The annual financial statements for the Foundation for 2004 appear under the heading Financials. A listing of awards in 2004 can be found within the Portfolio Reviews.

In 2004 net assets of the Foundation increased by 16.2 percent or $1.2 billion. This rise in net assets largely reflects income and gains generated by our investment portfolio. The investment return on the Foundation’s endowment was 19.1 percent in 2004, driven by strong performance across the portfolio.

Program activities in support of our mission continued at a strong pace and resulted in program payments to grantees and contractors of $387 million. When coupled with our program development, general administration and evaluation expenses ($48.7 million), the Foundation spent 5.46 percent of its net average asset value, exceeding the 5 percent payout requirement mandated by the tax law governing private foundations.

The Foundation continued to focus on good stewardship of its resources. As such, general administration expenses for the year were $21 million, essentially flat versus the prior year period.

Investment expenses, comprised primarily of fees paid to outside investment managers, totaled $33.1 million, an increase of $8.6 million compared with 2003, reflecting our continuing strategy to diversify the portfolio and the increase in the asset base. Federal and state taxes amounted to $21.2 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. By year-end, the Foundation fulfilled its 2003 and 2004 requirements.

Margaret H. Einhorn
Chief Financial Officer and Treasurer