All foundations, and indeed all philanthropists, are faced with the fact that demand exceeds supply. Because this reality is at once so little understood and so important in the particular case of the Ford Foundation, my report for 1971 is dedicated to a description of our basic financial position.

We recognize that there is a built-in source of frustration and even resentment in the hard fact that the Foundation gets more than fifty applications for every one that it can grant. Some of our most poignant letters of rejection go to those whose hope is that just a little of our money might make their dream come true—even though that dream is far outside the programs authorized by our Trustees.

But we create disappointment too in a much wider circle of men and women who believe—correctly—that what they are doing does fall within the range of problems on which we are trying to help. The only comfort we can offer in many such cases is the simple truth that in the context of what we aspire to do, there are more good applications than our current funds can support.

The following account attempts to advance an understanding of that truth. Experts and others with a taste for statistics will probably find it helpful to consult the ten-year table which is folded in at page 101, and use it as a reference while they read. But the story itself is designed for nonexperts.

For more than six years the Ford Foundation has waged an uphill battle to meet its existing commitments. We have paid the heavy price of two major budgetary reductions and a substantial inflationary erosion of our capital base. We think the struggle is at last behind us, but for the immediate future a continued policy of budgetary austerity is our only prudent choice.

In its first fifteen years of existence as a major foundation, from 1950 through 1965, the strategic financial problem before the Trustees and the staff of the Ford Foundation was to find the best possible ways to spend ever-increasing sums of money. The constantly growing resources of the Foundation not only inspired but even seemed to require such large-scale distributions as our faculty-salary, hospital, and medical-education grants of 1955 (a single Board meeting voted $500 million for these three purposes) and later large-scale challenge grants