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LINN-BENTON COMMUNITY COLLEGE FOUNDATION

(an Oregon not-for-profit corporation)

ANNUAL FINANCIAL REPORT

December 31, 2017 and 2016

LINN-BENTON COMMUNITY COLLEGE FOUNDATION BOARD OF TRUSTEES

2018

OFFICERS:

President Charlie Eads (14) Eads Broadcasting PO Box 749 Albany, OR 97321 (541) 926-8683 (work) (541) 967-1231 (home) [email protected]

Vice President Linda Modrell (14) 24497 Penland Drive Philomath, OR 97370 (541) 929-3904 (home) [email protected]

Treasurer Rosemary Bennett (07) 1077 13th SW Albany, OR 97321 (541) 928-1568 [email protected]

Secretary OPEN

Past President Carolyn Gardner (11) 3223 NW McKinley Dr Corvallis, OR 97330 (541) 754-4002, ext 201 (work) (541) 754-8313 (home) [email protected]

MEMBERS:

Dan Bedore (07) 3230 Liberty SW Albany, OR 97321 (541) 812-1426 [email protected]

Marty Cahill (16) Samaritan Lebanon Hospital 525 N. Santiam Hwy Lebanon, OR 97355 (541) 451-7114 (work) [email protected]

Randy Camp (14) Co-Energy Propane 2505 Pacific Blvd SE Albany, OR 97321 (541) 738-6733 (work) [email protected]

Nancy Ferguson (13) 6380 NE Pettibone Drive Corvallis, OR 97330 (541) 745-7809 [email protected]

Keith Frome 35670 Ebenger St SW Albany, OR 97321 (541) 753-3114 (w) (541) 990-6167 (cell) [email protected]

Nancy Goode (04) 763 Augusta Court Albany, OR 97321 (541) 926-1748 [email protected]

Doris Johnston (07) 2780 19th Ave NW Albany, OR 97321 (541) 740-7469 (cell) [email protected]

Jo Ann McQueary (12) 570 W Holley Road Sweet Home, OR 97386 (541) 367-2956 [email protected]

Diane Merten (00) 1235 NW Lewisburg Ave. Corvallis, OR 97330 (541) 745-7603 (home) [email protected]

Rick Peterson (18) Peak Internet 38232 Courtney Creek Dr. Brownsville, OR 97327 (541) 738-4900 (work) (541) 602-0800 [email protected]

George Pugh (05) At-Large Member 30415 Green Valley Road Shedd, OR 97377 (541) 491-3824 [email protected]

Joan Reukauf (16) Willamette Community Bank PO Box 927 Albany, OR 97321 (541) 971-4311 (work) Jreukauf@willamettecommunity bank.com 6275 SW Trellis Dr Corvallis, OR 97333 [email protected]

Dan Segel (16) Corvallis Knights 3814 NE 21st Ave Portland, OR 97212-1429 [email protected]

Stacie Wyss-Schoenborn (16) Central Willamette Com Credit Union PO Box 1899 Albany, OR 97321 (541)928-4536 (work) [email protected]

mailto:[email protected]







LINN-BENTON COMMUNITY COLLEGE FOUNDATION (an Oregon not-for-profit corporation)

TABLE OF CONTENTS

December 31, 2017 and 2016 Page

Number INTRODUCTORY SECTION

Board of Trustees Table of Contents

FINANCIAL SECTION

Independent Auditor’s Report ................................................................................................ 1-2 Basic Financial Statements

Statements of Financial Position ...................................................................................... 3 Statements of Activities .................................................................................................... 4 Statements of Cash Flows ............................................................................................... 5 Notes to Financial Statements ......................................................................................... 6-16

SUPPLEMENTARY INFORMATION

Statements of Functional Expenses ...................................................................................... 17

FINANCIAL SECTION

BASIC FINANCIAL STATEMENTS

2017 2016ASSETS

Cash and cash equivalents 183,730$ 2,576,359$ Contributions receivable 75,599 48,431 Pledges receivable 25,459 111,836 Loans receivable, net of allowance - - Other receivables 150 150 Investments 8,135,667 4,689,855 Beneficial interest in assets held by The Oregon Community Foundation 255,919 232,202 Property and equipment 587,636 764,608

TOTAL ASSETS 9,264,160$ 8,423,441$

LIABILITIESAccounts payable 66,902$ 63,207$ Obligations under split-interest agreements 54,749 52,693 Amounts held for others 1,515 1,515

TOTAL LIABILITIES 123,166 117,415

NET ASSETSUnrestricted - undesignated 752,545 714,124 Unrestricted - designated 1,446,220 1,269,528 Total unrestricted 2,198,765 1,983,652

Temporarily restricted 3,641,622 3,300,517 Permanently restricted 3,300,607 3,021,857

TOTAL NET ASSETS 9,140,994 8,306,026

TOTAL LIABILITIES AND NET ASSETS 9,264,160$ 8,423,441$

The accompanying notes are an integral part of these financial statements.

LINN-BENTON COMMUNITY COLLEGE FOUNDATION(an Oregon not-for-profit corporation)

STATEMENTS OF FINANCIAL POSITION


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Temporarily PermanentlyUnrestricted Restricted Restricted Totals

REVENUES AND OTHER SUPPORTContributions

Cash, stock and receivables 68,359$ 789,708$ 222,448$ 1,080,515$ Interest on loans 36,871 - - 36,871 Interest on checking accoun 807 - - 807 Dividends 141,547 261,527 - 403,074 Grant - 53,847 - 53,847 Fundraising 29,006 42,885 - 71,891 Rental property 3,993 11,978 - 15,971 In-kind contributions 181,923 - - 181,923 In-kind program contributions 12,272 149,227 - 161,499 Other revenue 1,438 23,003 296 24,737 Realized gain on investments 10,728 18,916 - 29,644 Unrealized gain on investments 193,426 390,179 - 583,605 Change in beneficial interest in assets hel by The Oregon Community Foundation - 23,717 - 23,717 Distribution of investment return earned on asset held by The Oregon Community Foundation - 10,831 - 10,831 Change in value of split-interest agreement - 1,986 - 1,986 Recovery of bad debts 12,283 - - 12,283 Net assets reclassified per donor requests - (56,006) 56,006 - Net assets released from restrictions fo general administration 53,075 (53,075) - - Net assets released from restrictions fo scholarships and program activities 1,284,424 (1,284,424) - -

TOTAL REVENUES ANDOTHER SUPPORT 2,030,152 384,299 278,750 2,693,201

EXPENSES AND LOSSESProgram services 1,299,317 - - 1,299,317 Supporting services

Management and genera 500,051 - - 500,051 Fundraising 15,671 - - 15,671

Bad debts expense - - - - Realized loss on disposition of fixed assets - 43,194 - 43,194

TOTAL EXPENSES AND LOSSES 1,815,039 43,194 - 1,858,233

CHANGE IN NET ASSETS 215,113 341,105 278,750 834,968

NET ASSETS AT BEGINNING OF YEAR 1,983,652 3,300,517 3,021,857 8,306,026

NET ASSETS AT END OF YEAR 2,198,765$ 3,641,622$ 3,300,607$ 9,140,994$

The accompanying notes are an integral part of these financial statements

2017


STATEMENTS OF ACTIVITIES

For the Years Ended December 31, 2017 and 2016

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Temporarily PermanentlyUnrestricted Restricted Restricted Totals

279,968$ 317,123$ 100,714$ 697,805$ 107,254 - - 107,254

470 - - 470 58,524 180,435 - 238,959

- 15,000 180,000 195,000 31,016 8,616 - 39,632 4,632 13,897 - 18,529

144,438 - - 144,438 10,184 220,324 - 230,508 4,863 20,386 - 25,249 1,832 9,498 - 11,330

90,942 165,762 - 256,704

- 2,083 - 2,083

- 10,584 - 10,584 - (805) - (805) - - - - - - - -

- - - -

1,275,078 (1,275,078) - -

2,009,201 (312,175) 280,714 1,977,740

1,295,791 - - 1,295,791

445,410 - - 445,410 12,823 - - 12,823 76,372 - - 76,372

- 1,000 - 1,000

1,830,396 1,000 - 1,831,396

178,805 (313,175) 280,714 146,344

1,804,847 3,613,692 2,741,143 8,159,682

1,983,652$ 3,300,517$ 3,021,857$ 8,306,026$

2016

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2017 2016CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets 834,968$ 146,344$ Adjustments to reconcile change in net asset

to net cash provided (used) by operating activitieDepreciation expense 4,272 4,273 Bad debts expense - 76,372 Loan interest added to principa - (76,372) In-kind contributions revenue (181,923) (144,438) In-kind contributions expense 181,923 144,438 In-kind program contributions revenue (161,499) (230,508) In-kind program contributions expense 161,499 230,508 Contributions of stock (57,883) - Contributions of fixed assets (4,000) - Realized gain on sale of investments (29,644) (11,330) Unrealized gain on investments (583,605) (256,704) Change in beneficial interest in assets held by The Orego Community Foundation (23,717) (2,083) Change in value of split-interest agreement (1,986) 805 Realized loss on disposition of fixed asset 43,194 1,000 (Increase) decrease in

Contributions receivable (27,168) (14,252) Pledges receivable 86,377 565,162 Prepaid expenses - 6,942

Increase (decrease) inAccounts payable 3,695 54,083 Obligations under split-interest agreement 4,042 (1,231)

Realized and unrealized gain on charitable remainder unitrus (6,027) (1,456) Contributions and grants restricted for long-term purpose (222,744) (280,714) Payments of charitable gift annuity obligation 1,870 1,870 Payments of charitable remainder unitrust obligation 2,612 2,607

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 24,256 215,316

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of investments (3,546,653) (547,308) Proceeds from sale of investments 778,000 2,513,350 Proceeds from sale of fixed assets 133,506 -

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (2,635,147) 1,966,042

CASH FLOWS FROM FINANCING ACTIVITIESPayments of charitable gift annuity obligation (1,870) (1,870) Payments of charitable remainder unitrust obligation (2,612) (2,607) Collection of contributions and grants restricted for long-term purposes 222,744 280,714

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 218,262 276,237

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,392,629) 2,457,595

CASH AND CASH EQUIVALENTS, beginning of yea 2,576,359 118,764

CASH AND CASH EQUIVALENTS, end of year 183,730$ 2,576,359$

SUPPLEMENTAL DISCLOSURESInterest paid -$ -$ Income taxes paid - -

The accompanying notes are an integral part of these financial statements


STATEMENTS OF CASH FLOWS


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NOTES TO FINANCIAL STATEMENTS


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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Nature of Activities Linn-Benton Community College Foundation is an Oregon not-for-profit corporation founded in 1972 under the laws and regulations of the state of Oregon. The Foundation exists for the express purpose of advancing and promoting the interest and development of Linn-Benton Community College and the students, faculty, and community. The Foundation provides a means for supporting projects and programs that are beyond the scope of the College. The Foundation’s Board of Trustees is organized to solicit and accept gifts in support of Linn-Benton Community College and to manage, invest, and account for the assets of the Foundation. The College-Foundation relationship is one of symbiosis with each entity beneficial to the other. B. Income Taxes Linn-Benton Community College Foundation is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Therefore, no provision for income taxes is included in the financial statements. In addition, the Foundation qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization that is not a private foundation under Section 509(a)(2). The Foundation’s tax exempt status can be revoked by the Internal Revenue Service as a result of direct violations of laws and regulations governing 501(c)(3) organizations. It is the Foundation’s policy, therefore, to maintain strict adherence to these laws and regulations in order to maintain its tax-exempt status and to engage only in activities related to their exempt purpose. Income from activities not directly related to performance of the Foundation’s tax-exempt purposes could be subject to taxation as unrelated business income. The Foundation has evaluated each of these sources of income and believes that none of them meet the Internal Revenue Service definition of unrelated business income; therefore, no entries have been made in these financial statements to recognize potential income tax liability. The Foundation’s tax returns for years prior to 2014 are generally no longer subject to examination by taxing authorities. C. Basis of Presentation Linn-Benton Community College Foundation records its revenue and expenses using the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when the liability is incurred.

Financial statement presentation follows the requirements of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 958, Not-for-Profit Entities. Under FASB ASC 958, the Foundation is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.




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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

D. Public Support and Revenue In accordance with FASB ASC 958-605, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions.

All donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a 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 statements of activities as net assets released from restriction.

Donated services are recognized as contributions in accordance with FASB ASC 958-605 if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by Linn-Benton Community College Foundation. Volunteers also provided services throughout the year that are not recognized as contributions in the financial statements since the recognition criteria under FASB ASC 958-605 were not met. During 2017 and 2016, Linn-Benton Community College Foundation received donated services valued at $169,050 and $131,737, respectively.

Linn-Benton Community College Foundation occupies an office at Linn-Benton Community College. The fair value of this occupancy for the years ended December 31, 2017 and 2016 is $12,873 and $12,701, respectively. E. Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

F. Cash and Cash Equivalents

Linn-Benton Community College Foundation considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents.

G. Investments

In accordance with FASB ASC 958-320, investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Unrealized gains and losses are included in the change in net assets. Investment income and gains are reported as increases in unrestricted net assets unless the donor places temporary or permanent restrictions on the investment income and gains. Once the restrictions are met (either by passage of time or by use) the investment income and gains are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restriction.




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H. Beneficial Interest In Assets Held By The Oregon Community Foundation

The Foundation is in an Endowment Partners Program with The Oregon Community Foundation (OCF). OCF is an Oregon not-for-profit corporation. Endowment Partners Program endowments are OCF funds established by charitable organizations in Oregon to serve as their endowments. OCF maintains variance power and legal ownership of the endowments and reports the funds as assets. In accordance with FASB ASC No. 958-605-25-33, a liability is established on the financial statements of OCF for the fair market value of the endowments. Linn-Benton Community College Foundation reports a beneficial interest in assets held by OCF as an asset in its financial statements.

Distributions are normally made at least annually based on a percentage determined by the Board of Directors of OCF under its grant percentage payout policy. Additional distributions are also available with the approval of the Linn-Benton Community College Foundation Board of Trustees and OCF’s Board of Directors. The Foundation’s beneficial interest in assets held by The Oregon Community Foundation is reported at fair value. I. Property and Equipment

Donations of property and equipment are recorded as support at their estimated fair value. Property and equipment valued at $5,000 or greater and maintained by the Foundation are capitalized. All others are expensed. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired assets are placed in service or distributed to Linn-Benton Community College as instructed by the donor. The Foundation reclassifies temporarily restricted net assets to unrestricted net assets at that time.

Capital assets are depreciated using the straight line method over their useful life. The duplex is being depreciated over 30 years.

J. Obligations Under Split-Interest Agreements

Obligations under split-interest agreements, which consist of one charitable remainder unitrust and two charitable gift annuities, are recorded when incurred at the present value, discounted at 3.25%, of the distributions to be made to the donor and/or donor-designated beneficiaries over either their actuarially determined expected lives or the life of the agreement. Distributions under the charitable remainder unitrust are determined annually based on a specified percentage of the trust’s assets. Distributions under the charitable gift annuities are fixed as specified in a Gift and Annuity Agreement. Obligations under split-interest agreements are revalued at the end of each year with the change being recognized in the statements of activities.




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K. Endowment Fund Policy

The Board of Trustees has established guidelines for the utilization of the Endowment Fund maintained to benefit the general purposes of the Foundation. The policy sets forth that the Foundation shall accept current and deferred gifts to the Endowment Fund. The Foundation’s policy is to maintain the principal of the fund in perpetuity. The policy allows up to 5 percent of the endowment’s fair value based on a 3-year rolling average balance, including investment earnings, to be expended in a given fiscal year as determined by the Board of Trustees.

If an endowment’s fair market value falls below the required minimum investment at the time the endowment was executed, the Foundation will not distribute any amount until the assets exceed that minimum. Any income not utilized in a given year may be retained for future use according to the endowment’s established purpose or reinvested in the endowment’s principal. The Foundation’s Board of Trustees is responsible for determining the annual distribution percentage and the method of calculation as deemed to be in the best interest of the Endowment Fund.

Endowment Fund assets are pooled in the Foundation’s Endowment Fund and managed by the Board of Trustee’s Finance Committee as well as professional investment firms. The goal of the Endowment Fund is to maintain the principal with sufficient returns to both grow the Endowment Fund and meet the income requirements for annual distributions to support the Endowment Fund’s established purpose such as providing annual scholarships. The Endowment Fund’s investment strategy is a conservative growth model which includes mutual funds, stocks and other assets. L. Functional Allocation of Expenses

The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities and in the statements of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

NOTE 2 – CASH AND CASH EQUIVALENTS

Cash and cash equivalents balances for the years ended December 31, 2017 and 2016 consist of the following:

2017 2016

Petty cash 50$ 50$ Checking account 174,189 128,780 Deposit in transit to checking account from investment account - 2,441,074 Money market accounts 9,491 6,455

Total cash and cash equivalents 183,730$ 2,576,359$




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NOTE 3 – PLEDGES RECEIVABLE

At December 31, 2017 and 2016, pledges receivable consisted of the following:

The pledges receivable unamortized discount has been discounted using a rate of 3%.

NOTE 4 – LOANS RECEIVABLE

In January 2013, the Foundation Board of Trustees authorized an investment loan of $100,000 for operations to a newly-formed not-for-profit company. In addition, the Foundation Board of Trustees authorized an additional loan during the year intended as a line of credit with a maximum loan amount of $200,000 (increased to $230,000 in May 2014). During 2013, the Foundation advanced the full $100,000 investment loan plus amounts totaling $195,000 on the additional loan. During 2014, the Foundation loaned an additional $35,000 to the not-for-profit company. The not-for-profit company made interest payments of $7,524 and required principal payments of $2,469 during 2013, and made interest payments of $750 during 2014. No payments were made in 2015. Terms of the loan agreements were modified throughout 2013, 2014 and 2015 to allow interest-only payments and, eventually, to defer all payments on the loans until 2016. During 2016, the not-for-profit company made interest payments of $30,882 on the loans, and unpaid accrued interest totaling $76,372 was added to the loan principal balance. During 2017, the not-for-profit company made interest payments of $36,871 and principal payments of $12,283. The Foundation’s financial statements reflect loans receivable of $391,620 and an allowance of $391,620 against all remaining loan balances as of December 31, 2017.

NOTE 5 – INVESTMENTS

The Foundation invests in premium investment grade mutual funds, certificates of deposit, equity securities, and debt securities from companies located throughout the United States and Europe. Fair values and unrealized appreciation (depreciation) at December 31, 2017 and 2016 are summarized as follows:

2017 2016

Unrestricted pledges receivable -$ 2,000$ Temporarily restricted pledges receivable 25,750 113,880

25,750 115,880 Unamortized discount (291) (4,044)

Pledges receivable, net 25,459$ 111,836$

Amounts due in:

Less than one year 23,750$ 88,379$ One to two years 1,709 23,457

25,459$ 111,836$




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NOTE 5 – INVESTMENTS (Continued)

The following schedule summarizes the investment return and its classification in the statements of activities for the years ended December 31, 2017 and 2016.

NOTE 6 – BENEFICIAL INTEREST IN ASSETS HELD BY THE OREGON COMMUNITY FOUNDATION

The Foundation has a separate endowment fund at The Oregon Community Foundation. In accordance with FASB ASC 958-605, Revenue Recognition, Linn-Benton Community College Foundation accounts for its interest in this fund using the equity method of accounting, which approximates the present value of the estimated expected future cash flow that will inure to the Foundation. The assets in this fund are restricted for an endowment. Changes in the Foundation’s beneficial interest in this fund for the years ended December 31, 2017 and 2016 are summarized as follows:

Unrealized UnrealizedAppreciation Appreciation

Cost Fair Value (Depreciation) Cost Fair Value (Depreciation)

InvestmentsEquity mutual funds 6,500,341$ 7,830,212$ 1,329,871$ 3,921,727$ 4,645,757$ 724,030$ Equity mutual funds held by trust 34,537 50,031 15,494 33,364 44,098 10,734 Certificates of deposit 245,000 244,977 (23) - - - Common stocks 10,488 10,447 (41) - - -

6,790,366$ 8,135,667$ 1,345,301$ 3,955,091$ 4,689,855$ 734,764$

2017 2016

Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Unrestricted Restricted Restricted

Interest income 807$ -$ -$ 470$ -$ -$ Dividend income 141,547 261,527 - 58,524 180,435 - Net realized and unrealized

gains 204,154 409,095 - 92,774 175,260 -

Total investment return 346,508$ 670,622$ -$ 151,768$ 355,695$ -$

2017 2016

2017 2016

Balance at beginning of year 232,202$ 224,119$ Assets transferred to The Oregon Community Foundation - 6,000 Plus increase in the fair value of the assets 34,548 12,667 Less distribution of investment return to the Foundation (10,831) (10,584)

Balance at end of year 255,919$ 232,202$




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NOTE 7 – PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2017 and 2016 consisted of the following:

During 1995, the Foundation received land as a non-cash contribution. The land was appraised at $305,000 on the date of acquisition and is being held for use by Linn-Benton Community College for educational purposes. In January 2010, the Foundation received notice of a planned gift from a retired Linn-Benton Community College employee who passed away in December 2009. The estate was in probate until June of 2011 when the Foundation took possession of a duplex in Corvallis, Oregon with an appraised value of $139,800 for the land and $128,170 for the building, and a small piece of land in New Mexico with an appraised value of $636. The duplex is being rented out with the assistance of a management company. In 2006, a non-cash contribution of land with an appraised value of $172,000 was received by the Foundation. The land was sold in 2017 for $133,506. The donor restricted the first $100,000 to help fund the Science and Health Center and the remainder of the proceeds are to be placed in an endowment fund. The grand piano was purchased by the Foundation and is recorded at cost. The Foundation has granted Linn-Benton Community College exclusive use of the piano at no charge.

Periodically, the Foundation receives automobiles as donations. The Foundation registers the automobiles in the Foundation’s name. These automobiles are then either sold outright with the proceeds going to one of the scholarship funds or donated to Linn-Benton Community College for various vocational programs. The Foundation routinely receives horses from various donors. Some horses are turned over to Linn-Benton Community College for use in the College’s agricultural technology program. Horses capitalized are being held for sale.

2017 2016

Land 445,436$ 617,436$ Building 128,170 128,170 Grand piano 20,000 20,000 Automobiles 8,600 8,600 Livestock 13,200 13,900

615,406 788,106 Less accumulated depreciation 27,770 23,498

Total property and equipment 587,636$ 764,608$




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NOTE 8 – DESIGNATION OF UNRESTRICTED NET ASSETS The Unrestricted – designated net assets balance is a quasi-endowment fund created by the Board of Trustees. The intention is to restrict spending to the earnings on the fund and maintain the principal balance. The fund was established by charging fifteen percent (15%) of all fundraising and investment earnings from the general fund of the Foundation. Funds may be used to provide interfund loans or grants to any endowment fund that has not maintained the economic value of its original gift and subsequent contributions. The use of all resources in the fund remains at the discretion of the Board of Trustees.

NOTE 9 – TEMPORARILY RESTRICTED AND PERMANENTLY RESTRICTED NET ASSETS

The restrictions on net assets are related to funds received for scholarships and other special assistance and funds invested in an endowment in accordance with donor wishes.

Temporarily restricted net assets are available for the following purposes:

During the years ended December 31, 2017 and 2016, $1,337,499 and $1,275,078, respectively, were released from temporary restrictions because purpose restrictions were satisfied.

Permanently restricted net assets consist of endowment fund investments to be held indefinitely, the income from which is expendable to support the special purposes designated by the donors.

NOTE 10 – ENDOWMENT FUND

As of December 31, 2017 and 2016, the Endowment Fund consisted of the following:

2017 2016

Award of scholarships and special assistance 1,162,233$ 1,266,894$ Advanced Transportation Technology Center Project 38,744 56,061 Temporarily restricted earnings on endowment funds 2,402,752 1,947,491 Split-interest agreements 37,893 30,071

3,641,622$ 3,300,517$

2017 2016

Temporarily restricted earnings 2,402,752$ 1,947,491$ Permanently restricted net assets 3,300,607 3,021,857

Total Endowment Fund 5,703,359$ 4,969,348$




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NOTE 10 – ENDOWMENT FUND (Continued)

A summary of Endowment Fund activity during 2017 and 2016 was as follows:

NOTE 11 – SPLIT-INTEREST AGREEMENTS

At December 31, 2017 and 2016, total assets held under split-interest agreements consisted of investments with a fair market value of $92,643 and $82,764 respectively. In late 2012, the Foundation entered into a charitable gift annuity agreement whereby the donor provided the Foundation with $20,000 in cash in exchange for the right to receive an annuity of $940 per year (paid in semi-annual installments of $470) during the donor’s natural life. The net present value of the estimated liability for future payments under this annuity agreement was $12,131 at December 31, 2017. Annuity payments of $940 were paid during 2017 and a $412 change in the value of this split-interest agreement was recognized during 2017.

In 2015, the Foundation entered into a charitable gift annuity agreement whereby the donor provided the Foundation with $15,000 in cash in exchange for the right to receive an annuity of $930 per year (paid in semi-annual installments of $465) during the natural life of the donor and their spouse. The net present value of the estimated liability for future payments under this annuity agreement was $8,804 at December 31, 2017. Annuity payments of $930 were paid during 2017 and a $307 change in the value of this split-interest agreement was recognized during 2017.

The Foundation is the trustee for a charitable remainder unitrust established on June 5, 1998 with a term of twenty years. Under the trust agreement, distributions are to be made to the trust’s beneficiaries in an annual amount equal to 6% of the fair market value of the trust’s assets as of the first day of each calendar year, payable in equal quarterly installments. Upon expiration of the trust, or upon the death of the last surviving trust beneficiary, the remaining assets in the trust are to be distributed in accordance with the trust agreement to various charitable remaindermen, one of which is the Foundation. The net present value of the estimated liability for payments to trust beneficiaries and other charitable remaindermen was $33,814 at December 31, 2017. The trust had earnings of $9,119, made distributions to donor-designated beneficiaries of $2,612, paid trust expenses of $595 and recognized a change in the value of this split-interest agreement of $2,705 in 2017.

2017 2016

Balance at beginning of year 4,969,348$ 4,485,511$

Contributions 311,338 336,261 Other income 746 1,868 Unrealized gain on endowment investments 421,027 172,816 Investment income 282,540 196,105 Expenses (273,783) (223,213) Reclassifications (7,857) -

Balance at end of year 5,703,359$ 4,969,348$




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NOTE 12 – AMOUNTS HELD FOR OTHERS

The Foundation acts as the fiscal agent for various departments and associations of Linn-Benton Community College by maintaining and investing funds for them. The account manager, for the intent and purpose of the funds, designates the use of these funds. These funds are not Foundation assets and are therefore recorded as a liability on the statements of financial position.

NOTE 13 – CONCENTRATIONS OF CREDIT RISK ARISING FROM CASH HELD WITH INSTITUTIONS

The Foundation maintains a checking account at a financial institution insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 at December 31, 2017. Amounts at our banking institution were fully insured as of December 31, 2017. The Foundation closed its investment account with Commonfund on December 30, 2016 and proceeds of $2,441,074 were deposited in the Foundation's checking account in January 2017. The Foundation then transferred this amount to its investment account at Edward Jones a few days later.

NOTE 14 – CONCENTRATIONS OF CREDIT RISK ARISING FROM INVESTMENTS

The Foundation's investments at December 31, 2017 are maintained with the local branch of the investment firm, Edward Jones. The Foundation’s investments are diversified in a variety of mutual funds, certificates of deposit and equity securities. However, the Foundation’s investments are subject to market fluctuations, which could dramatically affect the carrying value of these assets. The Foundation’s investments are insured by the Securities Investors Protection Corporation (SIPC) up to a maximum of $500,000. Investments at Edward Jones are also covered by additional insurance provided to investors through the company.

NOTE 15 – FAIR VALUE MEASUREMENTS

The Foundation follows the requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. In accordance with FASB ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a framework for measuring fair value and a three level hierarchy for fair value measurements based upon observable and unobservable input valuation techniques. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect significant market assumptions including those made by the reporting entity. The three level hierarchy is summarized as follows:

Level 1 - Quoted prices in active markets for identical securities Level 2 - Other significant observable inputs (including quoted prices for similar securities,

interest rates, credit risk, etc.) Level 3 - Significant unobservable inputs




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NOTE 15 – FAIR VALUE MEASUREMENTS (Continued) Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying amount of investments is based upon quoted market values, a Level 1 input.

The Foundation’s beneficial interest in assets held by The Oregon Community Foundation is reported at fair value at December 31, 2017. These assets are reported at fair value using information received from OCF (i.e., Level 3).

NOTE 16 – RELATED PARTY TRANSACTIONS

The loans made by the Foundation to the not-for-profit company and related principal and interest payments described in Note 4 are considered related party transactions. The Board of Directors of the not-for-profit company includes two members of the Foundation Board of Trustees plus the Executive Director of the Foundation. This constitutes a voting majority of the Board of Directors of the not-for-profit company, which was a condition of the Foundation making the loans to the not-for-profit company.

NOTE 17 - COMMITMENTS

During 2015, the Foundation agreed to guarantee a $100,000 line of credit with a local financial institution for the not-for-profit company described in Note 4. At December 31, 2017 there was $49,202 outstanding on this line of credit.

NOTE 18 – SUBSEQUENT EVENTS

Management has evaluated subsequent events through April 6, 2018, which was the date that the financial statements were available to be issued. On January 19, 2018 the line of credit described in Note 17 was called by the local financial institution and immediate repayment was requested. At that time, $49,202 was outstanding on the line of credit. The not-for-profit company negotiated with the local financial institution to have until May 20, 2018 to repay the line of credit. As of April 6, 2018 the remaining outstanding balance on the line of credit was $27,922.

SUPPLEMENTARY INFORMATION

Program ManagementServices and General Fundraising Totals

Scholarships and grants 371,895$ -$ -$ 371,895$ Materials and supplies 74,837 - 3,505 78,342 Materials for resale - 2,128 - 2,128 Postage - 7,867 - 7,867 Printing - 19,849 1,127 20,976 Publishing - 11,787 250 12,037 Licenses and fees - 1,635 - 1,635 Administrative support - 217,396 - 217,396 Contracted services 13,701 10,500 - 24,201 Insurance - 10,133 - 10,133 Contributions of equipment - - - - Contributions for capital construction 615,705 - - 615,705 Telephone - 326 - 326 Depreciation expense - 4,272 - 4,272 Travel 60,381 - - 60,381 In-kind contributions - 181,923 - 181,923 In-kind program contributions 161,499 - - 161,499 Other expenses 1,299 32,235 10,789 44,323

Totals 1,299,317$ 500,051$ 15,671$ 1,815,039

Bad debts expense -

1,815,039$

Supporting Services2017


STATEMENTS OF FUNCTIONAL EXPENSES


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Program ManagementServices and General Fundraising Totals

311,357$ -$ -$ 311,357$ 64,482 - 5,193 69,675

- 1,807 - 1,807 - 5,093 - 5,093 - 18,653 713 19,366 - 6,031 - 6,031 - 1,761 - 1,761 - 201,294 - 201,294

35,402 10,150 7,016 52,568 - 7,900 - 7,900

89,669 - - 89,669 557,997 - - 557,997

- 228 - 228 - 4,273 - 4,273

4,868 - - 4,868 - 144,438 - 144,438

230,508 - - 230,508 1,508 43,782 (99) 45,191

1,295,791$ 445,410$ 12,823$ 1,754,024

76,372

1,830,396$

2016Supporting Services

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