Annual Financial Report 2024 2025

Virginia Tech Financial Report 2024-2025

27. Notes to Component Unit Statements The Virginia Tech Foundation component unit statements found on pages 20 and 21 and subsequent notes comply with the Governmental Accounting Standards Board (GASB) format. Virginia Tech Foundation Inc. follows the Financial Accounting Standards Board (FASB) presentation format in their audited financial statements. Conse quently, reclassifications have been made to convert their statements to the GASB format . All dollar amounts are stated in thousands.

Fair Value Hierarchy - Virginia Tech Foundation Inc. Accounting Standards Codification (ASC) Topic 820 establishes a three-tier fair value hierarchy that 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 lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows: Level 1 – Inputs that use quoted prices (unadjusted) in active markets for identical assets or liabilities that the foundation has the ability to access. Level 2 – Inputs that include quoted prices for similar assets and liabilities in ac tive markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. The fair values of the foundation’s corporate debt securities and state, county and municipal securities are obtained from a third-party pricing service provider. The fair values provided by the pricing service provider are estimated using pricing models, where the inputs to those models are based on observable market inputs including credit spreads and broker-dealer quotes, among other inputs. The foundation classifies the prices obtained from the pricing services within Level 2 of the fair value hierarchy because the underlying inputs are directly observable from active markets. However, the pricing models used do entail a certain amount of subjectivity and, therefore, dif fering judgments in how the underlying inputs are modeled could result in different estimates of fair value. Level 3 – Inputs that are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The assets that were measured at fair value on a recurring basis at June 30, 2025 are presented in the first table on the next page. The second table on the next page summarizes the foundation’s investments in entities that calculate net asset value as a practical expedient to estimate fair value as of June 30, 2025, as well as liquidity and funding commitments.

Contributions Receivable - Virginia Tech Foundation Inc. The following summarizes unconditional promises to give at June 30, 2025 ( all dollars in thousands ): Receivable in less than one year $ 65,783 Receivable in one to five years 62,275 Receivable in more than five years 45,171 Total contributions receivable, gross 173,229 Less allowance for uncollectible contributions 4,457 Less discount to reduce estimated future cash flows to fair value 21,147 Contributions receivable, at fair value $ 147,625 The discount rates ranged from 4.72% to 7.00% at June 30, 2025. As of June 30, 2025 the foundation is unaware of any significant conditional promises to give. Investments - Virginia Tech Foundation Inc. The overall investment objective of the foundation is to invest its endowed funds in a manner that provides returns adequate to meet spending policy objectives in support of designated endowed programs while maintaining the purchasing power of the en dowment. The foundation invests a portion of its operating funds in the endowment to provide support for a portion of its annual operating activities. Investment activities are overseen by the board’s Investment Committee and are authorized by the board’s Executive Committee. The investment program is managed in accordance with its investment policy statement, which is reviewed annually by the board. The foundation’s primary approach towards investing involves the use of third-party investment managers to execute transactions on behalf of the foundation. However, the foundation may also invest directly in securities without restriction. The range of investment strategies utilized is not limited and includes both hedged and unhedged strategies across both public and private markets. Strategies currently employed include long-only equities, long/short hedge funds, fixed income, private credit, private equity, venture capital, real estate, and real assets. In the case of private securities, investments require the estimation of fair value by investment managers. Inputs into such valuations include fundamental factors as well as market comparable transactions. These values may differ significantly from the true value of such investments had readily available markets existed. As of June 30, 2025, long-term investments included investment assets held in internally managed trust funds with a carrying values totaling $63,350. At June 30, 2025, unspent bond proceeds of $6,210, invested in U.S. government treasuries, were included in short-term investments. These proceeds are restricted for investment in land and building development. The foundation is required by Maryland state law to maintain segregated assets for all annuities issued in an amount at least equal to the sum of its outstanding de ferred giving arrangements liability discounted to present value. As of June 30, 2025, the foundation had recorded annuity obligations of $6,547. As of June 30, 2025, the foundation had separately invested cash reserves of $12,498 and had met its minimum reserve requirement under Maryland state law. The following summarizes changes in relationships between cost and fair value of investments during 2025 ( all dollars in thousands ): Fair value Cost Net gains June 30, 2025 $ 2,282,545 $ 1,962,398 $ 320,147 June 30, 2024 2,120,942 1,901,929 219,013 Unrealized net gain for the year, including net gain on agency deposits held in trust of $32,073 101,134 Realized net gain for the year, including net gain on agency deposits held in trust of $24,079 59,516

Total net gain for the year, including net gain on agency deposits held in trust of $56,152

$

160,650

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