William Marsh Rice University

“The University accepts, from time to time, donations of art, historical treasures or similar assets. Such items are available for public exhibition and scholarly research. The University is a steward of these assets, preserving them for future generations. The asset amount reported for art held for public exhibition includes the construction and installation costs for outdoor sculpture.”

“The University's endowment earnings distribution policy guides the rate at which funds are released from the endowment for current spending. The policy reflects the desire to balance the current resource needs of the University with the long-term objective of preserving the purchasing power of the endowment for future generations and ensuring reasonable year-over-year stability of future endowment payouts. Under the policy, allowable endowment spending is between four percent and six and one-half percent of the trailing three year average endowment market value, with a targeted range of four and one-half percent to five and one-half percent in the intermediate range. Endowment contributions include Board-approved transfers from other institutional funds and other additions for which there is no specific line on the schedule.”

“The University is exempt from federal income tax to the extent provided under Section 501(c)(3) of the Internal Revenue Code. The IRS issued a determination letter in January 1938 that recognized the University as exempt from federal income tax under Section 501(c)(3). The University has 11 subsidiary corporations that are included in the consolidated financial statements. Two of these subsidiary corporations are exempt from federal income taxes under 501(c)(2), two are exempt under 501(c)(3), one is exempt under 501(c)(4), four are exempt under 501(c)(25) and two are subject to taxation. The University is classified as an organization that is not a private foundation under Section 509(a) of the Internal Revenue Code because it is described in Sections 509(a)(1) and 170(b)(1)(A)(ii) and, as such, gifts to the University qualify for deduction as charitable contributions to the extent provided by law. The University and its subsidiary corporations that are exempt from federal income tax are required to pay federal income tax on unrelated business income. The amount of income tax expense for unrelated business income for the University and its subsidiary corporations was immaterial for the years ended June 30, 2023 and 2022, respectively. The University is part of a small group of universities that are subject to an excise tax of 1.4% on the University's net investment income and the net investment income of its subsidiary corporations. The excise tax is recognized as a reduction of the University's investment returns. The portion of the excise tax associated with the current period realized gains was $3,876 and $4,847 for the years ended June 30, 2023 and 2022, respectively. U.S. GAAP requires the University to evaluate its tax positions to recognize a tax liability (or asset) if the University has taken an uncertain tax position that, more likely than not, would not be sustained upon examination by the IRS. The University has analyzed the tax positions taken and has concluded that as of June 30, 2023, there are no significant uncertain positions taken.”