SAE Foundation Annual Report 2014 - BDO11

SAE Foundation
Notes to the Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)
Investments
Investments are presented at fair value as measured by quoted market prices. Those investments
received as gifts or donations are recorded at their fair value on the date received. Investment
activity includes unrealized and realized gains and losses on investments (net
appreciation/depreciation), interest and dividends.
The Foundation's investments are exposed to various risks, such as interest rate, market and
credit risks. Due to the level of risk associated with these investments and the level of
uncertainty related to changes in the value of these investments, it is at least reasonably possible
that changes in the near term could materially affect the amounts reported in the financial
statements.
The Foundation has received contributions that are permanently restricted by the donors, for the
purpose of granting scholarships and awards. The income from certain permanently restricted
contributions is required to be spent in predetermined amounts as specified by the donor. The
income from other permanently restricted donations does not have specified spending amounts.
During 2012, SAE's Board of Directors elected to follow a total return policy with respect to its
permanently restricted funds, where no specified spending amount has been stipulated by the
donor, in accordance with Pennsylvania law. As such, SAE has adopted a total return investment
policy seeking to achieve for the investments held in SAE's restricted accounts a reasonable longterm total return, consistent with acceptable investment risk, derived both from appreciation of
capital and from earnings and distributions with respect to capital. The Board of Directors has
documented an investment spending policy consistent with state law. Under this policy, where
there is no stipulated spending amount from the donor, SAE may annually transfer up to 5.5% of
the three-year rolling average market value of total invested funds to operating funds.
The original contributions are maintained in permanently restricted net assets. Net appreciation
or depreciation in the fair value of investments is reflected in temporarily restricted investment
income (loss).
Unrealized gains and losses on permanently restricted investments are reflected in temporarily
restricted revenues and gains as described above. In years when the income transfer is greater
than the actual earnings, or when there is a loss, the excess is charged to temporarily restricted
net assets to the extent of accumulated prior year earnings. Any excess is charged to unrestricted
net assets.
Inventories
Inventories and supplies consist of medals and awards not yet given and are stated at the lower of
cost (determined on the first-in, first-out or average cost method) or market.

See accompanying independent auditor's report.
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SAE Foundation Annual Report 2014

Table of Contents for the Digital Edition of SAE Foundation Annual Report 2014