Fiscal Year 1994 Sources of Gross/Net Revenues 



Gross Net Percent Net 



Revenues Revenues Operating 



iSmillions) (Smillions) Revenues (%) 



304.0 



304.0 



72 



221.9 



38.8 



9 



45.7 



45.7 



11 



34.7 



34,7 



8 



606.3 



423.2 



100 



39.8 



39.8 





11.7 



11.7 





51.5 



51.5 





20.7 



20.7 





678.5 



495.4 





OPERATIONS 



Federal Appropriations 

 Nonappropriated Trust Funds 

 Unrestricted 

 Restricted 



Gov't Grants and Contracts 

 General Restricted 

 Total Sources for Operations 



CONSTRUCTION 



Federal Appropriations 

 Nonappropriated Trust Funds 

 Total Sources for Construction 



ENDOWMENT 

 AND SIMILAR FUNDS 



Total Revenues from All Sources 



costs; and asbestos decontamination of collections which 

 became contaminated when a tornado damaged several storage 

 buildings in Suitland, Maryland. 



A small drop in net unrestricted trust fund income was more 

 than offset by reduced expenditures and transfers, allowing the 

 Smithsonian to end the year with an increase of approximately 

 $0.8 million in the unrestricted trust fund balance. 



Restricted income from investments, gifts, and non-govern- 

 ment grants and contracts totalled $34.7 million. As a conse- 

 quence of the Institution's intensified effort to expand its public- 

 private partnerships and its focus on new fund-raising strategies, 

 restricted gift and non-government grant and contract income 

 increased by 38 percent over the previous year. These funds sup- 

 ported a wide range of educational and exhibition programs 

 throughout the Institution. Major funding received in fiscal 

 year 1994 helped to fund the operating budget of the National 

 Postal Museum, ecological research at the Smithsonian Tropical 

 Research Institute, the Science in American Life exhibit at the 

 National Museum of American History, and a joint initiative of 

 the Traveling Exhibition Service and the National Museum of 

 American History aimed at bringing jazz to public audiences 

 across the nation. The Smithsonian is especially grateful to its 

 many friends in the private sector whose generosity contributed 

 vitally to its work. Donors are listed in the Benefactors section 

 of this publication. 



In fiscal year 1994, the Institution received $45.7 million in 

 contracts and grants from government agencies, an increase of 

 $1.9 million over fiscal year 1993. Support from government 

 agencies constitutes an important source of research monies for 

 the Institution while also benefiting the granting agencies by pro- 

 viding 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. 



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 5 years. With this 

 payout policy, to achieve the endowment's objectives, the invest- 

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



During the year, the Institution conducted an in-depth study 

 of the long-term asset allocation policy of the endowment to 

 determine if it would allow the endowment to achieve its rate 

 of return objectives. The study recommended an increase in the 

 allocation to equities to increase the long-term return and in- 

 creased diversification into international assets to control overjll 

 risk. The Investment Policy Committee accepted this recommen 

 dation and it will be implemented in fiscal year 1995. 



In 1994, free elections in South Africa signalled the end of 

 apartheid. Based on the recommendation of the Investment 

 Policy Committee, the Board of Regents lifted its restriction on 

 investment in companies operating in South Africa. 



Following four years of significant growth, as depicted in the 

 chart below, the market value of the endowment decreased from 

 $387.6 million to $379 million during fiscal year 1994. Of the 

 $379 million, $166.8 million, or 44 percent, was unrestricted 

 and the balance of $212.2 million was restricted. New gifts and 

 internal transfers totalled $7.1 million while the payout was 

 $14.2 million and fees were $1.3 million. The total return on the 

 consolidated portfolio was -0.04 percent. This low return was 

 due to poor performance of the stock and bond markets caused 

 by rising interest rates during the year. At year end, the Institu- 

 tion's portfolio was invested 58 percent in equities, 39 percent in 

 bonds and 3 percent in cash equivalents. 



Market Value of Endowment and Similar Funds 



($ millions) CZl Restricted, Freer 



$500 

 $400 - 

 $300 



$200 

 $100 - 



$1) 



II Restricted, Other 

 I Unrestricted 



$344 



$388 



$3^9 



y s 



* 





1990 



1991 



1992 1993 



Fiscal Year 



3^5 



