The Solomon R. Guggenheim Foundation...The Solomon R. Guggenheim Foundation Consolidated Statement of Activities Year Ended December 31, 2010 The accompanying notes are an integral

The Solomon R. Guggenheim

Foundation Consolidated Financial Statements

December 31, 2010 and 2009

The Solomon R. Guggenheim Foundation Index


Pages(s)

Report of Independent Auditors ............................................................................................................... 1

Consolidated Financial Statements

Statements of Financial Position as of December 31, 2010 and 2009 ......................................................... 2

Statements of Activities for the years ended December 31, 2010 and 2009 ............................................ 3–4

Statements of Cash Flows for the years ended December 31, 2010 and 2009 ............................................ 5

Notes to Financial Statements ................................................................................................................ 6–33

PricewaterhouseCoopers LLP, PricewaterhouseCoopers Center, 300 Madison Avenue, New York, NY 10017 T: (646) 471 3000, F: (813) 286 6000, www.pwc.com/us

Report of Independent Auditors

To the Board of Trustees of The Solomon R. Guggenheim Foundation

In our opinion, the accompanying consolidated statements of financial position and the related

consolidated statements of activities and cash flows present fairly, in all material respects, the financial

position of The Solomon R. Guggenheim Foundation (“the Foundation”) at December 31, 2010 and 2009,

and the changes in its net assets and its cash flows for the years then ended in conformity with accounting

principles generally accepted in the United States of America. These consolidated financial statements are

the responsibility of the Foundation’s management. Our responsibility is to express an opinion on these

consolidated financial statements based on our audits. We conducted our audits of these statements 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 of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements, assessing the accounting principles

used and significant estimates made by management, and evaluating the overall financial statement

presentation. We believe that our audits provide a reasonable basis for our opinion.

May 25, 2011

The Solomon R. Guggenheim Foundation Consolidated Statements of Financial Position


The accompanying notes are an integral part of these consolidated financial statements.

2

2010 2009

AssetsCash and cash equivalents 8,709,577$ 5,579,761$ Contributions and grants receivable, net 17,374,817 22,388,706Accounts receivable 2,661,439 2,494,479Other receivables 968,168 1,631,506Inventories 1,078,435 1,320,860Prepaid expenses 190,558 158,963Deferred costs 664,584 657,651Investments 51,429,074 47,162,934Property, equipment and leasehold improvements, net 72,956,535 77,935,677Art collection 1 1

Total assets 156,033,188$ 159,330,538$

Liabilities and Net Assets

Liabilities Accounts payable and accrued expenses 12,854,714$ 14,595,082$ Deferred income and other 32,063,725 34,996,444Demand and other loans payable to banks 7,873,645 5,237,460Loan payable to Trust for Cultural Resources 12,700,000 14,800,000

Total liabilities 65,492,084 69,628,986

Net assetsUnrestricted 21,179,292 21,394,460 Temporarily restricted 20,386,651 21,920,809Permanently restricted 48,975,161 46,386,283

Total net assets 90,541,104 89,701,552

Total liabilities and net assets 156,033,188$ 159,330,538$

The Solomon R. Guggenheim Foundation Consolidated Statement of Activities

Year Ended December 31, 2010


3

Temporarily Permanently

Unrestricted Restricted Restricted Total

Operating support and revenue

Contributions, grants and bequests 12,884,510$ 4,336,006$ -$ 17,220,516$

Membership income 2,916,999 2,916,999

In-kind contributions 1,110,928 1,110,928

Benefit and special event income, net of direct expenses

of $1,624,163 1,739,011 1,739,011

Admissions 16,269,696 16,269,696

Traveling exhibition fees, royalties and other 12,753,664 12,753,664

Investment income from spending rate 640,008 640,008

Investment income (net of fees) (182,345) (150,247) (332,592)

Short-term investment income 7,138 7,138

Auxiliary revenues 8,188,042 8,188,042

Net assets released from restrictions 4,799,112 (4,799,112) -

Total operating support and revenue 61,126,763 (613,353) - 60,513,410

Operating expenses

Museum programs

Exhibition and projects 12,722,740 12,722,740

Traveling exhibitions 5,540,335 5,540,335

Curatorial and collection maintenance 9,323,900 9,323,900

Visitor services 4,837,714 4,837,714

Education 2,943,696 2,943,696

Auxiliary expenses, including cost of sales 7,013,743 7,013,743

Total program expense 42,382,128 - - 42,382,128

Supporting services

Management and general 11,420,213 11,420,213

Fundraising 2,821,162 2,821,162

Total supporting service 14,241,375 - - 14,241,375

Total operating expense 56,623,503 - - 56,623,503


over operating expense 4,503,260 (613,353) - 3,889,907

Nonoperating activity

Contributions 250,000 1,388,735 1,638,735

Net assets released from restriction 500,000 (500,000) -

Allowance for doubtful contributions receivable (500,000) (2,000,000) (2,500,000)

Investment return greater than spending amount 2,013,037 1,118,393 1,200,143 4,331,573

Depreciation and amortization (5,707,538) (5,707,538)

Interest and fees relating to debt (675,608) (675,608)

Net gain on disposal of fixed assets 23,013 23,013

Net change in postretirement benefit obligation 130,470 130,470

Foreign currency translation (226,487) (226,487)

Change in net assets before other changes 310,147 (1,994,960) 2,588,878 904,065

Change in net assets related to collection items purchased

Contributions 284,906 330,293 615,199

Net assets released from restrictions - collection

items purchased 163,478 (163,478) -

Collection items purchased (679,712) (679,712)

Change in net assets before cumulative

effects of changes in accounting principle 78,819 (1,828,145) 2,588,878 839,552

Reclassification for NYPMIFA (293,987) 293,987 -

Change in net assets (215,168) (1,534,158) 2,588,878 839,552

Net Assets

Beginning of year 21,394,460 21,920,809 46,386,283 89,701,552

End of year 21,179,292$ 20,386,651$ 48,975,161$ 90,541,104$

The Solomon R. Guggenheim Foundation Consolidated Statement of Activities

Year Ended December 31, 2009


4




Contributions, grants and bequests 8,491,948$ 5,817,975$ -$ 14,309,923$

Membership income 3,029,664 3,029,664

In-kind contributions 761,115 761,115

Benefit and special event income, net of direct expenses

of $1,622,575 1,544,183 1,544,183

Admissions 17,730,457 17,730,457

Traveling exhibition fees, royalties and other 12,299,597 12,299,597

Investment income from spending rate 630,931 630,931

Investment income (net of fees) (235,688) (8,870) (244,558)

Short-term investment income (net of fees) (9,023) (9,023)

Auxiliary revenues 8,639,252 8,639,252

Net assets released from restrictions 3,910,705 (3,910,705) -

Total operating support and revenue 56,793,141 1,898,400 - 58,691,541

Operating expenses

Museum programs

Exhibition and projects 12,441,506 12,441,506

Traveling exhibitions 5,497,052 5,497,052

Curatorial and collection maintenance 9,544,538 9,544,538

Visitor services 4,969,965 4,969,965

Education 3,442,016 3,442,016

Auxiliary expenses, including cost of sales 7,227,267 7,227,267

Total program expense 43,122,344 - - 43,122,344

Supporting services

Management and general 12,381,965 12,381,965

Fundraising 3,345,466 3,345,466

Total supporting service 15,727,431 - - 15,727,431

Total operating expense 58,849,775 - - 58,849,775


over operating expense (2,056,634) 1,898,400 - (158,234)

Nonoperating activity

Contributions 703,004 1,173,458 1,876,462

Net assets redesignated by Donor 4,700,000 1,800,000 (6,500,000) -

Investment return greater than spending amount 6,239,326 652,408 1,054,563 7,946,297

Depreciation and amortization (5,586,043) (5,586,043)

Interest and fees relating to debt (488,390) (488,390)

Net change in postretirement benefit obligation (165,166) (165,166)

Foreign currency translation 119,460 119,460

Return of sponsorship support (6,201,546) (6,201,546)

Change in net assets before other changes 3,465,557 (1,850,738) (4,271,979) (2,657,160)

Change in net assets related to collection items purchased

Contributions 159,255 162,021 321,276

Net assets released from restrictions - collection

items purchased 247,495 (247,495) -

Collection items purchased (946,077) (946,077)

Change in net assets 2,926,230 (1,936,212) (4,271,979) (3,281,961)

Net Assets

Beginning of year 18,468,230 23,857,021 50,658,262 92,983,513

End of year 21,394,460$ 21,920,809$ 46,386,283$ 89,701,552$

The Solomon R. Guggenheim Foundation Consolidated Statements of Cash Flows

Years Ended December 31, 2010 and 2009


5

2010 2009

Cash flows from operating activitiesChange in net assets 839,552$ (3,281,961)$ Adjustments to reconcile change in net assets to net cash (used in) provided

by operating activities:Depreciation and amortization 5,707,538 5,586,043Amortization of deferred financing costs and bond discount 29,025 29,025Allowance for doubtful contributions receivable 2,500,000Receipt of contributed securities (740,158) (591,219)Receipt of contributed fixed assets (115,947)Investment in acquisitions of art 679,712 486,077Net realized and unrealized (appreciation) on investments (5,185,868) (9,341,244)Net gain on disposal of fixed assets (23,013)Net change in postretirement benefit obligation (130,470) 165,166

Changes in operating assets and liabilitiesContributions receivable 2,513,889 4,633,411Accounts receivable and other receivables 496,378 49,899Inventories 242,425 313,862Prepaid expenses and deferred costs (67,553) (393,080)Accounts payable and accrued expenses (1,609,898) (5,767,114)Deferred income (3,087,969) (1,515,081)Contributions permanently restricted (1,659,324) (1,350,958)

Net cash provided by (used in) operating activities 388,319 (10,977,174)

Cash flows from investing activitiesInvestments in property, equipment and leasehold improvements (434,186) (2,424,906)Acquisitions of art (679,712) (486,077)Purchases of investments (57,032,717) (56,049,905)Proceeds from dispositions of investments 57,952,445 72,130,936Sale of contributed securities 740,158 591,219

Net cash provided by investing activities 545,988 13,761,267

Cash flows from financing activitiesPrincipal payments on loan payable to Trust for Cultural Resources (2,100,000) (2,000,000)Principal payments on notes payable (363,815) (200,972)Proceeds from (payments on) line of credit 3,000,000 (3,000,000)Contributions permanently restricted 1,659,324 1,350,958

Net cash provided by (used in) financing activities 2,195,509 (3,850,014)

Net increase (decrease) in cash and cash equivalents 3,129,816 (1,065,921)

Cash and cash equivalentsBeginning of year 5,579,761 6,645,682

End of year 8,709,577$ 5,579,761$

Supplemental informationInterest paid 289,000$ 271,148$ Income taxes paid 383,459 53,767

Non CashReceipt of in-kind donation of fixed assets 155,250$ 977,153$

The Solomon R. Guggenheim Foundation Notes to Consolidated Financial Statements


6

1. The Foundation

The Solomon R. Guggenheim Foundation (the “Foundation”) was established in 1937. The

Foundation’s mission is to promote the understanding and appreciation of art, architecture, and

other manifestations of visual culture, primarily of the modern and contemporary periods, and to

collect, conserve, and study the art of our time. The Foundation realizes this mission through

exceptional exhibitions, education programs, research initiatives, digital communications and

publications, and strives to engage and educate an increasingly diverse international audience

through its unique network of museums and cultural partnerships.

Over the course of more than seven decades, the Foundation has developed one of the world’s most

important collections of art from the 20th and 21st centuries. The Foundation has implemented a

strategic plan to expand internationally, resulting in facilities, collections, programming and

educational activities in four countries: the United States, Italy, Germany and Spain. Plans are

underway for a facility in Abu Dhabi, UAE. This plan has dramatically enriched the Foundation’s

holdings in art and significantly widened the audience for Guggenheim exhibitions and

programming.

The centerpiece of this international strategy is the Solomon R. Guggenheim Museum on Fifth

Avenue in New York. Designed by Frank Lloyd Wright, the iconic museum building is among the

world’s most recognized architectural monuments. The Foundation directly owns and operates the

Solomon R. Guggenheim Museum.

In Venice, the Peggy Guggenheim Collection primarily displays European and American art of the

first half of the 20th century in the former home of Peggy Guggenheim, the 18th century Palazzo

Venier dei Leoni on the Grand Canal. Its core collection emphasizes cubism, futurism, surrealism

and abstraction. The Foundation also directly owns and operates the Peggy Guggenheim

Collection and is a direct beneficiary, both financially and in furtherance of its mission, of the

activities of the Collection.

The Guggenheim Museum Bilbao, located in Bilbao, Spain was founded in cooperation with the

Basque government. This museum is located along the Nervion River in a building designed by

Frank Gehry that has received international acclaim for its architecture. It exhibits modern and

contemporary art, and is building a collection through acquisitions and commissions. Pursuant to a

contractual arrangement, the Foundation manages and operates the Guggenheim Museum Bilbao,

which is owned and funded by the Fundacion del Museo Guggenheim Bilbao.

In a collaboration with Deutsche Bank, the Deutsche Guggenheim in Berlin exhibits art in all

media, by both established and emerging artists, in a museum in the original Deutsche Bank

headquarters. The Foundation works with Deutsche Bank to develop exhibition programming,

including the highly successful commissioning program for new works, and all related activities for

the space which is funded and operated by Deutsche Bank.

Plans are underway to open a new Guggenheim Museum in the Cultural District of Saadiyat Island

in Abu Dhabi, the capital of the United Arab Emirates (UAE). The Guggenheim Abu Dhabi

Museum, which will be the largest in the Guggenheim network, will be designed by internationally

renowned architect Frank Gehry. The museum collection will encompass both acquired and

commissioned artworks dating from circa 1965 to the present by a transnational roster of artists,

with an additional focus on historic Middle Eastern art. The Foundation will not own the museum



7

but, under the terms of a contractual arrangement, will provide guidance with respect to the

development of the permanent collection and the formation and operation of the museum and will

conceive, develop, organize and realize the museum’s exhibition and educational programming.

2. Summary of Significant Accounting Policies

Basis of Presentation

The financial statements of the Foundation have been prepared on the accrual basis and include the

Foundation’s accounts in New York City related to the Solomon R. Guggenheim Museum and the

accounts maintained in Venice, Italy, for the Peggy Guggenheim Collection. All significant

intercompany transactions have been eliminated in consolidation. The Guggenheim Museum

Bilbao and Deutsche Guggenheim are separate legal entities that are not owned or controlled by the

Foundation and therefore are not consolidated into these financial statements.

Net Assets

The Foundation reports information regarding its financial position and activities according to three

classes of net assets: unrestricted, temporarily restricted and permanently restricted.

Unrestricted net assets are assets that are either not restricted by donors or assets in which the

donor-imposed restrictions have been satisfied.

Temporarily restricted net assets contain donor-imposed restrictions that permit the Foundation

to use or expend the assets as specified. The restrictions are satisfied either by the passage of

time or by action of the Foundation.

Permanently restricted net assets contain donor-imposed restrictions that stipulate the resources

be maintained permanently, but generally permit the Foundation to use all or part of the income

earned on these assets for either specified or unspecified purposes.

Revenues are reported as increases in unrestricted net assets unless use of the related assets is

limited by donor-imposed restrictions or the contribution is due in a future period. Contributions

whose restrictions have been met in the year the contribution was made are reported as unrestricted

support. Expenses are reported as decreases in unrestricted net assets. Gains and losses on

investments and other assets or liabilities are reported as increases or decreases in unrestricted net

assets unless their use is restricted by explicit donor stipulation or by law. Expirations of

temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the

stipulated time period has elapsed) are reported as a reclassification between the applicable classes

of net assets.

Measure of Operations

The Foundation includes in its measure of operations all revenues and expenses that are an integral

part of its programs and supporting activities. The measure of operations excludes permanently

restricted contributions, capital contributions, permanently restricted gifts released from their

restrictions that are deemed to be Board designated endowment funds, changes in net assets related

to collection items purchased, interest expense, fees relating to debt, depreciation and amortization

of fixed assets, foreign currency translation adjustments, loss on disposition of fixed assets, net

change in postretirement benefit obligation, investment return greater than spending amount for

operations and nonrecurring items.



8

Cash and Cash Equivalents

Except for cash and cash equivalents held for reinvestment, which are included with investments,

cash and cash equivalents includes cash on hand, demand deposits and short term investments

which are highly liquid in nature and have original maturities at the time of purchase of three

months or less. At December 31, 2010 and 2009, the Foundation's cash and equivalents were

maintained at financial institutions in excess of federally insured amounts.

Foreign Currency

Assets and liabilities of the accounts maintained in Venice, Italy, for the Peggy Guggenheim

Collection, where the Euro is the functional currency, have been translated at year end exchange

rates and profit and loss accounts have been translated using average yearly exchange rates. The

average exchange rate to purchase one Euro expressed in U.S. dollars was $1.326 and $1.395 for

the years ended December 31, 2010 and 2009, respectively. The exchange rate to purchase one

Euro expressed in U.S. dollars at December 31, 2010 and 2009 was $1.336 and $ 1.441,

respectively. Adjustments resulting from translation have been recorded as a change in net assets,

in the statement of activities. A foreign currency translation loss of $226,000 and gain of $119,000

were recorded for the years ended December 31, 2010 and 2009, respectively.

Investments

All debt and equity securities are recorded at fair value determined on the basis of quoted market

values. Realized gains and losses arising from the sale or other disposition of investments are

determined by the first-in, first-out method. In accordance with the Foundation’s policy, only

current investment income on donor designated endowment funds (and not appreciation), net of

investment fees, is used to support operations.

Alternative investments include investments in fixed income funds and hedge funds. The

Foundation values these investments in accordance with valuation provided by the investment

managers of the underlying funds. As a general rule, investment managers of funds value

investments based upon the best information available for a given circumstance and may

incorporate assumptions that are the investment manager's best estimates after considerations of a

variety of internal and external factors. The fund may make investment in securities that are

publicly traded, which are generally valued based on observable market prices, unless a restriction

exists. Investments for which observable market process do not exist are reported at fair value as

determined by the fund's investment manager. The Foundation's management may consider other

factors in assessing the fair value of these investments. Some of these funds may not have readily

ascertainable market values and may be subject to withdrawal restrictions.

The fair value of the funds represents the amount the Foundation expects to receive at

December 31, 2010 and 2009, if it had liquidated its investments in the funds on these dates.

Because alternative investments may not be readily marketable, the estimated value is subject to

uncertainty and, therefore, may differ from the value that would have been used had a ready market

for the investment existed. Such differences could be material.

Purchases and sales of securities are reflected on a trade-date basis. Realized gains and losses on

sales of securities are determined on an average-cost basis. Dividend income is recorded on the ex-

dividend date and interest income is recorded as earned on an accrual basis.

Unrealized gains and losses are determined by comparison of specific costs of acquisition to

market values at the last day of the fiscal year.



9

In January 2010, the Financial Accounting Standards Board issued two new investment disclosure

requirements and clarified guidance on existing investment disclosure requirements. The new

guidance requires entities to disclose transfers of assets in and out of Levels 1 and 2 of the fair

value hierarchy and the reasons for those transfers, effective for the Foundation's year ended

December 31, 2010. This guidance also requires entities to disclose gross reporting of changes in

Level 3 fair value measurements, effective for the Foundation's year ended December 31, 2011.

The first clarification requires entities to further disaggregate the presentation of investments by

class of asset and liabilities rather than by major category. The second clarification requires

entities to disclose the valuation technique used and the inputs used in determining the fair values

of each class of assets and liabilities. Both clarifications are effective for the Foundation's year

ended December 31, 2010. The adoption of this guidance is disclosure in nature and did not have a

material impact on the Foundation's consolidated financial statements.

Property, Equipment and Leasehold Improvements

Land, building, building improvements and renovations, leasehold improvements and equipment

purchases by the Foundation are recorded at cost. Normal repairs and maintenance are expensed as

incurred. A portion of the land for the museum in New York and the land and building related to

the Palazzo Venier dei Leoni were donated or bequeathed to the Foundation and are recorded at

estimated fair value as of the dates of donation. During 2005, land in upstate New York donated

by an artist was recorded at appraised valued. During 2010 and 2009, building improvements,

furniture, fixtures and equipment were donated by a vendor as part of the renovation of the

Foundation’s restaurant. In addition, office furniture was donated by a manufacturer in 2010.

Depreciation and amortization of assets under capital leases is calculated by the straight line

method over the estimated useful lives. The estimated useful lives for buildings and improvements

are 10-40 years and 3-10 years for furniture, fixtures and equipment. When property or equipment

is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the

respective accounts and the gain or loss realized on disposition is reflected in the change in net

assets. Leasehold improvements are amortized over the shorter of the term of the lease or the

estimated life of the improvement.

Art Collection

In accordance with industry practice, art objects purchased, donated and bequeathed are included in

permanently restricted net assets at a value of $1. Contributions for the purchase of collection

items, net assets released from restrictions to purchase collection items, the cost of all collection

items purchased and the proceeds from deaccessions of art are reported as nonoperating items in

the statement of activities.

The Foundation’s policy is to maintain and continue to acquire significant works of 20th and 21st-

century art in all mediums. From time to time, objects may be deaccessioned in accordance with

the terms of any applicable gift documents or bequests. Deaccessions result from a comprehensive

process set forth in the Foundation’s collection management policy in accordance with guidelines

issued by the American Association of Museums and the Association of Art Museum Directors.

Deaccessions occur solely for art acquisitions, a central feature of the Foundation’s mission, and

proceeds are reported as temporarily or permanently restricted in the statement of activities.



10

Contributions, Grants and Bequests

Contributions, grants and bequests including unconditional promises to give (pledges) and

corporate sponsorships are recognized as revenues in the period received. Conditional

contributions are recognized as revenue when the conditions on which they depend have been

substantially met. Corporate and individual memberships are reflected in operating support and

revenue when received. An allowance is established when the collection of a contribution is

determined to be doubtful. In addition, contributions deemed uncollectible are written off in the

year such determination is made.

In-Kind Contributions

In-kind contributions are primarily made up of contributed building improvements, furniture,

fixtures and equipment; and media and subscription services which are reported as contributions at

their fair value if such contributions create or enhance nonfinancial assets, would have been

purchased if not provided by contributions, require specialized skills and are provided by

individuals possessing such specialized skills. In addition, the appropriate value of in-kind

contributions are recorded as an expense and allocated to program and supporting service

categories based on the nature of the contribution.

Volunteers

A number of unpaid volunteers have made significant contributions of their time in the furtherance

of the Foundation’s programs covering most phases of the Foundation’s activities, except

maintenance and art handling. Volunteers provide administrative assistance in various areas of the

museum and support the visitor information desk. These contributions do not meet the criteria for

recognition of contributed services in accordance with accounting principles generally accepted in

the United States of America and therefore their value is not reflected in these financial statements.

Deferred Income and Other

Deferred income includes amounts received for projects which will be recognized as revenue when

the associated costs are incurred. Deferred income also includes income from two licensing

agreements; the first being amortized over 30 years, the second being amortized over 76 months;

an in-kind contribution of property and equipment which is to be amortized over 10 years; a

contribution received which may be refundable if certain conditions are not met; and two buildout

allowances which are being amortized over the life of their associated leases.

Auxiliary Activities and Inventories

Auxiliary activities consist primarily of the publication and sale of exhibition catalogues and other

related merchandise operations. Inventories are recorded principally at the lower of cost,

determined on the average cost basis, or market. Inventory consisted of $841,000 and $1,236,000

of finished goods and $188,000 and $85,000 of work in process at December 31, 2010 and 2009,

respectively.

Functional Classification of Expenses

The costs of providing museum programs and supporting services have been summarized in

Note 14. Museum programs include costs of the exhibitions and projects, curatorial activities,

education, visitor services and auxiliary activities. Management and general expenses include the

following departments: executive, financial administration, information systems, legal, external

affairs and human resources. Rent, building maintenance and office services are allocated among

the functional expense categories based on space usage information.



11

Postretirement Health Benefits

The Foundation provides postretirement life and health insurance for certain current employees and

retirees and recognizes the estimated cost of such benefits over the years of employment.

Advertising

The Foundation expenses advertising costs as incurred. The Foundation also has received donated

advertising, which amounted to $557,000 and $476,000 for 2010 and 2009, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally

accepted in the United States of America 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 consolidated financial statements, as well as the reported amounts of

revenues and expenses during the reporting period. Actual results could differ from those

estimates.

Reclassification

Certain amounts from the Foundation’s financial statements for the year ended December 31, 2009

have been reclassified to conform to the 2010 presentation.

Income Tax Status

The Foundation is exempt from Federal income taxes under Section 501(c)(3) of the U.S. Internal

Revenue Code. Contributions to the Foundation are tax deductible to contributors, to the extent

provided by law. The Foundation is subject to unrelated business income tax on certain

merchandise and activities. The Foundation’s Italian operations are also subject to the regulations

of the Italian tax code.

3. Contributions and Grants Receivable

Contributions and grants receivable at December 31, 2010 and 2009 were expected to be collected

as follows:

2010 2009

Within 1 year 13,655,417$ 12,478,535$

1 to 5 years 6,525,000 10,795,000

Gross contributions and grants receivable 20,180,417 23,273,535

Less: Discount to present value (305,600) (884,829)

Less: Allowance for doubtful contributions receivable (2,500,000)

Contributions and grants at present value 17,374,817$ 22,388,706$

At December 31, 2010 and 2009, $14,140,000 and $15,640,000 of the gross contributions

receivable, respectively, were due from five individuals, corporations or foundations. The interest

rates used to discount contributions receivable to present value ranged from 3.28% to 5.98%.

In October 2009, the Foundation received a $980,000 capital grant from New York City’s

Department of Design and Construction for Visitor’s Service Restoration. There were no

expenditures incurred or revenue recognized related to this award in 2009. In 2010, The City of

New York spent $5,200 for capital appropriations relating to this project.



12

The Foundation was awarded a $4,500,000 grant in 2004 and an additional $2,500,000 grant in

2005 from the City of New York Department of Cultural Affairs, totaling $7,000,000 for the

renovation of the Frank Lloyd Wright Building. In 2010, The City of New York spent $499,000

for capital appropriations related to this project.

For both of the projects noted above, the City’s investment of capital funding obligated the

Foundation to operate the facility and maintain equipment for the respective term as a nonprofit

entity, open to and used and maintained for the benefit of the people of the City of New York for

cultural, education and artistic uses.

4. Investments

Investments consisted of the following at December 31, 2010 and 2009:

Fair Value Cost Basis Fair Value Cost Basis

Cash and cash equivalents for 9,729,964$ 9,729,964$ 9,778,410$ 9,778,410$ reinvestment

Equities 7,171,954 7,289,004 3,676,117 4,102,381 Alternative Investments

Fixed Income Funds 11,724,568 12,893,334 12,288,656 14,625,001Equity Funds 3,505,127 3,358,263 4,115,265 4,378,467Fund of Hedge Funds 10,005,650 11,011,456 9,606,713 12,586,721Event/Credit Arbitrage Funds 5,649,721 5,545,539 5,275,748 5,545,539International Funds 3,642,090 3,710,700 2,422,025 2,467,892

Total AlternativeInvestments 34,527,156 36,519,292 33,708,407 39,603,620

51,429,074$ 53,538,260$ 47,162,934$ 53,484,411$

20092010

The following summarizes the Foundation’s investment return and its classification in the

consolidated statement of activities for the year ended December 31, 2010.



Interest and dividend income 526,419$ 22,162 2,732$ 551,313$ Net realized gains 481,672 158,186 153,227 793,085Net unrealized gains 2,176,941 960,206 1,181,872 4,319,019Investment fees (714,331) (172,408) (137,688) (1,024,427)

Total return on investments 2,470,701 968,146 1,200,143 4,638,990

Less Spending amount (640,008) (640,008)Other for operations 182,344 182,344

(457,664) - - (457,664)

Investment return greater thanspending amount 2,013,037$ 968,146$ 1,200,143$ 4,181,326$



13

The following summarizes the Foundation’s investment return and its classification in the

consolidated statement of activities for the year ended December 31, 2009.



Interest and dividend income 217,194$ 95,775$ 3,258$ 316,227$ Net realized gains (losses) 1,847,738 (1,404,160) (613,171) (169,593)Net unrealized gains 5,022,519 2,056,568 1,777,370 8,856,457Investment fees (452,882) (104,645) (112,894) (670,421)

Total return on investments 6,634,569 643,538 1,054,563 8,332,670

Less Spending amount (630,931) (630,931)Other for operations 235,688 235,688

(395,243) - - (395,243)

Investment return greater thanspending amount 6,239,326$ 643,538$ 1,054,563$ 7,937,427$

5. Fair Value Measurements

The Foundation’s investments are recorded in the financial statements at fair value. Fair value is

an exit price, representing the amount that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between market participants. As such, fair value is a market-

based measurement that should be determined based on assumptions that market participants would

use in pricing an asset or liability. Fair value accounting standards establish a three-tier fair value

hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 Observable inputs such as quoted prices in active markets;

Level 2 Inputs, other than quoted prices in active markets, that are observable either directly or

indirectly; and

Level 3 Unobservable inputs in which there is little or no market data, which require the

reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of three valuation techniques.

The three valuation techniques are as follows:

Market approach – Prices and other relevant information generated by market transactions

involving identical or comparable assets or liabilities;

Cost approach – Amount that would be required to replace the service capacity of an asset (i.e.,

replacement cost); and

Income approach – Techniques to convert future amounts to a single present amount based on

market expectations (including present value techniques).



14

The following table summarizes the valuation of the Foundation’s financial instruments measured

on a recurring basis by the above input levels using a market approached valuation method as of

December 31, 2010.

Unadjusted Significant

Quoted Other Market Observable UnobservablePrices Inputs Inputs

(Level 1) (Level 2) (Level 3) Total

Cash and cash equivalents 9,729,964$ $ $ 9,729,964$ Equities 7,171,954 7,171,954Alternative investments

Fixed Income Funds 508,369 11,216,199 11,724,568Equity Funds 954,369 2,550,758 3,505,127Fund of Hedge Funds 10,005,650 10,005,650Event/Credit Arbitrage Funds 5,649,721 5,649,721International Funds 2,210,235 1,431,855 3,642,090

Alternative investments total - 3,672,973 30,854,183 34,527,156

Total 16,901,918$ 3,672,973$ 30,854,183$ 51,429,074$

Cash and cash equivalents 4,046,895$ 4,662,682$ $ 8,709,577$

The following table summarizes the valuation of the Foundation’s financial instruments measured

on a recurring basis by the above input levels using a market approached valuation method as of

December 31, 2009.

Unadjusted Significant

Quoted Other Market Observable UnobservablePrices Inputs Inputs

(Level 1) (Level 2) (Level 3) Total

Cash and cash equivalents 9,778,410$ $ $ 9,778,410$ Equities 3,676,117 3,676,117Alternative investments

Fixed Income Funds 12,288,657 12,288,657Equity Funds 2,006,216 2,109,048 4,115,264Fund of Hedge Funds 9,606,712 9,606,712Event/Credit Arbitrage Funds 5,275,750 5,275,750International Funds 918,418 1,503,606 2,422,024

Alternative investments total - 2,924,634 30,783,773 33,708,407

Total 13,454,527$ 2,924,634$ 30,783,773$ 47,162,934$

Cash and cash equivalents 2,614,232$ 2,965,529$ $ 5,579,761$



15

The following is a description of the Foundation's valuation methodologies for assets and liabilities

measured at fair value.

Fair value for Level 1 is based upon quoted prices in active markets that the Foundation has the

ability to access for identical assets or liabilities. Market price data is generally obtained from

exchange or dealer markets. The Foundation does not adjust the quoted price for such assets and

liabilities.

Fair value for Level 2 is based on quoted prices for similar instruments in active markets, quoted

prices for identical or similar instruments in markets that are not active and model-based valuation

techniques for which all significant assumptions are observable in the market or can be

corroborated by observable market data for substantially the full term of the assets. Inputs are

obtained from various sources including market participants, dealers, and brokers.

Fair value for Level 3 is based on valuation techniques that use significant inputs that are

unobservable as they trade infrequently or not at all.

Investments included in Level 3 primarily consist of the Foundation’s ownership in alternative

investments. The value represents the ownership interest in the net asset value (NAV) of the

respective funds. The fair values (NAV) of the investments held by the funds that do not have

readily determinable fair values are determined by the investment managers and are based on

estimates that require varying degrees of judgment. The Foundation has performed due diligence

around these investment to ensure NAV is an appropriate measure of fair value as of December 31,

2010 and December 31, 2009. Because of the inherent uncertainty of valuing these investments

and certain underlying investment held by them, the Foundation's estimate of fair value may differ

significantly from the values that would have been used had a ready market for the investments

existed. These investments may be illiquid and thus there can be no assurance that the Foundation

will be able to realize the value of such investments in a timely manner. Many of the underlying

investments in the investments categorized as Level 3 are Levels 1 and 2.

The methods described above may produce a fair value calculation that may not be indicative of

net realizable value or reflective of future fair values. Furthermore, while the Foundation believes

its valuation methods are appropriate and consistent with other market participants, the use of

different methodologies or assumptions to determine the fair value of certain financial instruments

could result in a different estimate of fair value at the reporting date.

The following table summarizes those assets measured at fair value on a recurring basis using

significant unobservable inputs (Level 3):

Beginning Net Net Net Ending

Balances as Realized Change in Purchases, Transfers Balances as of

of January 1, Gains Unrealized Sales and in and/out December 31,2010 (Losses) Gains (Losses) Settlements of Level 3 2010

Fixed Income Funds 12,288,658$ 124,153$ 1,159,207$ (2,355,819)$ -$ 11,216,199$ Equity Funds 2,109,048 28,028 441,710 (28,028) 2,550,758Fund of Hedge Funds 9,606,713 (108,578) 1,974,203 (1,466,688) 10,005,650Event/Credit Arbitrage Funds 5,275,747 192,459 373,974 (192,459) 5,649,721International Funds 1,503,607 29,685 (71,752) (29,685) 1,431,855

30,783,773$ 265,747$ 3,877,342$ (4,072,679)$ -$ 30,854,183$



16

Beginning Net Net Net Ending

Balances as Realized Change in Purchases, Transfers Balances as of

of January 1, Gains Unrealized Sales and in and/out December 31,2009 (Losses) Gains (Losses) Settlements of Level 3 2009

Fixed Income Funds 11,016,310$ 51,033$ 1,272,348$ (51,033)$ -$ 12,288,658$ Equity Funds 4,178,448 5,081 632,260 (5,081) (2,701,660) 2,109,048Fund of Hedge Funds 13,480,476 (1,527,933) 3,854,016 (6,199,846) 9,606,713Event/Credit Arbitrage Funds 5,656,703 734,427 1,073,505 (2,188,888) 5,275,747International Funds 965,429 32,832 62,521 1,058,923 (616,098) 1,503,607

35,297,366$ (704,560)$ 6,894,650$ (7,385,925)$ (3,317,758)$ 30,783,773$

There were no significant transfers between Level classifications in 2010.

There were two significant transfers of investments between Level classifications in 2009. The

Level classification for two investments, with fair values totaling $3,317,758 as of January 1, 2009,

changed from Level 3 to Level 2 based on Fair Value guidance regarding redemptions, and the

Foundation’s policy

The following table summarizes the Foundation’s Alternative Investments by Major Class as of

December 31, 2010:

Redemption

Frequency (if Redemption

Class Fair Value currently eligible) Notice Period

Fixed Income Funds (a)

11,724,568$ Biennial (2 funds) 180 days (1 fund)Monthly (1 fund) 90 days (1 fund)

30 days (1 fund)

Equity Funds (b)

3,505,127 Annual (1 fund) 90 days (1 fund)Quarterly (1 fund) 60 days (1 fund)Monthly (1 fund) 30 days (1 fund)

Fund of Hedge Funds (c)

10,005,650 In Liquidation (1 fund) In Liquidation (1 fund)Annual (2 funds) 95 days (2 funds)

Quarterly (1 fund) 75 days (1 fund)

Event/Credit Arbitrage Funds (d)

5,649,721 Biennial (1 fund) 180 days (1 fund)Biannual (1 fund) 60 days (1 fund)Quarterly (1 fund) 100 days (1 fund)

International Funds (e)

3,642,090 Monthly (4 funds) 90-95 days (2 funds)30 days (2 funds)

Alternative Investments Total 34,527,156$



17

The following table summarizes the Foundation’s Alternative Investments by Major Class as of

December 31, 2009:

Redemption

Frequency (if Redemption

Class Fair Value currently eligible) Notice Period

Fixed Income Funds (a)

12,288,658$ Biennial (1 fund) 90 days (2 funds)Annual (1 fund)

Equity Funds (b)

4,115,264 Annual (1 fund) 90 days (1 fund)Quarterly (1 fund) 60 days (1 fund)

Fund of Hedge Funds (c)

9,606,713 In Liquidation (1 fund) In Liquidation (1 fund)Annual (2 funds) 95 days (2 funds)

Quarterly (1 fund) 75 days (1 fund)

Event/Credit Arbitrage Funds (d)

5,275,747 Biennial (1 fund) 180 days (1 fund)Biannual (1 fund) 60 days (1 fund)Quarterly (1 fund) 100 days (1 fund)

International Funds (e)

2,422,025 Monthly (2 funds) 90 (1 fund)30 days (1 fund)

Alternative Investments Total 33,708,407$

The following is a brief description of the Foundation’s Major Class categories for Alternative

Investments:

(a) Includes long and short positions in a broad variety of investments that are anticipated to

have primarily a fixed income focus, including investments in financial instruments of

companies undergoing periods of distress and turnaround.

(b) Principally long, concentrated portfolios invested in equity securities and large-cap

investments.

(c) Highly diversified portfolios of multiple managers. These funds invest across most liquid

asset classes and offer low correlations to markets and low volatility. One of the funds,

valued at $578,922 as of December 31, 2010 and $405,245 as of December 31, 2009, is

currently in liquidation.

(d) These funds participate across the capital structure of companies, identifying specific

catalysts that will create valuations to change over time. Generally, they have low net

exposure to the markets.

(e) These funds generally own equities of companies listed outside of the U.S., including

developed and developing countries. These funds have higher beta as a result of their higher

net exposure to markets.

Note there were no unfunded commitments as of December 31, 2010 and December 31, 2009.



18

With the exception of one fixed income investment and two alternative investments, the fair values

of the investments above have been estimated using the net asset value per share of the

investments. The fair value of one fixed income investment is based on an exit price provided by

the investee. The fair value of the two alternative investments has been estimated using recent

observable transacted data.

Loans and Other Loans Payable

The Foundation has determined that the carrying value of the demand and other loans payable to

banks and the loan payable to the Trust for Cultural Resources approximates fair value in

accordance with Fair Value Accounting Standards at December 31, 2010 and 2009.

Contributions Receivable

The fair value of pledges receivable was determined using a risk adjusted discount rate.

6. Endowments

The Foundation's endowment consists of approximately 30 individual funds established for a

variety of purposes. As required by Generally Accepted Accounting Principles (“GAAP”), net

assets associated with donor restricted endowment funds, and funds designated by the Board of

Trustees to function as endowments (“Board Designated”), are classified and reported based on the

existence or absence of donor-imposed restrictions. On September 17, 2010, New York State

enacted the New York Prudent Management of Institutional Funds Act (“NYPMIFA”). NYPMIFA

contains provisions that govern the appropriation of donor-restricted endowment funds

(“Endowment Funds”) and also provide standards for the prudent management and investment of

institutional funds, standards for the delegation of investment and management functions to outside

advisors, and procedures for lifting or modifying donor-imposed restrictions on the management,

investment, expenditure or purpose of an institutional fund. It replaces and updates key provisions

of the Uniform Management of Institutional Funds Act (“UMIFA”), which was adopted in New

York in 1978.

Described below are (i) NYPMIFA’s legal requirements with respect to appropriation of

endowment funds and the interpretation of NYPMIFA and UMIFA by the Foundation’s Board of

Trustees, (ii) NYPMIFA’s legal requirements with respect to the investment and management of

institutional funds and the Foundation’s investment strategy, and (iii) the financial reporting

requirements applicable to endowments.

Appropriation of Endowment Funds

Under UMIFA, the Foundation could appropriate for expenditure so much of the net appreciation

as the governing board determined was prudent; however appropriation below historic dollar value

of an endowment fund was not permitted other than earned income. Unlike prior law, NYPMIFA

permits appropriations below the historic dollar value of endowment funds if the Foundation

determines the appropriation is prudent; however, the donor of an endowment fund established

before September 17, 2010 may choose to retain the historic dollar value limit with respect to that

fund or include an explicit spending limitation. The Board has interpreted NYPMIFA for

Endowment Funds created on or after September 17, 2010, and with respect to donor Endowment

Funds created before that date where donors opt into having the new rules apply (or established by

donors who are no longer “available”), as permitting the Foundation to appropriate, subject to any

restrictions imposed in the gift instrument, from Endowment Funds prudently applying the

following eight factors: (i) the duration and preservation of the endowment fund; (ii) the purposes



19

of the Foundation and the endowment fund; (iii) general economic conditions; (iv) the possible

effect of inflation or deflation; (v) the expected total return from income and the appreciation of

investments; (vi) other resources of the Foundation; (vii) where appropriate and circumstances

would otherwise warrant, alternatives to the expenditure of the endowment fund, giving due

consideration to the effect that such alternatives may have on the Foundation; and (viii) the

investment policy of the Foundation. A contemporaneous record of the consideration given to each

of the factors by the Foundation in deciding to appropriate is required.

With respect to Endowment Funds governed by gift instruments executed before September 17,

2010, the legislation requires the Foundation to send a notice to all available donors asking them to

elect whether the Foundation may spend as much of the gift as is prudent, or the Foundation may

not spend below historic dollar value. The term historic dollar value was defined as the aggregate

fair value in dollars of (i) an endowment fund at the time it became an endowment fund, (ii) each

subsequent donation to the fund at the time it is made, and (iii) each accumulation made pursuant

to a direction in the applicable gift instrument at the time the accumulation is added to the fund. If

the donor does not respond within 90 days of receiving the notice, expenditures from the

endowment fund will be governed by the prudence standard in the new legislation.

The Board of Trustees understands that, in cases where donors that have opted out of the provisions

of NYPMIFA relating to appropriations and the Endowment Fund fair value is less than the

original dollar value, the Foundation can only appropriate for expenditure earned income. Once

the fair market value of the Endowment Fund exceeds its original dollar value, the Foundation may

appropriate income and the appreciation over the original dollar value of the fund if it is prudent to

do so. In addition, the original dollar value .of the Endowment Fund and the amount, if any, of

appreciation of the funds that is available for appropriation is determined on a fund-by-fund basis,

not by aggregating the asset values of multiple Endowment Funds.

With the exception of board-designated endowment funds and two relatively small endowment

funds restricted for the operation of the Peggy Guggenheim Collection, only current investment

income (and not appreciation) earned on donor-restricted endowment funds is expended, and such

earnings are used in accordance with donor stipulations. The income (and not appreciation) earned

on the Foundation’s permanently-restricted Art Endowment is used for art acquisitions.

The Foundation’s Board of Trustees has authorized a spending rate of up to 5% per annum on

board-designated endowment funds, to be applied to the Foundation’s operating expenses. The

amount the Foundation could withdraw each month pursuant to this authorization shall equal one-

twelfth of the product of (i) the ending market value of board-designated endowment funds from

the previous month, and (ii) 5%.

The Foundation’s Board of Trustees, on the recommendation of its Investment Committee, has

approved the application of a spending rate to be applied to two of the endowment funds restricted

for the operation of the Peggy Guggenheim Collection.

The Foundation’s spending policies are consistent with the Foundation’s objectives to utilize

income to support mission-critical programs while preserving capital and ensuring future

endowment growth.



20

Management and Investment of Institutional Funds

Legal Requirements under NYPMIFA

NYPMIFA requires the consideration of the following factors when managing or investing an

endowment fund: general economic conditions; the possible effect of inflation and deflation; the

expected tax consequences, if any, of investment decisions or strategies; the role that each

investment or course of action plays within the overall investment portfolio of the fund; the

expected total return from income and the appreciation of investments; other resources of the

Foundation; the needs of the Foundation and the fund to make distributions and to preserve capital;

and an asset’s special relationship or special value, if any, to the charitable purposes of the

Foundation. NYPMIFA further provides that, except as otherwise provided by a gift instrument,

(i) management and investment decisions about an individual asset must be made not in isolation

but rather in the context of the Foundation’s portfolio of investments as a whole and as a part of an

overall investment strategy having risk and return objectives reasonably suited to the fund and to

the Foundation, and (ii) investments of an endowment fund shall be diversified unless the

Foundation prudently determines that, because of special circumstances, the purposes of the fund

are better served without diversification. The Board has adopted an investment policy that

incorporates these requirements.

The Foundation's Investment Strategy

The Foundation’s investment process includes considering the Foundation’s objectives,

formulating an asset allocation plan, choosing the appropriate managers, achieving desired

diversification to meet risk profile and return goals, and the constant reviewing and updating of the

portfolio by monitoring performance and adjusting the portfolio as circumstances and needs

change, and clearly measuring success in meeting stated goals.

In light of NYPMIFA, the Foundation recently reviewed its investment strategy for its endowment

funds giving consideration to each of the factors outlined above and overall portfolio objectives

and adopted several changes to its asset allocation which were outlined by endowment fund.

The Foundation 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). In

determining the specific investment strategy, the Foundation and its investment advisors focus

heavily on the purpose of the investment portfolio. Other considerations include spending and

investment goals, range of investment alternatives, liquidity constraints, number of investments,

and geographical, currency and taxation matters, risk and diversification. Portfolios must be

appropriate in order to be sustainable for the long-term. When adapting the Foundation’s

approach, basic economic drivers are considered as well as three fundamental economic groupings

of scenarios: growth, inflation and depression.

Donor-restricted endowment funds that can be used to support operations are currently invested in

income-generating investment vehicles or, to the extent that original dollar value is sustained, in

investment vehicles that may generate appreciation while ensuring the preservation of capital.

Funds that are restricted for a specific use by the donor or by law or that are board-designated are

invested in investment vehicles that afford opportunities for appreciation. In general, the

endowment funds restricted for the operation of the Peggy Guggenheim Collection are invested for

growth in Euro-denominated investment vehicles. The overall endowment portfolio is intended to

provide a predictable stream of funds that can be used for general operations while attempting to

preserve capital and long-term growth.



21

Financial Reporting

Consistent with endowment accounting for not-for-profit organizations for funds subject to an

enacted version of UPMIFA, the Foundation classifies as permanently restricted net assets (a) the

original value of gifts donated to the permanent endowment, (b) the original value of subsequent

gifts to the permanent endowment, (c) the net realizable value of future payments to permanently

restricted net assets in accordance with the donor’s gift instrument (outstanding endowment

pledges net of applicable discount), and (d) accumulations, including appreciation, gains and

income, to the permanent endowment made in accordance with the direction of the applicable

donor gift instrument at the time the accumulation is added to the fund.

For financial reporting purposes, donor-restricted endowment fund appreciation, gains and income

exceeding donor restrictions are classified as temporarily restricted net assets until those amounts

are appropriated for expenditure by the Foundation in a manner consistent with the standard of

prudence prescribed by law. Upon appropriation, appreciation and earnings are reclassified as

unrestricted net assets.

For each donor-restricted endowment fund the Foundation shall classify the portion of the fund that

is not classified as permanently restricted net assets as temporarily restricted net assets until

appropriated for expenditure by the Foundation. In initially applying the guidance to its donor-

restricted endowment funds in existence upon NYPMIFA enactment, the Foundation determined

the accumulated amounts earned on donor-restricted endowment funds in excess of appropriation

which were previously reflected within unrestricted net assets. As a result, a reclassification to

temporarily restricted net assets of approximately $294,000 was reflected within the Statement of

Activities until such time as they are appropriated for expenditure.

The Foundation’s endowments consisted of the following at December 31, 2010 and 2009:



Donor-restricted endowment funds (16,177,622)$ 2,491,460$ 48,221,821$ 34,535,659$

*Board-designated endowment funds 15,577,647 12,012,507 - 27,590,154

Total funds (599,975)$ 14,503,967$ 48,221,821$ 62,125,813$

Endowment Net Asset Composition by Type of Fund

as of December 31, 2010

*Board-designated endowment funds include amounts recorded as Deferred Income.



22



Donor-restrictedendowment funds (15,460,425)$ 2,454,337$ 45,632,944$ 32,626,856$

*Board-designatedendowment funds 14,043,946 15,844,558 - 29,888,504

Total funds (1,416,479)$ 18,298,895$ 45,632,944$ 62,515,360$

Endowment Net Asset Composition by Type of Fund

as of December 31, 2009

*Board-designated endowment funds include amounts recorded as Deferred Income.

The Foundation’s endowments had the following changes for the years ended December 31, 2010

and 2009:



Endowment funds, December 31, 2009 (1,416,479)$ 18,298,895$ 45,632,944$ 62,515,360$

Investment return:Investment income 15,894 - 2,731 18,625

Net appreciation/depreciation(realized and unrealized) 1,004,108 1,262,211 1,197,411 3,463,730

Total investment return 1,020,002 1,262,211 1,200,142 3,482,355

Contributions 6,271,541 - 1,329,324 7,600,865Appropriation of endowment assets

for expenditure (6,442,327) - - (6,442,327)Other changes (32,712) (5,057,139) 59,411 (5,030,440)

Endowment funds,

December 31, 2010 (599,975)$ 14,503,967$ 48,221,821$ 62,125,813$

Changes in Endowment Net Assets

For the Fiscal Year Ended December 31, 2010



23



Endowment funds, December 31, 2008 1,081,280$ 13,376,898$ 49,904,923$ 64,363,101$

Investment return:Investment income (22,729) 1,438 3,258 (18,033)

Net appreciation/depreciation(realized and unrealized) 3,459,710 189,656 1,051,306 4,700,672

Total investment return 3,436,981 191,094 1,054,564 4,682,639

Contributions 4,177,237 5,000,000 1,004,956 10,182,193Appropriation of endowment assets

for expenditure (15,857,148) (191,094) - (16,048,242)Other changes 5,745,171 (78,003) (6,331,499) (664,331)

Endowment funds,

December 31, 2009 (1,416,479)$ 18,298,895$ 45,632,944$ 62,515,360$

For the Fiscal Year Ended December 31, 2009

Changes in Endowment Net Assets

The endowment funds classified as permanently restricted, temporarily restricted and unrestricted

net assets consist of the following at December 31:

2010 2009

Permanently restricted net assets

Educational programs 8,120,693$ 7,095,616$

Curatorial programs 1,537,047 1,537,047

Art fund 10,105,000 10,105,000

Publications 1,200,000 1,200,000

General operating support 27,259,081 25,695,281

Total endowment funds classified as permanentlyrestricted net assets 48,221,821 45,632,944

Temporarily restricted net assets

General operating 11,118,529 15,844,558

Capital construction and costs 2,454,337 2,454,337

Art endowment 931,101 -

Total endowment funds classified as temporarilyrestricted net assets 14,503,967 18,298,895

Unrestricted net assets

General operating support (599,975) (1,416,479)

Total endowment funds classified as unrestricted net assets (599,975) (1,416,479)

Total endowment funds 62,125,813$ 62,515,360$



24

As a result of unfavorable market fluctuations, the fair value of assets associated with individual

donor-restricted endowment funds has fallen below historic dollar value. The aggregate amounts

by which fair value was below historic value was approximately $11,102,000 and $13,265,000 as

of December 31, 2010 and 2009, respectively.

7. Property, Equipment and Leasehold Improvements, net

Property, equipment and leasehold improvements, net consisted of the following at December 31,

2010 and 2009:

2010 2009

Solomon R. Guggenheim Museum

Land 2,855,849$ 2,855,849$ Buildings and building improvements 101,039,705 105,449,853Construction in progress 22,500Furniture, fixtures and equipment 4,255,450 4,885,086Leasehold improvements 2,752,057 2,752,057

110,903,061 115,965,345

Less: Accumulated depreciation and amortization (43,278,892) (44,211,182)

Net book value 67,624,169 71,754,163

Palazzo Venier de Leoni

Land 274,794 274,794Building and building improvements 7,202,253 7,522,184Furniture, fixtures and equipment 1,653,243 1,759,936Leasehold improvements 4,194,014 4,497,634

13,324,304 14,054,548

Less: Accumulated depreciation and amortization (7,991,938) (7,873,034)

Net book value 5,332,366 6,181,514

Total property, equipment and

leasehold improvements, net 72,956,535$ 77,935,677$

8. Loan Payable to the Trust for Cultural Resources

At December 31, 2010 and 2009, the amount of bonds outstanding was as follows:

2010 2009

Series B variable rate bonds due December 1, 2015 12,700,000$ 14,800,000$

In 1990, the Foundation entered into a loan agreement with the Trust for Cultural Resources (the

“Trust”) primarily to provide long-term financing of the cost of the construction, renovation and

equipping of certain of the Foundation’s capital facilities. The Trust issued $13,500,000 of 1990

Series A revenue bonds and $41,400,000 of 1990 Series B revenue bonds. The Trust loaned the

proceeds of the issuance of the bonds to the Foundation. In 2000, the Foundation’s Series A

revenue bonds were redeemed.



25

While the bonds are not the debt of the Foundation, the agreement obligates the Foundation to

make payments equal to the debt service and sinking fund requirements, including any premium on

redemption on the bonds.

Payment of the principal and interest on the bonds is collateralized by an irrevocable letter of credit

issued by a bank. The Series B bonds’ letter of credit expires on January 31, 2012. At

December 31, 2010 and 2009, the available funds under the letter of credit were $12,821,781 and

$14,941,918, respectively. Pursuant to the terms of the letter of credit, the Foundation shall, among

other things, maintain a debt service coverage ratio of 1.2 to 1.0 (as defined in the agreement) as of

December 31. In lieu of meeting the debt service coverage ratio, the Foundation may maintain a

ratio of cash plus investments to debt ratio of 2.0 to 1.0 or higher with no more than 50% of the

unencumbered liquid assets (as defined in the agreement) being permanently restricted assets

(defined in the agreement as the “Alternative Financial Covenant”) as of December 31. At

December 31, 2010 and 2009, the Foundation was in compliance with the Alternative Financial

Covenant. In addition, as of 2009 the Foundation is required to maintain a minimum of

$25,000,000 of unencumbered liquid assets on the last day of June and December. At

December 31, 2010 and 2009, the Foundation also met this financial covenant.

The average interest rate for the Series B bonds during 2010 and 2009 was 0.25% and 0.30%,

respectively. At December 31, 2010, the Foundation’s estimated total debt service under the loan

agreement, representing payments of principal, sinking-fund requirements and interest payable

(with interest estimated at a rate of 0.27%) over each of the next five years, was as follows:

Year Ending Principal Interest Total

December 31 Payments Payments Payments

2011 2,200,000$ 34,070$ 2,234,070$ 2012 2,400,000 28,037 2,428,0372013 2,500,000 21,481 2,521,4812014 2,700,000 14,631 2,714,6312015 2,900,000 7,236 2,907,236

The Foundation incurred loan issuance cost in 1990 of approximately $1,205,000 in connection

with the loan payable to the Trust for Cultural Resources. Such costs are amortized on a straight-

line basis over the terms of the debt. The unamortized balances of such deferred costs included in

the statement of financial position amounted to $142,704 and $171,728 at December 31, 2010 and

2009, respectively.

9. Demand and Other Loans Payable

As of December 31, 2010 and 2009 the Peggy Guggenheim Collection has interest-free loans in the

amount of $136,835 and $205,725, respectively, which are due in equal annual installments ending

in 2014.

In 2004, the Foundation borrowed $5,100,000 from a bank. The loan has an outstanding balance of

$4,241,171 and $4,465,371 as of December 31, 2010 and 2009, respectively, and includes a

negative pledge on the warehouse storage facilities in New York and a springing mortgage in the

event of default. Interest is calculated using the daily Eurodollar rate. The loan, with a maturity

date of May 25, 2009, was renegotiated in November 2009. The amendment provides a maturity



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date of November 23, 2012, and interest is calculated at a rate per annum equal to the greater of the

Fixed Eurodollar Rate plus 2.50% and 3.25%. Pursuant to the loan agreement, the Foundation

shall, among other things, maintain a debt service coverage ratio of 1.2 to 1.0 (as defined in the

agreement) as of December 31. In lieu of meeting the debt service coverage ratio, the Foundation

may maintain a ratio of cash plus investments to debt ratio of 2.0 to 1.0 or higher with no more

than 50% of the unencumbered liquid assets (as defined in the agreement) being permanently

restricted assets (defined in the agreement as the “Alternative Financial Covenant”) as of

December 31. At December 31, 2010 and 2009, the Foundation was in compliance with the

Alternative Financial Covenant. In addition, as of 2009 the Foundation is required to maintain a

minimum of $25,000,000 of unencumbered liquid assets on the last day of June and December. At

December 31, 2010 and 2009, the Foundation also met this financial covenant. The average

interest rate for the loan during 2010 and 2009 was 3.88% and 1.59%, respectively.

In 2006, the Foundation borrowed $788,520 from a landlord to be used for alterations and

improvements at the Foundation’s new office space. The loan has an outstanding balance of

$495,639 and $566,364 as of December 31, 2010 and 2009, respectively. The maturity date of the

loan is August 2016. Interest is calculated at a designated rate of 6.75% per annum, payable on the

first day of each month commencing May, 2006.

In November of 2006, the Foundation entered into an agreement with a bank for a revolving line of

credit in the amount of $3,000,000. As of December 31, 2010, the line of credit has an outstanding

balance of $3,000,000; there was no outstanding balance as of December 31, 2009. Interest is

calculated using the British Bankers Association Libor Daily Floating Rate plus 1.75 percentage

points and is payable on the 13th day of each month until payment in full of any principal

outstanding. The average interest rate for the line of credit during 2010 and 2009 was 2.02% and

1.38%, respectively.

Payments of principal of other loans payable are due over the next five years as follows:

Year Ending

December 31 Total

2011 3,356,547$ 2012 4,154,5862013 109,9912014 92,5782015 99,024



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10. Net Assets

Net assets consisted of the following at December 31, 2010 and 2009:

2010 2009

Temporarily restricted net assets

Restricted by time 13,003,606$ 17,805,109$

Restricted by purpose

Exhibitions and projects 2,942,702 1,098,906

Capital construction and costs 2,454,337 2,454,337

Purchase of works of art 1,634,200 242,273

Other 351,806 320,184

Total temporarily restricted net assets 20,386,651$ 21,920,809$

Permanently restricted net assets

Art collection 1$ 1$

Land 753,338 753,338

and educational programs 8,120,694 7,095,616

Endowment, income restricted for curatorial chair 1,537,047 1,537,047

Endowment, art fund, income restricted for art purchases 10,105,000 10,105,000

Endowment, income restricted for publications 1,200,000 1,200,000

Endowment, income for general operating support 27,259,081 25,695,281

Total permanently restricted net assets 48,975,161$ 46,386,283$

Endowment, income restricted for endowment

11. Defined Contribution Retirement Plan

The Foundation has a defined contribution retirement plan to cover all eligible employees. This

plan was established under Section 403(b) of the Internal Revenue Code to include a basic

retirement plan. The Foundation makes an annual contribution equal to 3% of an eligible

participant’s base pay. Eligible employees may elect to contribute to the plan and the Foundation

will then match 50% of the first 5% of base pay contributed. During 2010 and 2009, respectively,

the Foundation recorded as an expense and contributed $678,173 and $620,967 to these plans.

12. Postretirement Health Plan

The Foundation has a plan that provides lifetime medical insurance benefits to certain retirees.

Accounting Standards require the Foundation to report the funded status of each pension and other

postretirement benefit plan as an asset (for over-funded plans) or as a liability (for under-funded

plans), replacing the accrued benefit obligation currently recorded. The funded status reported on

the balance sheet is equal to the benefit obligation. Accounting Standards also require that

unamortized actuarial gains and losses and prior service costs or credits are recognized as an

increase or decrease to net assets. Accounting Standards require employers to measure benefit plan

assets and liabilities and determine the discount rate for subsequent year expense recognition as of

the balance sheet date for financial reporting purposes.



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Information with respect to this plan as of and for the years ended December 31, 2010 and 2009 is

as follows:

2010 2009

Change in benefit obligations

Benefit obligation at beginning of year 1,234,359$ 1,123,473$ Interest cost 61,269 66,813Plan participants' contributions 5,430 8,043Actuarial loss (gain) (119,838) 161,288Benefits paid (109,677) (125,258)

Benefit obligation at end of year 1,071,543$ 1,234,359$

Change in plan assets

Fair value of plan assets at beginning of year -$ -$ Company contribution 104,247 117,215Plan participant contribution 5,430 8,043Benefits paid (109,677) (125,258)

Fair value of plan assets at end of year -$ -$

Funded status at end of year (1,071,543)$ (1,234,359)$

Components of net periodic benefit cost

Service cost - -Interest cost 61,269 66,813Recognized actuarial loss (gain) 10,632 (3,878)

Net periodic benefit cost 71,901$ 62,935$

Changes in net unrestricted assets

Net loss (gain) (119,838)$ 161,288$ Prior Service Cost - -Amortization of loss (gain) (10,632) 3,878Amortization of Prior Service Cost - -Amortization of transition obligation - -

Total (130,470)$ 165,166$



29

2010 2009

Weighted-average assumptions as of December 31

used for obligations

Discount rate 4.50% 5.25%

Weighted-average assumptions as of December 31

used for net periodic benefit cost

Discount rate 5.25% 6.25%

Assumed health care cost trend rates at December 31

Health care cost trend rate assumed for next year 8.00% 9.00%Rate to which the cost trend rate is assumed to

decline (the ultimate trend rate) 5.00% 5.00%Year that the rate reaches the ultimate trend rate 2017 2017

Amounts recognized in net unrestricted assets

consist of

Transition Obligation -$ -$ Net loss/(gain) 73,452 203,922Prior service cost (credit) - -

Total amount recognized 73,452$ 203,922$

Amounts in net unrestricted assets expected

to be recognized in net periodic benefit

cost in the coming fiscal year

Amortization of transition asset -$ -$ Amortization of unrecognized net loss (gain) (1,579) 10,631Amortization of prior service cost - -

Total (1,579)$ 10,631$

1% Point 1% Point

Increase Decrease

Effect of a 1% Point Change in the

Assumed Health Care Cost Trend Rates for 2011

Effect on Total of Service and Interest Cost Components 3,217$ 3,056$ Effect on Postretirement Benefit Obligation 56,256 (53,450)

Future Expected Cash flows

2011 113,164$ 2012 112,0572013 110,6732014 108,6802015 106,038

2016-2020 464,242

Expected Company Contributions for 2011 113,164$



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13. Related Party Transactions

Two members of the Foundation’s Board of Trustees serving on the Investment Committee are

managing partners of an investment firm. After review and in accordance with the Foundation’s

conflict of interest policy including recusal of interested parties from voting, the disinterested

Trustees who serve on this Committee have approved investments with a fair value of $14,280,000

and cost of $15,300,000 at December 31, 2010 and investments with a fair value of $11,819,000

and cost of $13,993,000 at December 31, 2009 and to be invested in certain investment vehicles

managed by this firm.

Two principal owners of the firm that currently provide investment advice to the Foundation are

also directors, shareholders and investment advisors of a multi-strategy fund of hedge funds of

which the Foundation has an approved investment. All performance fees related to the

Foundation’s investment in the fund of funds are waived and the assets invested in the fund are

excluded from the advisory fees calculation. At December 31, 2010 and 2009 the Foundation’s

investment, at fair value, in the fund of funds was $5,255,000 and $4,906,000, respectively. In

2010 and 2009 the Foundation paid the investment advisory firm $80,000 per annum.

The former Director of the Foundation acted as a consultant to the Foundation through an entity he

created. During 2010, the Foundation incurred consulting expenses to that entity of $597,000; a

third party reimbursed the Foundation for $50,000 of the $597,000 incurred. All 2010 consulting

expenses and 2009 unpaid expenses as of December 31, 2009 were paid as of December 31, 2010.

During 2009, the Foundation incurred consulting expenses to that entity of $966,000 of

which $843,000 were paid as of December 31, 2009. During 2009, a third party reimbursed the

Foundation for $154,000 of the $966,000 incurred.

In 2009 and 2010, the Foundation employed the current Director of the Fundacion del Museo

Guggenheim Bilbao, an independent affiliated museum, to oversee, on a part-time basis, the Abu

Dhabi project while still retaining his duties as the Director of the museum in Bilbao.

Approximately 3% of the Foundation’s programming activities is devoted to the Bilbao museum.

An officer of the Foundation’s Board of Trustees is also Of Counsel of a law firm that provides

legal counsel to the Foundation. During 2009, the Foundation incurred legal expenses of $9,900 to

that firm, which was paid in 2010.

The Foundation leased an apartment from an entity whose Managing Partner is a Trustee. In 2009,

the Foundation paid the entity $71,100. The entity sold this property in September 2009.

The Foundation has a license with a music licensing company whose Chairman and Chief

Executive Officer is a Foundation Trustee. The Foundation paid $3,000 in 2010 and in 2009 to the

licensing company.



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14. Functional Classification of Expenses

Expenses by functional classification for the years ended December 31, 2010 and 2009 are shown

below. Depreciation, interest expense, and fees relating to debt service, which are not allocated

functionally on the statement of activities, are allocated functionally below:

2010 2009

Program Expenses

Exhibition and projects 16,566,718$ 16,082,881$ Traveling exhibitions 5,540,335 5,497,052Curatorial and collection maintenance 9,940,915 10,163,996Visitor services 5,102,372 5,192,383Education 3,447,804 3,912,244Auxiliary activities 7,494,426 7,681,675

Total program expenses 48,092,570 48,530,231

Supporting Services

Management and general 12,036,257 12,994,222Fundraising 2,877,822 3,399,755

Total supporting services 14,914,079 16,393,977

Total expenses 63,006,649$ 64,924,208$

15. Net Assets Released from Restrictions

Net assets released during the years ended December 31, 2010 and 2009 are as follows:

2010


Unrestricted Restricted Restricted

General support 4,462,139$ (4,462,139)$ -$ Exhibitions and projects 836,973 (836,973)Collection items purchased 163,478 (163,478)

5,462,590$ (5,462,590)$ -$

2009


Unrestricted Restricted Restricted

General support 2,771,757$ (2,771,757)$ -$ Exhibitions and projects 1,138,948 (1,138,948)Redesignation by donor 4,700,000 1,800,000 (6,500,000)Collection items purchased 247,495 (247,495)

8,858,200$ (2,358,200)$ (6,500,000)$



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16. Commitments and Contingencies

The Foundation has noncancelable operating and capital leases for office and gallery facilities and

equipment. Future minimum annual lease payments under these lease agreements were as follows

at December 31, 2010:

Year Ending Operating Capital

December 31 Leases Leases Total

2011 2,667,914$ 166,816$ 2,834,730$

2012 2,380,766 134,024 2,514,790

2013 2,099,453 106,970 2,206,423

2014 2,121,944 47,137 2,169,081

2015 2,144,978 2,144,978

Thereafter 1,868,538 1,868,538

13,283,593$ 454,947$ 13,738,540$

Certain of these leases require payments under escalation clauses for taxes and operating expenses.

Rent expense is recognized on a straight-line basis over the term of the leases. The excess of rent

expenses accrued on a straight-line basis over rental payments is included in accrued expenses on

the statement of financial position. Rent expense, including taxes and operating expenses, for 2010

and 2009 amounted to $2,377,000 and $2,391,177, respectively.

The Foundation entered into a new operating lease agreement for administrative office space

effective January 1, 2006. In addition to the rental payments, the Foundation received free rent in

the amount of $353,693 and a lease incentive in the amount of $1,103,928, which will be

recognized over the life of the lease. The landlord of this building has extended the option of a

loan to the Foundation to perform renovations. The loan in the amount of $788,500 was signed

April 1, 2006.

On October 10, 2008, the Foundation amended the administrative office space lease to include

additional space associated with the Guggenheim Abu Dhabi Museum project. This amendment

included free rent of $240,667 and a lease incentive in the amount of $262,000 specific to the

additional space, which will be recognized over the life of the lease. There was also an additional

operating lease entered into for this project effective December 1, 2008.

In addition, the Foundation entered into an operating lease agreement for warehouse space

effective March 14, 2008 and renegotiated an operating lease agreement for art storage effective

April 7, 2009.

Under Italian law, deferred compensation accrues in favor of employees which they (or in the event

of their death, their heirs) are entitled to collect upon termination of employment. The amount

payable related to each year’s service is calculated on the basis of the remuneration of each year

and will be subject to annual revaluation based on increases in the Italian cost of living index

(ISTAT). Accrued severance payable in association with the Peggy Guggenheim Collection for

2010 and 2009 is $1,026,000 and $1,007,453, respectively.



33

Pursuant to a sponsorship agreement, a donor requested that certain net assets be separately

invested and maintained in temporarily restricted net assets until the parties develop an agreed

upon successor program for certain technology. In accordance with an agreement reached with the

donor, in November 2009 the Foundation refunded approximately $6,200,000 of the support

previously received.

From time to time the Foundation is involved in legal proceedings, arbitrations, and claims. The

Foundation believes that the liabilities, if any, that may result from such actions will not have a

materially adverse effect on the Foundation’s financial position.

17. Subsequent Events

Solomon R. Guggenheim Foundation evaluated its December 31, 2010 consolidated financial

statements for subsequent events through May 25, 2011, the date the consolidated financial

statements were issued. The Foundation is not aware of any material subsequent events which

would require recognition or disclosure in the consolidated financial statements.

Documents

The Solomon R. Guggenheim Foundation...The Solomon R. Guggenheim Foundation Consolidated Statement of Activities Year Ended December 31, 2010 The accompanying notes are an integral