KSU Foundation 2013 Board of Trustees Business Meeting

KSU Foundation 2013 Board of Trustees Business Meeting September 13, 2013

WELCOME Duane Cantrell Chair, Board of Trustees

Foundation Report Fred Cholick President & CEO

Our Mission q Advance K-State by uniting charitable giving with university priorities q Foster a culture of philanthropy q Steward and invest contributed funds

Fulfilling Our Mission We work with university partners and volunteer leaders to build lifelong relationships with alumni, friends, parents, faculty, staff and students through involvement and investment in the university.

Total gift activity: 2009– 2013

Household giving by trustees

Funds available to K-State: 2009– 2013

Key Initiatives q Developed and implemented new funding model q Enhanced the Endowment q q Engaged deans and department heads in campaign planning – philanthropic objectives and priorities of 2025 Implemented a performance management program for the distribution of compensation for all KSU Foundation employees

Comprehensive Funding Model q q q Increase philanthropic resources for the university – total gift activity in excess of $150 million Stabilize flow of funds to the academy Sustainable funding for the KSU Foundation’s budget

Enhanced the Endowment q Increased Cash Flow to the University q Enhanced Sustainability q Donor Centric Solutions

Campaign Planning q Collaborate to establish college and major unit goals q Training for deans, major unit leaders and staff on fundraising for larger gifts and working with volunteers q Developed system to identify and focus campaign-related activity q Developed system to more effectively and easily identify prospects to capitalize on university leaders’ travel

Keys to success Collaborating with our partners! • Alumni and friends • Corporations and foundations • Kansas State University • K-State Athletics • K-State Alumni Association

Governance Report Stephen Lacy Chair, Governance Committee

Governance q Enterprise Risk Assessment q Initiated a new platform to manage risk q Performance Management System q Finalized 1 st year with staff q Donor Advised Funds q Winding down due to limited participation causing IRS hurdles

Governance q q Review the KSU Foundation’s Articles of Incorporation and Bylaws Conflict of Interest Policy Completed & Reviewed Conducted a self-assessment survey for Board of Directors Reviewed and approved the KSU Foundation’s Form 990

Finance & Audit Report Kevin Lockett Chair, Finance & Audit Committee

Finance & Audit q 3 rd Year Audit with BKD – Kansas City • No material comments anticipated q Reviewed and approved the KSU Foundation’s audit and retirement plan q Review President Schulz expenses

2013 Finance & Audit q q Enhancing the Endowment q Existing Underwater Endowed Funds q Adopted Distribution on Funds < 15% impaired New Funding Model • Defined a new funding structure allowing KSUF to achieve a sustainable budget and grow the organization • Benchmarking o Big 12, Big 10 and Top 50 Public Research Institutions o Utilize benchmarking to guide growth to $150 million in fundraising

Peer comparison Endowment Market Value - FY 2011 $1, 250 $1, 000 $750 $500 $250 $0 KSU Staffing Levels 89 KU Iowa St 157 102 Nebraska 146 Auburn 135 Oregon St 113 22

Peer comparison 23

Funding model research • Big 10/Big 12/PAC 10 funding models • 25 other funding models • Significant variations within each institution • No easy answers 24

Peer Review • The 25 Institutions analyzed – 72% of Institutions <$ 1 Billion in assets have a Gift Fee • Outcome – Implemented a 5% tiered University Advancement Fee on each expendable and endowed gift (see fact sheet in padfolio) 25

KSU Foundation 2014 Budget KSU Foundation Operations: Funding $ 14. 7 million Expenses -$14. 3 University: Net - $. 8 Net deficit -$. 4

2014 Finance & Audit q Organizational Sustainability q q Define new Reserve Goals Finance & Audit role in Enterprise Risk Assessment q Manage Highest Likelihood & Impact Risks

Asset Management Report Richard Myers Chair, Asset Management Committee

Fiscal Year 2013 Activities q CIO transition q q David Weaver entered phased retirement July 1 st with Lois Cox assuming CIO responsibilities Rush Harvey joined the Foundation as Investment Officer Building sustainability of the endowment q Lowered cap on distribution to purpose 25 basis points to 4. 50% q Phased out distribution to campus units of. 23% over next 3 years Approved a change to the benchmark for inflation sensitive investments

Fiscal Year 2014 Initiatives q Organizational Sustainability q q Role in Enterprise Risk Assessment q q Manage Highest Likelihood & Impact Risks FY 14 organizational priority – q q Define new Reserve Goals (with Finance & Audit Committee) Enhance the endowment brand Portfolio discussions q Rising rate environment q Benchmarking metrics

Expendable Funds Pool Asset Allocation Market Value = $87. 7 MM

Endowment Pool Asset Allocation Market Value = $365 MM Inflation Sensitive 13% Deflation Hedge 9% Overlay 10% Diversifiers 6% Global Equities 7% Developed Countries 21% Other 62% Emerging Markets 12% Private Capital 22%

Endowment Pool Performance Analysis 14. 00 Annualized Returns - Net % 12. 00 10. 00 8. 00 6. 00 4. 00 2. 00 0. 00 Endowment Pool Macro Custom Benchmark Absolute Objective FY 13 12. 04 12. 43 3 -Year 9. 54 10. 44 5 -Year 2. 58 4. 81 10 -Year 7. 72 8. 36 8. 44

Endowment Pool Performance Analysis for periods ending 6/30/13 $400 25% 20% $350 $200 $150 10% 5% Annual Return $250 Market Value ($millions) 15% $300 0% -5% -10% $100 -15% $50 $0 Annual Return Endowment Pool Market Value -20% 6/30/04 18. 51% $188. 71 6/30/05 13. 74% $233. 53 6/30/06 13. 47% $269. 49 6/30/07 19. 32% $335. 01 6/30/08 1. 46% $337. 21 6/30/09 -21. 68% $259. 79 6/30/10 10. 33% $277. 58 6/30/11 19. 28% $337. 46 6/30/12 -1. 65% $328. 43 -25% 6/30/13 12. 04% $364. 68

Development Report Janet Sprang Ayres Chair, Development Committee

Fiscal Year 2013 Giving Highlights q $152 million in total gift activity; largest in history! § § q q Less than 1% of donors provided $83 million. Gifts from 57, 300 alumni and friends; up from 51, 400 last year $1. 7 million in gifts through Telefund in first year of expanded program 137 new scholarships and six endowed Chairs/Professorships.

Endowed and Expendable 26% Expendable $113, 401, 290 Endowed $38, 906, 357 74%

Foster a Culture of Philanthropy q q q K-State Proud raised $105, 600 in FY 13 Seven year combined total - $650, 000 Resulting in 350 students receiving Student Opportunity Awards

Foster a Culture of Philanthropy q q q 1863 Circle represents annual gifts of $1, 000 or more. 97% of the 331 Trustees contributed at the 1863 Circle level. Trustees annual gifts to 1863 Circle totaled $26, 344, 564 during fiscal year 2013.

Policies Approved Enhancing the Endowment Brand q q Awards from permanently endowed scholarship funds do not begin in the year they are established to ensure that adequate earnings have accrued to make the award. An expendable contribution may be added to an endowed scholarship fund so that awards can be made immediately while the endowed portion grows.

Nominating Report Duane Cantrell Chair, Nominating Committee

Trustee Re-nominations Robert Allen Steve Berland Steve Cooper Dick Anderson Beth Bird Dixon Doll Gloria Anderson Dan Bird Don Dressler Bruce Bachman Jerry Bohn Linda Dressler Jon Baum Julie Bohn Richard Evers Amy Bayer Kent Bradley Sharon Evers Brent Bayer Dwayne Broddle Doug Glover Charles Belew Jan Burton Tina Glover Jeanne Belew Charlie Claar Julie Hostetler Deloris Berland Janet Cooper Mark Hutton

Trustee Re-nominations Carl Ice Bill Muir Red Skelton Mary Ice Elaine Mull Ann Tiao Rebecca Jackson-Claar Glenn Mull Olive Ubel Loren Koch Dick Myers Brian Wicks Sandra Koch Mary Jo Myers Chuck Wilson Charles Lamphear David Nelson Jill Yeager Kelly Lechtenberg Mary Jo Nelson Mike Yeager Marcie Lechtenberg Shelly Prichard Nancy Zogleman de. Ann Moore Randy Rathbun Sam Moore Hal Ross

Emeritus Status Bruce Freeman Mel Kopf Bill Snyder Lisa Freeman Lynn Lin Sharon Snyder Carolyn Grier Dennis Lull Dave Woolfolk Jerod Heiman Doris Miller Gary Younger Phil Howe Monte Miller Sharon Younger Joan Knoll Sharon Reagan

New Nominees Ron Bourland Jud Neal Ross Stryker Dale Bradley Linda Neal Karolyn Tacha Susanne Bradley Cindy Peine Ron Tacha John Curtis Jim Peine Janice Witthuhn Polly Curtis Marita Soucie Van Witthuhn Marvin Manlove Mark Soucie Barbara Young Mary Manlove Phil Stroupe Joleen Moden Mary Stryker

Board of Directors Class 3 o John Allen – current member o Janet Ayres – current member o Charlie Chandler – current member o Kevin Lockett – current member Eligible for re-election of three-year terms.

Board of Directors Class 2 o o Kelly Lechtenberg – new member to fill vacancy created by early retirement of Lee Borck Jan Burton – new member to fill vacancy created by term expiration of Curt Frasier Eligible for election of two-year replacement term.

Nominating Motion q The recommendation of the Nominating Committee is to approve and ratify the following: • Class of 2013 re-nominations • Emeritus requests • New Board of Trustee nominees • Class 3 Board of Directors • Class 2 Board of Directors replacements

Board of Directors Dick Myers, Chair Sharon Evers Ex Officio Members: Rand Berney, Vice Chair Mike Goss Fred Cholick Janet Ayres, Secretary Carl Ice John Currie Kevin Lockett, Treasurer Steve Lacy Pat Koons John Allen Aaron Otto Amy Renz Mary Vanier Kirk Schulz Jan Burton Charlie Chandler Randy Coonrod Kelly Lechtenberg April Mason

Other Business Fred Cholick President & CEO

KSU Foundation 2014 Board of Trustees Business Meeting September 19, 2014