Annual Report to the Board of Regents

Fiscal Year 2005

January 2006

In September 2005, the National Museum of African Art received a 

transforming gift of one of the world’s finest collections of traditional African 

art: the Walt Disney-Tishman Collection.
1 Report to the Regents – January 2006

Public Impact

Visits to the Smithsonian 

In fi scal year 2005, the Institution counted 29.5 million visitors to its museums, traveling exhibitions, 

and National Zoo—a number equivalent to approximately 10 percent of the population of the United 

States. Th is was divided as follows:

24.2 million visits to Smithsonian museums in Washington and New York, plus the National Zoo 

and Udvar-Hazy Center—up 24 percent from the previous year.

5.3 million visits to traveling exhibitions mounted by the Smithsonian Institution Traveling 

Exhibition Service, Smithsonian American Art Museum, and National Portrait Gallery—up 26 

percent from the previous year.

Th is rebound from fi scal year 2004 fi gures refl ects factors such as the easing of fears about terrorism in 

the nation’s capital and the fi rst full year of operation for the immensely popular National Museum of the 

American Indian facility on the Mall, which drew nearly 2.5 million visitors in fi scal year 2005. 

Visits to Smithsonian Museums and Traveling Exhibitions

Fiscal Years 2003, 2004, and 2005

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

African Art

Air and Space

Udvar Hazy

American History

American Indian-Mall

American Indian-NY

Anacostia

Arts and Industries

Cooper-Hewitt

Freer/Sackler

Hirshhorn

Natural History

Postal

Renwick

Ripley Center

SI Castle

National Zoo

SAAM (Trv Exh)

NPG (Trv Exh)

SITES

FY 2003

FY 2004

FY 2005

Smithsonian Online

Virtual visitorship to Smithsonian websites—including the main website at www.si.edu and more than 

80 other sites—increased to 109.3 million, surpassing by about 10 percent the fi gure of 97.6 million 

recorded in fi scal year 2004. 

Much of the increase can be attributed to heavy visitation of the National Zoo 

website. Th e Zoo’s live web feeds of its new panda cub proved hugely popular, as 

did online videos and photos documenting the cub’s growth, veterinary exams, and 

other activities. Th e Zoo also used its website to conduct a panda-naming contest 

in which 202,045 votes were cast from around the world. Th e winning name, Tai 

Shan, means “peaceful mountain” in Chinese. 

•

•
2 Report to the Regents – January 2006

In addition to creating new virtual exhibitions, education sites, and research sites, Smithsonian units 

received numerous awards and other forms of recognition for their Web off erings in fi scal year 2005:

Th e National Museum of Natural History’s Lakota Winter Counts won the International Academy 

of Digital Arts and Sciences’ prestigious “Webby” award in the cultural institutions category and the 

United Nations World Summit Award in the e-culture category. 

Th e National Museum of American History’s America on the Move virtual exhibition was the featured 

site of the day on www.techlearning.com, and its Price of Freedom website received honorable 

mention in the American Association of Museums’ Muse Awards.

Th e Smithsonian Institution Traveling Exhibition Service’s Doodles, Drafts and Designs site was 

named a “hot site” by USA Today, a “site of the day” by Freelists, and a “pick of the day” by Yahoo!

Th e Center for Folklife and Cultural Heritage’s Global Sound, a virtual encyclopedia of the world’s 

musical traditions, was praised as “the ethnographic answer to iTunes” by the New York Times.

Th e Smithsonian American Art Museum’s Ask Joan of Art was the recipient of the American Library 

Association’s Th omson Gale Award.

Th e Center for Latino Initiatives’ Latino Virtual Gallery ¡Sabor! Salsa Music in the United States was 

selected for the 2005 National Board for Professional Teaching Standards conference.

Th e Smithsonian Astrophysical Observatory’s Astrophysics Data System (ADS) was praised by the 

United Nations General Assembly.

Th e Smithsonian Environmental Research Center’s Mangal Cay: A Caribbean Mangrove Island 

Virtual Tour site was a National Science Foundation “feature of the week.”

Conservation Central, an education website developed by the National Zoo, Friends of the National 

Zoo, and Fujifi lm, was honored by the National Association for Interpretation with its top award in 

the interactive multimedia category.

Exhibition Highlights

The Price of Freedom: Americans at War was unveiled on November 

11, 2004, in the new Kenneth E. Behring Hall of Military History at 

the National Museum of American History. Th e 18,200-square-foot 

permanent exhibition examines the nation’s military engagements from the 

Revolutionary War to the present.

Th e 2005 Smithsonian Folklife Festival—featuring Oman: Desert, Oasis, and 

Sea; Food Culture USA; Forest Service Culture and Community; and Nuestra 

Musica: Music in Latino Culture—drew over one million visitors. Th e Oman 

program was the fi rst in the Festival’s history to feature an Arab nation. 

Th e National Air and Space Museum launched the James S. McDonnell 

Space Hangar—housing the space shuttle Enterprise and other space-related 

artifacts—at its Steven F. Udvar-Hazy Center on November 1, 2004. 

A new permanent exhibition,Whatever Happened to Polio?, opened at the National Museum of 

American History to mark the 50th anniversary of the polio vaccine. 

Retratos: 2000 Years of Latin American Portraits, organized by the National Portrait Gallery, San 

Antonio Museum of Art, and El Museo del Barrio in New York City, premiered in New York in 

December 2004 and opened at the Smithsonian’s Ripley Center in October 2005. 

•

•

•

•

•

•

•

•

•
3 Report to the Regents – January 2006

Collections Highlights

On July 9, 2005, the National Zoo’s female giant panda, Mei Xiang, gave 

birth to a male cub, Tai Shan. In another success for the Zoo’s reproductive 

biology program, a litter of four cheetah cubs was born November 23, 

2004—the fi rst in the Zoo’s history. A second litter of fi ve was born in April. 

Th e National Museum of African Art received a transforming gift of one 

of the world’s fi nest private collections of traditional African art: the Walt 

Disney-Tishman Collection, with 525 pieces representing 75 peoples and 

including most major styles.

SpaceShipOne, the fi rst privately built and piloted vehicle to reach space, now hangs in the Milestones 

gallery of the National Air and Space Museum on the Mall, between Charles Lindbergh’s Spirit of St. 

Louis and Chuck Yeager’s Bell X-1. 

Soon after Hurricane Katrina struck on August 29, the National Museum of American History began 

fi eld collecting. Curator David Shayt and photographer Hugh Talman were dispatched to the Gulf area, 

returning after fi ve days with 935 digital photographs and 17 documented artifacts. 

Th e National Postal Museum acquired John Lennon’s childhood stamp album, which, in addition to 

over 550 stamps from around the world, bears the name, address, and signature of the young Lennon.

Th e Smithsonian Institution Libraries acquired the extraordinary Russell E. Train Africana Collection, 

a collection of over 2,000 books plus manuscripts, photographs, watercolors, sketches, maps, newspaper 

clippings, artifacts, and other ephemera. 

Education, Event, and Program Highlights

Over 35,000 people attended the National Museum of the American Indian’s fi rst 

National Powwow at the MCI Center in Washington, D.C., from August 12 to 

14, featuring hundreds of native artisans, singers, and dancers.

On June 30, 2005, President George W. Bush arrived at the Freer Gallery’s Meyer 

Auditorium to speak on the upcoming G8 Summit. Joining him were First Lady 

Laura Bush, Secretary of State Condoleezza Rice, and other honored guests. 

Th e NASA–Smithsonian Astrophysical Observatory’s Universe Education Forum

partnered with 14 museums and planetariums nationwide to present programs 

celebrating the centennial of Einstein’s theory of special relativity. 

On May 23, Freer and Sackler Galleries Director Julian Raby escorted Hamid Karzai, president of the 

Islamic Republic of Afghanistan, through the Galleries, with Vice President Dick Cheney in attendance. 

In partnership with the Fairfax Network, the National Air and Space Museum beamed a live Space Day

broadcast from its Udvar-Hazy Center to 33,000 classrooms. 

In May, the National Museum of American History staged a festival to mark the opening of its exhibition

¡Azúcar! The Life and Music of Celia Cruz. Over 14,000 visitors participated. 

Five Smithsonian Folkways recordings were nominated for Grammies, including the winner in the 

children’s music category, cELLAbration: A Tribute to Ella Jenkins.

Th e annual Smithsonian Teachers’ Night was held on November 5, 2004, at the National Museum of 

the American Indian. Simultaneous events were held at fi ve Affi liates. In all, 4,000 educators attended.
4 Report to the Regents – January 2006

Th e National Air and Space Museum exhibition The 

Wright Brothers and the Invention of the Aerial Age

won the 2005 John Wesley Powell Prize, presented by 

the Society for History in the Federal Government. 

National Outreach

Smithsonian Affi liations

Agreements were signed with 11 new Affiliates, including one in previously unrepresented Wisconsin. 

At the end of the fi scal year, there were 144 Affiliates in 40 states, the District of Columbia, Puerto Rico, 

and Panama. Th e sixth annual Smithsonian Affi liations National Conference was held on June 5–8, with 

65 affi liates from 30 states (plus the District of Columbia and Puerto Rico) represented.

Smithsonian Center for Education and Museum Studies (SCEMS)

In fi scal year 2005, 964 interns participated in SCEMS-administered internships at the Smithsonian. 

Interns came from 45 states, the District of Columbia, Puerto Rico, Guam, and 28 countries.

SCEMS publications during fi scal year 2005 included the Grandparents’ Guide to the Smithsonian (a joint 

project with the Smithsonian National Board Education Committee) and the booklet Teachers’ Guide to 

Smithsonian Exhibits. 

A new SCEMS website, Smithsonian Source: Resources for Teaching American History, off ers a panInstitutional approach to teaching American history. It includes lesson plans, images of primary sources, 

and videos that spotlight treasures from Institution collections.

Smithsonian Institution Traveling Exhibitions Service (SITES)

In fi scal year 2005, SITES circulated 56 exhibitions to 211 locations in 45 states and territories, 

including the District of Columbia and Puerto Rico, as well as Canada. Attendance was approximately 

4.6 million. 

Two new SITES exhibitions went on the road in the fourth quarter of fi scal year 2005: 

Visionary Anatomies opened on September 17 at the Monmouth Museum 

in Lincroft, New Jersey. It brings together 18 works by 11 artists whose art 

incorporates anatomical images and concepts. 

Between Fences, the latest “Museum on Main Street” exhibition for 

underserved audiences in rural America, debuted in fi ve states in September 

and October. It features images and objects that encourage visitors to 

consider how and why we build fences, and what they refl ect about us. 

Five other SITES exhibitions were launched in fi scal year 2005: Sports: 

Breaking Records, Breaking Barriers; Diana Walker: Photojournalist; Robert 

Rauschenberg, Artist-Citizen: Posters for a Better World; Art of the Stamp; and 

First Ladies: Political Role and Public Image. Th ree former fi rst ladies—Rosalynn Carter, Barbara Bush, 

and Hillary Rodham Clinton—have visited First Ladies.

SITES also launched an interactive, bilingual website, Beyond Baseball: The Life of Roberto Clemente, in 

collaboration with the Museo de Arte de Puerto Rico and Carimar.

•

•
5 Report to the Regents – January 2006

Th e Smithsonian Associates (TSA)

During fi scal year 2005, TSA off ered 1476 programs in the Washington, D.C., area and 32 programs

(featuring 330 presentations) in 15 other cities across the United States, featuring such outstanding 

personalities as physicist Stephen Hawking; Pulitzer-prize winning author Jared Diamond; historian 

Arthur Schlesinger; Justice Sandra Day O’Connor; retired General Electric CEO Jack Welch; former 

Senator and presidential candidate Bob Dole; storyteller Garrison Keillor; and Nobel laureate Elie Wiesel. 

Focused, First-Class Science

In fi scal year 2005, Smithsonian science units published 555 scientifi c articles, papers, and other 

publications in peer-reviewed journals, including such prestigious venues as Science, Nature, the

Astrophysical Journal, and Proceedings of the National Academy of Sciences. Th is represents a 43 percent 

increase from fi scal year 2004. 

National Air and Space Museum Center for Earth and Planetary Studies (CEPS)

CEPS scientists participated on science teams for several planetary missions, including the Mars 

Exploration Rovers (MER), the MESSENGER mission to Mercury, the European Mars Express, and the 

Mars Reconnaissance Orbiter. 

National Museum of Natural History (NMNH)

In the July 29 issue of Science, NMNH paleontologist Hans Sues and his colleagues announced the 

discovery of a clutch of eggs containing embryos of a 190-million-year-old herbivorous dinosaur, 

Massospondylus—the earliest known embryos for any terrestrial vertebrate.

In February, at the First International Conference on the Barcoding of Life in London, NMNH botanist 

John Kress and his co-authors gave a groundbreaking presentation proposing the fi rst workable barcoding 

system for plants. 

Museum Director Cristián Samper was among 15 scientists leading the four-year, $22 million 

Millennium Ecosystem Assessment—a comprehensive study of the world’s ecosystems involving 1300 

scientists from 95 countries. Th e project report issued in spring 2005 was hailed by United Nations 

Secretary General Kofi Annan as “an unprecedented contribution.”

Smithsonian Tropical Research Institute (STRI)

With support from Frank Levinson and the Peninsula Community Foundation, STRI is establishing a 

research program on evolutionary neurobiology under the leadership of staff scientist William T. Wcislo. 

Following an international search, STRI selected two fi ve-year fellows to participate in this initiative. 

STRI’s Bocas del Toro Research Station on the Caribbean coast of Panama received a 2005 Federal 

Energy and Water Management Award. Th e guiding principle of the main building’s design was “net zero 

impact”—collecting its own water, treating its own waste, and generating its own energy. 

Participants in the Th ird Annual Marine Taxonomy workshop at STRI’s Bocas del Toro Research Station 

in August surveyed the biodiversity of 25 sites, discovering both species not previously reported in 

Panama and new, unnamed species.
6 Report to the Regents – January 2006

National Zoological Park (NZP)

In partnership with the Zoological Park Organization of Th ailand, the Nashville 

Zoo, and the Clouded Leopard Species Survival Plan, the Zoo is developing a 

Clouded Leopard breeding program in Th ai zoos. Twelve cubs have been born, 

and selected cubs will be imported to the United States for genetic augmentation 

of the North American population. 

On September 18, the American Zoo and Aquarium Association (AZA) honored the National Zoo with 

its Edward H. Bean Award for the Zoo’s Golden Orb Spider Long-Term Propagation Program.

Smithsonian Astrophysical Observatory (SAO)

Th e fi rst of six off -axis mirrors for the Giant Magellan Telescope (GMT)—8.4 meters (27.5 feet) in 

diameter—was successfully cast. When completed, the GMT will be the largest optical telescope in the 

world. It is a joint project of SAO and seven other universities and research institutions. 

Th e November 20, 2004, issue of Astrophysical Journal Letters was dedicated to research results from the 

Submillimeter Array (SMA) on Mauna Kea, Hawaii, a joint project of SAO and the Academia Sinica 

Institute of Astronomy and Astrophysics in Taiwan. 

SAO astronomers and their colleagues held a press conference on March 23 to announce the detection of 

light coming directly from a planet around a star other than our sun. The New York Times reported this 

remarkable result under the “National News” banner, rather than in its “Science Times” section.

Smithsonian Environmental Research Center (SERC)

SERC joined with Portland State University (PSU) to establish the Aquatic BioInvasion Research and 

Policy Institute. Led by SERC’s Gregory Ruiz and PSU’s Mark Sitzma, the Institute combines SERC’s 

strength in marine ecosystems with PSU’s expertise in freshwater ecosystems.

Smithsonian Center for Materials Research and Education (SCMRE)

SCMRE staff were invited to work on restoring the Lodge of Retirement within the 

Forbidden City in Beijing, a rare example of a Chinese emperor’s private quarters. 

A Smithsonian team including SCMRE senior objects conservator Rae Beaubien and 

SCMRE post-graduate fellow Vicky Karas trekked to Mongolia to do preservation 

work on the mysterious Deer Stones monuments and to capture pictorial 

information on them with 3D laser scanning. 

Management Excellence

Toward the end of fiscal year 2005, the Smithsonian mourned the deaths of two distinguished leaders:

William H. Rehnquist, Chief Justice of the U.S. Supreme Court and chancellor of the Smithsonian’s 

Board of Regents, died of thyroid cancer on September 3, 2005, at the age of 80. 

Stephen E. Weil died at the age of 77 on August 9, 2005. Weil had been the founding deputy director 

of the Hirshhorn and was Emeritus Senior Scholar with the Smithsonian Center for Education and 

Museum Studies. 
7 Report to the Regents – January 2006

New Directors

John Berry became director of the National Zoo, eff ective October 1. Berry brings strong 

management skills and experience in animal conservation issues to his new post, having 

most recently served as executive director of the National Fish and Wildlife Foundation. 

Lonnie Bunch returned to the Smithsonian in July 2005 as the founding 

director of the National Museum of African American History and Culture. 

Most recently, Bunch was president of the Chicago Historical Society. He previously served in 

various posts at the National Museum of American History. 

Anson “Tuck” Hines was appointed director of the Smithsonian 

Environmental Research Center (SERC). Hines was SERC’s assistant director for the past 

17 years, in addition to serving as its marine ecologist and principal investigator of the Fish 

and Invertebrate Ecology Laboratory for the past 26 years. 

Pilar O’Leary became director of the Smithsonian Center for Latino 

Initiatives on August 22. Prior to joining the Smithsonian, O’Leary was an executive at 

Fannie Mae, where she spearheaded several development eff orts geared 

toward the Latino community. 

Olga Viso was elevated from deputy director at the Hirshhorn Museum and Sculpture 

Garden to become its fourth director on September 1. She succeeds Ned Rifkin, who will 

concentrate his eff orts on his role as Under Secretary for Art. 

Major Construction and Renovation Projects

Patent Offi ce Building

384,000 gross sq. ft. $298 million total estimated project and program cost

Th e historic Patent Offi ce Building, now known as the Donald W. Reynolds Center for American Art 

and Portraiture, will reopen in 2006. Th e project includes renewal of the 168-year-old building and 

creation of a 346-seat auditorium, open conservation labs, and storage areas. Th e physical plant renewal 

is approximately 90 percent complete. 

Th e anticipated opening date for the privately funded courtyard enclosure is late fall 2007. A 

construction delay occurred when the National Capital Planning Commission (NCPC) rejected the fi nal 

design submission at its June 2005 hearing. A revised design was approved by the NCPC in September.

Th e $298 million total project cost includes $166 million in Federal funds for revitalization of the 

original building; $72.6 million for the courtyard enclosure, landscape, and F Street stairs; and the 

remainder for exhibits, programs, and support costs. An appropriation of $44.4 million for fi scal year 

2005 completed the Federal funding of the project. 

National Zoological Park

$111 million total estimated cost for Asia Trail, Phases I and II

Th e Asia Trail, a Federal/private partnership with more than $12 million in non-Federal funds raised to 

date, will upgrade nearly 25 percent of the developed area of the Zoo. Asia Trail I will provide a renovated 

home for the giant pandas, sloth bears, fi shing cats, red pandas, giant salamanders, small clawed otters, 
8 Report to the Regents – January 2006

and clouded leopards. Asia Trail II will expand space for the Asian elephants. Th e Zoo is planning to 

open the exhibit in September 2006.

Th e total projected cost of Asia Trail I, including the otter habitat, is $52.7 million, to be funded with 

$45.2 million Federal and $7.5 million Trust. Th e fi scal year 2006 appropriations bill provided 

$9 million for the elephant facility and an additional $4.5 million for other Zoo facilities renewal eff orts. 

National Museum of American History, Behring Center

771,000 gross sq. ft. $89.2 million total project and program cost

Progress in the early stages of a comprehensive renovation/renewal of the National Museum of American 

History, Behring Center continues. Th e $89.2 million total cost includes design and construction costs 

for infrastructure and architectural enhancements for the central core renovation and Star-Spangled 

Banner exhibit. Th e Federal contribution to the project is $4 million for design and $41.5 million for 

construction; the remaining amount will be Trust-funded. 

Construction for the fi rst package of improvements to public corridors and space surrounding the 

third fl oor east wing gallery was completed in conjunction with the opening of the Price of Freedom 

exhibition in November 2004. Schematic designs for the entrance pavilions, central core, Star-Spangled 

Banner exhibit, and public spaces on the fi rst, second, and third fl oors were completed in August 2004. 

Th e design development phase for the second package of improvements to public halls and spaces 

surrounding the central core of the Museum was completed in March 2005. Construction is planned to 

start in fall 2006 and to be completed by summer 2008. 

Museum Support Center, Pod 5

119,500 gross sq. ft. $42.7 million total estimated cost

Construction of a fi fth storage pod at the Museum Support Center (MSC) in Suitland, Maryland, began 

in October 2005. Pod 5 will house most of the collections currently preserved in alcohol at the Natural 

History building and all of the collections housed in Pod 3 at MSC. Th is will eliminate a major safety 

concern by removing approximately 365,000 gallons of alcohol from non-code-compliant facilities. 

Congress has provided $37.3 million of the total project cost of $42.7 million through fi scal year 2006. 

Arts and Industries Building Staff and Programs Relocation and Building Closure

$34 million total project cost

$24.2 million of appropriated funds were spent in fi scal year 2005 to move programs and staff out of 

the Arts and Industries Building (AIB) and for activities required to mothball the AIB. Design and 

construction contracts for the relocation of 89 percent of the staff were obligated in fi scal year 2005, 

exceeding the established goal. All remaining staff will be moved by the end of 2006.

Th e Discovery Th eater was moved to the S. Dillon Ripley Center in November 2004, and the Early 

Enrichment Center for infants and toddlers was moved to a site adjacent to the National Museum of 

American History in January 2005. Many of the 25 units remaining in the AIB will move to other 

Smithsonian buildings or currently leased space at L’Enfant Plaza. Additional space has been leased for 

others, including the Smithsonian Archives and Offi ce of Protection Services. Th e Offi ce of the Chief 

Information Offi cer Data Center and 121 of its staff will move to a leased facility in Herndon, Virginia.

Th e planned relocation of units within existing Smithsonian facilities and negotiation of new long-term 

leases have resulted in projected savings (over previous estimates) of $10 million in total relocation costs.
9 Report to the Regents – January 2006

National Museum of African American History and Culture

Total project and program cost to be determined

Once the Regents designate a site for the Museum, transfer of that site to Smithsonian control will be 

initiated. Programming and planning for the new museum facility will begin once funding becomes 

available. Th e 2007 budget request to OMB included $2 million for planning the Museum, but this 

amount was not included in the passback.

National Museum of Natural History, Ocean Hall Exhibit

39,000 sq. ft. (exhibition area only) $43.9 million total estimated cost

Th e National Museum of Natural History is in the midst of its largest renovation of public space in the 

last 40 years. Th is major phase of the Museum’s master plan involves seven major halls, three retail shops, 

and replacement and relocation of the escalators. Th e installation of the Ocean Hall exhibit begins upon 

completion of this project in March 2007. 

Th e total estimated cost of the Ocean Hall project is $43.9 million: $21.7 million from Smithsonian 

Federal funding for fi scal years 2002 through 2006 and $22.2 million from a National Oceanic and 

Atmospheric Administration grant. Th e target for opening the Ocean Hall exhibit is September 2008. 

Permanent Physical Security Barriers—Multi-facility, Mall and off -Mall

$55 million total project and program cost

Temporary perimeter security barriers installed after September 11, 2001, will be replaced with more 

compatible permanent barriers. Planning, design, and construction are to be phased over multiple years, 

with Mall facilities taking precedence. Mall-wide, 35 percent design is complete. 

Project funding to date has come from $8 million in Federal anti-terrorism supplements. Th e fi scal year 

2006 appropriations bill provided an additional $7.9 million for design and construction of security 

barriers around NMNH and $1 million for National Museum of American History barriers.

Financial Strength

Fiscal year 2005 was another solid year fi nancially. Th e Endowment’s market value, an important 

bellwether of the Institution’s fi nancial health, exceeded budget by $43 million at fi scal year-end, reaching 

$779 million after accounting for the payout, fees and expenses, and additions—a record high. 

Smithsonian Institution Year-end Endowment Value

($ in millions)

779

697

638

552 626

741

0

300

600

900

FY00 FY01 FY02 FY03 FY04 FY05
10 Report to the Regents – January 2006

Financial Performance

In fi nal action on the Institution’s appropriation for fi scal year 2005, Congress approved less funding 

than requested and took no action to provide funding for the mandated Federal staff pay raise. In 

response, management imposed a Federal hiring freeze and embarked on a workforce planning process. 

Revenues for fi scal year 2005 exceeded the budget by $92 million. Th is was largely due to increases in 

restricted contributions and in Smithsonian Business Ventures income. Overall revenues increased despite 

a decrease in Federal revenues, refl ecting delays in relocating staff from the Arts and Industries Building; 

delays in constructing the new storage facility in Suitland, Maryland; across-the-board reductions of 1.4 

percent imposed by Congress after the budget was prepared; and adjustments in the phasing of work 

performed on NASA grants by the Smithsonian Astrophysical Observatory. 

Expenses for fi scal year 2005 were below the budget by $65 million, due largely to slower-than-planned 

spending of Trust funds raised and recognized in prior years; decreased spending associated with acrossthe-board reductions in Federal appropriations imposed by Congress after the budget was prepared; and 

the slower rate of work performed on NASA awards to SAO (which aff ected revenue as well).

A number of transactions not anticipated in the budget contributed to the positive budget variance: 

the sale of the National Museum of the American Indian’s warehouse property in the Bronx, New York, 

netted $10.7 million; auctions by the National Postal Museum of its revenue stamp collection netted 

$3.2 million; the reassignment to a local real estate developer of the “option to purchase” a Washington, 

D.C., warehouse rented by the Smithsonian netted $2.0 million; and Smithsonian Business Ventures 

netted an unanticipated sum from the settlement upon termination of the MBNA affi nity credit card 

program. 

Adding in the proceeds from real estate transactions and a few other relatively minor activities, the 

increase in the Institution’s overall net worth ($247 million) was $99 million more than the increase in 

fi scal year 2004—a positive budget variance of $215 million.

Smithsonian Institution Financial Performance for Fiscal Year 2005

($ in millions)

FY2005 Budget FY2005 Actual Variance to 

Budget

Revenues 898 990 92

Expenses 872 807 65

Endowment Return 

Reinvested

14 57 43

Other (8) 7 15

Growth in Net Assets 32 247 215

In addition, the November 2005 sale of the Victor Building in downtown Washington for $157 million, 

while not refl ected in fi scal year 2005 fi nancial statements, portends a strong fi nancial position in fi scal 

year 2006. Th e Victor Building was purchased in 1999 to provide offi ce space for Patent Offi ce Building 

employees during and after that facility’s renovation and to consolidate Washington, D.C.–based 

administrative employees working at a number of rental locations. Th e recent development boom and 

associated increase in the Building’s value prompted the Institution to monetize appreciation of the 

property and repay the existing debt.
11 Report to the Regents – January 2006

Financial Summary

Th e Smithsonian remains focused on the revitalization of its aging physical infrastructure. While Federal 

funding for such revitalization in fi scal year 2005 ($118 million) was a marked increase over prior years, 

it remained insuffi cient to support the Smithsonian’s needs. Unfortunately, the fi scal year 2006 facilities 

budget has declined by 31 percent (to $81 million)—at a time when there is a growing recognition, 

documented in the national media, of the Institution’s facilities funding crisis.

An April 2005 report by the Government Accountability Offi ce (GAO) validated the Institution’s overall 

facilities requirement of $2.3 billion for the nine-year period, fi scal years 2005–13. Whereas the 2001 

Congressionally mandated report by the National Academy of Public Administration established an 

average annual facilities revitalization funding requirement of $150 million, the GAO added institutional 

maintenance and construction requirements to an updated inventory of required facilities revitalization 

projects and arrived at a more comprehensive average annual funding requirement of $255 million.

Enacted Funding for Smithsonian Facilities Revitalization

($ in millions)

Without at least $150 million annually for facilities revitalization, the Smithsonian cannot expect to 

get ahead of the problem of its crumbling physical plant. Th e Board of Regents’ ad hoc Committee on 

Facilities Revitalization, established in September 2005, is evaluating options to address this problem. 

External Aff airs

In fi scal year 2005, the Institution generated $158.9 million in private support from individuals, 

foundations, and corporations. Th is is 24 percent ahead of the fi scal year 2004 total of $127.9 million 

and 77 percent ahead of the goal for the year ($90 million). 

In October, the Institution announced a transformative $45 million gift from the Donald W. Reynolds 

Foundation. In recognition of this extraordinary generosity, the Smithsonian American Art Museum, the 

National Portrait Gallery, and the special purpose facilities of the Patent Offi ce Building will collectively 

be known as the Donald W. Reynolds Center for American Art and Portraiture when they reopen in 

July 2006. With its 2001 gift of $30 million, the Reynolds Foundation now has given the Smithsonian 

$75 million, making it the second-largest donor since the founding of the Institution.

Th e Institution received 21 gifts of $1 million or more during fi scal year 2005. Many of these were for 

Institutional priority fund-raising projects, including the Reynolds Center, the Ocean Science Initiative, 

the National Museum of American History’s Star-Spangled Banner and facilities transformation, Phase II 

construction of the Steven F. Udvar-Hazy Center, and the creation of endowed museum directorships. 

81

118

98 83 68

48 57

0

40

80

120

160

FY00 FY01 FY02 FY03 FY04 FY05 FY06
12 Report to the Regents – January 2006

Private Funds Raised in Fiscal Year 2004 and Fiscal Year 2005

($ in millions)

Th e Contributing Membership raised $13.4 million in unrestricted funds, a 6 percent increase over last 

year’s $12.7 million; it added almost 5,000 members, bringing membership to just under 85,000. 

Th e James Smithson Society, for individuals contributing $2,000 to $10,000 in annual dues, also 

recorded healthy growth. Its revenues grew from $1.1 million last year to just under $1.3 million this 

year, or 12 percent. Its membership grew from 358 to 479, an increase of 34 percent.

Overall giving by members of the Smithsonian National Board was over $11 million, a fi gure that 

includes gifts, pledges, and payments on pledges.

Smithsonian Business Ventures

Smithsonian Business Ventures’ net gain in fi scal year 2005 exceeded the fi scal year 2004 net gain by 17% 

and the budget by 6 percent. Higher-than-anticipated sales at the National Museum of the American 

Indian drove the strong budget performance, which partially off set a shortfall in budgeted advertising 

revenue growth. Overall, SBV achieved $171.7 million in revenues. SBV also contributed another net 

gain, largely from the early termination settlement with MBNA.

Specifi c SBV highlights for fi scal year 2005 included the following:

During fi scal year 2005, SBV restructured vendor relationships and consolidated tour operators for 

the Smithsonian Journeys travel tour program to increase commissions, and outsourced the customer 

call center to improve sales and customer service. It also implemented new direct-marketing strategies 

for the program in Smithsonian magazine, which generated a 125 percent increase in customer 

prospects. As of September 30, with an estimated 45 percent of bookings complete for fi scal year 

2006, gross traveler revenue is on track to exceed fi scal year 2005 performance by 46 percent.

SBV formed a new strategic partnership with HarperCollins Publishers to publish and distribute up 

to 100 Smithsonian-branded nonfi ction trade books a year in categories such as science, American 

history, natural history, aviation, Native American history, biography, reference, art, and design.

In July, a new 10,600-square-foot McDonald’s restaurant opened at the Steven F. Udvar-Hazy Center, 

off ering a full menu and seating for hundreds, as well as an adjacent coff ee and sandwich bar. 

Th e Chesapeake Store of the National Museum of the American Indian, with its one-of-a-kind items 

and art objects, achieved record sales for a museum store, and the Museum’s Mitsitam Café, featuring 

Native American foods, continues to receive acclaim by food critics from around the nation.

•

•

•

•

92.9 91.2

35

67.7

0

20

40

60

80

100

120

140

160

180

FY 2004 FY 2005

Extraordinary Gifts of $5

Million or More

Private Funds, Excluding

Extraordinary Gifts
13 Report to the Regents – January 2006

Smithsonian magazine kicked off festivities for its 35th anniversary year with a Museum Day on 

April 30, with 468 museums across the nation—including 42 Affi liate museums—off ering free 

admission to Smithsonian readers. 

•