FS FY1920 by Riley Children's Foundation

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Independent Auditor’s Report and Consolidated Financial Statements June 30, 2020 and 2019

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment June 30, 2020 and 2019

Contents Independent Auditor’s Report............................................................................................... 1 Consolidated Financial Statements Statements of Financial Position ........................................................................................................ 3 Statements of Activities ...................................................................................................................... 4 Statements of Functional Expenses .................................................................................................... 6 Statements of Cash Flows .................................................................................................................. 8 Notes to Financial Statements ............................................................................................................ 9

Independent Auditor’s Report

Board of Governors James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Indianapolis, Indiana

We have audited the accompanying consolidated financial statements of James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment (Endowment), which comprise the consolidated statements of financial position as of June 30, 2020 and 2019, and the related consolidated statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Endowment as of June 30, 2020 and 2019, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Indianapolis, Indiana October 20, 2020

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Consolidated Statements of Financial Position June 30, 2020 and 2019

2020

2019

Assets Cash and cash equivalents Other assets Contributions receivable, net of allowance Cash surrender value of life insurance Investments Beneficial interest in charitable lead trusts Beneficial interest in perpetual trusts Property and equipment Total assets

7,587,405 819,660 8,504,199 1,070,822 332,169,158 9,866,425 26,154,544 1,371,750

9,478,085 650,701 8,656,317 1,023,810 342,845,780 9,612,270 26,684,633 1,343,964

387,543,963

400,295,560

251,682 915,867 27,807,856 185,261 1,176,900 6,106,702 36,444,268

255,347 1,160,643 22,957,295 165,859 6,109,669 30,648,813

Liabilities Accounts payable Other liabilities Grants payable Annuity obligations Paycheck protection program loan Investments held on behalf of Indiana University Total liabilities

Net Assets Without donor restrictions Undesignated Board-designated Total without donor restrictions net assets With donor restrictions Total net assets Total liabilities and net assets

See Notes to Consolidated Financial Statements

108,979,127 63,087,127 172,066,254 179,033,441 351,099,695 $

387,543,963

109,400,386 67,206,797 176,607,183 193,039,564 369,646,747 $

400,295,560

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Consolidated Statements of Activities Years Ended June 30, 2020 and 2019

2020 With Donor Restrictions

Without Donor Restrictions Revenues, Gains and Other Support Gift income Contributions Gifts in-kind Total gifts Other revenue and support Investment income Realized and unrealized gains (losses) on investments Gain (loss) on perpetual trusts Income from trusts Other income

Expenses Program services Grants Research Clinical programs Education Patient and family services Advocacy Buildings and equipment Camp Riley Other Total grants Riley Museum Home Total program services Supporting Services Administration Finance Fundraising Communications Total supporting services Loss on uncollectible contributions receivable Total expenses Change in Net Assets

29,834,722 309,136 30,143,858 227,419 (2,661,141) (696,377) 1,163,440 129,588 28,306,787 28,306,787

11,723,163 11,242,650 2,794,221 3,878,378 3,942,505 23,874 126,852 406,415 34,138,058 482,525 34,620,583

1,512,861 443,790 8,492,500 1,776,489 12,225,640 46,846,223

7,616 7,616

1,512,861 443,790 8,492,500 1,776,489 12,225,640 7,616 46,853,839

176,607,183 $

21,262,044 21,262,044 (135,590) (1,206,380) (696,377) 667,695 46,251 19,937,643 (33,936,150) (13,998,507)

(4,540,929)

Net Assets, Beginning of Year

See Notes to Consolidated Financial Statements

363,009 (1,454,761) 495,745 83,337 8,369,144 33,936,150 42,305,294

Net assets released from restrictions Total revenues, gains and other support

Net Assets, End of Year

8,572,678 309,136 8,881,814

Total

172,066,254

(14,006,123)

(18,547,052)

193,039,564

369,646,747

179,033,441

351,099,695

2019 With Donor Restrictions

Without Donor Restrictions

9,792,713 655,920 10,448,633

938,019 3,047,316 407,957 33,082 14,875,007 29,040,226 43,915,233

20,772,978 41,167 20,814,145

249,443 966,467 251,209 607,061 30,855 22,919,180 (29,040,226) (6,121,046)

30,565,691 697,087 31,262,778 1,187,462 4,013,783 251,209 1,015,018 63,937 37,794,187 37,794,187

11,443,168 8,798,061 3,106,909 3,854,328 987,113 227,464 930,723 336,153 29,683,919 485,429 30,169,348

2,268,432 503,643 8,422,272 2,200,745 13,395,092 1,824 43,566,264

14,123 14,123

2,268,432 503,643 8,422,272 2,200,745 13,395,092 15,947 43,580,387

348,969

(6,135,169)

176,258,214 $

Total

176,607,183

(5,786,200)

199,174,733 $

193,039,564

375,432,947 $

369,646,747

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Consolidated Statement of Functional Expenses Year Ended June 30, 2020

Program Services Riley Museum Grants Home Grants Salaries, taxes and benefits Advertising and promotion Bank fees Central Information Systems Children's Miracle Network Consulting Digital media Direct mail Donor relations Employee engagement Equipment and facility rental Events Insurance Marketing production Memberships and dues Fundraising platform fees Postage Printing services Professional development Professional fees Recruiting Rent Repairs and maintenance Service and support contracts Telephone and internet Temporary staffing Travel and related expenses Other Utilities Depreciation and amortization

Supporting Services Finance Fundraising

Administration

Communications

Total

34,138,058 -

335,777 5,984 1,300 826 1,186 22,056 1,773 268 5,073 23,984 2,703 1,848 11,900 183 4,005 12,659 51,000

960,639 7,756 59,034 16 40,778 9,503 98,187 7,631 1,235 125 11,192 153,552 5,772 35,701 11,740 26,521 6,905 3,304 13,966 46,995 12,309

355,165 401 695 704 1,105 3,676 17,851 3,020 49,545 3,453 1,509 511 6,155

4,607,164 249,911 321,578 863,706 120,724 498,548 106,170 372 100,837 324,759 6,720 52,512 268,649 35,137 67,704 37,580 17,203 178,507 30,198 433,529 34,526 70,843 4,078 61,545

631,982 542,071 55,000 125,622 4,010 33,666 1,003 113,984 325 18,241 77,230 2,893 49,089 8,304 64,499 9,495 7,839 14,311 16,925

34,138,058 6,890,727 548,055 257,667 321,578 863,706 236,058 125,622 498,548 106,186 41,976 114,350 359,611 128,367 113,984 62,936 268,649 55,585 150,132 52,770 174,431 5,772 281,148 77,246 576,797 56,227 15,204 94,340 69,900 12,659 147,934

34,138,058

482,525

1,512,861

443,790

8,492,500

1,776,489

46,846,223

6 See Notes to Consolidated Financial Statements

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Consolidated Statement of Functional Expenses Year Ended June 30, 2019

Supporting Services Finance Fundraising

Administration

Communications

Total

29,683,919 -

321,372 10,207 2,840 768 1,883 24,047 1,478 414 5,359 183 30,740 1,398 2,069 10,950 168 4,486 12,472 54,595

1,411,883 8,472 111,454 24,767 7,999 110,762 1,324 1,965 2,480 46,247 160,679 160,929 79,764 14,112 15,854 6,692 19,750 12,810 60,230 10,259

416,916 655 847 767 1,860 18,735 4,615 46,238 4,685 864 279 7,182

4,496,576 96,019 256,865 222,537 874,267 68,000 482,414 100,588 1,335 91,981 303,618 7,679 1,745 54,322 277,579 50,269 99,809 40,267 176,644 43,519 441,260 47,691 119,576 67,712

600,211 811,871 55,935 122,097 117 13,909 41,770 1,047 248,906 650 18,538 118,403 6,442 45,499 11,210 51,086 11,377 13,502 10,734 17,441

29,683,919 7,246,958 918,097 265,337 222,537 874,267 238,229 122,097 482,414 100,705 26,870 113,889 347,271 144,190 250,651 58,621 277,579 71,953 226,051 94,999 160,679 160,929 320,642 104,196 555,836 72,514 30,700 146,920 75,729 12,472 157,189

29,683,919

485,429

2,268,432

503,643

8,422,272

2,200,745

43,564,440

7 See Notes to Consolidated Financial Statements

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Consolidated Statements of Cash Flows Years Ended June 30, 2020 and 2019

2020 Operating Activities Change in net assets Items not requiring (providing) cash Depreciation and amortization Loss on uncollectible contributions receivable Net realized and unrealized (gains) losses on investments Change in value of beneficial interest in charitable lead trusts Change in value of beneficial interest in perpetual trusts Contributions restricted for long-term investment Proceeds from Paycheck Protection Program loan Changes in Prepaid expenses and other assets Contributions receivable Accounts payable and accrued expenses Grants payable Net cash used in operating activities

$ (18,547,052)

Investing Activities Purchase of property and equipment Purchase of investments Proceeds from sales and maturities of investments Net increase in cash surrender value of life insurance Net cash provided by investing activities Financing Activities Contributions restricted for long-term investment Change in value of investment held on behalf of Indiana University Annuity gifts Annuity payments Contribution of perpetual trust Net cash provided by (used in) financing activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year

2019

(5,786,200)

147,934 7,616 2,661,141 (254,155) 363,801 (2,262,883) 1,176,900

157,189 15,947 (4,013,783) (265,706) (251,209) (1,656,432) -

(168,959) 144,502 (248,441) 4,850,561 (12,129,035)

(355,849) (207,876) 315,607 (674,837) (12,723,149)

(175,720) (92,318,031) 100,333,512 (47,012) 7,792,749

(43,203) (91,705,538) 105,307,374 (43,181) 13,515,452

2,262,883

1,656,432

(2,967) 35,638 (16,236) 166,288 2,445,606

(2,049,247) 155,020 (15,057) (252,852)

(1,890,680)

539,451

9,478,085

8,938,634

Cash and Cash Equivalents, End of Year

7,587,405

9,478,085

Supplemental Cash Flows Information Stock gifts Gifts-in-kind

270,357 309,136

650,084 697,087

See Notes to Consolidated Financial Statements

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Note 1:

Nature of Operations and Summary of Significant Accounting Policies

The James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment (Endowment) was organized in 1921 to commemorate the life of Indiana’s poet, James Whitcomb Riley. The Endowment provides support for Riley Hospital for Children and its research programs, Camp Riley and the Riley Museum Home. The Endowment’s primary sources of support and revenue are contributions and investment earnings. The vision of the Endowment is to ensure children have access to exceptional healthcare by funding pediatric research, education and care. The mission is to raise funds statewide and steward Endowment assets for the kids. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Endowment and its wholly owned subsidiary, Riley Children’s Foundation, LLC (established in 2018). Effective April 1, 2018, James Whitcomb Riley Memorial Association, Inc. changed its d/b/a to Riley Children’s Endowment (Endowment) and a new entity was formed, Riley Children’s Foundation, LLC (Foundation). The Endowment’s Board of Governors determined that given the challenges involved in managing both operational and investment activities and the vastly different governance needs of these distinct functions, the Endowment could most effectively and efficiently further its charitable purposes by focusing exclusively on investment and endowment management, and by transferring the charitable programming and activities function to the Foundation, which has a governance structure and organizational capacity designed specifically to advance fundraising efforts. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of the revenues, expenses, gains, losses and other changes in net assets during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Endowment considers all liquid investments with original maturities of three months or less that are not part of the managed portfolio to be cash equivalents. At June 30, 2020 and 2019, cash equivalents consisted primarily of a sweep account. For the purposes of the statement of cash flows, the Endowment does not consider cash equivalents included within the managed portfolio (investments) to be cash equivalents.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

At June 30, 2020, the Endowment’s cash accounts exceeded insured limits by approximately $9,300,000. Investments Investments are carried at fair value. The Endowment’s alternative investments (including private equity, hedge funds, etc.) are recorded at net asset value (NAV), as a practical expedient, to determine fair value of the investments. Investment return includes dividend, interest and other investment income; realized and unrealized gains and losses on investments carried at fair value; and realized gains and losses on other investments. The Endowment invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the accompanying statements of financial position. The Endowment maintains pooled investment accounts for its endowments. Investment income and realized and unrealized gains and losses from securities in the pooled investment accounts are allocated monthly to the individual endowments based on the relationship of the fair value of the interest of each endowment to the total fair value of the pooled investment accounts, as adjusted for additions to or deductions from those accounts. At June 30, 2020, approximately 99% of the Endowment’s investments are invested in the Riley Children’s Endowment Unitized Fund (the “Fund”) coordinated through Northern Trust. The Endowment treats the application of its investment in the Fund as a mutual fund with shares as the common unit. The custodian-held assets in the Fund are managed by professional investment firms in accordance with Board approved investment and spending policies. Net earnings of the Fund are allocated to investing participants on a pro-rata basis. The fair value of the Fund’s investments in equities, fixed income securities and commodities are based on quoted market prices, if available, or estimated using quoted market prices for similar securities. Alternative investments, principally private equity, real estate, hedge funds and similar interests are valued using the most recent valuation available by the respective external fund manager, adjusted for cash receipts and cash disbursements. Transfers Between Fair Value Hierarchy Levels Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the period ending date.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Depreciation is charged to expense using the straight-line method over the estimated useful life of each asset. Assets under capital lease obligations and leasehold improvements are depreciated over the shorter of the lease term or their respective estimated useful lives. The estimated useful lives for each major depreciable classification of property and equipment are as follows: Furniture and equipment Leasehold improvements Riley Museum Home Visitors Center

3 - 7 years 5 years 30 years

Long-Lived Asset Impairment The Endowment evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. No asset impairment was recognized during the years ended June 30, 2020 and 2019. Net Assets Net assets, revenues, gains and losses are classified based on the existence or absence of donorimposed restrictions. Net assets without donor restrictions are available for use in general operations and not subject to donor restrictions. The governing board has designated, from net assets without donor restrictions, net assets for a board-designated endowment. Net assets with donor restrictions are subject to donor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Contributions Contributions are provided to the Endowment either with or without restrictions placed on the gift by the donor. Revenues and net assets are separately reported to reflect the nature of those gifts – with or without donor restrictions. The value recorded for each contribution is recognized as follows: Nature of the Gift Conditional gifts, with or without restriction Gifts that depend on the Endowment overcoming a donor imposed barrier to be entitled to the funds Unconditional gifts, with or without restriction Received at date of gift – cash and other assets

Value Recognized Not recognized until the gift becomes unconditional, i.e. the donor imposed barrier is met

Fair value

Received at date of gift – property, equipment and long-lived assets

Estimated fair value

Expected to be collected within one year

Net realizable value

Collected in future years

Initially reported at fair value determined using the discounted present value of estimated future cash flows technique

In addition to the amount initially recognized, revenue for unconditional gifts to be collected in future years is also recognized each year as the present-value discount is amortized using the levelyield method. When a donor stipulated time restriction ends or purpose restriction is accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the consolidated statements of activities as net assets released from restrictions. Absent explicit donor stipulations for the period of time that long-lived assets must be held, expirations of restrictions for gifts of land, buildings, equipment and other long-lived assets are reported when those assets are placed in service.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Gifts and investment income that are originally restricted by the donor and for which the restriction is met in the same time period the gift is received are recorded as revenue with donor restrictions and then released from restriction. Conditional contributions and investment income having donor stipulations which are satisfied in the period the gift is received and the investment income is earned are recorded as revenue with donor restrictions and then released from restriction. In-kind Contributions In addition to receiving cash contributions, the Endowment receives various in-kind contributions including advertising, concessions, office space, software, equipment, entertainment space, etc. from various donors. It is the policy of the Endowment to record the estimated fair value of certain in-kind donations as an expense in its financial statements, and similarly increase contribution revenue by the same amount. For the years ended December 31, 2020 and 2019, $309,136 and $697,087, respectively, was received in in-kind contributions. Income Taxes The Endowment is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and a similar provision of state law. However, the Organization is subject to federal income tax on any unrelated business taxable income. The Endowment files tax returns in the U.S. federal jurisdiction. Functional Allocation of Expenses The costs of supporting the various programs and other activities have been summarized on a functional basis in the consolidated statements of activities. The consolidated statements of functional expenses present the natural classification detail of expenses by function. Certain costs have been allocated among the program, administration, finance, fund raising and communications categories based on time studies, space allocations, and other methods. Subsequent Events As a result of the spread of the SARS-CoV-2 virus and the incidence of COVID-19, economic uncertainties have arisen which may negatively affect the financial position, results of operations and cash flows of the Endowment. The duration of these uncertainties and the ultimate financial effects cannot be reasonably estimated at this time. Subsequent events have been evaluated through October 20, 2020, which is the date the consolidated financial statements were available to be issued.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Note 2:

Contributions Receivable

Due within one year Due in one to five years Due in more than five years

Without Donor Restrictions

2020 With Donor Restrictions

145,555 145,555 145,555 -

3,424,953 2,790,369 4,282,760 10,498,082 (193,000) 10,305,082 (1,946,438)

3,570,508 2,790,369 4,282,760 10,643,637 (193,000) 10,450,637 (1,946,438)

145,555

8,358,644

8,504,199

Allowance for uncollectible contributions Discount for time value of money

Due within one year Due in one to five years Due in more than five years

Total

Without Donor Restrictions

2019 With Donor Restrictions

627,371 627,371 627,371 -

4,085,229 3,546,500 2,594,000 10,225,729 (193,000) 10,032,729 (2,003,783)

4,712,600 3,546,500 2,594,000 10,853,100 (193,000) 10,660,100 (2,003,783)

627,371

8,028,946

8,656,317

Allowance for uncollectible contributions Discount for time value of money

Total

Discount rates ranged from 0.29% to 3.28% and from 1.01% to 3.28% for 2020 and 2019, respectively.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Note 3:

Investments

The Endowment participates in an investment pool with Indiana University. This investment pool is under the control of the Endowment, as it is held in the Endowment’s name and is subject to the Endowment’s investment policy. Current fair value is used to determine the number of units allocated to additional assets placed in the pool and to value withdrawals from the pool. Investment income and realized and unrealized gains and losses are allocated equitably based on the number of units assigned to each participant. Details of the pool’s participant accounts at June 30 are as follows: Fair Value No. of Units Riley Children’s Endowment Indiana University

17,423,239 429,225

Total

2020

2019

323,468,237 6,106,702

334,192,104 6,109,669

329,574,939

340,301,773

The Endowment’s investments (including those investments held in the pool) as of June 30 are as follows: 2020 Cash equivalents Equities: Common stocks International equities Common trust/mutual funds Commingled funds Fixed income: U.S. Government and Government Agency securities Corporate bonds Municipal bonds International obligations Common trust/mutual funds Other fixed income Commingled funds Hedge funds Private credit Private equity Real assets: Partnerships Commingled funds Total

4,658,456

2019 $

8,071,282

9,022,935 268,896 13,700,604 101,910,914

17,926,485 967,125 13,798,794 103,920,842

16,222,161 14,125,014 967,499 955,651 6,835,241 21,153,175 101,948,217 100,780 15,743,568

21,401,897 11,277,304 1,211,946 1,431,193 846,902 6,535,477 18,800,084 94,529,895 13,538,039

17,081,332 7,474,715

12,404,051 16,184,464

332,169,158

342,845,780

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Alternative Investments Alternative investments held at June 30 consist of the following: Fair Value

June 30, 2020 Unfunded Redemption Commitments Frequency

Redemption Notice Period

Equities: Commingled funds $ 49,072,707 34,907,632 17,930,575

101,910,914

21,153,175

78,041,546 22,308,032 1,558,261 40,378 101,948,217 100,780 15,743,568 17,081,332 7,474,715 24,556,047

Total commingled equity funds Fixed income: Commingled funds Hedge funds

Total hedge funds Private credit Private equity Real assets: Partnerships Commingled funds Total real assets

Fair Value

Monthly Quarterly Triennially

10 - 90 Days 30 - 365 Days 45 - 90 Days

Daily

2 Days

2,850,000 11,804,686

Quarterly Annually Biennially None

45 - 120 Days 60 - 80 Days 60 Days Not applicable

None None

Not applicable Not applicable

12,358,850 12,358,850

None Monthly

Not applicable 15 Days

June 30, 2019 Unfunded Redemption Commitments Frequency

Redemption Notice Period

Equities: Commingled funds $

Total commingled equity funds Fixed income: Commingled funds Hedge funds

Total hedge funds Private equity Real assets: Partnerships Commingled funds Total real assets

5,243,220 55,071,392 25,320,763 9,441,640 8,843,827

Daily Monthly Quarterly Annually Triennially

14 Days 10 - 90 Days 30 - 365 Days 60 Days 90 Days

103,920,842

18,800,084

Daily

2 Days

63,443,158 28,215,903 2,819,175 51,659 94,529,895 13,538,039

Quarterly Annually Biennially None

45 - 90 Days 60 - 80 Days 60 Days Not applicable

11,480,937

None

Not applicable

12,404,051 16,184,464 28,588,515

15,414,321 15,414,321

None Monthly

Not applicable 15 - 30 Days

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Equity Commingled Funds: Equity commingled funds include investments in commingled fund vehicles that include a limited liability company, limited partnerships, a common trust fund, a British Virgin Islands business company, and Cayman Islands exempt companies, which invest in U.S., non-U.S., and emerging markets marketable equity securities. The investment in a common trust fund was redeemed during fiscal year 2020. These commingled funds have monthly to triennial liquidity subject to certain notice requirements. The fair values of the investments in this category have been estimated using the net asset value per share of the fund, which reflects the fair value of the underlying publicly traded securities. Fixed Income Commingled Funds: Fixed income commingled funds include investments in limited liability companies with U.S. short-term investment grade and U.S. intermediate government/credit fixed income strategies. These commingled funds have daily liquidity with two business days’ notice. The fair value of the investments in this category have been estimated using the net asset value per share of the fund, which reflects the fair value of the underlying bonds. Hedge Funds: Hedge funds include investments in commingled fund vehicles including Cayman Islands limited partnerships and Cayman Islands exempt companies, which implement a range of alternative investment strategies such as long/short equity, credit, managers investing opportunistically across the capital structure, and other strategies. These funds are open-ended in duration and generally offer quarterly to biennial liquidity subject to certain notice requirements and gate provisions, with the expectation that investments will be held for the long-term unless liquidity, rebalancing, or other needs of the Endowment necessitate redemption. The fair values of the investments in this category have been estimated using the net asset value per share of the fund, which reflects the fair value of the underlying publicly traded securities. Private Credit: Private credit includes an investment in a limited partnership that provides customized and secured debt financing to emerging growth companies. Private credit funds typically have investment terms greater than 10 years. The fair value of this investment has been estimated using the net asset value of the Endowment’s ownership interest in partners’ capital. This investment cannot be redeemed during the term of the fund. Distributions from this fund are received as the underlying investments of the fund are liquidated, which is expected to occur over the next 7 to 10 years. Private Equity: Private equity includes investments in limited partnerships, limited liability companies, British Virgin Islands limited companies, a Cayman Islands exempt limited partnership, and an English limited partnership that consist of direct and fund-of-funds structures, including private equity buyout, venture capital, direct financing (debt), and secondary private equity funds. These private equity funds typically have investment terms greater than ten years. The fair values of these investments have been estimated using the net asset value of the Endowment’s ownership interest in partners’ capital. The investments cannot be redeemed during the term of the fund. Distributions from each fund are received as the underlying investments of the funds are liquidated, which is expected to occur over the next 5 to 10 years.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Real Asset Partnerships: Real asset partnerships include investments in limited partnerships, limited liability companies, and a Cayman Islands exempt limited partnership which invest in a variety of energy and natural resources related infrastructure, property or companies, as well as real estate investments. These real asset partnerships typically have investment terms greater than 10 years. The fair values of these investments have been estimated using the net asset value of the Endowment’s ownership interest in partners’ capital. The investments cannot be redeemed during the term of the fund. Distributions from each fund are received as the underlying investments of the funds are liquidated, which is expected to occur over the next 5 to 10 years. Real Assets Commingled Funds: Real assets commingled funds include investments in limited partnership commingled fund vehicles, which invest in a concentrated portfolio of real estate and global natural resources marketable equity securities. The resources commingled fund was redeemed during fiscal year 2020. These commingled funds have monthly liquidity subject to certain notice requirements. The fair values of the investments in this category have been estimated using the net asset value per share of the fund, which reflects the fair value of the underlying publicly traded securities.

Note 4:

Split-Interest Agreements

Beneficial Interest Charitable Lead Trust The Endowment is the beneficiary of two charitable lead annuity trusts. The trusts provide for annual variable annuity payments through 2031. Based on the lives of the trust and applicable discount rates, the present value of future benefits expected to be received by the Endowment was estimated to be $9,866,425 and $9,612,270 at June 30, 2020 and 2019, respectively. The Endowment received $155,800 and $129,834 from the trusts in 2020 and 2019, which was recorded as a reduction in the receivable. Discount rates ranged from 2.04% to 4.39% for 2020 and 2019. Beneficial Interest in Perpetual Trusts The Endowment is also the beneficiary under various perpetual trusts administered by outside parties. Under the terms of the trusts, the Endowment has the irrevocable right to receive income earned on the trusts’ assets in perpetuity, but never receives the assets held in trusts. The estimated value of the expected future cash flows is $26,154,544 and $26,684,633, which represents the fair value of the trusts’ assets at June 30, 2020 and 2019, respectively. Income from these trusts was $1,163,440 and $1,015,018 for the years ended 2020 and 2019, respectively. Charitable Gift Annuities The Endowment has executed charitable annuity agreements with various donors. Under the terms of the annuity agreements, the donors contribute assets to the Endowment in exchange for the right to receive a fixed payment for a specified period of time. Upon receiving the annuity gift, the Endowment records a liability based on the present value of the estimated payments to the donor. The remainder of the gift is recorded as revenue in the period received. Annuity liabilities were $185,261 and $165,859 at June 30, 2020 and 2019, respectively. 18

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Note 5:

Property and Equipment

The Endowment’s property and equipment as of June 30 is comprised of the following: 2020 Riley Museum Home Riley Museum Home Visitors Center Furniture and equipment Leasehold improvements

43,189 1,311,143 741,597 259,468 2,355,397 (983,647)

43,189 1,311,143 565,878 259,468 2,179,678 (835,714)

1,371,750

1,343,964

Accumulated depreciation

Note 6:

2019

Paycheck Protection Program (PPP) Loan

The Endowment received a PPP loan established by the CARES Act and has elected to account for the funding as a conditional contribution by applying topic ASC 958-605, Revenue Recognition. Revenue is recognized when conditions are met, which include meeting full-time equivalent (FTE) and salary reduction requirements and incurring eligible expenditures. Any portion of the loan not forgiven bears interest at a fixed rate of 1% and matures on May 6, 2022. Currently, the Endowment anticipates substantially all of the loan will be forgiven. PPP loans are subject to audit and acceptance by the U.S. Department of Treasury, Small Business Administration, or lender; as a result of such audit, adjustments could be required to the recognition of revenue. The Endowment did not recognize any revenue during fiscal year 2020.

Note 7:

Leases

The Endowment leases office space under a lease agreement that expires on September 30, 2021. Annual minimum lease payments of $256,248 began on October 1, 2015. In addition to the minimum rent, the Endowment is required to pay additional rent based on a portion of the increase in the landlord’s operating expenses and real estate taxes. Total rent expense for the years ended June 30, 2020 and 2019 was $281,148 and $267,643, respectively. Future minimum lease payments are as follows: 2021 2022

273,048 68,262

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Note 8:

Net Assets With Donor Restrictions

Net assets with donor restrictions at June 30 are available for the following purposes or periods: Subject to expenditure for specified purpose Research Clinical programs Education Patient and family services Advocacy Buildings and equipment Camp Riley General program support - Riley Hospital for Children and other Museum Home Other

Subject to passage of time, no purpose restriction Endowments Accumulated investment income, subject to spending policy and appropriation Research Clinical programs Education Patient and family services Buildings and equipment Camp Riley General program support - Riley Hospital for Children and other Museum Home Other Amounts to be held in perpetuity Research Clinical programs Education Patient and family services Buildings and equipment Camp Riley General program support - Riley Hospital for Children and other Museum Home Foundation operations Other

Total endowments Other amounts to be held in perpetuity Research Clinical programs Education Patient and family services Buildings and equipment Advocacy Camp Riley General program support - Riley Hospital for Children and other Foundation operations Other

2020

2019

10,589,676 6,653,677 1,824,267 8,663,903 9,640,389 1,516,834 9,975,669 1,350,447 50,214,862

11,790,010 6,628,089 1,366,176 8,469,378 1,734,542 9,238,417 1,201,735 19,315,353 136,782 162,757 60,043,239

2,019,931

1,223,247

1,465,408 2,206,671 (3,462,202) 3,366,584 22,244 381,054 796,207 46,772 44,041 4,866,779

3,051,294 3,485,048 (338,060) 3,576,907 52,159 554,739 537,316 113,173 57,535 11,090,111

23,164,871 15,147,636 42,103,741 5,028,864 255,211 2,293,214 2,566,470 1,110,790 1,861,030 307,209 93,839,036

22,325,769 15,135,881 41,241,068 5,184,000 256,520 2,273,140 2,508,856 1,110,790 1,861,031 219,708 92,116,763

98,705,815

103,206,874

2,084,022 86,256 1,305,497 4,801,950 21,000 9,142,634 10,312,017 339,457 28,092,833

2,684,850 71,487 465,691 5,107,307 78,000 9,837 9,278,073 10,550,263 320,696 28,566,204

179,033,441

193,039,564

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Net Assets Released From Restrictions Net assets were released from donor restrictions during the year ended June 30 by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors. 2020 Purpose restrictions accomplished Program related Research Clinical programs Education Patient and family services Advocacy Buildings and equipment Camp Riley General program support Museum Home Other Time restriction met Net restrictions released

Note 9:

2019

9,245,223 2,784,301 2,549,312 2,377,327 794,193 25,939 10,934 15,463,833 202,135 42,311 440,642

8,684,078 2,460,919 2,444,155 1,453,564 683,551 1,797,491 769,792 10,130,365 52,310 204,083 359,918

33,936,150

29,040,226

Endowment

The Endowment’s endowment consists of approximately 150 individual funds established to support a variety of purposes, including:   

Clinical care Pediatric research Education

  

Family Support Programs The Riley Museum Home Operations of the Endowment

The endowment includes both donor-restricted endowment funds and funds designated by the Board of Governors to function as endowments (board-designated endowment funds). As required by accounting principles generally accepted in the United States of America (GAAP), net assets associated with endowment funds, including board-designated endowment funds, are classified and reported based on the existence or absence of donor-imposed restrictions.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

The Endowment’s Board of Governors has interpreted the State of Indiana Prudent Management of Institutional Funds Act (SPMIFA) as requiring preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, when reviewing its donor-restricted endowment funds, the Endowment considers a fund to be underwater if the fair value of the fund is less than the sum of (a) the original value of initial and subsequent gift amounts donated to the fund and (b) any accumulations to the fund that are required to be maintained in perpetuity in accordance with the direction of the applicable donor gift instrument. The Endowment has interpreted SPMIFA to permit spending from underwater funds in accordance with the prudent measures required under the law. Additionally, in accordance with SPMIFA, the Endowment considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: 1. 2. 3. 4. 5.

Duration and preservation of the fund Purposes of the Endowment and the fund General economic conditions Possible effect of inflation and deflation Expected total return from investment income and appreciation or depreciation of investments 6. Other resources of the Endowment 7. Investment policies of the Endowment

The composition of net assets by type of endowment fund at June 30, 2020 and 2019 was: 2020 With Donor Restrictions

Without Donor Restrictions Board-designated endowment funds Donor-restricted endowment funds Accumulated investment gains Amounts to be held in perpetuity

Total endowment funds

62,690,465

Total endowment funds

4,866,779 93,839,036 $

98,705,815

67,080,995

161,396,280

Total -

11,090,111 92,116,763 $

62,690,465 4,866,779 93,839,036

2019 With Donor Restrictions

Without Donor Restrictions Board-designated endowment funds Donor-restricted endowment funds Accumulated investment gains Amounts to be held in perpetuity

Total

103,206,874

67,080,995 11,090,111 92,116,763

170,287,869

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Changes in endowment net assets for the years ended June 30, 2020 and 2019 were: Without Donor Restrictions Endowment net assets, June 30, 2018

69,218,339

With Donor Restrictions $

104,086,435

Total $

173,304,774

Investment return Investment income Net appreciation Contributions Administrative expenses Appropriation of endowment assets for expenditure

153,076 601,736 225,000 (165,905)

245,206 966,008 2,654,950 (230,785)

398,282 1,567,744 2,879,950 (396,690)

(2,951,251)

(4,514,940)

(7,466,191)

Endowment net assets, June 30, 2019

67,080,995

Investment return Investment loss Net depreciation Contributions Administrative expenses Appropriation of endowment assets for expenditure Transfers Endowment net assets, June 30, 2020

103,206,874

170,287,869

(130,465) (873,251) 110,000 (167,550)

(155,093) (1,267,972) 2,260,073 (231,597)

(285,558) (2,141,223) 2,370,073 (399,147)

(3,104,264) (225,000)

(4,681,470) (425,000)

(7,785,734) (650,000)

62,690,465

98,705,815

161,396,280

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level the Endowment is required to retain as a fund of perpetual duration pursuant to donor stipulation or SPMIFA. At June 30, 2020 and 2019, funds with original gift values of $37,830,751 and $27,199,770, fair values of $33,102,403 and $24,527,062, and deficiencies of $4,728,348 and $2,672,708, respectively, were reported in net assets with donor restrictions. These deficiencies resulted from unfavorable market fluctuations that occurred shortly after investment of new restricted contributions and continued appropriation for certain purposes that was deemed prudent by the governing body.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

The Endowment has adopted investment and spending policies, approved by the Board of Governors, for endowment assets that attempt to provide a predictable stream of funding to programs and other items supported by its endowment while seeking to maintain the purchasing power of the endowment. Endowment assets include those assets of donor-restricted endowment funds the Endowment must hold in perpetuity or for donor-specified periods, as well as those of board-designated endowment funds. Under the Endowment’s policies, endowment assets are invested in a manner that is intended to produce results that exceed the annual distribution while assuming an acceptable level of investment risk. The Endowment expects its endowment funds to provide an average rate of return of approximately 8% annually over time. Actual returns in any given year may vary from this amount. To satisfy its long-term rate of return objectives, the Endowment relies on a total return strategy in which investment returns are achieved through both current yield (investment income such as dividends and interest) and capital appreciation (both realized and unrealized). The Endowment targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. The Endowment has a policy (the spending policy) of appropriating for expenditure each year 5% of its endowment fund’s average fair value over the prior 12 quarters through the calendar year end preceding the year in which expenditure is planned. In establishing this policy, the Endowment considered the long-term expected return on its investment assets, the nature and duration of the individual endowment funds, many of which must be maintained in perpetuity because of donor restrictions, and the possible effect of inflation. Accordingly, over the long-term, the Endowment expects the current spending policy to allow its endowment to grow at an average of the long-term rate of inflation. This is consistent with the Endowment’s objective to maintain the purchasing power of endowment assets held in perpetuity or for a specified term, as well as to provide additional real growth through new gifts and investment return.

Note 10: Employee Benefits The Endowment has established a 401(k) retirement plan for employees who meet certain eligibility requirements. The Endowment contributes 5% of each employee’s salary or wages. Participants may elect to defer a portion of their regular salary or wages and the Endowment has agreed to match the salary deferral, not to exceed 2.5% of compensation. Total retirement plan costs for 2020 and 2019 were $320,060 and $317,729, respectively.

Note 11: Disclosures About Fair Value of Assets and Liabilities Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1

Quoted prices in active markets for identical assets or liabilities

Level 2

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3

Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities

Recurring Measurements The following tables present the fair value measurements of assets recognized in the accompanying consolidated statements of financial position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2020 and 2019: 2020 Fair Value Measurements Using

Fair Value Investments Cash equivalents Equities: Common stocks International equities Common trust/mutual funds Commingled funds Fixed income: U.S. Government and Government Agency securities Corporate bonds Municipal bonds Common trust/mutual funds Other fixed income Commingled funds Hedge funds Private credit Private equity Real assets: Partnerships Commingled funds Total investments Beneficial interest in charitable lead trusts Beneficial interest in perpetual trusts

4,658,456

Quoted Prices in Active Markets for Identical Assets (Level 1)

4,658,456

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Investments Measured at NAV (A)

9,022,935 268,896 13,700,604 101,910,914

9,022,935 268,896 13,700,604 -

101,910,914

16,222,161 14,125,014 967,499 955,651 6,835,241 21,153,175 101,948,217 100,780 15,743,568

16,222,161 14,125,014 967,499 955,651 6,835,241 -

8,475,937

21,153,175 101,948,217 100,780 7,267,631

17,081,332 7,474,715 332,169,158 9,866,425 26,154,544

66,756,457 -

4,354,657 12,830,594 9,866,425 26,154,544

12,726,675 7,474,715 252,582,107 -

368,190,127

66,756,457

48,851,563

252,582,107

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

2019 Fair Value Measurements Using

Investments Cash equivalents Equities: Common stocks International equities Common trust/mutual funds Commingled funds Fixed income: U.S. Government and Government Agency securities Corporate bonds Municipal bonds International obligations Common trust/mutual funds Other fixed income Commingled funds Hedge funds Private equity Real assets: Partnerships Commingled funds Total investments Beneficial interest in charitable lead trusts Beneficial interest in perpetual trusts

Fair

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Significant Unobservable Inputs

Value

(Level 1)

(Level 2)

(Level 3)

8,071,282

Investments Measured at NAV

(A)

17,926,485 967,125 13,798,794 103,920,842

17,926,485 967,125 13,798,794 -

103,920,842

21,401,897 11,277,304 1,211,946 1,431,193 846,902 6,535,477 18,800,084 94,529,895 13,538,039

21,401,897 11,277,304 1,211,946 1,431,193 846,902 6,535,477 -

9,681,128

18,800,084 94,529,895 3,856,911

12,404,051 16,184,464 342,845,780 9,612,270 26,684,633

83,468,405 -

6,029,576 15,710,704 9,612,270 26,684,633

6,374,475 16,184,464 243,666,671 -

379,142,683

83,468,405

52,007,607

243,666,671

(A) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts included above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying statements of financial position, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended June 30, 2020. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Level 3 Valuation Process Fair value determinations for Level 3 measurements of securities are the responsibility of the Accounting Department in conjunction with the investment advisor and fund managers. The Accounting Department challenges the reasonableness of the assumptions used and reviews the methodology to ensure the estimated fair value complies with accounting standards generally accepted in the United States. Beneficial Interest in Charitable Lead Trusts Fair value is estimated by calculating the present value of the annuity over the term of the trusts using discount rates. Beneficial Interest in Perpetual Trust Fair value is estimated at the present value of the future distributions expected to be received over the term of the agreement. Due to the nature of the valuation inputs, the interest is classified within Level 3 of the hierarchy.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Level 3 Reconciliation The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying statements of financial position using significant unobservable (Level 3) inputs: 2019 Beneficial Interest in Charitable Lead Trusts

Investments Private Real Assets Equity Partnerships Balance, July 1, 2017

Purchases Distributions Unrealized gains Payments received Change in discount to present value Unrealized loss on perpetual trusts

849,046 (2,152,900) 563,240 -

Balance, June 30, 2018 Purchases Distributions Unrealized gains (losses) Payments received Contributions received Change in discount to present value Unrealized loss on perpetual trusts Balance, June 30, 2019

10,421,742

4,344,327 941,355 (205,292) 949,186 -

9,681,128

6,029,576

620,403 (1,988,152) 162,558 -

21,162 (676,700) (1,019,381) -

8,475,937

4,354,657

9,346,564

Beneficial Interest in Perpetual Trusts $

(129,834) 395,540 -

251,209

9,612,270

26,684,633

(155,800) 409,955 $

9,866,425

26,433,424

166,287 (696,376) $

26,154,544

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Unobservable (Level 3) Inputs The following tables present quantitative information about unobservable inputs used in recurring Level 3 fair value measurements at June 30, 2020 and 2019. Fair Value at June 30, 2020 Private equity investments Real asset investments Beneficial interest in charitable lead trusts Beneficial interest in perpetual trusts

8,475,937 4,354,657 9,866,425 26,154,544

Fair Value at June 30, 2019 Private equity investments Real asset investments Beneficial interest in charitable lead trusts Beneficial interest in perpetual trusts

9,681,128 6,029,576 9,612,270 26,684,633

Valuation Technique

Unobservable Inputs

Range

Net asset value equivalent (NAV) NAV Discounted cash flow Discounted cash flow

Adjustments to NAV Adjustments to NAV Discount rate (1)

None None 2.04% - 4.39% None

Valuation Technique

Unobservable Inputs

Range

NAV NAV Discounted cash flow Discounted cash flow

Adjustments to NAV Adjustments to NAV Discount rate (1)

None None 2.04% - 4.39% None

(1) Fair value has been determined utilizing the fair value of the underlying assets of the trust.

Note 12: Liquidity and Availability The Endowment receives significant contributions with donor restrictions to be used in accordance with the associated purpose restrictions. It also receives gifts to establish endowments that will exist in perpetuity; the income generated from such endowments is used to fund programs. In addition, the Endowment receives support and investment income without donor restrictions. The Endowment considers investment income without donor restrictions, appropriated earnings from donor-restricted and board-designated endowments, contributions without donor restrictions and contributions with donor restrictions for use in current programs which support Riley Hospital for Children and its research programs, Camp Riley and the Riley Museum Home to be available to meet cash needs for general expenditures. General expenditures include management and general expenses, fundraising expenses, communications expenses, and grant commitments.

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

The Endowment has established an Investment Policy Statement (“IPS”) that is used to define how the Endowment’s investment portfolio is managed. The investment portfolio is broken into three asset classes as defined below: 1. Short-Term Assets - includes the portion of the Endowment’s funds that have a time horizon of 3 years or less plus annual grant commitments. The IPS states that this asset class should be 100% liquid within one week. 2. Intermediate-Term Assets - includes the portion of the Endowment’s funds that have a time horizon of greater than 3 years but not more than 7 years. The IPS states that this asset class should be 80% liquid within 3 years and 100% liquid within 5 years. 3. Long-Term Assets - includes endowment funds to be held in perpetuity. These funds have a spending policy and a perpetual time horizon. The IPS states that 30% of this asset class should be liquid within one year and 60% liquid within 3 years. The Endowment strives to have sufficient liquid assets to meet its annual operating expenditures plus endowment distributions and estimated grant obligations for three years. This allows the Endowment to adjust to emerging programmatic needs of Riley Hospital for Children. The table below presents financial assets available for general expenditures within one year at June 30, 2020 and 2019: 2020 Cash and cash equivalents Contributions receivable, gross Investments Total financial assets Less: amounts not available to be used within one year Contributions receivable, due after one year Intermediate-term assets Investments held in perpetuity Investments held for board-designated endowment Investments held on behalf of Indiana University Financial assets not available to be used within one year Financial assets available to meet general expenditures within one year

7,587,405 10,643,637 332,169,158 350,400,200

2019 $

9,478,085 10,853,100 342,845,780 363,176,965

(7,073,129) (20,147,790) (93,839,036) (62,690,465) (6,106,702) (189,857,122)

(6,140,500) (20,256,253) (92,116,763) (67,080,995) (6,109,669) (191,704,180)

$ 160,543,078

$ 171,472,785

James Whitcomb Riley Memorial Association, Inc., d/b/a Riley Children’s Endowment Notes to Consolidated Financial Statements June 30, 2020 and 2019

Note 13: Commitments As of June 30, 2020, the Endowment has outstanding commitments of $21,342,000 for research, education, patient and family services and programs for Riley Hospital for Children. The commitments are expected to be paid in one year.

Note 14: Related Party Transactions Amounts due on promises to give from members of the Board of Governors were $4,924,347 and $4,941,548 at June 30, 2020 and 2019, respectively. The Endowment also purchases products and services from businesses in which a member of the Board of Governors held an ownership percentage. These purchases were not material in 2020 or 2019.

Note 15: Significant Estimates and Concentrations Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following: Investments The Endowment has significant investments in equity and debt securities and is therefore subject to concentrations of credit risk. Investments are managed by investment advisors who are supervised by the Finance Committee of the Board of Governors. Though the fair value of investments is subject to fluctuations on a year to year basis, the Committee members believe that the investment policy is prudent for the long-term welfare of the Endowment. Contributions Receivable At June 30, 2020 and 2019, 26% and 34% of the total contributions receivable were from one extended family, through their respective foundations and individual donations. Other concentrations of credit risk with respect to contributions receivable are limited due to the large number of contributors comprising the Endowment’s contributor base and their dispersion across different industries and geographic areas.

FS FY1920

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