SAE Foundation Annual Report 2015 - 33

SAE Foundation
Notes to the Financial Statements (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 maintains an

investment policy under which its
investments are kept within limits
designed to prevent risks caused
by concentrations.
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.
SAE's Board of Directors has
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
long-term 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
distributed and are stated at the
lower of cost (determined on the
first-in, first-out or average cost
method) or market.

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SAE Foundation Annual Report 2015

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