ADVANCING SUCCESS OSU FOUNDATION | 2010 ANNUAL REPORT OSUgiving.com/AdvancingSuccess
At OSU, we are Advancing Success. Our beloved institution is reaching levels never before possible as it gains unprecedented levels of support. The OSU Foundation 2010 online annual report chronicles this progress and the incredible passion shared by our donors.
KIRK A. JEWELL & DR. BARRY POLLARD
Due to the continued generosity of loyal donors like you, we had another great year, with our pooled investment fund showing an 8.7-percent return. Combine that with the $123.9 million in gifts we received, and our total endowment has reached $350.7 million.
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DEAR OSU SUPPORTER What is your passion? At the OSU Foundation, our mission is to unite donor and university passions and priorities to achieve excellence. Together, donors, the university and the Foundation are advancing success. And we want to thank you for your part. Success is defined in our current progress, which is substantial. Due to the continued generosity of loyal donors like you, we had another great year, with our pooled investment fund showing an 8.7-percent return. Combine that with the $123.9 million in gifts we received, and our total endowment has reached $350.7 million. Even after the market instability of the past two years, it’s the second-highest total in our history. Advancing Success is the theme for this Annual Report because it succinctly summarizes the tremendous year we have had. Success is defined by our students and they have articulately shown us what OSU success means to them through our OSUccess scholarship program. We are awarding six scholarships for the best video, photo and short essay answers to the question, “What is your portrait of success at OSU?” You can learn more about the competition and view the entries at OSUuccess.com. The most significant accomplishment of the year was the public launch of the $1 billion Branding Success campaign on Feb. 26. There, President Hargis announced his vision which will take OSU to another level. Branding Success includes goals of $500 million for students, $200 million for faculty, $200 million for facilities and $100 million for programs. So, how have we done? From the start of the quiet phase of the campaign in Dec. 2007 to the end of the fiscal year, our donors committed nearly $600 million toward our goal. For student support, the $263.2 million raised has added 371 scholarships. In faculty support, the $173.2 million has led to 114 new endowed chairs and professorships. Facility support totals $122.7 million, with progress being made toward a new Spears School of Business building, a new Performing Arts Center and an expansion of the Human Environmental Sciences building. In programs, $39.5 million has been committed, adding such initiatives as the entrepreneurship program that has put OSU at the forefront of universities in that discipline. Learn more about the success of the past year by watching our Annual Report video to witness the widespread impact that can be seen across our great campus. Finally, you can learn more about what we will accomplish in the near future by visiting our website at www.OSUgiving.com. With Branding Success, we are advancing success at OSU. Thank you for your efforts alongside us in this endeavor. Sincerely,
Dr. Barry Pollard Chairman
Kirk A. Jewell President & CEO 3
BOARD OF GOVERNORS AND TRUSTEES Mrs. Deborah Adams Mr. Jack Allen, Jr. Mr. Mark Allen Mr. Tom Atherton Mr. Bob Austin Mr. Ken Barrett Mrs. Claudia Bartlett Mr. Gary Bartlett Mr. Gene L. Batchelder Mr. Roger Beecham Mr. Bryan Begley Mr. Gary R. Belitz Mr. Edward Bellatti Mr. Bruce Benbrook Mr. Tom Bennett Mr. Richard Bogert Dr. D. Ray Booker Mr. Cory Bowker, Jr. Mr. Hal J. Brown Mrs. Kathy P. Brown Mr. Roger Brown Mr. Kevin Bryant Mr. Williams Buckles Mr. Don Bugh Mr. Merrill B. Burruss Jr. *Mr. Monty L. Butts Mr. Jarold Callahan Mr. Kurt Carter *Mr. Jerry D. Clack Mr. Chad J. Clay Mr. John A. Clerico *Mr. Bryan Close Mrs. Jan Cloyde Mrs. Patricia Cobb Mr. Patrick Cobb Mr. Samuel Combs, III Mr. Rick W. Cooper Mr. Kevin Corbett Mr. Jack Corgan Mr. Ron Corley Mr. Leonard Court Mr. Stephen Cropper Mr. Brent Curry Ms. Karen Cunningham The Honorable Dale DeWitt Mr. Michael W. Dickinson Mr. Gentner F. Drummond Dr. Jonathan E. Drummond Mr. Leslie D. Dunavant Mr. Kent Dunbar Mr. Joseph Eastin *Mr. Charlie Eitel Mr. Barry L. Eller Mr. Jeffrey Fisher Mrs. Malinda Berry Fischer *Mrs. Ellen Fleming
Mr. Chip Fudge Mr. Melvin Gilliam Mrs. Marybeth Glass *Mr. Michael Greenwood Mr. Gordon Greer Mr. Don Greiner, III Mr. Ken D. Greiner, Jr. *Mrs. Jennifer Grigsby Mr. John Groendyke Dr. James E. Halligan Mr. C.W. “Bill” Harrison Dr. Richard Hastings Mr. Chuck Hensley Dr. Gary C. Hill Mr. William E. Hobbs Ms. Helen Hodges Mr. Chad Hoecker *Mr. David Holsted Mr. Steve Holton Ms. Rhonda Hooper *Mr. Rex E. Horning Mr. David Houston Dr. Phyllis Hudecki Mr. Jerry L. Hudson *Mr. Donald D. Humphreys Mr. Gary D. Huneryager Mr. Michael S. Hyatt Mr. Doug Jackson Dr. Brett H. Jameson *Dr. Cathy Jameson Mr. Jeff Jensen *Mr. Kirk Jewell Dr. Carlos Johnson Mrs. Judy Johnson *Mr. Griffin E. Jones *Mr. Steven Jorns Mr. Edward Keller Mrs. Barbara Kierl Mr. Keith Kisling Mr. Trip Kuehne *Mr. David Kyle - Vice Chair Mr. Rusty LaForge Mr. Virl LaMunyon Mr. Larry Lanie Dr. Francine Allee Liebel Mrs. Caroline Linehan *Mr. John C. Linehan Ms. Jenee Lister Mr. Vincent Logan Mr. Steven Mackey Mr. Joe Martin Mrs. Peggy McCormick Mr. John McDougal Mr. Charlie McKee ^Mr. Ross McKnight Mr. Butch Meibergen
Ms. Retta Miller Dr. Trudy Milner Mr. Larry Mocha Dr. Ron Morgan Mr. Norman Myers Mr. Jerry Nichols Mr. Bob Norris *Mr. Bill Patterson *Mr. Stephen Bond Payne, Jr. *Dr. Barry L. Pollard – Board Chair Mrs. Barbara Pope Dr. Russell Postier Mrs. Patricia Houston-Prawl Dr. Leo E. Presley Mrs. Lisa Putt Mrs. Jennifer (Jennie) Reeves Mrs. Cindy Reilley Mrs. Helen L. Newman Roche Mr. David Ronck Mr. Gerald Roulet Dr. David Russell Mrs. Beverly Schafer Mr. Paul Schulte Mr. Keith Schwandt Mr. Harry Selph, II *Mr. Scott W. Sewell *Mr. Larry Shell Mr. Dennis Slagell Mrs. Becky Rodgers Smith Mr. John Smithson Dr. Mark P. Snell *Dr. William S. Spears Mr. Ken Starks *Mr. Jack E. Stuteville Mr. Stephen Tatum Mr. Lyndon Taylor Mr. Russell W. Teubner Mr. Todd Townsend Mr. David Trojan Mrs. Sharon Trojan Mr. Steve Tuttle Mrs. Linda K. Veazey Dr. David Waits *Mrs. Kim R. Watson Ms. Peggy Welch *Dr. Dennis R. White Mr. Randall W. White Mr. Jay Wiese Mr. Jon A. Wiese Mr. Brad Williams Mr. Jim H. Williams Mr. Jerry Winchester Mr. John Yeaman Mr. Dan Zaloudek Mr. Terryl Zerby Mr. Darton Zink * Denotes Board of Trustees
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^Denotes Honorary Trustee
OSU FOUNDATION TRUSTEES FRONT (L-R): Scott W. Sewell; John C. Linehan; Jerry D. Clack; David Kyle, Vice Chair; Jennifer Grigsby; Bill Patterson; Bryan Close BACK (L-R): Jack E. Stuteville; Ellen Fleming; Charlie Eitel; Dr. Barry L. Pollard, Chairman of the Board; Kirk A. Jewell, President & CEO; Monty Butts; Michael Greenwood; Dr. Dennis R. White NOT PICTURED: Gene L. Batchelder, Ross McKnight, William S. Spears, Kim R. Watson; Griffin E. Jones; Donald D. Humphreys; Steven Jorns; Stephen Bond Payne, Jr.; Larry Shell; David Holsted; Rex E. Horning; Dr. Cathey Jameson
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FINANCIAL HIGHLIGHTS
$123.9 M 2 0 1 0 T O TA L G I F T S
ASSETS $374.6M
06 07
$446.6M
08
$632.3M $453.8M
09 10
$526.3M 100M
200M
300M
400M
500M
600M
700M
ENDOWMENTS
06
$235.6M $302.5M
07 08
$459.4M
09
$306.5M
10
$350.7M 100M
6
200M
300M
400M
500M
ADVANCING SUCCESS The financial information listed here is a summary of the fiduciary support given to Oklahoma State University for the fiscal year ending June 30, 2010. Our fundraising this year shows how the donors are advancing success at OSU. They believe in the vision and mission of the university and trust the Foundation’s ability to achieve those shared goals. In a time of economic instability and decreasing state support for education, we are encouraged by the overwhelming generosity seen daily from OSU’s most valuable asset – its people. OSU is making a presence among its peers and climbing to a position of recognition and prestige that can only be achieved through continued private support. Endowments established though the OSU Foundation provide perpetual support to OSU in the form of student scholarships and fellowships, faculty chairs and professorships, research, equipment, and general university support. Endowment funds are pooled for investment purposes with the oversight of the investments being the responsibility of the investment committee of the Board of Trustees. This committee operates within the parameters of the Trustee-approved investment policy statement. The principal investment management objectives of the pooled funds are to: (1) safeguard and grow the endowed funds of the Foundation in real terms through superior investment management performance, and (2) provide a growing level of funding to the university to enable improved and expanded facilities and programs. For fiscal year 2010, the pooled investment fund produced a total return of 8.7 percent. On June 30, 2010, the total market value of the endowment investments was $350.7 million. This is an increase of $44.2 million over the previous year.
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Audited Consolidated Financial Statements and Other Financial Information
OklAhOmA StAte UnIverSIty FOUndAtIOn JUne 30, 2010
Audited Consolidated Financial Statements and Other Financial Information OKLAHOMA STATE UNIVERSITY FOUNDATION June 30, 2010
Independent Auditors’ Report ....................................................................................................................... 1 Consolidated Statements of Financial Position ........................................................................................... 2 Consolidated Statements of Activities .......................................................................................................... 3 Consolidated Statements of Cash Flows ....................................................................................................... 4 Notes to Consolidated Financial Statements ............................................................................................... 5
Other Financial Information Supplemental Combining Schedule of Activities for the Intercollegiate Accounts of the University Oklahoma State University Foundation ................................................ 40
Independent Auditors’ Report
Board of Trustees Oklahoma State University Foundation We have audited the accompanying consolidated statements of financial position of Oklahoma State University Foundation (the “Foundation”) as of June 30, 2010, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the Foundation’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year’s summarized comparative information has been derived from the 2009 financial statements and, in our report dated October 26, 2009, we expressed our opinion that these financial statements were fairly presented in conformity with accounting principles generally accepted in the United States of America. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oklahoma State University Foundation at June 30, 2010, and the results of its activities and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The Oklahoma State University Foundation--Supplemental Combining Schedule of Activities of the Intercollegiate Athletic Accounts is presented for purposes of additional analysis of the consolidated financial statements and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the consolidated financial statements taken as a whole.
Oklahoma City, Oklahoma October 14, 2010 1
Consolidated Statements of Financial Position OKLAHOMA STATE UNIVERSITY Consolidated Statements of FinancialFOUNDATION Position June 30, 2010 (with comparative totals for June 30, 2009) OKLAHOMA STATE UNIVERSITY FOUNDATION June 30, 2010 (with comparative totals for June 30, 2009)
2009
2010
Assets Cash and cash equivalents Assets Investments - Note B Contributions Cash and cash receivable, equivalentsnet - Note C Interest and other Investments - Note Breceivables - Note C Note receivablereceivable, from Cowboy - Note M Note C Contributions net - Athletics Other property investments Interest and other receivables- Note - NoteI C Note G Property and equipment, net - Athletics Note receivable from Cowboy - Note M Beneficial interests in trusts -- Note NoteJI Other property investments Other assets Property and equipment, net - Note G Beneficial interests in trusts - Note J Total Assets Other assets Liabilities and Net Assets
Total Assets
Liabilities Liabilities and Net Assets OSU support payable Accounts payable and accrued liabilities Liabilities Fundssupport held onpayable behalf of OSU OSU Athletics Funds held on behalf Cowboy andofaccrued liabilities Accounts payable under split Obligations Funds held on behalf ofinterest OSU agreements - Note H Unearned revenue Funds held on behalf of Cowboy Athletics - Note H Obligations under split interest agreements Total Liabilities Unearned revenue Net Assets - Note D Unrestricted D NetTemporarily Assets - Noterestricted Unrestricted Permanently restricted Temporarily restricted Permanently restricted
Total Liabilities
$ $
$ $ $ $
$ $ $ $
See notes to consolidated financial statements. See notes to consolidated financial statements. 2 2
2010 2,009,833 $ 430,311,772 47,655,615 2,009,833 $ 841,384 430,311,772 21,155,947 47,655,615 6,243,522 841,384 7,440,476 21,155,947 8,110,059 6,243,522 2,549,869 7,440,476 8,110,059 526,318,477 $ 2,549,869
2009 4,533,123 354,841,825 40,567,814 4,533,123 1,082,962 354,841,825 28,807,323 40,567,814 5,217,581 1,082,962 8,024,026 28,807,323 8,321,649 5,217,581 2,370,508 8,024,026 8,321,649 453,766,811 2,370,508
526,318,477
$
453,766,811
4,073,954 $ 3,171,638 3,612,550 4,073,954 $ 2,915,000 3,171,638 9,908,958 3,612,550 9,893,662 2,915,000 9,908,958 33,575,762 9,893,662
2,082,215 1,943,604 2,710,378 2,082,215 1,408,736 1,943,604 10,284,003 2,710,378 9,878,500 1,408,736 10,284,003 28,307,436 9,878,500
33,575,762 100,170,795 $ 81,951,913 310,620,007 $ 100,170,795 492,742,715 81,951,913 310,620,007 526,318,477 $ 492,742,715
28,307,436 66,250,698 63,168,070 296,040,607 66,250,698 425,459,375 63,168,070 296,040,607 453,766,811 425,459,375
526,318,477
453,766,811
$
Consolidated Statements of Activities Consolidated Statements of Activities OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA STATE UNIVERSITY FOUNDATION Year Ended June 30, 2010 (with comparative totals for June 30, 2009) Year Ended June 30, 2010 (with comparative totals for June 30, 2009) 2010 Temporarily2010Permanently Restricted Restricted Temporarily Permanently
Unrestricted Revenues and Support Contributions Revenues and Support Cash Contributions Securities Cash Land, goods, services, and other Securities Promises to give Land, goods, services, and other Total Contributions Promises to give
Unrestricted
54,509,837 2,726,313 11,234,777 2,726,313 (4,314,074) 11,234,777 (4,314,074)
17,415,599 (4,201,779) (304,812) (4,201,779) (304,812)
119,061,227 4,781,415 28,636,682 4,781,415 (4,618,886) 28,636,682 1,436,741 (4,618,886)
1,436,741 (147,834) 4,899,703 (147,834) 230,537 4,899,703 662,791 230,537 (112,318) 662,791 40,413,049 (112,318) 118,177,246 40,413,049
(4,729,321) 307,874 (4,729,321) 315,315 307,874 (853,829) 315,315 (40,413,049) (853,829) 18,783,843 (40,413,049)
-704,245704,245966,147966,14714,579,400-
1,436,741 (147,834) 170,382 (147,834) 1,242,656 170,382 978,106 1,242,656 978,106-151,540,489-
1,435,554 186,175(760,158) 186,175 1,288,275 (760,158) 1,288,275-(101,998,109) -
Total Revenues and Support Expenses Program services Expenses Intercollegiate athletics Program services Cowboy Athletics, Athletics Inc Inc. Intercollegiate athletics Library Cowboy Athletics, Athletics Inc Inc. Research Library General University support Research Awards University and scholarships General support Endowedand faculty and lectureship programs Awards scholarships Facilities and equipment Endowed faculty and lectureship programs Management, and fundraising Facilities and general equipment Charitable legacy distributions Management, general and fundraising Charitable legacy distributionsTotal Expenses
118,177,246
18,783,843
14,579,400
151,540,489
(101,998,109)
4,791,959 24,468,091 24 468 091 4,791,959 490,025 24 468 24,468,091 091 701,178 490,025 26,428,128 701,178 6,701,458 26,428,128 2,245,993 6,701,458 7,087,140 2,245,993 11,311,807 7,087,140 31,370 11,311,807 84,257,149 31,370
----------
----------
4,791,959 24,468,091 24 468 091 4,791,959 490,025 24 468 24,468,091 091 701,178 490,025 26,428,128 701,178 6,701,458 26,428,128 2,245,993 6,701,458 7,087,140 2,245,993 11,311,807 7,087,140 31,370 11,311,807 84,257,149 31,370
14,762,286 18,250,063 18 250 063 14,762,286 234,033 18 250 18,250,063 063 746,022 234,033 7,266,348 746,022 7,537,487 7,266,348 2,250,224 7,537,487 13,456,343 2,250,224 12,445,185 13,456,343 315,000 12,445,185 77,262,991 315,000
Total Expenses
84,257,149 33,920,097
18,783,843
14,579,400
84,257,149 67,283,340
77,262,991 (179,261,100)
Change in Net Assets Net Assets at Beginning of Year
33,920,097 66,250,698
18,783,843 63,168,070
14,579,400 296,040,607
67,283,340 425,459,375
(179,261,100) 604,720,475
Net Assets at Beginning of Year Net Assets at End of Year
66,250,698 $ 100,170,795
63,168,070 $ 81,951,913
296,040,607 $ 310,620,007
425,459,375 $ 492,742,715
604,720,475 $ 425,459,375
Net Assets at End of Year
$ 100,170,795
$ 81,951,913
$ 310,620,007
$ 492,742,715
$ 425,459,375
Change in Net Assets
$ 12,904,195 331,150 $ 12,904,195 26,185,143 331,150 15,089,349 26,185,143 54,509,837 15,089,349
See notes to consolidated financial statements. See notes to consolidated financial statements.
3 3
$
Total
47,135,791 2,055,102 21,603,684 2,055,102 21,603,6841,436,741-
$
25,693,352 2,848,510 25,693,352 18,593,929 2,848,510 18,593,92947,135,791-
Restricted
59,051,085 9,384,329 59,051,085 1,251,994 9,384,329 14,930,593 1,251,994 84,618,001 14,930,593 84,618,001 4,638,768 (190,042,589) 4,638,768 (3,362,135) (190,042,589) 1,435,554 (3,362,135)
Total Contributions Interest and dividends Net investment gains (losses) Interest and dividends Provision for uncollectible pledges Net investment gains (losses) Contract support servicespledges Provision for uncollectible Loss on disposals of other property Contract support services investments Loss on disposals of other property Management investments fee income Change in value split interest agreements Management fee of income Other in value of split interest agreements Change Reclassifications - donor directed Other Net assets released from directed restrictions Reclassifications - donor Total Revenues and Support Net assets released from restrictions
$
Restricted
2009 Total 2009 Total
Total
$
7,132,410 1,492,159 7,132,410 1,310,409 1,492,159 7,480,621 1,310,409 17,415,599 7,480,621
$ $
45,729,957 4,671,819 45,729,957 46,089,481 4,671,819 22,569,970 46,089,481 119,061,227 22,569,970
$ $
Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA STATE UNIVERSITY FOUNDATION Year Ended June 30, 2010 (with comparative totals for June 30, 2009) Year Ended June 30, 2010 (with comparative totals for June 30, 2009) Cash Flows from Operating Activities Increase in net Activities assets Cash Flows (decrease) from Operating Adjustments to reconcile Increase (decrease) in net increase assets (decrease) in net assets to net cash used in operating activities to reconcile increase (decrease) in net assets Adjustments investment losses toNet net cash used in(gains) operating activities Lossinvestment on sale of other property Net (gains) losses investments Contributions for long-term investment investments Loss on sale ofrestricted other property Non-cash expense Contributions restricted for long-term investment Non-cash expense contributions Depreciation expense Non-cash contributions Provision for expense uncollectible pledges Depreciation Changes infor assets and liabilities Provision uncollectible pledges Contributions net in assetsreceivable, and liabilities Changes Interest and other receivables Contributions receivable, net Beneficial interests in trusts Interest and other receivables Other assets Beneficial interests in trusts OSU support Other assets payable Accounts payable and accrued liabilities OSU support payable Funds held on behalf OSU liabilities Accounts payable andofaccrued Funds held on behalf of Cowboy Athletics OSU Obligations under split Funds held on behalf ofinterest Cowboyagreements Athletics Obligations under split interest agreements Unearned revenue Unearned revenue Net Cash Used In Operating Activities Net Cash Used In Operating Activities Cash Flows from Investing Activities
$ $
2010 2010 67,283,340 67,283,340
$ $
2009 2009 (179,261,100) (179,261,100)
(28,636,682) 147,834 (28,636,682) (17,415,599) 147,834 24,650,570 (17,415,599) (50,761,300) 24,650,570 861,033 (50,761,300) 4,618,886 861,033 4,618,886 (11,706,687) 241,578 (11,706,687) 211,590 241,578 (179,361) 211,590 1,991,739 (179,361) 1,228,034 1,991,739 902,172 1,228,034 1,506,264 902,172 (375,045) 1,506,264 15,162 (375,045) 15,162 (5,416,472)
190,042,589 190,042,589(9,679,288) (9,679,288) (10,445,272) 740,654 (10,445,272) 3,362,135 740,654 3,362,135 (3,682,824) 2,056,119 (3,682,824) 97,653 2,056,119 (257,939) 97,653 1,458,322 (257,939) 31,598 1,458,322 (709,222) 31,598 1,408,736 (709,222) (1,451,114) 1,408,736 (1,451,114) (6,288,953)
(5,416,472)
(6,288,953)
Purchase of investments Cash Flows from Investing Activities Proceeds from sales and maturities of investments Purchase of investments Proceeds from sale other propertyofinvestments salesofand maturities investments Notes receivable distributions Proceeds from sale of other property investments on notes receivable Payments Notes receivable distributions Purchases on of other investments notes property receivable Payments Purchases of other property investments property and equipment Purchases of property and equipment Net Cash Used In Investing Activities Net Cash Used In Investing Activities Cash Flows from Financing Activities
(98,737,914) 56,352,614 (98,737,914) 326,990 56,352,614 (11,632,655) 326,990 39,446,031 (11,632,655) 39,446,031(277,483) (277,483) (14,522,417) (14,522,417)
(101,202,338) 106,052,162 (101,202,338) 1,373,602 106,052,162 (28,807,323) 1,373,602 (28,807,323) (595,561) (1,363,992) (595,561) (1,363,992) (24,543,450) (24,543,450)
Proceeds fromFinancing line of credit Cash Flows from Activities Repayments online lineofofcredit credit Proceeds from Repayments onrestricted line of credit Contributions for long-term investment Contributions restricted for long-term Net Cashinvestment Provided By Financing Activities Net Cash Provided By Financing Activities Net Decrease in Cash and Cash Equivalents
7,693,785 (7,693,785) 7,693,785 17,415,599 (7,693,785) 17,415,599 17,415,599 (2,523,290)
9,679,2889,679,288 9,679,288 (21,153,115)
Net inEquivalents Cash and Cash Equivalents CashDecrease and Cash at Beginning of Year Cash and Cash Equivalents at Beginning of Cash and Cash Equivalents at End of Year Year
(2,523,290) 4,533,123 4,533,123 2,009,833 $ 2,009,833 $
(21,153,115) 25,686,238 25,686,238 4,533,123
Cash and Cash Equivalents at End of Year Supplemental Cash Flow Information Interfund note payable assumed by Cowboy Athletics Supplemental Cash Flow Information Interfund note payable assumed by Cowboy Athletics
See notes to consolidated financial statements. See notes to consolidated financial statements.
4 4
$ $
26,162,000 26,162,000
4,533,123 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: Oklahoma State Foundation (the “Foundation”) is a POLICIES not-for-profit NOTE A--ORGANIZATION ANDUniversity SUMMARY OF SIGNIFICANT ACCOUNTING corporation formed in 1961 to promote the educational, benevolent, and scientific purposes of Oklahoma State University “University” “OSU”). The(the Foundation, through Organization: Oklahoma (the State UniversityorFoundation “Foundation”) isthe a contributions not-for-profit it receives, provides University and programs which bepurposes funded by corporation formed infunds 1961 for to promote theprojects educational, benevolent, and cannot scientific of appropriations grants from and federal governments, or for which existing appropriations Oklahoma Stateor University (thestate “University” or “OSU”). The Foundation, through the contributions arereceives, inadequate. it provides funds for University projects and programs which cannot be funded by appropriations or grants from state and federal governments, or for which existing appropriations Reporting Entity: The consolidated financial statements include the assets, liabilities, net assets, are inadequate. and changes in net assets, and cash flows of the Foundation. The Foundation has approximately 3,900 component funds and one affiliated organization, the Foundation for Engineering at Reporting Entity: The consolidated financial statements include the assets, liabilities, net assets, Oklahoma University, October 10, 2008. The affiliated and changesState in net assets, andInc., cashwhich flows was of theincorporated Foundation. on The Foundation has approximately organization is included withone theaffiliated Foundation in the accompanying consolidated financial 3,900 component funds and organization, the Foundation for Engineering at statements the Foundation has anwas economic interest on in the organization and controls the Oklahoma because State University, Inc., which incorporated October 10, 2008. The affiliated affiliated organization’s of Trustees. by the affiliated organization is included Board with the FoundationFurther, in the distributions accompanyingmade consolidated financial organization exclusively benefit thehas charitable purposes of the Foundation. Alland material interstatements because the Foundation an economic interest in the organization controls the organization transactions have The Foundation and itsmade affiliate affiliated organization’s Boardbeen of eliminated. Trustees. Further, distributions by are thecollectively affiliated referred to as exclusively the Foundation throughout these consolidated statements. organization benefit the charitable purposes of financial the Foundation. All material interorganization transactions have been eliminated. The Foundation and its affiliate are collectively Operations: referred to as The the Foundation theseasconsolidated financial statements. Foundationthroughout acts primarily a fundraising organization, soliciting, receiving, managing, and disbursing contributions on behalf of the University. Distribution of amounts held in Operations: The Foundation acts primarily as a fundraising organization, soliciting, of receiving, Foundation is subject to the approval of the Foundation and the availability monies. the funds of the managing, Accordingly, accompanying consolidated financial statements Distribution generally reflect expenditures andthe disbursing contributions on behalf of the University. of amounts held in which have been submittedistosubject and approved by theof Foundation as ofand the the financial reporting date. of the Foundation to the approval the Foundation availability of monies. the funds Accordingly, the accompanying consolidated financial statements generally reflect expenditures Accounting Standards of to Codification: The adopted thefinancial Financial Accounting which have been submitted and approved by Foundation the Foundation as of the reporting date. Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The ASC does not alter current accounting principles generally accepted in the United States of (“U.S. GAAP”), Accounting Standards of Codification: The Foundation adopted theAmerica Financial Accounting but rather Board integrates existing accountingStandards standardsCodification with other authoritative Standards (“FASB”) Accounting (“ASC”). Theguidance. ASC doesThe not ASC alter providesaccounting a single source of authoritative U.S. GAAP for nongovernmental entities (“U.S. and supersedes current principles generally accepted in the United States of America GAAP”), all other previously non-SEC accounting and reporting The guidance. adoption ofThe the ASC but rather integratesissued existing accounting standards with otherguidance. authoritative did not have a significant on the Foundation’s statements. entities and supersedes provides a single source ofeffect authoritative U.S. GAAP financial for nongovernmental all other previously issued non-SEC accounting and reporting guidance. The adoption of the ASC Basisnot ofhave Presentation: did a significant effect on the Foundation’s financial statements. The Foundation’s financial statements have been prepared on the accrual basis of accounting in accordance with U.S. GAAP. To ensure the observance of limitations and Basis of Presentation: The use Foundation’s financial statements have beenmaintains prepared its on accounts the accrual restrictions placed on the of available resources, the Foundation in accordance with the principles and of fund accounting. Fund accounting is and the basis of accounting in accordance with practices U.S. GAAP. To ensure the observance of limitations restrictions on resources the use offoravailable theclassified Foundation accountsinto in procedures placed by which various resources, purposes are for maintains accountingits purposes accordance with the principles and practices of fund or accounting. Fund accounting is the funds that are maintained in accordance with the activities objectives of the Foundation. procedures by which resources for various purposes are classified for accounting purposes into funds that are maintained in accordance with the activities or objectives of the Foundation. 5 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Basis of Presentation--Continued: Contributions, including unconditional promises to give, are Continued recognized as revenues in the period received by the Foundation. Conditional promises to give are not recognized until the conditions on which they depend are substantially Transfers of assets Basis of Presentation--Continued: Contributions, including unconditionalmet. promises to give, are promises, which arereceived receivedby bythe the Foundation. Foundation prior to fulfilling these conditions, under conditional as revenues in the period Conditional promises to give are recognized are recorded asuntil a liability (i.e., unearned untilarethe conditionsmet. are substantially met. not recognized the conditions on whichrevenue) they depend substantially Transfers of assets Contributions of assets otherwhich than cash are recorded their estimated fair value on the conditions, gift date. promises, are received by theat Foundation prior to fulfilling these under conditional are recorded as a liability (i.e., unearned revenue) until the conditions are substantially met. to assets be received aftercash one are year are recorded the present estimated Contributions of other than recorded at theiratestimated fairvalue value of ontheir the gift date. future cash flows using a discount rate which is commensurate with the risks involved. Amortization of the discountto is be recorded as additional contribution revenue in the samevalue net asset classestimated and fund Contributions received after one year are recorded at the present of their as the cash original contribution. An rate allowance made for uncollectable contributions based upon future flows using a discount which isiscommensurate with the risks involved. Amortization management’s judgment analysis contribution of the creditworthiness ofsame the donors, of the discount is recorded and as additional revenue in the net asset past class collection and fund experience, andcontribution. other relevantAn factors. as the original allowance is made for uncollectable contributions based upon management’s judgment and analysis of the creditworthiness of the donors, past collection Contributions are reported as increases experience, and other relevant factors. in the appropriate net asset category. Expenses are reported as decreases in unrestricted net assets. Temporary restrictions on gifts to acquire long-lived assets are consideredare met in the as period in which assets arenet acquired or placed in service. Gifts of Contributions reported increases in thethe appropriate asset category. Expenses are reported property andinequipment arenet recorded as unrestricted supportonunless explicit donor stipulations as decreases unrestricted assets. Temporary restrictions gifts to acquire long-lived assets specify how themet assets be used how the longassets the assets must be or held, in which case the gift of is are considered in must the period in or which are acquired placed in service. Gifts recorded and as restricted support. Expirations of temporary restrictions (i.e., thedonor donor-stipulated property equipment are recorded as unrestricted support unless explicit stipulations purposehow has the been fulfilled stipulated time period elapsed) are reported specify assets must and/or be usedthe or how long the assets musthas be held, in which case theas giftnet is assets released from restrictions. Contributions from donors with general use restrictions recorded as restricted support. Expirations of received temporary restrictions (i.e., the donor-stipulated for the University a whole, or forthe specific colleges departments withinare the reported University, purpose has been as fulfilled and/or stipulated timeorperiod has elapsed) as are net reflected as unrestricted to the extent that the University, colleges or departments expended assets released from restrictions. Contributions received from donors with general have use restrictions sufficient dollars which meet these general usecolleges restrictions. Contributions which received and for the University as a whole, or for specific or departments within theare University, are whose restrictions are met the samethat period recognized as unrestricted contributions. reflected as unrestricted toin the extent the are University, colleges or departments have expended sufficient dollars which meet these general use restrictions. Contributions which are received and Income and gains on are reported asrecognized increases inaspermanently net assets if whose restrictions areinvestments met in the same period are unrestricted restricted contributions. the terms of the gift that gave rise to the investment require such amounts be added to the permanent Income and are reported as increases in temporarily Income andendowment. gains on investments aregains reported as increases in permanently restrictedrestricted net assetsnet if assets if theofterms of the giftgave or applicable lawinvestment impose restrictions on the use of the as the terms the gift that rise to the require such amounts be income added and to the increases inendowment. unrestricted net assets in all other permanent Income and gains arecases. reported as increases in temporarily restricted net assets if the terms of the gift or applicable law impose restrictions on the use of the income and as Generally,inlosses on investments increases unrestricted net assetsof in endowments all other cases.reduce temporarily restricted net assets to the extent donor-imposed temporary restrictions on the net appreciation of investments have not been met before occurs. Any remaining losses reduce unrestricted net assets. Subsequent Generally, lossesthe on loss investments of endowments reduce temporarily restricted net assets to the investment gains are applied first to unrestricted to the of extent that losses extent donor-imposed temporary restrictions on the net net assets appreciation investments havehave not previously been recognized, and Any then remaining to temporarily restricted net assets. net assets. Subsequent been met before the loss occurs. losses reduce unrestricted investment gains are applied first to unrestricted net assets to the extent that losses have previously been recognized, and then to temporarily restricted net assets. 6 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Net Asset Classifications: In August 2008, the FASB issued new guidance on the net asset Continued classification of donor-restricted endowment funds for not-for-profit organizations that are subject to enacted version of theInUniform Institutional Actnet of asset 2006 NetanAsset Classifications: August Prudent 2008, theManagement FASB issuedofnew guidanceFunds on the (“UPMIFA”). requirements also expand disclosures about an organization’s classification ofThese donor-restricted endowment funds for not-for-profit organizations thatendowment are subject funds (both donor-restricted funds and board-designated funds) whether or of not2006 the to an enacted version of the endowment Uniform Prudent Management of Institutional Funds Act organization is These subjectrequirements to UPMIFA. also expand disclosures about an organization’s endowment (“UPMIFA”). funds (both donor-restricted endowment funds and board-designated funds) whether or not the The State of isOklahoma organization subject to adopted UPMIFA.UPMIFA effective November 1, 2007 (“OK UPMIFA”). The Board of Trustees (the “Trustees”) of the Foundation has interpreted OK UPMIFA to require the Foundation exercise prudence determining whether to spend accumulate to donorThe State oftoOklahoma adopted inUPMIFA effective November 1, from 2007 or (“OK UPMIFA”). The restricted endowment with aof view the permanent nature and long-term continuing Board of Trustees (the funds “Trustees”) the toward Foundation has interpreted OK UPMIFA to require the viability of such funds, rather than the maintenance of the historic dollar value thereof, absent Foundation to exercise prudence in determining whether to spend from or accumulate to donorexplicit donor stipulations to with the contrary. restricted endowment funds a view toward the permanent nature and long-term continuing viability of such funds, rather than the maintenance of the historic dollar value thereof, absent Net assets, revenues, and to gains and losses are classified based on the existence or absence of explicit donor stipulations the contrary. donor-imposed restrictions. The Foundation is required to report information regarding its financial position and activities according to three classes of based net assets as follows: Net assets, revenues, and gains and losses are classified on the existence or absence of donor-imposed restrictions. The Foundation is required to report information regarding its Unrestricted Netaccording assets forto which areofno restrictions that the financial positionnet andassets: activities threethere classes netdonor assetsimposed as follows: assets be used for a specific purpose or held for a certain period of time. Unrestricted net assets: Net assets for which there are no donor imposed restrictions that the Temporarily net assets: assets to donor-imposed assets be usedrestricted for a specific purposeNet or held forsubject a certain period of time. stipulations that may or will be met, either by actions of the Foundation and/or the passage of time. When a restriction expires, temporarily restricted net subject assets are reclassified to unrestricted Temporarily restricted net assets: Net assets to donor-imposed stipulationsnet thatassets may andwill reported in the statement of activities net assets released restrictions. or be met, either by actions of the as Foundation and/or from the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets Permanently net assets: Net assets subject to donor-imposed stipulations that they be and reported restricted in the statement of activities as net assets released from restrictions. maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation torestricted use all or of the earned to ondonor-imposed any related investment forthat general or Permanently netpart assets: Netincome assets subject stipulations they be specific purposes. maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on any related investment for general or Cash and Cash Equivalents: The Foundation considers highly liquid investments with a maturity specific purposes. of three months or less when purchased, excluding cash equivalent funds held in the Foundation’s investment portfolio, to be cash Cash and Cash Equivalents: Theequivalents. Foundation considers highly liquid investments with a maturity of three months or less when purchased, excluding cash equivalent funds held in the Foundation’s investment portfolio, to be cash equivalents.
7 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Investments: Continued Investments consist of both marketable and non-marketable investment assets as follows: Investments: Investments consist of both marketable and non-marketable investment assets as Marketable Securities: Marketable securities include investments in cash and short-term funds, follows: equity mutual funds, bond mutual funds, commodities, balanced mutual funds, bond investmentsSecurities: (government and corporate), andinclude common and preferred stock and are reported at Marketable Marketable securities investments in cash and short-term funds, fair value in the accompanying consolidated financial statements. Realized gains and losses on equity mutual funds, bond mutual funds, commodities, balanced mutual funds, bond sales of marketable securities computed oncommon the first-in, first-out basis. investments (government andare corporate), and and preferred stock and are reported at fair value in the accompanying consolidated financial statements. Realized gains and losses on Non-marketable Securities: Non-marketable securities consist of limited partnership interests sales of marketable securities are computed on the first-in, first-out basis. and other investments. Non-marketable securities and are classified according to the nature of the underlying investment include privatesecurities equity funds, hedge funds,partnership common funds, and Non-marketable Securities:and Non-marketable consist of limited interests closely held stock. Non-marketable securities are stated at fair value or the best estimate of and other investments. Non-marketable securities and are classified according to the naturefair of value as determined by the manager the Foundation’s management. the underlying investment and investment include private equity and/or funds, hedge funds, common funds, and Realized gains and Non-marketable losses are computed on theare first-in, first-out basis. or the best estimate of fair closely held stock. securities stated at fair value value as determined by the investment manager and/or the Foundation’s management. TheRealized majoritygains of investments arecomputed combinedoninthe a first-in, commonfirst-out investment and losses are basis.pool and invested on the basis of a total return policy to provide income and improve opportunities to realize appreciation in investment Marketable and non-marketable to market, in The majority ofvalues. investments are combined in a commoninvestments investment are poolmarked and invested on the accordance with the ASC. basis of a total return policy to provide income and improve opportunities to realize appreciation in investment values. Marketable and non-marketable investments are marked to market, in Other Property Other property investments consist primarily of real property and accordance withInvestments: the ASC. forms of real property interests donated to and/or purchased by the Foundation and are carried at the Property lower of Investments: cost or market. Theproperty Foundation holds these assets until such timeproperty as they and are Other Other investments consist primarily of real transferred to the University or sold. No attempt is made by management to revalue other forms of real property interests donated to and/or purchased the Foundation and are carried property investments subsequent prior toholds transfer or assets sale due to the costare of at the lower of cost orat market. The dates Foundation these until suchprohibitive time as they obtaining periodic the Foundation’s management is of the to opinion thatother any transferred to the appraisals; University however, or sold. No attempt is made by management revalue subsequent revaluation not have significant impact on the consolidated property investments at would subsequent datesaprior to transfer or sale dueFoundation’s to the prohibitive cost of statementsperiodic of financial positionhowever, or changes net assets. Impairments recorded to reduce the obtaining appraisals; thein Foundation’s managementare is of the opinion that any carrying value of the assets to their net realizable value based on facts and circumstances at the subsequent revaluation would not have a significant impact on the Foundation’s consolidated time of the determination. No property investment impairments were recorded in 2010 2009.the statements of financial position or changes in net assets. Impairments are recorded to or reduce carrying value of the assets to their net realizable value based on facts and circumstances at the time of the determination. No property investment impairments were recorded in 2010 or 2009.
8 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Property, Plant and Equipment: Property, plant and equipment are stated at cost at the time of Continued acquisition or at fair value at the date of donation. The Foundation capitalizes all property and equipmentPlant purchased and/or donated withplant an original basis of $1,000 or more. is Property, and Equipment: Property, and equipment are stated at costDepreciation at the time of based on theor estimated usefulatlife the asset using the The straight-line method. The Foundation records acquisition at fair value theofdate of donation. Foundation capitalizes all property and impairments of its property, plant and equipment when it becomes probable theDepreciation carrying value equipment purchased and/or donated with an original basis of $1,000 or that more. is of the on assets will not beuseful fully recovered overusing the estimated useful life. Impairments are recorded to based the estimated life of the asset the straight-line method. The Foundation records reduce the carrying value of the assets their net realizable value based on facts andthe circumstances at impairments of its property, plant andtoequipment when it becomes probable that carrying value the time of the No property, plant and equipment impairments were in of the assets willdetermination. not be fully recovered over the estimated useful life. Impairments are recorded to 2010 orthe 2009. reduce carrying value of the assets to their net realizable value based on facts and circumstances at the time of the determination. No property, plant and equipment impairments were recorded in Beneficial Interests in Trusts: Beneficial interests in trusts represent the amounts held under 2010 or 2009. irrevocable perpetual and charitable remainder trust agreements between donors and third party trustees and are carried at fair value (Note J). Beneficial Interests in Trusts: Beneficial interests in trusts represent the amounts held under irrevocable perpetual and charitable remainder trust agreements between donors and third party Funds Held The (Note liability trustees and on areBehalf carriedofatOSU: fair value J).represents assets held on behalf of the University for which the Foundation acts as a custodian. The assets held are invested in the Foundation’s investment and investment income, distributions, and other expenses of these Funds Heldpool on Behalf of OSU: The liability represents assets held revenue on behalfand of the University for funds increase and/or decrease carrying value of the held asset are andinvested funds held of OSU which the Foundation acts as athe custodian. The assets in on thebehalf Foundation’s liability. The related are distributable to the University uponrevenue request. and expenses of these investment pool and assets investment income, distributions, and other funds increase and/or decrease the carrying value of the asset and funds held on behalf of OSU Funds Held Behalf of Cowboy Athletics:toThe is therequest. custodian for assets received liability. Theon related assets are distributable the Foundation University upon in conjunction with the notes receivable from Cowboy Athletics (Note M). These assets are held and available be used to makeAthletics: interest payments on theis note receivableforasassets requested by Funds Held ontoBehalf of Cowboy The Foundation the custodian received Cowboy Athletics. in conjunction with the notes receivable from Cowboy Athletics (Note M). These assets are held and available to be used to make interest payments on the note receivable as requested by Obligations Under Split Interest Agreements: Split interest agreements for which the Foundation Cowboy Athletics. serves as trustee include irrevocable charitable remainder trusts and charitable gift annuities (Note H). Obligations interest agreements areagreements the amounts to the the Foundation designated Obligations Under Split under Interestsplit Agreements: Split interest for due which beneficiaries of the charitable trust and/or annuitant and is equal to the present value of the serves as trustee include irrevocable charitable remainder trusts and charitable gift annuities expected payments to besplit made. (Note H).future Obligations under interest agreements are the amounts due to the designated beneficiaries of the charitable trust and/or annuitant and is equal to the present value of the Management Fee Income: to The assesses management fees on pooled investment and expected future payments beFoundation made. trust funds. Such revenues are reflected as increases in the Foundation’s operating fund (unrestricted) Fee and Income: decreases in Foundation the other funds managed by the Foundation (unrestricted and/or Management The assesses management fees on pooled investment and temporarily in the statement of activities. The Foundation also assesses management trust funds. restricted) Such revenues are reflected as increases in the Foundation’s operating fund and other fees and on funds that itinmanages others. (unrestricted) decreases the otherfor funds managed by the Foundation (unrestricted and/or temporarily restricted) in the statement of activities. The Foundation also assesses management and other fees on funds that it manages for others. 9 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Charitable Legacy Investment Funds: These are donor advised funds held by the Foundation. Continued Irrevocable charitable contributions are received by the Foundation and are invested in a separate pool. The Foundation is responsible investing and distributing the funds to the public charities Charitable Legacy Investment Funds:forThese are donor advised funds held by Foundation. nominated charitable by the donor, with theare stipulation that minimum and of 25% of the principal and Irrevocable contributions received by theaFoundation are invested in a separate earnings toward theis benefit of thefor University. The distributing Foundation the retains variance power with pool. Thego Foundation responsible investing and funds to public charities respect to contributions received andstipulation reports thethat contributions as unrestricted. Foundation nominated by the donor, with the a minimum of 25% of theThe principal and distributed $37,000 and $1,000 to The University accounts and distributed earnings go assets towardtotaling the benefit of the University. Foundation retains variance powerassets with totaling toapproximately to contributions other not-for-profit organizations from these respect contributions $31,000 receivedand and $315,000 reports the as unrestricted. The Foundation donor-advised funds during$37,000 2010 andand 2009, respectively. distributed assets totaling $1,000 to University accounts and distributed assets totaling approximately $31,000 and $315,000 to other not-for-profit organizations from these Reclassifications: Theduring Foundations reclassifies net assets from one net asset category to another as donor-advised funds 2010 and 2009, respectively. follows: Reclassifications: The Foundations reclassifies net assets from one net asset category to another as Net Assets Released from Restrictions: Net assets reclassifications which result from follows: fulfillment of the purposes for which the net assets were restricted and/or restrictions which expired with Released the passage of time. Net Assets from Restrictions: Net assets reclassifications which result from fulfillment of the purposes for which the net assets were restricted and/or restrictions which Reclassifications – Donor Directed: Net asset reclassifications which occur when a donor expired with the passage of time. withdraws or court action removes previously imposed restrictions, when a donor imposes restrictions on otherwise net asset assets,reclassifications and/or when an existing donor Reclassifications – Donor unrestricted Directed: Net which occur whenrestriction a donor requires certain amounts to removes be reclassified. withdraws or court action previously imposed restrictions, when a donor imposes restrictions on otherwise unrestricted net assets, and/or when an existing donor restriction Concentrations of Credit: ThetoFoundation has certain concentrations of credit risk with financial requires certain amounts be reclassified. institutions in the form of uninsured cash and time deposits. For purposes of evaluating credit risk, the stabilityofofCredit: financial conducting with theofFoundation periodically Concentrations Theinstitutions Foundation has certainbusiness concentrations credit risk is with financial reviewed and believes that credit related to theFor balances is minimal. institutions in management the form of uninsured cash andrisk time deposits. purposes of evaluating credit risk, the stability of financial institutions conducting business with the Foundation is periodically The Foundation received contributions from risk six donors totaling approximately $58,300,000 in reviewed and management believes that credit related to the balances is minimal. 2010 and contributions from seven donors totaling approximately $27,300,000 in 2009. These contributions represent approximately of total contribution revenue in 2010 and The Foundation received contributions49% fromand six32% donors totaling approximately $58,300,000 in 2009, and respectively. Contributions receivable $24,700,000 andinapproximately 2010 contributions from seven donorstotaling totalingapproximately approximately $27,300,000 2009. These $16,800,000 arerepresent due fromapproximately seven donors at June 30,32% 2010ofand 2009, respectively. Theseinreceivables contributions 49% and total contribution revenue 2010 and represent approximately 52% andreceivable 41% of total net contributions receivable at Juneand 30, approximately 2010 and 2009. 2009, respectively. Contributions totaling approximately $24,700,000 $16,800,000 are due from seven donors at June 30, 2010 and 2009, respectively. These receivables Income Taxes: The Foundation organization receivable are generally exempt from federal represent approximately 52% andand 41%its of affiliated total net contributions at June 30, 2010 and 2009. income tax under Section 501(a) as an organization described in Section 501(c)(3) of the Internal RevenueTaxes: Code (the “Code”). As a result, income taxes are not the accompanying Income The Foundation and its affiliated organization are included generallyinexempt from federal consolidated financial statements. income tax under Section 501(a) as an organization described in Section 501(c)(3) of the Internal Revenue Code (the “Code”). As a result, income taxes are not included in the accompanying consolidated financial statements. 10 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Accounting Continued for Uncertain Tax Positions: The FASB issued guidance on the accounting for uncertainty in income taxes. The Foundation adopted this new guidance for the year ended June 30, 2010. This an entityThe to recognize the financial statement of a tax Accounting for guidance Uncertainrequires Tax Positions: FASB issued guidance on the impact accounting for position when it is more likely not thatadopted the position will guidance be sustained upon uncertainty in income taxes. Thethan Foundation this new for the yearexamination. ended June Management evaluated Foundation’s taxtopositions that the Foundation 30, 2010. This guidancethe requires an entity recognizeand theconcluded financial statement impact of ahad tax taken nowhen uncertain positions that not require thebefinancial statements to comply position it is tax more likely than that adjustment the positiontowill sustained upon examination. with the provisions of this Withtax fewpositions exceptions, Foundation no longer subject to Management evaluated theguidance. Foundation’s andthe concluded thatisthe Foundation had income taxuncertain examinations by the U.S. federal, state or local tax for statements years beforeto2006. taken no tax positions that require adjustment toauthorities the financial comply with the provisions of this guidance. With few exceptions, the Foundation is no longer subject to Use of tax Estimates: The by preparation of consolidated financial statements in conformity income examinations the U.S. federal, state or local tax authorities for years before 2006.with accounting principles generally accepted in the United States of America requires management to make and The assumptions thatofaffect the reported amounts of assetsinand liabilities with and Use ofestimates Estimates: preparation consolidated financial statements conformity disclosed and accepted liabilitiesin atthe theUnited date ofStates the financial statements the reported accountingcontingent principlesassets generally of America requiresand management to amounts of revenues and expenses during the reporting period. Actual results could differ from make estimates and assumptions that affect the reported amounts of assets and liabilities and those estimates. disclosed 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 Significant Estimates: Estimates that are particularly susceptible to significant change include the those estimates. valuation of marketable and non-marketable investments, beneficial interests in trusts, and contributions receivable. The Foundation’s various investment beneficial Significant Estimates: Estimates that are particularly susceptible instruments to significantincluding change include the interests to various such as interest rate, credit, and overall market in volatility. valuationare ofexposed marketable and risks, non-marketable investments, beneficial interests trusts, Due and to the level of risk associated with these financial instruments, it is instruments reasonably possible thatbeneficial changes contributions receivable. The Foundation’s various investment including in the values of the investments and such beneficial interest will occur inoverall the near term volatility. and that such interests are exposed to various risks, as interest rate, credit, and market Due changes could materially affect amounts reported in the it consolidated statements of financial to the level of risk associated withthe these financial instruments, is reasonably possible that changes position. Significant fluctuations and in fair values could occur year to year theand amounts the in the values of the investments beneficial interest willfrom occur in the nearand term that such Foundation willmaterially ultimatelyaffect realize could differreported materially. estimate of contributions changes could the amounts in Management’s the consolidated statements of financial receivable allowance fluctuations for uncollectible is based on from consideration of all available position. Significant in fairamounts values could occur year to year andrelevant the amounts the information andultimately an analysisrealize of thecould collectibility of individual contributions, whichofarise primarily Foundation will differ materially. Management’s estimate contributions from pledges as well as and estates, at the is financial statement date. of all relevant available receivable allowance fortrusts uncollectible amounts based on consideration information and an analysis of the collectibility of individual contributions, which arise primarily Fair Value Measurements: July 1, 2008, thefinancial Foundation adopted ASC Topic 820, Fair Value from pledges as well as trustsOn and estates, at the statement date. Measurements and Disclosures, with respect to financial assets and liabilities. Topic 820 defines fair value, establishes a framework measuring fairFoundation value and expands fair value Fair Value Measurements: On for July 1, 2008, the adopteddisclosures ASC Topicabout 820, Fair Value measurements.andFair value is defined as thetoprice that would be received to sell an asset or paidfair to Measurements Disclosures, with respect financial assets and liabilities. Topic 820 defines transferestablishes a liability ainframework an orderly for transaction between market at the measurement date. value, measuring fair value andparticipants expands disclosures about fair value Topic 820 establishes a fair is value hierarchy thebe inputs to valuation used measurements. Fair value defined as thethat priceprioritizes that would received to sell antechniques asset or paid to to measure fair value into three broad levels. transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. 11 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Fair Value Measurements--Continued: The following is a brief description of those three levels: Continued Level 1: Quoted prices in active markets for identical assets or liabilities; Fair Value Measurements--Continued: The following from is a brief description ofby those three levels: Level 2: Inputs that are derived principally or corroborated observable market Level 1: Quoted prices in active markets for identical assets or liabilities; data; and Level 3: 2: Inputs that thatare areunobservable derived principally from ortocorroborated byvalue observable market and significant the overall fair measurement. data; and Financial assets and liabilities at fairand value on a recurring basis investments, Level 3: Inputs that are carried unobservable significant to the overall fairinclude value measurement. beneficial interests in trusts, funds held on behalf of OSU, and funds held on behalf of Cowboy Athletics (Note Foundation carried at include fair value on a nonFinancial assets F). andThe liabilities carriedhas at no fairassets valueoronliabilities a recurring basis investments, recurring basis at June 30, 2010 or 2009. beneficial interests in trusts, funds held on behalf of OSU, and funds held on behalf of Cowboy Athletics (Note F). The Foundation has no assets or liabilities carried at fair value on a nonT he FASBbasis continues clarify and enhance disclosures related to Topic 820 and as a result, the recurring at Juneto30, 2010 or 2009. Foundation implemented Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That toCalculate Net enhance Asset Value per Share (or to ItsTopic Equivalent) provides The FASB continues clarify and disclosures related 820 andwhich as a result, the amendments to and expands disclosures for the fair value measurement of investments in certain Foundation implemented Fair Value Measurements and Disclosures (Topic 820): Investments in entities calculate asset value share (or its year ended June provides 30, 2010. Certain that Entities That net Calculate Net per Asset Value perequivalent) Share (or for Its the Equivalent) which Adoption of tothis guidance did for notthe have a significant impact on the Foundation’s amendments andnew expands disclosures fair value measurement of investments in certain consolidated financialnet statements. entities that calculate asset value per share (or its equivalent) for the year ended June 30, 2010. Adoption of this new guidance did not have a significant impact on the Foundation’s Recent Accounting Pronouncements: In January 2010, the FASB issued amended standards that consolidated financial statements. require additional fair value disclosures. These amended standards require disclosures about inputs Accounting and valuation techniques used to measure value issued as well as disclosures Recent Pronouncements: In January 2010, fair the FASB amended standardsabout that significant transfers, beginning in 2011. Additionally, these amended standards require require additional fair value disclosures. These amended standards require disclosures about presentation of disaggregated activity within the reconciliation for fair valueas measurements using inputs and valuation techniques used to measure fair value as well disclosures about inputs (Level 3), beginning in 2012.these The adoption these standards is significant unobservable transfers, beginning in 2011. Additionally, amendedof standards require not expected of to disaggregated have a significant impact on the consolidated financial statements. presentation activity within theFoundation’s reconciliation for fair value measurements using significant unobservable inputs (Level 3), beginning in 2012. The adoption of these standards is Prior Year Information: The financial include certain prior-year summarized not expected to have a significant impact onstatements the Foundation’s consolidated financial statements. comparative information in total but not by net asset class. Such information does not include sufficient to constitute a presentation in conformity withcertain accounting principles generally Prior Yeardetail Information: The financial statements include prior-year summarized accepted in the United States of but America. such information be read in comparative information in total not by Accordingly, net asset class. Such informationshould does not include conjunction with the Foundation’s financial statements for the year ended June 30, 2009, from sufficient detail to constitute a presentation in conformity with accounting principles generally which information was Accordingly, derived. Certain reclassifications of be prior year acceptedthein summarized the United States of America. such information should read in comparative totals have been made in order to conform to the current year presentation. conjunction with the Foundation’s financial statements for the year ended June 30, 2009, from which the summarized information was derived. Certain reclassifications of prior year Subsequent Events: Management evaluated subsequent October 14, 2010, the comparative totals have been madehas in order to conform to theevents currentthrough year presentation. date the financial statements were available to be issued. See Note O for a discussion of subsequent event matters. Subsequent Events: Management has evaluated subsequent events through October 14, 2010, the date the financial statements were available to be issued. See Note O for a discussion of subsequent event matters. 12 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE B--INVESTMENTS Marketable and non-marketable investments at fair value consist of the following: NOTE B--INVESTMENTS June 30 Marketable and non-marketable investments at fair value consist of the following: 2010 2009 June 30 Marketable Securities 2010 2009 Cash and Short-Term Funds $ 14,661,148 $ 14,100,146 Marketable CommonSecurities and Preferred Stocks 87,064,864 82,524,368 Cash and Short-Term $ 14,661,148 $ 14,100,146 Equity Mutual Funds Funds Common and Preferred Stocks 87,064,864 82,524,368 Domestic 7,791,113 6,463,490 Equity Mutual Funds International 26,987,750 17,318,605 Domestic 7,791,113 6,463,490 Bond Mutual Funds International 26,987,750 17,318,605 Domestic 14,721,802 11,508,112 Bond Mutual Funds International 15,417,157 Domestic 14,721,802 11,508,112 Balanced Mutual Funds 10,512,263 8,910,455 International 15,417,157 Bond Investments 18,366,678 17,259,720Balanced Mutual Funds 10,512,263 8,910,455 Commodities 12,590,406 12,848,550 Bond Investments 18,366,678 17,259,720 Total Marketable Securities 208,113,181 170,933,446 Commodities 12,590,406 12,848,550 Non-Marketable Securities Total Marketable Securities 208,113,181 170,933,446 Common Funds Non-Marketable Securities Domestic Equity 20,965,704 9,457,418 Common Funds International Equity 21,223,181 18,929,676 Domestic 20,965,704 9,457,418 Hedge FundsEquity International 21,223,181 18,929,676 Distressed Equity 27,409,943 21,630,814 Hedge Funds Energy 11,620,991 15,075,715 Distressed 27,409,943 21,630,814 Fund of Fund 12,872,202 11,561,662 Energy 11,620,991 15,075,715 Global Long/Short 10,736,456 10,000,000 Fund Fund 12,872,202 11,561,662 Multi of Strategy 34,882,778 32,168,671 Global Long/Short 10,736,456 10,000,000 Private Equity Funds Multi Strategy 34,882,778 32,168,671 Distressed 13,813,675 8,583,167 Private HardEquity AssetsFunds 20,395,735 16,220,983 Distressed 13,813,675 8,583,167 International Equity 5,993,064 4,213,281 Hard Assets 20,395,735 16,220,983 Secondary Market and Venture 16,404,894 13,485,217 International 5,993,064 4,213,281 Software and Equity Financial Services 7,277,445 2,811,806 Secondary Market and Venture 16,404,894 13,485,217 Closely Held Stock 7,856,138 7,858,736 Software and Financial Services 7,277,445 2,811,806 Other 10,746,385 11,911,233 Closely Held Stock 7,856,138 7,858,736 183,908,379 Total Non-Marketable Securities 222,198,591 Other 10,746,385 11,911,233 $ 354,841,825 Total Investments $ 430,311,772 Total Non-Marketable Securities 222,198,591 183,908,379 Total Investments $ 430,311,772 $ 354,841,825 13
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE B--INVESTMENTS--Continued Net investment gains and losses consist of the following: NOTE B--INVESTMENTS--Continued Net investment gains and losses consist of the following: Net realized gains (losses) on investments carried at fair value unrealized gains (losses) Net realized gains (losses) on investments Change in at fair value of perpetual trusts carried fair value Change in fair value assets held in Net unrealized gains of (losses) estatesin and Change fairbequests value ofreceivable perpetual trusts Change in fair value of assets held in Net investment gains (losses) estates and bequests receivable
2010
2009 $
$
2010 1,047,057 27,907,942 (266,172) 1,047,057 27,907,942 (52,145) (266,172)
$
2009 (61,144,824) (127,902,459) (942,932) (61,144,824) (127,902,459) (52,374) (942,932)
$
28,636,682 (52,145)
$
(190,042,589) (52,374)
$
investment gains management, (losses) $ and 28,636,682 $ (190,042,589) Interest and dividends Net include consulting, custodial fees of approximately $1,377,000 and $991,000 for the years ended June 30, 2010 and 2009, respectively. Interest and dividends include consulting, management, and custodial fees of approximately On December 31, 2008, theyears Foundation invested in the Westridge Capital $1,377,000 and $991,000 for the ended June 30, 2010$13,000,000 and 2009, respectively. Management Enhancement Fund (the “WCM Fund”). In February 2009, the Foundation was notified by the National Futures the principals an affiliated had On December 31, 2008, the Association Foundation(“NFA”) investedthat $13,000,000 in in the Westridgeentity Capital been suspended from membership in the NFA Fund”). and that the activities 2009, of thethe principals and their Management Enhancement Fund (the “WCM In February Foundation was affiliatedbyentities were being restrained due(“NFA”) to allegations fraudulent activity from federal notified the National Futures Association that theof principals in an affiliated entity had regulators. The from Foundation is actively discussions with investingand entities been suspended membership in the involved NFA and in that the activities of other the principals their regardingentities the activities the restrained appointed receiver for the identified assets. activity At June from 30, 2010 and affiliated were of being due to allegations of fraudulent federal 2009, the value the WCM Fund investment included in the financial (and classified regulators. Theof Foundation is actively involved in discussions withstatements other investing entities as Non-Marketable Securities--Other in Note B) isfor $10,746,385 and $11,911,233, respectively, regarding the activities of the appointed receiver the identified assets. At June 30, 2010 and represents the projected present value of the future payments be received based on a probability 2009, the value of the WCM Fund investment included in thetofinancial statements (and classified analysis of potential Securities--Other outcomes. as Non-Marketable in Note B) is $10,746,385 and $11,911,233, respectively, and represents the projected present value of the future payments to be received based on a probability analysis of potential outcomes.
14 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 STATE UNIVERSITY FOUNDATION June 30, 2010 NOTE C--CONTRIBUTIONS AND OTHER RECEIVABLES NOTE C--CONTRIBUTIONS OTHER RECEIVABLES Unconditional contributions AND receivable, including amounts due under pledge agreements, are expected to be collected as follows: Unconditional contributions receivable, including amounts due under pledge agreements, are expected to be collected as follows: June 30 2010 2009 June 30 Contributions receivable in: 2010 2009 Less than one year $ 17,682,662 $ 15,995,327 Contributions receivable in: One year to five years 38,205,622 28,901,617 Less than one year $ 17,682,662 $ 15,995,327 2,647,552 Over five years 1,773,540 One year to five years 38,205,622 28,901,617 57,661,824 47,544,496 Over five years 1,773,540 2,647,552 Less: 57,661,824 47,544,496 Unamortized discount (4.33%-6.2%) 6,453,681 4,706,102 Less: Allowance for uncollectible amounts 3,552,528 2,270,580 Unamortized discount (4.33%-6.2%) 6,453,681 4,706,102 $ 47,655,615 $ 40,567,814 Allowance for uncollectible amounts 3,552,528 2,270,580 47,655,615 $ 40,567,814 Unconditional contributions receivable are temporarily$ restricted for scholarships, University operations, or expansion of the University’s facilities. Unconditional contributions receivable are temporarily restricted for scholarships, University operations, or expansion of the University’s facilities.
15 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 STATE UNIVERSITY FOUNDATION June 30, 2010 NOTE C--CONTRIBUTIONS AND OTHER RECEIVABLES--Continued NOTE C--CONTRIBUTIONS AND OTHER RECEIVABLES--Continued No amounts have been recognized in the financial statements for conditional promises to give because the conditions on which they depend have not been substantially met. Conditional No amounts have been in the financial statements for30,conditional promises to give promises to give total lessrecognized than $101,200,000 and $5,100,000 at June 2010 and 2009, respectively. because theonconditions on which they depend havecertain not been substantially met. Conditional Conditions these promises to give include meeting University benchmarks and raising promises give total less than $101,200,000 and $5,100,000 at June 30, 2010 and 2009, respectively. matching to funds. Conditions on these promises to give include meeting certain University benchmarks and raising Interest and other receivables are expected to be fully collected within one year and consist of the matching funds. following: Interest and other receivables are expected to be fully collected within oneJune year30and consist of the 2010 2009 following: Interest and Other Receivables: Receivable from OSU Interest andreceivable Other Receivables: Interest Receivable from OSU Other receivables
$ $
Interest receivable Other receivables
$ $
June 30 2010 750,364 $ 89,301 750,364 1,719 89,301 841,384 1,719 841,384
$ $ $
2009 768,354 302,036 768,354 12,572 302,036 1,082,962 12,572 1,082,962
NOTE D--NET ASSETS NOTE D--NET Unrestricted netASSETS assets consist of the following: June 30
Unrestricted net assets consist of the following:
2010
2009
Designated for the University General University support Designated University Facilitiesfor andthe equipment General support Awards University and scholarships Facilities and equipment Endowed faculty and lectureship positions Awards and scholarships Research Endowed faculty lectureship positions Faculty, staff and and student development support Research Charitable legacy fund Faculty, staff and student development support Charitable fund Designated forlegacy the Foundation
June 30 2010 2009 $ 61,645,977 $ 52,447,999 17,756,184 11,689,516 $ 17,133,960 61,645,977 $ 52,447,999 7,225,356 17,756,184 11,689,516 (11,583,611) (19,457,586) 17,133,960 7,225,356 1,243,245 1,124,949 (11,583,611) (19,457,586) 3,375,913 3,384,204 1,243,245 1,124,949 2,169,499 2,444,676 3,375,913 3,384,204 91,741,167 58,859,114 2,169,499 2,444,676
Invested in property and equipment Designated foron theshort-term Foundation Gain (loss) investment funds Invested in property and equipment OSU foundation reserves and general support Gain (loss) on short-term investment funds OSU foundation reserves and general support
91,741,167 7,440,076 (6,565,806) 7,440,076 7,555,358 (6,565,806) 8,429,628 7,555,358 $ 100,170,795 8,429,628 $ 100,170,795
16 16
$
58,859,114 8,024,026 (8,195,971) 8,024,026 7,563,529 (8,195,971) 7,391,584 7,563,529 66,250,698
$
66,250,698
7,391,584
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 STATE UNIVERSITY FOUNDATION June 30, 2010 NOTE D--NET ASSETS--Continued NOTE At JuneD--NET 30, 2010ASSETS--Continued and 2009, unrestricted net assets designated for the University includes allocation of $23,437,430 and $42,213,290, respectively, in realized and unrealized investment losses which At June 30, and 2009, unrestricted net assetsfunds designated for thethe University allocation occurred in 2010 certain donor-restricted endowment that caused fair valueincludes of the assets held of $23,437,430 andbelow $42,213,290, respectively, in realized unrealized investmentgains losses which in the fund to fall the original gift amount. Futureand realized and unrealized will first occurred in certain donor-restricted endowment funds that caused the fair value of the assets held restore unrestricted net assets and then any additional gains will increase temporarily restricted in fund to fall below the original gift amount. Future realized and unrealized gains will first netthe assets. restore unrestricted net assets and then any additional gains will increase temporarily restricted net assets. net assets designated for the Foundation are amounts held for use in operating the Unrestricted Foundation. Foundation reserves and general support represent quasi-endowments established Unrestricted netofassets designated for the Foundation are amounts held for use (losses) in operating the for the purpose providing a revenue stream for Foundation operations. Gains on shortFoundation. Foundation reserves the anddifference general support established term investment funds represents betweenrepresent the June quasi-endowments 30, 2010 and June 30, 2009 fair for the purpose of providing revenue stream for Foundation operations. (losses) on shortmarket value of short-terma investment funds compared to the total Gains amount available for term investment funds representsUnrestricted the differencenet between June 30, and June 2009 fair expenditure by the University. assets the invested in 2010 property and30, equipment market of short-term investment funds representvalue the Foundation’s building, furniture andcompared equipment.to the total amount available for expenditure by the University. Unrestricted net assets invested in property and equipment represent theand Foundation’s building, furniture and are equipment. Temporarily permanently restricted net assets restricted for the following: Temporarily and permanently restricted net assets are restricted for the following: June 30 2010 June 30 Temporarily Restricted 2010 General University support $ 16,510,290 $
Temporarily Restricted Facilities and equipment General University support Awards and scholarships Facilities and equipment Endowed faculty and lectureship programs Awards and scholarships Research Endowedstaff faculty lectureship programs Faculty, and and student development support Research Faculty, staff and student development support Permanently Restricted General University support Permanently Restricted Facilities and equipment General University support Awards and scholarships Facilities equipment Endowedand faculty and lectureship programs Awards and scholarships Research Endowed faculty lectureship programs Faculty, staff and and student development support Research OSU Foundation reserves and general support Faculty, staff and student development support OSU Foundation reserves and general support
$
$ $$ $
$ $
17 17
32,691,741 16,510,290 20,355,042 32,691,741 9,320,399 20,355,042 378,708 9,320,399 2,695,733 378,708 81,951,913 2,695,733
$
$
81,951,913 22,427,004 4,956,585 22,427,004 108,290,668 4,956,585 165,563,386 108,290,668 3,721,437 165,563,386 5,628,913 3,721,437 32,014 5,628,913 310,620,007 32,014
$$
310,620,007
$
$
$
2009 2009 12,174,936 19,287,931 12,174,936 19,791,093 19,287,931 9,153,997 19,791,093 326,214 9,153,997 2,433,899 326,214 63,168,070 2,433,899 63,168,070 19,604,588 4,706,840 19,604,588 100,523,602 4,706,840 162,703,551 100,523,602 3,708,852 162,703,551 4,793,174 3,708,8524,793,174 296,040,607 296,040,607
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 STATE UNIVERSITY FOUNDATION June 30, 2010 NOTE E--ENDOWMENT DISCLOSURES NOTE E--ENDOWMENT DISCLOSURES The Foundation’s endowment consists of approximately 2,200 funds established for a variety of purposes. Its endowment includes both donor-restricted endowment funds and funds designated Thethe Foundation’s of approximately 2,200 established for a variety of by Trustees toendowment function asconsists endowments. As required byfunds accounting principles generally purposes.inItsthe endowment includes both donor-restricted endowment funds andendowment funds designated accepted United States of America (“GAAP”), net assets associated with funds, by the Trustees function as As function required as by endowments, accounting principles generally including funds to designated by endowments. the Trustees to are classified and accepted the United of America (“GAAP”), net assets associated withInendowment reported in based on the States existence or absence of donor-imposed restrictions. addition tofunds, these including designated by the Trustees to the function are classifiedwhich and funds, the funds Foundation has seven funds held for benefitasofendowments, the Athletic Department reported based purpose on the existence or absence of donor-imposed addition to these contain donor restrictions for capital improvements. restrictions. These fundsInare functioning as funds, the Foundation seven funds for the benefit offor the Athletic Department which endowment funds untilhas requested by theheld Athletic Department distribution and are classified contain donor restricted purpose restrictions for capital improvements. These funds are functioning as as temporarily due to the donor purpose restriction on the original gift. endowment funds until requested by the Athletic Department for distribution and are classified as temporarily of restricted due to the donor purpose restriction on the original gift. Interpretation Relevant Law The Trustees of the Foundation have chosen to preserve the fair value of the original gift as of the Interpretation of Relevant Law gift date of the donor-restricted endowment funds absent explicit donor stipulations to the The Trustees the Foundation have chosenthe toFoundation preserve theclassifies fair value the originalrestricted gift as of net the contrary. As of a result of this interpretation, asof permanently gift date of the donor-restricted funds absent explicit donor(b)stipulations the assets (a) the original value of giftsendowment donated to the permanent endowment, the originalto value contrary. As a result of this the Foundation as permanently net of subsequent gifts to the interpretation, permanent endowment, and classifies (c) accumulations to therestricted permanent assets (a) themade original value of gifts donated to the permanent endowment, (b) the original at value endowment in accordance with the direction of the applicable donor gift instrument the of subsequent gifts to is theadded permanent and (c) accumulations to donor-restricted the permanent time the accumulation to the endowment, fund. The remaining portion of the endowment made accordance with the direction of the applicable gift instrument at the fund in that is not classified in permanently restricted donor net assets is classified as time the accumulation is added to thethose fund.amounts The remaining portion for of the donor-restricted temporarily restricted net assets until are appropriated expenditure by the endowment that is not classified permanently restricted net assets is UPMIFA. classified In as Foundation infund a manner consistent with theinstandard of prudence prescribed by OK temporarily restricted net assets the untilFoundation those amounts are appropriated forfactors expenditure by thea accordance with OK UPMIFA, considers the following in making Foundation in to a manner consistent with the donor-restricted standard of prudence prescribed by OK UPMIFA. In determination appropriate or accumulate endowment funds. accordance with OK UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate endowment funds. The duration and preservation of thedonor-restricted fund
The purposes of the Foundation and the donor-restricted endowment fund The duration and preservation of the fund General economic conditions The purposes of the Foundation and the donor-restricted endowment fund The possible effect of inflation and deflation General economic conditions The expected total return from income and the appreciation of investments The possible effect of inflation and deflation Other resources of the Foundation The expected total return from income and the appreciation of investments The investment policies of the Foundation Other resources of the Foundation
The investment policies of the Foundation
18 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE E--ENDOWMENT DISCLOSURES--Continued Endowment net asset composition by type of fund as of June 30, 2010: NOTE E--ENDOWMENT DISCLOSURES--Continued Temporarily Permanently Endowment net asset composition by type of fund as of June 30, 2010: Unrestricted Donor-restricted endowment funds Donor purpose Donor-restricted restricted funds endowment funds Board-designated Donor purpose endowment funds restricted funds Board-designated Total endowment funds endowment funds Total endowment funds
$Unrestricted (28,071,191) $
(28,071,191)
Restricted Temporarily $ Restricted 33,955,463
Restricted Permanently $ Restricted 289,581,483
Total $ 295,465,755
7,720,479 33,955,463
$ 289,581,483-
7,720,479 $ 295,465,755
7,720,479-
-
31,644,624 7,720,479
$
31,644,624-
Total
$
3,573,433 31,644,624
$
41,675,942 -
$ 289,581,483 -
$ 334,830,858 31,644,624
$
3,573,433
$
41,675,942
$ 289,581,483
$ 334,830,858
19 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE E--ENDOWMENT DISCLOSURES--Continued Changes in endowment netDISCLOSURES--Continued assets for the year ended June 30, 2010: NOTE E--ENDOWMENT Changes in endowment net assets for the year ended Temporarily June 30, 2010: Restricted Unrestricted Temporarily Endowment net assets, beginning of year $Unrestricted (13,432,634) $ Restricted 37,942,684 Endowment net assets, Investment return beginning ofdividends year $ (13,432,634) Interest and 426,894 $ 37,942,684 3,641,226 Investment return Interest on note receivable Interest andfees dividends Investment Interest on note Net realized andreceivable unrealized gains (losses) Investment fees Netinvestment realized and Total return unrealized gains (losses) Donor-restricted additions Total investment return Current year endowment Donor-restricted additions contributions Current year endowment Collection of current contributions and prior year pledges Collectionofofprior current Transfers year contributions and prior year pledges Transfers of prior year Total donor-restricted additions contributions Management fee Total donor-restricted additions Appropriation of endowment Management fee assets for expenditure Appropriationofofamounts endowment Reinvestment assets for expenditure appropriated Reinvestment of amounts Reclassification-donor directed appropriated Transfer of net assets due to Reclassification-donor satisfaction of donordirected purpose Transfer oftonet assets due to Transfers board-designated satisfaction of donor purpose endowment funds
Permanently Restricted Permanently $ Restricted 282,033,701
Total Total $ 306,543,751
131,004 426,894 (121,178) 131,004 15,512,209 (121,178)
$ 282,033,701- $ 306,543,751 4,068,120 1,254,484 1,385,488 3,641,226 4,068,120 (981,858) (1,103,036) 1,254,484 1,385,488 10,297,662 (3,935,611) 21,874,260 (981,858) (1,103,036)
15,948,929 15,512,209
14,211,514 10,297,662
(3,935,611) (3,935,611)
26,224,832 21,874,260
15,948,929
14,211,514
(3,935,611)
26,224,832
-
-
8,624,569
8,624,569
-
-
8,624,569 1,965,685
8,624,569 1,965,685
-
-
297,680 1,965,685
297,680 1,965,685
(560,305) -
(4,539,958) -
10,887,934 297,680 10,887,934
10,887,934 297,680 (5,100,263) 10,887,934
(560,305) (1,319,446)
(4,539,958) (5,293,918)
--
(5,100,263) (6,613,364)
(1,319,446) 19,284
(5,293,918) -
--
(6,613,364) 19,284
33,427 19,284
(375,215) -
595,459 -
253,671 19,284
33,427-
(375,215) (269,165)
595,459-
253,671 (269,165)
2,884,178-
(269,165) -
--
(269,165) 2,884,178
Transfers to board-designated Endowment net assets, end of year endowment funds
$
3,573,433 2,884,178
$
41,675,942 -
$ 289,581,483 -
$ 334,830,858 2,884,178
Endowment net assets, end of year
$
3,573,433
$
41,675,942
$ 289,581,483
$ 334,830,858
20 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 STATE UNIVERSITY FOUNDATION June 30, 2010 NOTE E--ENDOWMENT DISCLOSURES--Continued NOTE E--ENDOWMENT DISCLOSURES--Continued Endowment net asset composition by type of fund as of June 30, 2009: Endowment net asset composition by type of fund as of June 30, 2009: Temporarily Permanently Restricted Restricted Unrestricted Temporarily Permanently Donor-restricted endowment funds $Unrestricted (42,213,290) $ Restricted 30,407,720 $ Restricted 282,033,701 Donor-restricted Donor purpose endowment funds restricted funds Donor purpose Board-designated restricted funds endowment funds Board-designated Total endowment funds endowment funds
Total endowment funds
$
(42,213,290) -
$
28,780,656-
Total Total $ 270,228,131
30,407,720 7,534,964
$ 282,033,701-
$ 270,228,131 7,534,964
7,534,964-
-
7,534,964 28,780,656
$
(13,432,634) 28,780,656
$
37,942,684 -
$ 282,033,701 -
$ 306,543,751 28,780,656
$
(13,432,634)
$
37,942,684
$ 282,033,701
$ 306,543,751
21 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 STATE UNIVERSITY FOUNDATION June 30, 2010 NOTE E--ENDOWMENT DISCLOSURES--Continued NOTE E--ENDOWMENT Changes in endowment netDISCLOSURES--Continued assets for the year ended June 30, 2009: Changes in endowment net assets for the year endedTemporarily June 30, 2009: Permanently Unrestricted Endowment net assets, beginning of year Endowment net assets, Investment return beginning ofdividends year Interest and Interest on note receivable Investment return Investment Interest andfees dividends Net realized andreceivable Interest on note unrealized losses Investment fees Netinvestment realized and Total return unrealized losses Donor-restricted additions
Total investment return Current year endowment contributions Donor-restricted additions Current year purpose endowment restricted contribution contributions Collection of current Current year purpose and prior year pledges restricted contribution Transfers prior year Collectioninofofcurrent contributions and prior year pledges Transfers in of prioradditions year Total donor-restricted contributions Management fee
$Unrestricted 31,663,333 $
Restricted Temporarily $ Restricted 103,854,972
Restricted Permanently $ Restricted 323,912,492
Total Total $ 459,430,797
31,663,333 404,669 $ 103,854,972 3,846,878 $ 323,912,492 1,265 $ 459,430,797 4,252,812 148,425 1,421,295 1,569,720 (68,676) (748,805) (817,481) 404,669 3,846,878 1,2654,252,812 148,425 1,421,295 1,569,720 (47,095,472) (56,082,322) (54,657,003) (157,834,797) (68,676) (748,805) (817,481) (46,611,054) (51,562,954) (54,655,738) (152,829,746) (47,095,472) (56,082,322) (54,657,003) (157,834,797) (46,611,054)
(51,562,954)
(54,655,738)
(152,829,746)
-
-
5,228,919
5,228,919
-
4,285,855-
5,228,919-
4,285,855 5,228,919
-
1,777,594 4,285,855
1,368,800-
3,146,394 4,285,855
Total donor-restricted additions Appropriation of endowment Management fee assets for expenditure
(607,160)
1,777,5946,063,449 (5,049,619)
5,679,196 1,368,800 12,276,915 5,679,196-
5,679,196 3,146,394 18,340,364 5,679,196 (5,656,779)
(607,160) (863,576)
(5,049,619) (9,919,215)
--
(5,656,779) (10,782,791)
Appropriation ofamounts endowment Reinvestment of assets for expenditure appropriated
(863,576) -
(9,919,215) 41,463
--
(10,782,791) 41,463
-
(500,032) 41,463
500,032 -
--
(500,032) (4,985,380)
500,032-
(4,985,380)
2,985,823-
(4,985,380) -
--
(4,985,380) 2,985,823
Transfers to board-designated Endowment net assets, end of year endowment funds
$ (13,432,634) $ 2,985,823
37,942,684 -
$ 282,033,701 -
$ 306,543,751 2,985,823
Endowment net assets, end of year
$ (13,432,634) $
37,942,684
$ 282,033,701
$ 306,543,751
Reinvestment of amounts Reclassification-donor directed appropriated Transfer of net assets due to Reclassification-donor satisfaction of donordirected purpose Transfer assets due to Transfersoftonet board-designated satisfaction of donor purpose endowment funds
-
22 22
6,063,449
12,276,915
18,340,364
41,463
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE E--ENDOWMENT DISCLOSURES--Continued In addition to permanently restricted endowment funds, the Foundation also has interests in NOTE E--ENDOWMENT DISCLOSURES--Continued perpetual trusts and charitable remainder trusts which are managed by third parties and permanently contributions These assets not a partalso of the In addition torestricted permanently restrictedreceivable. endowment funds, theare Foundation hasFoundation’s interests in endowmenttrusts and therefore are not included in the endowment disclosures. perpetual and charitable remainder trusts which are managed by third parties and permanently restricted contributions receivable. These assets are not a part of the Foundation’s Funds with Deficiencies endowment and therefore are not included in the endowment disclosures. From time to time, the fair value of assets associated with individual donor-restricted endowment Funds withfall Deficiencies funds may below the level that the donor or OK UPMIFA requires the Foundation to retain as a fundtime of perpetual accordance with with U.S. individual GAAP, deficiencies of thisendowment nature are From to time, theduration. fair value In of assets associated donor-restricted reported infall unrestricted assets anddonor totaled and $42,213,290 at June 30,to2010 and funds may below the net level that the or $28,071,191 OK UPMIFA requires the Foundation retain as 2009, respectively. These deficiencies resulted from market fluctuations that occurred a fund of perpetual duration. In accordance withunfavorable U.S. GAAP, deficiencies of this nature are shortly after the investment newand permanently restricted and contributions, decline reported in unrestricted net of assets totaled $28,071,191 $42,213,290the at substantial June 30, 2010 and in therespectively. markets which occurred in August of 2008, and continued market appropriation from that certain funds 2009, These deficiencies resulted from unfavorable fluctuations occurred as deemed prudent. shortly after the investment of new permanently restricted contributions, the substantial decline in the markets which occurred in August of 2008, and continued appropriation from certain funds Return Objectives as deemed prudent.and Risk Parameters The Foundation has adopted investment and spending policies for endowment assets to provide Return Objectives and Risk Parameters for growth and a predictable level of funding to the University to enable it to maintain, improve and expand its facilities and programs. is recognized that these require long term The Foundation has adopted investmentItand spending policies for objectives endowment assetsa to provide investment horizon. Investment risk measured in terms of theto total portfolio and is managed to for growth and a predictable level ofisfunding to the University enable it to maintain, improve ensure that the asset allocation does not It expose the portfolio to unacceptable levels ofa risk at and expand its facilities and programs. is recognized that these objectives require longbut term the same time achieves the best risk possible returns in over time. Thetotal asset allocation reflect investment horizon. Investment is measured terms of the portfolio andpolicies is managed to and arethat consistent the investment objectives and risktotolerances expressed through ensure the assetwith allocation does not expose the portfolio unacceptable levels of risk butthe at Foundation’s investment policy. These policies, developed after examining the historical the same time achieves the best possible returns over time. The asset allocation policies reflect relationships of riskwith andthe return among objectives asset classes, are designed provide through the highest and are consistent investment and risk tolerances toexpressed the probability of meeting or exceeding return objectives at the lowest of risk. Actual returns Foundation’s investment policy. the These policies, developed afterlevel examining the historical in any given year may and vary from amount. relationships of risk returnthis among asset classes, are designed to provide the highest probability of meeting or exceeding the return objectives at the lowest level of risk. Actual returns Strategies Employed Achieving in any given year mayfor vary from thisObjectives amount. To achieve its objectives, the Foundation seeks to utilize leading edge strategic and tactical asset Strategies Achieving allocation Employed decisions, for selection of Objectives top tier investment managers, and active performance monitoring andobjectives, evaluation byFoundation Foundationseeks management, and thetactical Investment To achieve its the to utilize outside leading consultants, edge strategic and asset Committee decisions, of the Board of Trustees. utilizes a total and return strategy in which allocation selection of topThe tierFoundation investment managers, active performance investment returns are achieved through both capital appreciation (realized and and monitoring and evaluation by Foundation management, outside consultants, andunrealized) the Investment current yieldof(interest andofdividends). TheFoundation Foundationutilizes targets aa total diversified allocation of Committee the Board Trustees. The return asset strategy in which 45% equity-based, assets,through 15% hedge private equity, and and 10%unrealized) fixed income to investment returns10% are real achieved bothfunds, capital20% appreciation (realized and achieve long-term objectives within risktargets constraints. current its yield (interestreturn and dividends). The prudent Foundation a diversified asset allocation of 45% equity-based, 10% real assets, 15% hedge funds, 20% private equity, and 10% fixed income to achieve its long-term return objectives within prudent risk constraints. 23 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE E--ENDOWMENT DISCLOSURES--Continued Spending Policy and HowDISCLOSURES--Continued the Investment Objectives Relate to Spending Policy NOTE E--ENDOWMENT The Foundation’s spending policy is the mechanism in which earnings from endowments Spending Policy and How the Investment Objectives Relate to Spending Policy participating in the pooled investment fund are made available to the University. The Foundation’s spending policypolicy allowsisfor use of both income and appreciation as The Foundation’s spending thethe mechanism in realized which earnings from endowments components ofinthethe spending distribution. the available spending to policy the previous participating pooled policy investment fund In are2010, made the was University. The year’s spending amountpolicy adjusted by for an the inflationary factor (calculated theappreciation change in the Foundation’s spending allows use of both realized incomeasand as Consumer Price Index (“CPI”) fromdistribution. November 2008 through November 2009)was plus 5%previous of new components of the spending policy In 2010, the spending policy the gifts and reinvested funds. In 2009, spending policy the previous spending year’s spending amount adjusted by the an inflationary factorwas (calculated as theyear’s change in the amount adjusted by an(“CPI”) inflationary (calculated as the change in the2009) CPI from November Consumer Price Index fromfactor November 2008 through November plus 5% of new 2007 through November 2008),Ina 2009, one-time 7%, plus 4.2% new giftsyear’s and reinvested gifts and reinvested funds. the increase spendingof policy was theofprevious spending funds. it isinflationary the policy of the Trustees thatas nothe spending be CPI authorized from any amountFurthermore, adjusted by an factor (calculated changeshall in the from November endowment in which market value is less than the4.2% historic giftgifts value without first 2007 throughaccount November 2008),the a one-time increase of 7%, plus of new and reinvested obtaining permission from thepolicy donor. the donor cannot contacted, thebeFoundation’s Trustees funds. Furthermore, it is the of If the Trustees that nobe spending shall authorized from any permit University administration the fund whether or gift not value to distribute. The endowment account in which the for market valuetoisdetermine less than the historic without first spending permission policy distribution $6,613,364 and $10,782,791 for the years ended June Trustees 30, 2010 obtaining from thewas donor. If the donor cannot be contacted, the Foundation’s and 2009, respectively. permit University administration for the fund to determine whether or not to distribute. The spending policy distribution was $6,613,364 and $10,782,791 for the years ended June 30, 2010 and 2009, respectively. NOTE F--FAIR VALUE MEASUREMENTS The methods assumptions used to estimate the fair value of assets and liabilities in the NOTE F--FAIRand VALUE MEASUREMENTS financial statements, including a description of the methodologies used for the classifications within the fair and valueassumptions hierarchy, are as follows The methods used to estimate the fair value of assets and liabilities in the financial statements, including a description of the methodologies used for the classifications Cash asset is carried at cost which approximates fair value due within theand fairCash valueEquivalents: hierarchy, areThe as follows to the short maturity of such amounts. Cash and Cash Equivalents: The asset is carried at cost which approximates fair value due Investments: Marketable securities are stated at fair value and are based on quoted market to the short maturity of such amounts. prices, when available, or the best estimate of fair value as determined by the Foundation or the investmentMarketable manager. Generally, market andmarket shortInvestments: securities quoted are stated at fairprices valueare andavailable are basedfor oncash quoted term funds, stocks, mutual funds,asand bond investments and as such prices, whencommon available,and or preferred the best estimate of fair value determined by the Foundation or are classified as manager. Level 1 in Generally, the fair value hierarchy. are not for actively traded are the investment quoted marketBonds prices which are available cash and shortpricedfunds, by nationally thirdstocks, party pricing andbond are classified as Level 2 insuch the term commonrecognized and preferred mutual services funds, and investments and as hierarchy. Commodities at fair value as Bonds determined investment manager are classified as Level 1 inare thestated fair value hierarchy. whichbyarethe not actively traded are and areby classified as Level 3 in the hierarchy. priced nationally recognized third party pricing services and are classified as Level 2 in the hierarchy. Commodities are stated at fair value as determined by the investment manager and are classified as Level 3 in the hierarchy.
24 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued Investments--Continued: Non-marketable securities, except for closely held stock and other NOTE F--FAIR VALUE MEASUREMENTS--Continued non-marketable investments, are carried at fair value which is based on the net asset value per share as provided by Non-marketable the fund manager. The Foundation evaluates its ability redeem Investments--Continued: securities, except for closely held stock to and other investments carried at net asset value per at share determining notnet to asset classify the non-marketable investments, are carried fair in value which is whether based onorthe value investment as Level 2 orfund Level 3. Based onFoundation this assessment, the Foundation per share asasset provided by the manager. The evaluates its ability toclassifies redeem common fund investments as Level 2 and hedgeinfund and private equityorfund as investments carried at net asset value per share determining whether not investment to classify the Level 3 in the stock on and other non-marketable investments are investment assethierarchy. as Level 2 Closely or Levelheld 3. Based this assessment, the Foundation classifies valued the investments Foundation’sasmanagement based fund on the fair valueequity of thefund underlying assets, commonbyfund Level 2 and hedge and private investment as recent 3appraisals, and other factorsheld deemed to non-marketable the valuation and as such are Level in the hierarchy. Closely stock relevant and other investments classified Level 3 in the hierarchy. valued byasthe Foundation’s management based on the fair value of the underlying assets, recent appraisals, and other deemed to the as such are Contributions Receivable: Thefactors asset is carriedrelevant at cost net of avaluation discount and to present value classified as Level 3 in the hierarchy. using a rate which is commensurate with the risks involved on the gift date and an allowance for uncollectible accounts financial reporting Fair value is the price Contributions Receivable: The assetatisthe carried at cost net of date. a discount to present valuea market participant would pay to acquire the right to receive the cash flows inherent in using a rate which is commensurate with the risks involved on the gift date and the an promise tofor payuncollectible the Foundation and due to financial inclusionreporting of a discount net value present value anda allowance accounts at the date.toFair is the price allowance for uncollectible accounts the carrying value fairflows value.inherent in the market participant would pay to acquire the right to approximates receive the cash promise to pay the Receivables: Foundation and to is inclusion a discount net present value and Interest and Other Thedue asset carried of at cost which to approximates fair value allowance for uncollectible accounts the carrying value approximates fair value. due to the short maturity of such amounts. Interest and OtherThe Receivables: The asset is carried at cost which approximates fair value Note Receivable: asset is carried at cost. Fair value is determined by discounting the due to the short maturity of such amounts. future cash flows inflows to present value. The carrying value approximates fair value. Note Receivable: The asset is The carried at cost. Fair amount value is isdetermined by fair discounting the Other Property Investments: asset’s carrying based on the value of the future at cash to present value. (i.e., The cost carrying approximates fair value. to assets theflows time inflows of donation or purchase basis)value and reduced for impairments their realizable value based on carrying facts andamount circumstances the Other net Property Investments: The asset’s is based onatthe fairtime valueofof the determination. investments are(i.e., not cost heldbasis) for long-term investment purposes; assets at the timeProperty of donation or purchase and reduced for impairments to therefore, the carrying amount approximates fair value. their net realizable value based on facts and circumstances at the time of the determination. Property investments are not heldis for long-term investment Beneficial Interests in Trusts: The beneficial interest carried at fair value which ispurposes; based on therefore, the carrying amount approximates fair value. the present value of the expected future cash inflows from the trusts. The fair value of the underlying trust assets are based onbeneficial quoted market whenatavailable the best estimate Beneficial Interests in Trusts: The interestprices is carried fair valueorwhich is based on of valuevalue as determined by the trustcash manager. valuation technique thefair present of the expected future inflowsThe fromFoundation’s the trusts. The fair value of the considers fairassets valueare of based the assets held inmarket the trust andwhen applies a discount rate toestimate convert underlyingthe trust on quoted prices available or the best such amounts to determined a single present value amount when appropriate. The discount rate used by of fair value as by the trust manager. The Foundation’s valuation technique the Foundation market including inherent in the considers the fair reflects value ofcurrent the assets held inconditions the trust and applies the a discount raterisk to convert underlying assets and the risk of nonperformance the trustee.TheDue to therate significant such amounts to a single present value amount whenby appropriate. discount used by unobservable inputs required to estimate expectedincluding future cash from the Foundation reflects current market the conditions thereceipts inherent risktheintrust the agreements, the Foundation’s beneficial interest is classified Level 3 in the to hierarchy. underlying assets and the risk of nonperformance by theastrustee. Due the significant unobservable inputs required to estimate the expected future cash receipts from the trust agreements, the Foundation’s beneficial interest is classified as Level 3 in the hierarchy. 25 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued Other Assets: The primary other asset is cash surrender values on life insurance policies for NOTE F--FAIR VALUE MEASUREMENTS--Continued which the Foundation is the beneficiary and as such the carrying value approximates fair value. Assets: The primary other asset is cash surrender values on life insurance policies for Other which the Foundation the beneficiary and as such carrying value approximates fair OSU Support Payableisand Accounts Payable and the Accrued Liabilities: The carrying value. amount of the liabilities approximates fair value due to the short maturity of such amounts. OSU Support Payable and Accounts Payable and Accrued Liabilities: The carrying amount of the liabilities approximates fair Athletics: value due The to the short are maturity liabilities carriedofatsuch fair Funds Held on Behalf of OSU and Cowboy amounts. value. Fair value is based on the fair value of the cash and investment assets held by the Foundation benefit of theand University Cowboy The carried specific at assets Funds Heldfor on the Behalf of OSU Cowboyand/or Athletics: The Athletics. liabilities are fair held for Fair the benefit of based the University have beenofclassified the hierarchy for investments value. value is on the fair value the cashwithin and investment assets held by the (as discussed Theofrelated and associated classified The as Level 3 in the Foundation forabove). the benefit the University and/orliability CowboyisAthletics. specific assets hierarchy asbenefit there is for ahave similar andwithin principal inputs (i.e., value of held for the ofno themarket University beenliability classified the hierarchy for fair investments assets in the portfolio) classified Level 3 and therefore and significant (as discussed above). are The related as and associated liabilityare is unobservable classified as Level 3 in the to the overall fair value hierarchy as there is nomeasurement. market for a similar liability and principal inputs (i.e., fair value of assets in the portfolio) are Interest classifiedAgreements: as Level 3 andThe therefore are unobservable and significant Obligations Under Split liabilities’ fair value is determined by to the overall the fair value discounting futuremeasurement. cash flows at rates that could currently be negotiated by the Foundation borrowings of similar amounts.TheThe carrying Obligations for Under Split Interest Agreements: liabilities’ fairvalue value approximates is determined the by liabilities’ fairthe value. discounting future cash flows at rates that could currently be negotiated by the FoundationRevenue: for borrowings of similar amounts. carrying value approximates Unearned The liability is carried at cost The which approximates fair value duethe to liabilities’ fair value. the short maturity of those amounts. Unearned Revenue: The liability is carried at cost which approximates fair value due to the short maturity of those amounts.
26 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued Assets liabilities measured at fair value on a recurring basis are classified within the fair value NOTE and F--FAIR VALUE MEASUREMENTS--Continued hierarchy at June 30, 2010 as follows: Assets and liabilities measured at fair value onLevel a recurring basis within the Total fair value 1 Levelare 2 classified Level 3 hierarchy ASSETS at June 30, 2010 as follows: Marketable securities: Cash and Short-Term Funds ASSETS Common and Preferred Stocks Marketable securities: Equity Mutual Funds Cash and Short-Term Funds Domestic Common and Preferred Stocks International Equity Mutual Funds Bond Mutual Funds Domestic Domestic International International Bond Mutual Funds Balanced Mutual Funds Domestic Bond Investments International Commodities Balanced Mutual Funds Total Marketable securites Bond Investments Non-marketable Commodities securities: Common Funds Total Marketable securites Domestic Equity Non-marketable Internationalsecurities: Equity Common Funds Hedge Funds Domestic DistressedEquity International Equity Energy Hedge Funds Fund of Fund Distressed Global Long/Short Energy Multi-Strategy Fund Equity of Fund Private Funds Global Long/Short Distressed Multi-Strategy Hard Assets Private Equity Funds Int'l Equity Distressed Secondary Market and Venture Hard Assets Software and Financial Services Int'l Equity Closely Held Stock Secondary Market and Venture Other Software and Financial Services Total Non-marketable ecurities Closely Held Stock Investments Other Beneficial interests in trusts Total Non-marketable ecurities
Total assets Investments
LIABILITIES Beneficial interests in trusts Funds held on behalf of OSU Total assets Funds held on behalf of Cowboy Athletics LIABILITIES Total liabilities Funds held on behalf of OSU Funds held on behalf of Cowboy Athletics Total liabilities
$ $
Level 1 14,661,148 87,064,864 14,661,148 7,791,113 87,064,864 26,987,750
$ $
Level 2
-
$
---
$
Level 3
-
$
---
$
Total 14,661,148 87,064,864 14,661,148 7,791,113 87,064,864 26,987,750
7,791,113 14,721,802 26,987,750 15,417,157 10,512,263 14,721,802 13,065,891 15,417,15710,512,263 190,221,988 13,065,891 -
---
---
5,300,787-5,300,787 5,300,787 -
-12,590,40612,590,406 12,590,406
7,791,113 14,721,802 26,987,750 15,417,157 10,512,263 14,721,802 18,366,678 15,417,157 12,590,406 10,512,263 208,113,181 18,366,678 12,590,406
190,221,988 -
5,300,787 20,965,704 21,223,181
12,590,406 -
208,113,181 20,965,704 21,223,181
---
20,965,70421,223,181-
-----
-----
27,409,94311,620,99112,872,202 27,409,943 10,736,456 11,620,991 34,882,778 12,872,202 10,736,456 13,813,675 34,882,778 20,395,735
20,965,704 27,409,943 21,223,181 11,620,991 12,872,202 27,409,943 10,736,456 11,620,991 34,882,778 12,872,202 10,736,456 13,813,675 34,882,778 20,395,735
----190,221,988--
----42,188,885 47,489,67242,188,885-
5,993,064 13,813,675 16,404,894 20,395,735 7,277,445 5,993,064 7,856,138 16,404,894 10,746,385 7,277,445 180,009,706 7,856,138 192,600,112 10,746,385 8,110,059 180,009,706
5,993,064 13,813,675 16,404,894 20,395,735 7,277,445 5,993,064 7,856,138 16,404,894 10,746,385 7,277,445 222,198,591 7,856,138 430,311,772 10,746,385 8,110,059 222,198,591
$
190,221,988 190,221,988
$
$ $
190,221,988-
$ $
47,489,672 47,489,672
$ 200,710,171 192,600,112
$ 438,421,831 430,311,772
47,489,672-
8,110,059 $ 3,612,550 $ 200,710,171 2,915,000
8,110,059 $ 3,612,550 $ 438,421,831 2,915,000
$ $
-
$ $
-
$ $
6,527,550 3,612,550 2,915,000
$ $
6,527,550 3,612,550 2,915,000
$
-
$
-
$
6,527,550
$
6,527,550
27 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued Assets liabilities measured at fair value on a recurring basis are classified within the fair value NOTE and F--FAIR VALUE MEASUREMENTS--Continued hierarchy at June 30, 2009 as follows: 1 Level 2 classified Level 3 Assets and liabilities measured at fair value on Level a recurring basis are within the Total fair value ASSETS hierarchy at June 30, 2009 as follows: Marketable securities: Cash and Short-Term Funds ASSETS Common and Preferred Stocks Marketable securities: Equity Mutual Funds Cash and Short-Term Funds Domestic Common and Preferred Stocks International Equity Mutual Funds Bond Mutual Funds Domestic Domestic International Balanced Mutual Funds Bond Funds Bond Mutual Investments Domestic Commodities Balanced Mutual Funds Total Marketable securities Bond Investments Non-marketable Commodities securities: Common FundsTotal Marketable securities Domestic Equity Non-marketable Internationalsecurities: Equity Common Funds Hedge Funds Domestic Equity Distressed International Equity Energy Hedge Funds Fund of Fund Distressed Global Long/Short Energy Multi-Strategy Fund Equity of Fund Private Funds Global Long/Short Distressed Multi-Strategy Hard Assets Private Equity Funds Int'l Equity Distressed Secondary Market and Venture Hard Assets Software and Financial Services Int'l Equity Closely Held Stock Secondary Market and Venture Other Software and Financial Services Total Non-marketable securities Closely Held Stock Investments Other Beneficial interests in trusts Total Non-marketable securities Total assets Investments Beneficial interests in trusts LIABILITIES Funds held on behalf of OSU Total assets Funds held on behalf of Cowboy Athletics LIABILITIES Funds held on behalf of OSU Total liabilities
$ $
$
Level 1 14,100,146 82,524,368 14,100,146 6,463,490 82,524,368 17,318,605
Level 3 -
$
-
$
$
---
$
---
$
Total 14,100,146 82,524,368 14,100,146 6,463,490 82,524,368 17,318,605
6,463,490 11,508,112 17,318,605 8,910,455 2,603,019 11,508,1128,910,455 143,428,195 2,603,019 -
---
---
14,656,701 -14,656,701 14,656,701 -
12,848,55012,848,550 12,848,550
6,463,490 11,508,112 17,318,605 8,910,455 17,259,720 11,508,112 12,848,550 8,910,455 170,933,446 17,259,720 12,848,550
143,428,195 -
14,656,701 9,457,418 18,929,676
12,848,550 -
170,933,446 9,457,418 18,929,676
-------
9,457,41818,929,676-----
21,630,81415,075,71511,561,662 21,630,814 10,000,000 15,075,715 32,168,671 11,561,662 10,000,000 8,583,167 32,168,671 16,220,983
9,457,418 21,630,814 18,929,676 15,075,715 11,561,662 21,630,814 10,000,000 15,075,715 32,168,671 11,561,662 10,000,000 8,583,167 32,168,671 16,220,983
----143,428,195--
----28,387,094 43,043,79528,387,094-
4,213,281 8,583,167 13,485,217 16,220,983 2,811,806 4,213,281 7,858,736 13,485,217 11,911,233 2,811,806 155,521,285 7,858,736 168,369,835 11,911,233 8,321,649 155,521,285
4,213,281 8,583,167 13,485,217 16,220,983 2,811,806 4,213,281 7,858,736 13,485,217 11,911,233 2,811,806 183,908,379 7,858,736 354,841,825 11,911,233 8,321,649 183,908,379
43,043,795
$ 168,369,835 176,691,484
$ 354,841,825 363,163,474
-
8,321,649
8,321,649
2,710,378 $ 176,691,484 1,408,736
2,710,378 $ 363,163,474 1,408,736
143,428,195
$
$
143,428,195-
$
43,043,795-
$ $
--
$ $
--
$ $
4,119,114 2,710,378 1,408,736
$ $
4,119,114 2,710,378 1,408,736
$
-
$
-
$
4,119,114
$
4,119,114
Funds held on behalf of Cowboy Athletics Total liabilities
Level 2 $
28 28
at July 1, 2008 lized and unrealized s(losses) included in ings utions investments ses, including vestment of income
at June 30, 2009
lized and unrealized s(losses) included in ings investments ses, including vestment of income
at June 30, 2010
HOMA STATE UNIVERSITY FOUNDATION
0, 2010
F--FAIR VALUE MEASUREMENTS--Continued
ng June 30, 2010 and 2009:
owing tables summarize the changes in the fair value of the Foundation’s Level 3 financial assets by major category for the period
ending June 30, 2010 and 2009:
earni Distribu Contribu $ 12,590,406 $ 27,409,943 $ 11,620,991 $ 12,872,202 $ 10,736,456 $ 34,882,778Change $ 7,8 Sales of Purchas reinv 5,779,129 -
14,296,898
29
$ 54,501,299
(6,699,083) 1,630,814 (40,425,584) -
20,000,000
12,848,550 21,630,814
(3,454,724) -
Balance at June 30, 2010
(1,539,183) (13,015,859) -
Fund of Fund
Global Long/Short
$
$
6,164,709
$ 12,590,406
-
-
29
$ 27,409,943
Assets Hedge Funds 14,296,898
$ 10,736,456
$ 12,872,202
$ 11,620,991
-
736,456 -
1,310,540 -
(3,454,724) -
5,779,129 -
$ Energy
(1,539,183) (13,015,859)
10,000,000
11,561,662
15,075,715
21,630,814
12,848,550
-
10,000,000
$
5,000,000
1,000,000
20,000,000
-
6,164,709
Global Long/Short
-
$
Fund of Fund
396,953 -
(40,425,584) -
(6,699,083) -
1,630,814 -
Energy
$ 54,501,299
$
Distressed -
Distressed
Net realized and unrealized gains(losses) included in earnings Sales of investments Purchases, including reinvestment of income
$ 19,547,633
$ 19,547,633
Commodities
Balance at June 30, 2009
Balance at July 1, 2008 Net realized and unrealized gains(losses) included in earnings Contributions Sales of investments Purchases, including reinvestment of income
Commodities
Assets Hedge Funds
The following tables summarize the changes in the fair value of the Foundation’s Level 3 financial assets by major category for the period
NOTE F--FAIR VALUE MEASUREMENTS--Continued
June 30, 2010
OKLAHOMA STATE UNIVERSITY FOUNDATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
S TO CONSOLIDATED FINANCIAL STATEMENTS--Continued NOTES
OKLAH
June 30
NOTE
-
396,953 -
1,000,000 5,000,000 10,000,000
15,075,715 11,561,662 10,000,000
1,310,540 -
736,456 -
-
-
Multi Strategy Closel St
$ 36,562,769Balance $
Net real gains (4,393,743) earni (2 Change 8,0 Distribu (436) Contribu 81Sales of Purchas 32,168,671 7,8 reinv Balance
2,714,107Net real4 - gains (5
Balance
$ 34,882,778
-
2,714,107 -
32,168,671
81
(4,393,743) (436)
$ 36,562,769
Multi Strategy
-
497,560 (500,158)
7,858,736
-
(248,780) 8,010,716 -
96,800
$ 7,856,138
$
Closely Held Stock
ly Held tock
at July 1, 2008 96,800 lized and unrealized s(losses) included in ings 248,780) in value of split-interests 010,716 utions utions investments ses, including 858,736 vestment of income
at June 30, 2009
lized and unrealized 497,560 s(losses) 500,158) included in ings utions utions in value of split-interests 856,138 investments ses, including vestment of income
at June 30, 2010
June 30, 2010
OKLAHOMA STATE UNIVERSITY FOUNDATION
(2,059,796) (908,527)
3,772,114 (464,424) International Equity
$ 16,374,106
$
8,583,167
16,220,983
703,101 (662,145)
1,922,818
4,133,796
$ 13,813,675
$ 20,395,735
$
30
2,811,806
780,400 (7,402) 3,692,641 7,277,445
13,485,217
1,719,346 (689,669) 1,890,000 $ 16,404,894
1,798,617 (318,834)
16,220,983
703,101 (662,145)
4,133,796
8,583,167
3,772,114 (464,424)
1,922,818
1,798,617 (318,834)
1,719,346 (689,669)
300,000
1,890,000
5,993,064
$ 16,404,894 $
(3,147,915) (519,434)
$ -
2,811,806
(1,164,848) -
(266,172) 54,582 -
3,692,641
-
-
7,277,445
$ 10,746,385
780,400 (7,402) $ -
(514,922) (1,556,712)
(1,088,767) -
4,883,440
13,000,000
11,911,233
$
8,419,302
(942,931) (71,448) (220,226) 1,136,952 -
44,317
8,321,649
2,710,378
$ 13,813,675
Beneficial Interests in Trusts 5,993,064
300,000
Other
$ 20,395,735
$ 14,602,566 4,213,281
Software and Financial, Services
30
4,883,440
2,550,000
$
(514,922) (1,556,712)
(3,147,915) (519,434)
-
$
$ 14,602,566
9,660,279
991,240
13,485,217 2,519,843
4,213,281 2,528,968
2,550,000
(5,446,998) (991,240)
991,240 (1,929,475) (743,491)
(5,446,998) (991,240) $
(2,059,796) (908,527)
$
$ 9,660,279 Secondary Market and Venture
8,110,059
Balance at June 30, 2010
2,519,843 Assets
Net realized and unrealized gains(losses) included in earnings Distributions Contributions Change in value of split-interests Sales of investments Purchases, including reinvestment of income
Hard Assets
International Equity Private Equity Funds
Balance at June 30, 2009
2,528,968
$ 16,374,106
(1,929,475) (743,491)
9,022,522
Hard Assets
F--FAIR VALUE MEASUREMENTS--Continued
Software and Financial, Services
0, 2010
Secondary Market and Venture -
-
(1,164,848) -
11,911,233
13,000,000
(1,088,767) -
Other
$ 10,746,385
$
HOMA STATE UNIVERSITY FOUNDATION
Balance at July 1, 2008 Net realized and unrealized gains(losses) included in earnings Change in value of split-interests Distributions Contributions Sales of investments Purchases, including reinvestment of income $
9,022,522
Private Equity Funds
Distressed
Distressed
$
NOTE F--FAIR VALUE MEASUREMENTS--Continued Assets
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
S TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Liabilities
Funds Held on Behalf of OSU
$
$
3,419,600
(904,339) (149,200) 300,000 -
290,310 (144,059) 705,000 -
3,612,550
Fund on B of Co Ath $
(6 2,1
1,4
(1,7 (2,1 5,3
50,921
$ 2,9
$
$
8,110,059
-
(266,172) 54,582 -
8,321,649
-
(942,931) (71,448) (220,226) 1,136,952 -
8,419,302
Beneficial Interests in Trusts
$
$
3,612,550
50,921
290,310 (144,059) 705,000 -
2,710,378
44,317
(904,339) (149,200) 300,000 -
3,419,600
Funds Held on Behalf of OSU
-
(1,760,000) (2,100,000) 5,366,264 -
1,408,736
-
(691,264) 2,100,000 -
-
$ 2,915,000
$
Funds Held on Behalf of Cowboy Athletics
Liabilities
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued The summary changes in fair value of Level 3 assets has been prepared to reflect the activity in NOTE F--FAIRofVALUE MEASUREMENTS--Continued the same categories as those provided in the consolidated statements of activities, except that nonesummary of the activity relatedintofair thevalue fundsofheld on3behalf OSU orprepared Cowboy to Athletics is reported The of changes Level assets of has been reflect the activity in statements activities.inAll in statements custodial accounts increase and/or the consolidated same categories as thoseofprovided thetransactions consolidated of activities, except that decrease assets andrelated liabilities simultaneously do not impact the consolidated none of the activity to the funds held onand behalf of OSU or Cowboy Athletics statements is reported of in activities and/or net assets. of activities. All transactions in custodial accounts increase and/or the consolidated statements decrease assets and liabilities simultaneously and do not impact the consolidated statements of Net realized and net unrealized activities and/or assets. gains (losses) included in earnings for investments classified as Level 3 in the fair value hierarchy includes unrealized gains totaling $17,008,261 in 2010 and unrealized losses totaling $62,838,529 in gains 2009. (losses) Net realized and in unrealized (losses) included in earnings Net realized and unrealized included earnings gains for investments classified as Level interests in trusts classified as Levelgains 3 in totaling the fair value hierarchy include 3forinbeneficial the fair value hierarchy includes unrealized $17,008,261 in 2010 and unrealized andin$942,931 in realized 2010 andand 2009, respectively. losses totaling $266,172 $62,838,529 2009. Net unrealized gains (losses) included in earnings for beneficial interests in trusts classified as Level 3 in the fair value hierarchy include unrealized The Foundation accounts transfers between the levels within the fair value hierarchy at the losses totaling $266,172 andfor $942,931 in 2010 and 2009, respectively. beginning of the reporting period. During the year-ended June 30, 2010, the Foundation disaggregated investment categories and tothe facilitate comparability elected to makeat2009 The Foundationits’ accounts for transfers between levels within the fair value hierarchy the comparative 2010 presentation. As there no changes valuation methods beginning of to thethereporting period. During the were year-ended June in 30,the 2010, the Foundation used during 2009 2010, therecategories are no transfers reported.elected to make 2009 disaggregated its’or investment and tobetween facilitateclasses comparability comparative to the 2010 presentation. As there were no changes in the valuation methods The Foundation’s inare certain entities that calculate net reported. asset value (“NAV”) per share used during 2009 investments or 2010, there no transfers between classes and for which there is not a readily determinable fair value are summarized by category as follows: The Foundation’s investments in certain entities that calculate net asset value (“NAV”) per share Funds – is Distressed: This category includes funds whichbyinvest in aasvariety andHedge for which there not a readily determinable fair valuetwo are summarized category follows:of investment and non-investment grade fixed income securities and stressed and distressed equity securities both domestically and internationally. One of the funds carrying Hedge Funds – Distressed: This category includes two funds which invest with in a avariety of value of $14,128,291 and $10,061,581 at June 30,income 2010 and 2009, respectively, may be distressed redeemed investment and non-investment grade fixed securities and stressed and st each December with 90 days written at the redemption per share to a equity securities31both domestically and notice internationally. One of price the funds with subject a carrying possible 25% redemption limitation. atThe other fundand has2009, a carrying value of $13,281,652 and value of $14,128,291 and $10,061,581 June 30, 2010 respectively, may be redeemed $11,569,233 at June 2010 and 2009, respectively, and may be redeemed the end of each each December 31st 30, with 90 days written notice at the redemption price peratshare subject to a calendar quarter with 60 days written notice subject to a possible 10% hold-back until possible 25% redemption limitation. The other fund has a carrying value of $13,281,652 and completion of annual audit. $11,569,233 at its June 30, 2010 and 2009, respectively, and may be redeemed at the end of each calendar quarter with 60 days written notice subject to a possible 10% hold-back until completion of its annual audit.
31 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued Hedge FundsVALUE – Energy: This category includes four energy funds. Two of the funds are energy NOTE F--FAIR MEASUREMENTS--Continued equity funds invested primarily in securities of, or related to, companies engaged in energy, energyFunds dependent, andThis natural resource industries and related The are other two Hedge – Energy: category includes four energy funds.commodities. Two of the funds energy funds engage in speculative trading of energy energy-related commodities, futures equity funds invested primarily in securities of, orand related to, companies engaged in energy, contracts, swaps, options on futures contracts andand physical (cash) energy dependent, and natural resource industries relatedcommodities, commodities.and Thespot other two commodities. One of the equity funds with a carrying value of $7,420,799 and $9,290,664 at funds engage in speculative trading of energy and energy-related commodities, futures June 30, 2010 and 2009, respectively, terminate onphysical December 31, 2010, unless for contracts, swaps, options on futureswill contracts and commodities, andextended spot (cash) one additionalOne yearof at sole funds discretion the general Theand majority of the commodities. thethe equity with aofcarrying value partner. of $7,420,799 $9,290,664 at investments this category may bewill redeemed aton netDecember asset value at extended the closefor of June 30, 2010in and 2009, respectively, terminate 31, per 2010,share unless business on the year last day of each quarter; twopartner. of the funds a combined one additional at the solecalendar discretion of theexcept, general The with majority of the NAV of $3,885,297 $5,297,925 at June 30, 2010 andasset 2009,value require days at written notice investments in this and category may be redeemed at net per90share the close of and redemptions limited at thequarter; discretion of the partner. of the business on the lastmay day be of each calendar except, two general of the funds with One a combined speculative funds with a fair value $783,160 and $1,339,912 at June 30, 2010 andnotice 2009, NAV of $3,885,297 and $5,297,925 at of June 30, 2010 and 2009, require 90 days written respectively, has eight remaining on discretion its initial two lock-up period. and redemptions maymonths be limited at the of year the general partner. One of the speculative funds with a fair value of $783,160 and $1,339,912 at June 30, 2010 and 2009, Hedge Funds – Fund of Fund: This category includes one fund which invests in investment respectively, has eight months remaining on its initial two year lock-up period. partnerships and other investment vehicles, the underlying assets of which are typically publicly traded securities, a diversified portfolio of hedge managers. The Hedge Funds – Fund of Fund:through This category includes one fund which fund invests in investment investment may be redeemed at the end of each fiscal quarter with 90 days written notice and partnerships and other investment vehicles, the underlying assets of which are typically redemptions maysecurities, be limited at the adiscretion of portfolio the general partnerfund if total redemptions publicly traded through diversified of hedge managers. The exceed 25% may of the net asset value fund and up to with 10% 90 of the mayand be investment betotal redeemed at the endofofthe each fiscal quarter daysredemption written notice held back untilmay completion of the annual audit. redemptions be limited at fund’s the discretion of the general partner if total redemptions exceed 25% of the total net asset value of the fund and up to 10% of the redemption may be Hedge Funds – Global Long/Short: This category includes one fund that operates under a held back until completion of the fund’s annual audit. master/feeder fund structure whereby two limited partners invest substantially all of their investable assets in thisLong/Short: fund. The fund in both publicone andfund private Hedge Funds – Global Thisinvests category includes thatsecurities, operatesincluding under a high-yield securities, distressed instruments, equity securities, joint master/feeder fund structure whereby two limited partners invest derivates, substantially all venture of their arrangements, investment vehicles, or both maypublic allocate portions of its including assets to investable assetspooled in this fund. The fund invests in and private securities, independentsecurities, managers distressed on a discretionary basis. This investment may be redeemed the end high-yield instruments, equity securities, derivates, jointat venture of each calendarpooled quarter investment with 180 days written or notice andallocate redemptions mayof be limited at the arrangements, vehicles, may portions its assets to discretion of the generalonpartner if total redemptions 20% may of the asset value ofend the independent managers a discretionary basis. This exceed investment benet redeemed at the fund and up to 10% of thewith redemption be held back until completionmay of the of each calendar quarter 180 daysmay written notice and redemptions be fund’s limitedannual at the audit. At June 30,general 2010, there is one year redemptions remaining onexceed the initial period. discretion of the partner if total 20%lock-up of the net asset value of the fund and up to 10% of the redemption may be held back until completion of the fund’s annual Hedge Funds – Multi-Strategy: This category consists of two funds which focus on alternative audit. At June 30, 2010, there is one year remaining on the initial lock-up period. strategies including convertible and derivatives, private placements and investments, domestic and–international distressed equity, and fixedofincome. The funds Hedge Funds Multi-Strategy: This category consists two funds whichallow focusfor onredemption alternative at the end of each calendar quarter with 45 and/or 90 days written notice and redemptions strategies including convertible and derivatives, private placements and investments, may be limited at the discretion of the general in certain situations 5% and/or domestic and international distressed equity, andpartners fixed income. The funds allowand for redemption 10% the redemption amount may be held until90completion of the funds’ audit. at theofend of each calendar quarter with 45back and/or days written notice andannual redemptions may be limited at the discretion of the general partners in certain situations and 5% and/or 10% of the redemption amount may be held back until completion of the funds’ annual audit. 32 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued Private Equity Funds MEASUREMENTS--Continued – Distressed: This class includes two private equity funds which invest in NOTE F--FAIR VALUE performing, non-performing, and distressed debt and equity investments both domestically and internationally. Based onThis the class life includes of the private equity funds aswhich estimated Private Equity Funds – Distressed: two private equity funds invest by in management,non-performing, one of the fundsand with a NAV ofdebt $3,637,971 and $1,941,584 at both June domestically 30, 2010 and performing, distressed and equity investments 2009, internationally. respectively, will be fully on liquidated 2012. other equity fund with a NAV $10,175,704 and Based the lifein of the The private funds as of estimated by and $6,641,583one at June 2010 with and 2009, respectively, is and expected to terminate management, of the30,funds a NAV of $3,637,971 $1,941,584 at June in 30,December 2010 and 2013 but may be extended for liquidated up to two in additional years a majority of the 2009, respectively, will be fully 2012. The otherwith fundconsent with a of NAV of $10,175,704 limited partners. These30, investments do not allow for voluntary redemptions unfunded and $6,641,583 at June 2010 and 2009, respectively, is expected to terminateand in December commitments approximately at June 30, 2010.with consent of a majority of the 2013 but may total be extended for up$2,152,000 to two additional years limited partners. These investments do not allow for voluntary redemptions and unfunded Private Equity Funds – Hard Assets: This category consists of four limited partnerships which commitments total approximately $2,152,000 at June 30, 2010. invest in real estate, timberlands, real estate-related assets, infrastructure and related assets including equity related investments. investments nolimited provision for redemption; Private Equity Funds – Hard Assets: ThisThese category consists have of four partnerships which however, based on the private equity as estimatedassets, by management all four funds will be invest in real estate, timberlands, reallife estate-related infrastructure and related assets fully liquidated between 2011 and 2014. Unfunded commitments related to this class totaled including equity related investments. These investments have no provision for redemption; $9,456,000based at Juneon30, 2010. however, the private equity life as estimated by management all four funds will be fully liquidated between 2011 and 2014. Unfunded commitments related to this class totaled Private Equity Funds – International Equity: This category consists of two funds of which one is $9,456,000 at June 30, 2010. related to a master/feeder fund structure which invests substantially all of its assets in primaryEquity offerings of –limited partnership in private equity focused on theone AsiaPrivate Funds International Equity:interests This category consists offunds two funds of which is Pacific region and the other fund focuses on which equity,invests equity-related and debt in the related to a master/feeder structure substantially all securities of its assets in republicsofferings once forming part partnership of the Sovietinterests Union and other countries in Eastern The primary of limited in private equity funds focusedEurope. on the Asiafirst fund, withand a NAV of $3,347,139 and $2,353,936 at equity-related June 30, 2010 and Pacific region the other fund focuses on equity, and2009, debt respectively, securities in has the no provision redemption; management’s estimate of the life of The the republics oncefor forming part of however, the Sovietbased Unionon and other countries in Eastern Europe. private equity is $3,347,139 expected to be$2,353,936 fully liquidated in 2012. This fund has unfunded first fund, with fund, a NAVit of and at June 30, 2010 and 2009, respectively, has commitments totaling $700,000however, at June 30, 2010.onThe second fundestimate has a NAV of life $2,645,925 no provision for redemption; based management’s of the of the and $1,859,345 at June 2010 and respectively, the Foundation has unfunded provided private equity fund, it is30,expected to 2009, be fully liquidated and in 2012. This fund has written notice of its intent to liquidate the fund and is expecting redemption in one-third commitments totaling $700,000 at June 30, 2010. The second fund has a NAV of $2,645,925 annual increments beginning December 31, 2010. and $1,859,345 at June 30, 2010 and 2009, respectively, and the Foundation has provided written notice of its intent to liquidate the fund and is expecting redemption in one-third Private Equity Funds – Secondary Market and Venture: This category is made up of three limited annual increments beginning December 31, 2010. partnerships which invest in existing limited partnership interests, high growth companies in the lower middle across a variety of industry companies withlimited above Private Equity Fundsmarkets – Secondary Market and Venture: This sectors, categoryand is made up of three average equity returns in in the small limited capitalization sector.interests, Two ofhigh thegrowth partnerships with in a partnerships which invest existing partnership companies combined of markets $8,960,647 and $7,451,422 at industry June 30, 2010 andand 2009,companies respectively, have no the lower NAV middle across a variety of sectors, with above provisionequity for redemption; however, based on the private as estimated average returns in the small capitalization sector. Twoequity of thelife partnerships withby a management, expected to liquidated between 2011 2014. The remaining combined NAVare of $8,960,647 andbe$7,451,422 at June 30, 2010 andand 2009, respectively, have no partnershipfor interest may be however, redeemed based at the end fiscal equity quarter life withas30estimated days written provision redemption; on of theany private by notice. Unfunded to this class totaled2011 $4,660,000 at June 30, management, are commitments expected to related be liquidated between and 2014. The2010. remaining partnership interest may be redeemed at the end of any fiscal quarter with 30 days written notice. Unfunded commitments related to this class totaled $4,660,000 at June 30, 2010. 33 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE F--FAIR VALUE MEASUREMENTS--Continued Private Equity FundsMEASUREMENTS--Continued – Software and Financial Services: This category consists of two limited NOTE F--FAIR VALUE partnerships which invest primarily in the software and services industries with potential for high quality improvements, and long-term capitalconsists appreciation. is Private Equityrevenue, Funds –operational Software and Financial Services: This category of two There limited no provisionwhich for redemption; however, on and the services private equity life with as estimated by partnerships invest primarily in thebased software industries potential for management, are expected to be liquidated between and 2014. Unfunded commitments high quality revenue, operational improvements, and2013 long-term capital appreciation. There is related to this class total approximately $22,988,000 Juneprivate 30, 2010. no provision for redemption; however, based onatthe equity life as estimated by management, are expected to be liquidated between 2013 and 2014. Unfunded commitments related to this class total approximately $22,988,000 at June 30, 2010. NOTE G--PROPERTY AND EQUIPMENT Property and equipment consist of the following: NOTE G--PROPERTY AND EQUIPMENT June 30
Property and equipment consist of the following: Useful Life Land Buildings and leasehold improvements Land Equipmentand leasehold Buildings improvements Equipment Less: Accumulated depreciation
2010
2009
N/A Useful Life
$
June 30 955,110 $ 2010
955,110 2009
10-20 years N/A 3-10 years 10-20 years 3-10 years
$
7,296,319 955,110 3,004,462 7,296,319 11,255,891 3,004,462 3,815,415 11,255,891 7,440,476 3,815,415
$
7,260,048 955,110 3,228,702 7,260,048 11,443,860 3,228,702 3,419,834 11,443,860 8,024,026 3,419,834
7,440,476
$
Net property and equipment Less: Accumulated depreciation
$
Net property and equipment NOTE H--SPLIT-INTEREST AGREEMENTS
$
$
8,024,026
Assets H--SPLIT-INTEREST recorded under split-interest agreements administered by the Foundation are recognized NOTE AGREEMENTS in the Foundation’s consolidated financial statements as follows: Assets recorded under split-interest agreements administered by the Foundation are recognized June 30 in the Foundation’s consolidated financial statements as follows: 2010 2009 June 30 Investments, interest and other receivables $ 15,664,279 $ 14,465,939 2010 2009 292,004 Other property investments 1,701,709 Investments, interest and other receivables Total assets held under split-interest agreements Other property investments Obligations under split-interest agreements Total assets held under split-interest agreements Obligations under split-interest agreements
34 34
$ $ $ $
15,664,279 17,365,988 1,701,709 9,908,958 17,365,988
$ $ $ $
14,465,939 14,757,943 292,004 10,284,003 14,757,943
$
9,908,958
$
10,284,003
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE H--SPLIT-INTEREST AGREEMENTS--Continued Assets H--SPLIT-INTEREST received under theseAGREEMENTS--Continued agreements are recorded at fair value on the gift date and in the NOTE appropriate net asset category. Related contributions are recognized as contribution revenue and are equal to the under presentthese valueagreements of the future received over Assets received are benefits recordedtoatbefair value by on the the Foundation gift date and in the term of the agreements. Contribution recognized under these split-interestrevenue agreements appropriate net asset category. Relatedrevenue contributions are recognized as contribution and for equal the years June 30,of2010 and 2009 wastoapproximately and $178,200, are to theended present value the future benefits be received by$1,518,000 the Foundation over the respectively. Liabilities have been established for these split-interest which the term of the agreements. Contribution revenue recognized under theseagreements split-interestinagreements Foundation is the trustee for2010 which Foundation is obligated $1,518,000 to an annuitant under a for the years ended Juneor30, andthe2009 was approximately and $178,200, charitable gift annuity. These liabilities totaled approximately $9,909,000 and $10,284,000 at June respectively. Liabilities have been established for these split-interest agreements in which the 30, 2010 and is 2009, of these agreements, in the value of thea Foundation the respectively. trustee or forDuring whichthe theterm Foundation is obligatedchanges to an annuitant under split-interest are recognized in theapproximately consolidated $9,909,000 statementsand of activities based on charitable giftagreements annuity. These liabilities totaled $10,284,000 at June accretion of the discounted amount of the reevaluations of the 30, 2010 and 2009, respectively. During thecontribution, term of theseand agreements, changes in expected the value future of the benefits (payments) to be are received (paid) by on changes in split-interest agreements recognized in the Foundation consolidated(beneficiaries), statements ofbased activities based on life expectancy and other assumptions. Discount rates ranging from 2.3% to 10.2% as determined accretion of the discounted amount of the contribution, and reevaluations of the expected future on the contribution used(paid) in these Split interest agreements forchanges which the benefits (payments) date to bewere received bycalculations. the Foundation (beneficiaries), based on in Foundation is the trustee the charitable beneficiary is revocable included in as thedetermined assets and life expectancy and other but assumptions. Discount rates ranging fromare 2.3% to 10.2% liabilities above. Thedate liability these agreements is equal to the fair valuefor of the assets. on the contribution werefor used inrevocable these calculations. Split interest agreements which the Foundation is the trustee but the charitable beneficiary is revocable are included in the assets and liabilities above. The liability for these revocable agreements is equal to the fair value of the assets. NOTE I--OTHER PROPERTY INVESTMENTS Other property investments consist of the following: NOTE I--OTHER PROPERTY INVESTMENTS June 30
Other property investments consist of the following: Donated land and buildings Other real estate investments Donated land Property and buildings Total Other Investments Other real estate investments
$
Total Other Property Investments
2010
2009
June 30 5,444,101 $ 2010 799,421
4,415,675 2009 801,906 4,415,675 5,217,581 801,906
$
5,444,101 6,243,522 799,421
$
$
6,243,522
$
5,217,581
NOTE J--BENEFICIAL INTERESTS IN TRUSTS Beneficial interests in trusts consist of following: NOTE J--BENEFICIAL INTERESTS INthe TRUSTS June 30
Beneficial interests in trusts consist of the following: Perpetual trusts Charitable remainder trusts Perpetual trusts Interests in Trusts Total Beneficial Charitable remainder trusts
$
Total Beneficial Interests in Trusts
$
$
35 35
2010
2009
June 30 7,102,631 $ 2010 1,007,428 7,102,631 8,110,059 $ 1,007,428
7,368,803 2009 952,846 7,368,803 8,321,649 952,846
8,110,059
$
8,321,649
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE J--BENEFICIAL INTERESTS IN TRUSTS--Continued Perpetual trusts and related changes in fair value are classified as permanently restricted. NOTE J--BENEFICIAL INTERESTS IN TRUSTS--Continued Distributions from perpetual trusts are recognized as interest and dividend income in the statement of activitiestrusts and are either unrestricted or are temporarily in accordance with Perpetual andclassified related as changes in fair value classifiedrestricted as permanently restricted. any donor restrictions, except for distributions received andand fully expended in the same period Distributions from perpetual trusts are recognized as interest dividend income in the statement which are classified unrestricted. Theunrestricted Foundation’s interest in remainder trustswith and of activities and are as classified as either or beneficial temporarily restricted in accordance related changes in fair value as temporarily restricted unless the restriction any donor restrictions, exceptare forclassified distributions received and fully expended in donor the same period requires gift to be in perpetuity in which casebeneficial it is classified as in permanently restricted. which arethe classified as held unrestricted. The Foundation’s interest remainder trusts and Beneficial interests in remainder trusts, without donor imposed restrictions, are reclassified to related changes in fair value are classified as temporarily restricted unless the donor restriction unrestricted uponintermination trust. interests in trusts are restricted. carried at requires the net gift assets to be held perpetuity of in the which caseBeneficial it is classified as permanently fair value which is based on the present of the estimated expected future cash inflows using Beneficial interests in remainder trusts,value without donor imposed restrictions, are reclassified to discount rates risks involved. Discount rates range fromin5.2% toare 8.4% in 2010 unrestricted netwhich assetsreflect upon the termination of the trust. Beneficial interests trusts carried at and value 2009.which Contribution revenue related to ofthese agreements totaledfuture $0 and fair is based on the present value the estimated expected cashapproximately inflows using $1,137,000rates in 2010 andreflect 2009, respectively. discount which the risks involved. Discount rates range from 5.2% to 8.4% in 2010 and 2009. Contribution revenue related to these agreements totaled $0 and approximately $1,137,000 in 2010 and 2009, respectively. NOTE K--TRANSACTIONS TO SUPPORT UNIVERSITY ACTIVITIES The Foundation and the University have entered into a security agreement in conjunction with NOTE K--TRANSACTIONS TO SUPPORT UNIVERSITY ACTIVITIES the University’s issuance of its Oklahoma State University Athletic Facilities Revenue Bonds, Series 1998 (the “Bonds”). The Foundation has agreed security agreement issued in The Foundation and the University have entered intoto a extend securitythe agreement in conjunction with connection with issuance the University’s Athletic Facilities Revenue Athletic Bonds Series 1998Revenue to the Athletic the University’s of its Oklahoma State University Facilities Bonds, Facilities Revenue Bonds, The Series 2003 in the ofextend $19,385,000 issued agreement in connection with Series 1998 (the “Bonds”). Foundation hasamount agreed to the security issued in Phase I of the Football Stadium Renovation Project. Revenue Certain contributions the Foundation for connection with the University’s Athletic Facilities Bonds Seriesto1998 to the Athletic athletic facilities beenSeries pledged, otherofUniversity revenues and dedicatedwith use Facilities Revenuehave Bonds, 2003along in thewith amount $19,385,000 issued in connection taxes, for payment the Bonds.Project. Requests by the University for support to service Phase as I ofsecurity the Football StadiumofRenovation Certain contributions to the Foundation for principalfacilities and interest the pledged, Bonds arealong subject to the availability of sufficient contributions athletic haveon been with other University revenuesdonor and dedicated use restricted for this for purpose. Excess funds not Requests needed for service mayforbesupport utilizedto forservice other taxes, as security payment of the Bonds. bydebt the University intercollegiate athletic on programs as determined bythe theavailability Foundation.of sufficient donor contributions principal and interest the Bonds are subject to restricted for this purpose. Excess funds not needed for debt service may be utilized for other OSUF Okmulgee Student Housing, LLC (“Okmulgee”) and OSUF Phase III Student Housing, intercollegiate athletic programs as determined by the Foundation. LLC (“Phase III”), collectively referred to as the “LLCs”, are entities created by the Foundation to facilitate financingStudent and construction a student apartment project the University’s in OSUF Okmulgee Housing, of LLC (“Okmulgee”) and OSUFatPhase III Studentcampus Housing, Okmulgee, and University housing are andentities diningcreated facilities on the Stillwater, LLC (“PhaseOklahoma III”), collectively referred tostudent as the “LLCs”, by the Foundation to Oklahoma campus.and Theconstruction LLCs have of entered into apartment agreementsproject with the University to manage and facilitate financing a student at the University’s campus in maintain theOklahoma Okmulgeeand and University Phase III entities. Thehousing LLCs have entered into ground with Okmulgee, student andalso dining facilities on the leases Stillwater, the University’s Board ofLLCs Regents that effectively allow the University to annually all Oklahoma campus. The have entered into agreements with the University towithdraw manage and excess cash as defined, which the operation the financed student housing maintain theflow, Okmulgee and Phase IIIresults entities.from The LLCs have alsoofentered into ground leases with andUniversity’s dining facilities. the Board of Regents that effectively allow the University to annually withdraw all excess cash flow, as defined, which results from the operation of the financed student housing and dining facilities. 36 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE K--TRANSACTIONS TO SUPPORT UNIVERSITY ACTIVITIES--Continued The ground leases also provide for the transfer of ownership of the financed facilities to the NOTE K--TRANSACTIONS TO SUPPORT UNIVERSITY ACTIVITIES--Continued University upon final payment of the related bonds. The Foundation believes its economic interest in theleases LLCs also is notprovide material. addition, theofFoundation responsibility The ground forInthe transfer ownershiphas of no thelegal financed facilities for to the obligations of the LLCs. Accordingly, therelated Foundation consolidatebelieves the operations of the University upon final payment of the bonds.does Thenot Foundation its economic LLCs with the LLCs operations the Foundation for financial reporting In August 2009, interest in the is not of material. In addition, the Foundation haspurposes. no legal responsibility for the University’sofBoard of Regents issues the bonds to redeem thenot Phase III debtthe obligations to obligations the LLCs. Accordingly, Foundation does consolidate operationsand of the acquire thethe student housing dining facilities on the Stillwater LLCs with operations of and the Foundation for financial reportingcampus. purposes. In August 2009, the University’s Board of Regents issues bonds to redeem the Phase III debt obligations and to The Foundation entered intoand an dining agreement withonthe facilitate the sale of alcoholic acquire the student housing facilities theUniversity Stillwater to campus. beverages at the University-owned Atherton Hotel, which is operated by the University’s School of Hotel and Restaurant The with agreement utilizes a limited liability named The Foundation enteredAdministration. into an agreement the University to facilitate the company sale of alcoholic Ranchers’ LLC (“Ranchers Dining”), its subsidiary Cowboy Dining, LLC to accomplish beverages Dining, at the University-owned Athertonand Hotel, which is operated by the University’s School these transactions. The Foundation is the sole member of Ranchers Dining. Ranchers Dining has of Hotel and Restaurant Administration. The agreement utilizes a limited liability company named entered into agreements with the University, anditsthe Foundation believes that LLC as a result of these Ranchers’ Dining, LLC (“Ranchers Dining”), and subsidiary Cowboy Dining, to accomplish agreements, the Foundation will not have a significant economic interest in Ranchers Dining. these transactions. The Foundation is the sole member of Ranchers Dining. Ranchers Dining The has Foundation has no legal thethe obligations of believes Ranchersthat Dining. Accordingly, entered into also agreements with responsibility the University,for and Foundation as a result of these Ranchers Dining is not consolidated Foundation for financial reporting purposes. agreements, the Foundation will not with havethe a significant economic interest in Ranchers Dining. The Foundation also has no legal responsibility for the obligations of Ranchers Dining. Accordingly, Ranchers Dining is not consolidated with the Foundation for financial reporting purposes. NOTE L--EMPLOYEE BENEFIT PLAN The Foundation has a BENEFIT defined contribution benefit plan covering all full-time employees whose NOTE L--EMPLOYEE PLAN compensation meets eligibility requirements under the plan. The Foundation contributes between 6% 11.5% ofhas eligible employees’ salariesbenefit based plan on length of service to the employees Foundation.whose The Theand Foundation a defined contribution covering all full-time Foundation made contributions to the plan of approximately $484,000 and $457,000 during 2010 compensation meets eligibility requirements under the plan. The Foundation contributes between andand 2009,11.5% respectively. 6% of eligible employees’ salaries based on length of service to the Foundation. The Foundation made contributions to the plan of approximately $484,000 and $457,000 during 2010 and 2009, respectively. NOTE M--OTHER TRANSACTIONS WITH AFFILIATES The Foundation hasTRANSACTIONS a contract with the WITH University to coordinate and manage development programs NOTE M--OTHER AFFILIATES for the benefit of the University. Revenue for services rendered under this contract was approximately $1,437,000 and $1,436,000, respectively, for the to years ended and Junemanage 30, 2010 and 2009, programs of which The Foundation has a contract with the University coordinate development approximately and $748,000 at for June 30, 2010 and 2009, respectively, was still outstanding the benefit of$738,000 the University. Revenue services rendered under this contract was approximately for and is included in interest and other receivables in the consolidated statements of financial $1,437,000 and $1,436,000, respectively, for the years ended June 30, 2010 and 2009, position. of which approximately $738,000 and $748,000 at June 30, 2010 and 2009, respectively, was still outstanding and is included in interest and other receivables in the consolidated statements of financial position.
37 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE M--OTHER TRANSACTIONS WITH AFFILIATES--Continued The Foundation hasTRANSACTIONS the option to purchase the University up to $230,000 of land adjacent to NOTE M--OTHER WITHfrom AFFILIATES--Continued the golf course and real estate project in accordance with contract terms. This option expires in 2012Foundation and is assignable tooption the Foundation’s subsidiaries. The has the to purchaseformer from the University up to $230,000 of land adjacent to the golf course and real estate project in accordance with contract terms. This option expires in At 2009, the to Foundation had a note receivable from one fund and a note payable to 2012June and30, is assignable the Foundation’s former subsidiaries. another fund in the amount of $26,162,000 related to an agreement with the University to provide interim financing. Since the had note areceivable and note payable were between internal funds At Junebridge 30, 2009, the Foundation note receivable from one fund and a note payable to at the Foundation, financial statementsrelated did nottoreflect the assets, liabilities, or interest income another fund in thethe amount of $26,162,000 an agreement with the University to provide and interest expense in theSince consolidated financial statements of the Foundation. Oninternal April 1,funds 2010, interim bridge financing. the note receivable and note payable were between Cowboy Athletics the made a contribution thenot Foundation totalingliabilities, $5,162,000 representing at the Foundation, financial statementstodid reflect the assets, or interest incomea principal payment oninthe bridge financial financing.statements On May 31, 2010, Cowboy Athletics, and interest expense theinterim consolidated of the Foundation. On AprilCowboy 1, 2010, Athletic Facilities, Cowboy Golf,toLLC into atotaling promissory note agreement with Cowboy Athletics LLC, madeand a contribution the entered Foundation $5,162,000 representing a the Foundation whereby these entities assumed liability for repayment of the funds previously principal payment on the interim bridge financing. On May 31, 2010, Cowboy Athletics, Cowboy advancedFacilities, under the agreement with the University. Assumption of this liability by the entities Athletic LLC, and Cowboy Golf, LLC entered into a promissory note agreement with resulted in recognition of these contribution the amount of $21,000,000. of the the Foundation whereby entities revenue assumedinliability for repayment of theRepayment funds previously note is collateralized a guaranty from third party and certain common andby real property. advanced under the by agreement with thea University. Assumption of thisstock liability the entities All principal sums outstanding under the note bear interest at an rate equal to the greater resulted in recognition of contribution revenue in the amount of annual $21,000,000. Repayment of the of (1) seven and one-tenth percent (7.1%) or (2) the Wall Street Journal Prime Rate as of the first note is collateralized by a guaranty from a third party and certain common stock and real property. business day sums of each calendar quarter plusnote twobear percent (2%). Interest is rate paidequal annually, the All principal outstanding under the interest at an annual to thewith greater first due on May 31, 2011.orOutstanding on the note Rate was $21,000,000 at of (1)annual seven payment and one-tenth percent (7.1%) (2) the Wall principal Street Journal Prime as of the first June 30, 2010 is payable in five annual $4,200,000 beginning May 31, 2011. business day and of each calendar quarter plusinstallments two percentof(2%). Interest is paid annually, with The the Foundation earned interest of 2011. approximately $75,000 in 2010 is included in interest first annual payment due onincome May 31, Outstanding principal onwhich the note was $21,000,000 at and other receivables in the statements of financial position at June 30, 2010. June 30, 2010 and is payable in five annual installments of $4,200,000 beginning May 31, 2011. The Foundation earned interest income of approximately $75,000 in 2010 which is included in interest In December 2008, the Foundation into position an agreement with Cowboy Athletics, Inc., and other receivables in the statementsentered of financial at June 30, 2010. Cowboy Athletic Facilities, L.L.C., and Cowboy Golf, L.L.C. to provide a loan in the maximum amount of $38,000,000 be used primarily of the End Zone of Boone In December 2008, thetoFoundation entered for intoconstruction an agreement withWest Cowboy Athletics, Inc., Pickens Stadium. Repayment of the is collateralized current and future construction Cowboy Athletic Facilities, L.L.C., andloan Cowboy Golf, L.L.C. by to provide a loan in the maximum pledges received by theto Foundation for the West Zone, funds owned the Zone borrowers and amount of $38,000,000 be used primarily for End construction of the WestbyEnd of Boone held by the Foundation for the of benefit of theis West End Zoneby (except those under other Pickens Stadium. Repayment the loan collateralized current andpledged future construction agreements), certain common stock, for future lease End and/or sales proceeds End Zone pledges received by the Foundation the West Zone, funds ownedofbythe theWest borrowers and suites, and certain real property. The interest rate on the agreement is seven and one-tenth held by the Foundation for the benefit of the West End Zone (except those pledged under other percent (7.1%)certain per annum. At stock, June 30, 2009,lease the outstanding agreements), common future and/or salesprincipal proceedsbalance of the was West$28,807,323. End Zone During 2010, the Foundation made additional distributions to the entities in the amount of suites, and certain real property. The interest rate on the agreement is seven and one-tenth $11,450,717. the 30, entire note to the Foundation through a transfer percent (7.1%)The perentities annum.repaid At June 2009, thereceivable outstanding principal balance was $28,807,323. from another fund held the benefitdistributions of athletics intothe $6,000,000 (which During 2010, Foundation the Foundation madeforadditional theamount entitiesofin the amount of resulted in recognition of an expense in the amount of $6,000,000) and received cash totaling $11,450,717. The entities repaid the entire note receivable to the Foundation through a transfer $34,258,040. Total interest income under the agreement approximately $1,721,000 and from another Foundation fund held for the benefit of athleticswas in the amount of $6,000,000 (which $1,570,000 in 2010 and 2009, respectively. resulted in recognition of an expense in the amount of $6,000,000) and received cash totaling $34,258,040. Total interest income under the agreement was approximately $1,721,000 and $1,570,000 in 2010 and 2009, respectively. 38 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued OKLAHOMA STATE UNIVERSITY FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued June 30, 2010 STATE UNIVERSITY FOUNDATION OKLAHOMA June 30, 2010 NOTE M--OTHER TRANSACTIONS WITH AFFILIATES--Continued In recognition that TRANSACTIONS the Foundation’s status a separate not-for-profit corporation offers certain NOTE M--OTHER WITHas AFFILIATES--Continued advantages both to donors and to the University with regard to the contribution, management, and disbursement funds, the Foundation and thenot-for-profit Board of Regents of Oklahoma State In recognition of thatprivate the Foundation’s status as a separate corporation offers certain University and the Mechanical adhere to a contribution, joint resolution. This agreement both toAgricultural donors and and to the UniversityColleges with regard to the management, and advantages states that to the fullest extent permitted by law, all gifts and donations to the University be managed, disbursement of private funds, the Foundation and the Board of Regents of Oklahoma State and distributed by and through the Foundation andresolution. that all private for the invested, reinvested University and the Agricultural and Mechanical Colleges adhere to a joint Thisgifts agreement benefit of the University are topermitted be made by to the thantotothe theUniversity Universitybeormanaged, Board of states that to the fullest extent law,Foundation, all gifts and rather donations Regents. agreement recognizes existence of the Foundation asall theprivate entity responsible and further distributed by andthe through the Foundation and that gifts for the invested,This reinvested for the ofcoordination and development program and benefit the University aremanagement to be made to of theaFoundation, rather than tofor the non-athletic University orgifts Board of recognizes Cowboy Athletics, Inc. as the entity responsible for the coordination and management Regents. This agreement further recognizes the existence of the Foundation as the entity responsible of a the development program for athletic gifts. resolution provides received for coordination and management of aThe development program that for contributions non-athletic gifts and by the Foundation the benefit athletics mayresponsible be transferred to Cowboy Athletics, by donor recognizes Cowboyfor Athletics, Inc.ofas the entity for the coordination and Inc. management direction or at the request of the President for Athletic Programs and Director of Intercollegiate of a development program for Vice athletic gifts. The resolution provides that contributions received Athletics (VP for Athletic Programs). The agreement also states that upon transferInc. to by Cowboy by the Foundation for the benefit of athletics may be transferred to Cowboy Athletics, donor Athletics, therequest Foundation has President no furtherfor authority or responsibility for the funds. At the direction orInc., at the of the Vice Athletic Programs and Director of Intercollegiate direction of thefor VPAthletic for Athletic Programs, Foundation funds totaling approximately Athletics (VP Programs). Thethe agreement alsoprovided states that upon transfer to Cowboy $24,468,000 and $18,250,000 in assets held for the benefit of the Athletic Department to Cowboy Athletics, Inc., the Foundation has no further authority or responsibility for the funds. At the Athletics, of Inc. and Programs, 2009, respectively. The distributions are recognized as Cowboy direction theduring VP for2010 Athletic the Foundation provided funds totaling approximately Athletics, Inc. program expense in the held consolidated statements of Athletic activities.Department to Cowboy $24,468,000 and $18,250,000 in assets for the benefit of the Athletics, Inc. during 2010 and 2009, respectively. The distributions are recognized as Cowboy Athletics, Inc. program expense in the consolidated statements of activities. NOTE N--COMMITMENTS AND CONTINGENCIES In MayN--COMMITMENTS 2003, the Board of Trustees of the Foundation agreed to provide funds to the University to NOTE AND CONTINGENCIES support the new President’s Opportunity Scholarship Program (“POST”). The total commitment for the 2009-2010 schoolofyear and subsequent years in the aggregate is funds $242,250 which has been In May 2003, the Board Trustees of the Foundation agreed to provide to the University to reflected as a liability in the OSU support payable in the Foundation’s consolidated statement of support the new President’s Opportunity Scholarship Program (“POST”). The total commitment financial position at June year 30, 2010 2009. for the 2009-2010 school andand subsequent years in the aggregate is $242,250 which has been reflected as a liability in the OSU support payable in the Foundation’s consolidated statement of In Augustposition 2009, the into an unsecured revolving line of credit agreement with financial at Foundation June 30, 2010entered and 2009. a local financial institution. The maximum amount available under the agreement is $8,000,000 and all accrued interest and unpaid principal due and revolving payable on August 19,agreement 2010. Interest In August 2009, the Foundation entered into an is unsecured line of credit with at the 1 institution. month LIBOR rate plus 1.95% per annum with a 2.25% interest rateis floor. The aaccrues local financial The maximum amount available under the agreement $8,000,000 balance on the line of credit $0 onprincipal June 30, 2010. and all accrued interest andwas unpaid is due and payable on August 19, 2010. Interest accrues at the 1 month LIBOR rate plus 1.95% per annum with a 2.25% interest rate floor. The balance on the line of credit was $0 on June 30, 2010. NOTE O--SUBSEQUENT EVENTS At October 14, 2010, the date the financial statements were available to be issued the Foundation NOTE O--SUBSEQUENT EVENTS was in the process of renewing its revolving line of credit (see Note N). At October 14, 2010, the date the financial statements were available to be issued the Foundation was in the process of renewing its revolving line of credit (see Note N). 39 39
SUPPLE
INTERC OKLA
Year En
REVENU Contr Ca Sec La Pro Intere Net in Interc Other
EXPENS Progr Bu Sch Ge Fac Tra Dis Int Co Bu
Net Incre
NET ASS
NET ASS
See note
$ 5,087,465 9,792 6,464 24,325 24,601 120,000 5,272,647
SES ram expenses: udget support holarship eneral administration cilities, equipment and other purchases avel stribution of land, goods and services terest owboy Athletics, Inc. uilding and equipment maintenance TOTAL EXPENSES
1,000,000 150,960 4,493 25,726 6,464 2,000,000 41,731 3,229,374
ease (decrease)
SETS AT BEGINNING OF YEAR
SETS AT END OF YEAR
es to consolidated financial statements.
$ 5,087,465 9,792 6,464 24,325 24,601 120,000 5,272,647
Football
$ 4,664,699 $ 34,006 65,146 50,000 50,132 34,734 115,000 320 5,014,037
144,441 1,500 2,020 3,714 1,998 153,673
2,043,273 144,441 1,500 2,020 3,714 1,998 153,673
1,090,000 3,200 170,034 3,820 23,740 65,146 4,000,000 18,987 5,374,927
(360,890)
3,195,101
5,705,094
$ 5,238,374
$ 5,344,204
$ 59,000 2,275 33,846 13,345 2,020 15,898 126,384
$ 4,664,699 $ 34,006 65,146 50,000 50,132 34,734 115,000 320 5,014,037
EXPENSES Program expenses: Budget support Scholarship General administration Facilities, equipment and other purchases Travel Distribution of land, goods and services Interest Cowboy Athletics, Inc. Building and equipment maintenance TOTAL EXPENSES
2,565,482
357,641
$ 2,650,750
40
773,151
$
723,718
222,033 11,305 1,385,488 17,191,091 2,054 18,811,971
(49,433)
21,047,938
13,733,497
$ 34,781,435
723,718
$ 2,650,750
Nonprogram Specific
$
40
357,641
$
773,151
2,565,482 Athletic Facilities
330,352
$ 16,170,825 629,583 21,028,500 1,386,450 638,551 6,000 39,859,909
See notes to consolidated financial statements.
NET ASSETS AT END OF YEAR
(49,433)
85,268
Other Sports Men’s Women’s
NET ASSETS AT BEGINNING OF YEAR
27,289
$
Net Increase (decrease)
39,000 32,362 4,829 10,765 329,429 190,000 13,587 619,972
39,500 93,186 4,579 13,882 89,915 1,087,000 10,498 1,338,560
Basketball Men’s Women’s
$
330,352 $ 5,344,204
85,268 $ 5,238,374
27,289 5,705,094
39,000 32,362 4,829 10,765 329,429 190,000 13,587 619,972 3,195,101
39,500 93,186 4,579 13,882 89,915 1,087,000 10,498 1,338,560 (360,890)
59,000 2,275 33,846 13,345 2,020 15,898 126,384 2,043,273
177,281 329,429 12,319 46,510 5,000 570,539
1,090,000 3,200 170,034 3,820 23,740 65,146 4,000,000 18,987 5,374,927
862,395 $ 28,241 89,914 30,834 58,478 353,966 1,423,828
1,000,000 150,960 4,493 25,726 6,464 2,000,000 41,731 3,229,374
177,281 329,429 12,319 46,510 5,000 570,539
Football 862,395 $ 28,241 89,914 30,834 58,478 353,966 1,423,828
$
COLLEGIATE ATHLETIC ACCOUNTS OF THE AHOMA STATE UNIVERSITY FOUNDATION
Other Sports Men’s Women’s
nded June 30, 2010
REVENUES Contributions Cash Securities Land, goods, services, and other Promises to give Interest and dividends Net investment gain Intercollegiate athletic transfers Other revenue TOTAL REVENUES
Year Ended June 30, 2010
INTERCOLLEGIATE ATHLETIC ACCOUNTS OF THE OKLAHOMA STATE UNIVERSITY FOUNDATION
Basketball Men’s Women’s
UES ributions ash curities and, goods, services, and other omises to give est and dividends nvestment gain collegiate athletic transfers r revenue TOTAL REVENUES
SUPPLEMENTAL COMBINING SCHEDULE OF ACTIVITIES
EMENTAL COMBINING SCHEDULE OF ACTIVITIES
To
1,434,197 $ 28,5 18,651 7 221,353 21,7 2,329,128 3,7 117,733 2 313,674 1,1 (617,154) ( 4,953 3,822,535 56,1
41,332 4,000 980,920 4,507 118,574 221,353 13,738 1,384,424
2 7 1,3 24,4 1 30,8
2,438,111
25,2
12,685,846
38,9
$ 15,123,957
$ 64,2
2,2 1,6
$ 34,781,435
13,733,497
21,047,938
222,033 11,305 1,385,488 17,191,091 2,054 18,811,971
$ 16,170,825 629,583 21,028,500 1,386,450 638,551 6,000 39,859,909
Athletic Facilities
Total
12,685,846
2,438,111
41,332 4,000 980,920 4,507 118,574 221,353 13,738 1,384,424
$ 64,220,079
38,988,523
25,231,556
2,268,832 9,475 1,683,341 33,533 206,032 714,327 1,385,488 24,468,091 116,493 30,885,612
1,434,197 $ 28,541,303 18,651 721,773 221,353 21,742,826 2,329,128 3,765,578 117,733 239,057 313,674 1,118,546 (617,154) (17,188) 4,953 5,273 3,822,535 56,117,168
$ 15,123,957
$
Nonprogram Specific
Branding Success is a $1 billion campaign to unleash the transformative power of people and ideas at OSU. The campaign will secure $500 million in student scholarship support and a $500 million investment in faculty, facilities and programs. At the heart of this initiative is empowering Oklahoma State to pursue the vision of becoming a premier land-grant university. This campaign is the work of alumni and friends who share our intrepid spirit. They are undaunted by the ambitions of a campaign unlike anything in Oklahoma’s history. They are determined to ignite the potential of this great university. By joining them, you seize an extraordinary opportunity to change this university, this state and this nation. We know what we need to do. With your help, we will succeed.
OKLAHOMA STATE UNIVERSITY FOUNDATION 400 South Monroe / Stillwater, OK 74074 / Ph. 800.622.4678 Fax 405.385.5102 / info@OSUgiving.com / OSUgiving.com Uniting Donor and University Passions and Priorities to Achieve Excellence