Memo

This memorandum transmits the fiscal year 2023 financial statement audits of the Smithsonian 

Institution (Smithsonian) performed by the independent public accounting firm of KPMG LLP (KPMG). 

On January 22, 2024, KPMG issued its independent auditor’s report on the Smithsonian Institution’s 

statement of financial position as of September 30, 2023, and the related statements of financial 

activity and cash flows. KPMG expressed an unmodified opinion that concluded the financial 

statements were presented fairly, in all material respects, in accordance with the applicable financial 

reporting standards. 

As part of our oversight activities, we reviewed KPMG’s audit documentation and interviewed its 

representatives. Our review of KPMG’s fiscal year 2023 audit procedures disclosed no instances 

where KPMG did not comply, in all material respects, with the applicable auditing standards.

Our oversight of KPMG’s audit was not intended to enable us to express, and we do not express, an 

opinion about the Smithsonian’s financial statements, internal controls over financial reporting, or 

compliance with laws and regulations.

KPMG is responsible for its audit reports and the conclusions therein.

If you have any questions, please do not hesitate to contact me or Bruce Gallus, Financial Manager

and Contracting Officer’s Technical Representative, at (202) 633-7050.

Attachment

Date: January 22, 2024

To: Audit and Review Committee, Board of Regents

Lonnie G. Bunch III, Secretary

Cc: Meroe S. Park, Deputy Secretary and Chief Operating Officer

Ron Cortez, Under Secretary for Finance and Administration and Chief Financial Officer

John Lynskey, Deputy Chief Financial Officer and Controller, Office of Finance and Accounting

Porter N. Wilkinson, Chief of Staff to the Board of Regents

Greg Bettwy, Chief of Staff, Office of the Secretary

Farleigh Earhart, Acting General Counsel

Kate Forester, Deputy Chief of Staff, Office of the Regents

From: Joan Mockeridge, Acting Inspector General

Subject: Independent Auditor’s Report on the Smithsonian Institution’s Fiscal Year 2023 Financial 

Statements (OIG-A-24-01)

DocuSign Envelope ID: C0300959-6AE9-4FBA-B28F-024A11A98DE3
SMITHSONIAN INSTITUTION

Financial Statements and Notes to Financial Statements

September 30, 2023 and 2022

(With Independent Auditors’ Report Therein)
Independent Auditors’ Report 

The Office of the Inspector General, 

 Audit and Review Committee of the Board of Regents, 

 and the Secretary of the Smithsonian Institution: 

Opinion 

We have audited the financial statements of the Smithsonian Institution (the Organization), which comprise the 

statements of financial position as of September 30, 2023 and 2022, and the related statements of financial 

activities and cash flows for the years then ended, and the related notes to the financial statements. 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial 

position of the Organization as of September 30, 2023 and 2022, and the results of its changes in net assets 

and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. 

Basis for Opinion 

We conducted our audits in accordance with auditing standards generally accepted in the United States of 

America (GAAS). Our responsibilities under those standards are further described in the Auditors’ 

Responsibilities for the Audit of the Financial Statements section of our report. We are required to be 

independent of the Organization and to meet our other ethical responsibilities, in accordance with the relevant 

ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient 

and appropriate to provide a basis for our audit opinion. 

Responsibilities of Management for the Financial Statements 

Management is responsible for the preparation and fair presentation of the financial statements in accordance 

with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of 

internal control relevant to the preparation and fair presentation of financial statements that are free from 

material misstatement, whether due to fraud or error. 

In preparing the financial statements, management is required to evaluate whether there are conditions or 

events, considered in the aggregate, that raise substantial doubt about the Organization’s ability to continue as 

a going concern for one year after the date that the financial statements are issued. 

Auditors’ Responsibilities for the Audit of the Financial Statements 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free 

from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our 

opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not 

a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when 

it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting 

from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of 

internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in 

the aggregate, they would influence the judgment made by a reasonable user based on the financial 

statements. 

KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

KPMG LLP, a Delaware limited liability partnership and a member firm of 

the KPMG global organization of independent member firms affiliated with 

KPMG International Limited, a private English company limited by guarantee. 
2

In performing an audit in accordance with GAAS, we: 

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or

error, and design and perform audit procedures responsive to those risks. Such procedures include

examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the Organization’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting

estimates made by management, as well as evaluate the overall presentation of the financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise

substantial doubt about the Organization’s ability to continue as a going concern for a reasonable period of

time.

We are required to communicate with those charged with governance regarding, among other matters, the 

planned scope and timing of the audit, significant audit findings, and certain internal control related matters that 

we identified during the audit. 

Supplementary Information 

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The 

Trust and Federal information is presented for purposes of additional analysis and is not a required part of the 

financial statements. Such information is the responsibility of management and was derived from and relates 

directly to the underlying accounting and other records used to prepare the financial statements. The 

information has been subjected to the auditing procedures applied in the audit of the financial statements and 

certain additional procedures, including comparing and reconciling such information directly to the underlying 

accounting and other records used to prepare the financial statements or to the financial statements 

themselves, and other additional procedures in accordance with GAAS. In our opinion, the information is fairly 

stated in all material respects in relation to the financial statements as a whole. 

Washington, District of Columbia 

January 22, 2024 
SMITHSONIAN INSTITUTION

Statements of Financial Position

September 30, 2023 and 2022

(Dollars in millions)

2023 

Trust Federal Total funds Trust 

Assets:

Cash, cash equivalents, and U.S.Treasury balances (note 3) $ 409.8 805.2 1,215.0 207.5 Accounts receivable and other assets, net (note 4) 63.2 4.0 67.2 62.7 Pledges receivable, net (note 5) 274.7 — 274.7 329.0 Investments (note 6) 2,609.2 — 2,609.2 2,627.0 Property and equipment, net (note 7) 927.9 2,034.4 2,962.3 949.3 Operating lease right-of-use assets (note 8) 70.3 — 70.3 91.4 

Total assets $ 4,355.1 2,843.6 7,198.7 4,266.9 

Liabilities:

Accounts payable and accrued expenses (note 9) $ 102.2 182.4 284.6 105.9 Operating lease liabilities (note 8) 79.6 — 79.6 108.0 Deferred revenue 40.7 0.7 41.4 45.9 Unexpended federal appropriations — 696.8 696.8 — Environmental remediation obligations (note 10) — 53.0 53.0 — Long-term debt (note 11) 353.6 — 353.6 366.4 

Total liabilities 576.1 932.9 1,509.0 626.2 

Net assets (notes 12 and 13):

Without donor restriction:

Board designated 1,003.9 — 1,003.9 944.5 Undesignated 602.4 1,460.2 2,062.6 640.2 

Net assets without donor restriction 1,606.3 1,460.2 3,066.5 1,584.7 

With donor restriction:

Purpose and time restrictions 1,428.7 450.5 1,879.2 1,386.9 Endowments 744.0 — 744.0 669.1 

Net assets with donor restriction 2,172.7 450.5 2,623.2 2,056.0 Total net assets 3,779.0 1,910.7 5,689.7 3,640.7 Total liabilities and net assets $ 4,355.1 2,843.6 7,198.7 4,266.9 

See accompanying notes to financial statements.

3
SMITHSONIAN INSTITUTION

Statements of Financial Activities

Year ended September 30, 2023

(Dollars in millions)

2023

Without donor restriction With donor restriction 

Trust Federal Total Trust Federal Total 

Operating:

Support and revenues:

Federal appropriations (note 15) $ — 870.8 870.8 — — — Contributions 74.0 — 74.0 138.0 — 138.0 Grants and contracts 83.1 — 83.1 90.1 — 90.1 Business activities (note 16) 169.7 — 169.7 — — — Endowment payout (note 6) 50.8 — 50.8 49.4 — 49.4 

Imputed benefit revenue (note 2) — 54.7 54.7 — — — Short-term investment income and other revenue 58.7 12.4 71.1 10.7 — 10.7 

Total operating revenues 436.3 937.9 1,374.2 288.2 — 288.2 

Net assets released from restrictions (note 14) 204.1 19.1 223.2 (204.1) (19.1) (223.2) 

Total support and revenues 640.4 957.0 1,597.4 84.1 (19.1) 65.0 

Expenses (note 17):

Program activities:

Research 161.7 177.7 339.4 — — — Collections management 13.7 260.9 274.6 — — — Education, public programs, and exhibitions 101.8 290.2 392.0 — — — Business activities (note 16) 125.2 — 125.2 — — — 

Total program activities 402.4 728.8 1,131.2 — — — 

Supporting activities:

Administration 33.3 220.6 253.9 — — — Advancement 77.0 1.9 78.9 — — — 

Total supporting activities 110.3 222.5 332.8 — — — Total expenses 512.7 951.3 1,464.0 — — — Change in net assets before depreciation 127.7 5.7 133.4 84.1 (19.1) 65.0 

Depreciation (note 7) 69.0 128.0 197.0 — — — 

Change in net assets from operating activities 58.7 (122.3) (63.6) 84.1 (19.1) 65.0 

Nonoperating activities:

Federal capital appropriations (note 15) — — — — 285.8 285.8 Endowment gifts — — — 73.0 — 73.0 Gifts for construction projects — — — 1.7 — 1.7 Investment return, net of endowment payout (note 6) (32.3) — (32.3) (38.3) — (38.3) Rent revenue (note 8) 2.9 — 2.9 — — — Unrelated income tax expense (0.6) — (0.6) — — — Losses on disposition of assets (0.1) (0.1) (0.2) — — — Collection items not capitalized:

Collection items purchased (10.9) (3.1) (14.0) — — — Collection items sold 0.1 — 0.1 — — — 

Net assets released from restrictions (note 14) 3.8 183.5 187.3 (3.8) (183.5) (187.3) 

Change in net assets from nonoperating activities (37.1) 180.3 143.2 32.6 102.3 134.9 Change in net assets 21.6 58.0 79.6 116.7 83.2 199.9 

Net assets, beginning of year 1,584.7 1,402.2 2,986.9 2,056.0 367.3 2,423.3 Net assets, end of year $ 1,606.3 1,460.2 3,066.5 2,172.7 450.5 2,623.2 See accompanying notes to financial statements.

4
SMITHSONIAN INSTITUTION

Statements of Financial Activities

Year ended September 30, 2022

(Dollars in millions)

2022

Without donor restriction With donor restriction 

Trust Federal Total Trust Federal Total 

Operating:

Support and revenues:

Federal appropriations (note 15) $ — 822.4 822.4 — — — Contributions 65.6 — 65.6 104.2 — 104.2 Grants and contracts 80.5 — 80.5 81.4 — 81.4 Business activities (note 16) 133.5 — 133.5 — — — Endowment payout (note 6) 45.0 — 45.0 42.8 — 42.8 

Imputed benefit revenue (note 2) — 122.7 122.7 — — — Short-term investment income and other revenue 33.9 12.3 46.2 0.6 — 0.6 

Total operating revenues 358.5 957.4 1,315.9 229.0 — 229.0 

Net assets released from restrictions (note 14) 197.7 40.6 238.3 (197.7) (40.6) (238.3) 

Total support and revenues 556.2 998.0 1,554.2 31.3 (40.6) (9.3) 

Expenses (note 17):

Program activities:

Research 148.8 196.2 345.0 — — — Collections management 20.5 266.4 286.9 — — — Education, public programs, and exhibitions 98.1 298.8 396.9 — — — Business activities (note 16) 101.9 — 101.9 — — — 

Total program activities 369.3 761.4 1,130.7 — — — 

Supporting activities:

Administration 18.7 207.3 226.0 — — — Advancement 69.9 0.8 70.7 — — — 

Total supporting activities 88.6 208.1 296.7 — — — Total expenses 457.9 969.5 1,427.4 — — — Change in net assets before depreciation 98.3 28.5 126.8 31.3 (40.6) (9.3) 

Depreciation (note 7) 59.3 121.2 180.5 — — — 

Change in net assets from operating activities 39.0 (92.7) (53.7) 31.3 (40.6) (9.3) 

Nonoperating activities:

Federal capital appropriations (note 15) — — — — 227.2 227.2 Endowment gifts — — — 32.6 — 32.6 Gifts for construction projects — — — 10.0 — 10.0 Investment return, net of endowment payout (note 6) (127.6) — (127.6) (150.8) — (150.8) Rent revenue (note 8) 3.2 — 3.2 — — — Unrelated income tax expense (0.8) — (0.8) — — — Losses on disposition of assets — (0.2) (0.2) — — — Collection items not capitalized:

Collection items purchased (12.8) (3.7) (16.5) — — — Collection items sold 0.1 — 0.1 — — — 

Net assets released from restrictions (note 14) 31.3 345.9 377.2 (31.3) (345.9) (377.2) 

Change in net assets from nonoperating activities (106.6) 342.0 235.4 (139.5) (118.7) (258.2) Change in net assets (67.6) 249.3 181.7 (108.2) (159.3) (267.5) 

Net assets, beginning of year 1,652.3 1,152.9 2,805.2 2,164.2 526.6 2,690.8 Net assets, end of year $ 1,584.7 1,402.2 2,986.9 2,056.0 367.3 2,423.3 See accompanying notes to financial statements.

5
SMITHSONIAN INSTITUTION

Statements of Cash Flows

September 30, 2023 and 2022

(Dollars in millions)

2023 

Trust Federal Total 

Cash flows from operating activities:

Change in net assets $ 138.3 141.2 279.5 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities:

Loss on disposition of assets and other 0.4 0.3 0.7 Collection items purchased 10.9 3.1 14.0 Proceeds from sales of collection items (0.1) — (0.1) Depreciation 69.0 128.0 197.0 Amortization of operating lease right-of-use assets 21.1 — 21.1 Present value discount and accretion (0.1) 1.4 1.3 Contributions for endowments (73.0) (1.2) (74.2) Contributions for construction of facilities (1.7) — (1.7) Appropriations for repair, restoration, and construction — (285.8) (285.8) Net investment (gains) losses (33.2) — (33.2) Decrease (increase) in assets:

Accounts receivables and other assets (0.5) (1.2) (1.7) Pledges receivable, net 51.4 — 51.4 

Increase (decrease) in liabilities:

Accounts payable and accrued expenses (2.9) (4.8) (7.7) Operating lease liabilities (28.4) — (28.4) Deferred revenue (5.2) 0.7 (4.5) Unexpended federal appropriations — 21.2 21.2 Deferred gain on sale of real estate — — — Environmental remediation obligation — 5.5 5.5 

Net cash provided by operating activities 146.0 8.4 154.4 

Cash flows from investing activities:

Purchases of property and equipment (48.8) (273.4) (322.2) Purchases of investment securities (618.1) — (618.1) Proceeds from sales/maturities of investment securities 669.1 — 669.1 Collection items purchased (10.9) (3.1) (14.0) Proceeds from sales of collection items 0.1 — 0.1 

Net cash used in investing activities (8.6) (276.5) (285.1) 

Cash flows from financing activities:

Appropriations for repair, restoration, and construction — 275.7 275.7 Contributions for endowments 67.3 — 67.3 Contributions for construction of facilities 10.3 — 10.3 Principal from bond issuance, net — — — Principal payments on long-term debt (12.7) — (12.7) 

Net cash provided by financing activities 64.9 275.7 340.6 Net change in cash, cash equivalents and U.S. Treasury balances 202.3 7.6 209.9 

Cash, cash equivalents and U.S. Treasury balances:

Beginning of year 207.5 797.6 1,005.1 End of period $ 409.8 805.2 1,215.0 

Noncash investing activities:

Construction cost accruals $ 5.1 48.7 53.8 

Cash paid for interest $ 8.9 — 8.9 See accompanying notes to financial statements.

6
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

7 (Continued)

(1) Organization

The Smithsonian Institution (Smithsonian) was created by an act of Congress in 1846 in accordance with 

the terms of the will of James Smithson of England, who, in 1826, bequeathed property to the United 

States of America “to found at Washington, under the name of the Smithsonian Institution, an 

establishment for the increase and diffusion of knowledge among men.” Congress established the 

Smithsonian as a trust of the United States of America and vested responsibility for its administration in the 

Smithsonian Board of Regents (Board).

The Smithsonian is a museum and an education and research complex consisting of 21 museums, 

including one in New York City, and the National Zoological Park in Washington, DC. Additional facilities 

and programs are operated in five states and Panama. Research is carried out in eight research centers, in 

the museums and other facilities throughout the world. Smithsonian Enterprises (SE) was formed in 1999 

by the Board to deliver profitable products and services that further the Smithsonian’s mission.

A substantial portion of the Smithsonian’s operations is funded by annual Federal appropriations from the 

U.S. Congress to cover its core programs. The Smithsonian also receives Federal appropriations for the 

construction or repair and restoration of its facilities. Certain facilities have been constructed entirely by 

Federal appropriations, while others have been constructed with a combination of Federal and private 

funds. All monies, related activities, and balances from Federal appropriations are referred to herein as 

“Federal”.

In addition to Federal appropriations, the Smithsonian receives private support in the form of contributions, 

grants, and contracts, and earns income from investments and various business activities to support 

current operations. Business activities include Smithsonian magazines, the Smithsonian channel in 

partnership with Viacom/CBS, other publications, online catalogs, and retail operations located in its 

museums and centers. All other monies, related activities, and balances not considered Federal are 

referred to herein as “trust”, including all operating right-of-use assets and operating lease liabilities, 

regardless of whether the rent payments are paid from Federal appropriations.

(2) Summary of Significant Accounting Policies

(a) General

The financial statements are prepared in accordance with U.S. generally accepted accounting 

principles (U.S. GAAP) under Financial Accounting Standards Board (FASB) Accounting Standards 

Codification (ASC) 958, Not-For-Profit Presentation of Financial Statements.

These financial statements do not include the accounts of the National Gallery of Art, the John F. 

Kennedy Center for the Performing Arts, or the Woodrow Wilson International Center for Scholars, 

which were established by Congress within the Smithsonian but are governed by independent boards 

of trustees and not controlled by the Smithsonian.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

8 (Continued)

(b) Measure of Operations

The Smithsonian includes in its measure of operations Federal and trust support and revenues and 

expenses that are integral to its core programs services: research, collections management, education, 

public programs, exhibitions, and business activities. The measure of operations excludes certain 

nonoperating activities, including Federal capital appropriations, gifts for capital and endowment,

investment return in excess of amounts designated for operations, collection proceeds and

acquisitions, and other nonrecurring items.

The Board approves a portion of the Smithsonian’s cumulative investment return for support of current 

operations. The remainder is retained to support operations in future years and to offset potential 

market declines. The amount is computed under the Smithsonian’s spending policy and is allocated for 

use based on the underlying donor-imposed restrictions (see notes 12, 13 and 14). The annual 

allocation is referred to as the “endowment payout.”

(c) Net Assets

The Smithsonian’s net assets, support and revenues, expenses, and gains and losses are classified 

and reported based on the existence or absence of donor-imposed restrictions as follows:

Without donor restrictions – Net assets without donor restrictions consist of the Smithsonian’s net 

investment in property and equipment less any unfunded liabilities, and all other sources which are 

not subject to donor-imposed restrictions or other legal stipulations. At the discretion of the 

Smithsonian’s Board of Regents, trust funds which are not expended for operating activities may 

be set aside for designated purposes.

With donor restrictions – Net assets with donor restrictions carry specific donor-imposed 

stipulations on the use of the contributed funds, including Federal appropriations received for 

specific capital projects. Donor-imposed restrictions may expire by the passage of time or 

fulfillment of the donor’s stipulations. Unconditional contributions restricted to the acquisition or 

construction of long-lived assets are recorded as nonoperating revenue with donor restrictions in 

the period received. Donor restrictions are generally considered met and the net assets released 

from restriction when the related long-lived asset is placed in service.

Other net assets with donor restrictions include net assets with stipulations that require the corpus of 

the gift be maintained with only the income to be used to support operations or other specified purpose.

(d) Cash, Cash Equivalents, and U.S. Treasury Balances

Cash, cash equivalents, and U.S. Treasury balances include interest-bearing demand deposits and 

appropriated amounts yet to be disbursed remaining on deposit with the U.S. Department of Treasury 

(U.S. Treasury). The Smithsonian considers all highly liquid investments with an original maturity of 

three months or less at the date of purchase to be cash equivalents, except where such cash 

equivalents are held as part of a long-term investment strategy (see note 6). For purposes of the 

statements of cash flow, cash equivalents held within the investments are excluded from cash and 

cash equivalents.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

9 (Continued)

U.S. Treasury balances of $805.2 at September 30, 2023 and $796.4 at September 30, 2022, consist 

of appropriated funds that are available to pay current liabilities and finance authorized purchase 

commitments of the Smithsonian. U.S. Treasury balances are carried forward until such time as goods 

or services are received and payments made, or until the funds are returned to the U.S. Treasury.

(e) Contracts with Customers and Accounts Receivable

Business activities, including advertising, subscriptions, licensing, and other revenues are generally 

recognized as the services are provided over the period of performance. Revenues from magazines 

and long-term contracts are deferred and recognized ratably over the period of the underlying 

agreement. Concessions and retail sales are recognized when goods or services are sold at a point in 

time.

Customer receivables are invoiced based upon contractual terms. The Smithsonian maintains 

allowances for doubtful accounts to reflect management’s best estimate of probable losses inherent in 

receivable balances. Management determines the allowances for doubtful accounts based on known 

troubled accounts, historical experience, and other currently available evidence.

(f) Contributions, including Government Grants and Contracts, and Pledges Receivable

Contributions, including unconditional promises to give, are recognized as revenue in the period 

received. Unconditional promises to give are recognized initially at fair value with consideration given to 

anticipated future cash receipts and discounting such amounts at a risk-adjusted rate. Amortization of 

the discount is included in contributions revenue. Conditional promises to give are not recognized until 

they become unconditional, that is, when the barriers on which they depend are substantially met. 

Contributions of assets other than cash are recorded at their estimated fair value.

Allowance is made, if necessary, for uncollectible pledges receivable based upon management’s 

judgment and analysis of the creditworthiness of the donors, past collection experience, and other 

relevant factors.

The Smithsonian conducts sponsored program activity with various sponsors, including agencies and 

departments of the Federal government, local government entities, and foundations. Such grants and 

contracts revenue are recognized as the related qualifying expenses are incurred.

(g) Investments and Trusts Held by Others

Smithsonian employs an investment strategy that is designed to achieve returns that support 

Smithsonian’s mission and fulfill its fiduciary responsibility to its donors and constituents.

Investments are generally reported at fair value. Publicly traded fixed income, global equities, natural 

resources, and cash and cash equivalents are reported and valued using readily determinable market 

prices. Nearly all the valuations reported by marketable alternative investments and public equities held 

in commingled funds rely upon third party administrators to objectively value positions and calculate net 

asset value (NAV) based on the funds’ net asset value as a practical expedient. Investments in private 

equity structured funds (private equity, venture capital, real estate, natural resources) (collectively, 

nonmarketable investments) are valued at estimated fair value based on the funds’ net asset value, or 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

10 (Continued)

their equivalents, as a practical expedient, unless it is probable that all or a portion of the investment 

will be sold for an amount different from NAV. At September 30, 2023 and 2022, the Smithsonian had 

no plans or intentions to sell investments at amounts different from NAV. These estimated fair values 

may differ from the values that would have been used had a ready market existed for these 

investments, and the differences could be significant.

The Smithsonian may use derivative instruments to hedge risk in the portfolio, provide tactical asset 

class exposure and rebalance in a low cost and efficient manner. Derivatives such as futures, options, 

swap contracts, and forwards, if held, are recorded at fair value with the resulting gain or loss 

recognized in the Statement of Financial Activities.

At September 30, 2023, the Smithsonian held futures contracts with notional amounts of $54.9 million. 

Futures contracts are standardized contracts traded on an exchange to buy or sell a particular financial 

instrument at a predetermined price in the future. During the period futures contracts are open, 

changes in the values of the contracts are recognized as unrealized gains and losses. When the 

futures contracts are closed, the Smithsonian records a realized gain or loss equal to the difference 

between the proceeds from, or the cost of, the close-out and the original price.

Purchases and sales of investments are reflected on the trade-date basis using average historical cost. 

Dividend and interest income are recorded when earned on an accrual basis. In accordance with the 

policy of stating investments at fair value, the net change in unrealized appreciation or depreciation for 

the year is reflected in the statements of financial activities (see note 6).

The Smithsonian is also party to various split interest agreements with donors consisting primarily of 

irrevocable charitable remainder trusts and gift annuities.

Charitable remainder trusts held by others – Assets are reflected in pledges receivable, net with 

contribution revenues recognized at the date the trust is established based on the net present value of 

the estimated future payments to be made to the donors and/or other beneficiaries. Income 

distributions from these trusts are recorded as investment income and changes in the fair value of 

these trusts are recorded as unrealized gains or losses in the statement of financial activities.

Charitable gift annuities – Assets are included in investments and recognized at fair value at the date of 

the annuity agreement. An annuity liability is also recognized for the present value of future cash flows 

expected to be paid to the donor. Contribution revenue recognized is equal to the difference between 

the assets and the annuity liabilities. The annuity liabilities are adjusted during the term of the annuity 

for payments to donors, accretion of discounts, and changes in the life expectancies of the donors.

(h) Property and Equipment

Certain land occupied by Smithsonian buildings, located primarily in the District of Columbia, Maryland, 

and Virginia, was appropriated and reserved by Congress for the Smithsonian’s use. The Smithsonian 

serves as the trustee of the land for as long as it is used to carry out its mission. The land is titled in the 

name of the U.S. government and no value has been assigned in the accompanying financial 

statements.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

11 (Continued)

Property and equipment purchased with Federal or trust funds are recorded at cost. Property and 

equipment acquired through transfers from government agencies are recorded at net book value or fair 

value at the date of transfer, whichever is more readily determinable. Property and equipment acquired 

through donation are recorded at estimated fair value at the date of the gift.

Property and equipment assets are depreciated on a straight-line basis over their estimated useful lives 

as follows:

Buildings 30 years

Capital improvements 15 years

Equipment and software 3 – 10 years

Exhibit costs 10 years

Leasehold improvements are amortized over the shorter of the lease term or their useful lives.

(i) Collections – Stewardship Assets

The Smithsonian acquires its collections by purchase or donation. Collections are held for public 

exhibition, education, or research. The Smithsonian’s collections management policy includes guidance 

on the preservation, care, and maintenance of the collections and procedures relating to the 

accession/deaccession of collection items.

In conformity with the practice generally followed by museums, no value is assigned to the collections 

in the statement of financial position. Purchases of collection items are recognized as reductions in the 

appropriate net asset class in the period of acquisition. Proceeds from deaccessions or insurance 

recoveries for lost or destroyed collection items are recognized as increases in net assets without 

donor restrictions and designated for future collection acquisitions.

Noncash deaccessions of collection items result from the exchange, donation, or destruction due to 

deterioration, a lack of mission relation, or duplicate other objects. During the fiscal year, noncash 

deaccessions included works of art, animals, historical objects, and natural specimens.

Items that are acquired with the intent to sell, exchange, or otherwise be used for financial gain are not 

considered collection items and are recorded as other assets at their fair value at the date of 

acquisition.

(j) Federal Appropriations and Funds

Federal appropriations are provided by the U.S. government to support the general operations of the 

Smithsonian and the construction, repair, and restoration of its facilities. Appropriated funds are to be 

spent in accordance with applicable law, and revenue is recognized ratably over the fiscal year as the 

qualifying expenses are incurred. Unexpended appropriation balances are classified as a liability in the 

statements of financial position.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

12 (Continued)

Federal appropriations for general operations are recognized as operating revenue without donor 

restrictions, as qualifying expenses are incurred, and generally available for two years. The portion of 

these appropriations which are not obligated or expended are retained by the Smithsonian in 

accordance with Federal guidelines and returned to the U.S. Department of Treasury five years after

the expiration of the obligation period. During fiscal year 2023, $0.9 related to the fiscal year 2017

appropriation was returned. During fiscal year 2022, $0.5 related to the fiscal year 2016 appropriation 

was returned.

Amounts appropriated for construction or repair and restoration of facilities are recognized as 

nonoperating revenues with donor restrictions as capital is expended and generally available for 

obligation until expended. Such amounts remain purpose restricted until the capital project is 

completed and placed in service, at which time the net assets are released from restrictions.

Net assets of Federal funds without donor restrictions consist primarily of cash held at U.S. Treasury 

and net investment in property and equipment acquired or constructed with Federal funds less 

unfunded liabilities for environmental remediation obligations, annual leave, and estimated Federal

Employees Compensation Act liabilities for workers compensation claims. Net assets of Federal funds 

with donor restrictions consist of U.S. Treasury cash balances and construction in progress.

(k) Annual Leave

Annual leave is accrued as it is earned by employees and is included in compensation and benefit 

costs. The liability for unused annual leave was $54.5 and $54.8 at September 30, 2023 and 2022, 

respectively, and is included in accounts payable and accrued expenses within the statements of 

financial position.

(l) Employee Benefit Plans

The Smithsonian offers its employees a comprehensive set of benefits including pension, health and 

life insurance, and workers compensation for injuries sustained on the job. The Smithsonian’s 

contributions to the retirement, health, and life insurance plans described below are recognized in the 

statements of financial activities.

Federal Funded Pension, Health and Life Insurance Benefits, including Imputed Benefits

Federal employees hired after January 1, 1984, participate in the Federal Employees’ Retirement 

System (FERS). Federal employees hired prior to January 1, 1984, had the option of remaining under 

the Civil Service Retirement System (CSRS) or electing FERS. The terms of both these plans are 

defined in Federal regulations. Under both systems, a specified percentage is withheld from each 

Federal employee’s salary. The Smithsonian also contributes specified percentages of employees’

salaries. The Smithsonian’s expenses for these two plans were $57.7 and $59.3 in fiscal years 2023

and 2022, respectively.

Additional costs associated with these plans are borne by the U.S. government and are recorded as 

imputed benefit revenue and expense in the statements of financial activities. The Smithsonian

recognized $54.7 and $122.7 in fiscal years 2023 and 2022, respectively.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

13 (Continued)

The Smithsonian’s contributions to the pension plans are calculated using rates established by the 

Office of Personnel Management (OPM), the agency with U.S. government-wide responsibility for the 

oversight and administration of the plans. Consistent with reporting under multi-employer pension 

plans, the Smithsonian does not report CFRS and FERS assets, accumulated plan benefits, or future 

liabilities, if any, applicable to its covered employees. This data is reported for plan participants by 

OPM.

The imputed benefits estimate was changed in fiscal year 2023 to use the actual FERS wage base 

instead of estimates of FERS wages. Management believes this to be the most appropriate method of 

calculation of imputed benefits. Smithsonian considered this as a change in estimate and will be 

recognized in the current and future years in line with Treasury and FASAB guidance. Additionally, 

Smithsonian considered the impact of the change in estimate for fiscal year 2022 and noted there is no 

net impact to net assets.

Federal employees covered by CSRS or FERS are eligible to contribute to the Thrift Savings Plan 

(TSP), a defined contribution plan similar to a 401(k). The TSP is administered by the Federal

Retirement Thrift Investment Board, an independent agency of the U.S. government. For 

FERS-covered employees, the Smithsonian is required to match contributions of specified percentages 

of base pay. No matching contributions are made for CSRS-covered employees. The Smithsonian’s 

expenses for the TSP were $15.1 and $14.3 in fiscal years 2023 and 2022, respectively.

Most Federal employees are also eligible to participate in the Federal Employees Group Life Insurance 

(FEGLI) Program. Participating employees can obtain basic term life insurance, with the employee 

paying two-thirds of the cost and the Smithsonian paying one-third. Additional coverage is optional, to 

be paid fully by the employee. The basic life coverage may be continued into retirement if certain 

requirements are met. OPM administers this program and is responsible for the reporting of liabilities.

The Smithsonian’s expenses recognized for the FEGLI were $0.7 in fiscal years 2023 and 2022.

Most Federal employees are eligible to enroll in the Federal Employees Health Benefit (FEHB) 

Program, which provides post-retirement health benefits if certain conditions are met. OPM administers 

this plan and Smithsonian is not obligated under this plan.

Trust Funded Pension, Health and Life Insurance Benefits

Substantially all trust fund employees are eligible to participate in defined contribution retirement plan 

under which the Smithsonian contributes specified percentages of employees’ salaries. Such 

contributions are used to purchase individual annuities, the rights to which are immediately vested with 

the employees. Employees may also make voluntary contributions, subject to certain limitations. The 

Smithsonian’s expenses for this plan were $23.2 and $22.6 in fiscal years 2023 and 2022, respectively.

In addition to the retirement plans, certain health care and life insurance benefits are made available to 

active and retired trust fund employees. The plan is contributory for retirees and requires payment of 

premiums and deductibles. Retiree contributions for premiums are established by an insurance carrier 

based on the average per capita cost of benefit coverage for all participants. The accrued benefit 

obligation under this plan was $14.5 and $15.7 at September 30, 2023 and 2022, respectively, and is 

included in accounts payable and accrued expenses in the statements of financial position.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

14 (Continued)

Workers’ Compensation

The Federal Employees Compensation Act (FECA) provides income and medical cost protection to 

Smithsonian employees injured on the job, who have incurred work-related occupational diseases, and 

to beneficiaries of employees whose deaths are attributable to job-related or occupational diseases. 

The FECA program is administered by the U.S. Department of Labor (DOL) which pays claims and 

subsequently seeks reimbursement from the Smithsonian.

FECA expense is recognized based on amounts invoiced or expected to be invoiced by DOL and 

changes in the actuarially determined value of expected future benefits. The actuarially determined 

FECA liability represents the liability for expected future benefits for death, disability, medical, and 

miscellaneous costs for approved cases. The actuarial liability is calculated by DOL and evaluated by 

Smithsonian management annually, as of September 30, using a method utilizing historical benefit 

patterns related to specific incurred period, wage inflation factors, medical inflation factors and other 

variables. This liability constitutes an extended future estimate of cost which will not be obligated 

against budgetary resources until the fiscal year in which DOL bills the cost to the Smithsonian. The 

Smithsonian’s expenses for the FECA were $2.4 and $2.7 in fiscal years 2023 and 2022, respectively.

(m) Functional Allocation of Expenses

The cost of providing various programs and other activities summarized on a functional and natural 

basis is shown in note 17.

• Research includes personnel, travel, and other costs associated with the Smithsonian’s world-wide 

research programs.

• Collections management includes the care, storage, transportation, digitization, and other costs of 

managing the collections.

• Education, public programs, and exhibitions includes costs of providing a wide array of programing 

and outreach to academia and the general public as well as costs to display, manage, and 

transport exhibits.

• Business activities includes personnel, cost of goods sold, and related expenses.

• Administration includes costs for executive management, financial administration, human 

resources, and legal services.

• Advancement includes costs associated with individual and corporate gifts and grants, annual 

appeals, and other fund-raising efforts.

Costs that benefit more than one program, such as security, facilities, depreciation, and amortization,

are allocated across programs based on relative square feet, or direct costs as a percentage of total 

costs, before allocations.

(n) Related Organizations

The Smithsonian recognizes its interest in the net assets of organizations that are financially 

interrelated and the changes in its interest as other nonoperating activities. There are no related 

organizations of the Smithsonian.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

15 (Continued)

(o) Income Taxes

The Smithsonian is a tax-exempt organization as described in Section 501(c)(3) of the Internal 

Revenue Code of 1986, as amended (the Code). As such, the Smithsonian is generally exempt from 

Federal income taxes to the extent provided under Section 501 of the Code, except for unrelated 

business income.

The Tax Cuts and Jobs Act (the Act) was enacted in December 2017. Among other things, the Act 

imposes new taxes and established new rules for calculating unrelated business taxable income. The 

Smithsonian has reflected an estimate in its financial statements for unrelated trade or business 

income tax using the current proposed regulatory guidance and will continue to evaluate the impact of 

the Act on current and future tax positions.

The Smithsonian accounts for uncertain tax positions, when applicable. The tax years that remain 

subject to examination by the major tax jurisdictions under the statute are from the year 2019 and 

forward.

(p) Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting 

principles requires management to make estimates and assumptions that affect the reported amounts 

of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial 

statements and the reported amounts of revenues and expenses during the reporting period. Actual 

results could differ from those estimates.

(q) Risks and Uncertainties

The Smithsonian invests in a variety of investment securities. Investment securities are exposed to 

such risks as interest rate, market, and credit risks. As a result, changes in the values of investment 

securities may occur that could materially affect the value of the Smithsonian’s investments and its 

financial position.

(r) COVID-19 Pandemic

On March 13, 2020, the President of the United States declared a national emergency with respect to 

COVID-19, a respiratory disease declared to be a pandemic by the World Health Organization 

(Pandemic). The Pandemic affected the capital markets and the economy, and the museum, research 

and education sectors. The threat from the Pandemic was addressed on the national, Federal, state 

and local levels in various forms, including executive orders, state and local orders, and legislative 

actions.

All business activities of the Smithsonian were negatively affected by the Pandemic but have steadily 

improved in fiscal year 2023. During the Pandemic, museums were temporarily closed from 

March 2020 through April 2021, at which time certain museums reopened with several restrictions. By 

the end of June 2021, all museums had reopened partial days each week with limited capacity. In 

May 2022, all museums returned to normal operating hours with no capacity restrictions.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

16 (Continued)

(s) Recently Adopted Accounting Pronouncements

Contributed Nonfinancial Assets

In September 2020, the FASB issued Accounting Standards Update (ASU) No. 2020-07, Presentation 

and Disclosure by Not-for-Profit Entities for Contributed Nonfinancial Assets (Topic 958). This standard 

increased transparency around contributed nonfinancial assets, also known as “gifts-in-kind” (GIK), by 

requiring that GIK be presented separately in the statement of financial activities. The standard also 

added quantitative and qualitative disclosures for GIK at a disaggregated level including how assets 

are valued and how they are used. The Smithsonian adopted this ASU in fiscal year 2022 using a 

retrospective approach. Because total GIK are not material to the Smithsonian financial statements, 

they were not presented separately in the statement of financial activities but are included in other 

revenue.

Contributed nonfinancial assets, or gift in-kind contributions, such as donated space, services,

equipment, and other assets totaled $10.0 and $8.7 in fiscal years 2023 and 2022, respectively. These

gift in-kind contributions are recorded at estimated fair value at the date of the gift. Estimated fair value 

of donated space is based on average square foot rental costs of comparable real estate space. All 

other donated assets are valued based on either receipts or appraisals provided by donors. Donated 

space, services, and other assets are primarily utilized in education, public program, and exhibition 

programmatic activities. Donated services are also utilized for advancement. In kind contributions are 

not monetized.

Unless otherwise specified, gift in-kind contributions are restricted to use by specific Smithsonian units. 

These contributions are recognized as program support revenues (within other revenue) and program 

activities expenses in the statements of financial activities.

Each year volunteers make significant contributions of time to the Smithsonian, enhancing its programs 

and activities in the museums and with its collections. The services provided do not meet the criteria for 

recognition of contributed services, and accordingly, are not reflected in the statements of financial 

activities. Contributed services are reflected in the statements of financial activities at fair value if the 

services (1) create or enhance nonfinancial assets or (2) require specialized skills provided by 

individuals possessing those skills and are services, which would be typically purchased, if not 

provided by donation.

Intangibles

In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal Use 

Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud 

Computing Arrangement That Is a Service Contract. This ASU requires that implementation costs 

incurred for cloud computing arrangements be capitalized in accordance with Subtopic 350-40 and be 

amortized over the service term of the hosting arrangement. The Smithsonian adopted this ASU in 

fiscal year 2022 using a prospective approach. The adoption of ASU 2018-15 did not have a material 

impact on the Smithsonian financial statements.

(t) Reclassification

Certain prior year amounts have been reclassified to conform with the current year presentation.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

17 (Continued)

(3) Financial Assets and Liquidity Resources

Federal appropriations provide significant funding for the Smithsonian’s various programs and general 

operating costs, in addition to capital support for the repair, renovation and construction of its facilities. At 

the date of appropriation, an equal amount of cash is deposited and held by the U.S. Treasury on the 

Smithsonian’s behalf until expended.

To meet immediate and longer-term cash needs, the Smithsonian has a working capital investment policy. 

The policy requires excess funds be invested in securities that are short-term or securities with maturities 

greater than one year that are highly liquid, easily convertible, and high-quality allowing for required liquidity 

and providing a maximum return within defined risk constraints. At September 30, 2023, the working capital 

investment fund totals $470.0 and is comprised of cash equivalents of $307.2 and investments of $162.8.

At September 30, 2022, the working capital investment fund totals $441.2 and is comprised of cash 

equivalents of $158.6 and investments of $282.6.

Financial assets available for general expenditures (operating expenses, capital, and debt service), without 

donor or other restrictions limiting their use, consist of the following at September 30:

2023 2022

Trust Federal Total Trust Federal Total

Financial assets available w ithin one year:

Cash, cash equivalents, and U.S.

Treasury balances $ 409.8 805.2 1,215.0 207.5 796.4 1,003.9

Accounts receivable and other

assets, net 27.7 3.6 31.3 28.7 2.4 31.1

Pledges receivable, net 140.9 — 140.9 160.6 — 160.6

Working capital investments 162.8 — 162.8 282.6 — 282.6

Total financial assets 741.2 808.8 1,550.0 679.4 798.8 1,478.2

Plus endow ment payout approved for

fiscal years 2024 and 2023 98.8 — 98.8 87.6 — 87.6

$ 840.0 808.8 1,648.8 767.0 798.8 1,565.8

Quasi-endowment assets include funds without donor restrictions designated by the Board to function as 

endowment funds supporting the Smithsonian’s programs and operations, including the directors’ salaries

of certain museums and centers and various operating costs. Although the Smithsonian does not intend to 

spend from its board designated endowment funds, other than amounts approved, these funds could be 

made available, if necessary (see note 13).
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

18 (Continued)

(4) Accounts Receivable and Other Assets

Accounts receivable and other assets consist of the following at September 30:

2023 2022

Trust Federal Total Trust Federal Total

Grants and contracts $ 12.4 3.6 16.0 13.3 2.4 15.7

Trade accounts, net of allow ance

for doubtful accounts of $0.2 in 2023

and $0.3 in 2022 15.3 — 15.3 15.4 — 15.4

Inventory 15.3 0.3 15.6 16.2 0.4 16.6

Deferred expenses 8.6 0.1 8.7 7.8 — 7.8

Accrued interest and dividends receivable 2.2 — 2.2 0.5 — 0.5

Other assets 9.4 — 9.4 9.5 — 9.5

Total receivables and other

assets $ 63.2 4.0 67.2 62.7 2.8 65.5

(5) Pledges Receivable

Pledges receivable consist of the following at September 30:

2023 2022

Contributions receivable due within:

Less than 1 year $ 140.9 160.6 

1 to 5 years 116.5 158.4 

5 years and beyond 6.6 6.7 

264.0 325.7 

Less:

Allowance for uncollectible contributions (4.0) (4.8) 

Unamortized discount (at rates ranging from 1.1% to 2.9%) (8.2) (8.9) 

Contributions receivable, net 251.8 312.0 

Charitable remainder trusts 22.9 17.0

Pledges receivable, net $ 274.7 329.0 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

19 (Continued)

(6) Investments and Fair Value Measurements

Investments are comprised of the following at September 30:

2023 2022

Endowment, including Board designated funds $ 2,424.1 2,323.1 

Working capital investments 162.8 282.6 

Charitable gift annuity investments 22.3 21.3 

Total investments $ 2,609.2 2,627.0 

The three levels of the fair value hierarchy for recurring fair value measurements are prioritized based on 

the inputs to valuation techniques used to measure fair value and are as follows:

• Level 1 – Quoted or published prices in active markets for identical assets or liabilities, as of the 

reporting date.

• Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or 

liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be 

corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant 

to the fair value of the assets or liabilities.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

20 (Continued)

The following summarizes the Smithsonian’s investments at fair value as of September 30, 2023 and 2022:

2023

Total Level 1 Level 2 Level 3 NAV (1)

Endowment investments:

Global equities:

Developed markets $ 442.2 64.8 — — 377.4

Emerging markets 106.5 — — — 106.5

Marketable alternatives 334.2 — — — 334.2

Private equity:

Private equity 211.3 — — — 211.3

Venture capital 710.4 2.3 — — 708.1

Real assets:

Energy and natural resources 89.2 — — — 89.2

Real estate funds 199.0 — — — 199.0

Futures contracts 18.9 — 18.9 — —

Fixed income 59.0 40.4 — — 18.6

Cash and equivalents 252.4 252.4 — — —

Pooled investments 2,423.1 359.9 18.9 — 2,044.3

U.S. Treasury deposits 1.0 1.0 — — —

Total endowment 2,424.1 360.9 18.9 — 2,044.3

Fixed income (working capital fund) 162.8 162.8 — — —

Gift annuities, primarily equities 22.3 22.3 — — —

Total investments 2,609.2 546.0 18.9 — 2,044.3

Charitable remainder trusts 22.9 — — 22.9 —

$ 2,632.1 546.0 18.9 22.9 2,044.3

(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a

practical expedient have not been categorized within the fair value hierarchy. The fair value amounts presented in

this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented within the

statement of financial position.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

21 (Continued)

2022

Total Level 1 Level 2 Level 3 NAV (1)

Endowment investments:

Global equities:

Developed markets $ 349.1 52.0 — — 297.1

Emerging markets 100.2 — — — 100.2

Marketable alternatives 339.2 — — — 339.2

Private equity:

Private equity 196.0 — — — 196.0

Venture capital 785.6 7.5 — — 778.1

Real assets:

Energy and natural resources 83.4 — — — 83.4

Real estate funds 178.8 — — — 178.8

Futures contracts 40.5 — 40.5 — —

Fixed income 17.8 — — — 17.8

Cash and equivalents 231.5 231.5 — — —

Pooled investments 2,322.1 291.0 40.5 — 1,990.6

U.S. Treasury deposits 1.0 1.0 — — —

Total endowment 2,323.1 292.0 40.5 — 1,990.6

Fixed income (working capital fund) 282.6 282.6 — — —

Gift annuities, primarily equities 21.3 21.3 — — —

Total investments 2,627.0 595.9 40.5 — 1,990.6

Charitable remainder trusts 17.0 — — 17.0 —

$ 2,644.0 595.9 40.5 17.0 1,990.6

(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a

practical expedient have not been categorized within the fair value hierarchy. The fair value amounts presented in

this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented within the

statement of financial position.

The changes in Level 3 assets, charitable reminder trusts held by others, relate to valuation changes of the 

underlying assets. There were no transfers between levels during fiscal year 2023 or 2022.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

22 (Continued)

The following table summarizes the changes in Level 3 assets, charitable remainder trusts held by others, 

measured at fair value on a recurring basis for the years ended September 30:

2023 2022

Fair value of Level 3 assets, beginning of the year $ 17.0 20.0

Unrealized gains (losses) 6.3 (2.6) 

Proceeds from distributions (0.4) (0.4) 

Fair value of Level 3 assets, end of the year $ 22.9 17.0

The following summarizes information relating to the investments, which are stated at NAV as practical 

expedient for fair value and includes information about the nature, strategies, and risks of these major 

classes of nonmarketable investments as of September 30:

2023

Notice

Unfunded Redemption period

NAV commitments terms (Days)

Global equity: (a)

Developed markets $ 377.4 — Weekly to annually 9 – 90

Emerging markets 106.5 — Monthly to semi-annually 14 – 90

Marketable alternatives (b) 334.2 24.9 Monthly to at maturity 45 – N/A

Private equity: (c)

Private equity 211.3 69.0 N/A N/A

Venture capital 708.1 175.2 N/A N/A

Real assets: (d)

Energy and natural resources 89.2 12.2 N/A N/A

Real estate funds 199.0 125.5 N/A N/A

Fixed income (e) 18.6 — Quarterly 90 

$ 2,044.3 406.8
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

23 (Continued)

2022

Notice

Unfunded Redemption period

NAV commitments terms (days)

Global equity: (a)

Developed markets $ 297.1 — Weekly to annually 9 – 90

Emerging markets 100.2 — Monthly to semi-annually 14 – 90

Marketable alternatives (b) 339.2 42.0 Monthly to at maturity 5 – N/A

Private equity: (c)

Private equity 196.0 91.0 N/A N/A

Venture capital 778.1 142.0 N/A N/A

Real assets: (d)

Energy and natural resources 83.4 20.1 N/A N/A

Real estate funds 178.8 141.6 N/A N/A

Fixed income (e) 17.8 — Quarterly 90 

$ 1,990.6 436.7

(a) Global equity is comprised of investments in funds and strategies invested in publicly listed equity 

securities in the global developed and emerging markets. Some of the funds are subject to lock-ups.

(b) Marketable alternatives consist of investments in a broad array of securities and strategies aimed to reduce 

volatility and enhance returns. Smithsonian’s marketable alternatives managers may follow certain 

investment strategies including, but not limited, to long/short equity, credit and distressed, multi-strategy 

funds. Some of the funds are subject to soft and hard lock-ups and other funds are not eligible for 

redemption.

(c) Private equity consists of limited partnerships that are organized to invest primarily in shares of operating 

companies that are not listed on a publicly traded stock exchange. Private equity strategies include 

investments in leveraged buyouts, growth capital and distressed investments. Venture capital strategies 

invest in start-ups and businesses with perceived long-term growth potential. Distributions to limited 

partners are made as soon as feasible and, in accordance with the limited partnership agreement, when 

realizations (sales of portfolio companies) are made, or when interest payments, dividends, or 

recapitalizations are generated. Certain investments are commitment-based and not eligible for withdrawal 

through the life of the fund. Timing of liquidation of funds in unknown.

(d) Real assets include real estate energy and natural resources investments that are made mostly in private 

limited partnerships as well as publicly traded securities funds. Distributions to limited partners are made as 

soon as feasible and, in accordance with the limited partnership agreement, when realizations (sales of 

portfolio companies) are made, or when interest payments, dividends, or recapitalizations are generated.

Certain investments are commitment based and not eligible for withdrawal through the life of the fund.

Timing of liquidation of funds in unknown.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

24 (Continued)

(e) Fixed income includes funds that invest in U.S. government, agency and municipal bonds, and other 

interest-bearing products.

The Smithsonian is obligated under the terms of certain limited partnership agreements to remit additional 

funding periodically as capital calls are exercised. Such commitments are callable over the fund investment 

period, generally the first five years of the funds. The standard life of Smithsonian’s investments in these 

private partnerships are between 8 and 10 years with possible one to two one-year extension periods 

and/or other termination clauses.

The following summarizes the investment return, net of expenses, and its classification in the statements of 

financial activities for the years ended September 30:

2023 2022

Dividend and interest income, net of expenses $ 20.9 7.9 

Net realized and unrealized gains (losses) 33.2 (201.2) 

Total investment return $ 54.1 (193.3) 

Endowment payout allocated for operations $ 100.2 87.8 

Short term investment income (loss) 24.5 (2.7) 

Investment return, net of endowment payout (70.6) (278.4) 

Total investment return $ 54.1 (193.3) 

(7) Property and Equipment

Property and equipment consist of the following at September 30:

2023

Trust Federal Total

Land $ 32.8 — 32.8 

Construction in progress 64.5 452.3 516.8 

Buildings and capital improvements 1,236.4 3,599.5 4,835.9 

Equipment and software 298.4 268.7 567.1 

Leasehold improvements 104.7 34.2 138.9 

1,736.8 4,354.7 6,091.5 

Accumulated depreciation (808.9) (2,320.3) (3,129.2) 

Total property and equipment, net $ 927.9 2,034.4 2,962.3 

Depreciation expense $ 69.0 128.0 197.0 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

25 (Continued)

2022

Trust Federal Total

Land $ 32.8 — 32.8 

Construction in progress 47.2 369.2 416.4 

Buildings and capital improvements 1,216.2 3,415.9 4,632.1 

Equipment and software 290.7 267.0 557.7 

Leasehold improvements 104.9 33.9 138.8 

1,691.8 4,086.0 5,777.8 

Accumulated depreciation (742.5) (2,199.0) (2,941.5) 

Total property and equipment, net $ 949.3 1,887.0 2,836.3 

Depreciation expense $ 59.3 121.2 180.5 

(8) Leases

Accounting for Leases as Lessee

The Smithsonian leases office and warehouse space as well as equipment under long-term operating 

leases expiring at various dates to 2032.

Operating leases as a lessee are included in operating lease right-of-use (ROU) assets and operating 

lease liabilities on the statements of financial position. Rent expense under operating leases that provide 

for scheduled rent increases over their terms is recognized on a straight-line basis.

Right-of-use assets represent the right to use an underlying asset for the lease term, if the expected lease 

term is greater than 12 months. The Smithsonian elected a policy to not recognize ROU assets and lease 

liabilities for short-term leases, generally comprised of leases for office and communication equipment.

Lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and 

related liabilities are recognized at the lease commencement date based on the present value of lease 

payments over the lease term discounted using an appropriate incremental borrowing rate (5-Year yield 

established by the Department of Treasury). The commencement date is when the Smithsonian takes 

possession of the asset, or in the case of real estate leases, when the landlord makes the building 

available for use. The value of an option to extend or terminate a lease is reflected to the extent it is 

reasonably certain management will exercise that option.

Variable lease payments for leases are generally provided for as rent escalations based on increases in 

property taxes, operating expenses attributable to the leased properties. Changes in variable lease 

payments, other than those attributed to indexed rates estimates are recognized in the period in which they 

occur.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

26 (Continued)

The following table presents the various components of lease expense as of September 30, 2023 and 

2022:

2023 2022

Operating lease expense $ 22.8 23.9 

Variable lease expense 8.3 7.8 

Short-term lease costs 4.2 2.4 

$ 35.3 34.1 

The following table presents supplemental information relating to the cash flows arising from lease 

transactions for the years ended September 30, 2023 and 2022. Cash payments related to variable lease 

costs and short-term leases are not included in the measurement of ROU assets and operating lease 

liabilities, as such, are excluded from the amounts below.

Operating cash outflows from operating leases $ 29.9 30.1

Non cash right-of-use assets for lease liabilities:

Beginning balance 91.4 110.4

In exchange for new lease liabilities (2.3) 2.5

Accumulated amortization, right-of-use assets (18.8) (21.5) 

The weighted-average lease term and discount rate for Smithsonian leases for the years ended as of 

September 30, 2023 and 2022 is 3 years 10 months and .63%, and 4 years 9 months and 0.61%, 

respectively.

The Smithsonian currently limits leases using Federal funds to five years under the five-year contracting 

authority of the Federal Acquisition Streamlining Act. The Smithsonian still has legacy leases exceeding the 

current five-year authority that were executed prior to the enactment of the Federal Acquisition Streamlining 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

27 (Continued)

Act. The table below presents a maturity analysis of expected undiscounted cash flows for all leases on an 

annual basis for the next five years and thereafter.

2024 $ 25.3

2025 22.4

2026 10.7

2027 9.4

2028 6.4

Thereafter 1.6

Undiscounted cash flows for

leases 75.8

Add: discount 3.8

Operating lease liabilities $ 79.6

Accounting for Leases as a Lessor

The Smithsonian leases certain office space to the existing tenants that were residing in the headquarters 

building when purchased in fiscal year 2020. Lease payments due to the Smithsonian are generally fixed 

and paid over the term of the lease. In general, the Smithsonian does not consider renewal periods to be 

reasonably certain of being exercised. Leases provided by the Smithsonian do not contain variable 

payments that are based on an index or rate. Variable payments are recognized as revenue as earned. 

The Smithsonian leases do not contain residual value guarantees or purchase options.

Rent income included in the statement of financial activities for the years ended September 30, 2023 and 

2022 was $2.9 and $3.2, respectively.

Future undiscounted lease payments due to the Smithsonian on operating leases are as follows:

2024 $ 2.0

2025 1.9

2026 1.9

2027 2.0

2028 1.9

Thereafter 5.9

$ 15.6
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

28 (Continued)

(9) Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following at September 30:

2023

Trust Federal Total

Accounts payable $ 31.8 84.6 116.4

Accrued salaries 20.0 29.7 49.7

Accrued annual leave 19.1 35.4 54.5

Workers’ compensation (FECA) 2.3 26.8 29.1

Post retirement benefits 14.5 — 14.5

Other accrued personnel benefits 1.0 5.6 6.6

Deferred rent 0.4 — 0.4

Charitable gift annuity liabilities 11.7 — 11.7

Other accrued liabilities 1.4 0.3 1.7

Total accounts payable and

accrued expenses $ 102.2 182.4 284.6

2022

Trust Federal Total

Accounts payable $ 37.5 88.0 125.5

Accrued salaries 17.3 28.1 45.4

Accrued annual leave 18.9 35.9 54.8

Workers’ compensation (FECA) 2.3 27.0 29.3

Post retirement benefits 15.7 — 15.7

Other accrued personnel benefits 0.5 5.6 6.1

Deferred rent 0.7 — 0.7

Charitable gift annuity liabilities 12.6 — 12.6

Other accrued liabilities 0.4 0.3 0.7

Total accounts payable and

accrued expenses $ 105.9 184.9 290.8

Federal accrued annual leave, FECA, and other accrued liabilities are unfunded and cannot be met by the 

Smithsonian without continued annual Federal appropriations.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

29 (Continued)

(10) Environmental Remediation Obligations

The Smithsonian has unfunded environmental remediation obligations that are estimated based on third 

party studies, contractor bids, and internal estimates derived from recently completed remediation projects 

for similar facilities and other information for similar projects. The present value of the obligation is 

calculated using an inflation rate of 5.5% and 7.7% as well as a discount rate of 2.5% and 1.9% at

September 30, 2023 and 2022, respectively. Each period the obligation is accreted to its present value. 

Because the related properties are fully depreciated, changes in the estimated obligation are expensed. 

Any difference between the estimated obligation and the actual cost of remediation is also expensed.

The following summarizes activity in the unfunded environmental remediation obligation for the years 

ended September 30:

2023 2022

Balance, beginning of the year $ 46.1 46.6

Accretion 1.4 1.2

Remediation costs (3.5) (2.4) 

Change in estimate 9.0 0.7

Balance, end of year $ 53.0 46.1

(11) Long-term Debt

The Smithsonian’s long-term debt is unsecured and funded solely through trust funds without donor 

restrictions. Long-term debt is comprised of the following at September 30:

2023 2022

Series 2020 General Obligation Bonds, variable interest rate

of 1.18% to 2.1%, principal ranging $10.9 to $13.0, due

September 1, 2023 through 2034 $ 129.9 140.6

Series 2020 General Obligations Bonds, term, principal

amounts ranging $13.2 to $14.8, interest rate 2.645%,

due September 1, 2035 through 2039 70.0 70.0

Series 2020 General Obligation Bonds, term, principal

amounts ranging $15.1 to $16.5, interest rate 2.695%,

due September 1, 2040 through 2044 66.0 66.0

Series 2010 Revenue Bonds, term, principal amounts

ranging $2.0 to $2.4, interest rate 5.25%, due

February 1, 2023 through 2028 10.9 12.9
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

30 (Continued)

2023 2022

Series 2003 Revenue Bonds, variable interest rate of

1.58% to 4.5%, due December 1, 2033

Series A $ 52.5 52.5

Series B 25.0 25.0

354.3 367.0

Less: Unamortized bond issuance cost (2020 bond) (0.3) (0.3) 

Less: Unamortized underwriter’s discount (2020 bond) (0.7) (0.7) 

Plus: Unamortized bond premium (2010 bond) 0.3 0.4

$ 353.6 366.4

Series 2020 Revenue Bonds

The general obligation Series 2020 Federally taxable bonds were issued on June 18, 2020, to finance the 

costs of acquiring the Smithsonian’s consolidated administrative headquarters building located at 600 

Maryland Avenue, SW, of Washington D.C. Interest is payable semiannually on March 1 and September 1.

The bonds are subject to optional and mandatory redemption prior to their stated maturity.

The serial bonds mature annually through September 1, 2034, with principal repayments ranging from 

$10.9 to $13.0 per year. The term bonds maturing September 1, 2034 through 2039, have a fixed interest 

rate of 2.645%, and the term bonds maturing September 1, 2040 through 2044, have a fixed interest rate of 

2.695%.

Series 2010 Revenue Bonds

The tax-exempt Series 2010 Revenue Bonds were issued by the District of Columbia on behalf of the 

Smithsonian to finance capital and other projects. Interest is payable semiannually on August 1 and 

February 1.

The term bonds maturing on February 1, 2028, are subject to mandatory redemption by sinking fund 

installments ranging from $2.0 to $2.4 per year through the maturity date.

Series 2003 Revenue Bonds

The tax-exempt Series 2003 Revenue Bonds were issued by the Fairfax County Economic Development 

Authority (Virginia) on behalf of the Smithsonian to finance a portion of the Steven F. Udvar-Hazy Center, 

an extension of the National Air and Space Museum. The bonds are subject to early redemption at the 

option of the Smithsonian. Interest is payable monthly at a variable interest rate determined in accordance 

with the Indenture. Interest rates for Series A and Series B were 3.92% as of September 30, 2023 and 

1.68% as of September 30, 2022.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

31 (Continued)

The bonds are supported by a standby bond purchase agreement for both the Series A and Series B 

(collectively, the 2003 Liquidity Facility) with Wells Fargo (Trustee) and Northern Trust Company (Liquidity 

Facility provider). The 2003 Liquidity Facility provides liquidity support when the bonds are bearing interest 

at a daily or weekly rate and expires September 5, 2025.

Interest expense was $8.8 in fiscal year 2023 and $7.2 in fiscal year 2022.

Future annual maturities of long-term debt are as follows:

2024 $ 12.9

2025 13.1

2026 13.3

2027 13.6

2028 13.9

Thereafter 287.5

$ 354.3

The Smithsonian has a $50.0 line of credit available to provide additional resources if needed. There were 

no outstanding borrowings at September 30, 2023 and 2022. The amounts available to be borrowed on the 

line of credit are subject to the limitations of the Smithsonian’s debt covenants.

(12) Net Assets

Net assets consist of the following as of September 30:

2023

Without donor With donor

restrictions restrictions Total

Endowment investment fund $ — 1,420.2 1,420.2 

Board designated quasi endowment funds 1,003.9 — 1,003.9 

Total net assets subject to payout

spending policy 1,003.9 1,420.2 2,424.1 

Net assets with donor restrictions available for:

Programs and operations — 431.2 431.2 

Capital repairs, renovation, and construction — 284.5 284.5 

Endowment contributions receivable and other — 14.5 14.5 

Net investment in property and equipment 2,143.0 465.7 2,608.7 

Unfunded federal liabilities (115.6) — (115.6) 

Undesignated, including time restrictions 35.2 7.1 42.3 

$ 3,066.5 2,623.2 5,689.7
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

32 (Continued)

2022

Without donor With donor

restrictions restrictions Total

Endowment investment fund $ — 1,378.6 1,378.6 

Board designated quasi endowment funds 944.5 — 944.5 

Total net assets subject to payout

spending policy 944.5 1,378.6 2,323.1 

Net assets with donor restrictions available for:

Programs and operations — 408.4 408.4 

Capital repairs, renovation, and construction — 230.7 230.7 

Endowment contributions receivable and other — 13.8 13.8 

Net investment in property and equipment 2,085.8 384.1 2,469.9 

Unfunded federal liabilities (109.3) — (109.3) 

Undesignated, including time restrictions 65.9 7.7 73.6 

$ 2,986.9 2,423.3 5,410.2

Donor restricted endowment funds include accumulated appreciation of $658.3 as of September 30, 2023 

and $691.5 as of September 30, 2022. Future-funded Federal liabilities include environmental remediation 

obligations, accrued annual leave, workers compensation, and litigation liabilities.

Net assets with donor restrictions were available for the following purposes as of September 30:

2023 2022

Subject to Subject to

Endowments purpose Endowments purpose

at historical restriction at historical restriction

cost and time Total cost and time Total

Museums and general support $ 195.8 299.6 495.4 169.1 302.0 471.1

Education, public programs, exhibitions 346.1 502.5 848.6 313.2 526.5 839.7

Research 109.1 172.5 281.6 104.6 164.6 269.2

Acquisitions and collections 77.5 139.1 216.6 70.1 129.5 199.6

Facilities and capital 15.5 765.5 781.0 12.1 631.6 643.7

$ 744.0 1,879.2 2,623.2 669.1 1,754.2 2,423.3

Endow ments at historical costs above includes charitable remainder trusts and endow ment pledge receivables.

(13) Endowment Funds

The Smithsonian endowment consists of approximately 700 individual funds established for a variety of

purposes. The endowment includes both donor-restricted endowment funds and funds designated by the 

Board to function as endowments supporting the Smithsonian’s programs and operations. Net assets 

associated with endowment funds, including funds designated by the Board to function as endowments, 

are classified and reported based on the existence or absence of donor-imposed restrictions.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

33 (Continued)

Interpretation of Relevant Law

Management has resolved to be guided by the standards of the Uniform Prudent Management of 

Institutional Funds Act (UPMIFA) in the management, investment, and expenditure of endowment funds 

although it is not required to do so as a matter of law. Management has interpreted UPMIFA, as allowing 

the Smithsonian to allocate for expenditure or accumulate so much of an endowment fund as it determines 

to be prudent for the uses, purposes, and durations for which the endowment fund is established, subject to 

the intent of the donor as expressed in the gift instrument. Unless otherwise stated in the gift instrument, 

the assets in an endowment fund shall be donor-restricted assets until allocated for expenditure. The 

corpus of the Smithsonian’s endowment funds consists of (a) the original value of gifts donated to the 

permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and 

(c) changes to the permanent endowment made in accordance with the direction of the donor gift 

instrument. Earnings and accumulated appreciation of the endowment fund remain restricted until allocated

for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA. In 

accordance with UPMIFA, the following factors are considered when making a determination to allocate or 

accumulate donor-restricted funds: duration and preservation of the fund; purpose of board designated or 

donor-restricted fund; general economic conditions; possible impact of inflation and deflation; expected 

return from income and appreciation of investments; other available resources; and the Smithsonian’s 

investment guidelines.

The Smithsonian has adopted investment and spending policies for endowment assets that are intended to 

provide a predictable stream of funding for programs and operations while maintaining the purchasing 

power of the endowment. Under the investment policy, as approved by the Board, endowment assets are 

invested in a manner that reduces risk through diversification while obtaining a competitive rate of return. 

To satisfy its long-term rate-of-return, the Smithsonian relies on a total return strategy in which investment 

returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest 

and dividends), targeting a diversified asset portfolio that utilizes fixed income and equity-based 

investments to achieve its long-term objectives within prudent risk constraints. The Board’s Investment 

Committee reviews the long-term asset strategy for the investment pool.

Substantially all the assets of individual endowment funds are pooled and invested. Individual funds buying 

or disposing of units on the basis of the per unit market value at the beginning of the month in which the 

transaction takes place. Each fund participating in the investment pool receives an annual payout based on 

the number of units owned. The Smithsonian’s spending policy is based on an annual endowment 

spending rate of 5% of the prior 20 quarters’ average endowment value. This spending rate constitutes the 

Board’s annual allocation for spending endowment earnings to support programs and operations The 

Board authorized an additional allocation of up to 0.5% for fiscal year 2023 and 2022 for eligible funds to 

support the advancement priorities.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

34 (Continued)

The following summarizes certain per endowment unit information, in whole dollars.

2023 2022

Market value of fund per unit:

Beginning of the year $ 1,265.53 1,414.37

End of the year 1,234.72 1,265.53

Payout per unit:

Program and operations support $ 52.18 46.91

Advancement 4.99 3.88

The following table summarizes the change in endowment funds during fiscal year 2023 and 2022:

2023

Without With

donor donor

restrictions restrictions Total

Endowment net assets at beginning of the year $ 944.5 1,378.6 2,323.1 

Additional designation of quasi endowments

and reinvestments 81.5 12.2 93.7 

Uninvested cash 3.8 — 3.8 

Contributions received — 67.7 67.7 

Investment return 24.9 11.1 36.0 

Allocation of endowment assets for expenditure (50.8) (49.4) (100.2) 

Endowment net assets at end of year $ 1,003.9 1,420.2 2,424.1 

2022

Without With

donor donor

restrictions restrictions Total

Endowment net assets at beginning of the year $ 1,048.5 1,484.1 2,532.6 

Additional designation of quasi endowments

and reinvestments 16.4 8.3 24.7 

Uninvested cash 5.9 — 5.9 

Contributions received — 32.6 32.6 

Investment return (81.3) (103.6) (184.9) 

Allocation of endowment assets for expenditure (45.0) (42.8) (87.8) 

Endowment net assets at end of year $ 944.5 1,378.6 2,323.1 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

35 (Continued)

Endowment Funds with Deficiencies

From time to time, the fair value of assets associated with individual donor restricted endowment funds may 

fall below the level required to be maintained in perpetuity or the applicable donor gift document, creating 

an “underwater” endowment fund. Such deficiencies are generally the result of unfavorable market 

fluctuations and continuing the allocations for various programs is generally deemed prudent by the Board.

Significant underwater endowment funds were $3.8 and $2.7 at September 30, 2023 and 2022, 

respectively.

(14) Net Assets Released From Restriction

Net assets are released from donor restrictions due to the passage of time, assets placed in service, or by 

incurring expenses satisfying the restricted purpose specified by the donors, and were as follows for fiscal 

years 2023 and 2022:

2023

Trust Federal Total

Operating releases:

Purpose restricted gifts released for:

Museums and general support $ 35.2 — 35.2 

Education, public programs and exhibitions 100.6 — 100.6 

Research 55.4 — 55.4 

Acquisitions and collections 11.4 — 11.4 

Facilities 1.5 19.1 20.6 

Total operating releases 204.1 19.1 223.2 

Nonoperating releases:

Assets placed in service and released from:

Capital appropriation — 183.5 183.5 

Capital contributions 3.8 — 3.8 

Total nonoperating releases 3.8 183.5 187.3 

Total releases $ 207.9 202.6 410.5 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

36 (Continued)

2022

Trust Federal Total

Operating releases:

Purpose restricted gifts released for:

Museums and general support $ 33.9 — 33.9 

Education, public programs and exhibitions 97.0 — 97.0 

Research 51.7 — 51.7 

Acquisitions and collections 12.6 — 12.6 

Facilities 2.5 40.6 43.1 

Total operating releases 197.7 40.6 238.3 

Nonoperating releases:

Assets placed in service and released from:

Capital appropriation — 345.9 345.9 

Capital contributions 31.3 — 31.3 

Total nonoperating releases 31.3 345.9 377.2 

Total releases $ 229.0 386.5 615.5 

(15) Federal Appropriations

The Federal appropriation received in fiscal year 2023 is reconciled to Federal appropriation revenue 

recognized as follows:

2023

Repair,

Salaries restoration,

and and

expenses construction Total

Federal appropriations received $ 892.9 275.7 1,168.6 

Unexpended appropriations (186.9) (239.5) (426.4) 

Amounts expended from prior years’ appropriations 164.8 249.6 414.4 

Federal appropriation revenue $ 870.8 285.8 1,156.6 

Without donor restrictions (operating) $ 870.8 — 870.8 

With donor restrictions (nonoperating) — 285.8 285.8 

Federal appropriation revenue $ 870.8 285.8 1,156.6 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

37 (Continued)

The Federal appropriation received in fiscal year 2022 is reconciled to Federal appropriation revenue 

recognized as follows:

2022

Repair,

Salaries restoration,

and and

expenses construction Total

Federal appropriations received $ 852.2 217.2 1,069.4 

Unexpended appropriations (182.8) (185.0) (367.8) 

Amounts expended from prior years’ appropriations 153.0 195.0 348.0 

Federal appropriation revenue $ 822.4 227.2 1,049.6 

Without donor restrictions (operating) $ 822.4 — 822.4 

With donor restrictions (nonoperating) — 227.2 227.2 

Federal appropriation revenue $ 822.4 227.2 1,049.6 

(16) Business Activities

The following summarizes business activities for the years ended September 30:

2023 2022

Business Net Business Net

activities Operating operating activities Operating operating

revenue expenses gain revenue expenses gain

Smithsonian Enterprises $ 150.8 112.5 38.3 116.1 91.9 24.2

All other business activities 18.9 14.7 4.2 17.4 12.1 5.3

$ 169.7 127.2 42.5 133.5 104.0 29.5

Business activities revenue is further detailed as follows for the years ended September 30:

2023 2022

Merchandise sales $ 70.4 45.4

Media 22.8 24.8

Concessions, licensing, and other 76.5 63.3

$ 169.7 133.5
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

38 (Continued)

(17) Functional Classification of Expenses

Operating expenses by functional and natural classification are presented for the year ended 

September 30, 2023 as follows:

Program activities Supporting activities

Education,

programs

Collections and Business

Research mgmt exhibitions activities Admin Advancement Total

Trust:

Compensation and benefits $ 83.2 14.0 47.4 62.0 24.9 43.6 275.1 

Rent, utilities and services 70.4 (1.7) 49.1 19.6 (0.6) 29.4 166.2 

Cost of sales — — 0.1 54.0 — 2.4 56.5 

Travel and transportation 4.8 0.9 3.5 0.3 0.4 1.1 11.0 

Other 3.3 0.5 1.7 (10.7) 8.6 0.5 3.9 

Total before depreciation 161.7 13.7 101.8 125.2 33.3 77.0 512.7 

Depreciation 6.4 25.4 21.8 2.0 13.3 0.1 69.0 

Total operating expenses $ 168.1 39.1 123.6 127.2 46.6 77.1 581.7 

Federal:

Compensation and benefits $ 119.9 160.1 169.8 — 128.7 0.6 579.1 

Rent, utilities and services 52.2 95.6 112.4 — 85.5 1.3 347.0 

Cost of sales — — — — 0.2 — 0.2 

Travel and transportation 2.4 1.4 2.5 — 0.4 — 6.7 

Other 3.2 3.8 5.5 — 5.8 — 18.3 

Total before depreciation 177.7 260.9 290.2 — 220.6 1.9 951.3 

Depreciation 11.8 47.0 44.1 — 24.8 0.3 128.0 

Total operating expenses $ 189.5 307.9 334.3 — 245.4 2.2 1,079.3 

Total operating expenses:

Compensation and benefits $ 203.1 174.1 217.2 62.0 153.6 44.2 854.2 

Rent, utilities and services 122.6 93.9 161.5 19.6 84.9 30.7 513.2 

Cost of sales — — 0.1 54.0 0.2 2.4 56.7 

Travel and transportation 7.2 2.3 6.0 0.3 0.8 1.1 17.7 

Other 6.5 4.3 7.2 (10.7) 14.4 0.5 22.2 

Total before depreciation 339.4 274.6 392.0 125.2 253.9 78.9 1,464.0 

Depreciation 18.2 72.4 65.9 2.0 38.1 0.4 197.0 

Total operating expenses $ 357.6 347.0 457.9 127.2 292.0 79.3 1,661.0 
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

39 (Continued)

Operating expenses by functional and natural classification are presented for the year ended 

September 30, 2022 as follows:

Program activities Supporting activities

Education,

programs

Collections and Business

Research mgmt exhibitions activities Admin Advancement Total

Trust:

Compensation and benefits $ 79.8 13.8 44.2 53.1 20.2 40.9 252.0 

Rent, utilities and services 63.0 4.9 49.5 13.4 (6.8) 25.5 149.5 

Cost of sales — — 0.1 45.0 — 2.3 47.4 

Travel and transportation 2.9 0.9 3.1 0.1 0.1 0.4 7.5 

Other 3.1 0.9 1.2 (9.7) 5.2 0.8 1.5 

Total before depreciation 148.8 20.5 98.1 101.9 18.7 69.9 457.9 

Depreciation 6.8 20.5 20.0 2.1 9.8 0.1 59.3 

Total operating expenses $ 155.6 41.0 118.1 104.0 28.5 70.0 517.2 

Federal:

Compensation and benefits $ 134.3 166.0 185.3 — 133.2 0.4 619.2 

Rent, utilities and services 56.9 94.5 107.9 — 68.1 0.4 327.8 

Cost of sales — — — — 0.1 — 0.1 

Travel and transportation 1.4 0.8 1.4 — 0.3 — 3.9 

Other 3.6 5.1 4.2 — 5.6 — 18.5 

Total before depreciation 196.2 266.4 298.8 — 207.3 0.8 969.5 

Depreciation 14.0 41.9 45.0 — 20.1 0.2 121.2 

Total operating expenses $ 210.2 308.3 343.8 — 227.4 1.0 1,090.7 

Total operating expenses:

Compensation and benefits $ 214.1 179.8 229.5 53.1 153.4 41.3 871.2 

Rent, utilities and services 119.9 99.4 157.4 13.4 61.3 25.9 477.3 

Cost of sales — — 0.1 45.0 0.1 2.3 47.5 

Travel and transportation 4.3 1.7 4.5 0.1 0.4 0.4 11.4 

Other 6.7 6.0 5.4 (9.7) 10.8 0.8 20.0 

Total before depreciation 345.0 286.9 396.9 101.9 226.0 70.7 1,427.4 

Depreciation 20.8 62.4 65.0 2.1 29.9 0.3 180.5 

Total operating expenses $ 365.8 349.3 461.9 104.0 255.9 71.0 1,607.9 

Purchases of collection items are included in collections management activities.
SMITHSONIAN INSTITUTION

Notes to Financial Statements

September 30, 2023 and 2022

(Dollars in millions)

40

(18) Commitments and Contingencies

(a) Government Awards

The Smithsonian receives significant amounts of Federal funding in the form of grants and contracts. 

These awards are subject to audit by Federal agencies. Management is of the opinion that no material 

disallowances of costs or expenses are likely.

(b) Construction

As of September 30, 2023, the Smithsonian has commitments of approximately $314.1 related to 

construction in progress at several of its locations, the largest related to projects at the National Air and 

Space Museum of $98.7 and Museum Support Center Collections Storage Pod 6 construction of $46.6.

(c) Litigation

The Smithsonian is a party to various litigation arising out of the normal conduct of its operations. In the 

opinion of the Smithsonian’s general counsel, the ultimate resolution of these matters will not have a 

significant effect on the Smithsonian’s financial position or future results of operations.

(d) Subsequent Events

Management has evaluated subsequent events from September 30, 2023 through January 22, 2024,

which is the date that the financial statements are available to be issued and determined that there are 

no adjustments to or other items to disclose.