BHEF Winter 2019 Board Of Directors Meeting Materials

BHEF Board of Directors Meeting, February 27, 2019 BHEF Board of Directors Meeting February 27, 2019 3:00 p.m. EST Pearl Room InterContinental Washington DC - The Wharf 801 Wharf Street, SW Washington, DC 20024 Conference Number: 1-877-366-0711 • Participant Code: 19815967 AGENDA 3:00 p.m. Business Meeting 1. Welcome and Overview – Ryan Oakes 2. Approval of the FY19 Q1 Board of Directors Meeting Minutes – Ryan Oakes (Tab 1) 3. Chief Executive Officer’s Report – Brian Fitzgerald (Tab 2) 4. Committee Reports – Ryan Oakes a. Finance and Audit – Brian Fitzgerald (Tab 3) b. Membership – Brian Fitzgerald (Tab 4) 5. Closing Remarks – Ryan Oakes 4:45 p.m. Executive Session 5:30 p.m. Board Photo Tab 1 – FY19 Q1 Board of Directors Meeting Minutes BHEF FY2019, Q1 Board of Directors Meeting Minutes | 1 BHEF Board of Directors Meeting October 23, 2018 11:00 a.m. EST BOARD OF DIRECTORS MEETING MINUTES ATTENDEES Members: Joseph Aoun, Jeff Armstrong, Nariman Farvardin, Brian Fitzgerald, Ryan Oakes, Eduardo Padrón, Ron Pressman, Brian Roach, Tim Sands, Barbara Snyder, Peter Weinberg, and Mark Wrighton. BHEF Staff: Suzanne Amoonarquah, Steve Barkanic, Stacey Brown, Isabel Cardenas-Navia, Janet Chen, Ursula Gross, Debbie Hughes, Amanda Pumphrey, Terah Speigner, and Danielle Troyan. WELCOME Board Chair Ryan Oakes opened the meeting at 11:00 a.m. He welcomed members and provided an overview of the meeting agenda. Approval of the Board of Directors Meeting Minutes from the June 27, 2018 Meeting Oakes asked for a motion to approve the June 27, 2018 (FY18, Q4) Board of Directors Meeting Minutes. The motion was made and seconded. The minutes were unanimously approved. CHIEF EXECUTIVE OFFICER’S REPORT Brian Fitzgerald reviewed the contents of the CEO deck previously provided to the board. He highlighted key accomplishments in 2018, gave status updates on BHEF’s current projects, and outlined strategic opportunities for 2019-2020. Strategic Opportunities in 2019-2020 Fitzgerald opened with detailing an executive strategy for 2019-2020 to increase member value and strengthen BHEF’s brand as a national thought leader in actionable intelligence for foundational skills for the digital economy, strategic business partnerships, and innovative digital workforce solutions. Fitzgerald focused on market intelligence and national leadership as an opportunity to grow membership and securing multi-year funding streams to advance the strategic vision. He also spoke about how the Business Roundtable (BRT) project positions BHEF to engage CEOs and companies through digital workforce projects. BHEF FY2019, Q1 Board of Directors Meeting Minutes | 2 BHEF-BRT Workforce Partnership Initiative BHEF has fully implemented the BHEF-BRT Workforce Partnership Initiative (WPI) and secured funding from the JPMorgan Chase Foundation and the Northrop Grumman Foundation. BHEF and BRT have conducted project launch convenings in all eight regions during the summer and fall. Fitzgerald went on to describe that BHEF and BRT were embarking on the second cohort of projects and will need to seek new funding for those projects. Foundational Skills for the Digital Economy Fitzgerald indicated that BHEF would release new market intelligence on foundational skills for the digital economy in the weeks following the board meeting. The issue resonates with members and media, and Fitzgerald has conducted numerous interviews with media regarding the report. Fitzgerald noted that members are asking for help in driving the market intelligence deeper into their organizations. Enhance BHEF’s Thought Leadership BHEF has been working with Live Wire Media Relations (Live Wire) on a communications audit to revamp all printed and electronic material. Most importantly, BHEF has collaborated with the National Science Foundation (NSF) on a convening of employers. Fitzgerald thanked Joseph Aoun for participating in the convening on a panel of business and higher education representatives to explore how NSF can make new investments to promote workforce development in emerging fields. During the session, Boeing announced an $11 million gift to NSF to improve workforce skills through online courses via a grant program. The grant competition will begin in 2019. BHEF Winter Member Meeting 2019 BHEF plans to have a session of the upcoming member meeting focused on the NSF-Boeing partnership and will conduct a facilitated panel with France Córdova, director, NSF and Heidi Capozzi, senior vice president, The Boeing Company. The meeting will also include a learning session on reimaging work in the age of artificial intelligence (AI). Fitzgerald plans to invite coauthors Paul Daugherty and H. James Wilson to discuss their book Human + Machine: Reimagining Work in the Age of AI. MIT is creating a new AI college that will be an interdisciplinary space for exploring the application of AI across all disciplines. A representative from MIT will be invited to participate in the conversation. The winter meeting will conclude with a financial services roundtable discussion on how automation, AI, and digital skills are changing companies’ talent and business models. Increasing Member Value BHEF FY2019, Q1 Board of Directors Meeting Minutes | 3 Many BHEF members are currently engaged in the BHEF-BRT WPI project, and BHEF is able to leverage those partnerships to provide significant member value. Build BHEF’s Capacities for a Robust Communications Strategy Fitzgerald reported that, with Live Wire’s help, BHEF is tracking metrics on a monthly basis to help create a robust communication strategy. 2018-2019 Fundraising Strategy BHEF is intensifying fundraising efforts to pursue new sources of revenue and seek support for the program portfolio. Some of the targets for fundraising include:  BHEF received $1.2 million multi-year grant from JPMorgan Chase to fund the BHEF-BRT WPI project.  Northrop Grumman Foundation gave a $100,000 grant to help support the BHEF-BRT WPI project and support BHEF’s work in the DC-Maryland-Virginia area.  BHEF received over $200,000 of supplemental funding from NSF to conduct the September workforce convening and will discuss additional funding to integrate the BHEF-BRT WPI work into BHEF’s current grant that supports a network of five campuses.  A pre-proposal was submitted to the Alfred P. Sloan Foundation to capture the knowledge gained from the WPI.  BHEF will seek support from the Joyce, Hewlett, Moore, and other foundations to support knowledge capture and case studies on the regional partnerships developed through the WPI. FINANCE AND AUDIT REPORT Fitzgerald reviewed the Finance and Audit Report in the board package. He noted that the audit is to begin in late November. BHEF did not have the September financials when it sent out the board meeting materials and BHEF obtained the final documents before the call. Based on the August 31, 2018 financials actual revenue was $3,157, 032. Expenses were $2,586,725, and BHEF anticipated closing the year at $3,046,417 in total expenses. BHEF anticipated that final revenue will total $3,319,904, and expenses will total $3,046,417 for the year, resulting in a surplus of $273,487 in operating revenue and a net change in net assets of $294,661. BHEF had $628,656 in temporarily restricted net assets. As of September 30, 2018, the investment fund stood at $933,855.88, which is a slight increase from over a year ago. Fitzgerald noted that Vanguard Life Strategy Fund manages BHEF’s investment portfolio with forty percent of the managed portfolio in bonds, twenty-five percent in mutual funds, fifteen percent to short-term investments, and twenty percent in stocks. MEMBERSHIP REPORT BHEF FY2019, Q1 Board of Directors Meeting Minutes | 4 Ryan Oakes indicated that within the next six to nine months, the goal is to engage the entire BHEF membership to ramp up four focus regions to drive business engagement. In February, Jeff Armstrong agreed on a goal of thirty-five business and thirty-five academic members by 2020 and in order to get there BHEF needs to land seven C-suite business members and three academic members each year for the next two years. Ryan then turned the discussion over to Armstrong. Armstrong noted that BHEF was in a crescendo and had the opportunity to capitalize on the momentum. BHEF asked incoming academic members to bring a business member with them in order to obtain membership. There was a push for prospects, especially in California where Mary Papazian, president, San José State University and Armstrong were identifying a variety of companies. Armstrong asked the board to focus on taking action on who could be a potential member to fill the gap in membership. Fitzgerald commented that the lead-time on recruiting a Fortune 500 CEO is long. He informed the board that BHEF has branched outside of their prime prospect target lists to invite those who are willing to engage. Brandon Busteed, CEO, Kaplan USA was interested in joining as a corporate member, and the board approved his membership. The board proposed potential members and discussed what their impact on BHEF could be. CLOSING REMARKS BHEF’s staff will work to coordinate the next board call. The meeting went into executive session at 12:55 pm. Tab 2 – Chief Executive Officer’s Report Implementing BHEF’s Strategic Vision: Positioning for Leadership in Digital Skills and Innovating New Talent Solutions CEO Report Board of Directors Meeting February 27, 2019 Strategic Opportunities in 2019-2020 Execute a strategy in 2019-2020 to strengthen BHEF’s brand as a national thought leader in actionable intelligence for foundational skills for the digital economy, strategic business partnerships, and innovative digital workforce solutions in order to attract new members and increase member value. •Enhance BHEF’s position as a national leader in innovative workforce solutions through the Business Roundtable (BRT) partnership, market intelligence (MI), and thought leadership (TL). •Break new ground in TL by releasing a publication with PwC focused on digital reskilling and diversity, conduct a CEO Roundtable in Boston, and regular TL events throughout FY19 and FY20. •Utilize the BRT partnership to engage CEOs and companies through digital workforce projects, regional CEO convenings, and publications. •Engage members on reskilling and develop projects as proof points for new talent development strategiesthat aid in attracting new business members. •Continue to build new communications capabilities to improve brand recognition and increase visibility of MI publications and TL events. •Secure new, multi-year streams of revenue to advance BHEF’s strategic vision. © 2019 BHEF 2 BHEF-BRT Workforce Partnership Initiative © 2019 BHEF 3 Leverage the BHEF-BRT Workforce Partnership Initiative (WPI) to position BHEF as a national leader in workforce solutions. WPI utilizes BHEF’s partnership model to support the development of innovative digital talent ecosystems. •BHEF and BRT have launched projects in ten regions in 2019: Chicago, Cleveland, Columbus (OH), New York City, Milwaukee, North Carolina, Palo Alto, South Carolina, Utah, and the Washington, DC-Maryland-Virginia (DMV) region. •The DMV project launched its first digital technology credentials in January 2019 at George Mason University and Virginia Commonwealth University. Six more universities in the region are expected to launch credentials in fall 2019. •The Chicago Apprentice Network, led by Aon and Accenture, currently has 19 employers committed to joining the network and a goal of announcing 1,000 apprenticeships by 2020. A playbook released in December 2018 provides key insights for developing apprenticeships for professional roles. •BHEF will publish case studies and reports capturing insights across the regions. •BHEF and BRT will bring together the WPI companies to accelerate implementation and increase impact in March 2019. Enhance BHEF’s Thought Leadership With the support of BHEF’s PR firm, BHEF will partner with members and with BRT to publish TL reports and conduct national and regional TL events. •Work with BHEF’s PR firm Live Wire Media Relations to achieve bylined article placement, editorial board briefings, and speaking opportunities that leverage BHEF’s existing and forthcoming MI and TL reports. (Ongoing) •Partnered with National Science Foundation (NSF) on a convening of business and higher education representatives to explore how NSF’s research investments can promote workforce development in emerging fields. (September 2018) •Release a national TL report on a new strategy for NSF workforce investments for the digital economy. (Fall/Winter 2018) •Release a CEO playbook on digital workforce development. (Winter 2019) •Develop a new TL report on digital reskilling and diversity with PwC. (Summer 2019) •Conduct member-led regional TL events, e.g., CEO breakfasts, on BHEF digital MI. (Fall 2018–Spring/Fall 2019) © 2019 BHEF 4 Communications and Branding BHEF worked with Live Wire Media Relations to sharpen BHEF’s brand, messaging, and media positioning. Live Wire conducted a staff-wide messaging summit, utilizing staff input to develop: •An updated elevator pitch to aide staff in introducing BHEF to member prospects, potential donors, and members of the media. •New mission and vision statements, value proposition, and a fact sheet reflecting BHEF’s values and goals. •Five unique brand positions that BHEF staff can use as pivot points during professional interactions or interviews with members of the media. To develop a credible, knowledgeable, and prepared bench of BHEF spokespeople, Live Wire conducted strategic media training sessions with designated BHEF staff in a simulated news studio environment. •Group training for designated spokespeople with strategies and tactics behind communicating BHEF messages in a credible, concise, and effecting way. Comprehensive training materials were provided for ongoing education. •Three on-site individual training sessions, including extensive role-playing in a print and broadcast setting. Each spokesperson was provided with an in-depth evaluation that focused on their effectiveness in communicating BHEF’s key messages. © 2019 BHEF 5 News and Media Live Wire increased BHEF’s presence in national and trade press. Media Placements •09/19/2018 Inside Higher Ed –On-Ramps and Off-Ramps: Alternative Credentials and Emerging Pathways Between Education & Work •10/16/2018 Education Dive –JPMorgan Chase Foundation awards BHEF with $1.2 million to create workforce partnerships •11/13/2018 Washington Business Journal –What Amazon’s HQ2 means for what is already a hotly competitive market for talent •Forthcoming New York Times article in the spring learning feature Deskside Briefings •08/15/2018 Inside Higher Ed –Paul Fain •08/15/2018 Chronicle of Higher Education –Goldie Blumenstyk •09/25/2018 U.S. News & World Report –Rebecca Koenig •11/27/2018 New America –Iris Palmer, Mary Alice McCarthy •11/28/2018 Wall Street Journal –Eric Morath, Michelle Hackman © 2019 BHEF 6 News and Media (continued) Live Wire created an influencer and social media campaign to complement its traditional media efforts and raise awareness of BHEF. •Comprehensive social media strategy: updating LinkedIn and Twitter profiles on a weekly basis to share BHEF news, resulting in over 40,000 impressions and nearly 1,000 platform- specific engagements. •Media interviews with Brian Fitzgerald: –Inside Higher Ed –Alternative pathways to degrees –U.S. News & World Report –Value of liberal arts degrees –Washington Business Journal –Amazon HQ2 –Chronicle of Higher Education –Business-higher education partnerships •Speaking engagements and networking dinner at the Atlantic Festival: –Panel: Workforce Training and the Future of Work in the Age of AI –Roundtable Dinner: Training for the Future of Work •BHEF Journal Article –Industry and Higher Education –“The Digital Dilemma: Winning and Losing Strategies in the Digital Talent Race” (Spring 2019) •Captured footage from meetings for use in future video collateral and marketing materials. © 2019 BHEF 7 BHEF 2019-2020 Fundraising © 2019 BHEF 8 BHEF continues its fundraising efforts to pursue new sources of revenue and seek support for its program portfolio, MI, and TL. •BHEF is seeking a supplement to its multi-year grant from the JPMorgan Chase Foundation or a funding partner to support additional regional projects for the WPI. •BHEF submitted a proposal to NSF for $500,000 in supplemental funding to continue the activities of the current NSF grant focused on business-higher education partnerships to facilitate the transfer of students from two-year to four-year STEM pathways. •BHEF has submitted a $6 million multi-year NSF grant proposal in 2018 that will provide funding to BHEF through FY2021 and support eight WPI DMV universities, including many BHEF members, to implement specialist digital credentials. •BHEF is seeking support from the following members/prospects for MI and programmatic activities, including regional and national convenings and publications: Bloomberg LP, State Farm Mutual Automobile Insurance Company, and Santander Bank. •BHEF is currently exploring with the Alfred P. Sloan Foundation (Sloan) the potential of a grant focused on reskilling incumbent and older workers in digital areas as part of Sloan’s Working Longer program. •BHEF is seeking support from the Bill & Melinda Gates Foundation, Fidelity Charitable, The Joyce Foundation, the Pritzker TraubertFoundation, and other foundations to support knowledge capture and case studies on the regional partnerships developed through the WPI. BHEF Winter 2019 Member Meeting © 2019 BHEF 9 BHEF has planned a winter member meeting to explore the action agenda for high- skill workforce development in the digital economy. Winter meeting sessions will spotlight BHEF members and national thought leaders and policymakers who will discuss the actions that government, business, and higher education are taking to build the workforce needed for the digital economy and how key sectors are responding to these challenges. Wednesday, February 27 InterContinental Washington, DC –The Wharf 3:00 p.m.Board Meeting 4:45 p.m.Executive Session 5:30 p.m.Board Photo 6:00 p.m.Chair’s Reception 7:00 p.m.Dinner Honoring BHEF Past Chair Wes Bush BHEF Winter 2019 Member Meeting © 2019 BHEF 10 Thursday, February 28 Day II Program 7:45 a.m.Leadership Roundtable Breakfast 8:50 a.m.Welcome 9:00 a.m. Keynote -Senator Tim Kaine 9:30 a.m.Public-Private Partnerships: Accelerating Education, Skills, Development and Diversity in STEM Keynote: France Córdova, director, National Science Foundation Moderator: Steve Clemons, editor-at-large, The Atlantic Panelists: •France Córdova, director, National Science Foundation •Mark Cousino, director of Learning Strategy, Design, and Technology, The Boeing Company •Nariman Farvardin, president, Stevens Institute of Technology •Tim Sands, president, Virginia Polytechnic Institute and State University BHEF Winter 2019 Member Meeting © 2019 BHEF 11 Thursday, February 28 Day II Program 10:30 a.m.Break 10:45 a.m.Learning Session Automation and AI: The Implications for the Future of Work and Higher Education Moderator: Steve Clemons, editor-at-large, The Atlantic Panelists: •Joseph Aoun, president, Northeastern University •Michael Bezigos, managing director, Accenture Strategy, Accenture •Raghu Machiraju, professor and interim executive director, Translational Data Analytics Institute, The Ohio State University BHEF Winter 2019 Member Meeting © 2019 BHEF 12 Thursday, February 28 Day II Program 11:50 a.m. Automation and AI: Impact on the Financial Services Sector Moderator: Steve Clemons, editor-at-large, The Atlantic Panelists: •Mike Fenlon, chief people officer, PwC •Miguel Gamiño, executive vice president, Global Cities, MasterCard •Cameron Wadley, senior vice president and chief operating officer, Client Facing Platforms Technology, Bank of America •Ben Zimmerman, head of Alternative Data, Global Data Department, Bloomberg LP 12:50 p.m.Closing Remarks 1:00 p.m.Lunch 2:15 p.m.Adjourn Discussion Finance and Audit Membership Tab 3 – Finance and Audit Report BHEF Board of Directors Meeting, February 27, 2019 To: BHEF Board of Directors From: Brian K. Fitzgerald, CEO Date: February 27, 2019 Re: Finance and Audit Report I am pleased to report on the status of BHEF finances and update you on BHEF’s compliance with IRS reporting requirements. This report includes:  Review of Fiscal Year 2018 (FY18) Year-End Financials  Update on FY19 Budget, Quarter 1 Financials and Forecast  Investment Fund Report  Update on Audit and 990 Filing FY18 Year-End Financials 1 BHEF finished FY18 with total unrestricted revenues of $3,751,481. FY18 revenue included $1,580,000 in membership dues, which was less than the goal of $1,700,000. FY18 revenue also included $1,904,551 in grants, $265,743 in market intelligence contributions, $1,187 in miscellaneous administrative revenue, $18,123 in investment fund revenue, and a balance of $646,377 in temporarily restricted assets (see Attachment A). Expenses totaled $3,269,100, with $432,043 released from temporarily restricted assets— grants that were spent-down in FY18 as planned, resulting in a net change in net assets of $500,503. FY19 Budget Quarter 1 Financials 2 and Forecast During the board of directors meeting in June 2018, the board approved a FY19 budget of $4,319,649 (see Attachment B). As of the end of the first quarter ending December 31, 2018, BHEF had received $1,355,865 in new revenue, which included $1,160,000 in membership dues and $195,865 (cash-in) in grants. Temporarily restricted assets equaled $503,326. The forecast includes $4,145,310 in total revenue including an estimated $1,875,000 in membership revenue, $2,205,310 in grant revenue, an estimated $65,000 for market intelligence, and the release of approximately $503,326 from Temporary Restricted Net Assets – grants to be spent in 2019. Forecast expenses total $3,929,807. The forecast reflects a net change in net assets of $245,503. Investment Fund The value of the BHEF investment fund 3 as of December 31, 2018 was $920,940.96. BHEF’s investment portfolio is a Life Strategy Fund comprised of 80 percent of the managed portfolio in bonds and 20 percent in stocks. 1 Reflects audited statements from BHEF’s accountants. This represents accrual-basis accounting method. 2 Unaudited accrual-basis statements from BHEF’s accountants. 3 BHEF’s Investment Fund includes Operating Reserve funds (self-managed with Vanguard). BHEF Board of Directors Meeting, February 27, 2019 Audit and IRS Filings The accounting firm of Rubino & Company Chartered has completed BHEF’s FY18 financial and federal single audit report. This audit report and management letter are attached for your review. The audit found no reportable conditions. The IRS 990 filing is currently being drafted and will be filed by May 15. Copies will be provided to each board member in the near future. ATTACHMENT A Business-Higher Education Forum FY 2018 Actuals Based on September 30, 2018 Audited Financials Approved FY2018 YTD Actuals at 9-30-2018 VARIANCE Operating Net Assets Unrestricted Revenue: 200 Membership - Revenue1,700,000$ 1,580,000$ (120,000)$ 300 Conferences -Revenue-$ 1,187$ 1,187$ 510 Market Intelligence - Revenue300,000$ 265,743$ (34,257)$ 520 JPMC - Revenue-$ 600,000$ 600,000$ HEWI Summary - Revenue1,558,051$ 1,304,551$ (253,500)$ ------------------------------------------------------------ TOTAL OPERATING NET ASSETS3,558,051$ 3,751,481$ 193,430$ ---------------------------------------------------------------- Expenses 110 Administration - Expenses483,634$ 564,137$ (80,503)$ 200 Membership - Expenses372,404$ 206,313$ 166,091$ 250 Grants - Expenses95,241$ 127,797$ (32,556)$ 300 Conferences - Expenses277,210$ 201,336$ 75,874$ 500 Communications - Expenses238,766$ 161,130$ 77,636$ 510 Market Intelligence - Expenses300,000$ 252,103$ 47,897$ 520 JPMC - Expenses-$ 130,292$ (130,292)$ HEWI Summary - Expenses1,720,726$ 1,625,991$ 94,735$ ------------------------------------------------------------ Total Expenses3,487,981$ 3,269,100$ 218,881$ ---------------------------------------------------------------- NET CHANGE IN NET OPERATING ASSETS70,070$ 482,380$ 412,310$ ---------------------------------------------------------------- Non-Operating Net Assets Revenue: 900 BHEF Investment Fund - Revenue40,000$ 18,123$ (21,877)$ Total Revenue40,000$ 18,123$ (21,877)$ Expenses: 900 BHEF Investment Fund - Expenses9,750$ -$ 9,750$ Total Expenses9,750$ -$ 9,750$ ---------------------------------------------------------------- Net Change in Non-Operating Net Assets30,250$ 18,123$ (12,127)$ ---------------------------------------------------------------- NET CHANGE IN NET ASSETS100,320$ 500,503$ 400,183$ ====================================================================== Temporarily Restricted Net Assets Beginning Balance 2018 Additions 2018 SubtractionsEnding Balance 743-Sloan DataScience284,345$ -$ 193,370$ 90,974$ 757-Federal Reserve Bank of New York38,387$ -$ 38,387$ -$ 781-CIT II Smart Cities55,689$ -$ 55,689$ -$ 782-CIT III Smart Cities-$ 100,000$ 14,304$ 85,696$ 785-JPMC-$ 600,000$ 130,292$ 469,708$ Balance of Temporary Restricted Net Assets 378,421$ 700,000$ 432,043$ 646,377$ ====================================================================== ATTACHMENT B Business-Higher Education Forum FY19 Q1 Financials Financial Tracking: Based on December 31, 2018 Financials Approved FY2019 YTD at December 31, 2018 Forecast Operating Net Assets Unrestricted Revenue: 200 Membership - Revenue1,870,000$ 1,160,000$ 1,875,000$ 300 Conferences -Revenue-$ -$ -$ 510 Market Intelligence - Revenue165,000$ -$ 65,000$ 520 JPMC - Revenue454,892$ -$ 454,892$ 521 WPI - Revenue-$ 100,000$ 100,000$ HEWI Summary - Revenue1,829,757$ 95,865$ 1,650,418$ ------------------------------------------------------ TOTAL OPERATING NET ASSETS4,319,649$ 1,355,865$ 4,145,310$ --------------------------------------------------------------------------------- Expenses 110 Administration - Expenses477,098$ 253,332$ 516,986$ 200 Membership - Expenses362,492$ 67,661$ 362,492$ 250 Grants - Expenses139,183$ 25,581$ 102,324$ 300 Conferences - Expenses350,087$ 43,678$ 321,094$ 500 Communications - Expenses257,493$ 57,642$ 230,568$ 510 Market Intelligence - Expenses151,552$ 10,106$ 100,424$ 520 JPMC - Expenses711,431$ 121,707$ 546,828$ 521 WPI - Expenses-$ 1,327$ 98,673$ HEWI Summary - Expenses1,820,418$ 123,173$ 1,650,418$ ------------------------------------------------------ Total Expenses4,269,754$ 704,207$ 3,929,807$ --------------------------------------------------------------------------------- NET CHANGE IN NET OPERATING ASSETS49,895$ 651,658$ 215,503$ --------------------------------------------------------------------------------- Non-Operating Net Assets Revenue: 900 BHEF Investment Fund - Revenue30,000$ 21,358$ 30,000$ Total Revenue30,000$ 21,358$ 30,000$ Expenses: 900 BHEF Investment Fund - Expenses-$ -$ -$ Total Expenses-$ -$ -$ --------------------------------------------------------------------------------- Net Change in Non-Operating Net Assets30,000$ 21,358$ 30,000$ --------------------------------------------------------------------------------- NET CHANGE IN NET ASSETS79,895$ 673,016$ 245,503$ ======================================================================= Temporarily Restricted Net Assets646,378$ 143,052$ -$ 743-Sloan DataScience90,974$ 10,864$ -$ 782-CIT III Smart Cities85,696.00$ 10,481.00$ -$ 785-JPMC469,708$ 121,707$ -$ MAIN 301.564.3636 FAX 301.564.2994 6903 Rockledge Drive, Suite 1200 Bethesda, Maryland 20817-1818 rubino.com Member, American Institute of Certified Public Accountants February 6, 2019 To the Board of Directors Business Higher Education Forum 2025 M St NW, Suite 800 Washington, D.C. 20036 We have audited the financial statements of the Business Higher Education Forum for the year ended September 30, 201 8, and have issued our report thereon dated February 6, 2019. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standardsand Government Auditing Standardsand the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated December 4, 2018 . Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices You are responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Business Higher Education Forumare described in Note 2to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 201 8.We noted no transactions entered into by the Business Higher Education Forum duringthe year for which there is a lack of authoritative guidance or consensus.All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements and are based on your knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected.The most sensitive estimates affecting the financial statements were; 1) M anagement’sestimate of revenue recognized on grants and cooperative agreements is based on direct expensescharged to those grants and cooperative agreementsand allocated indirect expenses. We evaluated the key factors and assumptions used to develop the recognition of contract revenue in determining that it is reasonable in relation to the financial statements taken as a whole. Given the significance of revenue recognition to the financial statements, ouraudit procedures includetests of expense transactions to determine thatdirect and indirect costs are accumulatedin the appropriate cost pools. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in performing and completing our audit. Business Higher Education Forum February 6, 2019 Page 2of 2 Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleasedto report that no such disagreements arose during the course of our audit. Other Matters With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with U.S. generally accepted accounting principles, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of the Board of Directorsand management of Business Higher Education Forum and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Rubino & Company, Chartered BUSINESS HIGHER EDUCATION FORUM ______________ FINANCIAL STATEMENTS AND SINGLE AUDIT UNDER THE UNIFORM GUIDANCE Years Ended Septem ber 30, 2018 and 2017 TABLE OF CONTENTS Description Page Independent Auditors’ Report 1 – 2 Statements of Financial Position 3 Statements of Activities 4 Statement of Functional Expenses (September 30, 2018) 5 Statement of Functional Expenses (September 30, 2017) 6 Statements of Cash Flows 7 Notes to Financial Statements 8 – 14 Supplementary Information Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 15 – 16 Independent Auditors’ Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance 17 – 18 Schedule of Expenditures of Federal Awards 19 Notes to Schedule of Expenditures of Federal Awards 20 Schedule of Findings and Questioned Costs 21 – 22 Summary Schedule of Prior Audit Findings 23 PHONE 301.564.3636 FAX 301.564.2994 6903 Rockledge Drive, Suite 1200 Bethesda, Maryland 20817-1818 rubino.com Member, American Institute of Certified Public Accountants INDEPENDENT AUDITORS’ REPORT The Executive Committee Business Higher Education Forum Report on the Financial Statements We have audited the accompanying financial statements of the Business Higher Education Forum which comprise the statements of financial position as of September 30, 2018 and 2017, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Business Higher Education Forum, as of September 30, 2018 and 2017, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and related directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 6, 2019, on our consideration of the Business Higher Education Forum’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Business Higher Education Forum’s internal control over financial reporting and compliance. Bethesda, Maryland February 6, 2019 20182017 Current assets Cash and cash equivalents 981,726$ 695,259$ Investments 933,856 916,133 Accounts receivable 98,000 20,332 Grants receivable 599,711 389,422 Prepaid expenses11,843 5,800 Total assets2,625,136$ 2,026,946$ Current liabilities Accounts payable 508,114$ 220,438$ Deferred revenue 740,000 930,000 Total liabilities1,248,114 1,150,438 Net assets Unrestricted730,645 498,037 Temporarily restricted646,377 378,471 Total net assets1,377,022 876,508 Total liabilities and net assets2,625,136$ 2,026,946$ LIABILITIES AND NET ASSETS BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF FINANCIAL POSITION September 30, 2018 and 2017 ___________ _ ASSETS The accompanying notes are an integral part of these financial statements. 3 20182017 Unrestricted activities Revenues Membership dues1,580,000$ 1,520,000$ Grants and contributions1,445,3051,662,300 Investment return18,123 27,783 Miscellaneous1,197759 Net assets released from restrictions457,094 236,961 Total unrestricted revenues 3,501,719 3,447,803 Expenses Program services Higher education workforces 1,625,9971,777,108 Chase program 130,292- Conferences 201,337 278,270 Membership 206,315212,373 Communications 161,131 135,979 Market intelligence252,104 232,324 Total program services 2,577,176 2,636,054 Supporting services Management and general564,138 533,069 Grant development 127,797 60,871 Total supporting services691,935 593,940 Total expenses 3,269,111 3,229,994 Change in unrestricted net assets232,608 217,809 Temporarily restricted activities Grants and contributions 725,000355,000 Net assets released from restrictions(457,094) (236,961) Change in temporarily restricted net assets267,906 118,039 Change in net assets 500,514 335,848 Net assets, beginning of year 876,508 540,660 Net assets, end of year 1,377,022$ 876,508$ BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF ACTIVITIES Years Ended September 30, 2018 and 2017 ___________ _ The accompanying notes are an integral part of these financial statements. 4 HEWI Chase Conferences Membership Communications Market Intelligence Total Management and General Grant Development Total Expenses Labor Costs 631,167 $ 113,565 $ 123,914 $ 167,471 $ 93,142 $ 142,474 $ 1,271,733 $ 472,634 $ 115,687 $ 1,860,054 $ Consultants 230,896 - - - 51,741 60,088 342,725 - - 342,725 Sub-Award Payments 559,086 - - - - - 559,086 - - 559,086 Support Services Fees 11,681 - 10,750 16,502 9,397 14,066 62,396 150,929 10,446 223,771 Temporary Services 3,895 - - - - - 3,895 21,652 - 25,547 Travel 56,296 10,523 9,515 2,818 2,663 5,792 87,607 2,670 22 90,299 Meeting Expense 9,153 - 43,336 1,959 - 1,170 55,618 - - 55,618 Miscellaneous 350 - 45 246 230 - 871 3,828 - 4,699 Telephone 1,780 - 1,369 2,577 1,218 1,778 8,722 19,676 1,342 29,740 Office Supplies 1,185 - 1,657 433 190 337 3,802 3,765 299 7,866 Bank and Investment Fees - - - - - - - 1,044 - 1,044 Printing and Publications 3,886 - 10,751 10,211 1,142 25,904 51,894 33 1 51,928 Insurance - - - - - - 5,429 - 5,429 Books and Subscriptions 840 - - 3,658 - - 4,498 3,116 - 7,614 Postage and Delivery 697 - - 440 - 495 1,632 155 - 1,787 Website - - - - 1,408 - 1,408 497 - 1,905 Indirect Cost Allocation 115,085 6,204 - - - - 121,289 (121,290) - (1) Total 1,625,997 $ 130,292 $ 201,337 $ 206,315 $ 161,131 $ 252,104 $ 2,577,176 $ 564,138 $ 127,797 $ 3,269,111 $ BUSINESS HIGHER EDUCATION FORUM STATEMENT OF FUNCTIONAL EXPENSES Year Ended September 30, 2018 ___________ _ Program Services Supporting Services The accompanying notes are an integral part of these financia l statements. 5 HEWI Conferences Membership Communications Market Intelligence Total Management and General Grant Development Total Expenses Labor Costs 806,995 $ 140,113 $ 173,574 $ 114,405 $ 36,521 $ 1,271,608 $ 423,757 $ 55,124 $ 1,750,489 $ Consultants 254,659 - - - 186,344 441,003 - - 441,003 Sub-Award Payments 443,665 - - - - 443,665 - - 443,665 Support Services Fees 15,086 30,244 16,121 10,458 3,442 75,351 152,073 4,974 232,398 Temporary Services 5,050 9,214 3,358 5,922 359 23,903 19,923 - 43,826 Travel 68,948 7,187 2,911 62 968 80,076 3,191 23 83,290 Meeting Expense 13,641 74,032 - - - 87,673 565 - 88,238 Miscellaneous 18,420 12,185 4,545 141 - 35,291 5,854 - 41,145 Telephone 2,275 1,926 2,611 1,579 520 8,911 22,774 729 32,414 Office Supplies 23,570 1,332 5,615 659 3,920 35,096 776 21 35,893 Bank and Investment Fees 174 - - - - 174 1,798 - 1,972 Printing and Publications 16,402 2,036 1,381 30 1 19,850 37 - 19,887 Insurance - - - - - 5,254 - 5,254 Books and Subscriptions 922 - 1,820 1,194 - 3,936 3,006 - 6,942 Postage and Delivery 1,063 1 437 167 249 1,917 299 - 2,216 Website - - - 1,362 - 1,362 - - 1,362 Indirect Cost Allocation 106,238 - - - - 106,238 (106,238) - - Total 1,777,108 $ 278,270 $ 212,373 $ 135,979 $ 232,324 $ 2,636,054 $ 533,069 $ 60,871 $ 3,229,994 $ BUSINESS HIGHER EDUCATION FORUM STATEMENT OF FUNCTIONAL EXPENSES Year Ended September 30, 2017 ____________ Program Services Supporting Services The accompanying notes are an integral part of these financial statements. 6 20182017 Cash flows from operating activities Change in net assets500,514$ 335,848$ Reconciling adjustments Net realized and unrealized investment losses (gains)4,276 (9,448) Changes in operating assets and liabilities: Accounts receivable(77,668) (332) Grants receivable(210,289) (64,445) Prepaid expenses(6,043) 4,557 Accounts payable 287,676 (74,984) Deferred revenue (190,000) 3,742 Net cash provided by operating activities308,466 194,938 Cash flows from investing activities Purchase of investments(21,999) (18,137) Net cash used by investing activities(21,999) (18,137) Net increase in cash and cash equivalents286,467 176,801 Cash and cash equivalents, beginning of year695,259 518,458 Cash and cash equivalents, end of year981,726$ 695,259$ Supplemental cash flow information: Cash paid for interest:-$ -$ Cash paid for taxes:-$ -$ BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF CASH FLOWS Years Ended September 30, 2018 and 2017 ____________ The accompanying notes are an integral part of these financial statements. 7 BUSINESS HIGHER EDUCATION FORUM NOTES TO FINANCIAL STATEMENTS Years Ended September 30, 2018 and 2017 ______________ 8 1. Organization Business Higher Education Forum (the Forum) is an organization of Fortune 500 CEOs, prominent college and university presidents, and foundation leaders working to advance innovative solutions to the nation’s education challenges in order to enhance U.S. competitiveness. The Forum and its members advance public policy, develop programs and tools to help its members and other leaders strengthen U.S. education, and inspire other corporate, academic, and foundation leaders to act. 2. Summary of Significant Accounting Policies Basis of Accounting The Forum prepares its financial statements on the accrual basis of accounting. Accordingly, revenues are recognized when earned and expenses are recognized when the underlying obligations are incurred. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from these estimates. Cash and Cash Equivalents The Forum maintains cash accounts with commercial banks and money market funds with financial institutions. The Forum defines cash and cash equivalents as deposits held with a maturity of three months or less. Investments Investments are recorded at estimated fair values based on quoted market prices in active markets. Investment transactions are recorded on a trade-date basis. Investment income, including unrealized gains or losses, is reported in the statements of activities as non- operating increases or decreases in unrestricted net assets, unless otherwise restricted by the donor or law. BUSINESS HIGHER EDUCATION FORUM NOTES TO FINANCIAL STATEMENTS Years Ended September 30, 2018 and 2017 ______________ 9 2. Summary of Significant Accounting Policies (continued) Accounts Receivable Accounts receivables are presented at their outstanding balances. Management periodically reviews the status of all accounts receivable balances for collectability. Each accounts receivable balance is assessed based on management’s knowledge of the member and the age of the receivable balance. Based on these reviews, management charges the allowance for doubtful accounts any balances management deems to be uncollectable. Grants Receivable All unconditional promises to give are receivable within one year and are recorded at net realizable value on the statements of financial position as grants receivable. Conditional promises to give, if any, are not included as support until the conditions are substantially met. The allowance method is used to determine uncollectible amounts. The allowance is based upon prior years’ experience and management’s analysis of subsequent collections. Promises to give are considered past due and allowances on promises to give are recorded when circumstances indicate collection is doubtful for particular promises to give or as a general reserve for all promises to give. Promises to give are written off if reasonable collection efforts prove unsuccessful. Bad debt expense is reflected in grant development expense on the statements of activities when allowances on promises to give are increased or when promises to give written off exceed available allowances. The allowance for doubtful accounts as of September 30, 2018 and 2017, was $0. There was no bad debt expense for the years ended September 30, 2018 and 2017. Deferred Revenue Deferred revenue principally consists of membership dues received in advance. Membership dues are recognized as revenue over the related membership period. Net Assets Net assets consist of the following categories: Unrestricted net assets represent funds that are not subject to donor-imposed stipulations and are available for the Forum’s general operations. BUSINESS HIGHER EDUCATION FORUM NOTES TO FINANCIAL STATEMENTS Years Ended September 30, 2018 and 2017 ______________ 10 2. Summary of Significant Accounting Policies (continued) Temporarily restricted net assets represent subject to donor-imposed restrictions that expire with either the passage of time satisfaction of program requirements. The Forum had no permanently restricted net assets as of September 30, 2018 and 2017. Grants and Contributions Contributions are generally available for unrestricted use in the year received unless specifically restricted by the donor. Contributions of cash and other assets are reported as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor 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 restrictions. The Forum’s policy is to treat grants from foundation as contributions. Contributed Services Donated services are recognized as contributions 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 the Forum. Allocation of Expenses The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Income Taxes The Forum is exempt from in