OFFICE OF THE 

INSPECTOR GENERAL 

0 Smithsonian 

Memo 

Greg Bettwy, Chief of Staff, Office of the Secretary 

From: Cathy L. Helm, Inspector General 

Subject: Independent Auditor’s Report on the Smithsonian Institution’s Fiscal Year 2021

Date: January 26, 2022 

To: Audit and Review Committee, Board of Regents 

Lonnie G. Bunch III, Secretary 

Cc: Ron Cortez, Under Secretary for Finance and Administration 

Janice Lambert, Chief Financial Officer 

Jennifer Case, Controller, Office of Finance and Accounting 

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

Financial Statements (OIG-A-22-02) 

This memorandum transmits the fiscal year 2021 financial statement audits of the 

Smithsonian Institution (Smithsonian) performed by the independent public accounting 

firm of KPMG LLP (KPMG). On January 26, 2021, KPMG issued its independent 

auditor’s report on the Smithsonian Institution’s statement of financial position as of 

September 30, 2021, 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 2021 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 Joan T. Mockeridge, 

Assistant Inspector General for Audits, at (202) 633-7050. 

Attachment 
~ 

SMITHSONIAN INSTITUTION 

Financial Statements and Notes to Financial Statements 

September 30, 2021 and 2020 

(With Independent Auditors’ Report Therein)
 

 

 

 

~ 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. 

Independent Auditors’ Report 

The Office of the Inspector General, Audit and Review, 

Committee of the Board of Regents, and the Secretary 

Smithsonian Institution: 

Report on the Financial Statements 

We have audited the accompanying financial statements of Smithsonian Institution, which comprise the 

statements of financial position as of September 30, 2021 and 2020, the related statements of financial 

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

Management’s Responsibility for the Financial Statements 

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

accordance with U.S. generally accepted accounting principles; this includes 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. 

Auditors’ Responsibility 

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted 

our audits in accordance with auditing standards generally accepted in the United States of America. Those 

standards require that we plan and perform the audit to obtain reasonable assurance about whether the 

financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of 

the risks of material misstatement of the financial statements, whether due to fraud or error. In making those 

risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation 

of the financial statements 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 entity’s internal control. Accordingly, we 

express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and 

the reasonableness of significant accounting estimates made by management, as well as evaluating the overall 

presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 

audit opinion. 

Opinion 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial 

position of Smithsonian Institution as of September 30, 2021 and 2020, and the changes in its net assets and 

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

 

 

Emphasis of Matter 

As discussed in Note 2(t) to the financial statements, in fiscal year 2021, Smithsonian Institution adopted new 

accounting guidance Accounting Standards Update No. 2016-02, Leases (Topic 842), as amended. Our 

opinion is not modified with respect to this matter. 

Other Matter 

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

accompanying information regarding the presentation of Trust and Federal on the statements of financial 

position as of September 30, 2021 and 2020, the related statements of financial activities and cash flows for the 

years then ended, and the related notes to the financial statements is supplementary information 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 auditing standards generally accepted in the United States of America. 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 26, 2022 
SMITHSONIAN INSTITUTION 

Statements of Financial Position 

September 30, 2021 and 2020 

(Dollars in millions) 

Trust 

2021 

Federal Total Funds Trust 

Assets: 

Cash, cash equivalents, and U.S.Treasury balances Accounts receivable and other assets, net Pledges receivable, net 

Investments Property and equipment, net Operating lease right-of-use assets 

$ 149.6

51.8 

369.1 

2,834.7 

962.3110.4

 758.6

3.0 

—

—

 1,806.0 — 908.2

54.8 

369.1

 2,834.7

 2,768.3 

110.4

 173.8

65.8 

179.1 2,179.1 

981.6

 —

 

  

Total assets $ 4,477.9 2,567.6 7,045.5 3,579.4 

Liabilities: 

Accounts payable and accrued expenses Operating lease liabilities Deferred revenue Unexpended federal appropriations Deferred gain on sale of real estate Environmental remediation obligations Long-term debt 

$ 99.8

133.4

49.3 

—

— 

—

378.9 

174.4 — 

0.5

 666.6

— 

46.6

—

 274.2

133.4

 49.8

 666.6 

— 

46.6 378.9

 117.8

 —

 55.8 

—

0.4 

—

 391.3 

177.1

 

 51.7

Total liabilities 661.4 888.1 1,549.5 565.3 

Net assets: 

Without donor restriction 

Board designated Undesignated 

1,048.5

603.8

 — 1,152.9

1,048.5 

1,756.7 

804.7641.4

 1,209.

Net assets without donor restriction 1,652.3 1,152.9 2,805.2 1,446.1 

With donor restriction 

Purpose and time restrictions Endowments 

1,529.4 

634.8 

526.6 

—

2,056.0 

634.8

973.0 

595.0 

Net assets with donor restriction 2,164.2 526.6 2,690.8 1,568.0 

Total net assets 3,816.5 1,679.5 5,496.0 3,014.1 

Total liabilities and net assets $ 4,477.9 2,567.6 7,045.5 3,579.4 

See accompanying notes to financial statements. 

3 
SMITHSONIAN INSTITUTION 

Statements of Financial Activities 

Year ended September 30, 2021 

(Dollars in millions) 

Without Donor Restriction 

Trust Federal Total Trust 

2021 

With Donor Restriction 

Federal Total 

Operating: 

Support and revenues: 

Federal appropriations Contributions Grants and contracts Business activities Endowment payout Imputed benefit revenue Short-term investment income and other revenue 

$ — 

60.0 81.0 86.042.2 

— 

16.2 

773.9 

— —

 — 

—

107.1 

10.6 

773.9

60.0

 81.0

86.0

 42.2

107.1

26.8 —

 220.2 64.8 — 40.6 —

0.7 —

——

 —

—

 —

— —

 220.2 64.8 — 40.6 —

0.7 — 280.2 

 — 

Total operating revenues 285.4 891.6 1,177.0 326.3 — 326.3 

Net assets released from restrictions 148.1 58.0 206.1 (148.1) (58.0) (206.1) 

Total support and revenues 433.5 949.6 1,383.1 178.2 (58.0) 120.2 

Expenses: 

Program activities: 

Research Collections management Education, public programs, and exhibitions Business activities 

141.6

18.869.775.5

 189.0 252.0 288.3 — 

330.6 270.8 358.0 

75.5

— — — 

—

— — — 

—

—— — 

— 

141.6

Total program activities 305.6 729.3 1,034.9 — — — 

Supporting activities: 

Administration Advancement 

51.763.1 

204.5

0.7 

256.2 

63.8

— 

—

— 

—

— 

— 

Total supporting activities 114.8 205.2 320.0 — — — Total expenses 420.4 934.5 1,354.9 — — — Change in net assets before depreciation and amortization 13.1 15.1 28.2 178.2 (58.0) 120.2 

Depreciation, amortization, and changes in environmental remediation obligations 58.9 109.6 168.5 — — — 

Change in net assets from operating activities (45.8) (94.5) (140.3) 178.2 (58.0) 120.2 

Nonoperating activities: 

Federal capital appropriations Endowment gifts Gifts for construction projects Investment return, net of endowment payout Gain on sale of real estate Rent revenue Unrelated income tax expense Change in net assets of related organization and other Losses on disposition of assets Collection items not capitalized: 

Collection items purchased Collection items sold 

Net assets released from restrictions 

———

243.9 

0.47.20.1

(4.8) 

(0.3) (7.1) 

1.4

11.2

 — — —

—

 — — — 

— 

(0.8) (3.4) 

— 41.8

 — — — 243.9

0.47.20.1

(4.8) 

(1.1) 

(10.5) 

1.4

 53.0 

— 

37.379.9

 314.2 — — —

(2.2) 

— —

 —

(11.2) 

213.3 

— — 

—

 — — —

— 

— 

— —

(41.8) 

213.3

37.3 79.9 

314.2

 — — — 

(2.2) 

— 

— — 

(53.0) 

—  

Change in net assets from nonoperating activities 252.0 37.6 289.6 418.0 171.5 589.5 

Change in net assets 206.2 (56.9) 149.3 596.2 113.5 709.7 Net assets, beginning of year 1,446.1 1,209.8 2,655.9 1,568.0 413.1 1,981.1 

Net assets, end of year $ 1,652.3 1,152.9 2,805.2 2,164.2 526.6 2,690.8 

See accompanying notes to financial statements. 

4 
SMITHSONIAN INSTITUTION 

Statements of Financial Activities 

Year ended September 30, 2020 

(Dollars in millions) 

Without Donor Restriction 

Trust Federal Total Trust 

2020 

With Donor Restriction 

Federal Total 

Operating: 

Support and revenues: 

Federal appropriations Contributions Grants and contracts Business activities Endowment payout Imputed benefit revenue Short-term investment income and other revenue 

$ — 

47.7 78.0 

108.6

39.1 

— 

21.0 

765.7 

— —

 — 

—

87.2 

10.7 

765.7

47.7

 78.0

108.6

 39.1

87.2

31.7 —

 134.7 57.8 — 37.8 —

0.8 —

——

 —

—

 —

— —

 134.7 57.8 — 37.8 —

0.8 — 182.4 

 — 

Total operating revenues 294.4 863.6 1,158.0 231.1 — 231.1 

Net assets released from restrictions 155.1 23.5 178.6 (155.1) (23.5) (178.6) 

Total support and revenues 449.5 887.1 1,336.6 76.0 (23.5) 52.5 

Expenses: 

Program activities: 

Research Collections management Education, public programs, and exhibitions Business activities 

140.6

17.081.198.6

 182.9 241.8 269.4 — 

323.5 258.8 350.5 

98.6

— — — 

—

— — — 

—

—— — 

— 

140.6

Total program activities 337.3 694.1 1,031.4 — — — 

Supporting activities: 

Administration Advancement 

35.766.7 

175.6

0.5 

211.3 

67.2

— 

—

— 

—

— 

— 

Total supporting activities 102.4 176.1 278.5 — — — Total expenses 439.7 870.2 1,309.9 — — — Change in net assets before depreciation and amortization 9.8 16.9 26.7 76.0 (23.5) 52.5 

Depreciation, amortization, and changes in environmental remediation obligations 58.9 118.0 176.9 — — — 

Change in net assets from operating activities (49.1) (101.1) (150.2) 76.0 (23.5) 52.5 

Nonoperating activities: 

Federal capital appropriations Endowment gifts Gifts for construction projects Investment return, net of endowment payout Gain on sale of real estate Rent revenue Unrelated income tax expense Change in net assets of related organization and other Losses on disposition of assets Collection items not capitalized: 

Collection items purchased Collection items sold 

Net assets released from restrictions 

———

73.3 

3.92.9

— 

(1.3) 

(0.5) (8.7) 

0.6 

13.3

 — — —

— 

— — 

— 

— 

(0.1) (2.3) 

125.8

 — — — 

73.3

3.92.9

— 

(1.3) 

(0.6) 

(11.0) 

0.6

 139.1 

— 

16.8

7.8

 110.4 — —

— 

0.2 

— —

 —

(13.3) 

197.5 

— — 

—

 — —

— 

— 

— 

— —

(125.8) 

197.5

16.8 

7.8 

110.4

 — — 

— 

0.2 

— 

— — 

(139.1) 

—  

Change in net assets from nonoperating activities 83.5 123.4 206.9 121.9 71.7 193.6 

Change in net assets 34.4 22.3 56.7 197.9 48.2 246.1 Net assets, beginning of year 1,411.7 1,187.5 2,599.2 1,370.1 364.9 1,735.0 

Net assets, end of year $ 1,446.1 1,209.8 2,655.9 1,568.0 413.1 1,981.1 

See accompanying notes to financial statements. 

5 
SMITHSONIAN INSTITUTION 

Statements of Cash Flows 

September 30, 2021 and 2020 

(Dollars in millions) 

2021 

Trust Federal Total Trust 

Cash flows from operating activities: 

Change in net assets $ 802.4 56.6 859.0 23Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: 

Gain / loss on disposition of assets and other 0.3 8.1 8.4 

Collection items purchased 7.1 3.4 10.5 

Proceeds from sales of collection items (1.4) — (1.4) 

Depreciation, amortization, and changes in environmental remediation obligations 58.9 109.6 168.5 5

Amortization of operating lease right-of-use assets 23.5 — 23.5 

Present value discount and accretion (0.1) 1.1 1.0 Contributions for endowments (37.3) — (37.3) (1

Contributions for construction of facilities (79.9) — (79.9) Appropriations for repair, restoration, and construction — (213.3) (213.3) 

Net investment gains (638.4) — (638.4) (25

Decrease (increase) in assets: 

Accounts receivables and other assets 14.0 (1.2) 12.8 1

Pledges receivable, net (105.8) — (105.8) (1

Increase (decrease) in liabilities: 

Accounts payable and accrued expenses 6.0 (9.4) (3.4) (1Operating lease liabilities (25.2) — (25.2) 

Deferred revenue (6.5) (0.3) (6.8) Unexpended federal appropriations — 44.0 44.0 

Deferred gain on sale of real estate (0.4) — (0.4) 

Net cash provided by (used in) operating activities 17.2 (1.4) 15.8 

Cash flows from investing activities: 

Purchases of property and equipment (39.3) (164.1) (203.4) (30Purchases of investment securities (563.0) — (563.0) (64

Proceeds from sales/maturities of investment securities 545.8 — 545.8 67

Collection items purchased (7.1) (3.4) (10.5) 

Proceeds from sales of collection items 1.4 — 1.4 

Net cash used in investing activities (62.2) (167.5) (229.7) (28

Cash flows from financing activities: 

Appropriations for repair, restoration, and construction — 214.5 214.5 Contributions for endowments 28.7 — 28.7 2

Contributions for construction of facilities 4.4 — 4.4 

Principal from bond issuance, net — — — 29Principal payments on long-term debt (12.3) — (12.3) 

Net cash provided by financing activities 20.8 214.5 235.3 32

Net change in cash, cash equivalents and U.S. Treasury balances (24.2) 45.6 21.4 3

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

Beginning of year 173.8 713.0 886.8 13

End of year $ 149.6 758.6 908.2 17

Noncash investing activities: 

Construction cost accruals $ 6.6 38.5 45.1 

Cash paid for interest $ 7.1 — 7.1 

See accompanying notes to financial statements. 

6 
 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(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 19 museums and the 

National Zoological Park in Washington, DC, and two museums in New York City. Additional facilities and 

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

museums and other facilities throughout the world. Millions of individuals visit Smithsonian museums and 

other facilities annually: 3.1 million in fiscal year 2021 and 7.7 million in fiscal year 2020. 

As of September 30, 2021, the Smithsonian’s extensive collection contained approximately 157.1 million 

objects: 0.4 million works of arts, 8.7 million historical artifacts, and 148.0 million natural and physical 

science specimens (living and nonliving). The Smithsonian also maintained 144,600 cubic feet of archival 

holdings and 2.2 million library volumes. During fiscal year 2021, 1.6 million collection items were acquired, 

and 6,598 items were deaccessioned. 

By comparison, as of September 30, 2020, the Smithsonian’s extensive collection contained approximately

155.6 million objects: 0.4 million works of arts, 8.8 million historical artifacts, and 146.4 million natural and 

physical science specimens (living and nonliving). The Smithsonian also maintained 164,800 cubic feet of 

archival holdings and 2.4 million library volumes. During fiscal year 2020, 61,386 collection items were 

acquired, and 5,643 items were deaccessioned. 

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 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. 

7 (Continued) 
 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(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. 

(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, and 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. 

8 (Continued) 
 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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, 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. 

U.S. Treasury balances of $758.6 at September 30, 2021 and $713.0 at September 30, 2020 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. 

9 (Continued) 
 

 

 

 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(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 

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, 2021 and 2020, 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. 

Equity hedge is an exchange traded option that seeks to reduce potential downside equity risk. Option 

contracts require payment of premiums in exchange for the right to purchase or sell underlying 

investments at a contracted strike price and maturity. The equity hedge is a put option with a notional 

value of $180 million, expiring on 1/21/2022, and is classified as level 2 in the fair value hierarchy. 

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

10 (Continued) 
 

 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

serves as trustee of the land for as long as they are 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. 

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. Federal 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 

11 (Continued) 
 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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

the statements of financial position. 

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 2021, $0.6 related to the fiscal year 2015 

appropriation was returned. During fiscal year 2020, $0.8 related to the fiscal year 2014 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 of $59.6 at September 30, 2021 and $56.8 at 

September 30, 2020 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 

statement 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 plans were $53.2 for fiscal year 2021 and $48.3 for 

fiscal year 2020, respectively. 

12 (Continued) 
 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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 $107.1 in fiscal year 2021 and $87.2 in fiscal year 2020, respectively. 

The Smithsonian’s current year contributions to the pension plans are recognized in the statement of 

financial activities 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. 

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 FERScovered employees, the Smithsonian is required to match contributions of specified percentages of 

base pay. No matching contributions are made for CSRS-covered employees. Expense recognized for 

the TSP was $14.2 and $13.7 in fiscal year 2021 and 2020, respectively, in the statements of financial 

activities. 

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. 

Expense recognized for the FEGLI was $0.7 and $0.6 in fiscal year 2021 and 2020, respectively, in the 

statements of financial activities. 

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 expense for this plan was $21.5 for fiscal year 2021 and $21.4 for fiscal year 2020, 

within the statements of financial activities. 

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. At year-end, the accrued 

benefit obligation under this plan was $20.6 and $19.2 as of September 30, 2021 and 2020, 

13 (Continued) 
 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

respectively, and is included in accounts payable and accrued expenses in the statement of financial 

position. 

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. 

Expense recognized for the FECA was $2.7 and $3.0 in fiscal year 2021 and 2020, respectively, in the 

statements of financial activities. 

(m) Contributed Services and Donated Assets 

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. 

Donated assets, other than donations of cash or collection items, are recorded at estimated fair value 

at the date of gift. 

In kind contributions such as donated space, equipment, services, and various other items totaled 

$10.4 in fiscal year 2021 and $11.8 in fiscal year 2020, and are recognized as program support 

revenues (within other revenue) and program activities expenses in the statements of financial 

activities. 

(n) 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 worldwide research programs. 

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

of managing the collections. 

14 (Continued) 
 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

• 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. 

(o) 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. During fiscal year 2021 the 

Smithsonian and the Friends of the National Zoo, as well as the UK Charitable Trust, were dissolved. 

The net asset balances were written-off and the losses are reflected in nonoperating activities within 

the statements of financial activities. There are no other related organizations of the Smithsonian. 

(p) 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 2016 and 

forward. 

(q) 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. 

15 (Continued) 
 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(r) 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. 

(s) 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 is affecting the capital markets and the economy, and the museum, 

research and education sectors. The threat from the Pandemic is being addressed on the national, 

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

legislative actions. 

The United States Congress enacted several COVID-19-related bills, including the Coronavirus Aid, 

Relief, and Economic Security Act (CARES Act), signed into law on March 27, 2020, which provided 

over $2 trillion of direct financial aid to American families, payroll and operating expense support for 

small businesses, and loan assistance for distressed industries, as well as providing funds to and 

directing the Federal Reserve System to support the capital markets. In fiscal year 2020, the CARES 

Act provided the Smithsonian with $ 7.5 million in direct support to respond to the Pandemic. 

The Pandemic is an ongoing situation. The Smithsonian’s museums and galleries in the District of 

Columbia and New York and the Smithsonian’s National Zoo were closed in March 2020 to support the 

effort to contain the spread of COVID-19. Select museums, galleries, and the National Zoo were 

reopened in a phased approach over the summer of 2020. However, due to the resurgence of COVID19, they were closed again in November 2020. Starting in the summer of 2021, all museums have 

opened again, although with reduced capacity. 

All business activities of the Smithsonian were negatively affected by the Pandemic. Due primarily to 

the decline in visitors at the museums and other facilities, significant declines in revenues from retail, 

concessions, theaters, in-person classes and parking operations occurred. The continued impact of the 

Pandemic on the Smithsonian’s operating results and financial condition are uncertain. 

(t) Recently Adopted Accounting Pronouncements 

Leases 

In February 2016, FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), 

as amended, which, along with related amendments, replaced existing capital and operating lease 

reporting and disclosure requirements. 

ASU No. 2016-02 requires, among other changes to the lease accounting guidance, lessees to 

recognize most leases on the statement of financial position through both a right-of-use asset and a 

corresponding lease liability, and additional qualitative and quantitative disclosures. The Smithsonian 

adopted Topic 842 using a modified retrospective transition approach effective October 1, 2020, which 

16 (Continued) 
 

 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

resulted in the recognition of operating lease liabilities and right-of-use assets of approximately $110.4. 

As a result, there was no cumulative effect adjustment recognized. 

The Smithsonian elected to adopt the package of transition practical expedients and, therefore, did not 

reassess (1) whether existing or expired contracts contained a lease, (2) lease classification for existing 

or expired leases, or (3) the accounting for initial direct costs that were previously capitalized. 

Additionally, the Smithsonian has adopted the lease-related disclosures in note 8. 

Collections 

In March 2019 FASB issued ASU No. 2019-03, Not-for-Profit Entities (Topic 958): Updating the 

Definition of Collections. The FASB issued this ASU to modify one of the three criteria in the GAAP 

definition of the term collection that required an entity to have an organizational policy that requires the 

proceeds from collection items that are sold to be used to acquire collection items. This criterion has 

been expanded to permit the proceeds to also be used for direct care of existing collections. The ASU 

also requires that a collection-holding entity disclose its policy for the use of proceeds from when 

collection items are deaccessioned. If an entity permits that proceeds be used for direct care, an entity 

must disclose how it defines direct care. 

The Smithsonian updated its collected policy on October 1, 2020 to allow proceeds from 

deaccessioned collection items to be used for direct care. The adoption of ASU 2019-03 did not have a 

material impact on the Smithsonian’s financial statements. 

(u) Recent Accounting Pronouncements 

In September 2020, the FASB issued ASU No. 2020-07, Presentation and Disclosures by Not-for-Profit 

Entities for Contributed Nonfinancial Assets, Not-For-Profit Entities (Topic 958). This ASU is expected 

to increase transparency around contributed nonfinancial assets (also known as “gifts-in-kind”)

received by not-for-profit (organizations, including transparency on how those assets are used and how 

they are valued. It also addresses presentation and disclosure of contributed nonfinancial assets. ASU 

2020-07 is effective for the Smithsonian in fiscal year 2022 and is not expected to have a material 

impact on its financial statements. 

(3) Financial Assets and Liquidity Resources 

Federal appropriations provide a 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 

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 short term, high quality instruments allowing for required 

liquidity and providing a maximum return within defined risk constraints. At September 30, 2021, the 

working capital investment fund totals $338.7 and is comprised of cash equivalents of $63.7 and short-term 

investments of $275.0. At September 30, 2020, the working capital investment fund totals $321.6 and is 

comprised of cash equivalents of $103.0 and short-term investments of $218.6. 

17 (Continued) 
 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

The Smithsonian had a $50.0 line of credit available to provide additional resources if needed. Borrowings 

under the line bear annual interest at LIBOR plus 0.55%. The line expired on October 31, 2020 and was 

not renewed. There were no outstanding borrowings at September 30, 2021 and 2020. 

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: 

Trust Federal Total Trust Federal Total

Financial assets available within one year:

Cash, cash equivalents, and U.S.

Treasury balances $ 149.6 758.6 908.2 173.8 713.0 886.8

Accounts receivable and other assets 26.4 2.7 29.1 24.2 1.6 25.8

Pledges receivable, net 165.7 — 165.7 94.8 — 94.8

Investments 275.0 — 275.0 218.6 — 218.6

Total financial assets 616.7 761.3 1,378.0 511.4 714.6 1,226.0

Plus endowment payout approved for

for fiscal years 2022 and 2021 79.7 — 79.7 80.4 — 80.4

$ 696.4 761.3 1,457.7 591.8 714.6 1,306.4

2021 2020

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 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). 

(4) Accounts Receivable and Other Assets 

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

Trust Federal Total Trust Federal Total

Grants and contracts $ 12.4 2.7 15.1 11.9 1.6 13.5

Trade accounts, net of allowance

for doubtful accounts of $0.3 in 2021

and $0.4 in 2020 14.0 — 14.0 17.7 — 17.7

Inventory 10.6 0.3 10.9 12.0 0.2 12.2

Deferred expenses 5.4 — 5.4 7.8 — 7.8

Accrued interest and dividends receivable 0.2 — 0.2 0.1 — 0.1

Other assets 9.2 — 9.2 16.3 — 16.3

Total receivables and other assets $ 51.8 3.0 54.8 65.8 1.8 67.6

2021 2020

18 (Continued) 
 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(5) Pledges Receivable 

Pledges receivable consist of the following as of September 30: 

2021 2020

Due within:

Less than 1 year $ 165.7 94.8

1 to 5 years 186.3 72.9

5 years and beyond 10.4 0.7

 362.4 168.4

Less:

Allowance for uncollectible contributions (5.6) (2.6)

Unamortized discount (at rates ranging from 1.1% to 2.9%) (7.7) (2.9)

Contributions receivable, net 349.1 162.9

Charitable remainder trusts 20.0 16.2

Pledges receivable, net $ 369.1 179.1

(6) Investments and Fair Value Measurements 

Investments are comprised of the following at September 30: 

2021 2020

Endowment, including Board designated funds $ 2,532.5 1,937.8 

Working capital short-term investments 275.0 218.6 

Charitable gift annuity investments 27.2 22.7 

Total investments $ 2,834.7 2,179.1 

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. 

19 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

The following summarizes Smithsonian’s investments at fair value as of September 30, 2021 and 2020: 

Total Level 1 Level 2 Level 3 NAV (1)

Endowment investments:

Global equities:

Developed markets $ 452.1 58.6 - - 393.5

Emerging markets 147.3 - - - 147.3

Marketable alternatives 357.2 - - - 357.2

Private equity:

Private equity 225.1 - - - 225.1

Venture capital 936.5 27.2 - - 909.3

Real assets:

Energy and natural resources 92.1 - - - 92.1

Real estate funds 182.6 20.8 - - 161.8

Equity hedge 5.5 - 5.5 - -

Fixed income 23.0 - - - 23.0

Cash and equivalents 110.1 110.1 - - -

Pooled investments 2,531.5 216.7 5.5 - 2,309.3

 U.S. Treasury deposits 1.0 1.0 - - -

Total endowment 2,532.5 217.7 5.5 - 2,309.3

Fixed income (working capital fund) 275.0 275.0 - - -

Gift annuities, primarily equities 27.2 27.2 - - -

Total investments 2,834.7 519.9 5.5 - 2,309.3

Charitable remainder trusts 20.0 - - 20.0 -

$ 2,854.7 519.9 5.5 20.0 2,309.3

(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 heirarchy. The fair 

value amounts presented in this table are intended to permit reconciliation of the fair value heirarchy to

the amounts presented within the statement of financial position.

2021

20 (Continued) 
 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

Total Level 1 Level 2 Level 3 NAV (1)

Endowment investments:

Global equities:

Developed markets $ 344.1 42.7 - - 301.4 

Emerging markets 123.3 - - - 123.3 

Marketable alternatives 355.3 - - - 355.3 

Private equity & venture capital

Private equity 186.4 - - - 186.4 

Venture capital 551.6 4.3 - - 547.3 

Real assets:

Energy and natural resources 86.5 6.8 - - 79.7 

Real estate 135.7 - - - 135.7 

Fixed income 22.1 - - - 22.1 

Cash and equivalents 131.8 131.8 - - -

Pooled investments 1,936.8 185.6 - - 1,751.2 

 U.S. Treasury deposits 1.0 1.0 - - -

Total endowment 1,937.8 186.6 - - 1,751.2 

Fixed income (working capital fund) 218.6 218.6 - - -

Gift annuities, primarily equities 22.7 22.7 - - -

Total investments 2,179.1 427.9 - - 1,751.2 

Charitable remainder trusts 16.2 - - 16.2 -

$ 2,195.3 427.9 16.2 - 1,751.2 

2020

(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 heirarchy. The 

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

heirarchy 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 2021 or 2020. 

21 (Continued) 
 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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: 

2021 2020

Fair value of Level 3 assets, beginning of the year $ 16.2 17.9

Unrealized gains (losses) 4.1 (1.4)

Proceeds from distributions (0.3) (0.3)

Fair value of Level 3 assets, end of the year $ 20.0 16.2

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: 

Notice 

Unfunded Redemption Period 

NAV Commitments terms (Days)

Global equity: (a)

 Developed markets $ 393.5 - Weekly to annually 9 - 90

 Emerging markets 147.3 - Monthly to semi-annually 14 - 90

Marketable alternatives (b) 357.2 48.2 Monthly to at maturity 45 - N/A

Private equity: (c)

 Private equity 225.1 64.3 N/A N/A

 Venture capital 909.3 122.8 N/A N/A

Real assets: (d)

 Energy and natural resources 92.1 25.2 N/A N/A

 Real estate funds 161.8 117.2 Quarterly to at maturity 60 - N/A

Fixed income (e) 23.0 - Quarterly 90 

$ 2,309.3 377.7

2021

22 (Continued) 
 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

Notice 

Unfunded Redemption Period

NAV Commitments terms (Days)

Global equity: (a)

 Developed markets $ 301.4 - Weekly to annually 6 - 90

 Emerging markets 123.3 - Monthly to semi-annually 14 - 90

Marketable alternatives (b) 355.3 4.3 Monthly to at maturity 45 - N/A

Private equity: (c)

 Private equity 186.4 77.3 N/A N/A

 Venture capital 547.3 118.4 N/A N/A

Real assets: (d)

 Energy and natural resources 79.7 28.6 N/A N/A

 Real estate funds 135.7 109.5 Quarterly to at maturity 60 - N/A

Fixed income (e) 22.1 - Quarterly 90

$ 1,751.2 338.1

2020

(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, multistrategy 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. 

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

interest-bearing products. 

23 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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: 

2021 2020

Dividend and interest income, net of expenses $ 7.3 6.4 

Net realized and unrealized gains 634.8 259.1 

Total investment return 642.1 265.5 

Endowment payout allocated for operations 82.8 76.9 

Short term investment income 1.2 4.9 

Investment return, net of endowment payout 558.1 183.7 

Total investment return $ 642.1 265.5 

(7) Property and Equipment 

Property and equipment consist of the following as of September 30: 

Trust Federal Total

Land $ 32.8 — 32.8 

Construction in progress 98.8 531.2 630.0 

Buildings and capital improvements 1,211.7 3,070.8 4,282.5 

Equipment and software 199.6 258.1 457.7 

Leasehold improvements 104.0 29.0 133.0 

1,646.9 3,889.1 5,536.0 

Accumulated depreciation (684.6) (2,083.1) (2,767.7) 

Total property and equipment, net $ 962.3 1,806.0 2,768.3 

Depreciation expense $ 58.9 115.8 174.7 

2021

24 (Continued) 
 

 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

Trust Federal Total

Land $ 32.3 — 32.3 

Construction in progress 80.1 416.4 496.5 

Buildings and capital improvements 1,226.5 3,035.7 4,262.2 

Equipment and software 196.2 247.7 443.9 

Leasehold improvements 106.0 25.6 131.6 

1,641.1 3,725.4 5,366.5 

Accumulated depreciation (659.5) (1,966.3) (2,625.8) 

Total property and equipment, net $ 981.6 1,759.1 2,740.7 

Depreciation expense $ 58.9 128.8 187.7 

2020

(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 (see note 2t). 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 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. 

25 (Continued) 
 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

The following table presents the various components of lease expense as of September 30, 2021: 

Operating lease expense $ 25.5 

Variable lease expense 9.8 

Short-term lease expense 3.1 

$ 38.4 

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

transactions as of September 30, 2021. 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. 

Cash paid for amounts included in the measurement of lease liabilities

Operating cash outflows from operating leases $ 21.9

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

At adoption of ASC-Topic 842 89.5

In exchange for new lease liabilities 44.5

Accumulated amortization, ROU assets (23.6)

The weighted-average lease term and discount rate for Smithsonian leases as of September 30, 2021 is 5 

years and 7 months and 0.55%, 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 

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

annual basis for the next five years and thereafter. 

2022 $ 30.1

2023 28.6

2024 22.8

2025 22.6

2026 12.0

Thereafter 19.4

Undiscounted cash flows for leases 135.5

Less: discount (2.1)

Operating lease liabilities $ 133.4 

26 (Continued) 
 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

Prior to the adoption of the new lease guidance on October 1, 2020, ROU assets and lease liabilities for 

operating leases were not recognized in the statements of financial position. The following table depicts 

annual minimum lease payments under operating leases in effect as of September 30, 2020: 

2021 $ 26.8

2022 26.5

2023 24.1

2024 14.0

2025 13.6

Thereafter 10.3

$ 115.3 

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 year ended September 30, 2021 was 

$7.2. 

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

2022 $ 3.6

2023 2.6

2024 2.4

2025 2.3

2026 2.3

Thereafter 12.0

$ 25.2

27 (Continued) 
 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(9) Accounts Payable and Accrued Expenses 

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

Trust Federal Total

Accounts payable $ 26.8 71.8 98.6 

Accrued salaries 14.5 25.4 39.9 

Accrued annual leave 19.8 39.8 59.6 

Workers' compensation (FECA) 2.3 31.0 33.3 

Post retirement benefits 20.6 — 20.6 

Other accrued personnel benefits 0.5 6.1 6.6 

Deferred rent 0.9 — 0.9 

Charitable gift annuity liabilities 13.0 — 13.0 

Other accrued liabilities 1.4 0.3 1.7 

Total accounts payable and accrued expenses $ 99.8 174.4 274.2 

2021

Trust Federal Total

Accounts payable $ 24.2 73.2 97.4 

Accrued salaries 14.2 23.2 37.4 

Accrued annual leave 18.6 38.2 56.8 

Workers' compensation (FECA) 2.3 32.1 34.4 

Post retirement benefits 19.2 — 19.2 

Other accrued personnel benefits 0.3 6.6 6.9 

Deferred rent 23.1 — 23.1 

Charitable gift annuity liabilities 13.2 — 13.2 

Other accrued liabilities 2.7 3.8 6.5 

Total accounts payable and accrued expenses $ 117.8 177.1 294.9 

2020

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

Smithsonian without continued annual Federal appropriations. 

(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 3.0% and 1.5%, as well as a discount rate of 1.8% and 2.2% as of 

September 30, 2021 and 2020, 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. 

28 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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

ended September 30: 

2021 2020

Balance, beginning of the year $ 51.7 61.4

Accretion 1.1 1.1

Remediation costs (8.0) -

Change in estimate 1.8 (10.8)

Balance, end of the year $ 46.6 51.7

 

(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 as of September 30: 

2021 2020

Series 2020 General Obligation Bonds, variable interest rate

of 0.8% to 2.1%, principal ranging $10.7 to $13.0, due

September 1, 2022 through 2034 $ 151.2 161.8 

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, serial, principal amount

$1.7, interest rate 5.0%, due February 1, 2021 — 1.7 

Series 2010 Revenue Bonds, term, principal amounts

ranging $1.8 to $2.4, interest rate 5.25%, due

February 1, 2022 through 2028 14.7 14.7 

Series 2003 Revenue Bonds, variable interest rate of

0.05% to 0.12%, due December 1, 2033

Series A 52.5 52.5 

Series B 25.0 25.0 

379.4 391.7 

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

Less: Unamortized underwriter's discount (2020 bond) (0.7) (0.8) 

Plus: Unamortized bond premium (2010 bond) 0.5 0.7 

$ 378.9 391.3 

29 (Continued) 
 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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 

$10.7 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, which begin on February 1, 2022 and range from $1.8 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 0.05%, as of September 30, 2021 and 

0.12%, as of September 30, 2020. 

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 6, 2022. 

Interest expense was $6.9 in fiscal year 2021 and $3.1 in fiscal year 2020. 

30 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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

2022 $ 12.5

2023 12.7

2024 12.9

2025 13.1

2026 13.3

Thereafter 314.9

$ 379.4 

(12) Net Assets 

Net assets consist of the following as of September 30: 

Without Donor 

Restrictions

With Donor 

Restrictions Total

Endowment investment fund $ — 1,484.1 1,484.1

Board designated quasi endowment funds 1,048.5 — 1,048.5

Total net assets subject to payout 1,048.5 1,484.1 2,532.6

spending policy

Net assets with donor restrictions available for:

Programs and operations — 403.7 403.7

Capital repairs, renovation, and construction — 237.1 237.1

Endowment contributions receivable and other — 20.6 20.6

Net investment in property and equipment 1,847.4 542.0 2,389.4

Unfunded federal liabilities (117.7) (117.7) — 

Undesignated, including time restrictions 27.0 3.3 30.3

$ 2,805.2 2,690.8 5,496.0

2021

31 (Continued) 
 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

Without Donor 

Restrictions

With Donor 

Restrictions Total

Endowment investment fund $ — 1,133.1 1,133.1

Board designated quasi endowment funds 804.7 — 804.7

Total net assets subject to payout 804.7 1,133.1 1,937.8

spending policy

Net assets with donor restrictions available for:

Programs and operations — 273.8 273.8

Capital repairs, renovation, and construction — 124.6 124.6

Endowment contributions receivable and other — 10.3 10.3

Net investment in property and equipment 1,913.8 435.6 2,349.4

Unfunded federal liabilities (125.8) (125.8) — 

Undesignated, including time restrictions 63.2 3.7 66.9

$ 2,655.9 1,981.1 4,637.0

2020

Donor restricted endowment funds include accumulated appreciation of $845.7 as of September 30, 2021 

and $530.5 as of September 30, 2020. Future-funded Federal liabilities include environmental remediation 

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

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

Endowments at 

historical cost

Subject to 

purpose 

restriction 

and time Total

Endowments at 

historical cost

Subject to 

purpose 

restriction 

and time Total

Museums and general support $ 172.3 346.7 519.0 158.5 258.5 417.0 

Education, public programs, exhibitions 299.7 580.2 879.9 279.9 324.1 604.0 

Research 100.1 190.3 290.4 95.0 117.9 212.9 

Acquisitions and collections 61.0 144.3 205.3 60.0 111.6 171.6 

Facilities and capital 1.7 794.5 796.2 1.6 574.0 575.6 

$ 634.8 2,056.0 2,690.8 595.0 1,386.1 1,981.1 

Endowments at historical costs above includes charitable remainder trusts and endowment pledge receivables.

2021 2020

32 (Continued) 
 

 

 

 

 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(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. 

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 consist 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 donorrestricted 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 2021 and 2020 for eligible funds to 

support the advancement priorities. 

33 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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

2021 2020

Market value of fund per unit:

Beginning of the year $ 1,104.32 996.12

End of the year $ 1,414.37 1,104.32

Payout per unit:

Program and operations support $ 45.05 43.91

Advancement $ 3.94 0.81

The following table summarizes the change in endowment funds during fiscal year 2021 and 2020: 

Without 

donor 

restrictions

With donor 

restrictions Total

Endowment net assets at beginning of the year $ 804.7 1,133.1 1,937.8 

reinvestments 16.3 9.7 26.0

1.6 — 1.6

Contributions received — 23.2 23.2

Investment return 268.0 358.7 626.7

Allocation of endowment assets for expenditure (42.1) (40.6) (82.7)

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

2021

Additional designation of quasi endowments and 

Uninvested cash

Without 

donor 

restrictions

With donor 

restrictions Total

Endowment net assets at beginning of the year $ 717.4 1,002.2 1,719.6 

14.5 2.8 17.3

Uninvested cash 1.7 — 1.7

Contributions received — 16.8 16.8

Investment return 110.2 149.1 259.3

Allocation of endowment assets for expenditure (39.1) (37.8) (76.9)

Endowment net assets at end of year $ 804.7 1,133.1 1,937.8 

2020

Additional designation of quasi endowments and 

reinvestments

34 (Continued) 
 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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. 

At September 30, 2021 and 2020, there are no significant underwater endowment funds. 

(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 2021 and 2020: 

Trust Federal Total

Operating releases:

Purpose restricted gifts released for:

Museums and general support $ 27.8 — 27.8 

Education, public programs and exhibitions 64.4 — 64.4 

Research 45.7 — 45.7 

Acquisitions and collections 9.4 — 9.4 

Facilities 0.8 58.0 58.8 

Total operating releases 148.1 58.0 206.1 

Nonoperating releases:

Assets placed in service and released from:

Capital appropriation — 41.8 41.8 

Capital contributons 11.2 — 11.2 

Total nonoperating releases 11.2 41.8 53.0 

Total releases $ 159.3 99.8 259.1 

2021

35 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

Trust Federal Total

Operating releases:

Purpose restricted gifts released for:

Museums and general support $ 26.4 — 26.4 

Education, public programs and exhibitions 72.4 — 72.4 

Research 44.0 — 44.0 

Acquisitions and collections 9.8 — 9.8 

Facilities 2.5 23.5 26.0 

Total operating releases 155.1 23.5 178.6 

Nonoperating releases:

Assets placed in service and released from:

 Research Research 0.3 — 0.3 

Capital appropriation — 125.8 125.8 

Capital contributons 13.0 — 13.0 

Total nonoperating releases 13.3 125.8 139.1 

Total releases $ 168.4 149.3 317.7 

2020

(15) Federal Appropriations 

The Federal appropriation received in fiscal year 2021 is reconciled to Federal appropriation revenue 

recognized, which includes the remaining amounts recognized from fiscal year 2020 appropriation for 

COVID-19 expenses from the Cares Act, as follows: 

Repair,

Salaries restoration,

and and

expenses construction Total

Federal appropriations received $ 818.2 214.5 1,032.7 

Unexpended appropriations (163.0) (187.2) (350.2) 

Amounts expended from prior years’ appropriations 118.7 186.0 304.7 

Federal appropriation revenue $ 773.9 213.3 987.2 

Without donor restrictions (operating) $ 773.9 — 773.9 

With donor restrictions (nonoperating) — 213.3 213.3 

Federal appropriation revenue $ 773.9 213.3 987.2 

2021

36 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

The Federal appropriation received in fiscal year 2020, which includes $7.5 million for COVID-19 from the 

Cares Act, is reconciled to Federal appropriation revenue recognized as follows: 

Repair,

Salaries restoration,

and and

expenses construction Total

Federal appropriations received $ 801.1 253.8 1,054.9 

Unexpended appropriations (128.7) (338.9) (467.6) 

Amounts expended from prior years’ appropriations 93.3 282.6 375.9 

Federal appropriation revenue $ 765.7 197.5 963.2 

Without donor restrictions (operating) $ 765.7 — 765.7 

With donor restrictions (nonoperating) — 197.5 197.5 

Federal appropriation revenue $ 765.7 197.5 963.2 

2020

(16) Business Activities 

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

Net Net

Operating operating Operating operating

Revenue expenses gain Revenue expenses gain

Smithsonian Enterprises $ 70.7 66.0 4.7 92.9 91.3 1.6

Unit activities 15.3 11.5 3.8 15.7 9.3 6.4

$ 86.0 77.5 8.5 108.6 100.6 8.0

2021 2020

Revenue is further detailed as follows for the years ended September 30: 

2021 2020

Merchandise sales $ 12.0 27.9

Media 28.0 37.2

Concessions, licensing, and other 46.0 43.5

$ 86.0 108.6

37 (Continued) 
 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(17) Functional Classification of Expenses 

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

September 30, 2021 as follows: 

Education,

public

programs

Collections and Business

Research management exhibitions activities Administrative Advancement Total

Trust

$ 78.2 13.7 40.5 46.1 30.4 38.3 247.2

Rent, utilities, services, and supplies 60.3 4.0 27.0 12.4 14.8 21.9 140.4

Cost of sales — — 0.1 27.2 — 2.5 29.8

Travel and transportation 0.5 0.5 1.2 — 0.1 (0.1) 2.2

Other 2.6 0.6 0.9 (10.2) 6.4 0.5 0.8

Total before depr & amort 141.6 18.8 69.7 75.5 51.7 63.1 420.4

changes in environmental 

remediation obligations 6.8 20.4 19.8 2.0 9.8 0.1 58.9

Total operating expenses $ 148.4 39.2 89.5 77.5 61.5 63.2 479.3

Federal

$ 128.8 157.4 177.4 — 131.6 0.3 595.5

Rent, utilities, services, and supplies 52.7 78.7 94.7 — 65.4 0.3 291.8

Cost of sales — — — — 0.1 — 0.1

Travel and transportation 0.3 0.5 0.4 — 0.1 — 1.3

Other 7.2 15.4 15.8 — 7.3 0.1 45.8

Total before depr & amort 189.0 252.0 288.3 — 204.5 0.7 934.5

Depreciation, amortization, and 

changes in environmental 

remediation obligations 12.6 37.9 40.7 — 18.2 0.2 109.6

Total operating expenses $ 201.6 289.9 329.0 — 222.7 0.9 1,044.1

Total Operating Expenses

$ 207.0 171.1 217.9 46.1 162.0 38.6 842.7

Rent, utilities, services, and supplies 113.0 82.7 121.7 12.4 80.2 22.2 432.2

Cost of sales — — 0.1 27.2 0.1 2.5 29.9

Travel and transportation 0.8 1.0 1.6 — 0.2 (0.1) 3.5

Other 9.8 16.0 16.7 (10.2) 13.7 0.6 46.6

Total before depr & amort 330.6 270.8 358.0 75.5 256.2 63.8 1,354.9

Depreciation, amortization, and 

changes in environmental 

remediation obligations 19.4 58.3 60.5 2.0 28.0 0.3 168.5

Total operating expenses $ 350.0 329.1 418.5 77.5 284.2 64.1 1,523.4

Program Activities Supporting Activities

Compensation and benefits

Compensation and benefits

Compensation and benefits

Depreciation, amortization, and 38 (Continued) 
SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

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

September 30, 2020 as follows: 

Education,

public

programs

Collections and Business

Research management exhibitions activities Administrative Advancement Total

Trust

$ 76.7 13.4 42.0 53.0 35.0 38.3 258.4

Rent, utilities, services, and supplies 60.1 4.3 34.5 14.7 (1.2) 24.5 136.9

Cost of sales — — 0.1 40.9 — 2.7 43.7

Travel and transportation 2.4 0.4 3.1 0.2 0.3 0.7 7.1

Other 1.4 (1.1) 1.4 (10.2) 1.6 0.5 (6.4)

Total before depr & amort 140.6 17.0 81.1 98.6 35.7 66.7 439.7

Depreciation, amortization, and 

changes in environmental 

remediation obligations 6.8 20.3 19.9 2.0 9.8 0.1 58.9

Total operating expenses $ 147.4 37.3 101.0 100.6 45.5 66.8 498.6

Federal

$ 124.5 155.9 170.7 — 126.0 0.3 577.4

Rent, utilities, services, and supplies 50.9 78.4 92.3 — 46.0 0.2 267.8

Cost of sales — — 0.1 — 0.1 — 0.2

Travel and transportation 1.1 0.8 0.8 — 0.2 — 2.9

Other 6.4 6.7 5.5 — 3.3 — 21.9

Total before depr & amort 182.9 241.8 269.4 — 175.6 0.5 870.2

Depreciation, amortization, and 

changes in environmental 

remediation obligations 13.6 40.8 43.8 — 19.6 0.2 118.0

Total operating expenses $ 196.5 282.6 313.2 — 195.2 0.7 988.2

Total Operating Expenses

$ 201.2 169.3 212.7 53.0 161.0 38.6 835.8

Rent, utilities, services, and supplies 111.0 82.7 126.8 14.7 44.8 24.7 404.7

Cost of sales — — 0.2 40.9 0.1 2.7 43.9

Travel and transportation 3.5 1.2 3.9 0.2 0.5 0.7 10.0

Other 7.8 5.6 6.9 (10.2) 4.9 0.5 15.5

Total before depr & amort 323.5 258.8 350.5 98.6 211.3 67.2 1,309.9

Depreciation, amortization, and 

changes in environmental 

remediation obligations 20.4 61.1 63.7 2.0 29.4 0.3 176.9

Total operating expenses $ 343.9 319.9 414.2 100.6 240.7 67.5 1,486.8

Program Activities Supporting Activities

Compensation and benefits

Compensation and benefits

Compensation and benefits

Collections items purchased included in nonoperating activities are collections management activities. 

39 (Continued) 
 

 

 

 

 

 

 

 

SMITHSONIAN INSTITUTION 

Notes to Financial Statements 

September 30, 2021 and 2020 

(Dollars in millions) 

(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, 2021, the Smithsonian has commitments of approximately $448.6 related to 

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

Space Museum of $252.6. 

(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 

Subsequent to September 30, 2021, the Smithsonian committed capital of $101.3 to 15 funds and 

redeemed $52.7 from its existing fund managers. Management has evaluated subsequent events from 

September 30, 2021 through January 26, 2022, 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. 

40