Finding Text
Finding 2023-002 - Material Weakness - Borrowings from Endowment Fund
Criteria: Ohio Revised Code 1715.53 (Ohio UPMIFA) Appropriations from net appreciation states that
"an institution may appropriate for expenditure or accumulate so much of an endowment fund as the
institution determines is prudent for the uses, benefits, purposes, and duration for which an endowment
fund is established. Unless stated otherwise in the gift instrument, the assets in an endowment fund are
donor-restricted assets until appropriated for expenditure by the institution. In making a determination to
appropriate or accumulate, the institution shall act in good faith, with the care that an ordinary prudent
person in a like position would exercise under similar circumstances."
Condition: The College has borrowed from its endowment funds for campus renovations and to cover
certain operating expenses of the College prior to and immediately following its accreditation and
approval to participate in federal student financial aid programs. As such, the fair value of assets
associated with the donor-restricted endowment funds has fallen below the level that the donor or
UPMIFA requires the College to retain as a fund of perpetual duration.
Cause: When the purchase of the College happened in 2009, the buildings were in such despair that
they were not able to be used. The College deemed it prudent to borrow from endowment to repair
building be able to meet accreditation standards.
Effect or potential effect: The judgment of the Board of Trustees is that the endowment exists for the
sole purpose of benefiting the College and that the continuing operation of the College could not be
assured without borrowing of funds from the endowment. Potential effect is that donor would not agree
with "prudence" of the borrowing of the endowment funds.
Recommendation: The College should continue to work long-term plans for maintaining and sustaining
financial stability and full restoration of the endowment.
Repeat finding: Yes. Prior year finding number 2022-002. The College was not in financial position to
repay loans from endowments.
Views of responsible officials: See attached.