,058
19,504,687
3,876,557
1,792,319
2,578,585
394,436
2,209,506
17,625,337
3,227,192
1,621,982
1,997,741
Total operating expenses
29,754,418
27,076,194
Additions to permanent endowments
Donor contributions
12,025,911
6,307,161
22,909,793
$ 37,555,411
Total operating support and
revenue
Investment income
Interest and dividend income
Realized (loss) gain on sale, net
Unrealized gain
Management fees earned
Foundation
Nevada System of Higher Education
Redemption and consultation fees
Total investment income
Total revenues
Operating expenses
Alumni programs
Capital projects
University programs
University scholarships
Administrative
Fundraising
Change in net position
$
9
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2015
Currently Known Facts
The Foundation’s primary sources of revenue are donor contributions, university support and investment
income. Comparing fiscal year ended June 30, 2015 to June 30, 2014, donor contributions combined with
additions to permanent endowments increased $2.6 million or 6.7%. As the University continues to increase
student enrollment and student graduation rates, as well as, partnering with the Northern Nevada community
for outreach, we have seen our fundraising results increase significantly. The Foundation expects to see this
trend continue as the Foundation partners to raise funds for new campus construction projects.
Requests for Information
This report is designed to provide a general overview of the University of Nevada, Reno Foundation’s finances
for all interested parties. For additional information or questions concerning the information contained in this
report, please call the Foundation Treasurer at (775) 784-1587.
10
BASIC FINANCIAL STATEMENTS
11
University of Nevada, Reno Foundation
STATEMENT OF NET POSITION
June 30, 2015
(With comparative totals as of June 30, 2014)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Investments
Due from University of Nevada
Due from endowment fund
Other current assets
Current portion of pledges receivable, net
Current portion of notes receivable
Total current assets
Unrestricted
$
NON-CURRENT ASSETS
Investments
Pledges receivable, net
Notes receivable
Real property held for investment
Residual interest in irrevocable trusts
Other assets
Equipment, at cost, less accumulated depreciation of $65,270
Total non-current assets
Total assets
2015
Restricted
10,211,296
5,837,535
13,287
166,319
56,311
16,284,748
$
308,500
181,685
75,400
565,585
25,338,846
28,596,684
93,420
6,000
7,260,865
61,295,815
Endowment
$
2,639,083
117,530,452
29,662
1,710,500
121,909,697
2014
Total
Total
$
38,189,225
151,964,671
106,707
6,000
195,981
8,971,365
56,311
199,490,260
$
26,872,668
147,957,121
280,015
122,100
6,885,964
12,554
182,130,422
12,564,461
15,189,426
1,150,436
284,622
29,188,945
26,699,479
2,162,397
45,900
1,463,124
30,370,900
39,263,940
17,351,823
354,400
2,613,560
466,307
75,400
60,125,430
28,711,887
19,986,734
61,354
4,411,751
2,501,305
453,734
47,892
56,174,657
$ 152,280,597
$ 259,615,690
$ 238,305,079
$
$
$
$
16,850,333
$
90,484,760
$
174,732
16,098
190,830
$
6,215,516
4,000
6,219,516
LIABILITIES, DEFERRED INFLOWS AND NET POSITION
CURRENT LIABILITIES
Due to University of Nevada
Due to restricted fund
Accounts payable
Total current liabilities
NON-CURRENT LIABILITIES
Accrued compensation
Unearned revenue
Total non-current liabilities
Total liabilities
The accompanying notes are an integral part of this statement.
8,199,903
30,538
8,230,441
452,564
452,564
1,463,124
1,463,124
160,472
1,930,088
2,090,560
109,722
1,776,219
1,885,941
365,702
6,672,080
1,484,241
8,522,023
10,116,382
-
-
3,872,897
3,872,897
3,877,720
75,400
16,409,231
16,484,631
83,812,680
83,812,680
15,172,870
131,750,589
146,923,459
75,400
16,409,231
98,985,550
131,750,589
247,220,770
47,892
16,162,053
82,590,021
125,511,011
224,310,977
Endowment pledge donations, net
Invested in capital assets
Unrestricted
Restricted - expendable
Restricted - nonexpendable
Total net position
6,390,248
6,000
35,215
6,431,463
160,472
14,400
174,872
DEFERRED INFLOWS OF RESOURCES
NET POSITION
6,000
15,117
21,117
12
University of Nevada, Reno Foundation
STATEMENT OF SUPPORT AND REVENUE, EXPENSES
AND CHANGES IN NET POSITION
Year ended June 30, 2015
(With comparative totals for the year ended June 30, 2014)
Operating support and revenue
Donor contributions
University support
Special events and other income
Total operating support and revenue
Unrestricted
$
Operating expenses
Program expenses
Alumni programs
Capital projects
University programs
University scholarships
Total program expenses
Administrative and fundraising expenses
Administrative
Fundraising
Total administrative and fundraising expenses
Total operating expenses
OPERATING INCOME (LOSS)
Investment income (loss)
Additions to permanent endowments
Donor contributions
Transfers between funds
Distribution of expendable endowment
Other
Total transfers between funds
CHANGE IN NET POSITION
Net position at beginning of year
Net position at end of year
The accompanying notes are an integral part of this statement.
422,823
3,066,661
139,238
3,628,722
$
29,014,716
4,062,715
33,077,431
Endowment
$
2014
Total
Total
-
$
29,437,539
3,066,661
4,201,953
36,706,153
$
32,555,530
2,539,199
1,958,818
37,053,547
362,212
152,934
-
1,640,058
19,351,753
3,876,557
-
362,212
1,640,058
19,504,687
3,876,557
394,436
2,209,506
17,625,337
3,227,192
515,146
24,868,368
-
25,383,514
23,456,471
1,792,319
2,578,585
4,370,904
-
-
1,792,319
2,578,585
4,370,904
1,621,982
1,997,741
3,619,723
4,886,050
24,868,368
-
29,754,418
27,076,194
(1,257,328)
8,209,063
-
6,951,735
9,977,353
1,561,612
(149,962)
2,520,497
3,932,147
21,270,897
-
-
12,025,911
12,025,911
6,307,161
(29,598)
(29,598)
5,298,898
111,688
5,410,586
(5,298,898)
(82,090)
(5,380,988)
-
-
274,686
13,469,687
9,165,420
22,909,793
37,555,411
16,209,945
$
2015
Restricted
16,484,631
13
$
70,342,993
137,758,039
224,310,977
186,755,566
83,812,680
$ 146,923,459
$ 247,220,770
$ 224,310,977
University of Nevada, Reno Foundation
STATEMENT OF CASH FLOWS
Year ended June 30, 2015
(With comparative totals for the year ended June 30, 2014)
Cash flows from operating activities:
Donor contributions
University support
Special events and other income
Cash paid to University of Nevada
Cash paid to employees for services
Cash paid to suppliers
Unrestricted
$
Net cash provided by (used in) operating activities
423,332
3,252,798
139,238
(648,680)
(3,257,259)
(1,125,795)
2015
Restricted
$
26,684,623
4,062,715
(26,446,758)
(11,178)
Endowment
$
2014
Total
Total
-
$
27,107,955
3,252,798
4,201,953
(27,095,438)
(3,257,259)
(1,136,973)
$
21,214,971
2,726,790
1,958,818
(20,430,805)
(2,552,365)
(1,081,985)
(1,216,366)
4,289,402
-
3,073,036
1,835,424
(29,598)
5,410,586
4,260,947
(5,380,988)
4,260,947
-
4,626,470
-
Net cash provided by (used in) non-capital
financing activities
(29,598)
5,410,586
(1,120,041)
4,260,947
4,626,470
Cash flows from capital and related financing activities:
Purchase of equipment
(54,083)
-
-
(54,083)
(40,830)
(54,083)
-
-
(54,083)
(40,830)
1,611,558
2,071
(143,406)
17,597
132,121
10,629,372
(8,740,815)
-
2,039,228
36,707,115
(38,218,184)
-
3,782,907
47,338,558
(47,102,405)
17,597
3,172,416
46,522,531
(43,274,644)
15,151
1,487,820
2,020,678
528,159
4,036,657
6,435,454
187,773
11,720,666
(591,882)
11,316,557
12,856,518
10,023,523
13,618,180
3,230,965
26,872,668
14,016,150
Cash flows from non-capital financing activities:
Additions to permanent endowments
Transfer between funds
Net cash used in capital and related financing activities
Cash flows from investing activities:
Investment income
Proceeds from sale of investments
Purchase of investments
Principal payments received on notes receivable
Net cash provided by investing activities
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
$
10,211,296
14
$
25,338,846
$
2,639,083
$
38,189,225
$
26,872,668
University of Nevada, Reno Foundation
STATEMENT OF CASH FLOWS - CONTINUED
Year ended June 30, 2015
(With comparative totals for the year ended June 30, 2014)
Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss) to net cash
provided by (used in) operating activities:
Depreciation
Gifts of stocks and bonds
Gifts of property
Gift of property to University of Nevada
Changes in:
Other current assets
Pledges receivable
Other assets
Due to (from) University of Nevada
Accounts payable
Unearned revenue
Net cash provided by (used in) operating activities
Non-cash investing activity:
Increase in cash surrender value of life insurance
The accompanying notes are an integral part of this statement.
Unrestricted
$
Restricted
(1,257,328)
$
2015
8,209,063
Endowment
$
2014
Total
Total
-
$
6,951,735
$
9,977,353
26,575
(2,052)
-
(2,464,529)
(508,780)
-
26,575
(2,466,581)
(508,780)
14,733
(1,007,937)
(3,671,950)
-
(50,693)
6,014
11,968
49,150
(18,335)
544,687
(12,573)
(1,629,532)
901
168,500
-
(69,028)
544,687
(12,573)
(1,623,518)
12,869
217,650
107,433
(6,343,462)
(12,158)
2,626,024
3,590
141,798
$
(1,216,366)
$
4,289,402
$
-
$
3,073,036
$
1,835,424
$
-
$
10,482
$
-
$
10,482
$
12,158
15
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
NOTE A - SUMNOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The University of Nevada, Reno Foundation (the “Foundation”) is a nonprofit corporation. The
Foundation’s mission is to serve as an innovative, flexible and efficient organization to facilitate the
solicitation and management of gifts, grants, bequests and other revenues for the benefit of the University
of Nevada (“University”) or any organizations that are affiliated with the University of Nevada and are
exempt from Federal income taxation.
The Foundation is considered to be a component unit and will be included in the basic financial statements
of the University and the Nevada System of Higher Education (“NSHE”).
A summary of the Foundation’s significant accounting policies applied in the preparation of the
accompanying financial statements follows.
1.
Financial Reporting
The financial statements of the Foundation have been prepared in accordance with generally accepted
accounting principles (“GAAP”) as applied to governmental units. The Governmental Accounting
Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental
accounting and financial reporting principles.
Since the Foundation’s funds are considered to be enterprise funds for financial reporting purposes, the
Foundation follows the accrual basis of accounting, wherein revenues are recorded as earned and expenses
are recorded as incurred.
In order to ensure observance of limitations and restrictions placed on the use of resources available to
the Foundation, its accounts are maintained in accordance with the principles of fund accounting.
Resources for various purposes are classified for accounting and reporting purposes into funds established
according to their nature and purpose. Separate accounts are maintained for each fund. Accordingly, all
financial transactions have been recorded and reported by fund group as follows:
Unrestricted Fund - Represents funds that are not restricted and are available for the general operations and
programs of the Foundation.
Restricted Fund - Represents funds that are restricted by the donor and may only be utilized in accordance
with purposes established by such donors. These funds are primarily restricted for scholarships, capital
projects and university programs.
Endowment Fund - Represents funds that are subject to restrictions of gift instruments requiring that the
principal be invested and only the income be utilized for their established purposes. Endowment income
is primarily restricted for scholarships and university programs.
Because endowment investment funds include funds derived originally from permanently restricted gifts,
the management of these funds is subject to Nevada law (NRS 164.640), The Uniform Prudent
Management of Institutional Funds. The Board of Trustees has a separate Investment Committee that
reviews the performance and makes recommendations on the investments.
16
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.
- Continued
Financial Reporting - Continued
The Foundation has adopted an investment policy that establishes an annual spendable objective, which
is to provide funds for operating and capital expenses, and is calculated as 5.25% of the average market
value of assets over the 12-quarter period ending on June 30th of each previous year. Earnings in excess
of 5.25% are reinvested into the corpus and are reported as Restricted – Expendable on the Statement of
Net Position. The spending objective is to be met through the use of interest, dividends, and, to the extent
appropriate, accumulated capital gains and corpus. As of June 30, 2015, the Foundation has calculated the
current spending objective and has distributed the funds, which are reported as a transfer between the
restricted and endowment funds on the Statement of Support and Revenue, Expenses and Changes in
Net Position. The Foundation’s policy is to withhold distributions of income on endowments that are
10% or more under their historic gift value.
2.
Recognition of Support and Revenue
Donations, gifts and pledges received are recognized as income when all eligibility requirements are met,
provided that the promise is verifiable, the resources are measurable and the collection is probable. For
pledges received for endowed support, the revenue is deferred until payment is received. Pledges receivable
are recorded at net present value using the appropriate discount rate. Pledges are examined on an annual
basis to determine their collectability based upon the Foundation’s collection history; an allowance is
recorded for amounts where collection is uncertain. Donations, gifts and pledges received are recorded as
unrestricted, restricted or endowed support depending on the existence and/or nature of any donor
restrictions.
3.
Cash and Cash Equivalents
The Foundation considers all highly liquid short-term interest bearing investments purchased with an
original maturity of three months or less and money market funds to be cash equivalents. Cash from all
accounts are pooled for investment purposes.
4.
Investments
Investments in equity and debt securities with readily determinable fair values are stated at fair value. In
such cases, fair value is determined based on quoted market prices. Investments that do not have readily
available market values are stated at fair value as reported by the Foundation’s Investment Manager. These
investments include a diverse range of investment vehicles (“commingled funds”), including private equity,
real estate and commodity funds. The valuation of these investments is based on the most recent value
provided by the Investment Manager, with a June 30 “as of” date for most investments and a March 31
“as of” date for private equity and limited partnerships. To evaluate the overall reasonableness of the
valuation and resulting carrying value, management obtains and considers the audited financial statements
of such investments. Management believes this method provides a reasonable estimate of fair value.
However, the recorded value may differ from the market value had a readily available market existed for
such investments, and those differences could be material.
Investments are stated at fair value, and realized and unrealized gains and losses are reflected in the
Statement of Support and Revenue, Expenses and Changes in Net Position. The cost of investments sold
is based on the average cost and/or first-in, first-out basis of all the shares of each investment held at the
time of sale. Dividend and interest income are recognized when earned.
17
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
5.
- Continued
Depreciation
Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations
over their estimated service lives on a straight-line basis.
6.
Income Taxes
The Foundation is a nonprofit corporation, exempt from income tax under Internal Revenue Code Section
501(c)(3), qualified for the charitable contribution deduction. Accordingly, no liability for Federal income
taxes has been provided in the Foundation’s financial statements.
7.
Donated Assets and Services
Donated assets are reflected as contributions in the accompanying statements at their estimated fair value
at the date of receipt. No amount for donated services has been reflected in the Foundation’s financial
statements, since no objective basis is available to measure the value of such services. Nevertheless, a
substantial number of volunteers have donated significant amounts of their time to the Foundation’s
program services and its fundraising efforts.
8.
Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles,
management is required to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the 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 accounting estimates made by management include the amount of net pledges
receivable, the amount of expendable endowment income, and the fair value of investments.
9.
Comparative Information
The basic financial statements and the notes to the financial statements include certain prior-year
summarized comparative information in total, but not by fund. Such information does not include
sufficient detail to constitute a presentation in conformity with generally accepted accounting principles.
Accordingly, such information should be read in conjunction with the Foundation’s basic financial
statements for the year ended June 30, 2014 from which the summarized information was derived.
18
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE B - CASH AND INVESTMENTS
Cash and cash equivalents consist of the following as of June 30:
2015
Cash
Money market funds
Commingled funds
Certificates of deposit
2014
$
3,560,921
550,474
33,827,830
250,000
$
2,044,718
338,091
24,239,859
250,000
$
38,189,225
$ 26,872,668
The fair value of investments consists of the following as of June 30:
2015
Equity investments
Commingled funds
Certificates of deposit
U.S. Government securities
$
2014
767,532
164,004,510
6,814,364
19,642,205
$ 755,656
150,011,587
4,594,356
21,307,409
$ 191,228,611
$176,669,008
At June 30, 2015, the Foundation’s investments had the following maturities:
Investment Maturities (in years)
Less than 1
1–5
Fair Value
Equity investments
Commingled funds
Certificates of deposit
U.S. Government securities
$
767,532
164,004,510
6,814,364
19,642,205
$
$ 191,228,611
767,532
129,363,921
2,598,632
19,234,586
$ 151,964,671
19
$
26,452,503
4,215,732
407,619
$ 31,075,854
6 – 21
$
-
8,188,086
-
$ 8,188,086
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE B - CASH AND INVESTMENTS
- Continued
Investments are recorded in the following funds at June 30:
2015
Unrestricted Fund
Restricted Fund
Endowment Fund
$
5,837,535
41,161,145
144,229,931
$ 191,228,611
2014
$
5,744,094
36,426,411
134,498,503
$ 176,669,008
The cumulative net appreciation (depreciation) of investments is as follows for the years ended June 30:
2015
Unrestricted Fund
Restricted Fund
Endowment Fund
$
1,037,281
1,516,153
15,172,870
$ 17,726,304
2014
$
1,087,246
1,789,786
12,247,028
$ 15,124,060
The Foundation’s investment policy for cash and cash equivalents is to exercise sufficient due diligence to
minimize investing cash and cash equivalents in instruments that will lack liquidity. The Foundation,
through its Investment Managers, considers the cash and cash equivalents to consist of two discrete pools
of funds: a short term pool and an intermediate term pool. The short-term pool shall be funded in an
amount sufficient to meet the expected daily cash requirements of the Foundation. The goals of the
investments are to maintain the principal in the account while maximizing the return on the investments.
The short-term pool is staggered in 30, 60 and 90 day investments. Appropriate types of investments are
money market funds, certificates of deposit, commercial paper, U.S. Treasury bills and notes, mortgage
backed securities (U.S. Government) and internal loans to the University secured by a promissory note
with an appropriate interest rate. The intermediate term pool is invested in fixed income securities
generally having an average maturity of three years or less in order to take advantage of higher yields.
It is the policy of the investment program to invest according to an asset allocation strategy that is designed
to meet the goals of the Endowment Investment Objective. The strategy will be based on a number of
factors, including:




The projected spending needs;
The maintenance of sufficient liquidity to meet spending payments;
Historical and expected long-term capital market risk and return behaviors;
The relationship between current and projected assets of the Endowment and its spending
requirements.
20
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE B - CASH AND INVESTMENTS
- Continued
This policy provides for diversification of assets in an effort to maximize the investment return and
manage the risk of the Endowment consistent with market conditions. Asset allocation modeling identifies
asset classes the Endowment will use and the percentage each class represents in the total fund. Due to
the fluctuation of market values, positioning within a specified range is acceptable and constitutes
compliance with the policy. It is anticipated that an extended period of time may be required to fully
implement the asset allocation policy, and that periodic revisions will occur.
Investment Program Strategy
As a result of the above process, the Board has adopted the following asset allocation targets and ranges,
exclusive of amounts transferred to the Endowment’s operating account:
Asset Allocation Targets and Ranges
Min
Wt.
Target
Wt.
Max
Wt.
Equities
Global Equities
Private Markets
30%
25%
5%
40%
30%
10%
50%
35%
15%
Fixed Income
Core US Fixed Income
High Yield Fixed Income
Alternative Debt
32%
12%
10%
5%
40%
15%
15%
10%
48%
18%
20%
15%
Alternatives
Real Estate
Real Assets
12%
0%
7%
20%
10%
10%
28%
15%
13%
0%
0%
5%
Cash
Investment Risk Factors
There are many factors that can affect the fair value of investments. Some factors, such as credit risk and
concentrations of credit risk may affect fixed income securities, which are particularly sensitive to credit
risks and changes in interest rates. The Investment Committee meets quarterly to review the investments
and has policies regarding acceptable levels of risk.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of an organization’s investment
in a single issuer. The Foundation restricts investment of cash and cash equivalents and investments to
financial institutions with high credit standing, and the Foundation currently purchases certificates of
deposit of less than $250,000 per bank or institution. Commercial paper is limited to a maximum of 10%
of the total cash and cash equivalents available. The Foundation has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents and
investments.
21
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE B - CASH AND INVESTMENTS
- Continued
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder
of the investment. This is measured by the assignment of a rating by a nationally recognized statistical
rating organization. None of the investments held by the Foundation are rated by a nationally recognized
statistical rating organization.
Fixed income securities or obligations of the U.S. Government are not considered to have credit risk.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.
As a means of limiting its exposure to fair value losses arising from rising interest rates, the Foundation’s
investment policy limits the maturities of U.S. Treasury instruments and certificates of deposit to no more
than 90 days unless the rate justifies the return and the current liquidity requirements are met.
Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an
investment or a deposit. Foreign investments are monitored by the Investment Manager, and the
Foundation has policies in place to address foreign currency risk.
Custodial Credit Risk – Deposits
In the case of deposits, this is the risk that in the event of a bank failure, the Foundation’s deposits exceed
FDIC limits and as a result may not be insured and returned to the Foundation. All cash deposits are
primarily on deposit with two financial institutions and several investment companies. The Foundation
does not have a deposit policy for custodial credit risk. As of June 30, 2015, the Foundation’s bank balances
totaled $37,909,755. Of this balance, $619,219 was covered by depository insurance and/or collateralized
and $33,691,249 is held by State Street Government Securities and subject to their investment policies.
The remaining $3,599,288 was uninsured and uncollaterized and, as a result, was subject to custodial credit
risk at June 30, 2015.
Custodial Credit Risk – Investments
For an investment, this is the risk that, in the event of the failure of the counterparty, the Foundation will
not be able to recover the value of its investments or collateral securities that are in the possession of an
outside party. Investments consist primarily of commingled funds. Debt and equity securities other than
open-end mutual funds are uncollateralized.
Commitments
As of June 30, 2015, the Foundation has commitments to acquire approximately $14.2 million in
commingled funds.
22
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE C - UNEARNED REVENUE
Unearned revenue is directly related to assets held in irrevocable trusts, of which the Foundation is the
residual beneficiary, and from royalties and special events. The support and revenue from these irrevocable
trusts will be recognized when the Foundation receives its residual interest in the trusts. Distributions to
beneficiaries of these irrevocable trusts are made based on rates set forth in the trust documents. Upon
death of the income beneficiaries, the trusts will be distributed, and the Foundation will receive its residual
interest in the trusts. The assets held in the irrevocable trusts are recorded at fair value. Unearned revenue
is comprised of the following as of June 30:
Residual interest in trust
Royalties and special events
2015
2014
$ 1,718,513
211,575
$1,625,184
151,035
$ 1,930,088
$1,776,219
NOTE D - RELATED PARTY TRANSACTIONS
The University of Nevada provided the Foundation with administrative and support services for the years
ended June 30, 2015 and 2014 in the amounts of $3,066,661 and $2,539,199, respectively. The Foundation
expended $25,021,302 and $23,062,035 for capital projects, programs and scholarships for the University
of Nevada for the years ended June 30, 2015 and 2014, respectively. Amounts due to the University of
Nevada at June 30, 2015 and 2014 are $6,390,248 and $8,199,903, respectively. Amounts due from the
University of Nevada at June 30, 2015 and 2014 are $106,707 and $280,015, respectively.
The Foundation received $713,181 and $704,676 from the Nevada System of Higher Education during
the years ended June 30, 2015 and 2014, respectively, for management fees related to endowments held
on the University’s behalf. These amounts are included in investment income on the Statement of Support
and Revenue, Expenses and Changes in Net Position.
In 2008 the University and the Nevada Commission on Mineral Resources entered into an interlocal
contract to restore funding for the Mackay School of Mines. The agreement split the funding the
University received. Any funding over a certain amount would be split and transferred to the Foundation.
The Foundation received $3,005,863 and $818,881 from the University in the years ended June 30, 2015
and 2014, respectively. The amount is included in special events and other income on the Statement of
Support and Revenue, Expenses and Changes in Net Position.
23
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2015
NOTE E - PLEDGES RECEIVABLE, NET
Pledges receivable are recorded as revenue at the pledge date, except for endowed support pledges where
the revenue is deferred until payment is received. The net present value is calculated based upon the pledge
date, the Internal Revenue Service Applicable Federal Rates (AFR) and the pledge payment schedule. The
AFR currently varies from 1.2% to 3.0% depending on the term or duration of the pledge. Pledges
receivable consist of the following as of June 30:
2015
Athletics
CABNR
College of Liberal Arts
College of Business
College of Education
College of Engineering
College of Science
Interdisciplinary
KUNR
Library
Scholarships
School of Journalism
School of Medicine
$
Present value discount
Net present value of pledges receivable
Less: Current portion of pledges receivable, net
Less: Allowance for uncollectable pledges
Pledges receivable, net
732,561
435,000
444,930
3,002,500
975,000
310,059
592,000
9,870,000
36,070
8,400
1,015,417
66,000
11,968,829
29,456,766
(1,748,147)
27,708,619
(8,971,365)
(1,385,431)
$ 17,351,823
24
2014
$
164,000
914,000
4,124,200
132,822
428,959
854,500
9,416,500
57,425
8,600
1,873,000
218,000
12,176,329
30,368,335
(2,081,284)
28,287,051
(6,885,964)
(1,414,353)
$ 19,986,734
SUPPLEMENTAL INFORMATION
25
University of Nevada, Reno Foundation
UNRESTRICTED FUND
ALUMNI AND UNIVERSITY PROGRAM EXPENSES
Year ended June 30, 2015
(With comparative totals for the year ended June 30, 2014)
2015
Alumni programs
Chapter
Homecoming
Membership fund
Outreach
Pregame
Student recruitment
Student support
Staff and office expense
$
Total alumni programs
2,808
75,668
56,317
31,081
40,423
86,720
38,391
30,804
2014
$
72,787
79,813
116,458
67,610
31,022
26,746
362,212
394,436
University programs
Program support
Faculty and staff enrichment
Presidential supplemental salary
Teacher award
6,923
29,837
116,174
-
113,507
65,006
116,993
7,000
Total university programs
152,934
302,506
Total alumni and university
program expenses
$
26
515,146
$
696,942
University of Nevada, Reno Foundation
UNRESTRICTED FUND
ADMINISTRATIVE AND FUNDRAISING EXPENSES
Year ended June 30, 2015
(With comparative totals for the year ended June 30, 2014)
Payroll and related expenses
Salaries and wages
Fringe benefits
$
Operating
Audit and tax fees
Advertising
Appreciation, gifts and sponsorships
Books, periodicals and subscriptions
Contract services
Depreciation expense
Dues and memberships
Equipment maintenance expense
Insurance, taxes and licenses
Legal fees
Meeting and hosting expense
Office expense
Photography and audio visual
Postage and freight
Printing and duplicating
Recruitment costs
Special event and meeting supplies
Telephone
Training and registration fees
Travel expense
Total administrative and
fundraising expenses
2015
Fundraising
Administrative
851,294
297,613
1,148,907
$
59,038
2,335
6,199
1,584
50,976
18,630
554
96,978
16,715
25,725
8,197
54,677
4,372
82,270
151,209
9,911
12,792
19,087
7,407
14,756
643,412
$
1,792,319
27
1,608,897
499,455
2,108,352
$
113
55
(60)
18,320
234,298
7,945
1,990
17,856
8,932
16,320
41,147
2,490
18,346
36,493
11,465
13,403
41,120
470,233
$
2,578,585
2014
Total
Total
2,460,191
797,068
3,257,259
$
59,151
2,390
6,139
19,904
285,274
26,575
2,544
114,834
16,715
25,725
17,129
70,997
45,519
84,760
169,555
9,911
49,285
30,552
20,810
55,876
1,113,645
$
4,370,904
1,915,159
637,206
2,552,365
46,174
1,128
13,265
20,647
221,549
14,733
2,280
116,965
16,738
45,313
27,587
88,781
3,840
74,677
156,424
9,708
99,345
28,761
12,956
66,487
1,067,358
$
3,619,723
COMPLIANCE SECTION
28
Report of Independent Certified Public Accountants
Report of Independent Certified Public Accountants on
Internal Control over Financial Reporting and on Compliance
and Other Matters Required by Government Auditing Standards
Grant Thornton LLP
100 W Liberty Street, Suite 770
Reno, NV 89501-1965
T 775.786.1520
F 775.786.7091
www.GrantThornton.com
Board of Trustees
University of Nevada, Reno Foundation
We have audited, in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of University of Nevada, Reno
Foundation (the “Foundation”), which comprise the statement of net position as of June 30, 2015, and the
related statements of support and revenues, expenses and changes in net position and cash flows for the
year then ended, and the related notes to the financial statements, and have issued our report thereon dated
October 7, 2015.
Internal control over financial reporting
In planning and performing our audit of the financial statements, we considered the Foundation’s internal
control over financial reporting (“internal control”) to design audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of internal control. Accordingly, we do not express
an opinion on the effectiveness of the Foundation’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and
correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of
deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of
the Foundation’s financial statements will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses. Given these limitations, during our audit we did not identify any deficiencies in the
Foundation’s internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
Compliance and other matters
As part of obtaining reasonable assurance about whether the Foundation’s financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on compliance
with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Grant Thornton LLP
U.S. member firm of Grant Thornton International Ltd
29
Intended purpose
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the Foundation’s
internal control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the Foundation’s internal control and compliance.
Accordingly, this report is not suitable for any other purpose.
Reno, Nevada
October 7, 2015
Grant Thornton LLP
U.S. member firm of Grant Thornton International Ltd
30