Financial Report 31 7 



FINANCIAL REPORT 



RICK JOHNSON, CHIEF FINANCIAL OFFICER 



The Smithsonian Institution receives funding from both federal appropriations ana non- 

 appropriated trust sources. Nonappropriated trust funds include all funds received from 

 sources other than direct federal appropriations. These other sources include gifts and 

 grants from individuals, corporations, and foundations- grants and contracts from federal, 

 state, or local government agencies; earnings from short- and long-term investments; rev- 

 enue from membership programs; and revenue from business activities, such as Smithsonian 

 magazine, museum shops and restaurants, mail order catalogues, and licensed products. 



Federal appropriations provide funding for the Institution's core functions: caring for 

 and conserving the national collections, sustaining basic research on the collections and 

 in selected areas of traditional and unique strength, and educating the public about the 

 collections and research findings through exhibitions and other public programs. Federal 

 appropriations also fund most activities associated with maintaining and securing the 

 facilities and with various administrative and support services. 



Smithsonian trust funds allow the Institution to undertake new ventures and enrich 

 existing programs in ways that would not otherwise be possible. These funds provide the 

 critical margin of excellence for innovative research, building and strengthening the 

 national collections, constructing and presenting effective and up-to-date exhibitions, and 

 reaching out to new and underrepresented audiences. In recent years, the Smithsonian has 

 also begun to rely on trust funds to support major new construction projects. 



The following sections describe the external environmental factors affecting the Institu- 

 tion's general financial condition, its financial status and its planned response to chang- 

 ing conditions; financial results for fiscal year 1999, and organizational and financial mea- 

 sures being taken to ensure the continued ?.scai health of the Institution. 



Financial Perspectives 



As we move into the new millennium, the Smithsonian has made major advances in sev- 

 eral key projects that will sustain and enhance its reputation as a world-class center for 

 research and education. The Smithsonian's continued focus on generating new revenues 

 through fund raising and business activities is integral to this advancement. 



The Discovery Center in the National Museum of Natural History opened in fiscal year 

 1999. This project provides space for new programs, a cafe, an IMAX 8 theater, and an 

 expanded museum shop. Incremental net income from business activities in the museum 

 will repay the funds borrowed to build this facility. 



The fund-raising campaign for the Dulles Center, a major extension of the National Air and 

 Space Museum at Dulles International Airport, continued this year. By the end of calendar 

 year 1999, approximately 68 percent of the campaign goal of $130 million had been received 

 in cash and pledges. The capstone of the campaign was a $60 million pledge from Steven F. 

 Udvar-Hazy. Net income from business activities in this facility and pledge payments will 

 repay planned borrowing. The project is also receiving significant support from the Com- 



