"Give" is a word we use many times a day. We may say that a person gives a talk, gives someone a chance, gives medicine, gives birth to an idea. We use it without thinking, as it is an understood part of everyday life.

But if you peel the onion, what is common among all forms of giving is the concept of passage÷whether of knowledge, opportunity or the spirit of caring÷between people.

The simplicity of the concept of giving belies its power. If you give it some thought, you and others likely will agree that few actions are as powerful as a genuine act of giving. Through giving you express respect, a desire to share, a compassion for others. It is how you thank people. It is how you return the blessings that have flowed to you. It is how you grow a relationship, a family...a community.

If you are good at giving, it appears deceptively simple. It becomes a habit; it feels natural. And even if you don't acknowledge it openly, it is the work of the heart.

We at The Dayton Foundation believe we are the luckiest people in the world, because we work with givers. We have watched Foundation donors dig deep into their pockets to help their chosen local organizations be able to continue their work and grow. And when needed, we have seen them respond to help rescue other communities hit by unspeakable tragedies.

Each of over 2,000 funds that make up The Dayton Foundation represents someone's experience of giving. Each is someone's personal story, someone's passion. Each is a person's or family's gift to the community and to a future they may never see÷an act of faith.

The Governing Board and staff of The Dayton Foundation are ever-mindful of the call of responsibility to protect what Foundation donors have entrusted to the Foundation for the community good. We are grateful to be part of the flow of giving that ultimately expresses and lifts the human spirit.

During the last fiscal year, donors contributed $42 million and opened a record number of new funds÷236÷at The Dayton Foundation. One hundred were new endowment or legacy funds, 12 of which were Family Foundation Plus^SM funds (more than $250,000 each), an astonishing number for only the second year of this private foundation alternative. The remaining funds were in new Charitable Checking Accounts^SM.

In the same time period, nearly $34 million flowed out from Foundation donors' funds as gifts to charitable organizations and to the community. A very small percentage of this total was unrestricted dollars in a discretionary pool that funded program initiatives and grants, which are detailed in the "Outcomes" section of this report.

We are pleased to be able to report that as of June 30, 2005, The Dayton Foundation holds $261 million of community assets (before depreciation), more under management than at any time in the Foundation's 84-year history. In addition, documented planned and deferred gifts totaled $213 million, holding the promise of future benefit to our region and its numerous charitable organizations.

Over the past year, the Foundation has made important strides in the Governing Board's leadership initiatives and in facilitating important discussions aimed at strengthening the nonprofit community (please see the "Outcomes" section of this report).

The Dayton Foundation's founders had the wisdom to establish The Dayton Foundation in 1921 as a then-philanthropically revolutionary concept called a community foundation. They designed it to be an enduring organization that makes its stewardship role its highest priority.

But those of us who serve in the community foundation field soon learn that this stewardship is more than a responsibility. It is absolutely integral to our ability to carry out our charitable mission÷"to advance charitable giving and provide leadership to meet changing needs in our community." It is integral, because we can't fulfill our mission unless we ensure that the community's charitable resources, entrusted to us, remain in our community for generations to come.

As these resources grow, it raises the community's philanthropic tide. Along with our community leadership role, this "raising of the tide" constitutes the greatest value the Foundation offers our region today.

It is important to understand that The Dayton Foundation is not one person's vision. It represents the collective vision of some 2,700 donors. Central to carrying out this collective vision is stewardship, which assures that we will rigorously adhere to the expressed wishes of our donors in perpetuity and that we will manage their resources in a responsible and overall enduring manner.

We have spoken with you at other times about the Foundation's investment policies÷revised last year for even greater stability and diversification. We have talked about the independent, third-party investment oversight we have hired (Fund Evaluation Group in Cincinnati) to provide quality assurance, to monitor investment performance and to insure diligent compliance with the Foundation's investment policies by the institutions entrusted with managing Foundation funds.

We have spoken, as well, about the Foundation's long history of receiving unqualified opinions (this past fiscal year included) from independent accounting and auditing firms that we engage yearly to do a thorough, voluntary audit of our books and accounting systems and procedures. We have written about our ongoing efforts to maintain efficiency and contain costs, while preserving effectiveness and quality of service. Operating expenses continue at 1 percent of assets.

But there are other stewardship pieces about which we have spoken very little, if at all.

The Dayton Foundation has voluntarily submitted itself to in-depth examinations of our practices by both the Ohio Association of Nonprofit Organizations (OANO) and the Council on Foundations (COF), the premier international organization for both community and private foundations, based in Washington, D.C.

We are pleased to report that one of the two reviews is complete, and that OANO has notified us that the Foundation is now among just two community foundations in Ohio that are among eight nonprofits statewide, certified to date as meeting OANO's 56 Standards for Excellence for accountability and ethical business practices. The more than year-long COF certification process is nearly complete, and we anticipate good news to report there in the next few months.

You probably have seen numerous stories about the Sarbanes-Oxley Act, signed into law in 2002 in response to corporate and accounting scandals and designed to improve public confidence in the accuracy and integrity of financial reporting of public companies.

Discussion of Sarbanes-Oxley has surfaced again, this time around the applicability to private foundations and the nonprofit community. We have reviewed the measures and have voluntarily adopted a number of measures outlined in the Act that we think are good practices for nonprofits as well. We have in place, either as policy or as practice, such important procedures as whistleblower, privacy and conflict-of-interest policies, numerous oversight practices, the attachment of audited financial statements to our publicly available 990s, etc.

The annual report is another reflection of this discussion of stewardship. It is one of the ways the Foundation yearly reports to our constituents and the public about their community foundation's health and progress in meeting our mission. It also is one of the important ways we recognize donors and their funds, today and in perpetuity.

Finally, one of the most important aspects of our stewardship structure is an elaborate system of volunteer oversight, historically imbedded in the Foundation's operations. At the top of this volunteer oversight construct is the Governing Board (composed of 15 experienced, civic leaders from across the community), then seven standing Board committees, more than 50 fund committees and hundreds of committee volunteers.

We couldn't be more blessed by donor confidence and generosity and a year of strong community giving and support. We are humbled by this and will continue to work hard to continue to earn this trust and do the best job humanly possible.

It is difficult to express the extent of our gratitude to our donors, our financial advisor partners who help us find new people in the community to serve, and the nonprofit community that gives so richly to our community's cherished quality of life.

Thank you to each and every one of you. You teach us every day about the true nature of the art of giving.

Judy D. McCormick, Chair

Michael M. Parks, President