Page 35 - RFCUNY-2010AnnualReport

The Research Foundation of The City University of New York (the Foundation) was chartered in 1963 to further the purposes of The City University of New York (the University or CUNY) and other not-for-profit organizations, through the pursuit, acquisition, and administration of grants and gifts. The Foundation is a separate legal entity and is exempt from federal income taxes under the provisions of Section 501(c)(3) of the Internal Revenue Code (the Code).

230 West 41st Street LLC (the LLC) was established on May 7, 2004 as a Delaware limited liability com-pany and organized pursuant to the Limited Liability Operating Agreement (the Agreement) dated July 14, 2004 between the Foundation (the Sole Member with a 100% interest in the LLC) and the LLC. The LLC was formed to acquire, own, and operate an approx imately 300,000 square-foot office building located at 230 West 41st Street in New York, New York (the Property). The LLC is a single-member limited liability company organized and accordingly is treated as a disregarded entity for federal, state, and local income tax purposes.

Grants Plus Inc. (Grants Plus) was created by the Foundation and incorporated in May 2004 to provide postaward administration of sponsored programs for not-for-profit organizations other than the Foundation or CUNY. Grants Plus is a separate legal entity exempt from federal income taxes under the provisions of Section 501(c)(3) of the Code.

(a) Basis of Presentation

The accompanying consolidated financial statements, which consolidate the Foundation, the LLC, and Grants Plus (collectively, the Organization), are pre-pared on the accrual basis of accounting in accor-dance with generally accepted accounting principles in the United States for external financial reporting by not-for-profit organizations. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements present balances and transactions according to the existence or absence of donor-imposed restrictions. At June 30, 2010 and 2009, none of the Organization’s net assets or changes therein were subject to donor-imposed restrictions, and accordingly are classified and reported as unre-stricted net assets, and which includes grants and contracts for the performance of certain services or functions.

Revenues and gains and losses on investments and other assets are reported as changes in unrestricted net assets unless limited by explicit donor-imposed

restrictions or by law. Expenses are reported as decreases in unrestricted net assets. (b) Grants and Contracts

Revenue from grants and contracts, awarded to and accepted by the Foundation, Grants Plus, and various units of the University, as joint grantees, primarily for research, training, and academic development programs, is recognized as earned, that is, as the related costs are incurred under the grant or contract agreements.

Facilities and administrative costs recovered on grants and contracts are recorded at rates established by the Foundation with its federal cognizant agency, or predetermined by the nonfederal sponsor. Facilities and administrative cost rates for government grants and contracts are subject to audit, and subsequent final settlements, if any, are recorded as current period adjustments. Management believes the impact of any future settlements to be immaterial to the consol-idated financial statements. (c) Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates and assumptions are based on management’s best esti-mates and judgment. Management evaluates its esti-mates and assumptions on an ongoing basis using historical experience and other factors, and adjusts such estimates when facts and circumstances dictate. In the preparation of the Organization’s consolidated financial statements, management uses significant accounting estimates with respect to the valuation of accounts receivable and of the postretirement benefit obligation. (d) Cash Equivalents

Highly liquid debt instruments with maturities at date of purchase of three months or less are classified as cash equivalents, except for those short-term invest-ments that are managed by an external investment manager for long-term investment purposes. (e) Investments

Investments are reported at fair value based upon quoted market prices. Realized and unrealized gains and losses on investments are reflected in the accom-panying consolidated statements of activities.