Fiscal Year 1995 Sources of Gross/Net Revenues 









Percent 









Net 





Gross 



Net* 



Operating 





Revenues 



Revenues 



Revenues 





(Smillions) 



(Smillions) 



(%) 



Operations 









Federal Appropriations 



313.3 



313.3 



71 



Nonappropriated Trust Funds 









Unrestricted 



226.8 



41.0 



10 



Restricted 









Gov't Grants and Contracts 



50.3 



50.3 



11 



General Restricted 



36.7 

 627.1 



36.7 

 441.3 



8 



Total Sources for Operations 



100 



Construction 









Federal Appropriations 



44.7 



44.7 





Nonappropriated Trust Funds 



7.0 



7.0 





Total Sources for Construction 



51.7 



51.7 





Endowment and Similar Funds 



29.3 



29.3 





Total Revenues from All Sources 



708.1 



522.3 





and Space Museum, and the establishment of the Jerome and 

 Dorothy Lemelson Center for the Study of Invention and Inno- 

 vation at the National Museum of American History. The 

 Smithsonian is especially grateful to its many friends in the 

 private sector whose generosity contributed vitally to its work. 

 The names of major donors are listed in the Benefactors section 

 of this publication. 



In fiscal year 1995, the Institution received $50.3 million in 

 contracts and grants from government agencies, an increase of 

 $4.6 million over fiscal year 1994. Support from government 

 agencies constitutes an important source of research monies for 

 the Institution while also benefiting the granting agencies by 

 providing access to Smithsonian expertise and resources. As in 

 prior years, the majority of these funds were provided by the 

 National Aeronautics and Space Administration for research 

 programs at the Smithsonian Astrophysical Observatory. Other 

 projects funded included a study at the Smithsonian Environ- 

 mental Research Center of the rising concentration of carbon 

 dioxide in the atmosphere and support for sorting biological 

 specimens from the polar regions at the National Museum of 

 Natural History. 



* Net of expenses related to revenue-generating activities, e.g., museum 

 shops, restaurants, publications, etc. 



Operations (Tables i and 2) 



Federal appropriations of $313.3 million provided the core fund- 

 ing for ongoing programs of the Institution. An increase of $10.9 

 million from the fiscal year 1994 level funded the continued de- 

 velopment of the National Museum of the American Indian, the 

 Smithsonian Astrophysical Observatory's Submillimeter Tele- 

 scope Array, the move of collections to the Museum Support 

 Center, expanded Latino programming, and partial support for 

 inflationary increases in salaries and benefits. Unfunded but 

 mandatory inflationary costs for salaries and benefits, rent and 

 utilities were absorbed within baseline resources through cost 

 savings gained from restructuring of programs and activities. 



Unrestricted trust fund income showed an increase of $4.9 

 million from last fiscal year. Several business activities, such as 

 Smithsonian magazine, restaurant concessions and museum 

 shops, along with investment income, showed healthy increases. 

 However, these increases were more than offset by the $4.5 

 million loss by the Smithsonian Institution Press. This unprece- 

 dented loss led the Institution to begin to reevaluate this activity 

 completely. 



Restricted income from investments, gifts and non-govern- 

 ment grants and contracts totaled $36.7 million, a level that 

 sustains and modestly improves upon the large, 38% growth 

 last fiscal year. The Institution continues to intensify its fund- 

 raising activities and focus on new strategies. Last fiscal year 

 was the most successful year ever in raising funds for a wide 

 range of educational, exhibition, research, and related construc- 

 tion programs throughout the Institution. Major gifts and grants 

 received in fiscal year 1995 helped to support the National Postal 

 Museum, the exhibition "How Things Fly" at the National Air 



314 



Endowment (Tables 3, 4, and 5) 



The Institution pools its endowment funds for investment 

 purposes into a consolidated portfolio, with each endowment 

 purchasing shares in a manner similar to shares purchased by 

 an investor in a mutual fund. 



The Investment Policy Committee of the Smithsonian's Board 

 of Regents establishes investment policy and recommends the 

 annual payout for the consolidated endowment. The Smith- 

 sonian's policies for managing the endowment are designed to 

 achieve two objectives: 1) to provide a stable, growing stream 

 of payouts for current expenditures and 2) to protect the value 

 of the endowment against inflation and maintain its purchasing 

 power. Current policy calls for an average payout of 4.5 percent 

 of the average market value over the prior five years. With this 

 payout policy, to achieve the endowment's ob|ectives, the invest- 

 ment policy targets a real rate of return of 5 percent. 



In fiscal year 1994, the Investment Policy Committee approved 

 a new asset allocation policy with higher exposure to equities to 

 increase expected return, while controlling risk through modest 

 international diversification. During fiscal year 1995, the Com- 

 mittee implemented this policy. The investment managers were 

 given global mandates, and new specialist investment managers 

 were hired for domestic and international equities. 



As depicted in the chart below, the market value of the en- 

 dowment increased from $379.0 million to $434.6 million dur- 

 ing fiscal year 1995. Of the $434.6 million, $189.6 million, or 

 44 percent, was unrestricted, and the balance of $245.0 million 

 was restricted. New gifts and internal transfers totaling $3.4 mil- 

 lion were added to the endowment while the payout was $14.8 

 million. Investment management fees were $1.2 million. The 

 total return on the consolidated portfolio was 18.3 percent. At 

 year end, the Institution's portfolio was invested 76 percent in 

 equities, 21 percent in bonds, and 3 percent in cash equivalents. 



