B-169011, APR. 2, 1970

B-169011: Apr 2, 1970

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FUNDS FOR MAGAZINE ARE NOT EVEN TRUST FUNDS BUT ARE PRIVATE SPECIAL PURPOSE (NONAPPROPRIATED) FUNDS ADMINISTERED BY SMITHSONIAN ASSOCIATES. FINANCIAL SUPPORT FOR MAGAZINE IS TO COME FROM SUBSCRIPTIONS. AUDITING FUNCTION OF GAO DOES NOT EXTEND TO PUBLICATION ACTIVITIES OF SMITHSONIAN ASSOCIATES SINCE NO APPROPRIATED FUNDS ARE INVOLVED. STATUS SMITHSONIAN INSTITUTION WAS CREATED BY ACT OF AUG. 10. 1846 TO ADMINISTER CHARITABLE TRUST CREATED BY WILL OF JOHN SMITHSON. PRINCIPAL OF BEQUEST WAS REQUIRED TO BE LENT TO U.S. WHICH WAS APPROPRIATED TO INSTITUTION'S PERPETUAL MAINTENANCE AND SUPPORT. HAVE NOT AUDITED INSTITUTION'S TRUST FUNDS (NONAPPROPRIATED FUNDS) SINCE ITS ESTABLISHMENT. ONLY SOME SPECIFIC ACTIVITIES ARE SUPPORTED BY APPROPRIATED FUNDS AND GAO'S AUDIT THEREOF IS SPECIFICALLY PROVIDED IN BUDGET AND ACCOUNTING ACT.

B-169011, APR. 2, 1970

SMITHSONIAN INSTITUTION--PUBLICATIONS--LEGALITY EDITOR OF "LANDSCAPE ARCHITECTURE" PROTESTS ALLEGED ENTRANCE OF SMITHSONIAN INSTITUTION INTO COMMERCIAL PUBLISHING BUSINESS BY PUBLISHING MAGAZINE "SMITHSONIAN." HOWEVER, FUNDS FOR MAGAZINE ARE NOT EVEN TRUST FUNDS BUT ARE PRIVATE SPECIAL PURPOSE (NONAPPROPRIATED) FUNDS ADMINISTERED BY SMITHSONIAN ASSOCIATES, BODY OF PRIVATE CITIZENS WITH NO RESPONSIBILITY FOR OR ACCESS TO APPROPRIATED FUNDS. FINANCIAL SUPPORT FOR MAGAZINE IS TO COME FROM SUBSCRIPTIONS, ADVERTISING AND OTHER PRIVATE SOURCES AND, THEREFORE, AUDITING FUNCTION OF GAO DOES NOT EXTEND TO PUBLICATION ACTIVITIES OF SMITHSONIAN ASSOCIATES SINCE NO APPROPRIATED FUNDS ARE INVOLVED. SMITHSONIAN INSTITUTION--STATUS SMITHSONIAN INSTITUTION WAS CREATED BY ACT OF AUG. 10, 1846 TO ADMINISTER CHARITABLE TRUST CREATED BY WILL OF JOHN SMITHSON. PRINCIPAL OF BEQUEST WAS REQUIRED TO BE LENT TO U.S. TREASURY AT 6% INTEREST, WHICH WAS APPROPRIATED TO INSTITUTION'S PERPETUAL MAINTENANCE AND SUPPORT, AND ITS ORGANIZATION AND POWERS REMAIN SUBSTANTIALLY UNCHANGED. ACCOUNTING OFFICERS OF GOVT. HAVE NOT AUDITED INSTITUTION'S TRUST FUNDS (NONAPPROPRIATED FUNDS) SINCE ITS ESTABLISHMENT. ONLY SOME SPECIFIC ACTIVITIES ARE SUPPORTED BY APPROPRIATED FUNDS AND GAO'S AUDIT THEREOF IS SPECIFICALLY PROVIDED IN BUDGET AND ACCOUNTING ACT, 1921.

TO LANDSCAPE ARCHITECTURE:

THIS IS IN RESPONSE TO YOUR LETTER OF FEBRUARY 3, 1970, IN WHICH YOU PROTEST THE ENTRANCE OF THE SMITHSONIAN INSTITUTION INTO THE COMMERCIAL MAGAZINE PUBLISHING BUSINESS, IN COMPETITION WITH YOUR OWN JOURNAL AND MANY OTHERS, BY PUBLISHING THE MAGAZINE "SMITHSONIAN." YOU FURTHER STATE THAT YOU HAVE BEEN INFORMED BY THE SECRETARY OF THE SMITHSONIAN INSTITUTION THAT "SMITHSONIAN" IS BEING FINANCED BY A NONTAX SUPPORTED SECTOR OF THE INSTITUTION, SMITHSONIAN ASSOCIATES.

WE UNDERSTAND THAT AT A MEETING OF THE BOARD OF REGENTS OF THE SMITHSONIAN INSTITUTION ON JANUARY 28, 1970, PLANS FOR THE PUBLICATION OF THE MAGAZINE "SMITHSONIAN" WERE APPROVED. FINANCIAL SUPPORT FOR THE MAGAZINE WAS TO COME FROM SUBSCRIPTION INCOME, ADVERTISING REVENUE AND OTHER PRIVATE SOURCES OUTSIDE PRESENTLY EXISTING SMITHSONIAN FUNDS.

BECAUSE OF THE UNIQUE NATURE OF THE SMITHSONIAN INSTITUTION, ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE NOT AUDITED THE TRUST FUNDS (NONAPPROPRIATED FUNDS) OF THE INSTITUTION SINCE ITS ESTABLISHMENT.

THE INSTITUTION WAS CREATED BY THE ACT OF AUGUST 10, 1846 (9 STAT. 102) TO ADMINISTER THE CHARITABLE TRUST CREATED BY THE WILL OF JOHN SMITHSON, WHO BEQUEATHED THE BULK OF HIS ESTATE "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." THAT ACT, THE PRESIDENT AND VICE PRESIDENT, THE HEADS OF THE EXECUTIVE DEPARTMENTS, THE CHIEF JUSTICE, THE COMMISSIONER OF THE PATENT OFFICE, AND THE MAYOR OF THE CITY OF WASHINGTON, DURING THEIR TERMS OF OFFICE, WITH SUCH OTHER PERSONS AS THEY MIGHT ELECT AS HONORARY MEMBERS, WERE CONSTITUTED AN "ESTABLISHMENT," TO HAVE PERPETUAL SUCCESSION, "WITH THE POWERS, LIMITATIONS, AND RESTRICTIONS, HEREINAFTER CONTAINED, AND NO OTHER." CONDUCT OF THE BUSINESS OF THE INSTITUTION WAS VESTED IN A BOARD OF REGENTS, COMPOSED OF THE VICE-PRESIDENT, THE CHIEF JUSTICE, THE MAYOR OF WASHINGTON, THREE MEMBERS OF EACH HOUSE OF THE CONGRESS, AND SIX OTHER PERSONS TO BE CHOSEN BY JOINT RESOLUTION OF CONGRESS. THE PRINCIPAL OF THE SMITHSON BEQUEST (WHICH HAD BEEN PAID INTO THE TREASURY IN 1838) WAS REQUIRED TO BE LENT TO THE UNITED STATES TREASURY AT SIX PERCENT INTEREST, WHICH WAS APPROPRIATED TO THE PERPETUAL MAINTENANCE AND SUPPORT OF THE INSTITUTION. A TRACT OF PUBLICLY OWNED LAND WAS APPROPRIATED TO THE INSTITUTION, AND CONSTRUCTION OF A SUITABLE BUILDING THEREON FOR A MUSEUM, LABORATORY, LIBRARY, ART GALLERY, AND LECTURE ROOMS WAS AUTHORIZED, AUTHORITY BEING VESTED IN THE REGENTS TO CONTRACT FOR THE BUILDING UPON SUCH PLAN AS THEY MIGHT DIRECT, TAKING SUFFICIENT SECURITY FOR THE PERFORMANCE OF THE CONTRACT. PAYMENT OF THE DEBTS OR UPON CONTRACTS INCURRED OR ENTERED INTO IN CONFORMITY WITH THE ACT WAS AUTHORIZED TO BE MADE UPON CERTIFICATION O THE CHANCELLOR AND SECRETARY. A REPORT OF THE OPERATIONS, EXPENDITURES, AND CONDITION OF THE INSTITUTION WAS REQUIRED TO BE MADE TO CONGRESS AT EACH SESSION.

FROM TIME TO TIME THE FUNCTIONS OF THE SMITHSONIAN HAVE BEEN INCREASED BY LAWS PLACING UNDER ITS CONTROL ADDITIONAL ESTABLISHMENTS OR AUTHORIZING IT TO EXTEND ITS ACTIVITIES INTO ADDITIONAL FIELDS, BUT ITS ORGANIZATION AND POWERS WITH RESPECT TO THE SUBJECT MATTER OF ITS CREATION HAVE REMAINED SUBSTANTIALLY UNCHANGED. (SEE 20 U.S.C. 41 57.)

FROM THE INFORMATION AVAILABLE TO US AT THIS TIME IT APPEARS THAT THE FUNDS INTENDED TO BE UTILIZED FOR THE MAGAZINE "SMITHSONIAN" ARE NOT EVEN TRUST FUNDS ADMINISTERED BY THE INSTITUTION ITSELF BUT ARE PRIVATE SPECIAL PURPOSE (NONAPPROPRIATED) FUNDS ADMINISTERED BY SMITHSONIAN ASSOCIATES, A BODY OF PRIVATE CITIZENS WITH NO RESPONSIBILITY FOR OR ACCESS TO APPROPRIATED FUNDS FOR ANY PURPOSE WHATSOEVER.

THUS IT DOES NOT APPEAR TO US THAT THE AUDITING FUNCTION OF THIS OFFICE EXTENDS TO THE PUBLICATION ACTIVITIES OF SMITHSONIAN ASSOCIATES.

YOU FURTHER STATE:

"THIS DOES NOT GET AROUND THE FACT THAT THE SMITHSONIAN MAGAZINE COULD NOT EXIST WITHOUT THE PRESENCE OF THE SMITHSONIAN INSTITUTION, WHICH IS SUPPORTED BY TAXES. * * *"

SMITHSONIAN INSTITUTION IS ONLY SUPPORTED IN SOME SPECIFIC ACTIVITIES BY APPROPRIATED FUNDS, FUNDS ULTIMATELY DERIVED FROM TAXATION. ALTHOUGH IT MAY BE THAT THE SUBSCRIBER AND ADVERTISER ACCEPTANCE OF SMITHSONIAN MAGAZINE DEPENDS IN LARGE PART ON ITS PERMITTED USE OF THE SMITHSONIAN NAME, THIS IS AN AREA WHERE NO APPROPRIATED FUNDS ARE INVOLVED.

IN SUMMARY, OUR AUDIT OF THE FUNDS APPROPRIATED FROM THE UNITED STATES TREASURY TO THE SMITHSONIAN INSTITUTION, WHICH IS SPECIFICALLY PROVIDED IN THE BUDGET AND ACCOUNTING ACT, 1921, DOES NOT COVER THE SITUATION HERE PRESENTED.