Financial Statements and Report of Independent
Certified Public Accountants
University of Nevada, Reno Foundation
June 30, 2014
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 statement of net position as of June 30,
2014, 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.
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 financial
position of University of Nevada, Reno Foundation as of June 30, 2014, and the changes in its net position
and its cash flows for the year 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 inquiries 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 pages 26 and 27, respectively, are presented for purposes of additional
analysis and are 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 2013 summarized comparative information
We have previously audited the Foundation’s 2013 financial statements (not presented herein), and we
expressed an unmodified audit opinion on those audited financial statements in our report dated
September 12, 2013. In our opinion, the accompanying summarized comparative information as of and
for the year ended June 30, 2013 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 September 22, 2014,
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
September 22, 2014
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, 2014
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, 2014. 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, 2014. The Statement of Support and
Revenue, Expenses and Changes in Net Position summarizes the Foundation’s financial activity for the year
ended June 30, 2014. 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, 2014. The schedules that follow the notes to the financial statements are prepared from the
Foundation’s basic financial statements.
New Accounting Standard Adopted
In fiscal year 2014, the Foundation adopted GASB Statement No. 65, Items Previously Reported as Assets and Liabilities
(GASB 65), amends or supersedes the accounting and financial reporting guidance for certain items previously
required to be reported as assets or liabilities. The objective is to either properly classify certain items that were
previously reported as assets and liabilities as deferred outflows of resources or deferred inflows of resources
or recognize certain items that were previously reported as assets and liabilities as outflows of resources
(expenses) or inflows of resources (revenues). The implementation of GASB 65 resulted in recording
endowment pledge donations (net) and deferred inflow of resources in the endowment funds of $3.9 million
and $933 thousand as of the June 30, 2014 and 2013, respectively.
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 (net), real property held for investment, residual interests
in irrevocable trusts, other assets and equipment, less accumulated depreciation.
6
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2014
Statement of Net Position – Continued
Liabilities are also classified between current and non-current. Current liabilities include the amount due to the
University of Nevada, due to unrestricted 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 $42.7 million during the year ended June 30, 2014. This increase in total assets is due
to an increase both in donor contributions and in the fair market value of the Foundation’s investments during
the year ended June 30, 2014.
Current liabilities increased by $2.2 million and are attributable to the amount owed to the University of Nevada
at June 30, 2014 versus June 30, 2013. Net position increased by $37.6 million for the year ended June 30,
2014. The following is a comparison of the Statement of Net Position at June 30, 2014 and 2013.
Statement of Net Position
2014
2013
$ 182,130,422
56,174,657
$ 151,819,688
43,813,447
238,305,079
195,633,135
8,230,441
1,885,941
6,065,052
1,879,700
Total liabilities
10,116,382
7,944,752
Deferred inflow of resources
3,877,720
932,817
Net position
Invested in capital assets
Unrestricted
Restricted – expendable
Restricted – nonexpendable
47,892
16,162,053
82,590,021
125,511,011
21,795
15,200,621
60,626,822
110,906,328
Total net position
224,310,977
186,755,566
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
7
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2014
Net Position
Total net position was $224 million at June 30, 2014, of which $16.2 million is available for the unrestricted
purposes of the Foundation. Included in the unrestricted net position are Quasi Endowment and other
designated funds of $9.6 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. Due to Foundation spending policies, this will not be spent but invested to retain the
purchasing power of the endowment for future generations.
Components of Net Position
2014
Invested in capital assets
Unrestricted
Undesignated
Quasi Endowment and other
designated funds
Restricted – expendable
Restricted – expendable endowment
Restricted – nonexpendable endowment
$
Total net position
47,892
2013
$
21,795
6,566,241
6,340,939
9,595,812
70,342,993
12,247,028
125,511,011
8,859,682
53,743,689
6,883,133
110,906,328
$ 224,310,977
$ 186,755,566
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,
2014. The statement is broken down into three categories: Operating Support and Revenue, Operating
Expenses and Investment Income.
Operating support and revenue include donor contributions, university support, special events and other
income. These revenues increased from the prior year by $12.8 million primarily due to an increase in donor
contributions for several large construction projects across campus.
Investment income increased by $7.6 million for the year ended June 30, 2014 over the prior year. The market
values of the Foundation’s investments have continued to increase with the economy and the stock market.
Operating expenses consist of alumni programs, capital projects, university programs, university scholarships,
and administrative and fundraising expenses. Operating expenses increased by $2.8 million for the year ended
June 30, 2014 when compared to prior year which was due to an increase in expenditures on scholarships and
University programs.
8
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2014
Statement of Support and Revenue, Expenses and Changes in Net Position - Continued
The following is a comparison of the Results of Operations for the years ended June 30:
2014
Operating support and revenues
Donor contributions
University support
Special events and other income
$
Total operating support and
revenue
32,555,530
2,539,199
1,958,818
37,053,547
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
2013
$
20,785,049
1,895,215
1,542,024
24,222,288
2,815,650
11,334,204
6,715,247
3,492,138
(302,375)
9,281,645
451,824
704,676
(750,704)
633,574
1,432,164
(844,363)
Total investment income
21,270,897
13,692,783
Total revenues
58,324,444
37,915,071
394,436
2,209,506
17,625,337
3,227,192
1,621,982
1,997,741
348,033
4,034,783
14,326,725
2,531,563
1,513,134
1,516,445
Total operating expenses
27,076,194
24,270,683
Additions to permanent endowments
Donor contributions
6,307,161
4,256,685
37,555,411
$ 17,901,073
Operating expenses
Alumni programs
Capital projects
University programs
University scholarships
Administrative
Fundraising
Net change in net position
$
9
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2014
Currently Known Facts
The Foundation’s primary sources of revenue are donor contributions, university support and investment
income. Comparing fiscal year ended June 30, 2014 to June 30, 2013, donor contributions increased by $11.8
million or 56.6%. 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, 2014
(With comparative totals as of June 30, 2013)
2013
Total
2014
ASSETS
Unrestricted
Restricted
Endowment
Total
$ 10,023,523
5,744,094
199,424
115,626
12,554
16,095,221
$ 13,618,180
36,426,411
80,591
494
5,874,772
56,000,448
61,354
308,500
181,685
47,892
599,431
17,120,206
4,057,351
1,025,150
272,049
22,474,756
28,711,887
2,866,528
45,900
1,476,155
33,100,470
28,711,887
19,986,734
61,354
4,411,751
2,501,305
453,734
47,892
56,174,657
25,975,333
13,429,861
75,261
1,281,751
2,587,870
441,576
21,795
43,813,447
$ 16,694,652
$ 78,475,204
$ 143,135,223
$ 238,305,079
$ 195,633,135
$
$
$
$
$
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
$
3,230,965
105,786,616
5,980
1,011,192
110,034,753
$
26,872,668
147,957,121
280,015
122,100
6,885,964
12,554
182,130,422
$
14,016,150
132,638,233
408,240
487,524
101,271
4,154,472
13,798
151,819,688
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 $38,695
Total non-current assets
Total assets
LIABILITIES, DEFERRED INFLOWS AND NET POSITION
CURRENT LIABILITIES
Due to University of Nevada
Due to unrestricted fund
Accounts payable
Total current liabilities
354,855
4,130
358,985
7,845,048
3,099
7,848,147
23,309
23,309
8,199,903
30,538
8,230,441
5,573,879
487,524
3,649
6,065,052
NON-CURRENT LIABILITIES
Accrued compensation
Unearned revenue
Total non-current liabilities
Total liabilities
109,722
16,000
125,722
284,064
284,064
1,476,155
1,476,155
109,722
1,776,219
1,885,941
59,722
1,819,978
1,879,700
484,707
8,132,211
1,499,464
10,116,382
7,944,752
-
-
3,877,720
3,877,720
932,817
47,892
16,162,053
16,209,945
70,342,993
70,342,993
12,247,028
125,511,011
137,758,039
47,892
16,162,053
82,590,021
125,511,011
224,310,977
21,795
15,200,621
60,626,822
110,906,328
186,755,566
DEFERRED INFLOWS OF RESOURCES
Endowment pledge donations, net
NET POSITION
Invested in capital assets
Unrestricted
Restricted - expendable
Restricted - nonexpendable
Total net position
The accompanying notes are an integral part of this statement.
12
University of Nevada, Reno Foundation
STATEMENT OF SUPPORT AND REVENUE, EXPENSES
AND CHANGES IN NET POSITION
Year ended June 30, 2014
(With comparative totals for the year ended June 30, 2013)
Total
2013
Total
-
$ 32,555,530
2,539,199
1,958,818
37,053,547
$ 20,785,049
1,895,215
1,542,024
24,222,288
2014
Unrestricted
Operating support and revenue
Donor contributions
University support
Special events and other income
Total operating support and revenue
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
$
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.
Endowment
659,666
2,539,199
164,603
3,363,468
$ 31,895,864
1,794,215
33,690,079
394,436
302,506
-
2,209,506
17,322,831
3,227,192
-
394,436
2,209,506
17,625,337
3,227,192
348,033
4,034,783
14,326,725
2,531,563
696,942
22,759,529
-
23,456,471
21,241,104
1,621,982
1,997,741
3,619,723
-
-
1,621,982
1,997,741
3,619,723
1,513,134
1,516,445
3,029,579
4,316,665
22,759,529
-
27,076,194
24,270,683
(953,197)
10,930,550
-
9,977,353
(48,395)
1,961,153
1,167,791
18,141,953
21,270,897
13,692,783
-
-
6,307,161
6,307,161
4,256,685
(20,427)
(20,427)
4,415,388
85,575
4,500,963
(4,415,388)
(65,148)
(4,480,536)
-
-
987,529
16,599,304
19,968,578
37,555,411
17,901,073
15,222,416
53,743,689
117,789,461
186,755,566
168,854,493
$ 16,209,945
$ 70,342,993
$ 137,758,039
$ 224,310,977
$ 186,755,566
Additions to permanent endowments
Donor contributions
Transfers between funds
Distribution of expendable endowment
Other
Total transfers between funds
Restricted
13
$
University of Nevada, Reno Foundation
STATEMENT OF CASH FLOWS
Year ended June 30, 2014
(With comparative totals for the year ended June 30, 2013)
2013
Total
2014
Unrestricted
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
Endowment
$ 20,852,491
1,794,215
(20,295,611)
(12,920)
(502,751)
2,338,175
-
1,835,424
2,158,246
(20,427)
4,500,963
4,626,470
(4,480,536)
4,626,470
-
3,563,705
-
Net cash provided by (used in) non-capital
financing activities
(20,427)
4,500,963
145,934
4,626,470
3,563,705
Cash flows from capital and related financing activities:
Purchase of equipment
(40,830)
-
-
(40,830)
-
(40,830)
-
-
(40,830)
-
1,892,825
345,008
(393,485)
13,099
260,277
1,852,007
(489,540)
-
1,019,314
44,325,516
(42,391,619)
2,052
3,172,416
46,522,531
(43,274,644)
15,151
4,576,532
43,973,725
(63,890,828)
16,341
Net cash provided by (used in) investing activities
1,857,447
1,622,744
2,955,263
6,435,454
(15,324,230)
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS
1,293,439
8,461,882
3,101,197
12,856,518
(9,602,279)
8,730,084
5,156,298
129,768
14,016,150
23,618,429
$ 10,023,523
$ 13,618,180
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
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
14
$
$
-
Total
362,480
2,726,790
164,603
(135,194)
(2,552,365)
(1,069,065)
Net cash provided by (used in) operating activities
$
Restricted
3,230,965
$
$
21,214,971
2,726,790
1,958,818
(20,430,805)
(2,552,365)
(1,081,985)
26,872,668
$
$
20,714,788
2,049,139
1,542,024
(19,032,435)
(2,311,332)
(803,938)
14,016,150
University of Nevada, Reno Foundation
STATEMENT OF CASH FLOWS - CONTINUED
Year ended June 30, 2014
(With comparative totals for the year ended June 30, 2013)
2013
Total
2014
Unrestricted
Reconciliation of operating income (loss) to net cash 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 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
$
Restricted
Endowment
$
-
Total
(953,197)
$ 10,930,550
$
9,977,353
$
(48,395)
14,733
(7,903)
(5,000)
-
(1,000,034)
(3,666,950)
-
-
14,733
(1,007,937)
(3,671,950)
-
10,770
(1,078,675)
(900,000)
65,000
167,293
227,465
3,858
50,000
(59,860)
(6,343,462)
(12,158)
2,398,559
(268)
91,798
-
107,433
(6,343,462)
(12,158)
2,626,024
3,590
141,798
147,677
2,018,756
(11,914)
2,015,904
(12,917)
(47,960)
$
(502,751)
$
2,338,175
$
-
$
1,835,424
$
2,158,246
$
-
$
12,158
$
-
$
12,158
$
11,914
The accompanying notes are an integral part of this statement.
15
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE 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.
16
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2014
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.
- Continued
Financial Reporting - Continued
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.
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, 2014, 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.
New Accounting Standards Adopted
In fiscal year 2014, the Foundation adopted GASB Statement No. 65, Items Previously Reported as Assets and
Liabilities (GASB 65), amends or supersedes the accounting and financial reporting guidance for certain
items previously required to be reported as assets or liabilities. The objective is to either properly classify
certain items that were previously reported as assets and liabilities as deferred outflows of resources or
deferred inflows of resources or recognize certain items that were previously reported as assets and
liabilities as outflows of resources (expenses) or inflows of resources (revenues). The implementation of
GASB 65 resulted in recording endowment pledges receivable (net), and deferred inflows of resources in
the endowment funds of $3.9 million and $933 thousand as of June 30, 2014 and 2013, respectively.
3.
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.
4.
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.
17
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2014
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
5.
- Continued
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.
6.
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.
7.
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.
8.
Donated Assets and Services
Donated assets are reflected as contributions in the accompanying statements at their estimated fair market
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.
9.
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.
18
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2014
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- Continued
10. 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, 2013 from which the summarized information was derived.
NOTE B - CASH AND INVESTMENTS
Cash and cash equivalents consist of the following as of June 30:
2014
Cash
Money market funds
Commingled funds
Certificates of deposit
2013
$
2,044,718
338,091
24,239,859
250,000
$
1,099,270
1,097,458
11,569,422
250,000
$
26,872,668
$ 14,016,150
The fair value of investments consists of the following as of June 30:
2014
Equity investments
Commingled funds
Certificates of deposit
U.S. Government securities
$
755,656
150,011,587
4,594,356
21,307,409
$ 176,669,008
2013
$
762,626
129,665,987
3,639,387
24,545,566
$ 158,613,566
At June 30, 2014, 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
$
862,462
150,011,587
4,594,356
21,200,603
$
$ 176,669,008
862,462
124,392,452
1,702,020
21,000,186
$ 147,957,120
19
$
19,946,906
2,892,336
200,417
$23,039,659
6 – 10
$
5,672,229
-
$ 5,672,229
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2014
NOTE B - CASH AND INVESTMENTS
- Continued
Investments are recorded in the following funds at June 30:
2014
Unrestricted Fund
Restricted Fund
Endowment Fund
$
5,744,094
36,426,411
134,498,503
$ 176,669,008
2013
$
5,131,862
35,388,372
118,093,332
$ 158,613,566
The cumulative net appreciation (depreciation) of investments is as follows for the years ended June 30:
2014
Unrestricted Fund
Restricted Fund
Endowment Fund
$
2013
1,087,246
1,789,786
12,247,028
$
520,613
999,206
6,883,133
$ 15,124,060
$
8,402,952
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, 2014
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, 2014
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, 2014, the Foundation’s bank
balances totaled $26,770,210. Of this balance, $728,130 was covered by depository insurance and/or
collateralized and $24,205,027 is held by State Street Government Securities and subject to their
investment policies. The remaining $1,837,053 was uninsured and uncollaterized and, as a result, was
subject to custodial credit risk at June 30, 2014.
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, 2014, the Foundation has commitments to acquire approximately $14.3 million in
commingled funds.
22
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2014
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. The properties were appraised in January 2014, and the values were lowered due to the changing
rental market. Unearned revenue is comprised of the following as of June 30:
Residual interest in trust
Royalties and special events
2014
2013
$ 1,625,184
151,035
$ 1,772,278
47,700
$ 1,776,219
$ 1,819,978
NOTE D - RELATED PARTY TRANSACTIONS
The University of Nevada provided the Foundation with administrative and support services for the years
ended June 30, 2014 and 2013 in the amounts of $2,539,199 and $1,895,215, respectively. The Foundation
expended $23,062,035 and $20,893,071 for capital projects, programs and scholarships for the University
of Nevada for the years ended June 30, 2014 and 2013, respectively. Amounts due to the University of
Nevada at June 30, 2014 and 2013 are $8,199,903 and $5,573,879, respectively. Amounts due from the
University of Nevada at June 30, 2014 and 2013 are $208,015 and $408,240, respectively.
The Foundation received $704,676 and $1,432,164 from the Nevada System of Higher Education during
the years ended June 30, 2014 and 2013, 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.
23
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2014
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 1.0% to 3.0% depending on the term or duration of the pledge.
Pledges receivable consist of the following as of June 30:
2014
Athletics
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
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
24
2013
$
963,592
1,725,000
246,000
1,500,000
290,160
601,800
56,500
19,000
943,385
424,000
13,751,500
20,520,937
(2,011,112)
18,509,825
(4,154,472)
(925,492)
$ 13,429,861
SUPPLEMENTAL INFORMATION
25
University of Nevada, Reno Foundation
UNRESTRICTED FUND
ALUMNI AND UNIVERSITY PROGRAM EXPENSES
Year ended June 30, 2014
(With comparative totals for the year ended June 30, 2013)
2014
Alumni programs
Homecoming
Membership fund
Outreach
Student recruitment
Student support
Staff and office expense
$
Total alumni programs
72,787
79,813
116,458
67,610
31,022
26,746
2013
$
55,494
49,047
111,700
69,221
36,410
26,161
394,436
348,033
University programs
Program support
Faculty and staff enrichment
Presidential supplemental salary
Teacher award
113,507
65,006
116,993
7,000
250,000
45,591
114,306
7,500
Total university programs
302,506
417,397
Total alumni and university
program expenses
$
26
696,942
$
765,430
University of Nevada, Reno Foundation
UNRESTRICTED FUND
ADMINISTRATIVE AND FUNDRAISING EXPENSES
Year ended June 30, 2014
(With comparative totals for the year ended June 30, 2013)
Payroll and related expenses
Salaries and wages
Fringe benefits
Administrative
2014
Fundraising
$
$
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
730,051
240,474
970,525
46,174
1,128
9,341
1,848
21,913
11,233
1,175
95,513
15,788
45,313
16,883
74,678
3,358
71,792
143,815
9,708
46,738
18,266
3,050
13,743
651,457
$
1,621,982
27
1,185,108
396,732
1,581,840
$
3,924
18,799
199,636
3,500
1,105
21,452
950
10,704
14,103
482
2,885
12,609
52,607
10,495
9,906
52,744
415,901
$
1,997,741
2013
Total
Total
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
1,705,614
575,718
2,281,332
51,940
971
10,874
20,323
23,134
10,770
2,617
91,782
16,101
12,055
15,855
87,159
3,485
59,568
163,848
14,526
83,962
26,659
8,578
44,040
748,247
$
3,029,579
COMPLIANCE SECTION
28
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 assets as of June 30, 2014, and the
related statements of support and revenues, expenses and changes in net assets and cash flows for the year
then ended, and the related notes to the financial statements, and have issued our report thereon dated
September 22, 2014.
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
September 22, 2014
Grant Thornton LLP
U.S. member firm of Grant Thornton International Ltd
30