Michigan Education Association

“Investment earnings from donor-restricted endowment funds are classified as unrestricted income absent explicit donor stipulations to the contrary. In the event that the fair value of donor-restricted endowment funds falls below the level required to be maintained in perpetuity, the resulting deficiency is recorded as a reduction of unrestricted net assets. The scholarship fund is to be invested with prudent levels of risk and with the expectation that long-term total returns (yield plus appreciation) will preserve or increase the real value of the fund (adjusting for inflation) after releasing cash to support scholarship grants and operational expenses. The fund is to be broadly diversified among equity investments (expected to provide the highest total returns and best inflation hedge over the long term although with the highest volatility), fixed-income investments (providing steady income and a stabilizing influence), and cash equivalents (providing liquidity and safety of principal). Investment risks are to be considered within the context of the entire scholarship fund and a long-term horizon. The investment objectives are to provide an average annual, real basis, total return of 4.5% or higher and to have sound performance relative to market indices and peer groups tailored to each asset class, over a 3 to 5-year time horizon.”

“In the preparation of the tax returns, tax positions are taken based on interpretation of federal, state and local income tax laws. Management periodically reviews and evaluates the status of uncertain tax positions and makes estimates of amounts, including interest and penalties, ultimately due or owed. No amounts have been identified, or recorded, as uncertain tax positions. Federal, state and local tax returns generally remain open for examination by the various taxing authorities for a period of three to four years.”