Worcester Polytechnic Institute Alumni Association

“The intended use of the endowment funds is to support scholarships provided to wpi students. In addition to current yield, the association has interpreted state law to allow for the utilization of capital appreciation on permanently restricted endowment funds unless explicit donor stipulations specify how net appreciation must be used. Accordingly, the association segregates capital appreciation between that which can be used for current operation and that which is attributable to permanently restricted endowment funds. For financial reporting purposes, current yield and capital appreciation attributed to permanently restricted endowment funds are considered donor restricted until appropriated for use, and the historic dollar value of such funds is considered nonexpendable. On july 2, 2009, massachusetts enacted its uniform prudent management of institutional funds act ("upmifa") statute. Upmifa provides guidance for investment management; enumerates guidelines to prudent investing; and eliminates the concept of "historic dollar value" for donor-restricted endowments. The association adopted upmifa during the year ended june 30, 2010 and has not limited appropriation of underwater funds to current yield. Appropriation on underwater funds in years prior to adoption had been limited to current yield until such time as the deficiency had been restored and the fair value of the fund exceeded the level required to be retained permanently. There are currently no underwater funds. The association has a prudent approach of investment and spending for its endowment and similar funds that attempt to provide a predictable stream of funding for its programs. To satisfy its objectives, the association relies on a total return approach in which investment returns are achieved through both capital appreciation (realized and unrealized gains) and current yield (interest, dividend and other investment income).”

“The association is generally exempt from federal and state income taxes. Management annually reviews for uncertain tax positions along with any related interest and penalties and believes that the association has no uncertain tax positions that would have a material adverse effect, individually or in the aggregate, upon the association's statements of financial position, or the related statements of activities, or cash flows.”