The annual financial statements for the Foundation for 2002 appear under the navigation heading Financials. Awards in 2002 are listed in the Grants & Contracts section.

In 2002 the net assets of the Foundation decreased 13.3 percent. Three factors contributed to this decline. First, the net return on the investment portfolio was negative 6.73 percent, primarily a reflection of the current economic conditions. Second, continuing a strategy of aggressive program development started last year, the Foundation awarded grants and contracts totaling $556 million. This is the second largest award year in the Foundation's history. Third, the Foundation spent 5.6 percent of its average asset value, exceeding the 5 percent payout requirement mandated by the tax law governing private foundations.

At the same time that we were ramping up our program development activities, we focused inward on our internal expenditures. As a result, program development, evaluation, and general administration for the year were $47.1 million or 8.5 percent of total awards. This represents a decrease of $132,000 compared to last year.

Investment expenses totaled $24.2 million, a decrease of $1.5 million compared to last year. This decrease is due to lower management fees as a result of a reduced asset base due to market conditions, coupled with some consolidation of investment managers. Federal and state taxes amounted to $6 million.

The Internal Revenue Code requires private foundations to make qualifying distributions of 5 percent of the fair market value of assets not used in carrying out the charitable purpose of the Foundation. These distributions are to be completed within twelve months of year-end. The Foundation has fulfilled its 2001 requirement of $406.3 million. The 2002 requirement is approximately $412 million.

Peter Goodwin
Vice President and Treasurer

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