0.15 Appendixes

Appendix c: financial analysis: notes and tables

A critical component of this story has been the Society's evolving financial con­dition. Because of that fact, a detailed analysis of the Society's financial state­ments was conducted that reaches back to 1935, the year the Society received the $4.5 million Thompson bequest. There are certain problems in studying a time series of such length. Most significant, because the analysis uses data from the Society's annual reports and audited financial statements, it changes with the for­mats chosen by the Society's accountants and managers at the time. Occasionally, these changes make it difficult to keep presentation of the information consistent over time. To alleviate this problem, this analysis focuses on major financial categories only. From 1935 to 1974, the statements were, for the most part, comparable; however, in 1975, the Society converted from cash-based accounting to an accrual accounting system using complex (and very different) fund accounting concepts. Because of that change, the analysis of the tenure of James J. Heslin has been divided into two parts, 1960-1974 and 1975-1981.

The data shown in the tables that follow differ from what was originally pre­sented in the Society's statements. The chief difference involves distinguishing between operating and capital activity. Unfortunately, nonprofit institutions are not required to prepare operating statements. Consequently, activities that are capital in nature, such as the receipt of endowment gifts or sales of real prop­erty, are often shown as part of the current operating performance of the insti­tution. Inclusion of such cash inflows as operating income does not provide an accurate picture of an institution's operating stability, and every effort has been made to exclude such capital activity from the operating data.

What follows are brief summaries of the most significant assumptions, along with adjustments that have been made to the results, for the tables that follow.

Table c.3-1

1937: The Society included certain expenditures for the construction of its building. These amounts, totaling $51,000, were excluded from total oper­ating expenditures.

1939: The Society borrowed approximately $25,000 from the endowment to cover a deficit, but it was shown as revenue. $25,000 was deducted from total operating revenue. The interfund loan was repaid in 1950.

1943: The Society purchased a neighboring lot at 15 West Seventy-Sixth Street for $25,000. That amount was deducted from total operating expen­ditures.

Table c.3-2

1950: The Society transferred $25,000 from operations to the endowment to retire the interfund loan taken in 1939 (no interest was paid). $25,000 was deducted from total operating expenditures.

1954: Several changes took place in the Society's accounts in this year. First, there were several capital transfers from operations (including a $15,000 transfer to a publications fund) totaling approximately $24,000, which has been deducted from total operating expenditures. The Society also established three board-designated funds, the accumulated surplus fund, a pension fund, and an accessions fund.