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Since 1970, fortunately, there has been steady improvement as unrestricted-purpose income reflected rising revenues from concession fees, higher interest on current fund investments and a dramatic rise in earnings from auxiliary activities, particularly the National Associates Membership and the Magazine.

Despite the near doubling of our administrative costs since 1970, it has been possible to rebuild our working fund balances and distribute meaningful amounts of money to Smithsonian Bureaus to take advantage of opportunities to improve their national collections or increase exhibition and research efforts in a modest way.  More recently it was also possible to fund a portion of the Cooper-Hewitt renovation and the entire NMNH West Court construction, primarily an Associates public service project.  Finally, in the past two fiscal periods a beginning was made toward bolstering our unrestricted-purpose endowment funds.

[[underline]]Need for Increased Unrestricted-Purpose Endowment Funds[[/underline]]

From this background we may draw the following conclusions:

1.  Smithsonian has never, until the past two or three years, had any real protection in the way of surplus Trust Fund assets and income against the effect of inflation or other adverse