Three Arches Foundation

“Intended uses of endowment funds: endowment funds consist of restricted contributions whereby the principal must remain intact while the income thereon may be used as intended by the donor, either restricted for a specific use or unrestricted. Endowment funds may be restricted by donors or be board designated. The foundation currently has a policy to target spending at up to 5% of the total market value of the investment portfolio, based upon a 36-month rolling average annually as of september 30, adjusted for inflation. Spending is defined to include first, operating expenses and second, grant distributions. The percent is based on investment portfolio performance and general economic conditions, taking into account other considerations. In 2020 the investment policy was amended to allow the board to use discretion on the spending policy and the board approved a grant budget of up to $2,000,000 due to the covid-19 pandemic. For perpetually restricted endowments, the foundation has a spending policy unless otherwise directed by the donor where a maximum of 5%of the 36 month rolling average value of the perpetual restricted endowments can be transferred to operations or used for the purpose intended as long as the original corpus is not invaded.”

“Fin 48 footnote accounting for uncertainty in income taxes: the provisions of "accounting for uncertainty in income taxes" prescribe a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The organization recognizes interest and penalties accrued related to unrecognized tax uncertainties in income tax expense, if any. The organization had no unrecognized tax uncertainties in 2020 or 2019.”

“INCREASE IN GIFT ANNUITY”

“Reconciliation to audited financial statements note that the three arches foundation has its own audited financial statements. The reconciliation shown in parts xi and xii are to the three arches foundation audited financial statements.”

“2018 changes in endowment net assets: in june of 2019, keybank, the trustee for the william r. Daniels memorial fund and the harriet s. Homer trust, concluded that as a result of the closing of lakewood hospital in february 2016, the hospital's share (31.25% and 25% respectively) of the net income interest should now be evenly divided between and distributed to healthy lakewood foundation and three arches foundation. Income distributions to the other charitable beneficiaries would continue as stated in the trust agreements. Three arches foundation, along with the healthy lakewood foundation, communicated their agreement to the trustee's distribution plan to divide lakewood hospital's income interest evenly between the two foundations. Further, the cleveland clinic and lakewood hospital association communicated their consent to the trustee's distribution plan and indicated they would not pursue any beneficial interest in the trust funds. Accordingly, three arches foundation has reduced the value of the assets held in perpetual trusts as of december 31, 2018, by 50% to $1,695,373. This adjustment is netted to line 1b, column (c).”