BHEF Winter 2020 Board Of Directors Meeting Materials

BHEF Board of Directors Meeting, February 13, 2020 BHEF Board of Directors Meeting February 13, 2020 2:30 p.m. EST Pearl Room, 12 th Floor InterContinental Washington DC - The Wharf 801 Wharf Street, SW Washington, DC 20024 AGENDA 2:30 p.m. Business Meeting 1. Welcome and Overview – Randy Woodson 2. Approval of the FY20 Q1 Board of Directors Meeting Minutes – Randy Woodson (Tab 1) 3. Chief Executive Officer’s Report – Brian Fitzgerald (Tab 2) 4. Committee Reports – Randy Woodson a. Finance and Audit – Brian Fitzgerald (Tab 3) b. Membership – Jeff Armstrong (Tab 4) 5. Closing Remarks – Randy Woodson 4:30 p.m. Executive Session Tab 1 – FY20 Q1 Board of Directors Meeting Minutes BHEF FY2020, Q1 Board of Directors Meeting Minutes | 1 BHEF Board of Directors Meeting (By Phone) October 23, 2019 10:00 AM EST Board of Directors Meeting Minutes Attendees Board Members: Robert Caret, Jim Clements, John DeGioia, Nariman Farvardin, Brian Fitzgerald (ex officio), Mike King, Ryan Oakes, Mary Papazian, Brian Roach, Tim Sands, Barbara Snyder, Randy Woodson. BHEF Staff: Suzanne Amoonarquah, Steve Barkanic, Stephanie Blochinger, Stacey Brown, Janet Chen, Ursula Gross, Amanda Pumphrey, Terah Speigner, Jennifer Thornton, Danielle Troyan. Welcome and Overview Board Chair Ryan Oakes opened the meeting at 10:00 a.m. He welcomed members and provided an overview of the agenda. Approval of the FY19 Q4 Board of Directors Meeting Minutes Oakes asked for a motion to approve the FY19 Q4 Board of Directors Meeting Minutes. The motion was made and seconded. The minutes were unanimously approved. Chief Executive Officer’s Report Before taking the Board through the CEO’s Report, Brian Fitzgerald introduced Jennifer Thornton, who replaced Isabel Cardenas-Navia as BHEF’s vice president of programs. Strategic Opportunities in 2020 In 2020 BHEF will further its strategy to strengthen BHEF’s brand as a national leader in developing and deploying digital talent ecosystems by strategically utilizing grant funding to publish thought leadership (TL) reports to attract new funding, new members, and increase member value. Key elements of this strategy included enhancing BHEF’s position as a national thought leader in implementing digital workforce solutions through a multi-state partnership, the Workforce Partnership Initiative (WPI), and new market intelligence (MI). BHEF plans to expand its national TL role by releasing publications from NSF and JPMorgan Chase grants, publishing a digital reskilling report with PwC focused on diversity and inclusion, and cohosting a reskilling summit in the spring or summer of 2020. The plan to build on the NSF Convergence- BHEF FY2020, Q1 Board of Directors Meeting Minutes | 2 Accelerator (C-Accel) and other grants will help BHEF secure new, multi-year streams of revenue to ensure the sustainability of BHEF’s strategic vision. BHEF was given notice that the infrastructure relationship with SmithBucklin will end in the spring of 2020, and BHEF will work to relocate its offices and develop independent infrastructure. FY20 National Leadership Opportunities BHEF received significant grant funding around digital talent and the development of regional talent ecosystems. These grants included:  NSF Convergence-Accelerator (C-Accel) planning grant (Phase I) will allow market intelligence on the impact of workforce in the region. It will allow BHEF to measure reskilling demand and capacity of higher education to respond to that demand, and ultimately will allow BHEF to develop a replicable model for deploying comprehensive reskilling systems.  The Closeout of NSF-I (12-31-2019), which was a five million dollar five-year grant will enable BHEF to publish an important TL report on the impact of these partnerships and the broader impact beyond the scope of the grant, the five partnerships, and beyond BHEF and its partners.  The final year of the JPMorgan Chase grant for WPI, provided the last $600,000 to advance the work in ten regions including Raleigh-Durham. It will allow BHEF to produce TL reports on the regional talent ecosystems developments. It gives BHEF the opportunity to support its members and replicate in New England and other regions.  BHEF planned to build on the reskilling whitepaper by producing a BHEF-PwC reskilling TL report and cohost a national reskilling summit in the spring or summer of 2020. BHEF’s NSF Convergence-Accelerator STEM Grant BHEF received a nine-month $1 million grant to plan a comprehensive assessment of supply and demand in DMV and plan a systematic response by employers and universities to increase supply and diversify the talent. Fitzgerald reported that a number of the region’s universities are supporting this grant, including:  American University  Howard University  John Hopkins University  George Mason University  Georgetown University  George Washington University  University of Maryland, Baltimore County  University of Maryland, College Park  University of Richmond  University of Virginia  Virginia Commonwealth University  Virginia Tech The planning grant provided small sub-grants to nine of the listed universities, and three declined funding. All signaled willingness to partner in the follow up grant. BHEF commissioned DMV workforce analysis by a national research firm, Emsi. They will conduct regional and national employer surveys, structured employer interviews, and focus groups – emphasizing reskilling women, underrepresented groups, and veterans. Through the grant, BHEF plans to systematically map universities’ existing reskilling capacity and conduct gaps and opportunities analysis for high-demand reskilling credentials. BHEF FY2020, Q1 Board of Directors Meeting Minutes | 3 Fitzgerald reported that one of the unique opportunities this grant provides is the ability to explore and document the role of business intermediaries in building responsive digital talent ecosystems that will also serve as a potential scaling mechanism to other regions. Out of the eight hundred letters of interest submitted to NSF, they invited five hundred and forty Phase I proposals and awarded forty-three, of which BHEF was one. NSF will award eight to ten Phase II grants, only Phase I recipients are eligible to apply for a Phase II grant up to $5 million in order to implement the plan developed in Phase I. However, BHEF must submit the proposal for Phase II at month six, February 2020, and will be prepared in March 2020 for an in-person pitch session in front of NSF reviewers. The question was raised whether BHEF organized a group to prepare a practice session ahead of the Phase II proposal presentation in order to help BHEF pinpoint areas of needed improvement for the proposal. Brian answered that BHEF recognized this need and noted one of the members of the Greater Washington Partnership, McKinsey, is serving as a thought partner. BHEF plans to use their help to scope out the strategy for the grant and for coaching. Bob Caret reintroduced BHEF to Mark Grovic of New Market Ventures Partners who volunteered to help BHEF as well. Enhance BHEF Communications BHEF plans to deepen its value proposition with members-only content and expanded external communications. Quick monthly hits will highlight BHEF in action. Data points may include future TL and speaking engagement dates, media placements, upcoming publications, member spotlight, project updates, and new member announcements. Members will receive exclusive, unpublished insights quarterly. Written to be read and digested in under five minutes, this MI is designed to empower and equip successful business-higher education engagements. BHEF’s public relations firm, Live Wire Strategic Communications, will focus on:  releasing TL publications and securing speaking engagements for BHEF leadership at key conferences and events;  securing media placements and expert commentary quotes;  placing op-eds and bylined articles in news outlets and journals;  and managing BHEF’s overall media presence. Fundraising The Board challenged Fitzgerald to create a multi-year funding stream that supports BHEF’s programmatic work and ensures financial sustainability. To meet this challenge, BHEF secured a $1 million nine-month NSF C-Accel planning grant (Phase I) which will permit BHEF and its partners to submit a 3-year, $5 million (Phase II) reskilling implementation grant (FY20, Q2). BHEF sought a supplement to its multi-year JPMorgan Chase grant or a funding partner to support additional regional projects for WPI. BHEF will seek new relationships with funders as TL and scaling partners as well as well-defined FY20 fundraising targets by quarter, including:  Q1: ECMC Foundation – WPI support  Q2: NSF C-Accel; Strada Education Network – scaling talent solutions through business intermediaries BHEF FY2020, Q1 Board of Directors Meeting Minutes | 4  Q3: Trellis Company; VMware; Lumina Foundation; Alfred P. Sloan Foundation – expanding diversity of talent  Q4: The Keck Center; Arnold Ventures LLC; The James Irvine Foundation; Joyce Foundation; Gordon and Betty Moore Foundation; Lilly Endowment Inc. Oakes offered help from Accenture by providing manpower heading into the upcoming projects with BHEF to help meet demand. BHEF’s Organizational Infrastructure BHEF will end its 15-year infrastructure relationship with SmithBucklin when their lease expires on May 31, 2020 and will relocate into new office space. BHEF’s Senior Director, Finance and Administration, Stacey Brown, leads the transition to the new office space, digital telecommunications services, and new benefits. BHEF assessed options for cost-effective office space in Dupont Circle/West End areas and will need to sign a multi-year lease by November or December 2019. BHEF examined options for procurement of infrastructure services, including payroll and benefits, technology, and telecommunications. BHEF will continue its contract with SmithBucklin’s Financial Management Services, at least through the FY19 audit. BHEF will present a detailed plan outlining the most feasible solutions and costs across a range of infrastructure components at the FY20, Q2 meeting. The move was anticipated for mid-April 2020. BHEF Winter 2020 Member Meeting The BHEF Winter 2020 Member Meeting will investigate the challenges and opportunities, accomplishments and insights gained from implementing digital credentialing and integrating these credentials into work-based learning. This meeting will provide the opportunity to explore the critical role of credentials in upskilling and reskilling success for business, employees, and universities. Fitzgerald then reviewed the draft agenda for the Board. Finance and Audit Committee Report As BHEF prepares to close out FY19, as of August 31, 2019 BHEF received $2,538,311 in revenue, which included $1,640,000 in membership dues, $928,311 in grants, $15,000 in MI revenue, and $5000 in administrative revenue. Expenses totaled $3,000,597. BHEF was $412,286 in the negative and net change in net assets was $350,457. Following the close of the August financials, BHEF received the $600,000 payment from JPMorgan Chase and received some dues money as well. BHEF anticipated that it will have a total revenue of $4,080,822 and expenses $3,924,712 with $156, 111 in surplus and a net change in net assets of $449,996. Fitzgerald noted that the difference in the administrative expenses is due to the departure of two staff members in FY19. Farvardin asked if the positions were filled immediately, and Fitzgerald informed the Board that Debbie Hughes’ position was not yet filled and that Isabel Cardenas-Navia’s was critical enough to the NSF grant that we filled her position immediately upon her departure with Jennifer Thornton. He explained how BHEF balances its hiring process with funding streams. BHEF FY2020, Q1 Board of Directors Meeting Minutes | 5 Membership Committee Report Fitzgerald reported on Jeff Armstrong’s behalf that the Board approved the 2020 budget in June, and the budget included a $2.1 million revenue target and BHEF anticipates that dues revenue will increase slightly from $1.64 to $1.7 million after the receipt of late dues revenue. Fitzgerald reported that BHEF had fifty-five members, fifteen short of the seventy member target. BHEF was below the target for both business and academic members. Fitzgerald relayed a message from Armstrong that emails to prospects are easily lost in inboxes and that BHEF needs personal contacts. BHEF needs the Board’s help in identifying new nominations and asked that in the following weeks the Board identify three names as a minimum and commit to speaking to or meeting with these prospects in the next quarter. Fitzgerald offered the BHEF team’s support in connecting with these member prospects along with BHEF’s targeted prospect list. Randy Woodson nominated Brian Roach to the membership committee and Brian Roach replied that he would help in any way that BHEF would need. Closing Remarks The meeting went into executive session at 11:15 a.m. These minutes were certified on: __________________, 2019. By: Brian K. Fitzgerald BHEF Secretary __________________________________ Tab 2 – Chief Executive Officer’s Report Implementing BHEF’s Strategic Vision: Demonstrating National Leadership in Deploying and Replicating Digital Talent Ecosystems CEO Report Board of Directors Meeting February 13, 2020 Strategic Opportunities in 2020-2021 Execute a strategy in 2020 to strengthen BHEF’s brand as a national leader in developing and deploying digital upskilling ecosystems by strategically utilizing grant funding in the D.C.-Maryland-Virginia (DMV) region, building and replicating with BHEF members to attract new funding, new members, and increase member value. •Enhance BHEF’s position as a national leader in deploying digital workforce ecosystems by adding upskilling capabilities to BHEF’s workforce solutions portfolio through the new nine- month $1M NSF Convergence Accelerator (C-Accel) upskilling planning grant (Phase I) in the DMV, and apply for Phase II implementation funding ($5M) that develops the DMV upskilling ecosystem and scales ecosystems with BHEF members and partners nationally. •Expand BHEF’s national thought leadership (TL) role by releasing a digital upskilling report with PwC focused on diversity and inclusion, and co-host a release event in spring or summer 2020. •Continue to build new external and member communications capabilities to improve brand recognition, increase visibility of market intelligence (MI) publications, TL events, and member value. •Build on the C-Acceldigital upskilling planning grant and seek other grants to secure new, multi-year streams of revenue to ensure sustainability of BHEF’s strategic vision. •Rebuild the Membership Committee and regain momentum toward the Board’s goal of achieving 35-35 business-academic parity in CY20. © 2020 BHEF 2 FY20 National Leadership Opportunities Significant grant funding will position BHEF as the national leader in talent ecosystem development. •C-AccelPhase I will design and implement Phase II, an upskilling ecosystem for digital credentials inthe DMV region to match upskilling supply and demand, and replicate upskilling ecosystems with BHEF members and WPI sites nationally. •JPMorgan Chase grant for the Workforce Partnership Initiative (WPI) provides the final $600,000 to advance the 10 WPI sites, including NYC, Silicon Valley, Raleigh- Durham, and produce TL reports on developing digital talent ecosystems. •Support BHEF members in digital talent ecosystem replication in New England with the New England Board of Higher Education, other partners, and regions. •Build on the upskilling whitepaper by releasing a digital upskilling report with PwC focused on diversity and inclusion, and co-host a release event in spring or summer 2020. •Building on years of digital leadership in Asia-Pacific Economic Cooperation (APEC) with Wiley, serve as U.S. leader in planning an Organisationfor Economic Co-operation and Development (OECD) Global Summit on Digital Skills in fall 2020. © 2020 BHEF 3 The C-Accelgrant has permitted BHEF to measure the DMV digital upskilling demand, assess higher education (HE) upskilling capacity, and design a digital upskilling ecosystem that makes accessible and affordable digital credentials available. •C-AccelPhase I will expand BHEF’s digital talent solutions by providing the resources to conduct a comprehensive assessment of supply and demand in the DMV and plan systematic responses by employers and universities to increase supply and diversity of talent. Findings include: –Emsianalysis documents high digital tech employment demandand gaps in six digital tech areas: Cyber & Information Security, AI/Machine Learning, Cloud, Data Analytics, Software & Programming, and IT Networking. –Analysis indicates current gaps in specific skills, e.g., DevOps, and trends toward growing demand for particular skills. –Analysis also uncovered employment pathways enabling employers and HE to align credentials with pathways but also upskilling barriers, e.g., low participation rate using tuition reimbursement. •Understanding the gaps, employer challenges, and HE landscape enable BHEF to design an effective credentialing ecosystem and submit to NSF a $5M C-AccelPhase II implementation grant proposal to build an upskilling talent ecosystem in the DMV. •C-AccelPhase II will allow for scaling opportunities with BHEF members. BHEF’s NSF Convergence Accelerator STEM Grant © 2020 BHEF 4 Strengthen Member Value BHEF is advancing towards its continuous objective to deepen its value proposition through exclusive MI, powerful programmatic engagements, and a broader, more diverse membership base. •Exclusive MI. In Q1, BHEF launched its monthly insights brief. The benefit also spotlights BHEF peer leadership in digital skill development and enables BHEF to be better membership stewards by staying abreast of what’s happening in member companies and on member campuses. BHEF also released its first quarterly missive, which shared unpublished insights on Designing and Implementing Work-Based Learning: A Call to Action for CHROs. •National scaling partnership opportunities. C-AccelPhase II will use new MI to inform BHEF’s plan to meet the national digital upskilling demand by creating a replicable digital upskilling ecosystem. BHEF invites its members to serve as scaling partners by putting the market intelligence, process guides, and credential models to work in their regions. •Parity through an expanded and diverse membership body.A stronger brand, combined with opportunities such as C-AccelPhase II, will enable BHEF to reach its board-set membership goal of 35/35 by CY 2020. BHEF’s programmatic excellence and exceptional member value empowers BHEF members to engage with business prospects, opening the doors to new members from across the U.S. in tech, advanced manufacturing, and healthcare. Ideally, it will also identify and begin conversations with underrepresented minority and female CEOs and C-suites. © 2020 BHEF 5 BHEF Communications BHEF developed new members-only content and continues to produce MI. Members now receive a regular communiqué that highlights BHEF in action, with information about BHEF's programmatic agenda, as well as media mentions, upcoming publications, and speaking engagements. BHEF released five publications in 2019: –Designing and Implementing Work-Based Learning: A Call to Action for CHROs –Reskilling –A Solution for the Digital Skills Gap –Reskilling America’s Workforce: Exploring the Nation's Future STEM Workforce Needs –Creating Purposeful Partnerships –Future Skills, Future Cities: New Foundational Skills in Smart Cities Following the member meeting, BHEF will release Building Bridges to Success: Regional Business-Higher Education Partnerships to Grow and Diversity the STEM Workforce. BHEF continues to hone its communications. Plans for 2020 include: –A new web presence –Branching into new media, with appearances on podcasts and webinars –Continued efforts in traditional print media and speaking engagements © 2020 BHEF 6 BHEF 2020 Fundraising © 2020 BHEF 7 BHEF will use its recent fundraising momentum to pursue new sources of revenue and seek new relationships with funders. •C-AccelPhase I will permit BHEF and its partners to submit a three-year $5M Phase II upskilling implementation grant (FY20, Q2). •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 WPI, e.g., CT. •BHEF will seek new relationships with funders as TL and scaling partners. •FY20/FY21 Fundraising targets by quarter include: •Q2: ECMC Foundation—Scaling digital credentials •Q3: NSF C-Accel; Strada Education Network—Scaling Digital Upskilling Ecosystems •Q4: The Keck Center; Arnold Ventures LLC; The James Irvine Foundation; Joyce Foundation; Gordon and Betty Moore Foundation; Lilly Endowment Inc. •FY21, Q1: Lumina Foundation—Adding industry-endorsed credentials to academic degrees BHEF’s Organizational Infrastructure BHEF will end its 15-year infrastructure relationship with SmithBucklin when their lease expires on May 31, 2020, and relocate into new office space and on to the cloud. •BHEF’s senior director, Finance and Administration, Stacey Brown, is leading the transition to new office space, digital telecommunications services, and benefits. •BHEF assessed options for cost-effective office space and signed a multi-year lease in January 2020 to relocate to One DuPont Circle (ACE). •BHEF is examining options for procurement of infrastructure services, including payroll and benefits, technology, and telecommunications. •BHEF will continue to contract with SmithBucklin’sFinancial Management Services, at least through the FY19 audit. •BHEF will present a detailed plan outlining the most feasible solutions and costs across a range of infrastructure components on the FY20, Q3Board call. •Staff anticipate a May move. © 2020 BHEF 8 BHEF Winter 2020 Member Meeting Connecting the Dots: Replicating and Scaling Credentials to Build Digital Talent Ecosystems As the demand for digital talent grows exponentially, BHEF academic and business members are at different stages in offering and recognizing digital credentials. The BHEF Winter 2020 Member Meeting will investigate the challenges and opportunities, accomplishments, and insights gained from implementing digital credentialing and integrating these credentials into work-based learning. This meeting will provide the opportunity to explore the critical role of credentials in upskilling and upskilling success for business, employees, and universities. Thursday, February 13, 2020 InterContinental Washington, D.C. –The Wharf 801 Wharf Street SW, Washington, D.C. 20024 2:30 p.m.Board Meeting 4:00 p.m.Executive Session 4:30 p.m.Board Photo 6:00 p.m.Chair’s Reception 7:00 p.m.Chair’s Dinner © 2020 BHEF 9 BHEF Winter 2020 Member Meeting Friday, February 14, 2020 InterContinental Washington, D.C. –The Wharf 801 Wharf Street SW, Washington, D.C. 20024 7:45 a.m.Breakfast 8:20 a.m. Welcome 8:30 a.m.Session I (Working Breakfast) Market Intelligence Briefing: The Digital Upskilling Supply-and-Demand Challenge in the D.C. Region Presenters: •Brian Fitzgerald, CEO, Business-Higher Education Forum •Jennifer Thornton, vice president, Programs, Business-Higher Education Forum •David Metnick, managing director, Accenture North America 9:35 a.m. Session II Enabling Lifelong Learners: Insights from Learning Science and the Credential Marketplace Panelists: •Holly Custard, deputy director, Institute Partnerships and Outreach, StradaEducation Network •Douglas Harrison, dean, School of Cyber and IT, University of Maryland Global Campus •Matthew Miller, senior lecturer on education, associate dean for learning and teaching, Harvard University •Andrew Tein, vice president, Government Affairs, Wiley © 2020 BHEF 10 BHEF Winter 2020 Member Meeting Friday, February 14, 2020 InterContinental Washington, D.C. –The Wharf 801 Wharf Street SW, Washington, D.C. 20024 10:35 a.m. Session III Connecting Work-Based Learning with Credentials Panelists: •Michael Carren, head, Corporate Social Responsibility, The Guardian Life Insurance Company •Angie Kamath, dean, Continuing Education and Workforce Development, CUNY •Bonnie Zuckerman, manager, LXP, Apprenticeships, and Digital Skills, Northrop Grumman Corporation 11:35 a.m. Break 11:45 a.m.Session IV Upskilling and Credentials: Winning Strategies for Talent Retention and Development Panelists: •Yvette Burton, professor, Professional Practice in Human Capital Management; academic director, Columbia University •Megan Hanik, US Tax Human Capital Director, PwC •Jacqueline Welch, senior vice president, chief human resources officer, and chief diversity officer, Freddie Mac •David Zaharchuk, research director, IBM Institute for Business Value, IBM Corporation © 2020 BHEF 11 BHEF Winter 2020 Member Meeting Friday, February 14, 2020 InterContinental Washington, D.C. –The Wharf 801 Wharf Street SW, Washington, D.C. 20024 12:45 p.m. Session V (Working Lunch) Supplement or Supplant –Credentials and Academic Degrees Panelists: •Monique Baptiste, VP program officer, Workforce Strategies, Global Philanthropy, JPMorgan Chase & Co. •Ken Eisner, director, Worldwide Education Programs, Amazon •Kemi Jona, associate dean, Digital Innovation and Enterprise Learning, Northeastern University •Holly Zanville, strategy director, Future of Learning and Work, Lumina Foundation 1:50 p.m. Closing Remarks 2:00 p.m. Adjourn © 2020 BHEF 12 Discussion Finance and Audit Membership Tab 3 – Finance and Audit Report BHEF Finance and Audit Report, February 13, 2020 To: BHEF Board of Directors From: Brian K. Fitzgerald, CEO Date: February 13, 2020 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 2019 (FY19) Year-End Financials  Update on FY20 Budget, Quarter 1 Financials and Forecast  Investment Fund Report  Update on the FY19 Audit and 990 Filing FY19 Year-End Financials 1 BHEF finished FY19 with total unrestricted revenues of $3,990,070. FY19 revenue included $1,690,000 in membership dues, which was less than the goal of $1,870,000. FY19 revenue also included $2,291,869 in grants, $15,000 in market intelligence contributions, $8,201 in miscellaneous administrative revenue, $18,123 in investment fund revenue, and a balance of $877,731 in temporarily restricted assets (see Attachment A). Expenses totaled $3,763,831, with $694,951 released from temporarily restricted assets—grants that were spent-down in FY19 as planned, resulting in a net change in net assets of $1,107,791. It should be noted that positive net assets were much higher than anticipated due to the timing of the receipt of the second installment of $600,000 from JPMorgan Chase. BHEF originally anticipated receipt to occur in FY20, however payment was issued at the end of FY19 requiring the auditors to book those funds in FY19. FY20 Budget Quarter 1 Financials 2 and Forecast During the board of directors meeting in June 2019, the board approved a FY20 budget of $3,330,529 (see Attachment B). As of the end of the first quarter ending December 31, 2019, BHEF had received $1,540,674 in new revenue, which included $1,125,000 in membership dues and $415,674 (cash-in) in grants. Temporarily restricted assets equaled $879,018. The forecast includes $3,060,441 in total revenue including an estimated $1,700,000 in membership revenue (down from the initial request of $2,100,000), $2,060,441 in grant revenue, and the release of approximately $697,261 from Temporary Restricted Net Assets – grants to be spent in 2020. Forecast expenses total $3,682,075. The forecast reflects a net change in net assets of ($399,877). 1 Reflects audited statements from BHEF’s accountants. This represents accrual-basis accounting method. 2 Unaudited accrual-basis statements from BHEF’s accountants. BHEF Finance and Audit Report, February 13, 2020 Investment Fund The value of the BHEF investment fund 3 as of December 31, 2019 was $1,031,894.95. An 11% increase over the December 31, 2018 fund balance of $920,940.96. BHEF’s investment portfolio is a Life Strategy Fund comprised of 80 percent of the managed portfolio in bonds and 20 percent in stocks. Audit and IRS Filings The accounting firm of Rubino & Company Chartered has completed BHEF’s FY19 financial and federal single audit report. The draft audit report and management letter are attached for your review. The audit found no reportable conditions. The IRS 990 filing is currently being drafted and will be filed by May 15. Copies will be provided to each board member in the near future. 3 BHEF’s Investment Fund includes Operating Reserve funds (self-managed with Vanguard). ATTACHMENT A Business-Higher Education Forum FY2019 Year-End Financials Audited At September 31, 2019 Approved FY2019 Actuals at 9-30-2019 Varience Variance Operating Net Assets Unrestricted Revenue: 200 Membership - Revenue1,870,000$ 1,690,000$ (180,000)$ (2,050,000)$ 300 Conferences -Revenue-$ 8,201$ 8,201$ 8,201$ 510 Market Intelligence - Revenue165,000$ 15,000$ (150,000)$ (315,000)$ 520 JPMC - Revenue454,892$ 600,000$ 145,108$ (309,784)$ 521 WPI - Revenue-$ 100,000$ 100,000$ 100,000$ 525 Google - Revenue-$ 212,000$ 212,000$ 212,000$ HEWI Summary - Revenue1,829,757$ 1,364,869$ (464,888)$ (2,294,645)$ ---------------------------------------------------------------------------------- TOTAL OPERATING NET ASSETS4,319,649$ 3,990,070$ (329,579)$ (2,666,583)$ ------------------------------------------------------------------------------------- Expenses 110 Administration - Expenses477,098$ 650,299$ (173,201)$ 650,299$ 200 Membership - Expenses362,492$ 256,996$ 105,496$ 256,996$ 250 Grants - Expenses139,183$ 105,440$ 33,743$ 105,440$ 300 Conferences - Expenses350,087$ 369,063$ (18,976)$ 369,063$ 500 Communications - Expenses257,493$ 239,412$ 18,081$ 239,412$ 510 Market Intelligence - Expenses151,552$ 10,894$ 140,658$ 10,894$ 520 JPMC - Expenses711,431$ 500,381$ 211,050$ 500,381$ 521 WPI - Expenses-$ 20,415$ (20,415)$ 20,415$ 525 Google - Expenses-$ 62,417$ (62,417)$ 62,417$ HEWI Summary - Expenses1,820,726$ 1,548,515$ 272,211$ 1,548,515$ ---------------------------------------------------------------------------------- Total Expenses4,270,062$ 3,763,831$ 506,231$ 3,763,831$ ------------------------------------------------------------------------------------- NET CHANGE IN NET OPERATING ASSETS49,587$ 226,239$ 176,652$ 1,097,249$ ------------------------------------------------------------------------------------- Non-Operating Net Assets Revenue: 900 BHEF Investment Fund - Revenue30,000$ 83,408$ 53,408$ 23,408$ Total Revenue30,000$ 83,408$ 53,408$ 23,408$ Expenses: 900 BHEF Investment Fund - Expenses-$ -$ -$ -$ Total Expenses-$ -$ -$ -$ ------------------------------------------------------------------------------------- Net Change in Non-Operating Net Assets30,000$ 83,408$ 53,408$ 23,408$ ------------------------------------------------------------------------------------- NET CHANGE IN NET ASSETS79,587$ 309,647$ 230,060$ 1,120,657$ ======================================================================= Beginning Balance 2019 Additions 2019 Subtractions Ending Balance Temporarily Restricted Net Assets660,682$ 912,000$ (694,951)$ 877,731$ -$ -$ -$ -$ 520-JPMC469,708$ 600,000$ (500,381)$ 569,327$ 521-WPI/Northrup-$ 100,000$ (20,415)$ 79,585$ 525-Google-$ 212,000$ (62,417)$ 149,583$ 743-Sloan DataScience90,974$ -$ (90,974)$ (0)$ 782-CIT II Smart Cities100,000$ -$ (20,764)$ 79,236$ ======================================================================= TOTAL NET CHANGE IN NET ASSETS1,107,791$ ATTACHMENT B Business-Higher Education Forum FY2020 Q1 FINANCIALS - At December 31, 2019 Approved FY2020FY2020 Q1 Actuals Projected FY2020 Varience Operating Net Assets Unrestricted Revenue: 200 Membership - Revenue2,100,000$ 1,125,000$ 1,700,000$ (400,000)$ 300 Conferences -Revenue-$ -$ -$ -$ 510 Market Intelligence - Revenue-$ -$ -$ -$ 520 JPMC - Revenue600,000$ -$ -$ (600,000)$ 521 WPI - Revenue-$ 100,000$ 100,000$ 100,000$ 525 Google - Revenue122,500$ -$ 122,500$ -$ HEWI Revenue:508,029$ 315,674$ NSF Year V to 12-31-19 208,029$ 137,941$ (70,088)$ NSF C-Accel300,000$ 1,000,000$ 700,000$ ---------------------------------------------------------------------- TOTAL OPERATING NET ASSETS3,330,529$ 1,540,674$ 3,060,441$ (270,088)$ -------------------------------------------------------------------------------------- Expenses 110 Administration - Expenses584,786$ 120,764$ 584,786$ 0$ 200 Membership - Expenses345,218$ 50,605$ 325,218$ 20,000$ 250 Grants - Expenses70,038$ 4,454$ 53,038$ 17,000$ 300 Conferences - Expenses329,863$ 14,842$ 294,863$ 35,000$ 500 Communications - Expenses268,577$ 52,118$ 250,077$ 18,500$ 510 Market Intelligence - Expenses130,000$ -$ -$ 130,000$ 520 JPMC - Expenses588,000$ 51,503$ 513,327$ 74,673$ 521 WPI - Expenses70,000$ 6,228$ 70,000$ -$ 525 Google - Expenses284,500$ 23,826$ 123,826$ 160,674$ HEWI Summary - Expenses612,742$ 350,455$ 1,466,941$ (854,199)$ ---------------------------------------------------------------------- Total Expenses3,283,724$ 674,795$ 3,682,075$ (398,351)$ -------------------------------------------------------------------------------------- NET CHANGE IN NET OPERATING ASSETS46,805$ 865,879$ (621,634)$ (668,439)$ -------------------------------------------------------------------------------------- Non-Operating Net Assets Revenue: 900 BHEF Investment Fund - Revenue40,000$ 15,137$ 40,000$ -$ Total Revenue40,000$ 15,137$ 40,000$ -$ Expenses: 900 BHEF Investment Fund - Expenses-$ -$ -$ -$ Total Expenses-$ -$ -$ -$ -------------------------------------------------------------------------------------- Net Change in Non-Operating Net Assets40,000$ 15,137$ 40,000$ -$ -------------------------------------------------------------------------------------- NET CHANGE IN NET ASSETS86,805$ 850,742$ (581,634)$ (668,439)$ ==================================================================================== ==================================================================================== Beginning Balance Adjustments FY20 Balance to Date Projected FY2020 YE Balance Temporarily Restricted Net Assets877,731$ 1,287$ 879,018$ 181,757$ -$ -$ -$ 520-JPMC569,327$ (51,503)$ 517,824$ 56,000$ 521-WPI/Northrup79,585$ 93,772$ 173,357$ 100,000$ 525-Google149,583$ (23,826)$ 125,757$ 25,757$ 782-CIT II Smart Cities79,236$ (17,156)$ 62,080$ -$ ==================================================================================== BALANCE OF TEMPORARY RESTRICTED877,731$ 1,287$ 879,018$ 181,757$ TOTAL NET CHANGE IN NET ASSETS964,536$ 297,384$ (399,877)$ ==================================================================================== January __, 2020 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 Business Higher Education Forum for the year ended September 30, 2019, and have issued our report thereon dated January __, 2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and 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 18, 2019. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Business Higher Education Forum are described in Note 2 to the financial statements. As described in Note 2, Business Higher Education Forum changed accounting policies related to its financial statement presentation by adopting FASB Accounting Standards Update (ASU) 2016-14 Presentation of Financial Statements for Not-for-Profit Entities during 2019. Accordingly, the accounting change has been retrospectively applied to prior periods presented as if the policy had always been used. We noted no transactions entered into by Business Higher Education Forum during the 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 prepared by management and are based on management’s 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 estimate affecting the financial statements was: Management’s estimate of revenue recognized on grants and cooperative agreements is based on direct expenses charged to those grants and cooperative agreements and 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, our audit procedures included tests of expense transactions to determine that direct and indirect costs are accumulated in 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 dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We are pleased to report that no such misstatements were identified during the audit. 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 auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated January __, 2020. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to Business Higher Education Forum’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as Business Higher Education Forum’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. 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. Business Higher Education Forum January __, 2020 Page 3 of 3 Other Reporting Issues The footnotes disclose the adoption of FASB Accounting Standards Update (ASU) 2016-14 Presentation of Financial Statements for Not-for-Profit Entities which changes the presentation of Business Higher Education Forum’s financial statements. As a result of adopting ASU 2016-14, the following changes are reflected in the 2019 financial statements:  An emphasis of matter paragraph was included in the auditors’ report.  Net assets now reflect only two classes rather than three. Unrestricted net assets are now Net assets without restrictions and Temporarily restricted net assets and Permanently restricted net assets have been combined and are now Net assets with restrictions.  Investment income on the Statements of Activities is considered a “non-operating” activity.  New financial statement disclosures: o Measure of Operations has been added to the Summary of Significant Accounting Policies, defining operating and non-operating activities. o Availability and Liquidity of Financial Assets has been presented in Note 7, disclosing financial assets available to meet cash needs for general expenditures within one year. This information is intended solely for the use of the Board of Directors and 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 September 30, 2019 and 2018 DRAFT 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, 2019) 5 Statement of Functional Expenses (September 30, 2018) 6 Statements of Cash Flows 7 Notes to Financial Statements 8 – 15 Supplemental 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 16 – 17 Independent Auditors’ Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance 18 – 19 Schedule of Expenditures of Federal Awards 20 Notes to Schedule of Expenditures of Federal Awards 21 Schedule of Findings and Questioned Costs 22 – 23 Summary Schedule of Prior Audit Findings 24 DRAFT INDEPENDENT AUDITORS’ REPORT The Executive Committee Business Higher Education Forum Report on the Financial Statements We have audited the accompanying financial statements of Business Higher Education Forum, which comprise the statements of financial position as of September 30, 2019 and 2018, 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. DRAFT 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Business Higher Education Forum, as of September 30, 2019 and 2018, and the changes in its net assets, functional expenses and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 2 to the financial statements, Business Higher Education Forum adopted Accounting Standards Update 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, during the year ended September 30, 2019. Our opinion is not modified with respect to this matter. 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 relates 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 January __, 2020, on our consideration of 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 January ___, 2020 DRAFT BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF FINANCIAL POSITION September 30, 2019 and 2018 ____________ 20192018 ASSETS Current assets Cash and cash e quivalents 840,256$ 981,726$ Investments 1,016,859 933,856 Accounts receivable 653,202 98,000 Grants receivable 528,450 599,711 Prepaid expenses4,806 11,843 Total assets3,043,573$ 2,625,136$ LIABILITIES AND NET ASSETS Current liabilities Accounts payable 506,912$ 508,114$ Deferred revenue 850,000 740,000 Total liabilities1,356,912 1,248,114 Net assets Without donor restrictions1,070,571 730,645 With donor restrictions616,090 646,377 Total net assets1,686,661 1,377,022 Total liabilities and net assets3,043,573$ 2,625,136$ The accompanying notes are an integral part of these financial statements. 3 DRAFT BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF ACTIVITIES Years Ended Se ptember 30, 2019 and 2018 ____________ 20192018 Revenue and support Membership dues1,690,000$ 1,580,000$ Grants and contributions1,691,8681,445,305 Sponsorship5,000- Miscellaneous3,2061,197 Net assets released from donor restrictions630,287 457,094 Total revenue and support 4,020,361 3,483,596 Expenses Program services Higher education workforces 1,548,5161,625,997 Chase program 500,380130,292 Conferences 369,063 201,337 Membership 256,996206,315 Communications 239,412 161,131 Google 62,416- DMV Projects 20,415- Market intelligence10,894 252,104 Total program