Arkansas State University System Foundation Inc.

“The Foundation is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code and is not a private foundation within the meaning of Section 509(a) of the Code. Accounting standards require the Foundation to evaluate tax positions and recognize a tax liability (or asset) if the Foundation has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The Foundation has analyzed the tax positions taken and has concluded that as of June 30, 2018 and 2017, there are no uncertain positions taken or expected to be taken that would require the recognition of a liability (or asset) or disclosure in the financial statements. The Foundation may be subject to audit by the Internal Revenue Service; however there are currently no audits for any tax periods in progress.”

“Change in Split-Interest Agreements 16,000.”

“Investment return objectives, risk parameters and strategies: the foundation has adopted investment and spending policies, approved by the board of trustees, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also maintaining the purchasing power of those endowment assets of the long-term. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, which exceeds the annual distribution with acceptable levels of risk. Endowment assets are invested in a well-diversified asset mix, which includes equity and debt securities, that is intended to result in a consistent inflation-protected rate of this amount. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk. Spending policy: the foundation has a policy of appropriating for distribution each year 4% of its endowment fund's average fair value of the prior five calendar year-ends for most of its endowments. In establishing this policy, the organization considered the long-term expected return on its investment assets, the nature and duration of the individual endowment funds, many of which must be maintained in perpetuity because of donor-restrictions, and the possible effects of inflation. The organization expects the current spending policy to allow its endowment funds to grow at a nominal average rate of 3% annually, which is consistent with the organization's objective to maintain the purchasing power of the endowment assets as well as to provide additional real growth through investment return. Intended use: enowment funds are intended to be kept in perpetuity to provide income for support of various academic functions with member campuses of the asu system.”