Docstoc

The UCSB Foundation

Document Sample
The UCSB Foundation Powered By Docstoc
					The UCSB Foundation
Report on Audited Financial Statements
For the Years Ended June 30, 2007 and 2006
The UCSB Foundation
Index
June 30, 2007 and 2006


                                                                                                                                               Page

Report of Independent Auditors..............................................................................................................1

Management’s Discussion and Analysis (Unaudited).................................................................................2


Financial Statements

Statements of Net Assets
June 30, 2007 and 2006 .............................................................................................................................9

Statements of Revenues, Expenses and Changes in Net Assets
For the Years Ended June 30, 2007 and 2006 .........................................................................................10

Statements of Cash Flows
For the Years Ended June 30, 2007 and 2006 .........................................................................................11

Notes to the Financial Statements ............................................................................................................12
                                                                                PricewaterhouseCoopers LLP
                                                                                350 South Grand Avenue
                                                                                Los Angeles CA 90071
                                                                                Telephone (213) 356 6000
                                                                                Facsimile (813) 637 4444




                                  Report of Independent Auditors


Board of Trustees
The UCSB Foundation


In our opinion, the accompanying statements of net assets and the related statements of revenues,
expenses and changes in net assets and cash flows present fairly, in all material respects, the
financial position of The UCSB Foundation (the “Foundation”) at June 30, 2007 and 2006, and the
changes in its net assets and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America. 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 audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audits 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, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The Management’s Discussion and Analysis on pages 2 through 8 is not a required part of the basic
financial statements but is supplementary information required by the Governmental Accounting
Standards Board. We have applied certain limited procedures, which consisted principally of inquiries
of management regarding the methods of measurement and presentation of the supplementary
information. However, we did not audit the information and express no opinion on it.




September 28, 2007




                                                  1
The UCSB Foundation
Management’s Discussion and Analysis
As of and For the Years Ended June 30, 2007 and 2006 (Unaudited)


The following discussion and analysis presents an overview of the financial performance of The UCSB
Foundation (the “Foundation”) during the years ended June 30, 2007 (“2007”) and June 30, 2006
(“2006”). It should be read in conjunction with, and is qualified in its entirety by, the related financial
statements and footnotes. The financial statements, footnotes and this discussion and analysis were
prepared by management and are the responsibility of management.

Overview
This annual report consists of a series of financial statements prepared in accordance with the statements
of the Governmental Accounting Standards Board (“GASB”). These statements focus on the financial
condition of the Foundation, its changes in net assets and its cash flows, taken as a whole.

One of the most important questions asked about Foundation finances is whether the Foundation is better
off or worse off as a result of the year’s activities. Perhaps as important is assessing the long-term
financial performance of the Foundation. The key to understanding these questions are the Statements
of Net Assets, Statements of Revenues, Expenses and Changes in Net Assets and the Statements of
Cash Flows. These statements present financial information in a form similar to that used by private
sector companies. The Foundation’s net assets (the difference between assets and liabilities) are one
indicator of the Foundation’s financial health. Over time, increases or decreases in net assets is one
indicator of the improvement or erosion of the Foundation’s financial health when considered with other
nonfinancial information.

The Statement of Net Assets includes all assets and liabilities. The Statement of Revenues, Expenses
and Changes in Net Assets presents revenues earned and expenses incurred during the year. Activities
are reported as either operating or nonoperating, with gifts and disbursements to The Regents of the
University of California reported as operating revenue and expenses, respectively, and investment results
reported as nonoperating revenue or expense. These statements are prepared using the accrual basis of
accounting.

Another way to assess the financial health of the Foundation is to look at the Statement of Cash Flows.
Its primary purpose is to provide relevant information about the cash receipts and cash payments of an
entity during a period. The Statement of Cash Flows helps users assess an entity’s ability to generate
future net cash flows, its ability to meet its obligations as they come due and its needs for external
financing.




                                                      2
The UCSB Foundation
Management’s Discussion and Analysis
As of and For the Years Ended June 30, 2007 and 2006 (Unaudited)


Condensed Statements of Net Assets

                                                 June 30,               June 30,               June 30,
                                                   2007                   2006                   2005

Assets
Current assets                               $ 11,491,810           $    7,517,400         $ 10,145,957
Noncurrent assets                             115,824,173               85,321,910           70,189,627

              Total assets                   $ 127,315,983          $ 92,839,310           $ 80,335,584

Liabilities
Current liabilities                          $      203,771         $      180,993         $      373,416
Noncurrent liabilities                            1,560,225              1,370,896              1,135,010

              Total liabilities              $    1,763,996         $    1,551,889         $    1,508,426

Net Assets
Invested in capital assets –
   net of related debt                       $        8,018         $       12,585         $       10,591
Unrestricted                                        816,794                715,780                677,920
Restricted
   Expendable                                    76,535,810             50,061,543             44,674,392
   Nonexpendable (Endowment)                     46,783,540             39,325,035             32,560,947
   Nonexpendable (Trusts)                         1,407,825              1,172,478                903,308

              Total net assets               $ 125,551,987          $ 91,287,421           $ 78,827,158


Assets
FY 2005-2006
Total current assets declined approximately $2.63 million, from $10.15 million on June 30, 2005 to $7.52
million on June 30, 2006. This reflected a continued trend of significant transfers of non-endowment
assets to campus that were related to specific capital projects and to provide program support to the
Campaign for U.C. Santa Barbara.

Total non-current assets increased approximately $15.13 million, from $70.19 million on June 30, 2005 to
$85.32 million on June 30, 2006. This continued a trend of significant growth driven both by investment
portfolio performance (a 11.57% total return in the fiscal year ended June 30, 2006 for the investment
portfolio) and continued recent high levels of pledge fulfillment designated to support endowments and
current year endowment gifts.

FY 2006-2007
Total current assets increased from $7.52 million at June 30, 2006 to $11.49 million on June 30, 2007.
This increase of almost $4 million reflects significant inflows of pledge payments related to capital projects
and research programs that occurred in FY 06-07. It is anticipated that these assets will be transferred to
the campus in coming years.




                                                      3
The UCSB Foundation
Management’s Discussion and Analysis
As of and For the Years Ended June 30, 2007 and 2006 (Unaudited)


Assets (Continued)
FY 2006-2007 (Continued)
Total non-current assets increased approximately $30.5 million, from $85.32 million on June 30, 2006 to
$115.82 million on June 30, 2007. This continues a trend of significant growth driven both by investment
portfolio performance (an estimated 19.81% total return in the fiscal year ended June 30, 2007 for the UC
Treasurer’s General Endowment Pool) and continued recent high levels of pledge fulfillment designated
to support endowments and current year endowment gifts.


Liabilities
FY 2005-2006
Liabilities declined relative to the prior year as a function of when checks are remitted to our vendors.

All of the liability accounts, both current and noncurrent, with the exception of accounts payable, are
related to trusts and deferred gifts and are offsets to the related asset balances discussed above. In
other words, as a result of the increase in the number of trusts administered by the Foundation, these
other liability account balances increased by a related amount. This is the sole factor accounting for the
growth in Noncurrent Liabilities from the prior year. While the creation of new trusts and deferred gifts
creates expanded liabilities, it is in fact a measure of fund-raising success.

As reflected in the footnotes, following the trend established by the University of California in 2004 for its
charitable remainder trusts, The UCSB Foundation moved administration of its trusts to two outside firms
specializing in this function. The trust assets continued to be held at the UC Office of the Treasurer and
are broadly invested, with the exception of any asset that could give rise to Unrelated Business Income.
It also assures a heightened level of scrutiny and management oversight will be applied to managing trust
assets so as to full fund the associated liabilities.

FY 2006-2007
Current liabilities increased slightly when contrasted to the prior year as a function of when checks are
remitted to our vendors.

All of the liability accounts, both current and noncurrent, with the exception of accounts payable, are
related to trusts and deferred gifts and are offsets to the related asset balances discussed above. In
other words, as a result of the increase in the number of trusts administered by the Foundation, these
other liability account balances increased by a related amount. This is the sole factor accounting for the
growth in noncurrent liabilities from the prior year. While the creation of new trusts and deferred gifts
creates expanded liabilities, it is in fact a measure of fund-raising success.




                                                      4
The UCSB Foundation
Management’s Discussion and Analysis
As of and For the Years Ended June 30, 2007 and 2006 (Unaudited)


Net Assets
FY 2005-2006
The categories of Restricted-Expendable and Restricted-Nonexpendable (endowment) address both
restricted current use and endowment funds. It is important to note that, as a measure of fundraising
success, the Unrestricted Net Assets increased from $677,920 on June 30, 2005 to $715,780 on June 30,
2006. We anticipated that this increase in the Unrestricted balance will be allocated to the campus during
the 2006-2007 Fiscal Year in support of the Campaign for U.C. Santa Barbara.

The Foundation posted strong gains in the Restricted-Expendable category due to a change in donor
giving patterns that focused on current campus initiatives. We anticipate an increase in offsetting
transfers to campus in the coming years. The growth in Restricted-Nonexpendable net assets occurred
at a higher rate. As in the prior year, this reflects a blend of continued fundraising success and fulfillment
of prior year pledges that are funding endowments.

FY 2006-2007
The categories of Restricted-Expendable and Restricted-Nonexpendable (endowment) address both
restricted current use and endowment funds. It is important to note that, as a measure of fundraising
success, the Unrestricted Net Assets increased from $715,780 on June 30, 2006 to $816,794 on June 30,
2007. We anticipate that this increase in the Unrestricted balance will be allocated to the campus during
the 2007-2008 Fiscal Year in support of the Campaign for U.C. Santa Barbara.

The Restricted-Expendable balance increase dramatically as the Foundation realized strong fundraising
success in current use gifts and expanded use of Funds Functioning as Endowments (“FFEs”) in support
of longer-term campus program expenditure plans. Additionally, the strong investment performance
compounded the growth of assets in this category as unrealized gains are reported as Restricted-
Expendable Assets. The growth in Restricted-Nonexpendable net assets was sustained at a fairly strong
rate as endowment gift and pledge payment activity remained strong. As in the prior year, this reflects a
blend of continued fundraising success and fulfillment of prior year pledges that are funding endowments.

Condensed Statements of Revenues, Expenses and Changes in Net Assets

                                                 June 30,               June 30,                June 30,
                                                   2007                   2006                    2005


Operating revenues                            $ 21,234,590           $ 10,544,212           $    8,257,817
Operating expenses                              11,016,469             12,874,037               10,608,608

              Operating income (loss)            10,218,121              (2,329,825)            (2,350,791)

Non-operating revenues                           17,372,995              8,282,242               6,094,789
Capital contributions                             6,673,450              6,507,846               4,041,380

              Changes in net assets              34,264,566             12,460,263               7,785,378

Net assets, beginning of year                    91,287,421             78,827,158              71,041,780

Net assets, end of year                       $ 125,551,987          $ 91,287,421           $ 78,827,158




                                                      5
The UCSB Foundation
Management’s Discussion and Analysis
As of and For the Years Ended June 30, 2007 and 2006 (Unaudited)


Revenue and Support
FY 2005-2006
Operating revenues increase significantly from $8.26 million to $10.54 million for the years ended
June 30, 2005 and 2006, respectively. This reflects increased giving towards the new campus Alumni
House that were directed through the UCSB Foundation.

Operating expenses increased to a historically high level (from $10.61 million to $12.87 million for the
years ended June 30, 2005 and 2006, respectively). This sustained level of activity includes all transfers
to funds from the Foundation to the campus. As a result it is directly reflective of continued fundraising
success. The Foundation also released funds to campus in support of the Campaign for U.C. Santa
Barbara and provided releases of funds to campus for specific Capital Projects. In the fiscal year ended
June 30, 2006 the Foundation provided the U.C.Regents with a one-time supplemental release of
$1.00 million in support of the Campaign for U.C. Santa Barbara.

Distributions from Endowment Funds and Designated Funds increased when contrasted to the prior year.
The Foundation’s Endowment payout policy, adopted in conformance with UMIFA, provides prudent
Capital Preservation for both Endowment Funds and Designated Funds. It is also intended to assure a
stable flow of payouts in the face of volatile market conditions. Because the Foundation uses a sixty-
month average share value to achieve a more stable payout flow, and because the Foundation
maintained the payout policy at the five percent level for the 2005-2006 fiscal year, the increased level of
distributions relative to the prior year is simply reflective of the growth in the Fair Market Value of the
Endowment Funds and Designated Funds.

Non-operating revenues increased from a net non-operating revenue of $6.09 million to net non-operating
revenues of $8.28 million for the years ended June 30, 2005 and 2006, respectively. This reflects the
swing up in short-term rates and the consequent improvement in interest earnings generated through
investments. Dividend revenues remained at relatively low levels. Despite this improvement, the process
of distributing endowment payouts under UMIFA required the realization of capital gains as income and
the associated distribution of those gains to campus. This is a planned practice as the Foundation
invests for total return on the portfolio and views current income as a secondary objective.

Capital contributions (funds placed into permanent endowments) continued to grow at a significant pace
as a result of fund-raising success. The $6.51 million attributed to Capital Contributions accounted for
slightly more than half of the growth in Net Assets in FY 2005-2006. This is consistent with the prior fiscal
year when Capital Contributions totaled $4.04 million and accounted for more than half of the growth in
Net Assets. This improvement represents a combination of new endowment gift activity and the receipt of
pledge payments tied to pre-existing Endowment Funds.

FY 2006-2007
Operating revenues increase significantly from $10.54 million to $21.23 million for the years ended
June 30, 2006 and 2007, respectively. This reflects increased giving towards the new campus capital
projects that were directed through The UCSB Foundation and strong performance in endowment pledge
payments from prior year commitments.




                                                     6
The UCSB Foundation
Management’s Discussion and Analysis
As of and For the Years Ended June 30, 2007 and 2006 (Unaudited)


Revenue and Support (Continued)
FY 2006-2007 (Continued)
Operating expenses declined from a historical high of $12.87 million for the year ended June 20, 2006
down to $11.02 million for the year ended June 30, 2007. While a reduction, this still represents a very
high level of activity when compared to historical performance. This level of activity includes all transfers
to funds from the Foundation to the campus. As a result, it is directly reflective of continued fundraising
success. The Foundation also released funds to campus in support of the Campaign for U.C. Santa
Barbara and provided releases of funds to campus for specific Capital Projects. In the fiscal year ended
June 30, 2006 the Foundation provided The U.C. Regents with a one-time supplemental release of $1.00
million in support of the Campaign for U.C. Santa Barbara. When controlling for this event the reduction
in transfers is much less pronounced.

Distributions from Endowment Funds and Designated Funds increased when contrasted to the prior year.
The Foundation’s Endowment payout policy, adopted in conformance with UMIFA, provides prudent
Capital Preservation for both Endowment Funds and Designated Funds. It is also intended to assure a
stable flow of payouts in the face of volatile market conditions. Because the Foundation uses a sixty-
month average share value to achieve a more stable payout flow, and because the Foundation
maintained the payout policy at the five percent level for the 2006-2007 fiscal year, the increased level of
distributions relative to the prior year is simply reflective of the growth in the Fair Market Value of the
Endowment Funds and Designated Funds.

Non-operating revenues increased from a net non-operating revenue of $8.28 million to net non-operating
revenues of $17.37 million for the years ended June 30, 2006 and 2007, respectively. This reflects the
increase in short-term rates and the consequent improvement in interest earnings generated through
investments. Dividend revenues remained at relatively low levels. Despite this improvement, the process
of distributing endowment payouts under UMIFA required the realization of capital gains as income and
the associated distribution of those gains to the campus. This is a planned practice as the Foundation
invests for total return on the portfolio and views current income as a secondary objective.

Capital contributions (funds placed into permanent endowments) grew at a moderate pace as a result of a
plateau in fund-raising performance related to endowments. While the $6.67 million received in FY 2006-
2007 is a historically high figure, the recognition of unrealized gains as Non-operating Revenues accounts
for the dramatic increase in this category.


Factors Impacting Future Periods
Management has seen a stabilization of pledge fulfillment trends as the economy has performed more
consistently. That being said, the Foundation Board and management team are careful not to make
programmatic commitments based on outstanding pledge balances, so any fluctuations are not material
to the Foundation’s financial condition. However, this is an area that continues to be monitored carefully.




                                                      7
The UCSB Foundation
Management’s Discussion and Analysis
As of and For the Years Ended June 30, 2007 and 2006 (Unaudited)


Factors Impacting Future Periods (Continued)
Management is aware of increased employment within the Development Office on the U.C. Santa
Barbara campus. This has translated into additional fundraising results in recent years. The Foundation
is facing added endowment management responsibilities and the associated increase in investment
management workload. Management added a staff position during the 2006-2007 fiscal year to assist
with the increase workload projected for the fiscal year ending June 30, 2008. The expense of this
position is being offset by an allocation of funds generated through an Endowment Cost Recovery Fee.
The Board has directed management to move funds invested through the U.C. Treasurer’s Office to an
external investment management services firm (Goldman Sachs). This transition will occur on or about
October 1, 2007.

In response to market volatility and more conservative projections of long-term financial market returns,
Management made a significant modification to the UMIFA Endowment Payout distribution formula by
moving to a mid-year calculation of the sixty-month rolling average. This had the effect of reducing the
UMIFA Endowment Payout distribution formula for the 2007-2008 fiscal year by about 3.7% from the
model used in FY 2006-2007. The 60-month rolling average share value for the UC General Endowment
Pool as of December 31, 2006 was $19.65 while the share value for GEP on June 30, 2007 was $24.29.
So the 60-month rolling average is 80.89% of the share value as of June 30, 2007. Applying this factor in
calculating the annual payout means that the annual distribution is equivalent to 4.04% of the Fair Market
Value of Endowment Principal for each Fund as of June 30, 2007. Investment portfolio performance
(total return net of fees and charges) would have to exceed the 4.04% level by a factor greater than a
long-term inflation rate assumption to protect against an inter-generational decline in endowment
purchase power. This is the concern that management has focused on and that drove management to
implement this change in the UMIFA endowment distribution policy for future years.

Management is not aware of any other factors that would have a significant negative impact on future
periods.




                                                    8
The UCSB Foundation
Statements of Net Assets
June 30, 2007 and 2006

                                                                         2007                 2006

Assets
Current assets
   Cash                                                             $        16,156      $        40,213
   Short-term investments                                                 6,269,870            5,649,865
   Pledges receivable-current portion, net                                5,178,459            1,405,803
   Accounts receivable                                                       16,247              410,320
   Other current assets                                                      11,078               11,199

                  Total current assets                                   11,491,810            7,517,400

Noncurrent assets
  Pledges receivable-net                                                  8,353,373            3,651,959
  Assets of charitable remainder trusts                                   3,170,566            2,719,370
  Investments                                                           104,292,202           78,937,982
  Contributed assets held for sale                                               14                   14
  Equipment-net of accumulated depreciation                                   8,018               12,585

                  Total noncurrent assets                               115,824,173           85,321,910

                  Total assets                                      $ 127,315,983        $    92,839,310

Liabilities and Net Assets
Current liabilities
   Accounts payable                                                 $        1,255       $        4,997
   Charitable remainder trust liability                                    202,516              175,996

                  Total current liabilities                                203,771              180,993

Noncurrent liabilities
  Charitable remainder trust liability                                    1,560,225            1,370,896

                  Total noncurrent liabilities                            1,560,225            1,370,896

                  Total liabilities                                       1,763,996            1,551,889

Net assets
   Invested in capital assets-net of related debt                            8,018               12,585
   Unrestricted                                                            816,794              715,780
   Restricted
      Nonexpendable
          Endowment                                                      46,783,540           39,325,035
          Charitable Remainder Trust Funds                                1,407,825            1,172,478
      Expendable
          Endowment                                                      20,418,635           11,474,881
          Funds functioning as endowments                                49,863,235           32,407,539
          Gifts                                                           6,253,940            6,179,123

                  Total net assets                                  $ 125,551,987        $    91,287,421




                 The accompanying notes are an integral part of these financial statements.

                                                     9
The UCSB Foundation
Statements of Revenues, Expenses and Changes in Net Assets
For the Years Ended June 30, 2007 and 2006


                                                                           2007                 2006

Operating revenues
Contributions, net of allowance                                       $ 21,220,158           $ 10,532,465
Other revenue                                                               14,432                 11,747

                 Total operating revenues                                 21,234,590           10,544,212

Operating expenses
General operations                                                         1,809,327            2,925,489
University programs and other designated disbursements                     8,395,002            9,310,803
Scholarships and awards                                                      812,140              637,745

                 Total operating expenses                                 11,016,469           12,874,037

                 Operating income (loss)                                  10,218,121            (2,329,825)

Nonoperating revenues
Realized/unrealized gains on investments, net                             14,511,832            5,996,155
Interest and dividends                                                     2,625,815            2,016,917
Change in the value of charitable remainder trust liabilities                235,347              269,170

                 Total nonoperating revenues                              17,372,995            8,282,242

                 Increase in net assets before
                    capital contributions                                 27,591,116            5,952,417

Other changes in net assets
Permanent endowment contributions                                          6,673,450            6,507,846

                 Changes in net assets                                    34,264,566           12,460,263

Net assets
Beginning of year                                                         91,287,421           78,827,158

End of year                                                           $ 125,551,987          $ 91,287,421




                The accompanying notes are an integral part of these financial statements.

                                                      10
The UCSB Foundation
Statements of Cash Flows
For the Years Ended June 30, 2007 and 2006

                                                                           2007                  2006

Cash flows from operating activities
  Receipts from contributions                                         $ 11,412,876          $ 10,332,986
  Payments to campus                                                    (9,207,142)           (9,948,548)
  Payments to beneficiaries                                               (179,490)             (154,572)
  Payments for administrative expenses                                  (1,809,327)           (2,932,443)
  Other receipts/payments – net                                            263,256              (852,954)

               Net cash provided by (used in)
                  operating activities                                      480,173             (3,555,531)

Cash flows from capital and related financing activities
  Purchases of equipment                                                           –                (6,954)

Cash flows from noncapital financing activities
  Private gifts for endowment purposes                                    5,313,803             3,898,087

Cash flows from investing activities
  Proceeds from sale of investments                                      7,991,988           13,037,867
  Purchases of investments                                             (16,435,836)         (15,385,622)
  Interest and dividends on investments                                  2,625,815            2,016,917

               Net cash used in investing activities                      (5,818,033)            (330,838)

               Net (decrease) increase in cash                              (24,057)                4,764

Cash – beginning of year                                                     40,213                35,449

Cash – end of year                                                    $      16,156         $      40,213

Supplemental Disclosure Noncash Gifts
  Marketable securities                                               $ 2,692,857           $ 2,231,438
  Real estate                                                         $         –           $ 1,250,000

Reconciliation of net operating income (loss) to net cash
  provided by (used in) operating activities
  Operating income (loss)                                             $ 10,218,121          $ (2,329,825)
  Adjustments to reconcile operating income (loss) to net cash
     provided by (used in) operating activities
     Depreciation                                                              4,567                4,960
     Noncash gifts                                                        (1,322,629)            (535,409)
     Changes in assets and liabilities
         Decrease (increase) in other current assets                             121                 (624)
         Decrease (increase) in accounts receivable                           57,805             (390,795)
         Decrease (increase) in pledges receivable                        (8,474,070)             672,199
         (Decrease) in accounts payable                                       (3,742)            (976,037)

               Net cash provided by (used in)
                  operating activities                                $     480,173         $ (3,555,531)



               The accompanying notes are an integral part of these financial statements.

                                                   11
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


1.    Organization

      The UCSB Foundation (the “Foundation”), a not-for-profit organization, was formed in 1973 for
      the purpose of encouraging voluntary private gifts, trusts and bequests for the benefit of the
      University of California, Santa Barbara (the “University”). Funds raised through the Foundation
      on behalf of The Regents of The University of California are made directly to The Regents and
      are not included in the accompanying financial statements. The Foundation provides financial
      support for various University-related programs, including faculty research and teaching activities,
      student scholarships, equipment purchases and capital improvements. The Foundation transfers
      monies to the University, which assumes responsibility for actual disbursement.

      The Foundation is subject to the policies and procedures of The Regents of the University of
      California and is a component unit of the University of California and as such will be included in
      the basic financial statements of the University of California. The University established
      administrative guidelines for the Foundation with regard to the Foundation’s ability to conduct
      operations through its Policy on Campus Foundations. The University’s policy limits the ability of
      the Foundation to make certain expenditures and provides a general framework for its operations.
      The Foundation was established solely to support the mission of the University, and is considered
      a governmental not-for-profit organization, subject to reporting under the Governmental
      Accounting Standards Board (the “GASB”). The Foundation does not have any component units.


2.    Summary of Significant Accounting Policies

      Basis of Accounting
      The financial statements are prepared using the economic resources measurement focus and
      accrual basis in conformity with accounting principles generally accepted in the United States of
      America as promulgated by the GASB. The GASB requires that the Foundation comply with the
      requirements of all GASB pronouncements as well as Financial Accounting Standards Board
      Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research
      Bulletins issued on or before November 30, 1989 that do not conflict with or contradict GASB
      pronouncements.

      A summary of the significant accounting policies applied in the preparation of the accompanying
      financial statement is presented below:

      Cash and Cash Equivalents
      Cash and cash equivalents consist of cash held in bank accounts, cash on hand and any short-
      term investments with original maturities of less than three months. Money market accounts are
      treated as investments.

      Investments and Spending Policy
      Investments consist mainly of stocks, bonds, U.S. Treasury notes, tax-exempt securities,
      certificates of deposit and money market accounts. Donated securities held as investments, with
      no objectively determinable market value, are stated at a nominal amount.




                                                  12
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


2.    Summary of Significant Accounting Policies (Continued)

      Investments and Spending Policy (Continued)
      Investments are carried at fair value. Investments consist principally of investments in The
      Regents of the University of California Short Term Investment Pool (“STIP”) and General
      Endowment Pool (“GEP”). The basis of determining the fair value of investments is the readily
      determinable sales price or current exchange rate of the investments based on prices or
      quotation from over the counter markets. In the case of pooled funds or mutual funds, fair value
      is determined as the number of units held in the pool multiplied by the price per unit share as
      quoted by the broker.

      The net change in the fair value of investments represents both realized and unrealized gains and
      losses on investments. The calculation of realized gains and losses is independent of the
      calculation of the net change in the fair value of investments. Realized gains or losses are
      computed based on specific identification of investments sold or units held in pooled funds. Any
      gains or losses recognized on the sale of current fund investments are included with investment
      income and are available for distribution. All or a portion of gains and losses on the sale of
      endowment fund investments are reinvested in principal. The income allocated could include
      capital gains, which are treated as spendable income rather than additions to principal.

      Endowment funds are invested in accordance with the Endowment Investment Spending Policies
      and Guidelines, adopted by the Board of Trustees (the “Board”) and the Uniform Management of
      Institutional Funds Act (“UMIFA”). Investment decisions are based on a long-term investment
      strategy, with an objective of maximizing the endowment portfolio’s long-term total return (yield
      plus appreciation). The portfolio generally maintains a mix of 60% to 80% equity securities and
      20% to 40% fixed income securities, with further refinements in the type of securities held.

      It is the goal of the Foundation that the total return from endowment investments should be
      adequate to meet the following objectives:

          •   Preserve investment capital and its purchasing power.
          •   Generate sufficient resources to meet spending needs (payout).
          •   Attain reasonable capital appreciation through prudent acceptance of risk to enhance the
              future purchasing power of the investment capital.

      The Board has established an endowment-spending rate policy that gives consideration to total
      return, inflation and the expendable income needs of the fund holders. The amount of actual
      cash yield the endowment portfolio earns is not the determining factor for the established
      spending rate and may be greater or less than the amount of expendable income allocated to
      endowment fund holders during any one fiscal year. Both realized and unrealized net gains in the
      portfolio may be used in addition to the actual cash yield to meet the annual established spending
      rate. The Board-approved annual endowment-spending rate for the Fiscal Years ended June 30,
      2007 and 2006 was 5% of the sixty-month rolling average Fair Market Value as of June 30, 2006
      and 2005, respectively, for each endowment.

      Pledges Receivable
      Unconditional pledges of private gifts to the Foundation that are not endowment-related are
      recorded as pledges receivable and revenue in the year promised at the present value of
      expected cash flows. Conditional pledges, pledges of endowments, and intentions to pledge, are
      recognized as receivables and revenues when the specified conditions and/or eligibility and
      recognition requirements of GASB 33 are met.



                                                 13
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


2.    Summary of Significant Accounting Policies (Continued)

      Assets of Charitable Remainder Trusts
      The Foundation has been designated as the trustee for several charitable remainder trusts (the
      “Trusts”). The trust agreements require that the Foundation make annual payments to the trust
      beneficiaries. Upon the death of the beneficiaries or termination of the Trusts as defined, the
      remaining assets of the Trusts will become available to the Foundation, as stipulated in the trust
      agreements. Following the trend established by the University of California in 2004 for its
      charitable remainder trusts, The UCSB Foundation moved administration of its trusts to two
      outside firms specializing in this function. The trust assets continued to be held at the UC Office
      of the Treasurer and are broadly invested, with the exception of any asset that could give rise to
      Unrelated Business Income.

      The Trusts are established by donors to provide income, generally for life, to designated
      beneficiaries. Each year, beneficiaries receive payments as specified in the trust agreement, a
      fixed payment (annuity trusts) or a percentage of the Trusts’ fair market value (standard unitrust).
      The liability represents actuarially determined amounts for contractual obligations of the
      charitable remainder trusts.

      Funds Held in Trust
      The Foundation has been named the irrevocable beneficiary for several charitable remainder
      trusts for which the Foundation is not the trustee. Upon maturity of each trust, the remainder of
      the trust corpus will be transferred to the Foundation.

      Consistent with the Foundation’s recognition policy for pledges of endowment, receivables and
      contribution revenue associated with these trusts are not reflected in the accompanying financial
      statements. The Foundation recognizes contribution revenue when all GASB 33 eligibility
      requirements have been met (that is when the resources are actually distributed to the
      Foundation).

      Donated Properties
      Donations of securities, real estate properties and other nonmonetary items are recorded at their
      fair market value at the date of gift. Real estate properties currently listed for sale are recorded at
      appraised value or present market value, less estimated selling expenses, whichever is lower.

      Contributed Assets Held for Sale
      From time to time, the Foundation receives assets other than cash from its donors. It is the
      Foundation’s policy to sell these assets to support its programs or, in the case of Endowment
      Funds, to invest them in accordance with the Foundation’s investment policy. At June 30, 2007
      and 2006, several non-cash contributions were held pending sale. They were comprised of non-
      liquid stock certificates in privately held corporations. It is the Foundation’s intention to liquidate
      these assets as soon as is practicable.

      Equipment
      Depreciation is computed using the straight-line method over a five-year useful life. At June 30,
      2007 and 2006, the cost of equipment was $63,416 for both years (no new equipment was
      purchased in fiscal year 2007) and accumulated depreciation was $55,398 and $50,831,
      respectively.




                                                    14
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


2.    Summary of Significant Accounting Policies (Continued)

      Other Deferred Gifts
      For deferred gift instruments other than charitable remainder trusts, a deferred gift is recorded
      when a donor makes an immediate transfer of the remainder interest of an asset to the
      Foundation. However, the Foundation will not receive the benefits of the remainder interest until
      subsequent periods. Upon the death of the donor, or as described in the agreement, the
      remainder interest of the asset will become contributions to the Foundation as stipulated in the
      agreement.

      The Foundation has been notified of certain deferred gifts (intentions to give, interests in
      charitable annuity pools) from which it will receive assets. These deferred gifts are not reflected
      in the accompanying financial statements.

      Net Assets
      To ensure observance of limitations and restrictions placed on the resources available to the
      Foundation, net assets and revenues, expenses, and gains and losses are classified and
      reported as follows, based on the existence or absence of donor-imposed restrictions or other
      externally imposed restrictions.

              Invested in capital assets – Invested in capital is used to account for equipment, net of
              accumulated depreciation and any related debt. There is no outstanding debt related to
              Foundation capital assets.

              Unrestricted net assets – Unrestricted net assets are net assets of the Foundation that
              are not subject to donor-imposed restrictions.

              Restricted net assets, expendable – Net assets whose use by the Foundation is
              subject to externally-imposed restrictions that can be fulfilled by actions of the Foundation
              pursuant to those restrictions or that expire by the passage of time are classified as
              expendable net assets.

              Restricted net assets, nonexpendable (endowment or permanently restricted) –
              Restricted net assets, nonexpendable are used to account for net assets that are subject
              to restrictions of gift instruments requiring, in perpetuity, that the principal be invested,
              and permitting only a certain amount of the annual return generated by the investment to
              be distributed (“spending”). The spending component of restricted net assets,
              nonexpendable is classified as restricted net assets, expendable as all investment return
              associated with these gifts is purpose-restricted.

              Restricted net assets, nonexpendable (charitable remainder trusts) – Charitable
              remainder trust funds are resources acquired by the Foundation subject to an agreement
              whereby the assets are made available on the condition that the Foundation distribute
              stipulated amounts periodically to designated individuals. Payments of such amounts
              terminate at a time or event specific in the agreement and upon termination the principal
              of the remaining funds reverts to the Foundation. This category applies to trust funds
              when the donor has provided for the establishment of an endowment upon maturity.




                                                   15
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


2.    Summary of Significant Accounting Policies (Continued)

      Revenues and Expenses
      Operating revenues and expenses are distinguished from non-operating items and generally
      result from providing services in connection with ongoing operations and stewarding of current
      funds. The principal operating revenues are derived from gifts and other fund-raising activities.
      Operating expenses include distributions to the University and administrative expenses.

      Non-operating revenues and expenses include investment income, net realized gain (loss) on the
      sale of investments, change in unrealized appreciation (depreciation) in the fair value of
      investments and the change in the carrying value of charitable remainder trust obligations.

      Gifts from permanent endowment purposes are classified as Other Changes in Net Assets.

      Income Tax Status
      No provision has been made for federal or state income taxes, as the Foundation is organized
      and operates as a not-for-profit corporation as described in Section 501(c)(3) of the Internal
      Revenue code and corresponding section of the California Revenue and Taxation Code.

      Use of Estimates
      The preparation of financial statements in conformity with accounting principles generally
      accepted in the United States of America requires management to make certain estimates and
      assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
      assets and liabilities at the date of the financial statements and the reported amounts of revenue
      and expenses during the reporting period. Actual results could differ from those estimates.


3.    Cash and Investment Management

      In accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures, the
      Foundation’s investments are reported by investment type at market value in the composition of
      investments below. GASB Statement No. 40 also requires the disclosure of various types of
      investment risks based on the type of investment, as well as, stated polices adopted by the
      Foundation to manage those risks.




                                                  16
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


3.    Cash and Investment Management (Continued)

      Cash and investments consist of the following as of June 30, 2007 and 2006:

                                                                     2007                 2006

      Cash
      Commercial banks                                         $       16,156       $      40,213

                     Total cash                                $       16,156       $      40,213


      Investments
      Equity securities
         Domestic                                              $      195,015       $     118,458
         Foreign                                                      735,173             263,096
      Fixed income securities
         U.S. Treasury bills                                                 –            258,700
      Commingled funds
         Balanced funds (Regents GEP, American Funds)              102,632,337          78,274,782
         U.S. equity funds (Regents Russell 3000, SEI Large
             Cap, SEI Small Cap)                                     1,519,278           1,370,904
         Non-U.S. equity funds (Regents EAFE Index Fund,
             SEI Int’l. Funds, SEI Emerging Markets Fund)             474,211             418,096
         U.S. bond funds (Regents Fixed Income Fund,
             SEI Fixed Income Fund, SEI Bond Fund)                    936,334             884,484
         Non-U.S. bond funds (SEI Emerging Markets
             Debt Fund)                                                  3,998              3,981
         Money market funds (Regents STIP, Federated
             Prime Obligations Fund)                                 7,031,292           5,714,715
      U.S. real estate property                                        205,000                   –

                     Total investments                             113,732,638          87,307,216

                     Total cash and investments                $ 113,748,794        $ 87,347,429


      Current – cash                                           $        16,156      $       40,213
      Current – short-term investments                               6,269,870           5,649,865
      Noncurrent – investments (includes assets of
        charitable trusts)                                         107,462,768          81,657,351

                     Total cash and investments                $ 113,748,794        $ 87,347,429




                                                17
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


3.    Cash and Investment Management (Continued)

      The Foundation deposits and maintains cash in a commercial bank to meet the operating needs
      and transfers the excess funds as often as necessary to its primary investment account at the
      University of California.

      The Foundation invests primarily in the University of California commingled funds (UC pooled
      funds). A description of the funds used is as follows:

          The General Endowment Pool (“GEP”) is a balanced portfolio containing equity and fixed-
          income securities that provide diversification and economies of scale. The primary goal is to
          maximize long-term total return, growth of principal, and a growing payout stream to ensure
          that future funding for endowment-supported activities can be maintained. This fund is used
          as the core investment vehicle for the Foundation’s endowed contributions.

          The Short Term Investment Pool (“STIP”) is a money market portfolio intended to allow
          fund participants to maximize return on their short-term cash balances by taking advantage of
          the economies of scale of investing in a larger pool. STIP emphasizes safety of principal and
          provides liquidity to meet campuses’ cash-flow requirements. Investments authorized by The
          Regents for the STIP include a broad spectrum of high-quality money market and fixed-
          income securities with a maximum maturity of 5½ years. This fund is used by the Foundation
          as its core investment vehicle for expendable contributions.

      The Foundation utilizes the following investment funds, as created by the UC Treasurer’s Office
      and held in custody accounts at State Street Global Advisors, for its trusts:

          The Russell 3000 Tobacco Free Index is a U.S. equity fund, comprised of stocks in the
          Russell 3000 index, excluding tobacco companies. This fund is managed by State Street
          Global Advisors.

          The EAFE Index is a non-U.S. equity fund, comprised of the Morgan Stanley Capital Europe,
          Asia, Far East (“EAFE”) Index plus Canada, excluding U.S. This fund is managed by State
          Street Global Advisors.

          The Fixed Income Pool is a U.S. bond portfolio made up of U.S. government securities and
          mortgage-backed and U.S. corporate bonds. This pool is managed by the Treasurer of the
          University of California.

      Change in the Fair Value of Investments
      The change in the fair value of investment represents the difference between the fair value of the
      investments at the beginning of the fiscal year and the end of the fiscal year, taking into
      consideration investment purchases, sales and redemptions. The calculation of realized gains
      and losses on the sale of investments is independent of the calculation of the net change in the
      fair value of investments. Realized gains and losses on investments that had been held more
      than one fiscal year and sold in the current year were included as a change in the fair value of
      investments reported in the current year and include transactions arising from sale of contributed
      assets and liquidation of investment accounts during the year.




                                                  18
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


3.    Cash and Investment Management (Continued)

      The components of the change in fair value of investments are as follows for the year ended
      June 30, 2007 and 2006:

                                                                          2007                    2006

      Unrealized appreciation on investments                         $ 14,144,722             $   5,742,609
      Realized gain on investments, net                                   367,110                   253,546

      Change in the fair value of investments                        $ 14,511,832             $   5,996,155

      Investment Risk Factors
      There are many factors that can affect the value of investments. Some, such as custodial risk,
      interest rate risk, concentration of credit risk, and foreign currency risk may affect both equity and
      fixed income securities. Equity securities respond to such factors as economic conditions,
      individual company earnings performance, and market liquidity, while fixed income securities are
      particularly sensitive to credit risks and changes in interest rates. The Foundation has
      established investment policies to provide the basis for the management of a prudent investment
      program appropriate to the particular fund type.

      Credit Risk
      Fixed income securities are subject to credit risk, which is the risk that a bond issuer will fail to
      pay interest or principal in a timely manner, or that negative perceptions of the issuer’s ability to
      make these payments will cause security prices to decline. The circumstances may arise due to
      a variety of factors such as financial weakness, bankruptcy, litigation and/or adverse political
      developments. A bond’s credit quality is an assessment of the issuer’s ability to pay interest on
      the bond, and ultimately, to pay the principal. Credit quality is evaluated by one of the
      independent bond rating agencies such as Moody’s Investors Service or Standard and Poor’s.
      The lower the rating, the greater the chance that the bond issuer will default or fail to meet its
      payment obligations. Generally, the lower a bond’s credit rating the higher its yield should be to
      compensate for the additional risk.

      Certain fixed income securities, including obligations of the U.S. government or those explicitly
      guaranteed by the U.S. government, are not considered to have risk. The Foundation’s
      investment in the University’s STIP is considered to be an investment in an external investment
      pool and is “unrated.” Similarly, the Fixed Income Pool, managed by the UC Regent’s Treasurer,
      is an external commingled pool and also is “unrated.”

      The credit risk profile for fixed income securities at June 30, 2007 is as follows:

              Fixed income – commingled funds                                               Credit Rating
              U.S. bond funds                                        $     936,334            not rated
              Non-U.S. bond funds                                            3,998            not rated
              Money market funds                                         7,031,292            not rated

                               Total fixed-income securities         $ 7,971,624




                                                   19
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


3.    Cash and Investment Management (Continued)

      Custodial Credit Risk – Deposits and Investments
      Custodial credit risk for deposits and investments is the risk that in the event of the failure of the
      custodian, the Foundation may not be able to recover the value of investment securities that are
      in the possession of an outside party.

      The Board of Trustees of The UCSB Foundation, as the governing board, is responsible for
      oversight of the Foundation’s investments. Pursuant to The Regents’ Policy on Campus
      Foundations, the Foundation’s Board of Trustees has the authority to oversee the management of
      its investments directly, or utilize the services and investment vehicles offered by the UC
      Regents’ Treasurer’s Office. The Foundation Board has chosen to primarily use the various
      pooled investment vehicles managed by the UC Regents’ Treasurer as its core investment for the
      endowment expendable funds, and its trusts. Although it does not have a specific policy
      addressing custodial risk, substantially all of the Foundation’s investment assets (98%) are
      invested with the various investment pools managed by the Treasurer of the University of
      California. These pools are considered to be investments in external pools and are not exposed
      to custodial credit risk because their existence is not evidenced by securities that exist in physical
      or book entry form. The Foundation has investment in the GEP and STIP, as described earlier.
      Similarly, the investment accounts held at State Street Global Advisors (EAFE Index, Russell
      3000 Index and Fixed Income Fund), are also externally managed pools and the assets are held
      in custody or trust and would not be available to State Street’s creditors because they are
      excluded from the assets of the custodian.

      The Foundation minimizes cash balances by sweeping available balances into investment
      accounts on a regular basis. The majority of the cash balance not invested is maintained in the
      STIP.




                                                    20
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


3.    Cash and Investment Management (Continued)

      Custodial Credit Risk – Deposits and Investments (Continued)
      The custodial credit risk profile for investments at June 30, 2007 and 2006 is as follows:

                                                                            2007                 2006

      Exposed to custodial risk
      Investment type
         Equity Securities
            Domestic                                                  $      195,015        $      118,458
            Foreign                                                          735,173               263,096
         Fixed income securities
            U.S. Treasury bills                                                     –              258,700

                       Total exposed to custodial risk                       930,188               640,254

      Not subject to custodial risk
      Cash and cash equivalents                                               16,156                40,213
      Commingled funds
         Balanced funds (Regents GEP, American Funds)                     102,632,337           78,274,782
         U.S. equity funds (Regents Russell 3000, SEI
             Large Cap, SEI Small Cap)                                      1,519,278            1,370,904
         Non-U.S. equity funds (Regents EAFE Index Fund,
             SEI Int’l. Funds, SEI Emerging Markets Fund)                    474,211               418,096
         U.S. bond funds (Regents Fixed Income Fund,
             SEI Fixed Income Fund, SEI Bond Fund)                           936,334               884,484
         Non-U.S. bond funds (SEI Emerging Markets
             Debt Fund)                                                         3,998                 3,981
         Money market funds (Regents STIP, Federated
             Prime Obligations Fund)                                        7,031,292            5,714,715
      U.S. real estate property                                               205,000                    –

                       Total not subject to custodial risk                112,863,392           86,707,175

                       Total cash and investments                     $ 113,748,794         $ 87,347,429

      Concentration of Credit Risk
      Concentration of credit risk is the risk of loss associated with a lack of diversification of having too
      much invested in a few individual issuers, thereby exposing the organization to greater risks
      resulting from adverse economic, political, regulatory, geographic, or credit developments.
      Securities issued or explicitly guaranteed by the U.S. government, mutual funds, external
      investment pools and other pooled investments are excluded from this review. Investments in the
      various investment pools managed by the Treasurer of the University of California are external
      investment pools and are not subject to concentration of credit risk. There is no concentration of
      any single individual issuer of equity or non-U.S. government fixed income securities that
      comprise more than five percent of total investments.




                                                    21
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


3.    Cash and Investment Management (Continued)

      Interest Rate Risk
      Interest rate risk is the risk that fixed income securities will decline because of rising interest
      rates. The Foundation measures interest rate risk using the effective duration method. The
      Interest Rate Risk schedule summarizes the average effective duration of its fixed income
      investments. The Foundation maintains a policy to manage interest rate risk for fixed income
      investments which requires, in the aggregate, the average duration of managed fixed income
      assets to be maintained within the range of the average duration of the current Lehman
      Aggregate Bond Index plus or minus one and one-half years. This policy does not apply to
      investments in the unendowed investment pool including the STIP or other money market funds.

      The interest rate risk profile for fixed income securities at June 30, 2007 and 2006 is as follows:

                                            2007             Effective        2006              Effective
                                          Fair Value         Duration       Fair Value          Duration

      Commingled Funds
      U.S. bond funds                    $     936,334       5.28 years    $     884,484        4.74 years
      Non-U.S. bond funds                        3,998       9.22 years            3,981       10.03 years
      Money market funds                     6,269,870       1.23 years        5,649,865        1.10 years

                Total fixed income       $ 7,210,203                       $ 6,538,330

      Foreign Currency Risk
      Foreign currency risk is the possibility that changes in exchange rates between the U.S. dollar
      and foreign currencies could adversely affect a deposit or investment’s fair value. The
      Foundation, via its investment in the STIP fund, has no exposure to foreign currency risk. The
      Foundation’s endowment asset allocation policy includes an allocation to non-U.S. equities. This
      exposure is obtained through investment in the GEP, which has an internal allocation to non-U.S.
      securities. The Foundation also has foreign currency exposure through its investment in The
      Regents’ EAFE Index Fund due to the foreign currency denominated investments in this fund.
      Under the Foundation’s investment policy, there is no provision to purchase individual foreign-
      denominated securities but one investment fund (less than 10% of the Foundation’s investments)
      has invested in foreign securities on our behalf.

      The components in the foreign currency risk profile as of June 30, 2007 and 2006 are as follows:

                                                                          2007                   2006

      Equity Securities
      Australian dollar                                             $     168,000          $      62,360
      Canadian dollar                                                     567,173                200,736

                   Total exposure to foreign currency risk          $     735,173          $     263,096




                                                   22
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


4.    Pledges Receivable

      Included in pledges receivable at June 30, 2007 and 2006 are the following unconditional
      promises to give:

                                                                        2007                 2006

      Amount due in
      Less than one year                                           $    5,598,334       $   1,519,787
      One to five years                                                10,266,082           4,298,677
      Due after 5 years                                                   100,000             796,121

                      Subtotal                                         15,964,416           6,614,585

      Unamortized discount                                             (1,335,408)           (496,734)

      Allowance for uncollectibles
      Current                                                            (419,875)           (113,984)
      Noncurrent                                                         (677,301)           (946,105)

                      Total allowance                                  (1,097,176)          (1,060,089)

                      Net pledges receivable                       $ 13,531,832         $   5,057,762

      Current pledges receivable                                   $    5,178,459       $   1,405,803
      Noncurrent pledges receivable                                     8,353,373           3,651,959

                      Net pledges receivable                       $ 13,531,832         $   5,057,762

      The allowance for uncollectible pledges has been established at 7.5% of contribution revenue.
      Pledges due beyond one year have been discounted at an annual rate of 5%.


5.    Administration Fees

      To offset a portion of the direct costs related to gifts processing and accounting, any investment
      earnings held in the STIP accrue to the Foundation. For the years ended June 30, 2007 and
      2006, $209,641 and $299,724 were generated, respectively.

      An annual endowment administration fee is assessed on all endowment funds and funds
      functioning as endowments managed by the Foundation at the rate of 25 basis points beginning
      this year ended June 30, 2007. The prior year (ended June 30, 2006) rate was 15 basis points.
      Administration fees of $203,066 and $99,093 were charged by the Foundation for the years
      ended June 30, 2007 and 2006, respectively.




                                                  23
The UCSB Foundation
Notes to the Financial Statements
June 30, 2007 and 2006


6.    Related Parties

      The University provides certain services to the Foundation. Such costs, which are directly
      attributable to a support program, are charged to the Foundation and were $0 for each of the
      years ended June 30, 2007 and 2006. The University also provides facility use and maintenance,
      data processing and other services to the Foundation, which is not included in the Foundation’s
      financial statements. Such costs attributable to these services were $1,026,099 and $1,010,992
      for the years ended June 30, 2007 and 2006, respectively.

      The Foundation does not have any employees. All functions and activities are conducted by
      employees of the University. The University employees serving Foundation functions are
      covered by The Regents of the University of California pension plan and post-retirement health
      care plan.

      All of the Foundation’s office space is provided by the University of California, Santa Barbara.
      The costs of the office space are not included in the accompanying financial statements.




                                                  24

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:15
posted:8/14/2011
language:English
pages:26