3. Federal Taxes:

The Internal Revenue Code imposes an excise tax on private foundations equal to 2 percent of net investment income (principally interest, dividends, and net realized capital gains, less expenses incurred in the production of investment income). This tax may be reduced to 1 percent for foundations that meet certain distribution requirements.

The provision for federal excise tax consists of a current provision on realized net investment income and a deferred provision on net unrealized appreciation of investments. The current provision for 2004 on net investment income at 2 percent was $21,197,914 and the current provision for 2003 on net investment income at 1 percent was $5,758,728. The change in unrealized appreciation reflected on the statements of activities includes a provision for deferred taxes based on net unrealized appreciation of investments at 2 percent. The increase (decrease) in unrealized appreciation in 2004 and in 2003 resulted in a change of the deferred federal excise tax liability of $8,727,382 and ($1,605,379), respectively.

In 2004 and 2003 the Foundation was liable for federal and state unrelated business income tax in connection with its limited partnership interests. The Foundation paid or credited approximately $2,500,000 for this federal and state unrelated business income tax for each of 2004 and 2003.

4. Contributions Receivable:

Contributions receivable at December 31, 2004 and 2003 include $11,377,805 and $9,880,780, respectively, representing the present value of the estimated future benefit to be received as a beneficiary in a charitable remainder trust. The interest rates used to discount the trust receivable to present value range from 4.75 percent to 6.5 percent at December 31, 2004 and 5 percent to 6.5 percent at December 31, 2003.

5. Investments:

At December 31, 2004 and 2003, the cost and fair values of the investments are summarized as follows (in thousands):

Included in Domestic equities and International equities at December 31, 2004 and 2003 are approximately $238 million and $165 million, respectively, of securities on loan pursuant to a securities lending agreement.

Pursuant to its limited partnership agreements, as of December 31, 2004 and 2003, the Foundation had commitments of approximately $1,136 million and $801 million, respectively, which are expected to be funded over the next three to five years.

The Foundation purchases and sells forward foreign currency contracts whereby the Foundation agrees to exchange one currency for another on an agreed-upon date at an agreed-upon exchange rate to minimize the exposure of certain of its investments to adverse fluctuations in currency markets. At December 31, 2004 and 2003, the Foundation had open forward foreign currency contracts with notional amounts totaling $9.6 million and $8.6 million, respectively. Included in the statements of financial position at fair value are pending receivables of $9,663,879 and pending payables of $9,663,863, resulting in an unrealized loss of $16 at December 31, 2004 and pending receivables of $8,853,246 and pending payables of $8,992,275, resulting in an unrealized loss of $139,029 at December 31, 2003. Such contracts involve, to varying degrees, the possible inability of counterparties to meet the terms of their contracts. Changes in the value of forward foreign currency contracts are recognized as unrealized gains or losses until such contracts are closed.

The net realized gains on sales of securities for 2004 and 2003 were as follows (in thousands):