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New Policy Adopted for Investment of Smithsonian Endowment Funds

At its meeting on May 10, 1972, a majority of the Board of Regents of the Smithsonian Institution approved the adoption of new principles designed to make possible improved investment performance in the management of its endowment funds, now totaling close to $50,000,000. These principles include, first, the establishment of maximum total return as the investment objective for the funds without assuming an inappropriate degree of risk and, secondly, the determination of amounts to be distributed from endowment funds each year as a prudent portion of the average total return expected on these funds over an extended period and taking into account both present and future needs of the Institution. This prudent portion is currently to be set at 4 - 1/2% of a 5-year running market average of the valuation of the funds.

These policies were recommended by the Institutions' Investment Policy Committee following an extensive study based on the findings of reports prepared for the Ford Foundation on the management of endowment funds of non-profit institutions. The recommendations also follow receipt of advices from legal counsel of the firm of Covington and Burling. Similar policies have already been adopted in one form or another by more than twenty of the leading universities of the country, although in most cases application has been limited to funds in which principal as well as income may be expended for the purposes of the gift. The Smithsonian Investment Policy Committee includes three Regents, Mr. William A. M. Burden, Chairman, Dr. Crawford H. Greenwalt, and Mr. James E. Webb, as well as four experienced investment executives, Mr. Harold F. Linder, Mr. Donald Moriarty, Mr. Charles H. Mott, and Mr. William R. Salomon.