CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT

June 30, 2015 and 2014

IVY TECH FOUNDATION, INC.

CONTENTS Page CONSOLIDATED FINANCIAL STATEMENTS Independent Auditors’ Report 1-2 Consolidated Statements of Financial Position 3 Consolidated Statements of Activities 4 Consolidated Statements of Cash Flows 5-6 Notes to Consolidated Financial Statements 7-27 CONSOLIDATING INFORMATION Independent Auditors’ Report on Consolidating Information 28 Consolidating Schedule – Statement of Financial Position Information 29 Consolidating Schedule – Statement of Activities Information 30

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Independent Auditors’ Report

Board of Directors Ivy Tech Foundation, Inc. We have audited the accompanying consolidated financial statements of Ivy Tech Foundation, Inc. (a not-for-profit organization), which comprise the consolidated statements of financial position as of June 30, 2015 and 2014, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ivy Tech Foundation, Inc. as of June 30, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States. Change in Accounting Principle As discussed in Note 1, Ivy Tech Foundation, Inc. adopted Accounting Standards Update No. 2013-06, Not-for-Profit Entities (Topic 958), Services Received from Personnel of an Affiliate during fiscal year 2015. The 2014 consolidated financial statements were adjusted to retrospectively apply this change in accounting principle. Our opinion is not modified with respect to that matter. Indianapolis, Indiana September 28, 2015

2015 2014ASSETS

Cash and equivalents 10,502,142$ 5,164,469$ Investments 16,135,292 19,870,710 Pledges receivable 9,325,439 9,106,942 Prepaid expenses and other assets 974,857 3,545,977 Property and equipment, net 73,190,646 76,916,326 Note receivable from related party 261,051 294,051 Net investment in direct financing lease with related party 6,290,279 Note receivable from bank 23,510,509 23,510,509 Cash restricted for Ivy Tech Properties, Inc. 368,128 Beneficial interest in trusts 204,434 204,417 Assets restricted for permanent endowment 30,958,791 26,335,407 Agency funds - Intersection Connection 5,000,738 4,959,108

TOTAL ASSETS 176,354,178$ 170,276,044$

LIABILITIESAccounts payable and accrued expenses 1,560,971$ 2,570,669$ Accounts payable - related party 1,273,768 412,890 Lines of credit borrowings 2,769,574 3,687,276 Interest rate swaps liability 261,079 247,784 Notes payable and capital lease obligation 58,784,077 54,057,405 Other liabilities 394,705 91,381 Agency funds - Intersection Connection 5,000,738 4,959,108

Total Liabilities 70,044,912 66,026,513

NET ASSETSUnrestricted 9,303,488 10,902,610 Restricted:

Temporarily restricted 66,046,987 67,011,514 Permanently restricted 30,958,791 26,335,407

Total Restricted 97,005,778 93,346,921

Total Net Assets 106,309,266 104,249,531

TOTAL LIABILITIES AND NET ASSETS 176,354,178$ 170,276,044$

See accompanying notes.

IVY TECH FOUNDATION, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONJune 30, 2015 and 2014

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Temporarily PermanentlyUnrestricted Restricted Restricted Total

REVENUE, GAINS AND SUPPORTContributions:

Cash and pledges 400,005$ 8,920,579$ 4,408,047$ 13,728,631$ Non-cash 3,153,394 3,153,394 Grant revenue 1,959,258 1,959,258

Total Contributions 400,005 14,033,231 4,408,047 18,841,283

In-kind contributed operational services 3,191,521 3,191,521 Investment income 687,044 587,540 (71,401) 1,203,183 Vending and royalty income 892,646 892,646 Special events income, net of expenses of $559,175 in 2015 and $785,161 in 2014 26,564 276,064 136,090 438,718 Real estate rental income 3,238,188 30,140 3,268,328 Gain on sales of property and equipment 73,862 73,862 Uncollectible pledges (2,597) (32,600) (5,150) (40,347) Miscellaneous revenue 1,954 9,995 11,949

8,509,187 14,904,370 4,467,586 27,881,143 Net assets released from restrictions 15,713,099 (15,713,099) Reclassification of donor intent (155,798) 155,798

Total Revenue, Gains and Support 24,222,286 (964,527) 4,623,384 27,881,143

EXPENSESFinancial aid to students 3,405,518 3,405,518 Building improvements, supplies and equipment 3,314,238 3,314,238 Faculty and staff development 237,526 237,526 Special programs 2,588,773 2,588,773 Community outreach/promotional expense 1,375,019 1,375,019 Donations to Ivy Tech Community College 303,927 303,927 Donated property to Ivy Tech Community College 2,784,261 2,784,261 In-kind expense 1,337,065 1,337,065 Real estate expenses 6,106,675 6,106,675 Other program expenses 71,236 71,236

Total College Assistance Program Expenses 21,524,238 21,524,238 Administrative expenses 1,410,903 1,410,903 Fundraising expenses 2,872,972 2,872,972

Total Expenses 25,808,113 25,808,113

INCREASE (DECREASE) IN NET ASSETS BEFORE LOSS ON INTEREST RATE SWAPS (1,585,827) (964,527) 4,623,384 2,073,030

Loss on interest rate swaps (13,295) (13,295)

INCREASE (DECREASE) IN NET ASSETS (1,599,122) (964,527) 4,623,384 2,059,735

NET ASSETS

Beginning of Year 10,902,610 67,011,514 26,335,407 104,249,531

End of Year 9,303,488$ 66,046,987$ 30,958,791$ 106,309,266$

See accompanying notes.

2015

IVY TECH FOUNDATION, INC.

CONSOLIDATED STATEMENTS OF ACTIVITIESYears Ended June 30, 2015 and 2014

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Temporarily PermanentlyUnrestricted Restricted Restricted Total

370,705$ 9,980,614$ 481,888$ 10,833,207$ 4,214,358 4,214,358 8,051,778 8,051,778

370,705 22,246,750 481,888 23,099,343

3,768,898 3,768,898 871,407 3,584,300 78,663 4,534,370

1,053,730 1,053,730

1,028,071 1,028,071 3,444,766 30,186 3,474,952

61,281 61,281 (30,395) (30,395)

31,621 (5,752) 324 26,193 9,602,408 26,853,160 560,875 37,016,443

17,906,720 (17,906,720) (343,961) 343,961

27,509,128 8,602,479 904,836 37,016,443

2,872,585 2,872,585 6,806,926 6,806,926

151,335 151,335 2,289,843 2,289,843 1,373,433 1,373,433

258,977 258,977 449,843 449,843

2,546,647 2,546,647 6,151,723 6,151,723

66,646 66,646 22,967,958 22,967,958 1,522,620 1,522,620 3,266,362 3,266,362

27,756,940 27,756,940

(247,812) 8,602,479 904,836 9,259,503

(2,935) (2,935)

(250,747) 8,602,479 904,836 9,256,568

11,153,357 58,409,035 25,430,571 94,992,963

10,902,610$ 67,011,514$ 26,335,407$ 104,249,531$

2014 - Adjusted

IVY TECH FOUNDATION, INC.

CONSOLIDATED STATEMENTS OF ACTIVITIESYears Ended June 30, 2015 and 2014

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2015 2014OPERATING ACTIVITIES

Increase in net assets 2,059,735$ 9,256,568$ Adjustments to reconcile increase in net assets to net cash provided by operating activities:

Depreciation of property and equipment 3,701,425 3,673,046 Gain on sales of property and equipment (73,862) (61,281) Net realized and unrealized gains on investments (49,630) (3,121,778) In-kind contribution of property (1,703,757) Contribution of property to Ivy Tech Community College 2,784,261 449,843 Loss on interest rate swaps 13,295 2,935 (Increase) decrease in value of beneficial interest in trusts 71,384 (99,263) (Increase) decrease in certain operating assets:

Pledges receivable (218,497) (347,920) Prepaid expenses and other assets 1,074,877 (2,348,010)

Increase (decrease) in certain operating liabilities:Accounts payable and accrued expenses (1,009,698) 1,172,006 Deferred special events income (257,562)

Contributions restricted for long-term purposes (4,467,586) (560,875) Net Cash Provided by Operating Activities 2,181,947 7,757,709

INVESTING ACTIVITIESProceeds from note receivable from related party 33,000 Purchases of property and equipment (50,115) (1,589,550) Proceeds from sales of property and equipment 245,000 449,613 Proceeds from direct financing lease with related party 59,721 Purchases of investments (15,930,927) (26,934,783) Sales and maturities of investments 18,980,358 20,982,859 Decrease in cash restricted for Ivy Tech Properties, Inc. 368,128 1,279,277 Decrease in assets restricted for property 195,592

Net Cash Provided (Used) by Investing Activities 3,705,165 (5,616,992)

FINANCING ACTIVITIESNet repayments on lines of credit (557,528) (81,523) Payments on notes payable (1,127,554) (1,255,271) Payments on capital lease obligations (495,774) Net change in accounts payable - related party 819,675 (117,129) Net change in other liabilities 303,324 (3,994) Proceeds from contributions restricted for long-term purposes:

Investment in permanently restricted endowment 508,418 561,216 Net Cash Used by Financing Activities (549,439) (896,701)

NET INCREASE IN CASH AND EQUIVALENTS 5,337,673 1,244,016

CASH AND EQUIVALENTSBeginning of Year 5,164,469 3,920,453

End of Year 10,502,142$ 5,164,469$

See accompanying notes.

IVY TECH FOUNDATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWSYears Ended June 30, 2015 and 2014

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2015 2014SUPPLEMENTAL DISCLOSURES

Interest paid 1,088,350$ 1,129,806$ Noncash investing and financing activities:

In-kind contribution of property 1,703,757 Contribution of property to Ivy Tech Community College 2,784,261 449,843 Assets acquired through capital lease obligation 6,350,000 Net investment in direct financing lease with related party 6,350,000 Property purchase financed with note payable 1,916,997 Note payable refinanced 6,000,000 Payments on line of credit made by related party 360,174 225,232 Line of credit borrowings refinanced with notes payable 911,527

See accompanying notes.

IVY TECH FOUNDATION, INC.

Years Ended June 30, 2015 and 2014CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

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IVY TECH FOUNDATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2015 and 2014

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General: Ivy Tech Foundation, Inc. (the Foundation) was incorporated on June 9, 1969 under The Indiana Foundations and Holding Companies Act of 1921 (as amended), and during the 1992-1993 fiscal year elected to be governed under the Indiana Nonprofit Corporation Act of 1991. The Foundation, whose principal activity is to promote educational, scientific and charitable purposes in connection with, or at the request of, Ivy Tech Community College of Indiana (the College), commenced its financial activities with the receipt of various unrestricted contributions in October 1970. Major sources of revenue for the Foundation include contributions from individuals, corporations and granting foundations. The accompanying consolidated financial statements include the accounts of the Foundation and the following wholly-owned subsidiaries: Community Enterprises Incorporated (CEI) – A corporation formed on October 15, 2008, to engage in real

estate transactions.

Community Enterprises Properties, LLC (CEP) – A member managed limited liability company formed on June 29, 2009, to engage in real estate transactions.

Ivy Tech Properties, Inc. (ITP) – an Indiana public benefit corporation formed on February 15, 2012, to partially

acquire, own and redevelop a multi-story building for the expansion of the College’s Indianapolis campus. ITP is a qualified active low-income community business under Section 45D(f)(2) of the Internal Revenue Code.

The Foundation and its subsidiaries are collectively referred to as the Foundation throughout this report. All intra-entity accounts and transactions have been eliminated in consolidation. Basis of Accounting: The Foundation reports its operations on the accrual basis wherein revenue and support are recognized in the period earned and expenses in the period incurred. Estimates: Management uses estimates and assumptions in preparing financial statements in conformity with accounting principles generally accepted in the United States. Those estimates and assumptions affect the reported amounts of asset and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Net Asset Classifications: The consolidated financial statements report the changes in and the total of each of the net asset classes, based upon donor restrictions, as applicable. Net assets are classified as unrestricted, temporarily restricted, and permanently restricted. The following classes of net assets are maintained by the Foundation: Unrestricted Net Assets include general and board designated assets and liabilities which may be used at

the discretion of management to support the Foundation’s purposes and operations. Temporarily Restricted Net Assets include assets related to gifts with explicit donor-imposed restrictions

that have not been met as to specified purpose, or to later periods of time or after specified dates. Unconditional promises to give that are due in future periods and are not permanently restricted are classified as temporarily restricted net assets.

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NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Permanently Restricted Net Assets include assets related to gifts with donor-imposed restrictions that

stipulate the principal be held in perpetuity with the earnings thereon being temporarily restricted until appropriated for expenditure.

At times, the Foundation receives requests by donors or their designates to change the use for which their original gift was intended. These requests are reviewed by the Foundation for approval. Approved changes, depending on the donors’ requests, may result in the reclassification of net assets between unrestricted, temporarily restricted, or permanently restricted net asset classes. Reclassifications of $155,798 and $343,961 are reflected in the consolidated statements of activities as reclassifications of donor intent for the years ended June 30, 2015 and 2014, respectively. Cash and Equivalents: For the purposes of the consolidated statement of cash flows, cash equivalents includes money market fund shares. The Foundation maintains its cash in bank deposit accounts which, at times, may exceed the federally insured limits. The Foundation has not experienced any losses from these bank accounts. Promises to Give: Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Investment Valuation and Income Recognition: Investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 4 for discussion of fair value measurements. Interest income is recorded on the accrual basis, and dividends are recorded on the ex-dividend date. Purchases and sales of investments are recorded on the trade date. Gains and losses on the sale of investments are determined using the specific-identification method. Realized and unrealized gains and losses on investments are included in the consolidated statements of activities. Investment income is allocated to capital campaign accounts and endowment funds only. Investment income is not allocated to other expendable restricted funds in lieu of charging an investment management fee to these funds. Investment Pools: The Foundation maintains master investment accounts for its endowments. Interest, dividends, and realized gains and losses from securities in the master investment accounts are allocated quarterly to the individual endowments based on the relationship of the value of each endowment to the total. Beneficial Interest in Trusts: The Foundation is an irrevocable beneficiary of four trusts. The Foundation’s beneficial interest in trusts is reported at fair value in the temporarily restricted or permanently restricted net asset class, based on the nature of the trust and donor restrictions. See Note 4 for discussion of fair value measurements. Changes in value of beneficial interest in trusts are recognized in investment income in the same net asset class as the initial value. Property and Equipment: Expenditures for property and equipment and items which substantially increase the useful lives of existing assets are capitalized at cost, except for donated items, which are recorded at fair market value at the date of donation. The Foundation provides for depreciation on the straight-line method at rates designed to depreciate the costs of assets over estimated useful lives as follows: Buildings and improvements 20-30 years Software 3-5 years Furniture and fixtures 5-10 years

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NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the asset’s carrying amount to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair market value. To date, no adjustments to the carrying amount of property and equipment have been required. Agency Funds represent cash and pledges receivable maintained by the Foundation on behalf of the Intersection Connection joint venture agreement that were not designated by the donor for the exclusive use of one particular organization. The Foundation and two other unrelated, non-profit organizations formed the joint venture to raise funds for facility and program expansion. The Foundation serves as the fiscal agent for the joint venture; however, any expenditure of the funds are subject to the approval of the coordinating committee established under the agreement, which includes representation from all three parties. Support and Revenue: The Foundation reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statement of activities as net assets released from restrictions. Non-Cash Contributions: In addition to receiving cash contributions, the Foundation receives non-cash contributions including gifts of securities and real estate from various donors. The Foundation's policy is to record securities and real estate donations at their fair market value on the date of donation. Real estate donations are considered to have an implied time restriction and are treated as temporarily restricted support. Also, the Foundation receives personnel services from the College that provide direct benefit to the Foundation. During fiscal year 2015, the Foundation adopted Accounting Standards Update No. 2013-06, Not-for-Profit Entities (Topic 958), Services Received from Personnel of an Affiliate (ASU 2013-06). Under ASU 2013-06, these services are measured at the cost recognized by the College for the personnel providing those services. The Foundation applied a modified retrospective approach, in which the 2014 consolidated financial statements were adjusted to apply ASU 2013-06, but no adjustment was made to the beginning net assets. The adoption of ASU 2013-06 resulted in an increase in in-kind contributions and in-kind administrative expenses of $3,768,898, from amounts previously reported in the 2014 consolidated financial statements. See Note 14. Leasing Arrangements: The Foundations leasing arrangements consist principally of the leasing of various land and buildings. Except for one arrangement, the Foundation’s leases are classified as operating leases. Real estate rental income is recognized on a straight-line basis over the term of each operating lease. Leasing arrangements are discussed further in Note 13. Derivative Instrument and Hedging Activities: The Foundation has entered into interest rate swap agreements principally to protect against the risk of interest rate movements on bond debt. The Foundation does not engage in speculative derivative transactions for trading purposes. See Notes 4 and 11. Functional Allocation of Expenses: The costs of providing the programs and services of the Foundation have been summarized on a functional basis in the consolidated statements of activities. Accordingly, certain costs have been allocated among the programs and supporting activities benefited. Although the method used was appropriate, other methods could have produced different results.

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NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes: Ivy Tech Foundation, Inc. is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC). CEP is a single member, member managed limited liability company that is treated as a disregarded entity for federal and state income tax purposes, and thus is also exempt from federal income taxes under Section 501(c)(3) of the IRC. Ivy Tech Properties, Inc. is exempt from federal income taxes under Section 501(c)(2) of the IRC. In addition, Ivy Tech Foundation, Inc. has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) of the IRC. There was no unrelated business income for the years ended June 30, 2015 and 2014. Therefore, no provision or liability for income or excise taxes has been included in the consolidated financial statements for these entities. CEI is a taxable corporation; however, it had no federal or state income taxes currently payable or deferred tax assets or liabilities as of June 30, 2015 and 2014. The Foundation and ITP file U.S. federal and state of Indiana information returns. CEI files U.S. federal and state of Indiana income tax returns. The Foundation, ITP, and CEI are no longer subject to U.S. federal and state income tax examinations by tax authorities for years before the year ended June 30, 2012. Reclassifications: Certain amounts in the 2014 consolidated financial statements have been reclassified to conform to the presentation of the 2015 consolidated financial statements. Subsequent Events: The Foundation has evaluated the consolidated financial statements for subsequent events occurring through September 28, 2015, the date the consolidated financial statements were available to be issued. See Note 11. NOTE 2 - ASSETS RESTRICTED FOR PERMANENT ENDOWMENT Assets with donor-imposed restrictions limiting their use to long-term purposes have been excluded from other assets which are available for current use. Assets restricted for permanent endowment consisted of the following at June 30, 2015 and 2014: 2015 2014 Investments $24,951,599 $24,216,323 Beneficial interest in perpetual trust 477,708 513,993 Beneficial interest in charitable remainder trust 458,521 493,637 Pledges receivable 5,070,963 1,111,454 Total Assets Restricted for Permanent Endowment $30,958,791 $26,335,407 NOTE 3 - ENDOWMENT The Foundation’s endowment consists of over 300 individual funds established for a variety of purposes. As required by accounting principles generally accepted in the United States (GAAP), net assets associated with endowment funds, including funds designated by the Board of Directors to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The Foundation’s endowment includes only donor-restricted endowment funds, as the Board of Directors has not designated any funds to function as endowments.

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NOTE 3 - ENDOWMENT (CONTINUED) Interpretation of Relevant Law The Board of Directors of the Foundation has interpreted the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: The duration and preservation of the fund The purposes of the Foundation and the donor-restricted endowment fund General economic conditions The possible effect of inflation and deflation The expected total return from income and the appreciation of investments Other resources of the Foundation The investment policies of the Foundation. The endowment net asset composition by type of fund as of June 30, 2015 and 2014, was as follows: Temporarily Permanently 2015 Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ $2,757,931 $30,500,270 $33,258,201 2014 Donor-restricted endowment funds $ $3,476,289 $25,841,770 $29,318,059 Activity in the endowment by net asset class for the years ended June 30, 2015 and 2014, is summarized as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment at June 30, 2013 $ (3,632) $ 1,106,460 $24,972,964 $26,075,792 Investment Return: Investment income 3,632 329,875 333,507 Net appreciation (realized and unrealized) 3,231,962 42,633 3,274,595 Total Investment Return 3,632 3,561,837 42,633 3,608,102 New gifts 482,212 482,212 Appropriated for expenditure (1,192,008) (1,192,008) Reclassification of donor intent 343,961 343,961

Endowment at June 30, 2014 3,476,289 25,841,770 29,318,059

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NOTE 3 - ENDOWMENT (CONTINUED) Temporarily Permanently Unrestricted Restricted Restricted Total Investment Return: Investment income $ 475,120 $ 475,120 Net appreciation (realized and unrealized) 106,177 $ (36,285) 69,892 Total Investment Return 581,297 (36,285) 545,012 New gifts 4,538,987 4,538,987 Appropriated for expenditure (1,299,655) (1,299,655) Reclassification of donor intent 155,798 155,798 Endowment at June 30, 2015 $ $ 2,757,931 $30,500,270 $33,258,201 Funds with Deficiencies From time to time, the fair value of assets associated with individual donor restricted endowment funds may fall below the level that the donor or UPMIFA requires the Foundation to retain as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature are reported against unrestricted net assets. There were no deficiencies at June 30, 2015 and 2014. Return Objectives and Risk Parameters The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity. Under this policy, as approved by the Board of Directors, the primary investment objective of the Foundation for endowment assets is to provide a real rate of return (total return minus inflation) sufficient to support, in perpetuity, the restricted purposes of each endowment account, in order to serve the mission of the Foundation. The Board of Directors recognizes in the policy that it is particularly important to preserve the value of the assets in real terms to enable the Foundation to maintain the purchasing power of its support of the College without eroding the real, long-term value of the corpus of the endowment. The target return, net of fees, approved by the Board of Directors is 8.5%. Actual returns in any given year may vary from these objectives. Strategies Employed for Achieving Objectives

To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation of 55% equity investments, 35% fixed income investments, and 10% risk reduction assets to achieve its long-term return objectives within prudent risk constraints.

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NOTE 3 - ENDOWMENT (CONTINUED) Spending Policy and How the Investment Objectives Relate to Spending Policy

The Foundation has a policy of appropriating for distribution each year 5% of its endowment fund’s asset value as of the immediately preceding January 1. The amount may also be reduced at the recommendation of the Finance Committee if deemed prudent based on a balanced view of investment returns, spending needs of the College, and maintaining fund values in perpetuity. Over the long term, the Foundation expects the current spending policy to allow its endowment to grow. This is consistent with the Foundation’s objective to maintain the purchasing power of the endowment assets held in perpetuity or for a specified term as well as to provide additional real growth through new gifts and investment return. NOTE 4 - FAIR VALUE MEASUREMENTS The Foundation has categorized its assets and liabilities that are measured at fair value into a three-level fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Foundation has the ability to access. Level 2 – Inputs to the valuation methodology may include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and/or inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. In situations where there is little or no market activity for the asset or liability, the Foundation makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

Following is a description of the valuation methodologies used by the Foundation for assets and liabilities that are measured at fair value on a recurring basis. There have been no changes in the methodologies used at June 30, 2015 and 2014.

Mutual Fund Shares and Money Market Fund Shares: Valued at the published net asset value (NAV), as reported by each fund, of the shares held by the Foundation at the reporting date.

Common Stocks, Exchange Traded Funds, and Government Obligations: Valued at the closing price reported on the active market on which the individual securities are traded. Corporate Bonds: Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issues with similar credit ratings. Structured Products: Unsecured debt obligations with valuation linked to the performance of a referenced commodity or commodities or index, which are adjusted for specified factors or fees.

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NOTE 4 - FAIR VALUE MEASUREMENTS (CONTINUED) Hedge Funds: Valued at the net asset value (NAV) of the respective hedge fund at the reporting date. The NAV is used as a practical expedient to estimate fair value and is based on the fair value of the hedge fund’s underlying investments less its liabilities. If management determines, based on its own due diligence and investment monitoring procedures, that the reported NAV of any hedge fund is not representative of fair value, and the difference between fair value and reported value is material, management will estimate the fair value of the investment in the hedge fund in good faith. For the years ended June 30, 2015 and 2014, no adjustments to the reported NAV were recorded. Certificates of Deposit: Determined by discounting the related cash flows on current yields of similar investments with comparable durations considering the credit-worthiness of the issuer. Beneficial Interest in Perpetual Trust: Valued using the fair value of the assets in the trust as a practical expedient, since no facts and circumstances indicate that the fair value of the assets in the trust differs from the fair value of the beneficial interest. Beneficial Interest in Charitable Remainder Trusts: Valued at the present value of future cash flows considering the estimated return on invested assets during the term of the agreement, the contractual payment obligations under the agreement, and a discount rate commensurate with the characteristics of the trust. The expected term of each agreement is determined based on life expectancies of the beneficiaries.

Interest Rate Swap Derivatives: Valued using the valuation provided by the counterparties, without adjustment, which utilizes a model primarily based on the applicable interest yield curve at the reporting date.

The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Foundation’s management believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain assets and liabilities could result in a different fair value measurement at the reporting date. For assets and liabilities with fair value measured using Level 3 inputs, management determines the fair value measurement policies and procedures in consultation with the Foundation’s Finance Committee. Those policies and procedures are reassessed at least annually to determine if the current valuation techniques are still appropriate. At that time, the unobservable inputs used in the fair value measurements are evaluated and adjusted, as necessary, based on current market conditions and other third-party information.

The Foundation’s investments in hedge funds, which are valued at fair value utilizing the practical expedient, are generally classified within the fair value hierarchy based on the Foundation’s ability to redeem its investment in a hedge fund at NAV per share, or its equivalent, as of the measurement date. When the Foundation has the ability to redeem its investment in a hedge fund at NAV in the near term, as determined by management, the investment is generally categorized in Level 2. When the Foundation neither has the ability to redeem its investment in a hedge fund at NAV nor has the ability to redeem at NAV in the near term, the investment is generally categorized in Level 3.

The Foundation’s beneficial interest in perpetual trust is categorized in Level 3 because the Foundation does not have the ability to redeem the asset at its practical expedient.

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NOTE 4 - FAIR VALUE MEASUREMENTS (CONTINUED) Following is a summary, by major nature and risks class within each level of the fair value hierarchy, of the Foundation’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2015 and 2014:

2015 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market fund shares $ 4,397,507 $ 4,397,507 Investments (including endowment): Mutual fund shares - equities: Large cap funds 10,520,734 10,520,734 Mid cap funds 2,965,586 2,965,586 International funds 7,414,218 7,414,218 Other equity funds 283,064 283,064 Mutual fund shares - fixed income: Intermediate-term bond funds 4,862,961 4,862,961 Non-traditional bond funds 1,351,109 1,351,109 Ultrashort bond funds 1,028,155 1,028,155 Other bond funds 1,598,572 1,598,572 Common stocks 824,881 824,881 Exchange traded funds 114,224 114,224 Corporate bonds $2,400,867 2,400,867 Government obligations 995,290 995,290 Structured products 277,704 277,704 Hedge funds $3,441,123 3,441,123 Certificates of deposit - bank 3,008,403 3,008,403

Beneficial interest in trusts (including endowment):

Beneficial interest in perpetual trust 477,708 477,708 Beneficial interest in charitable remainder trusts 662,955 662,955 Total Assets at Fair Value $36,356,301 $5,686,974 $4,581,786 $46,625,061 Liabilities Interest rate swaps liability $ 261,079 $ 261,079 Total Liabilities at Fair Value $ 261,079 $ 261,079

2014 Assets Cash equivalents: Money market fund shares $ 2,630,641 $ 2,630,641 Investments (including endowment): Mutual fund shares - equities: Large cap funds 7,868,495 7,868,495 Mid cap funds 2,528,496 2,528,496 International funds 6,160,134 6,160,134 Other equity funds 417,012 417,012 Mutual fund shares - fixed income: Short-term bond funds 1,060,960 1,060,960 Intermediate-term bond funds 8,205,230 8,205,230 Inflation-protected bond funds 878,850 878,850 Ultrashort bond funds 1,965,122 1,965,122 Other bond funds 2,322,392 2,322,392

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NOTE 4 - FAIR VALUE MEASUREMENTS (CONTINUED) 2014 (Continued) Level 1 Level 2 Level 3 Total Common stocks $ 845,034 $ 845,034 Exchange traded funds 179,998 179,998 Corporate bonds $ 76,448 76,448 Government obligations 960,859 960,859 Structured products 593,548 593,548 Hedge funds $3,120,819 3,120,819 Certificates of deposit - bank 6,903,636 6,903,636

Beneficial interest in trusts (including endowment):

Beneficial interest in perpetual trust 513,993 513,993 Beneficial interest in charitable remainder trusts 698,054 698,054 Total Assets at Fair Value $36,023,223 $7,573,632 $4,332,866 $47,929,721 Liabilities Interest rate swaps liability $ 247,784 $ 247,784 Total Liabilities at Fair Value $ 247,784 $ 247,784 At June 30, 2015 and 2014, the Foundation had no other assets or liabilities that are measured at fair value on a recurring basis. Following is a summary of the changes in Level 3 assets for the years ended June 30, 2015 and 2014: Beneficial Beneficial Interest in Interest in Charitable Hedge Perpetual Remainder Funds Trust Trusts Balance at June 30, 2013 $1,540,199 $471,357 $641,427 Purchases 1,497,448 Unrealized gains 83,172 42,636 56,627 Balance at June 30, 2014 3,120,819 513,993 698,054 Purchases 584,346 Sales proceeds (450,000) Unrealized gains (losses) 185,958 (36,285) (35,099) Balance at June 30, 2015 $3,441,123 $477,708 $662,955

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NOTE 4 - FAIR VALUE MEASUREMENTS (CONTINUED) Quantitative Information about Significant Unobservable Inputs Used in Level 3 Fair Value Measurements The following table represents the Foundation’s Level 3 assets, the valuation techniques used to measure the fair value of those assets, and the significant unobservable inputs and the ranges of values for those inputs. Principal Basis or Range Fair Valuation Unobservable of Significant Instrument Value Technique Inputs Input Values 2015 Hedge Funds $3,441,123 NAV N/A N/A Beneficial $ 477,708 Fair value N/A N/A Interest in of trust Perpetual Trust assets Beneficial $ 662,955 Discounted Return on trust Interest in cash flow assets 6.0% Charitable Remainder Trusts Discount rate 2.0% 2014 Hedge Funds $3,120,819 NAV N/A N/A Beneficial $ 513,993 Fair value N/A N/A Interest in of trust Perpetual Trust assets Beneficial $ 698,054 Discounted Return on trust Interest in cash flow assets 6.0% Charitable Remainder Trusts Discount rate 2.2% Fair Value of Investments in Entities that Use NAV The following table summarizes investments measured at fair value based on the NAV per share as of June 30, 2015 and 2014: Redemption Fair Value Unfunded Frequency Redemption Instrument 2015 2014 Commitments (if currently eligible) Notice Period Hedge funds (a) $ 880,160 $ 794,274 N/A 25% per quarter 9 months Hedge funds (b) 911,826 834,233 N/A Quarterly 45 days Hedge funds (c) 1,649,137 1,492,312 N/A 25% per quarter 65 days (No limit as of 12/31) Total Hedge Funds $3,441,123 $3,120,819

(a) The portfolio engages primarily in the following investment strategies: U.S. convertible and volatility arbitrage, U.S. and European convertible credit and capital structure opportunities, Asia arbitrage, statistical arbitrage, long/short equity, credit opportunities, global macro, and merger arbitrage.

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NOTE 4 - FAIR VALUE MEASUREMENTS (CONTINUED)

(b) Investment fund employs a research-driven, bottom-up investment process that involves extensive qualitative and quantitative analysis that incorporates international relationships and expertise across capital structures, industries and geographies. The fund benefits from its ability to opportunistically allocate capital among its underlying strategies: merger arbitrage, long/short equity special situations, corporate credit, convertible/derivative arbitrage and structured credit.

(c) Investment fund is an actively managed registered fund of hedge funds with a target portfolio of 20-25 single

strategy and diversified hedge funds. It seeks to fully complement an existing traditional stock and bond portfolio with a focus on generating capital appreciation over the long-term, with relatively low volatility and a low correlation with traditional equity and fixed income markets.

Financial Instruments: The carrying values of the Foundation’s other financial instruments, which include cash, pledges receivable, notes receivable, accounts payable and accrued expenses, agency funds, lines of credit borrowings, and notes payable approximate fair value due to the maturity dates and current market conditions. NOTE 5 - INVESTMENTS Investments, including assets restricted for permanent endowment, consisted of the following at June 30, 2015 and 2014: 2015 2014 Cost Fair Value Cost Fair Value Certificates of deposit $ 3,006,091 $ 3,008,403 $ 6,907,552 $ 6,903,636 Government obligations 979,612 995,290 941,878 960,859 Mutual funds - fixed income 9,559,504 8,840,797 14,241,450 14,432,554 Mutual funds - equities 18,158,215 21,183,602 12,847,804 16,974,137 Exchange traded funds 104,998 114,224 155,150 179,998 Corporate bonds 2,418,771 2,400,867 70,816 76,448 Common stocks 531,102 824,881 527,107 845,034 Risk reduction assets 3,416,182 3,718,827 3,557,448 3,714,367 Total Investments $38,174,475 $41,086,891 $39,249,205 $44,087,033 Investments are included in the consolidated statements of financial position at June 30, 2015 and 2014 as follows: 2015 2014 Investments $16,135,292 $19,870,710 Assets restricted for permanent endowment 24,951,599 24,216,323 Total Investments $41,086,891 $44,087,033 Investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term could materially affect the amounts reported in the Foundation’s consolidated financial statements.

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NOTE 5 - INVESTMENTS (CONTINUED) Investment income included in the consolidated statements of activities for the years ended June 30, 2015 and 2014, consisted of the following: 2015 2014 Interest and dividends $ 1,224,937 $1,313,329 Net realized gains 1,407,392 1,061,215 Net unrealized gains (losses) (1,357,762) 2,060,563 Change in value of beneficial interest in trusts (71,384) 99,263 Total Investment Income $ 1,203,183 $4,534,370 NOTE 6 - PLEDGES RECEIVABLE Pledges receivable are as follows at June 30, 2015 and 2014: 2015 2014 Capital campaign $ 6,185,278 $ 6,057,488 Endowments 5,263,838 1,162,768 Agency 3,256,024 3,476,808 Grants 1,519,000 1,770,138 Other pledges 1,990,025 1,699,758 Less: discount on pledges receivable (685,755) (625,186) Total Pledges Receivable $17,528,409 $13,541,774 Amount due in: Less than one year $ 7,946,238 $ 4,386,035 One to five years 8,128,611 8,425,859 More than five years 1,453,560 729,880

Total Pledges Receivable $17,528,409 $13,541,774

Pledges receivable are included in the consolidated statements of financial position at June 30, 2015 and 2014 as follows: 2015 2014 Pledges receivable $ 9,325,439 $ 9,106,942 Assets restricted for permanent endowment 5,070,963 1,111,454 Agency funds - Intersection Connection 3,132,007 3,323,378 Total Pledges Receivable $17,528,409 $13,541,774 NOTE 7 - NOTE RECEIVABLE On April 25, 2012, the Foundation advanced proceeds of $23,510,509 to a bank under a note which matures on March 15, 2041. Interest-only payments are due from the Bank annually through April 2019. Principal and interest are due monthly beginning in May 2019. Interest is accrued at 1.4% per year. Interest earned in fiscal years 2015 and 2014 was $329,147. The Bank used the proceeds to provide capital to certain entities making Qualified Low-Income Community Investment (QLICI) loans to ITP.

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NOTE 8 - CONTRIBUTIONS OF INTERESTS IN REAL ESTATE JOINT VENTURES During the year ended June 30, 2014, the Foundation was gifted a 50% interest in certain real estate entities. Columbus Group Partnership I holds one retail real estate location in Indianapolis and was donated to a trust for the benefit of the Foundation. Columbus Group Partnership II holds two retail real estate locations in Florida. Columbus Automotive, Inc. held a multi-tenant building in Franklin, IN, where the Franklin College campus is currently located. These interests were donated to and held by the trustee at June 30, 2014. The Foundation recognized a contribution of $1,496,243 for its interest in the trust, which was included in other assets at June 30, 2014. During the year ended June 30, 2015, the Foundation entered into an agreement with the other owner of the real estate entities to exchange the Foundation’s 50% interest in Columbus Group Partnership I and Columbus Group Partnership II for the other owner’s 50% interest in the underlying assets of Columbus Automotive, Inc. The Foundation recorded an additional contribution of $1,128,755 for the change in the estimated fair value of the assets received during the year ended June 30, 2015. After acquiring full ownership of the $2,625,000 in the underlying assets of Columbus Automotive, Inc., the Foundation subsequently contributed the assets to the College and was included in donated property to Ivy Tech Community College for the year ended June 30, 2015. NOTE 9 - BENEFICIAL INTEREST IN TRUSTS The Foundation is the beneficiary of an irrevocable beneficial interest in a perpetual trust managed by a third-party trustee. The Foundation is entitled to receive 50% of the net income earned from the assets of the trust, but will never receive the assets held in the trust. The portion of the trust attributable to the present value of the future benefits to be received by the Foundation was recorded as a permanently restricted contribution in the period the trust was established. Beneficial interests in perpetual trusts are measured at fair value. See Note 4 for the discussion of fair value measurements. Distributions received from the trust are restricted for scholarships and are included in temporarily restricted contributions. Total distributions received from this trust were $24,646 and $23,900 for the years ended June 30, 2015 and 2014, respectively. The Foundation also holds an irrevocable beneficial interest in three charitable remainder trusts managed by third-party trustees. The charitable remainder trusts provide for the payment of distributions to a grantor or other designated beneficiary over the designated beneficiaries’ lifetimes. Upon the death of the designated beneficiary, the remaining assets designated for the Foundation for one of the charitable remainder trusts will be used to establish a perpetual trust, related to which the Foundation will be entitled to receive 50% of the net income earned from the trust, but will never receive the assets held in the perpetual trust. Upon the death of the designated beneficiaries of the other two trusts, the remaining assets will be distributed to the Foundation for its use in accordance with donor restrictions, if any. No distributions were received from these trusts in fiscal years 2015 or 2014. The portion of the trusts attributable to the present value of the future benefits to be received by the Foundation was recorded as a temporarily or permanently restricted contribution in the period the trust was established. Beneficial interests in charitable remainder trusts held by third parties are measured at fair value. See Note 4 for the discussion of fair value measurements. NOTE 10 - ASSETS HELD IN COMMUNITY FOUNDATIONS AND SIMILAR ENTITIES The Foundation has been named a beneficiary of various funds administered by community foundations and other similar entities. However, these funds are not included in the Foundation’s consolidated statements of financial position because the other entities have variance power over the funds. At June 30, 2015 and 2014, these funds approximated $6.6 million and $6.8 million, respectively, based on information available from the community foundations and other entities.

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NOTE 11 - DEBT AND CREDIT ARRANGEMENTS Notes payable and capital lease obligation consisted of the following at June 30, 2015 and 2014: 2015 2014 Note payable - 6.50%, payable in 240 monthly installments of $9,506, including interest, with a final payment due on May 3, 2025. Collateralized by land and buildings in Kokomo, Indiana. A portion of this note is due to a related party. See Note 14. $ 827,214 $ 885,447 Note payable - 4.55%, payable in 128 monthly installments of $5,487, including interest, with a final payment due on July 15, 2025. Collateralized by Rayl building in Kokomo, Indiana. 528,826 565,662 Tax exempt bond - 5.00%, payable in 216 monthly installments, with current monthly payments of $18,592, including interest, with a final payment due on June 1, 2024. This is a tax exempt bond from the Indiana Finance Authority. Collateralized by land and buildings in Evansville and Kokomo, Indiana. 1,614,496 1,753,012 Note payable – variable rate (2.95% at June 30, 2015), subject to adjustment every three years beginning in 2020, tied to the 3 year Federal Home Loan Bank-Indianapolis Rate, payable in 120 monthly installments of $18,500, including interest, with a final payment due on December 1, 2023. Collateralized by land in Warsaw, Indiana. 1,649,778 1,819,598 Note payable - LIBOR plus 2% (2.18% at June 30, 2015), payable in monthly interest only payments with a final payment of principal and interest on July 1, 2016. Collateralized by property in Muncie, Indiana. 312,070 512,027 Note payable - 4.30%, payable in 84 monthly installments of $25,830, including interest, with a final balloon payment of $883,386 due on April 26, 2018. Debt is held by CEP, and guaranteed by Ivy Tech Foundation. Collateralized by land in Michigan City, Indiana. 1,563,860 1,800,040 Note payable - 4.30%, payable in 96 monthly installments of $19,748, including interest, with a final payment due on January 19, 2020. Debt is held by CEP, and guaranteed by Ivy Tech Foundation. Collateralized by buildings in Terre Haute, Indiana. 983,900 1,175,151

Tax exempt bond - 3.59%, payable in monthly installments of $8,340, including interest, with a final payment due on December 9, 2031. Debt is held by CEP, and guaranteed by Ivy Tech Foundation. Collateralized by land and a building in Jeffersonville, Indiana. 1,239,744 1,287,685 Tax exempt bond - 65% of LIBOR plus 2.42% (2.44% at June 30, 2015), payable in monthly interest-only payments, with a balloon payment due on June 1, 2036. Debt is held by CEP, and guaranteed by Ivy Tech Foundation. Collateralized by a building in Fort Wayne, Indiana. 1,858,638 1,907,458 Note payable - LIBOR plus 2.10% (2.28% at June 30, 2015), payable in monthly interest-only payments, with a balloon payment of $6,000,000 plus interest due on May 31, 2016. Debt is held by CEP and guaranteed by Ivy Tech Foundation. Collateralized by land in Lafayette, Indiana. 6,000,000 6,000,000

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NOTE 11 - DEBT AND CREDIT ARRANGEMENTS (CONTINUED) 2015 2014 Two QLICI notes payable - 1.0313%, payable in annual interest-only payments through April 5, 2019 and monthly principal and interest payments beginning on May 5, 2019, through maturity on March 5, 2041. Debt is held by ITP and collateralized by mortgages on property in Indianapolis, Indiana. $3,813,000 is guaranteed by Ivy Tech Foundation. Notes may not be prepaid prior to April 5, 2019. $14,475,000 $14,475,000 Two QLICI notes payable - 1.0227%, payable in annual interest-only payments through April 5, 2019 and monthly principal and interest payments beginning on May 5, 2019, through maturity on March 5, 2041. Debt is held by ITP, guaranteed by Ivy Tech Foundation, and collateralized by a mortgage on property in Indianapolis, Indiana. Notes may not be prepaid prior to April 5, 2019. 6,860,000 6,860,000 Two QLICI notes payable - 1.0241%, payable in annual interest-only payments through April 5, 2019 and monthly principal and interest payments beginning on May 5, 2019, through maturity on March 5, 2041. Debt is held by ITP, guaranteed by Ivy Tech Foundation, and collateralized by a mortgage on property in Indianapolis, Indiana. Notes may not be prepaid prior to April 5, 2019. 10,716,325 10,716,325 Tax exempt bond - 65% of LIBOR plus 1.30% (1.48% at June 30, 2015), payable in monthly interest-only payments, with a balloon payment due on August 1, 2015. Debt is held by CEP and guaranteed by Ivy Tech Foundation. Collateralized by a building in Indianapolis, Indiana. (A) 4,300,000 4,300,000 Capital lease obligation with semiannual installments through December 2030, ranging from $570,256 to $577,606 annually, including interest imputed at 5.17%. Secured by the associated building which has been leased to the College under a direct financing lease arrangement (see Note 13). 5,854,226 Total Notes Payable and Capital Lease Obligation $58,784,077 $54,057,405

(A) In August 2015, CEP refinanced this tax exempt bond with a long-term note agreement. The refinanced note bears interest at a fixed rate of 2.45% and is payable in monthly payments of principal and interest beginning September 1, 2015, with a balloon payment of $3,594,354 at maturity on August 1, 2018. Refinanced debt remains held by CEP, but no guarantee or collateral was required.

The future capital lease payments and aggregate maturities of long-term debt, including the effects of the subsequent refinancing, were as follows: Payable In Capital Lease Debt Year Ending June 30, Payments Principal 2016 $ 575,106 $ 7,128,934 2017 573,806 1,527,307 2018 572,406 2,055,054 2019 572,656 4,371,760 2020 577,606 708,121 Thereafter 5,718,880 37,138,675 8,590,460 Less: Amounts representing interest (2,736,234) $ 5,854,226 $52,929,851

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NOTE 11 - DEBT AND CREDIT ARRANGEMENTS (CONTINUED) Notwithstanding any provision of the above QLICI notes to the contrary, on the 7th anniversary, or April 25, 2019, ITP will make a principal payment of $300,000, less the remaining balance in the loan loss reserve initially funded at $300,000, related to the $14,475,000 notes; a principal payment of $140,000 related to the $6,860,000 notes; and a principal payment of $55,525, less the remaining balance in the loan loss reserve initially funded at $55,525, related to the $10,716,325 notes. The Foundation has an unsecured bank line of credit with PNC Bank for short-term borrowings up to $4,000,000 through March 31, 2016, with interest payable monthly on outstanding borrowings and computed at 1.25% plus daily LIBOR (1.43% at June 30, 2015). At June 30, 2015 and 2014, the Foundation had outstanding borrowings of $1,597,239 and $2,444,740, respectively, under the line of credit. The Foundation also has an additional unsecured bank line of credit with PNC Bank for borrowings up to $1,600,000 through March 31, 2016, with interest payable monthly and computed at 1.90% plus daily LIBOR (2.08% at June 30, 2015). At June 30, 2015 and 2014, the Foundation had outstanding borrowings of $1,172,335 and $1,242,536, respectively, under the line of credit. Both agreements require compliance with certain financial covenants. Interest expense totaled $1,087,515 and $1,126,470 in the years ended June 30, 2015 and 2014, respectively. The Foundation has an interest rate swap agreement that effectively fixes the interest rate on the outstanding principal of the tax exempt bond that had a balance of $1,858,638 at June 30, 2015. The notional amount of the contract as of June 30, 2015 was $1,865,600, and the agreement expires in June 2036. Based on the swap agreement, the Foundation pays interest calculated at a fixed rate of 5.29% to the counterparty to the swap agreement. In return, the counterparty pays the Foundation interest based on a variable rate of 65% of the USD-LIBOR-BBA-Bloomberg rate plus 242 basis points. Only the net difference in interest payments is exchanged with the counterparty. The Foundation had a second interest rate swap agreement that effectively fixed the interest rate on the outstanding principal of the tax exempt bond that had a balance of $4,300,000 at June 30, 2015. The notional amount of the contract as of June 30, 2015 was $4,300,000. This agreement expired in August 2015 and was not renewed. Based on the swap agreement, the Foundation paid interest calculated at a fixed rate of 1.85% to the counterparty to the swap agreement. In return, the counterparty paid the Foundation interest based on a variable rate of 65% of the USD-LIBOR-BBA-Bloomberg rate plus 130 basis points. Only the net difference in interest payments was exchanged with the counterparty. The Foundation’s purpose for entering into these swap agreements was to hedge against the risk of interest rate increases on the related variable rate bond debt. Accordingly, the swap agreements are classified as cash flow hedging activity and represent a derivative financial instrument reflected on the consolidated statements of financial position at fair value. The estimated fair value of the interest rate swaps at June 30, 2015 and 2014 was a liability of $261,079 and $247,784, respectively. The change in the fair value is recognized in the consolidated statements of activities. The cash flow effects of the swap arrangements are reported as adjustments to interest expense. See Note 4 for the related fair value measurement disclosures. NOTE 12 - NET ASSETS Net assets consisted of the following at June 30, 2015 and 2014: 2015 2014 Unrestricted: Unrestricted $ 7,420,515 $ 8,361,008 Campus undesignated 1,501,635 1,763,325 Property 61,152 460,574 Alumni association 320,186 317,703 9,303,488 10,902,610

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NOTE 12 - NET ASSETS (CONTINUED) 2015 2014 Temporarily Restricted: Deferred gifts $ 466,750 $ 446,053 Property 25,321,119 27,137,225 Scholarships 2,683,674 2,638,520 Expendable from endowed 2,048,579 1,990,631 Grants and programs 12,605,227 12,958,344 Technology 354,336 301,268 Appreciation on endowment funds 2,757,931 3,476,289 Other direct funds 791,333 2,806,400 Facility 4,402,306 2,101,833 Capital accumulation 13,172,796 11,502,163 Project 705,000 705,202 Other 737,936 947,586 66,046,987 67,011,514

Permanently Restricted: Deferred gifts for endowment 458,521 493,637 Endowment 30,500,270 25,841,770 30,958,791 26,335,407 Total Net Assets $106,309,266 $104,249,531 For the years ended June 30, 2015 and 2014, net assets released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors were as follows: 2015 2014 Deferred gifts $ 9,461 $ 4,669 Property 2,409,435 2,460,896 Scholarships 1,497,336 1,327,875 Expendable from endowed 1,220,229 1,153,388 Grants and programs 3,861,751 3,424,975 Technology 3,425 20,872 Other direct funds 2,929,299 317,640 Facility 743,710 4,250,664 Capital accumulation 1,542,859 2,188,409 Project 71,776 39,851 In-kind 1,337,064 2,546,647 Other 86,754 170,834 Total Restrictions Released $15,713,099 $17,906,720

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NOTE 13 - LEASES A summary of property rented under operating leases to the College and the related rental income for the years ended June 30, 2015 and 2014 is as follows: 2015 2014 Evansville First Avenue plaza $ 95,280 $ 95,280 Kokomo Technology building 118,800 118,800 Terre Haute Doughmaker building 139,800 139,800 Terre Haute Brentlinger building 102,000 102,000 Kokomo Trialon building 134,160 134,160 Kokomo Dupont building 98,710 128,040 Fishers building 149,940 149,940 Amatrol building 119,256 119,256 Michigan City building 324,000 324,000 Fort Wayne automotive building 120,000 120,000 Fort Wayne aviation land and building 172,756 174,286 Batesville building 149,940 Indianapolis culinary building 300,000 OAMTC building 231,084 132,935 Other Indiana buildings and land 180,300 229,698 Total Rental Income from the College $2,286,086 $2,118,135 The related leases contain purchase options and renewal provisions with various terms. As of June 30, 2015, the future minimum lease payments receivable under the agreements were $1,434,266 for the year ending June 30, 2016, not including leases expected to be renewed subsequent to June 30, 2015. Additionally, the Foundation receives rental income from third party operating leases. Rental income from third party lessees for the years ended June 30, 2015 and 2014, was $982,242 and $1,336,817, respectively. As of June 30, 2015, the future minimum lease payments receivable under these agreements were as follows: Year Ending Rental June 30, Receipts 2016 $1,238,293 2017 1,187,392 2018 1,188,257 2019 675,657 Total $4,289,599 The cost of property and equipment predominantly held for lease and the related accumulated depreciation at June 30, 2015 and 2014, are as follows: 2015 2014 Land $ 14,055,929 $ 13,928,358 Buildings and improvements 72,182,023 72,755,493 Software 284,096 284,096 Furniture and fixtures 300,029 300,029 86,822,077 87,267,976 Less: Accumulated depreciation (13,631,431) (10,351,650) Property and Equipment, Net $ 73,190,646 $ 76,916,326

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NOTE 13 - LEASES (CONTINUED) The Foundation received an in-kind contribution of real property located in Muncie, Indiana on August 31, 2009, valued at $3,143,300. The Foundation’s gift agreement with the donor specifies that a portion of the property will be used for the educational purposes of the College beginning on March 1, 2011 through December 31, 2035. The book value of the property at June 30, 2015 and 2014, of $2,410,348 and $2,543,613, respectively, is included in temporarily restricted net assets. During 2015, the Foundation entered into a leasing arrangement with the College classified as a direct financing lease. The Foundation recognized interest income of $198,187 during the year ended June 30, 2015, related to its investment in this direct financing lease. A summary of future minimum lease payments receivable under this agreement is as follows: Year Ending Rental June 30, Receipts 2016 $ 1,011,159 2017 573,806 2018 572,406 2019 572,656 2020 577,606 Thereafter 5,718,880 9,026,513 Less: amounts representing interest (2,736,234) Total $ 6,290,279 Effective April 1, 2011, the Foundation entered into a land operating lease with a third party through March 31, 2051. The base rent is due in monthly installments and includes rent escalations over the term of the lease. The Foundation owns the building that is located on the rented land. The Foundation sub-leases the land lease payments to the College. The future base rental payments are as follows: Year Ending Rental June 30, Payments 2016 $ 24,890 2017 25,077 2018 25,637 2019 25,637 2020 25,829 Thereafter 939,980 Total $1,067,050 NOTE 14 - RELATED PARTY TRANSACTIONS The College employees provide staff support for the Foundation. The College pays all salaries and benefits for these employees. The Foundation provides the College a monthly amount to fund a portion of the College's operating expenses related to the College Development Office. The amount paid to the College for the years ended June 30, 2015 and 2014, was $650,000. In addition, the Foundation recorded in-kind contributions of $3,191,521 and $3,768,898 for the years ended June 30, 2015 and 2014, respectively, for personnel services and other operating expenses not reimbursed.

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NOTE 14 - RELATED PARTY TRANSACTIONS (CONTINUED) As part of the Foundation’s principal activity of promoting the College, the Foundation provides funding and support to the College for various purposes. Such funding and support is included in the consolidated statements of activities as financial aid to students, instructional supplies and equipment, special programs, community outreach/promotional expense, donations to Ivy Tech Community College, donated property to Ivy Tech Community College, and in-kind expense. Related party accounts payable to the College were $1,273,768 and $412,890 at June 30, 2015 and 2014, respectively. Additionally, during fiscal year 2005, the Foundation purchased property from a member of its Board at that time and two other unrelated persons. The amount of the related note payable to the former Board member (see Note 11) at June 30, 2015 and 2014, was $757,537 and $810,865, respectively. The Foundation's purchase of the property enabled the College to reduce its monthly rent payments. The Foundation has several operating leases and a direct financing lease with the College (see Note 13). Additionally, the College purchased property from the Foundation during 2013 and financed a portion of the purchase with the Foundation. The amount of the related note receivable from the College at June 30, 2015 and 2014, was $261,051 and $294,051, respectively. The note is to be paid in annual installments over 10 years beginning January 31, 2014, of $33,000 plus interest that has accumulated on the Foundation’s lines of credit borrowings as a result of the indebtedness or until paid in full. NOTE 15 - FORETHOUGHT BUILDING AGREEMENT During fiscal year 2014, the Foundation entered into an agreement with Batesville Community School Corporation (the School Corporation) for the School Corporation to purchase a 20% interest in certain real estate for $1,000,000. After $1,000,000 of student grants are awarded or after 10 years, whichever is sooner, the interest will transfer back to CEP. Since the 20% interest ultimately transfers back to CEP and CEP retains rights to rental income during the agreement, the transaction was not recognized as a sale. During the ten year period, the School Corporation is entitled to receive student grants up to $1,000,000 from the College. The proceeds were recorded as a liability, which will be amortized into revenue as the College awards the student grants. As of June 30, 2015 and 2014, there was $954,700 and $1,000,000, respectively, included in accrued expenses related to this transaction. NOTE 16 - CONCENTRATION One contribution provided 11% of total revenue, gains, and support for the Foundation for the year ended June 30, 2015. One contribution provided 14% of total revenue, gains, and support for the Foundation for the year ended June 30, 2014. NOTE 17 - CONTINGENCY AND GUARANTEE By providing QLICI loans (see Note 11), the financing entities are entitled to receive New Market Tax Credits (NMTCs) if all other criteria of the NMTC program are met. The NMTCs are contingent on the Foundation maintaining compliance with applicable sections of 45D of the Internal Revenue Code during the seven-year recapture period ending in April 2019. Failure to maintain compliance or to correct noncompliance within a specified time period could result in recapture of previously claimed tax credits plus penalties and interest. The financing entities are expected to receive approximately $12,910,000 of NMTCs over the seven-year period. Management has determined that no liability should be recorded related to this recapture contingency.

CONSOLIDATING INFORMATION

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Independent Auditors’ Report on Consolidating Information

Board of Directors Ivy Tech Foundation, Inc. We have audited the consolidated financial statements of Ivy Tech Foundation, Inc. (a not-for-profit organization) as of and for the year ended June 30, 2015, and our report thereon dated September 28, 2015, which expressed an unmodified opinion on those consolidated financial statements, appears on pages 1 and 2. Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The information included in the consolidating schedules of statement of financial position information and statement of activities information is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The consolidating information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States. In our opinion, the consolidating information is fairly stated in all material respects in relation to the consolidated financial statements as a whole. Indianapolis, Indiana September 28, 2015

Ivy Tech Ivy Tech

Foundation, Properties,

Inc. Inc.

ASSETSCash and equivalents 10,469,102$ 18,877$ Investments 16,135,292 Pledges receivable 9,325,439

Prepaid expenses and other assets 351,723 449,350 Intra-entity due from 3,940,626 109,181 Property and equipment, net 15,081,645 30,470,916 Note receivable from related party 261,051 Net investment in direct financing lease with related partyNote receivable from bank 23,510,509 Beneficial interest in trusts 204,434 Assets restricted for permanent endowment 30,958,791 Agency funds - Intersection Connection 5,000,738

TOTAL ASSETS 115,239,350$ 31,048,324$

LIABILITIESAccounts payable and accrued expenses 332,908$ 164,516$ Accounts payable - related party 1,273,768 Intra-entity due to 249,181 505,376 Lines of credit borrowings 2,143,971 Interest rate swaps liability 261,079 Notes payable and capital lease obligation 3,282,607 32,051,325 Other liabilities 394,705 Agency funds - Intersection Connection 5,000,738

Total Liabilities 12,938,957 32,721,217

NET ASSETS AND STOCKHOLDER'S EQUITYCommon stockAdditional paid-in capital 2,810,650 Unrestricted 8,873,092 (4,483,543) Restricted:

Temporary restricted 62,468,510 Permanently restricted 30,958,791

Total Restricted 93,427,301

Total Net Assets and Stockholder's Equity 102,300,393 (1,672,893)

TOTAL LIABILITIES AND NET ASSETS AND STOCKHOLDER'S EQUITY 115,239,350$ 31,048,324$

IVY TECH FOUNDATION, INC.

CONSOLIDATING SCHEDULE - STATEMENT OF FINANCIAL POSITION INFORMATIONJune 30, 2015

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Community Community

Enterprises, Enterprises

Inc. Properties, LLC Eliminations Total

9,376$ 4,787$ 10,502,142$ 16,135,292 9,325,439

173,784 974,857

140,000 (4,189,807)$ 27,638,085 73,190,646

261,051 6,290,279 6,290,279

23,510,509 204,434

30,958,791 5,000,738

9,376$ 34,246,935$ (4,189,807)$ 176,354,178$

1,063,547$ 1,560,971$ 1,273,768

5,221$ 3,430,029 (4,189,807)$ 625,603 2,769,574

261,079 23,450,145 58,784,077

394,705 5,000,738

5,221 28,569,324 (4,189,807) 70,044,912

1,000 (1,000) 9,000 140,000 (2,959,650)

(5,845) 1,959,134 2,960,650 9,303,488

3,578,477 66,046,987 30,958,791

3,578,477 97,005,778

4,155 5,677,611 106,309,266

9,376$ 34,246,935$ (4,189,807)$ 176,354,178$

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Ivy Tech Ivy Tech Community CommunityFoundation, Properties, Enterprises, Enterprises

Inc. Inc. Inc. Properties, LLCREVENUE, GAINS AND SUPPORT

Contributions:Cash and pledges 400,005$ Non-cashGrant revenue

Total Contributions 400,005

In-kind contributed operational services 3,191,521 Investment income 488,814 34$ 9$ 198,187$ Vending and royalty income 892,646 Special events income, net of expenses 26,564 Real estate rental income 1,388,707 572,104 1,849,481 Gain on sale of property and equipment 73,862 Uncollectible pledges (2,597) Miscellaneous revenue 1,954

6,461,476 572,138 9 2,047,668 Net assets released from restrictions 14,980,607 732,492 Reclassification of donor intent

Total Revenue, Gains and Support 21,442,083 572,138 9 2,780,160

EXPENSESFinancial aid to students 3,405,518 Building improvements, supplies and equipment 3,314,238 Faculty and staff development 237,526 Special programs 2,588,773 Community outreach/promotional expense 1,375,019 Donations to Ivy Tech Community College 303,927 Donated property to Ivy Tech Community College 2,784,261 In-kind expense 1,337,065 Real estate rental expenses 2,124,569 2,274,422 1,350 2,278,438 Other program expenses 71,236

Total College Assistance Program Expenses 17,542,132 2,274,422 1,350 2,278,438 Administrative expenses 1,398,703 12,200 Fundraising expenses 2,872,972

Total Expenses 21,813,807 2,286,622 1,350 2,278,438

INCREASE (DECREASE) IN NET ASSETS AND STOCKHOLDER'S EQUITY BEFORE LOSS ON INTEREST RATE SWAPS (371,724) (1,714,484) (1,341) 501,722

Loss on interest rate swaps (13,295)

INCREASE (DECREASE) IN NET ASSETS AND STOCKHOLDER'S EQUITY (385,019) (1,714,484) (1,341) 501,722

NET ASSETS AND STOCKHOLDER'S EQUITY

Beginning of Year 9,258,111 41,591 5,496 1,597,412

End of Year 8,873,092$ (1,672,893)$ 4,155$ 2,099,134$

Unrestricted

IVY TECH FOUNDATION, INC.

CONSOLIDATING SCHEDULE - STATEMENT OF ACTIVITIES INFORMATIONYear Ended June 30, 2015

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PermanentlyRestricted

Ivy Tech Community Ivy TechFoundation, Enterprises Foundation,

Inc. Properties, LLC Inc. Eliminations Total

8,920,579$ 4,408,047$ 13,728,631$ 2,578,394 575,000$ 3,153,394 1,959,258 1,959,258

13,458,231 575,000 4,408,047 18,841,283

3,191,521 587,540 (71,401) 1,203,183

892,646 276,064 136,090 438,718

30,140 (572,104)$ 3,268,328 73,862

(32,600) (5,150) (40,347) 9,995 11,949

14,329,370 575,000 4,467,586 (572,104) 27,881,143 (14,980,607) (732,492)

(155,798) 155,798 (807,035) (157,492) 4,623,384 (572,104) 27,881,143

3,405,518 3,314,238

237,526 2,588,773 1,375,019

303,927 2,784,261 1,337,065

(572,104) 6,106,675 71,236

(572,104) 21,524,238 1,410,903 2,872,972

(572,104) 25,808,113

(807,035) (157,492) 4,623,384 2,073,030

(13,295)

(807,035) (157,492) 4,623,384 2,059,735

63,275,545 3,735,969 26,335,407 104,249,531

62,468,510$ 3,578,477$ 30,958,791$ -$ 106,309,266$

Temporarily Restricted

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