VCU School of Business Financial Statements 062020

Virginia Commonwealth University School of Business Foundation Financial Statements... Auditor’s Responsibility Our responsibility is to express an opinion on these financial statement

Virginia Commonwealth University School of Business Foundation

Financial Statements

L Dans Callans Jr Juanita B Leatherberry

Ting Xu

John R Nelson

Virginia Commonwealth University School of Business Foundation

Charles ( Foster Jr Brenton S (alsey

Baxter F Phillips Jr Bryan F Kornblau

W Austin Ligon

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit

We conducted our audit in accordance with auditing standards generally accepted in the United States of America Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements The procedures selected depend on the auditor s judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error )n making those risk assessments the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the 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 financial statements

Report on Summarized Comparative Statements

We have previously audited the Foundation s June financial statements and we expressed an unmodified audit opinion on those audited financial statements in our report dated November )n our opinion the summarized comparative information presented herein as of and for the year ended June is consistent in all material respects with the audited financial statements from which it has been derived

Virginia Commonwealth University School of Business Foundation

Statement of Activities and Changes in Net Assets

Year Ended June 30, 2020, with Comparative Totals for the Year Ended June 30, 2019

Without With Donor Donor Restrictions Restrictions 2020 Operating Revenue

Contributions $ 224,219 $ 1,315,255 $ 1,539,474

Rental income 2,018,414 2,018,414

Course revenue 1,722,147 1,722,147

Miscellaneous 37,368 37,368

Net assets released from restrictions 2,134,229 (2,134,229)

Total operating revenue 6,136,377 (818,974) 5,317,403

Operating Expenses

School of Business Programs 2,805,300 2,805,300

Educational Facilities 2,813,424 2,813,424

Center for Corporate Education 845,867 845,867

Management General 235,618 235,618

Fundraising 125,891 125,891

Total operating expenses 6,826,100 6,826,100

Changes in net assets from operations (689,723) (818,974) (1,508,697)

Other Changes in Net Assets Net investment return 662,704 830,590 1,493,294

Claim on life insurance policy 250,000 250,000

Unrealized gain on interest rate swap agreement

Termination of interest rate swap agreement

Deutsche Bank L)BOR settlement

Changes in net assets before transfers (27,019) 261,616 234,597

Transfers from Virginia Commonwealth University Foundation

Changes in net assets (27,019) 261,616 234,597

Net assets beginning 11,430,739 34,749,345 46,180,084

See Notes to Financial Statements

Totals

Statement of Functional Expenses

Year Ended June 30, 2020, with Comparative Totals for the Year Ended June 30, 2019

Expenses

Distributions to and in support of VCU $ 2,481,410 $ 800,463 $ 44,993 $ 3,326,866 $ $ $ $ 3,326,866 Reimbursement to VCU for personnel expenses 289,737 289,737 182,150 182,150 471,887 Depreciation and amortization 1,341,017 1,341,017 1,341,017 )nterest expense 654,263 654,263 654,263 )nterest expense amortization of debt issuance costs 10,716 10,716 10,716 Professional services and fees 149,948 418,070 568,018 21,576 18,124 39,700 607,718 Other expenses 53,206 6,965 37,605 97,776 22,727 99,035 121,762 219,538 Supplies and marketing materials 37,353 55,462 92,815 43,848 43,848 136,663 Legal and regulatory fees 9,165 9,165 9,165 Write off of uncollectible contribution receivables 83,383 83,383 83,383

2,805,300 2,813,424 845,867 6,464,591 235,618 161,007 396,625 6,861,216 Less expenses included with revenues

on the statement of activities

Gift fees netted against permanent corpus (35,116) (35,116) (35,116) Total expenses included in the expense section

on the statement of activities $ 2,805,300 $ 2,813,424 $ 845,867 $ 6,464,591 $ 235,618 $ 125,891 $ 361,509 $ 6,826,100

See Notes to Financial Statements

Statements of Cash Flows

Years Ended June 30, 2020 and 2019

2020 Cash Flows from Operating Activities

Years Ended June 30, 2020 and 2019

2020 Supplemental Schedule of Noncash Investing and Financing

Activities

Decrease in deposits held liability for Virginia Commonwealth

University offset by decrease in investment assets $ (17,814)

Decrease in amounts due to Virginia Commonwealth University Decrease in amounts due to Virginia Commonwealth University $ (1,411,760) Retirement of series bonds included in due to Virginia Commonwealth University

)ssuance of series bonds included in due to Virginia Commonwealth University

)ncrease in bond premium included in due to Virginia Commonwealth University net of unamortized debt issuance costs

)ncrease in debt issuance costs included in due to Virginia Commonwealth University net of unamortized debt issuance costs

Amortization of debt issuance costs series bonds

Amortization of debt issuance costs series bonds (10,716)

Amortization of bond premium 202,476

Net unrealized gain on interest rate swap agreement

Cash remitted to Virginia Commonwealth University $ (1,220,000)

See Notes to Financial Statements

The sole purpose of the Foundation is to provide financial and other support to the School of Business for the benefit of Virginia Commonwealth University

Comparative financial statements

These financial statements include summarized comparative prior year information in the statement of financial position and the statement of activities and changes in net assets that are not presented by net asset class and do not contain sufficient detail to conform with generally accepted accounting principles Therefore this information should be read in conjunction with the Foundation s financial statements for the year ended June

Cash, cash equivalents and cash investments

For purposes of reporting the statements of cash flows the Foundation includes all cash accounts except funds held by investment managers which are not subject to withdrawal restrictions or penalties and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents on the accompanying statement of financial position The Foundation at times may have cash in excess of insured limits The Foundation s cash is in institutions whose credit ratings are monitored by management to minimize the concentration of credit risk At June the Foundation had cash balances and cash investments that exceeded insurance limits

Accounts receivable

The Foundation extends unsecured credit in the ordinary course of its activities but mitigates the associated credit risk by actively pursuing past due accounts Accounts receivable are considered past due if nonpayment exceeds forty five days from the due date )f necessary

an allowance for uncollectible receivables is recorded based on management s evaluation of the collectability of individual receivables Receivables are charged against the allowance when deemed to be uncollectible Subsequent recoveries are added to the allowance

of gain or loss associated with these investments is reflected in the accompanying financial statements as unrealized gain loss on investments Actual gains or losses are dependent upon the general partners distributions during the life of each partnership

Net Asset Value NAV is used as a practical expedient for certain commingled funds privately held investments and securities held in partnership format for which a readily determinable fair value is not available unless the Foundation believes such NAV calculation

is not measured in accordance with fair value These values may differ significantly from values that would have been used had a readily available market existed for such investments and that difference could be material to the change in net assets of the Foundation

Net investment return is reported in the statement of activities and consists of interest and dividend income and realized and unrealized capital gains and losses less external investment expenses

Acquisitions of real estate are recorded at cost or if donated at fair market value at the time

of the donation Depreciation is provided for property that is actively rented using the straight line method at rates adequate to amortize the cost of the property over its estimated useful life The estimated useful life of the property is years

Net Assets

Net assets revenues gains and losses are classified based on the existence or absence of

donor imposed restrictions Accordingly net assets and changes therein are classified and reported as follows

Net Assets Without Donor Restrictions – Net assets available for use in general operations and

not subject to donor restrictions As of June the governing board has designated a portion of assets without donor restrictions to support the goals of the Campaign for the VCU School of Business

Net Assets With Donor Restrictions –Net assets 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 Donor imposed restrictions are released when a restriction expires that is when the stipulated time has elapsed when the stipulated purpose for which the resource was restricted has been fulfilled or both Net assets with donor restrictions at June consist of contributions with restrictions that support student faculty and programmatic initiatives within the VCU School of Business

Program service fees received in advance are deferred to the applicable period in which the

related services are performed and included under the caption Contract liabilities in the

financial statements For the year ended June it is anticipated that all amounts shown in contract liabilities will be realized within one year The Foundation does not accept contracts related to the delivery of non credit programs which extend beyond one year from the statement of financial position date

of the financial statements and the reported amounts of revenues and expenses during the reporting period Actual results could differ from those estimates

Income taxes

The Organization is exempt from Federal income taxes as an organization other than a private foundation under Section c of the )nternal Revenue Code (owever income from certain activities not directly related to the Organization s tax exempt purpose may be subject to taxation as unrelated business income The Organization had no unrelated business income during the year ended June )n addition the Organization qualifies for the charitable contribution deduction under Section b A vi and has been classified as an organization other than a private foundation under Section a

Management has concluded that the Foundation had no significant financial exposure to uncertain tax positions as of June The tax years of to remain subject to examination by the taxing authorities

The Organization includes penalties and interest assessed by income taxing authorities in operating expenses The Organization did not have penalties and interest expenses for the year ended June

Reclassifications

Certain amounts in the prior year financial statements have been reclassified for comparative purposes to conform with the presentation in the current year financial statements

The Foundation s endowment funds consist of donor restricted endowments and funds designated by the board as endowments Endowment distributions subject to spending policy and appropriation are restricted for specific purposes with the exceptions of amounts available for general use

Discount rates between and were used in determining the present value of the contributions receivable

Note 4 Investments

Assets of various funds are pooled for investment purposes Equity of individual funds in the pooled investments is maintained using the market value method Under the market value method units of participation are assigned when dollars enter the pool based upon the most recently determined market value of units The market value of units of participation