Annual Report 2008
Colonial Williamsburg monitors and reports internally on the regularly recurring, or operating, revenues and expenses resulting from routine activities in order to assess the financial performance of its educational and for-profit activities. It reports in the audited financial statements all revenue and expense in accordance with generally accepted accounting principles to reflect the consolidated financial impact of all activities of the foundation and its subsidiaries. A third reporting format is required by the Internal Revenue Service on Form 990, an annual information return for The Colonial Williamsburg Foundation, the 501 (c ) (3) entity that is exempt from federal income taxes on most of its activities. The financial results on Form 990 are the unconsolidated financial results of only this 501 (c) (3) organization; the foundation’s taxable subsidiaries—for example, Colonial Williamsburg Company—report their financial results separately on corporate income tax returns.
The operating results presented in the internal report and reflected in the top half of the consolidated income statement and statement of changes in net assets shown in this annual president’s report incorporate ticket sales, all revenues generated by hospitality and products, sales, unrestricted operating gifts and restricted gifts for operations spent for their intended purpose during the year, the budgeted amount of endowment support provided by our endowment spending policy, and all operating expenses of the foundation and its subsidiaries.
Below the operating deficit line in the annual president’s report we include nonoperating items, such as the difference between the total return produced by the endowment and the budgeted endowment support, all other gifts and grants—that is to say, pledges, restricted gifts received but not spent, gifts for endowment and capital projects, and gifts of objects—gains on sale of real estate, noncash adjustments such as unrealized gains and losses in the pension plan and interest rate swap agreements, and the financial statement impact of changes in generally accepted accounting principles. The combination of the operating and nonoperating items is reflected as the change in net assets, which is consistent with the audited financial statements.
During calendar year 2008, Colonial Williamsburg’s revenue-generating activities—visitation, hospitality, products, commercial real estate, and fund-raising—felt the impact of the slowdown in the domestic economy, high gasoline prices during the summer vacation season, and decline in the financial markets, particularly during the fourth quarter of 2008.
For 2008, total revenues, including budgeted endowment support, were $210 million, a decrease of $15 million from 2007, and expenses were $249 million, a decrease of $13 million from 2007. The operating loss was $39 million, an increase of $2 million relative to the year before. The foundation’s endowment value was $611 million at year’s end, a decline of $209 million from the year before. In a year in which the global stock markets declined between 37 percent and 53 percent, Colonial Williamsburg’s endowment produced a total return of negative 17.6 percent. That performance ranked the foundation in the top decile of endowed institutions.
As of December 31, net assets were $728 million, a $326 million decrease compared with year-end 2007 net assets of $1.054 billion. The primary reasons for the decrease were the negative endowment and pension investment returns, and withdrawals from the endowment to support operations and routine capital expenditures.