HARVARD CLUB OF BOSTON FOUNDATION

Notes to Financial Statements

(See Independent Accountants’ Compilation Report)

Cash

The Foundation considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents.

Investment

Investment is carried at fair value. See discussion under Note 5 – Fair Value Measurements for a description of the methodologies used for assets measured at fair value. Investment income is reported in the Statements of Activities and Changes in Net Assets and consists of interest income, realized and unrealized gains and losses, less external and direct internal investment expenses.

Contributions

The Foundation recognizes contributions when cash, securities or other assets; an unconditional promise to give; or a notification of a beneficial interest is received. Conditional promises to give, that is, those with a measurable performance or other barrier and a right of return, are not recognized until the conditions on which they depend have been met.

Scholarships and fellowships

The Foundation recognizes expenses for scholarships and fellowships when they are approved and are unconditionally promised to the recipients. Scholarship awards are conditioned on the recipients remaining enrolled as students at Harvard University and the awards are recognized annually as this condition is met.

Functional expense allocations

The costs of program and supporting services activities have been summarized on a functional and natural classification basis in the Statements of Functional Expenses. Expenses that can be identified with a specific program or supporting service are charged directly to the program or supporting service. Expenses which apply to more than one functional category have been allocated based on estimates made by management.

Use of estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.

Note 3 – Liquidity and availability

Financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of the Statement of Financial Position date are comprised of the following: