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[[underline]] PRIVATE UNRESTRICTED FUNDS [[/underline]] 

[[underline]] Projects Results for FY 1974 [[/underline]]

The outlook for our important private unrestricted funds has continued to brighten steadily throughout the year to the point where we now are projecting a surplus for the current fiscal year of $1,800,000 compared to a surplus of $543,000 last year (see Exhibit B).

The principal causes of this unexpectedly favorable result are our revenue-producing activities (see Exhibit C), and particularly the [[underline]] Smithsonian [[/underline]] Magazine, which should show a gain of $1,200,000 compared to only $330,000 in FY 1973, and break-even in FY 1972. Subscriptions are now expected to exceed 600,000 by next June 30th, a 12-month increase of 142,000. Advertising revenues will be over $1,750,000, nearly double those of the previous year. It is entirely possible that some income taxes will now be payable on a portion of these advertising revenues.

Other revenue-producing activities also have shown greater than expected gains. The Associates Program, which includes the many varied programs for Resident (Washington area) Associates, foreign study tours and gifts from National Associates, will provide $325,000 of net income, compared to a slight loss in the previous year, after paying costs of the Associates' reception center, one-half of our fund raising efforts and administration of the National Associates Board program. Our Museum Shops are showing substantial gains in sales volume and profits of $200,000 or more despite the recent lower visitor count resulting from the energy crisis. Sales of our highly successful "History of