Research Corporation · Research Corporation is a private foundation, established in 1912, that...

Research CorporationNinety-first Annual Report, 2003

America’s Private Science Foundations: Catalysts for Change

Research CorporationANNUAL REPORT: JANUARY 1, 2003 to DECEMBER 31, 2003

Research Corporation is a private foundation, established in 1912, that sup-ports basic research in the physical sciences (chemistry, physics and astronomy) atU.S. and Canadian colleges and universities. As one of the country’s first foundations, Research Corporation was incorporated before the term “foundation”came into popular use. Research Corporation’s founder, Frederick GardnerCottrell, was a distinguished scientist, inventor and philanthropist. He continues toserve as a model and inspiration for the scientists who receive ResearchCorporation awards today.

Table of Contents

President’s Message FIVE

America’s Private Science Foundations: Catalysts for Change SIX

Program Review TWENTY-EIGHT

Program Summary TWENTY-NINE

Awards Approved THIRTY

Independent Auditors’ Report THIRTY-EIGHT

Notes to Financial Statements FORTY-TWO

Board of Directors, Advisory Committee and Staff FIFTY

Throughout this report, images of lightning are used to represent the energy of dramatic change.

other players achieve the innovation and trans-formation.

Since the early Twentieth Century, ResearchCorporation and other private science founda-tions have looked for ways to inspire, instilland instigate change. This annual report exam-ines how the unique qualities and missions ofprivate science foundations enable them to becritical participants in the higher-education andscientific communities. With the importantchallenges facing these same communities inthe Twenty-first Century, Research Corporationand its sister philanthropic organizations mustmaintain and strengthen their roles as catalystsfor change.

We hope that the ideas and challenges high-lighted in this report will serve as catalyststhemselves−inspiring all of us to innovate, toengage, and to make a difference in the worldof science and higher education.

John P. SchaeferPresident

Every day on college anduniversity cam-

puses, the ongoing process of research andeducation brings forth new ideas, technologiesand understandings. Sometimes a new insightarrives in a flash. More often, innovation andlearning require careful nurturing.

This process of growth, innovation andtransformation involves a complex interplay ofindividuals and organizations, of personal ini-tiative and cooperative efforts. The individualsinclude scholars, students, researchers, admin-istrators and teachers. The organizationsinclude research groups, departments, insti-tutes, laboratories, colleges, universities, agen-cies and scientific societies.

Within this complex system, private sciencefoundations and their program officers haveplayed an important role, sometimes behindthe scenes, occasionally on the main stage.The role most often undertaken by private sci-ence foundations is that of catalyst, helping

President’s Message

SIX

Thunder is good, thunder is impressive; but it is lightning

that does the work. − Mark Twain

In 1902 American scientistand inventor Frederick

Gardner Cottrell received his Ph.D. in Leipzig,Germany for work with the famous Germanchemist, Wilhelm Ostwald. Seven years later,in 1909, Ostwald won the Nobel Prize inChemistry "in recognition of his work on catal-ysis." In 1912, Cottrell established America'sfirst foundation devoted exclusively to theadvancement of science, Research Corporation.

Is it merely a coincidence that the man whohad the vision to establish a philanthropicfoundation for the advancement of science wasalso a scientist who understood catalysis?

Throughout the Twentieth Century, thefoundation that Cottrell established has been a"catalyst for change" in the scientific and high-er-education communities. Today, ResearchCorporation and other private science founda-tions continue to play important, catalyticroles, helping continually reshape and revital-ize science.

Is there indeed a similarity between chemi-cal catalysis and the work of private sciencefoundations?

Any organization, of course, can call itself a"catalyst for change." A quick Google search on

that well-worn slogan turns up over 73,000websites, from a personal growth seminar inCanada to a rock-and-roll band in Cincinnati.What gives private science foundations anyspecial claim on this phrase?

As defined in introductory chemistry text-books, a catalyst is a substance that alters thespeed of, or makes possible, a chemical or bio-chemical reaction but remains unchanged atthe end of the reaction. By analogy, an organi-zation that serves as a catalyst for change willalter the speed of, or make possible, transfor-mations and changes in other institutions,while remaining itself unchanged and faithfulto its original mission.

America's Private Science Foundations: Catalysts for Change

Above left:FrederickGardnerCottrell. Right: WilhelmOstwald

SEVEN

Textbook explanations of chemical catalystspoint out these additional qualities:

h Catalysts are very modest in size,compared to the large quantity of mate-rial they are able to transform.hCatalysts can be highly targeted andexquisitely specific in how they effectchemical and biochemical change.hCatalysts facilitate chemical reactionsthat would otherwise be too slow or toodifficult.hCatalysts accomplish their role bybonding temporarily with the moleculesthey seek to transform, creating an envi-ronment where molecular change occursmore quickly and easily, and then releas-ing the transformed molecules back intothe wider world.

This article examines the qualities and char-acteristics of private science foundations−based on interviews with more than a dozenleaders from the philanthropic, scientific andhigher-education communities−revealing thatcatalysis is indeed an apt metaphor for the roleplayed by private science foundations. Andwith the set of challenges and opportunitiesfacing today's colleges and universities, alsodiscussed in this article, the unique role playedby private science foundations will be evenmore important in the coming decades.

Private Science Foundations Are Small,Compared to the Federal Government

The most obvious characteristic of today'sprivate science foundations, and the one thatgives rise to many of the other characteristics,is their relatively small size. Compared to thesize of the federal government's role in science(as measured in dollars), today's private sci-ence foundations are minuscule, providingonly about 1.5 percent of the amount providedby the federal government for science.

Private science foundations haven't alwaysbeen the "small kid on the block." When thefirst private foundations and research institu-


tions−Carnegie Institution of Washington(established in 1902), Carnegie Foundation forthe Advancement of Teaching (established in1905), Carnegie Corporation (established in1911), Research Corporation (established in1912) and Rockefeller Foundation (establishedin 1913)−began supporting the advancementof science and higher education, the U.S. fed-eral government was not the major financialsupporter in this arena. Early grants ofResearch Corporation, for example, fundedpioneering work in chemistry and physics,such as Robert H. Goddard’s experiments withthe first liquid-fuelled rocket, Ernest O.Lawrence’s development of the first largecyclotron and Robert Van de Graaff’s buildingof the Van de Graaff generator, an early tool fornuclear research.

However, a major shift in funding occurredduring and after World War II, under the lead-ership of Vannevar Bush. During his distin-guished career, Bush, a respected engineer andscience administrator, gained a sweepingoverview of the scientific and technical com-munity, including the worlds of academe, pri-vate science foundations and the federal gov-ernment. He started his professional career atMassachusetts Institute of Technology (MIT)as a professor (1923-1932) and then served asvice president and dean of engineering (1932-1938). From 1938 to 1955, he was president ofthe Carnegie Institution of Washington. Bushalso served on the board of directors ofResearch Corporation from 1939 to 1946.

EIGHT


During World War II, he became director ofthe Office of Scientific Research andDevelopment, which oversaw all defenseresearch and development, including the devel-opment of radar and the atomic bomb.

With this broad set of experiences, Bushbelieved that "without scientific progress noamount of achievement in other directions caninsure our health, prosperity and security as anation in the modern world." Shaping thisbelief into a national science policy, Bush out-lined his vision in his landmark report toPresident Franklin Roosevelt, “Science−TheEndless Frontier” (1945).

Following the path outlined by VannevarBush, the federal government began assumingan increasingly important role in basic scientif-ic research. The National Science Foundation(NSF) was established in 1950. Its presenceexpanded rapidly, especially in the periodimmediately following the Soviet launch ofSputnik in late 1957. NSF's budget grew from$40 million in fiscal year 1958 to nearly $500million in 1968. During the same period, thefunding role of the National Institutes ofHealth (NIH) also expanded dramatically, fol-lowing the establishment of the ResearchGrants Office in 1946. From a budget of justover $4 million in 1947, the NIH grants pro-gram grew to more than $100 million in 1957and $1 billion in 1974.

Today, the federal government's investmentin scientific research and development (R&D)dwarfs the funding available from private sci-ence foundations. For example, the non-defense portion of the federal R&D budget in2002 (as reported by the American Associationfor the Advancement of Science in its annualR&D budget analysis) was approximately $51billion. Of this amount, $23 billion was pro-vided through the National Institutes ofHealth, and $28 billion flowed through otherfederal agencies, including the NationalScience Foundation, the Department of Energy(DOE) and the National Aeronautics andSpace Administration (NASA). The defense-related portion of the federal R&D budget in2002 was approximately $55 billion, with mostof those funds flowing through theDepartment of Defense and the Department ofEnergy (and, in the future, through theDepartment of Homeland Security).

By comparison, private foundations gave$568 million for science and technology in2002, according to data collected by theFoundation Center. This amounts to about 2.0percent of the $28 billion provided by non-defense, non-NIH federal science agencies. Inthe health field, private foundations play alarger, but still relatively small, role. In 2002,private foundations' grants in the health fieldwere $2.9 billion, about 12.6 percent of theNIH budget. (For additional details on thesedata, and how they were calculated, see "The Universe of Private Science Foundations”on page fifteen.)

Can private foundations, providing fundsthat some might consider to be "only noiselevel," hope to make a difference in the scien-tific community? Or, phrased another way,how can private science foundations leveragetheir limited funds to make a significantimpact?

Faced with the overarching role played bythe federal government, private science foun-dations have taken on the characteristics ofcatalysts, and these strategies have enabledthem to thrive and play important roles in theadvancement of science.

NINE


Private Science Foundations Are Nimble

Peter J. Bruns, vice president for grants andspecial programs at the Howard HughesMedical Institute, uses nautical analogies whendiscussing the roles and approaches of federaland private institutions. He portrays the feder-al government as a super tanker: huge, impos-ing and majestic, but cumbersome and slow toturn. By contrast, Bruns' analogies for privateinstitutions are vessels with much greaterspeed and agility: racing boats, tugboats andpilot boats.

Although the federal government hasimplemented a few grants programs that allowa rapid response, such as NSF's Small Grantsfor Exploratory Research (SGER) program,most federal programs build up speed verygradually, like a super tanker. Arthur B. Ellis,director of NSF’s Chemistry Division, says,"Private science foundations certainly have anagility that is sometimes hard for us in the fed-

eral government to match. At NSF, for exam-ple, putting out a new program announcementthat has input from our community might takea year. And then it might be a couple of addi-tional years before the program has reached asteady state."

Private science foundations, on the otherhand, can establish new programs quickly andeasily, without the lengthy and open processthat federal agencies use. "One of the greatadvantages of private foundations is that theyare really flexible and able to respond to per-ceived needs very quickly," says John P.Schaefer, president of Research Corporation.

Foundations' programs are often undertak-en in the spirit of experimentation, to try outgood ideas and see if they have the intendedeffects. According to Lawrence A. Funke, pro-gram director of the American ChemicalSociety's Petroleum Research Fund (PRF), forexample, PRF recently launched three pilot

Arthur B. EllisNational Science

Foundation

The NationalScience Foundation

(NSF) is an inde-pendent agency of

the U.S. Government, established by the National Science Foundation

Act of 1950. The Act established the NSF's mission: "To promote the progress of science; toadvance the national health, prosperity, and wel-

fare; and to secure the national defense." With anannual budget of approximately $4 billion, NSF's

program areas include Biology; Computer/Information Sciences; Crosscutting Programs;

Education; Engineering; Geosciences;International; Math/Physical Sciences; Polar

Programs and Social/Behavioral Sciences.(www.nsf.gov)

TEN

Peter J. Bruns Howard Hughes Medical Institute

The Howard Hughes Medical Institute (HHMI),established in 1953, is a nonprofit medicalresearch organization that employs hundreds ofleading biomedical scientists working at the fore-front of their fields. In addition, through its grantsprogram and other activities, HHMI is helpingenhance science education at all levels and main-tain the vigor of biomedical science worldwide.(www.hhmi.org)


programs on an experimental basis. "We'll beevaluating these programs, starting next year,"says Funke. "If they proceed, they will have tothen come from the regular budget."

Not only can private science foundationsstart programs quickly, but they can also stopprograms more quickly than the federal gov-ernment. Lee S. Shulman, president ofCarnegie Foundation for the Advancement ofTeaching, says, "Foundations can be muchmore nimble than federal agencies. Maybe wecan't quite turn on a dime, but we can turn ona quarter." If a program is not meeting its goalsor a foundation sees a better use of its funds,it can simply discontinue a program. Thesesorts of decisions are much more difficult tomake in the public and political arena in whichfederal agencies operate.

Every foundation has programs that havebeen discontinued−sometimes because theneed has disappeared, sometimes because the

federal government has established a similarprogram to meet the need, and sometimesbecause the program didn't work out as antici-pated. At Research Corporation, for example,leaders recently suspended the ResearchInnovation Award (RIA) program , giving it a"sabbatical," while staff and board reassess theimpact of the program. According to Schaefer,"We have a long tradition of making a bigimpact with programs that are targeted in astrategic way. We want to make sure the RIAprogram is meeting this high standard."

Along with the ability to start and stopquickly, private science foundations are consid-ered "light on their feet" because they havegreat flexibility in implementing their pro-grams. Federal agencies develop detailed writ-ten rules for programs, which must then bestringently applied on a nationwide basis.Private foundations, on the other hand, oper-ate with more flexible guidelines and can sim-ply "go with their gut" when an idea excitesthem. Mark J. Cardillo, executive director ofthe Camille and Henry Dreyfus Foundation,points out, "a private foundation can use its

John P. SchaeferResearchCorporation

ResearchCorporation, estab-lished in 1912, waschartered to "makeinventions andpatent rights more

available and effective to the useful arts and manu-factures" and to devote the net earnings of the cor-poration to providing "means for scientificresearch and experimentation" at scholarly institu-tions. Today, its programs aid basic research in thephysical sciences of chemistry, physics and astron-omy. Through its grant programs, ResearchCorporation supports ideas independently pro-posed by faculty members at U.S. and Canadiancolleges and universities and also carries on activi-ties related to science advancement. (www.rescorp.org)

Lawrence A. FunkePetroleum Research Fund

(PRF)

The American Chemical Society's PetroleumResearch Fund (PRF), established as a trust in

1944, is dedicated to "advanced scientific educa-tion and fundamental research in the 'petroleum

field,' which may include any field of pure sciencewhich . . . may afford a basis for subsequent

research directly connected with the petroleumfield." Grants are made to nonprofit institutions inthe United States and other countries in response

to proposals. Fundamental research is currentlysupported in chemistry, the earth sciences, chemi-

cal engineering and in related fields such as polymers and materials science.

(www.chemistry.org/prf)

ELEVEN


best judgment on things that are hard to quan-tify." Agencies, on the other hand, oftenrequire quantifiable evidence when evaluatingthe success of a program.

Clearly, institutional flexibility is one of thekeys to private science foundations' success ascatalysts for change. Similarly, molecular flexi-bility is one of the keys to the success ofchemical and biochemical catalysts. In fact,some biochemical catalysts, such as certainenzymes, can lose their ability to catalyzeimportant biochemical reactions if they areconstrained in rigid molecular structures.

Private science foundations are focused and targeted

A chemical or biochemical catalyst oftenperforms just one particular role, such asbreaking or forming one particular type ofchemical bond, and it performs that role veryefficiently and effectively. Similarly, private sci-ence foundations often narrow the focus oftheir programs, performing one particular roleand performing it very well.

Sometimes the focus of a foundation isbased on scientific discipline. For example, theCamille and Henry Dreyfus Foundation andthe Welch Foundation were established bytheir founders to focus on chemistry. ThePetroleum Research Fund was established tosupport "advanced scientific education and

fundamental research in the petroleum field."Research Corporation, established with abroad mission of the advancement of science,has in recent years narrowed the focus of itsgrants to the disciplines of chemistry, physicsand astronomy.

Sometimes the focus of a foundation isbased on geography. The M.J. MurdockCharitable Trust focuses its philanthropicefforts in five states of the Pacific Northwest.

"Focus is a desirable thing," says NormanHackerman, chairman of the ScientificAdvisory Board of the Welch Foundation,which is restricted by the will of the founderto supporting chemistry in the state of Texas."The system [for funding and doing science] isso big, it won't yield to brute force. Eventhough we are a little actor in a big scene,we've been able to do more than if we hadn'tbeen restricted."

A foundation's decision to change its focuscan have far-reaching impacts. For example,the F.W. Olin Foundation, established in 1938,

Lee S. ShulmanThe Carnegie

Foundation for the

Advancement ofTeaching

The Carnegie Foundation for the Advancement ofTeaching, established in 1905, is an independent

policy and research center whose charge is "to doand perform all things necessary to encourage,

uphold, and dignify the profession of the teacherand the cause of higher education." The founda-

tion's work is focused on four major areas of con-cern: undergraduate education, professional andgraduate education, K-12 and teacher education,

and knowledge sharing functions.(www.carnegiefoundation.org)

Mark J. CardilloThe Camille and HenryDreyfus Foundation, Inc.

The Camille and Henry DreyfusFoundation, Inc., established in 1946, seeks "toadvance the science of chemistry, chemical engi-neering and related sciences as a means of improv-ing human relations and circumstances around theworld." The foundation makes awards to academicand other eligible institutions through severalawards programs. Awards are open to all academicinstitutions in the states, districts and territoriesof the United States.(www.dreyfus.org)

TWELVE


was a major funder of new buildings for morethan two generations. With an emphasis onteaching and laboratory facilities for engineer-ing and science, the foundation helped con-struct and fully equip seventy-two buildings onfifty-seven independent college campuses. Inthe 1990s, however, the foundation decidedthe best way to maximize its impact was tohelp create a college from scratch that couldreform engineering education. The Franklin W.Olin College of Engineering, located inNeedham, Massachusetts, officially opened infall 2002 to its inaugural freshman class.

One of the most important tasks for newprivate science foundations, such as the KavliFoundation and the Gordon and Betty MooreFoundation (both established in 2000), is todetermine their specific areas of focus. TheKavli Foundation, for example, has selectedthree areas in which to focus its activities: cos-mology, neuroscience and nanoscience. TheGordon and Betty Moore Foundation recentlydecided not to launch an initiative in the bio-medical science area, where existing fundingfrom other sources is already at a high level.Instead, it established a ten-year, $145-millioninitiative in the area of marine microbiology.

Private science foundations take risksLeaders of private science foundations con-

sider one of their most important roles to beas risk-takers. Research Corporation's Schaefersays, "Private foundations can take more gam-bles than governmental organizations. Theycan take on projects that are out of the main-stream−interesting ideas that don't fall withinthe guidelines of spelled-out programs."

Although leaders in federal agencies alsotalk about being risk-takers, the culture of thefederal grants system presents a number of

constraints and restrictions that may inhibitrisk-taking. These barriers, which have evolvedas part of an otherwise highly successful sys-tem of funding science, include the following:

h Agencies are accountable in a verypublic way to Congress, the media and taxpayers, with the implicit questionbeing "What have you done for me late-ly?" Private foundations, on the otherhand, are accountable primarily to theintention of their founders, with theimplicit question being "Have you beentrue to our philanthropic mission?" h Agencies look for results within a rel-atively short time horizon, with publica-tions expected before the grant is up for renewal. Private foundations, on the other hand, are often more willing to letcutting-edge research blossom overtime.

THIRTEEN

Norman HackermanThe Welch Foundation

The Welch Foundation supports fundamentalchemical research at universities, colleges or othereducational institutions within the state of Texas.

Since its founding in 1954, the organization hascontributed to the advancement of chemistry

through research grants, departmental programs,endowed chairs, visiting lectureships

and other special projects at educational institutions in Texas.

(www.welch1.org)

h Agencies use a formal, business-like peer review process that is inherently con-servative, with favorable reviews oftengoing to those individuals and institutionsthat have already established track records.One disturbing consequence of this systemis that the average age of Ph.D. scientistsreceiving their first major NIH grant hasrisen from thirty-nine to forty-two over theten-year period of 1992-2002. Some pri-vate foundations, on the other hand, makedecisions in a less formal process involvingpeer input, where it's easier to discuss andmake choices based on judgment and sub-jective criteria. h Agencies, in the spirit of efficiency, often focus on larger grants, mainly toestablished investigators. Private founda-tions, on the other hand, devote some oftheir funds in smaller increments to proj-ects that are still in the formative stages.

The energy required to surmount all thesebarriers limits the number of "risky" researchprojects that will be undertaken in the world offederal grants. Only a few scientists will have theenergy, persistence, courage and luck to vault allthese hurdles. By lowering the barriers, privatefoundations increase the chances that scientistswill be able to move ahead. This same principle−lowering barriers to allow increased rates of suc-cess−is how chemical and biochemical catalystswork at the molecular level.

Another way that private science foundationstake risks is by funding research in emergingareas, where federal programs have not yet beenestablished. Over the years, private foundationshave played major roles in the birth of fields suchas radio astronomy (Research Corporation) andcomputational biology (W.M. Keck Foundation).

Private foundations are also able to take oncertain types of projects that rarely find federalsupport, including bricks-and-mortar projects,"exploration-driven" research (as opposed to"hypothesis-driven" research) and the develop-ment of new types of instrumentation. Both theKeck Foundation and Research Corporation, forexample, have played major roles in funding new


telescopes: the Keck Observatory in Hawaii andthe Large Binocular Telescope in Arizona.According to Research Corporation's Schaefer,"Those telescopes wouldn't have come intobeing−or would have taken many, many years−ifthe scientists and institutions had to go throughthe regular federal government funding process.A project like the Keck Telescopes, for example,would have consumed all of NSF's budget forastronomy for several years. I don't think the pol-itics of the situation would have allowed that tohappen."

Private science foundations build closerelationships with scientists, institutionsand scientific communities

One of the most important qualities of privatescience foundations is that they take great care tobuild strong and close relationships with theinstitutions they serve. And because of thosestrong relationships, the institutions and thefoundations both benefit.

Building and maintaining relationships is alabor-intensive process, and it is only possiblebecause foundations target their programs. NealO. Thorpe, trustee and executive director of theM.J. Murdock Charitable Trust, points out,"Compared to federal agencies, we're closer to theground in terms of what's going on in the sciencedivisions of the private colleges. There are only

FOURTEEN


The Universe of Private Science FoundationsThe philanthropic organizations highlighted in this article represent only a

sample from the broad universe of private science foundations. Within this broaduniverse, there is great diversity. Each philanthropic organization is unique interms of its mission, its founding documents, its programs and its operating philosophy. Therefore, it can be challenging to collect and analyze data and information that will provide a useful and meaningful picture of the universe of private science foundations.

FIFTEEN

The data reported on pagenine of this article are takenfrom FC Stats-The FoundationCenter's Statistical InformationCenter (www.fdncenter.org/fc_stats). The FC Stats data-base contains over 2,300 datatables with valuable informationcategorizing foundations andgrants by many different criteria.

Yet even this useful and com-prehensive database is incomplete. For example,three of the philanthropic organizations inter-viewed for this article are not technically classifiedas a "foundation" for the purposes of the FC Statsdatabase:

h The Howard Hughes Medical Institute isclassified by the Internal Revenue Code as amedical research organization.h The Carnegie Foundation for theAdvancement of Teaching is classified as aprivate operating foundation. It uses incomefrom an endowment to support its activitiesand does not award grants.h The Petroleum Research Fund, originallyestablished as a trust, is now an endowmentadministered by the American ChemicalSociety.

Therefore, the Foundation Center data describingthe extent of private foundation funding for scienceand for health do not include these three organiza-tions.

With the caveat that a rigorous analysis andcomparison of philanthropic organizations isbeyond the scope of this article, here are some factsthat provide a brief overview of the universe of pri-vate science foundations:

The largest foundation in the United States isthe Bill and Melinda Gates Foundation, with itsfocus on "bringing innovations in health and learn-ing to the global community." Its endowmentexceeds $25 billion. In 2002, according to FC Stats,the Gates Foundation awarded $145 million ingrants for science and technology.

The Howard Hughes MedicalInstitute has assets of about $11billion. In 2003, through itsgrants and special programs,HHMI awarded $107 million,primarily in support of scienceeducation at all levels, from pre-college science education to post-doctoral training. (In addition,HHMI, in its role as a medicalresearch organization, disbursednearly $500 million in support of

scientific research.)According to FC Stats, three other foundations

awarded over $50 million each for grants for sci-ence and technology in 2002:

h W.M. Keck Foundation, $55 millionh The David and Lucile Packard Foundation, $52 millionh Lilly Endowment Inc., $50 millionA more complete list of private science founda-

tions is provided by the Foundation Center in itstable, "Top 50 U.S. Foundations Awarding Grants inScience and Technology, circa 2002." Within thisgroup of 50 foundations:

h Eight foundations awarded $10 millionor more for science and technologyh Sixteen foundations awarded from $5million to $10 million for science and tech-nologyh Twenty-six foundations awarded from$2.37 million to $5 million for science andtechnologyIn the research areas of science, technology and

health, the level of federal grant support signifi-cantly exceeds that of private science foundations.Lee Shulman points out, however, that this general-ization is not true in the research fields of K-12 andhigher education. Says Shulman, "there is so littlefederal research funding in education (in contrastto the funding of educational operations or thefunding of student loans) that the funding fromscience foundations is actually the core of educa-tional research support rather than a catalyst.”


thirty private colleges in the five states inwhich we give grants. That gives us an oppor-tunity to really get to know those institutionsvery well. We put a lot of energy into learningwhat the challenges are for science faculty andadministrators, and then trying to fashion pro-grams and responses that will meet thoseneeds. It's easy for us to call together a groupof science faculty, brainstorm with them, hearthem out, and then respond. As a result, we'veseen a significant change in the culture of thescience divisions with respect to faculty andstudent research. It would have been very diffi-cult for a large federal agency to do that."

The in-depth relationship and understand-ing that develop between a private sciencefoundation and an institution it serves can leadto more effective change. Neal B. Abraham,executive vice president, vice president for aca-demic affairs, dean of the faculty and professorof physics at DePauw University, says, "Mysense is that private science foundations havebeen more sensitive to the ebb and flow−thepace of change−at different institutions. Someinstitutions adopted neuroscience or environ-mental science or biochemistry a decade ago,and some haven't done that yet. There's a littlemore faddism in the federal funding−'now isthe time to do this.' The private science foun-dations have been more open to 'what's rightfor you at this point in time.' That depends on

who's retiring, who's join-ing your faculty andwhether you've just had anendowment campaign andhave some money tospend. There are a lot ofdifferent things in play."

James M. Gentile, pro-fessor of biology and deanfor the Natural Sciences atHope College, points out,"In the private sciencefoundations, the programofficers play a key role infaculty development. A lotof one-on-one conversationand mentoring goes on.For the most part, you

don't get that from the public sector. With pri-vate science foundations, it's a much morehands-on approach, and it really helps with

SIXTEEN

Neal O. ThorpeM.J. Murdock Charitable Trust

The M.J. Murdock Charitable Trust, established in1975, has a mission "to enrich the quality of life in

the Pacific Northwest by providing grants toorganizations that seek to strengthen the region'seducational and cultural base in creative and sus-

tainable ways." The trust has focused its grant-making efforts in five states of the Pacific

Northwest: Alaska, Idaho, Montana, Oregon andWashington. A historical emphasis in grantmakinghas been in education and scientific research, and

the trust has four formal grant programs with a focus on the sciences.

(www.murdock-trust.org)


faculty development. It's almost more like clas-sical relationship building that one finds withfoundations and organizations except this isrelationship building through the scientificenterprise."

In biochemistry, the classical metaphor forthe way an enzyme catalyzes a chemical reac-tion is the lock-and-key metaphor. The enzymeprovides an active site−a protected molecularenvironment uniquely suited to the particularmolecule that will be transformed. Through aone-on-one exchange of energy and atoms thattakes place in the active site, the chemicalreaction is catalyzed and the target moleculetransformed. Private science foundations cancatalyze change in much the same way−through specially tailored, one-on-oneexchanges of energy, ideas and funds.

Challenges and Opportunities for the Future

As discussed above, private science founda-tions have developed useful strategies thathelp them serve a catalytic role in the scienceand education communities. Looking ahead,the need for foundations' assistance is moreimportant than ever, because major challenges

face today's scientific and educational institu-tions. Here's an overview of three of thosechallenges.

Neal B. Abraham

DePauw University

DePauw University, founded in 1837, is a private,selective, coeducational, residential, undergraduate

liberal arts college. Located in Greencastle,Indiana, DePauw University has an enrollment of

approximately 2,300 students.(www.depauw.edu)

James M. Gentile

Hope College

Hope College, estab-lished in 1866, is a

private, four-year, residential, liberal arts, under-graduate college. Located in Holland, Michigan,Hope College has an enrollment of approximately3,000 students.(www.hope.edu)

SEVENTEEN


EIGHTEEN

Lightning, Legumes and Laboratories: The Role of Catalysis in Nitrogen Fixation

Water, water everywhere, nor any drop to drink.- Samuel Coleridge, The Rime of the Ancient Mariner

If Coleridge had been a chemist, he might have chosen N2 gas, instead of liquid H2O,to illustrate the paradox of scarcity in the midst of apparent abundance.

Nitrogen gas, N2, makes up 78 percent of the air we breathe. Nitrogen is also anessential component of many chemical building blocks of life, including amino acids, pro-teins and DNA. Yet animals and higher plants can’t make use of it and convert it intothese important organic molecules, because N2 is a relatively inert substance that doesn'tcombine with other elements under ordinary conditions.

Before it can be used by most living organisms, nitrogen must first be combined withhydrogen or oxygen to form more reactive chemical compounds such as ammonia, nitritesand nitrates. Only then can most living organisms utilize the nitrogen. This process ofconverting nitrogen gas to a more usable form is called nitrogen fixation. It's a difficultprocess from a chemical perspective, with a very high activation energy barrier that mustbe surmounted. A recent article about biological oceanography described the problem thisway: "Nitrogen, nitrogen everywhere, but not an energetically bioavailable form to drink."

Sources of Nitrogen Fixation

Several billion years ago, in earth's early days, the first conversion of nitrogen gas tonitrates and ammonia was caused by lightning, which was able to produce the extremeconditions of high temperatures and pressure required. Today, a relatively small amountof nitrogen gas is turned into nitrates and then ammonia as a result of lightning. As dra-matic as lightning can be, however, it still doesn't provide enough nitrogen fixation tosupport abundant life on earth. Scientists estimate that only 5 to 8 percent of nitrogenfixation on earth results from lightning.

How, then, does nitrogen fixation take place? Today, most naturally occurring nitrogen fixation takes place in a less dramatic fash-

ion, without extreme conditions of temperature or pressure, without flashes of brightlight and loud claps of thunder. It happens quietly underground and underwater. And ithappens as a result of catalytic reactions in certain forms of bacteria.

These bacteria use enzymes called nitrogenases to catalyze the combination of nitro-gen and hydrogen to form ammonia. These bacteria are found in the oceans, in the soil,and in symbiotic relationships that take place in root nodules of certain plants, mostnotably legumes such as clover, alfalfa and soybeans.

Modern Society's Reliance on Nitrogen Fixation

Materials containing fixed nitrogen, such as saltpetre (sodium nitrate), guano, manure and decaying plantmaterial, have long been used in human agriculture as fertilizers. During the Nineteenth Century, scientistsbegan to understand fixed nitrogen's importance to growing plants, and farmers began to incorporate the use offertilizers into more intensive agricultural methods.

At the same time, a second use for fixed nitrogen became increasingly important−its use as a starting materi-al for making gunpowder and explosives. By the end of the Nineteenth Century, these two competing uses start-ed to strain the natural supplies of fixed nitrogen. Nitrogen fixation became a subject of great strategic impor-tance, and scientists began searching for new sources of fixed nitrogen.

Early in the Twentieth Century, two German scientists, Fritz Haber and Carl Bosch, discovered and developed


NINETEEN

a catalytic process for converting nitrogen and hydrogen gas to ammonia. The process used extremely high pres-sures and moderately high temperatures in the presence of an active iron-based catalyst. The Haber-Boschprocess quickly became one of the most important industrial chemical processes, and Haber and Bosch eachreceived Nobel Prizes for their work. (The Haber-Bosch process, still widely used, is responsible for producingammonia used in fertilizer that sustains roughly 40 percent of the world's population today.) As Germany beganto expand its industrial production of ammonia, other countries sought to develop their own strategic capabili-ties in this area. In 1916, the United States established the Fixed Nitrogen Research Laboratory. A key goal ofthis laboratory was to develop new catalysts for nitrogen fixation.

Research Corporation's Catalytic Role in Nitrogen Fixation

Among the many organizations and scientists that have played key roles in improving our understanding ofnitrogen fixation are Research Corporation and its founder, Frederick Gardner Cottrell.

In 1922, Cottrell was appointed director of the Fixed Nitrogen Research Laboratory. During Cottrell's tenureat the laboratory, from 1922 to 1930, American scientists developed a very reactive and stable catalyst for use inthe Haber-Bosch process.

Over the decades since then, scientists with Research Corporation support have continued to explore hownitrogen fixation occurs in both biological and non-biological systems. Because of its great significance, both as afield of scientific study and as a subject that promises great practical value, nitrogen fixation remains an impor-tant area of research today.

For example, among the eleven talented scholars recently selected to receive a 2004 Cottrell Scholar Award ischemist Paul Chirik. Chirik and coworkers at Cornell University, in a recent scientific paper (Nature, Volume 427,pages 527-530, 2004), announced the discovery of a zirconium compound that enables the production of ammo-nia from nitrogen and hydrogen in solution at relatively low temperatures.

Nitrogen Fixation and Symbiosis:An Inspiration for PrivateScience Foundations

The bacteria that toil quietlybeneath the surface to transform nitro-gen into ammonia play an indispensa-ble role in the ecosystem. They usecatalysis to lower the barriers to trans-formation, and they work closely in asymbiotic relationship with othermembers of the ecosystem.

The world of higher education hasalso been described as an ecosystem. Ina chapter titled "The University asEcosystem" (Reinventing UndergraduateEducation: A Blueprint for America'sResearch Universities, 1998), the mem-bers of the Boyer Commission on Educating Undergraduates in the Research University, write:

The ecology of the university depends on a deep and abiding understanding that inquiry, investigationand discovery are the heart of the enterprise, whether in funded research projects or undergraduateclassrooms or graduate apprenticeships. Everyone at a university should be a discoverer, a learner.That shared mission binds together all that happens on a campus. The teaching responsibility of theuniversity is to make all its students participants in the mission.

In both ecosystems−the world of plants and animals and the world of higher education−the fruits of the sys-tem would not be possible without the hidden, behind-the-scenes work of the catalysts for transformation,whether they be nitrogen-fixing bacteria or private science foundations.

Challenge #1: Helping scientists build andsustain their careers

The scientific and higher-education enter-prise is not a well-oiled machine with easilyreplaced parts; it's a complex, living systemcomprising many individuals with uniquecareers, values and talents. Each of thosecareers is a journey, with trials and tasks,twists and turns, successes and failures. At keystages along the career path, private sciencefoundations can play an important role in help-ing individuals take the next step.

One of the stages where private sciencefoundations have been making important con-tributions is at the beginning of a faculty mem-ber's career. The process by which federalgrants are awarded today makes it especiallyhard for young scientists to get started, so pri-vate science foundations have concentratedmany of their programs on the needs of youngfaculty members. In chemistry, for example,young scientists have received valuable helpearly in their careers from ResearchCorporation, the Welch Foundation, theArnold and Mabel Beckman Foundation, thePetroleum Research Fund and the DreyfusFoundation.

Many scientists can point to private foun-dations as the first organizations to fund themand "believe in them," providing both financialand moral support at a fragile time in theircareers. Carl E. Wieman, distinguished profes-sor of physics, University of Colorado atBoulder, who received the Nobel Prize inPhysics in 2001 for his work on the creationand study of Bose-Einstein condensation,describes his early career this way:

Shortly after I arrived at Michigan,I found that the research scientistposition I had taken was not theresearch faculty position that I hadexpected. It had all the disadvantagesof a regular postdoc, but none of theadvantages in that there was not suf-ficient research money in the grant tocover my salary, so that I also had toteach, and I had to be responsible formuch of the administration of the


research group. However, I threwmyself into the experiment and workedextremely hard, and my position wasconverted into a regular assistant pro-fessor position after a couple of years.Shortly after this, I developed a some-what different formulation for how todescribe atomic parity violation experi-ments. This allowed me to see clearlyhow to compare the sensitivities of alarge variety of different experimentalapproaches. At that same time, I wasalso becoming increasingly disillu-sioned with the hydrogen experiment,and my new formulation made it clear to me that a quite differentapproach, using laser spectroscopy ofcesium, would have a far better chanceof success.

For a variety of reasons, I chose topursue the cesium experiment on myown, after first receiving assurancesfrom the department chair that this wasa suitable activity. Unfortunately, myabandoning of the hydrogen experimentto pursue my own atomic parity viola-tion experiment lead to considerablefriction with senior faculty and generalstrife within the department. As ayoung assistant professor naïve indepartmental politics, I was quite vul-nerable, and had a difficult time during

TWENTY

my subsequent years at Michigan.However, during that time, SarahGilbert and I were able to get fundingfrom Research Corporation and thenNSF and used it to thoroughly develop anovel experimental approach for meas-uring atomic PV in cesium . . . . By 1984we had made sufficient progress to indi-cate the viability of our approach, andthis attracted an offer of a faculty posi-tion at the University of Colorado inBoulder. I eagerly accepted the offer.

[from Wieman's autobiography on the NobelPrize website (www.nobel.se)]In a recent letter to Research Corporation,

Wieman elaborated on this story, writing:

As I reflect on my career and itsmany successes, I remain very gratefulfor the help I received from ResearchCorporation at the most critical stage. My first grant, from ResearchCorporation of course, came at a terriblycritical and difficult time for me. With it, I was able to demonstrate enough results to get an NSF grant andafter that I was off and running. It is dif-ficult to describe, however, how impor-tant that first Research Corporationgrant was to me, and frightening tothink what would have become of mycareer if it had not been there.

Gentile describes today's federal funding situa-tion like this: "In the federal sector today, scienceis almost always done 'in arrears.' You have toprove so much of your point up front [in thegrant proposal], that there's very little risk-takinginvolved. The entrepreneurial art of science isalmost lost for the practical art of the machine-like laboratory to crank out the data and get itdone. The private foundations, on the other hand,seem to be able to understand that, even whileideas aren't fully blossomed yet, they will investin an individual or a program or a research area.They allow the people to succeed by establishingthemselves. That's why private foundations often-times have the biggest impact on the youngestfaculty."

Schaefer says, "Getting that first olive out ofthe jar is often very difficult for people just start-ing their research careers. The NSF does haveprograms in that area as well, but the ability toget research programs established with the helpof private foundations is often a key factor inhelping academic scientists launch their careers.That's going to be a continued function of sciencefoundations."

With the recent surge in new faculty hiring toreplace retiring faculty members, the need forthis type of assistance is greater than ever. Funkeobserves, for example, that applications for PRFstarter grants have increased about 30 percent inthe past ten years.

Another stage in the career path where assis-tance is especially needed is after young facultymembers receive tenure. At that point in theircareers, they are expected to take on moreresponsibilities as college and university citizens,while continuing their commitment to teachingand maintaining an active program of scholarshipin their discipline. Some administrators see thismidcareer stage as a danger point, where the timecrunch on faculty members can lead to burnout.Ideally, these young faculty members will learn tosustain their research over the course of their


TWENTY-ONE

Carl E. WiemanUniversity ofColorado atBoulder

The University ofColorado, Boulder,founded in 1876, isthe oldest campus in the four-member University of Colorado system. It is a public university with approximately 23,500 undergraduate students and 4,500 graduate students. (www.colorado.edu)

careers and will develop into senior teacher-scholar-servant scientists who will serve as rolemodels and mentors.

Michael E. Nelson, dean of the College ofScience and Allied Health at the University ofWisconsin, La Crosse, speaks to this concern:"Here at La Crosse, the peak for retirementspassed several years ago, and close to 70 percentof our faculty members in science have arrived inthe last ten years. How will we keep this newgeneration of faculty members active after theyhave received tenure and been promoted? One ofmy most important tasks as a dean is to helpkeep faculty members intellectually active aftertenure and promotion."

As the large group of young scientists whohave recently joined faculties across the nationcontinue their growth as teacher-scholars, howcan private science foundations help nurture thatprocess?

Two new programs addressing this careerstage are in the pilot stages at the PetroleumResearch Fund and Research Corporation. At thePetroleum Research Fund, a pilot program toexpand funding for undergraduate faculty sabbati-cals has received a great deal of application inter-est. Research Corporation recently convened a

group of senior and emerging academic leaders toexplore models for academic leadership and todiscuss issues related to department advance-ment and leadership.

Perhaps these new foundation initiatives formid-career scientists will−just like the successfulprograms for starting faculty−provide an impor-tant catalytic boost at a crucial time in the careersof academic scientists.

Challenge #2: Responding to the growing inter-disciplinarity of the sciences

Much of the excitement today for bothresearch and teaching is found at the interfaces ofthe traditional scientific disciplines, in areas suchas neuroscience, nanoscience, environmental sci-ence, computational biology and chemical genet-ics. But the traditional disciplines, departments,majors and introductory courses are still essentialand important . . . aren't they? How are academicinstitutions adjusting to these emerging fields?

As young faculty members begin their aca -demic careers at liberal arts colleges, many ofthem want to incorporate the frontier areas ofresearch into the curriculum−areas such as com-putational biology, proteomics or the interfacebetween astronomy and particle physics. Throughthese programs, young faculty members remainenergized and are able to do their own research,while also introducing undergraduate students toresearch. However, these types of programs pre-sent a significant financial challenge, because


TWENTY-TWO

Michael E. NelsonUniversity ofWisconsin, La Crosse

The University ofWisconsin-La Crossewas founded in 1909in La Crosse,Wisconsin, as the La Crosse NormalSchool. Today, it isone of the thirteen four-year public campuses inthe University of Wisconsin System. It has anenrollment of about 8,000 undergraduate studentsand 600 graduate students.(www.uwlax.edu)

Different colleges are adopting differentapproaches:

h At the University of Wisconsin, LaCrosse, the university established a RiverStudies Center, which draws on a broadrange of disciplines including biology,chemistry and geography. The center includes both faculty and outside experts from governmental agencies. h The new science building at HopeCollege will group faculty offices, labspace and instrumentation pods by the nature of the research rather than by aca-demic discipline−one floor is for facultymembers who investigate molecules,another floor is for those involved in envi-ronmental studies and a third floor is forthose studying the human condition. h Some colleges have added majors andnew departments in areas such as bio-chemistry, while others keep the biochem-istry program as part of a chemistrymajor. Other colleges add concentrations,minors or double majors.h Some colleges are forming consortiaand partnerships with sister institutionsto enable them to offer more opportuni-ties for teaching, research and collabora-tion in areas such as astronomy, geologyand neuroscience. An early example of asuccessful consortium is the Five College Radio Observatory, which received initial funding from Research Corporation in 1960. The members of this consortium−Amherst College, Hampshire College,

they often require top-end instrumentation.Unfortunately, these emerging, interdisciplinaryareas often don't fit into the guidelines for partic-ular federal programs. Private science founda-tions, on the other hand, have the flexibility torespond more easily and quickly to these needsand opportunities.

In addition to the financial challenges, theburgeoning of interdisciplinary fields providesadministrative challenges and opportunities forthe traditional structures of institutions.

DePauw University's Abraham says, "Theinterdisciplinary nature of science is a criticalissue. Smaller colleges are organized arounddepartments, and departmental structures aren'tvery flexible. Dealing with emerging, interdisci-plinary fields and emerging subfields is a hugeproblem for colleges that have few people tryingto cover large parts of the discipline."

When a faculty member retires, should theybe replaced by someone with the same specialty?Or is this an opportunity to restructure a depart-ment by adding someone from an interdiscipli-nary area, even if it's outside the core discipline?If there isn't an opportunity to hire faculty mem-bers in new areas, can current faculty membersbe retrained in these areas? And what about thecurriculum? Should new subjects be infused intothe curriculum or should they simply be added asnew courses to the existing curriculum?"Curriculum issues are really tough," saysAbraham. "Should we preserve general chemistryas it's always been done and add yet anothercourse in biomolecular chemistry? Or do we takea more biomolecular approach to the way weteach introductory chemistry?"


TWENTY-THREE

Challenge #3: Balancing research and teaching

In recent years, a central theme for many pri-vate science foundations has been to exploreways of balancing the role of research and teach-ing in the various settings of higher education.

Shulman puts the problem in its historicalcontext, looking back at the huge growth of fed-eral science support since World War II: "Theunintended consequence on undergraduate sci-ence education of this way of doing science hasbeen to create an enormous tension within theacademic institutions between research andteaching. As institutions began to elevate andhonor the scholars who were most successful inattracting those government funds−far more thanthey honored those who did an extraordinary jobin the classroom−we began to see the quality ofundergraduate science education suffering.Graduate education and research took prece-dence, especially in the 'Research Intensive' insti-tutions. The emphasis in doctoral education inthe sciences shifted, because the preparation ofthe next generation of faculty was being donealmost entirely within the context of big researchprojects. This tended to diminish the centrality ofteaching in their identity as scientists."

Bruns says, "The most sweeping challenge inscience education for the higher-education com-munity is to get scientists more interested in,and rewarded for, being innovative in education.Here's my simplest assay for this:


Mount Holyoke College, Smith Collegeand the University of Massachusetts−nowoffer a Five College AstronomyDepartment that provides a richer envi-ronment for doing astronomy than wouldbe possible if each institution operatedindependently. A more recent example of asuccessful partnership is the Keck GeologyConsortium, a collaborative effort oftwelve liberal arts colleges across thenation. An example of a successful collab-oration in neuroscience can be found inPhiladelphia, where Bryn Mawr Collegeand Haverford College have joined forcesto offer their students an interdisciplinaryconcentration in Neural and BehavioralSciences.

Each of these solutions to the challenge ofincreasing interdisciplinarity brings with it a dif-ferent set of administrative issues related to hir-ing and tenure decisions, space allocation,assignment of credit hours, institutional loyaltiesand departmental boundaries. As institutionstransform themselves in response to the chang-ing nature of science, private science foundationscan use their catalytic strengths−nimbleness,flexibility, risk-taking, focus, close involvementand familiarity−to help ease and speed the ongo-ing process of change.

TWENTY-FOUR

Metaphorical Musings on Catalysts and Private Science Foundations

Among scientific concepts that have beenembraced as metaphors by modern culture andlanguage, the metaphor of a "catalyst" ranks nearthe top. The notion of a substance, individual ororganization that can inspire change and trans-formation, while remaining unchanged itself, isparticularly compelling. And, in the case of pri-vate science foundations, "catalyst" proves to be avery apt metaphor.

Isaac Asimov, biochemist and prolific author,mused about metaphors and catalysts in his 1959essay titled "Enzymes and Metaphor" [The mainpurpose of Asimov's essay was to suggest a vari-ety of metaphors that could be used to introducestudents to the initially mysterious concept ofcatalysis.]:

Any unnecessary aura of mystery inscience is undesirable since science isdevoted to making the universe lessmysterious, not more so . . . . To doaway with mystery, it is only necessary to offer the students common examplesof how a reaction can be hastened bymere presence of an extraneous sub-stance; examples that, on the face of it,do not involve witchcraft. In short, astudent may be unready for physicalchemistry, but he is always ready formetaphor . . . . Once given themetaphor, it will, if dramatic enough,be retained.

You go up to some successful scientist andask, 'Are you doing experiments the way you didas a graduate student?'

And they'd say, 'Of course not. Are youkidding?'

Then you ask, 'Are you teaching the way youdid as a graduate student?'

And most would probably say, 'Yes.'

So there's a disconnect in the system. Theburden is on both the faculty and the administra-tion to encourage faculty to break out of the moldin education."

In the last decade, public and private sciencefoundations have launched initiatives to redressthis balance. Programs such as ResearchCorporation's Cottrell Scholars program, theHHMI Professors program and the NSF Director'sAwards for Distinguished Teaching Scholars allseek to honor and encourage scholars who arefinding innovative ways to balance research andteaching. Recent reports from the NationalResearch Council−”Science Teaching Recon-sidered” (1997), “Transforming UndergraduateEducation in Science, Mathematics, Engineering,and Technology” (1999) and “Bio 2010:Undergraduate Education to Prepare BiomedicalResearch Scientists” (2003)−sound a clear call forreform and innovation. The Carnegie Founda-tion's Initiative on the Doctorate (launched in2001) aims at enriching and invigorating the edu-cation of doctoral students, with a focus onpreparing "stewards of the discipline." This initia-tive includes institutional partners in six academ-ic disciplines, including chemistry, mathematicsand neuroscience.

Other recent initiatives dealing with theseissues include Project Kaleidoscope (launched in1989) and the Preparing Future Faculty program(launched in 1993 by the Council of GraduateSchools and the Association of American Collegesand Universities). Both of these ongoing initia-tives have benefited from strong grant supportfrom foundations.

In the human body, catalytic enzymes play akey role in balancing all the elements of a healthymetabolism. Can private science foundations playa similar catalytic role in achieving a healthy bal-ance between research and teaching in the higher-education community?


TWENTY-FIVE


TWENTY-SIX

Metaphor, then, by way of bothreason and psychology, is itself acatalyst. By its mere presence andwithout actually increasing the sci-entific content of a course, it has-tens the process of learning and isnot used up thereby. [Journal ofChemical Education, Vol. 36, Nov.1959, pp. 535-538]

If a metaphor "hastens the process oflearning," as Asimov suggests, what more canprivate science foundations learn from thecatalyst metaphor? What final advice can begleaned from this metaphor as private sciencefoundations move forward in the Twenty-firstCentury?

Here are three such lessons: h Catalysts can lose their effectiveness

when they become too rigid, when they losetheir specificity and focus by trying to cat-alyze too many different types of reactions,and when they become involved with reac-tants that inhibit or poison the catalyticprocess. A catalyst is usually most effectiveand useful when it stays true to its originalpurpose and mission.

h The scientific enterprise is complexand multifaceted, like a living organism. Forcertain difficult chemical and biochemicalreactions to take place in a living organism,catalysts are essential. For the scientificenterprise to thrive, private science founda-tions are also essential. Foundations must

[Asimov's metaphors include a brick and inclinedplane, coated and uncoated with ice; a manstranded in the sandy desert with only a piece ofpaper and pencil, who is then given a writingboard upon which to write; and a chair.]

Imagine a man who is standing in amuddy field of indefinite extent whofinds he must tie his shoelace . . . . Anordinary kitchen chair is quite adequateas a catalyst with which to acceleratethe tying of shoelaces. But now imaginea specially designed chair with back,arm rests, and foot rests that aremotorized and capable of automatedmotion . . . . The specially-designedchair (enzyme) is at once a more effi-cient and more specific enzyme thanthe generally-designed one (inorganiccatalyst).

[In the essay's conclusion, Asimov contemplatesthe value of metaphors.]

. . . the judicious use of metaphor inthe introduction of new concepts, gen-erally, is not only an aid to understand-ing but adds also to the interest and pleasure of the course. Naturally, we allfeel that science is its own reward andrequires no artificial sweetening to bestimulating and fascinating, but unac-countably, as we all know, many stu-dents fail to see this.

tions−remains bright and strong. In the world of chemistry and biochemistry,

recent advances in catalysis were honored byNobel Prizes in 1989 and 2001. Advances incatalysis will continue to transform our under-standing of nature and help us improve key areasof our lives, including health, energy and theenvironment.

In the world of science philanthropy, newfoundations are being created, and establishedfoundations are embarking on new programs.The leadership and support provided by privatescience foundations will be essential to meetingthe complex challenges facing education and sci-ence in the years ahead.

If foundations can heed the lessons learnedfrom chemical and biochemical catalysts, thenfoundations truly will be catalysts for change.

seek out those places in the overall enterprisewhere they can be most useful in lowering barri-ers. h Catalysts that work effectively in organisms

often work as partners in inter-related reactionsor metabolic cycles. When science foundations,both public and private, work together as part-ners, they can be especially effective and canensure a thriving and growing scientific enter-prise. Can foundations do more to coordinatetheir efforts in some way to further increase theireffectiveness?

A century ago, the science of chemical cataly-sis and the world of private science foundationswere both in their infancies. Since that time, inthe hundred years known as "the American cen-tury," the United States has witnessed the growthof an unparalleled system of higher educationand the creation of a scientific and technologicalenterprise that has vastly improved our healthand quality of life. Private science foundationshave played a role in this success.

Now, as we embark on another century, thefuture of catalysis−and private science founda-

TWENTY-SEVEN


ResearchCorporation, likeother private science

foundations, responds nimbly to changingneeds and opportunities, while preserving aclear focus on its overall mission. That mis-sion, as articulated by our founder FrederickGardner Cottrell more than ninety years ago,is to provide the means for "technical and sci-entific investigation, research and experimen-tation."

In 2003, we exercised that flexibility, inorder to enhance our programs, by significant-ly reducing our funding to one grant programwhile significantly increasing our funding toanother. Faced with tightened budgets result-ing from several years of downturn in thestock market, the board and staff of ResearchCorporation reviewed how well the ScienceAdvancement Programs were meeting theiroriginal goals.

As a result of this careful review, we deter-mined that the Research Innovation Award(RIA) program, directed to the newest faculty,was not meeting its intended goal. Initiated in1997, this program was heavily subscribed tofrom the outset. While that suggested wewere meeting a need, the program also posedseveral problems. Among those, for example,was the very heavy burden placed on the sci-

entific community by our need for peerreview. In the judgment of the foundation, thebenefits and impact of the award−althoughsignificant−were not meeting the high stan-dards we set for our programs. Consequently,in 2003, funding for the RIA program wasreduced by 24 percent and has been fully sus-pended for 2004 and 2005.

Also during 2003, we saw a sudden andmajor increase in the quality and the numberof proposals submitted to the Cottrell CollegeScience Award (CCSA) program, and we wereable to respond to that development. We werepleased to award ninety-three CCSA grants in2003, compared to an average of seventygrants annually over the previous three years.Awardees received $3,366,035, an increase ofmore than 31 percent over the previous year.Those funds will provide increased opportuni-ties for research by faculty and their studentsat primarily undergraduate institutions acrossthe United States and Canada.

In order to carry out the programmaticwork of Research Corporation, we have astrong professional staff, a committee of dis-tinguished science advisors and a cadre ofwilling expert reviewers throughout the scien-tific community. The hub of all this activity isour office in Tucson, Arizona, where we also

Program Review

TWENTY-EIGHT

COTTRELL COLLEGE SCIENCE AWARDS

Cottrell College Science Awards are the foun-dation’s largest program, supporting faculty inchemistry, physics and astronomy at primarilyundergraduate institutions. The program,which encourages student research involve-ment, funded ninety-three out of 262 facultyapplicants. Two cycles of awards are featuredeach year; in 2003, the foundation granted atotal of $3,366,035, averaging $36,194 peraward.

COTTRELL SCHOLARS AWARDS

Cottrell Scholars Awards support excellence inboth research and teaching in chemistry,physics and astronomy at Ph.D.-granting insti-tutions. Each award totals $75,000, to be usedlargely at the discretion of the scholar. Out of122 requests submitted, twelve CottrellScholars awards were made, totaling$900,000.

RESEARCH OPPORTUNITY AWARDS

Research Opportunity Awards support midca-reer faculty of demonstrated productivity whoseek to explore new experimental research atPh.D.-granting institutions. Out of six candi-dates nominated by their department chairsfor awards in 2003, three proposals were fund-ed for a total of $146,221.

RESEARCH INNOVATION AWARDS

Research Innovation Awards were instituted in1997. The Research Innovation Awards pro-gram is open to beginning faculty at Ph.D.-granting institutions and encourages innova-tion by scientists early in their academiccareers. Of 141 proposals received, thirty-fourwere recommended for awards which totaled$1,190,000.

OTHER AWARDS

In 2003, Louisiana State University received aSpecial Opportunity in Science Award of$474,000. Discretionary Awards for the yeartotaled $275,000.

made several key changes in 2003. We added two new program officers to the

Research Corporation staff. Silvia Roncojoined our staff after more than ten years atthe chemistry department of University ofSouth Dakota, where, working with under-graduates, she established a highly successfulresearch program. Jack Pladziewicz joined thestaff after a long and distinguished career inthe chemistry department at University ofWisconsin, Eau Claire. The third member ofour program officer team, Lee Radziemski,joined our staff in May 2002, after serving as aphysicist and university administrator, mostrecently as dean of the College of Sciences atWashington State University.

Another significant change occurred inDecember 2003, when Research Corporationmoved into a new office building. Our newoffices, shown on page one of this report, willprovide space for program expansion as need-ed, while also serving as a sound financialinvestment for the foundation.

With new staff, a new building and a clearvision of how Research Corporation programscan make a difference in the communities weserve, we look forward to meeting the newchallenges and opportunities of 2004 withboth forethought and flexibility.

Raymond KellmanVice President

TWENTY-NINE

Program SummaryOne hundred and forty-two awards were made in support of faculty research, research-enhancedteaching and special projects in science in 2003. Funding for the foundation’s programs noted belowtotaled $5,602,256. In addition, two other awards were made, totaling $749,000.

Calvin CollegePaul Harper, Department of Physics: Kinetics of thelamellar-hexagonal phase transition in lipid-watersystems-$43,951

Central Michigan University

Minghui Chai, Department of Chemistry:Investigation of dendrimer-based self-assembliesand their encapsulation with small organic mole-cules in solutions-$36,224

Bradley D. Fahlman, Department of Chemistry:Supercritical fluid facilitated growth of carbon nan-otube-dendrimer nanocomposite materials-$37,830

Central Washington UniversityAnthony L. Diaz, Department of Chemistry:Fundamental investigations of the VUV opticalproperties of new luminescent materials-$23,846

City University of New York, Hunter CollegeGregory Foster, Department of Physics: Spinsqueezing and entanglement of cold atoms forapplications in precision measurement and quan-tum information-$35,144

Colgate UniversitySara Ann Brazill, Department of Chemistry:Investigation of DNA aptamer-protein recognitionutilizing electrochemical techniques: Developmentstoward a protein microarray-$35,910

Ephraim Woods III, Department of Chemistry: Thepolarity of aerosol surfaces measured using aerosolphotoionization spectroscopy-$39,036

College of CharlestonJustin Wyatt, Department of Chemistry: Directedortho-alkylation of chiral aromatic oxazolines(derived from chiral α, α - disubstituted aminoacids)-$35,718

College of the Holy CrossKenneth V. Mills, Department of Chemistry: Themechanism and molecular evolution of hedgehogproteins and related auto-processing domains-$41,890

COTTRELL COLLEGE SCIENCE AWARDS

Bates CollegeJennifer L. Koviach, Department of Chemistry:Synthesis of 2-deoxyglycosides by conjugate addi-tion-$37,218

Paula Jean Schlax, Department of Chemistry:Characterization of the role of RpoS mRNA interac-tions with regulatory factors during osmotic induc-tion of the rpoS gene-$24,150

Boise State UniversityAlex Punnoose, Department of Physics: Origin ofroom temperature ferromagnetism in Co dopedTiO2 thin films-$41,133

Bradley UniversityKelly R. Roos, Department of Physics: Interlayerdiffusion in metallic epitaxial systems-$34,144

California Polytechnic State University, San Luis ObispoRobert Echols, Department of Physics: Exploringfundamental electrical and optical properties of het-erojunction semiconducting polymer solar cells-$35,470

California State University, ChicoChristopher J. Nichols, Department of Chemistry:The synthesis of the natural product coryden-dramine A-$31,183

California State University, Long Beach

Christopher R. Brazier, Department of Chemistry:Jet-cooled emission spectroscopy of silicon boride-$35,382

California State University, Los AngelesGuo-meng Zhao, Department of Physics:Oxygen-isotope effects on electrical transport andmagnetic properties in single crystals and thin filmsof manganites-$45,803

Calvin CollegeEric J. Arnoys, Department of Chemistry: Analysisof the nuclear transport of galectin-3 using fusionproteins-$33,718

Research CorporationAWARDS APPROVED

January 1, 2003 to December 31, 2003

THIRTY

College of the Holy CrossKimberley Frederick, Department of Chemistry:Characterization of electroosmotic flow in fused sil-ica capillaries and electrostatically self-assembledpolyelectrolyte multilayers-$39,787

Columbia CollegeFrank L. Somer Jr., Department of Chemistry:Structural dynamics of liquids and glasses-$31,184

Concordia CollegeDrew Rutherford, Department of Chemistry:Enantioselective catalysis in “green” solvents:Recyclable catalysts for perfluorocarbon and super-critical carbon dioxide solvent systems-$29,085

DePauw UniversityHilary J. Eppley, Department of Chemistry: Ionicliquid syntheses of new molecular precursors tomixed metal oxides-$44,400

East Tennessee State UniversityYuriy Razskazovskiy, Department of Physics:Sequence-specific radiation targeting of DNA inhypoxic environment-$36,335

Elon UniversityJoel M. Karty, Department of Chemistry: Resonanceand inductive contributions to fundamental chemi-cal systems-$34,218

Fairfield UniversityMatthew A. Kubasik, Department of Chemistry:Studies of hydrogen/deuterium exchange kinetics inconformationally labile peptides-$36,218

Georgia Southern UniversityKurt N. Wiegel, Department of Chemistry:Synthesis and characterization of photo-tunable liq-uid crystalline polymers with variable mesogenicstructures-$43,352

Grinnell CollegeCharles E. Cunningham, Department of Physics:Search for an ideal 3D Ising spin glass in DyxY(1-x)Co2Ge2 and NdxLa(1-x)Co2Ge2 singlecrystals-$39,750

Hamilton CollegeTimothy E. Elgren, Department of Chemistry:Characterization of sol-gel encapsulated amine oxi-dase and chloroperoxidase-$35,220

Hamilton CollegeGeorge C. Shields, Department of Chemistry:Quantum chemical investigation of the mechanismof action of the enediyne natural products-$35,000

Harvey Mudd CollegeKarl A. Haushalter, Department of Chemistry:The influence of chromatin structure on the repairof 8-oxoguanine DNA lesions-$34,976

Hobart and William Smith CollegesErin T. Pelkey, Department of Chemistry:Regiocontrolled synthesis of complex pyrrole hete-rocycles-$39,818

Hope CollegePeter L. Gonthier, Department of Astronomy:Radio and high energy emission from neutron stars-$23,700

Mark E. Little, Department of Physics: Charge carri-er transport investigations in amorphous nitridefilms using time-of-flight drift mobility-$46,048

William F. Polik, Department of Chemistry:Spectroscopically accurate potential energy surfacecalculations at high energies-$45,000

Indiana State UniversityStephen F. Wolf, Department of Chemistry:Investigation of the distribution of highly volatiletrace elements in chondritic meteorites-$38,860

Research Corporation Awards Approved, 2003

THIRTY-ONE

Ithaca CollegeScott M. Ulrich, Department of Chemistry:Generation of allele-specific histone deacetylaseinhibitors-$38,148

James Madison UniversityKevin L. Caran, Department of Chemistry: Facilesynthesis and derivatization of two novel rigidtrimeric scaffolds-$35,000

Kevin P. Minbiole, Department of Chemistry: Acyclopropane fragmentation approach to heterocycleassembly-$35,000

John Carroll UniversityJeffrey S. Dyck, Department of Physics: Pressuretuning the ferromagnetic transition in the layeredV2-VI3 diluted magnetic semiconductors-$35,845

Kenyon CollegeFrank C. Peiris, Department of Physics:Investigation of the electronic excitation structureof spintronics based diluted magnetic semiconduc-tors using spectroscopic ellipsometry-$36,920

Lakehead UniversityCraig D. MacKinnon, Department of Chemistry:Engineering the structures of new oligomeric semi-conductors-$32,713

Lebanon Valley CollegeWalter A. Patton, Department of Chemistry: Mechanism of ammonia transfer in E. coli GMP syn-thetase-$39,820

Lewis and Clark CollegeLouis Y. Kuo, Department of Chemistry: Aqueousinvestigation of molybdocene organometallic com-plexes-$28,684

Loyola College in MarylandElaine M. Shea, Department of Chemistry: Actionof amide and ester conjugates of the plant hor-mone indole-3-acetic acid in carrot embryo initia-tion-$27,648

Macalester CollegePaul J. Fischer, Department of Chemistry: Studieson intramolecular amine-stabilized transition-metal boryl complexes-$35,000

Marist CollegeElisa M. Woolridge, Department of Chemistry:Understanding the oxidative inactivation of lac-case and xylanase toward design of a simultane-ous biodelignification system-$42,083

Mississippi CollegeG. Reid Bishop, Department of Chemistry: Structural and energetic bases of molecular recogni-tion of amino acid analogs by DNA and RNAaptamers-$33,182

Northern Arizona UniversityGus L.W. Hart, Department of Physics: A study ofmagnesium-based hexagonal alloys for use in light-weight applications-$29,884

Oberlin CollegeStephen A. FitzGerald, Department of Physics:Quantum dynamics of gas doped fullerene systems-$37,648

Yumi Ijiri, Department of Physics: Magnetic finitesize effects in iron-based nanoparticles-$44,410

Ohio Northern UniversityJeffrey A. Gray, Department of Chemistry: Two-color transient absorption spectroscopy and kineticsof organic peroxy radicals in aqueous solution-$39,950

Otterbein CollegeDavid G. Robertson, Department of Physics:Studies in Coulomb gauge QCD-$34,480

Pennsylvania State University, Erie-Behrend CollegeJay C. Amicangelo, Department of Chemistry:Investigations of intermediates related to siliconnitride chemical vapor deposition processes usingmatrix-isolation infrared spectroscopy-$39,018


THIRTY-TWO

Pomona CollegeEdward J. Crane III, Department of Chemistry:Enzymatic mechanisms of control of internal redoxenvironment in hyperthermophiles-$39,036

Rochester Institute of TechnologyScott Victor Franklin, Department of Physics: Jamming in large aspect-ratio granular materials-$35,018

Rose-Hulman Institute of TechnologyLuanne F. Tilstra, Department of Chemistry: Astudy of peptide aggregation that focuses onchanges in particle size distribution as a function oftime-$37,268

Saint Joseph’s UniversityThomas M. Halasinski, Department of Chemistry:Investigation of azaaromatics in the interstellarmedium via matrix-isolation spectroscopy-$39,530

St. Olaf CollegeJason J. Engbrecht, Department of Physics: Studiesof positronium-gas interactions using an Age-Momentum Correlation spectrometer-$36,218

Seton Hall UniversityDaniel-Dennis McAlevy Bubb, Department ofPhysics: Resonant infrared pulsed laser depositionof polymer thin films-$35,000

Shippensburg University of PennsylvaniaJohn N. Richardson, Department of Chemistry:Application of colloidal Au nanoparticles to attenu-ated total reflectance spectroelectrochemical sens-ing-$35,563

Smith CollegeKate Queeney, Department of Chemistry: Wetchemical oxidation of silicon: A microscopic andmacroscopic approach-$33,410

Kevin M. Shea, Department of Chemistry: A newstrategy for the synthesis of tricyclic compoundsusing cobalt mediated reactions-$33,684

Southern Illinois University at CarbondaleShane Stadler, Department of Physics: Half-metallicnanocomposites-$38,500

Stonehill CollegeMarilena Fitzsimons Hall, Department ofChemistry: Modeling the Zn2+ coordination site ofzinc metalloenzymes using peptide phage display-$38,426

Stonehill CollegeCheryl S. Schnitzer, Department of Chemistry:Developing a model of metal complexes at the gas-liquid interface using a novel bubble column-$37,025

Union CollegeJoanne Dora Kehlbeck, Department of Chemistry:Functional foldamers: Design, synthesis and evalua-tion of biomimetic heteropolymers for the recogni-tion of the EVH1 protein domain-$37,548

Chad R. Orzel, Department of Physics: Ultra-coldionizing collisions in metastable rare gases-$41,039

Rebecca A. Surman, Department of Physics: Heavyelement synthesis in outflows from gamma-rayburst accretion disks-$20,948

Union UniversityMichael R. Salazar, Department of Chemistry:Theoretical investigations into the reactive colli-sions of closed shell positive ions with isotopichydrogen-$32,806

University of Colorado at Colorado Springs

Radha Pyati, Department of Chemistry: New ruthe-nium complexes and their π-stacking interactionsstudied by electrochemistry, electrochemilumines-cence, and photophysics-$37,310

University of Colorado at Denver

Xiaotai Wang, Department of Chemistry:Lanthanide-carboxylate coordination polymers:Syntheses, structures, and porous applications-$42,970


THIRTY-THREE

University of Hawaii at Hilo

Philippe Binder, Department of Physics:Determinism tests and external forcing in chaoticsystems-$32,206

University of LethbridgeMichael Gerken, Department of Chemistry: Novelmolybdenum sulfide fluorides and polysulfide fluo-ride complexes-$28,980

University of Nevada, Las VegasByron L. Bennett, Department of Chemistry:Photocatalytic reduction of carbon dioxide by Re(I)in fluorous media-$39,683

Balakrishnan Naduvalath, Department ofChemistry: Investigation of chemical reactions atultracold temperatures-$39,500

University of North Carolina at CharlotteAngela Davies, Department of Physics:Fundamental investigations of the phase change onreflection of light-$35,316

Thomas A. Schmedake, Department of Chemistry:Monitoring energy transfer reactions in photonicmaterials: Towards more efficient photocatalystdesign-$33,451

University of North Carolina at GreensboroNadja Cech, Department of Chemistry:Indentification of immune-stimulating liver metabo-lites of Echinacea-$34,784

Edward H. Hellen, Department of Physics:Reentrant dynamics on a neural-based loop-$37,318

University of North Carolina at WilmingtonLiping Gan, Department of Physics: Precisionmeasurements of electromagnetic properties ofthe light pseudoscalar mesons-$28,110

University of PortlandAnn Marie Anderssohn, Department ofChemistry: The function of myocilin as a molecu-lar chaperone-$32,500

Tamar More, Department of Physics: Experimentalobservations of Stewartson layer instabilities-$43,918

University of RichmondSamuel A. Abrash, Department of Chemistry: A

study on the role of triplet states in the photochem-istry of organosilanes-$40,091

University of San DiegoLeigh A. Plesniak, Department of Chemistry:Hunter-killer peptides: Structure and membraneinteractions-$17,445

University of WinnipegMichael O. Eze, Department of Chemistry: Effectsof cerulenin and nitric oxide on cell growth, fattyacid synthesis, and monooxygenase function inAzotobacter vinelandii-$34,072

University of Wisconsin, Eau ClaireMarcia A. Miller-Rodeberg, Department ofChemistry: The degradation of azo dyes by the cata-lase/peroxidase enzymes of Brevibacterium fuscum-$40,576

University of Wisconsin, La Crosse

Robert W. McGaff, Department of Chemistry:Solventothermal synthesis of transition metal alkox-ides-$40,348

Virginia Military Institute

Daren J. Timmons, Department of Chemistry:Development of metallaligands for the synthesisand luminescence studies of mixed d- and f-blockcomplexes-$39,755

Wellesley CollegeCourtney Lannert, Department of Physics:Variational wavefunction Monte Carlo analysis ofcooperative ring exchange in the intermediate-UHubbard model-$35,148


THIRTY-FOUR

Western Kentucky UniversityYoung-Seok Shon, Department of Chemistry:Synthesis and assembly of photoactive or electroac-tive dendrimer capsules-$35,000

Whittier CollegeB. Glenn Piner, Department of Astronomy: Themaximum speed of blazar jets-$35,218

Williams CollegeDwight L. Whitaker, Department of Physics: TheBEC phase transition and effects of quenched disor-der-$45,000

Wofford CollegeRamin Radfar, Department of Chemistry: Structuralanalysis on the role of glycolytic enzyme enolase ininteraction with cholesteryl esters and inhibition ofcholesteryl ester hydrolase-$45,220

COTTRELL SCHOLARS AWARDS

California Institute of TechnologyBrian M. Stoltz, Department of Chemistry: Newinnovations in the teaching and implementation ofsynthetic chemistry-$75,000

Georgetown UniversityDavid Andrew Egolf, Department of Physics:Computational science in the heart and in the class-room-$75,000

Iowa State UniversityNicola L. Pohl, Department of Chemistry: Chemicalbiology of glycopolymer and deoxysugar biosynthe-sis using mass spectrometry-$75,000

Simon Fraser UniversityJ. Steven Dodge, Department of Physics: Terahertzmeasurements of quasiparticle lifetimes-$75,000

Syracuse UniversityMark Trodden, Department of Physics: Geometry,topology and Kaluza-Klein cosmology-$75,000

University of ArizonaMichael R. Meyer, Department of Astronomy:A whole greater than the sum of its parts:Understanding the origins of stellar masses andmentoring tomorrow’s scholars-$75,000

University of Illinois at Urbana-ChampaignTaekjip Ha, Department of Physics: Structuraldynamics of Holliday junction: Single moleculestudies of conformer transitions and branch migra-tion-$75,000

University of Notre DameMichael D. Hildreth, Department of Physics:Enhancing the potential for Higgs discovery at theFermilab Tevatron-$75,000

University of OregonRichard P. Taylor, Department of Physics: Fractalconductance fluctuations in ballistic nanostruc-tures-$75,000

University of WashingtonDaniel R. Gamelin, Department of Chemistry:Synthetic, magnetic, and spectroscopic approachesto understanding and controlling the magnetism ofdoped inorganic nanocrystals-$75,000

Sarah L. Keller, Department of Chemistry:Specialized domains in lipid bilayers and monolay-ers-$75,000

Virginia Polytechnic Institute and StateUniversityT. Daniel Crawford, Department of Chemistry:Quantum mechanical studies of chirality: Local cor-relation methods for optical rotation in large mole-cules-$75,000

RESEARCH OPPORTUNITY AWARDS

Ohio State University, ColumbusTerry Lee Gustafson, Department of Chemistry:Protein folding dynamics in quorum-sensing recep-tor-ligand interactions-$50,000

University of Notre DameHoward A. Blackstead, Department of Physics: Aparadigm for the genesis of high temperature super-conductor electronics-$46,584

University of Wisconsin, MilwaukeeMarija Gajdardziska-Josifovska, Department ofPhysics: Transmission electron microscopy study ofstabilization mechanisms for polar oxide interfaces-$49,637


THIRTY-FIVE

RESEARCH INNOVATION AWARDS

Brandeis UniversityOleg V. Ozerov, Department of Chemistry: C-Fbond functionalization catalyzed by three-coordi-nate Si compounds-$35,000

Brigham Young UniversityBranton J. Campbell, Department of Physics:Incident-neutron wavelength resolution with aFourier prism-$35,000

Steven L. Castle, Department of Chemistry: A strat-egy for the synthesis of three contiguous quaternarycenters: Application to the syntheses of acutumineand acutumidine-$35,000

Brown UniversityWilliam C. Trenkle, Department of Chemistry:Catalytic stereoselective synthesis of chiral sp3 car-bon centers-$35,000

Case Western Reserve UniversityJie Shan, Department of Physics: A novel approachtowards high-resolution terahertz microscopy basedon nonlinear optics-$35,000

Florida State UniversityGregory B. Dudley, Department of Chemistry: Ringexpansion strategies for preparing cyclophanes:Concise syntheses of roseophilin and floresolide A-$35,000

Georgia Institute of TechnologyAlex M. Kuzmich, Department of Physics: Spinsqueezing on the atomic clock transition-$35,000

Johns Hopkins UniversityOleg Tchernyshyov, Department of Physics:Quantum spin liquid in frustrated magnets: A semi-classical route-$35,000

Louisiana State UniversityLuis Lehner, Department of Astronomy: Blackstring simulations: Towards understanding theirfinal fate-$35,000

Loyola University of ChicagoJan Florian, Department of Chemistry: Computersimulations and design of vanadium-based transi-tion state analogs for phosphoryl transfer enzymes-$35,000

McMaster UniversityPaul W. Ayers, Department of Chemistry: Accuratedetermination of molecular electronic structure:Chasing the theoretical limit of computational effi-ciency-$35,000

Miami UniversityHongcai Zhou, Department of Chemistry: Synthesisof novel hard-soft heterobimetallic paddlewheelcomplexes-$35,000

Shouzhong Zou, Department of Chemistry: Probingsurface bonding, structure and reactivity onnanometer scale by tip-enhanced Raman spec-troscopy-$35,000

Stanford UniversityDavid Goldhaber-Gordon, Department of Physics:Strongly-interacting electrons in a quantum pointcontact-$35,000

State University of New York at AlbanyIgor K. Lednev, Department of Chemistry:Structural rearrangement of human S100A12 pro-tein on metal ion binding: Real time kinetic studies-$35,000

Texas A&M UniversityAlexei V. Sokolov, Department of Physics: Precisecontrol of electronic and nuclear motion by sub-cycle laser pulses synchronized with molecularoscillations-$35,000

Coran M.H. Watanabe, Department of Chemistry:Harnessing marine derived pharmaceuticals-$35,000


THIRTY-SIX

University of ArizonaAlex D. Cronin, Department of Physics: Atom wavephase shifts due to vacuum fluctuations near a sur-face-$35,000

University of British ColumbiaMona Berciu, Department of Physics: Spintronicnano-devices based on the giant Zeeman effect indiluted magnetic semiconductors-$35,000

University of California, IrvineAlexander L. Chernyshev, Department of Physics:Correlated quantum phases in nanostructures-$35,000

Sergey Nizkorodov, Department of Chemistry:Development of a novel approach for studying themechanism of ozonolysis of unsaturated fatty acidsat gas-solid and gas-liquid interfaces-$35,000

University of California, RiversideRoland Kawakami, Department of Physics:Investigating electron spin in carbon nanotubes byoptical pumping techniques-$35,000

University of ChicagoIlya A. Gruzberg, Department of Physics: StochasticLoewner evolution, its extensions and applications-$35,000

Chuan He, Department of Chemistry: Catalysiswith high-valent silver species in solution-$35,000

University of FloridaRonald K. Castellano, Department of Chemistry:Rationally designed protein polymers as biolubri-cants-$35,000

University of GuelphLeonid S. Brown, Department of Physics:Investigating the light-sensitive element of a newphotoreceptor in its native environment-$35,000

University of Illinois at Urbana-ChampaignChad M. Rienstra, Department of Chemistry: Novelmethods for detection of proton NMR signals inmagnetically diluted solid proteins under fastmagic-angle spinning-$35,000

University of IowaNed Bowden, Department of Chemistry: The firstcontrolled synthesis of hollow organic nanotubesfor the templated growth of inorganic nanomateri-als-$35,000

University of Minnesota, Twin CitiesTony Gherghetta, Department of Physics:Supersymmetry and extra dimensions-$35,000

University of OttawaNatalie Goto, Department of Chemistry:Development of fluorinated solvents for the study ofmembrane protein structure by solution NMR-$35,000

University of RochesterJohn C. Howell, Department of Physics: Unit quan-tum efficiency counting of entangled photons-$35,000

University of South Carolina-ColumbiaJohn J. Lavigne, Department of Chemistry:Controlling molecular orientation: Directed self-assembly of functionalized oligomeric thiophenesusing small molecules-$35,000

University of TorontoJoseph H. Thywissen, Department of Physics: One-dimensional cold quantum gases-$35,000

University of Wisconsin, MadisonGary Shiu, Department of Physics: Testing stringtheory from the sky: Cosmological probes of quan-tum gravity-$35,000


THIRTY-SEVEN

Independent Auditors’ Report

Board of DirectorsResearch CorporationTucson, Arizona

We have audited the accompanying statements of financial position of Research Corporation (the”Foundation”) as of December 31, 2003 and 2002, and the related statements of activity and changesin net assets and of cash flows for the years then ended. These financial statements are the responsibil-ity of the Foundation’s management. Our responsibility is to express an opinion on these financialstatements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United Statesof America. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout 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. An auditalso includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial positionof the Foundation at December 31, 2003 and 2002, and the results of its operations and its cash flowsfor the years then ended in conformity with accounting principles generally accepted in the UnitedStates of America.

DELOITTE & TOUCHE LLP

APRIL 19, 2004 PHOENIX, ARIZONA

THIRTY-EIGHT

Statements of Financial PositionDecember 31, 2003 and 2002

AssetsINVESTMENTS:Marketable securities—at market (Note 2)Other investments (Note 3)Program-related investment in Research

Corporation Technologies, Inc. (Note 4)Other program-related investments (Note 5)Investment in joint venture (Note 6)

Total investments

Cash and cash equivalentsRestricted cash (Note 5)Accrued dividends and interest receivable Property and equipment—net (Note 7)Notes receivable (Note 5)Prepaid pension cost (Note 9)Other assets

TOTAL

Liabilities and Net Assets

LIABILITIES:Grants payableLine of credit (Note 8)Notes payable (Note 5)Other (Notes 5, 9 and 11)

Total liabilities

COMMITMENTS AND CONTINGENCIES (Notes 3, 5, 6 and 10)

NET ASSETS:UnrestrictedTemporarily restricted (Note 5)

Total net assets

TOTAL

See notes to financial statements.

2003

$89,488,92522,647,506

25,000,0004,318,5801,006,500

142,461,511

3,513,753250,000257,461 255,154

6,043,404 1,295,000

31,712

$154,107,995

$5,098,651 9,000,0001,982,4592,925,762

19,006,872

134,851,123250,000

135,101,123

$154,107,995

2002

$67,654,478 21,092,312

25,000,0004,430,000

118,176,790

753,229

122,00036,366

7,581,9285,258,433

32,816

$131,961,562

$4,346,92411,000,0002,788,9143,103,808

21,239,646

110,721,916

110,721,916

$131,961,562

THIRTY-NINE

Statements of Activity and Changes in Net AssetsYears ended December 31, 2003 and 2002

REVENUE:Unrestricted revenues and gains:Interest and dividends from marketable securitiesInterest income from program-related investment (Note 4)Other interest income Pension and other income (Note 9)

Total unrestricted revenues and gains

Contributions released from restrictions

Total revenueEXPENSES:Grants approved (Note 5)Science advancementProgram-related (Note 5)Information and communicationsGeneral and administrative (Notes 9, 10 and 11)Interest and other expense (Notes 8 and 9)

Total expenses

DECREASE IN NET ASSETS BEFORE NET LOSS ON INVESTMENTS

NET GAIN (LOSS) ON INVESTMENTS (Notes 2, 3 and 5)

INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS

INCREASE IN TEMPORARILY RESTRICTED ASSETS — Contributions received for restricted purpose (Note 5)

INCREASE (DECREASE) IN NET ASSETS

NET ASSETS—Beginning of year

NET ASSETS—End of year


2003

$1,799,1381,750,000

154,567785,785

4,489,490

4,489,490

6,305,4731,072,6001,561,330

90,6191,355,152

547,958

10,933,132

(6,443,642)

30,572,849

24,129,207

250,000

24,379,207

110,721,916

$135,101,123

2002

$1,339,2831,750,000

180,747 488,676

3,758,706

26,282

3,784,988

5,536,2391,404,4932,874,855

95,9303,700,105

326,374

13,937,996

(10,153,008)

(16,808,508)

(26,961,516)

(26,961,516)

137,683,432

$110,721,916

FORTY

Statements of Cash FlowsYears ended December 31, 2003 and 2002

CASH FLOWS FROM OPERATING ACTIVITIES:Increase (decrease) in net assetsAdjustments to reconcile increase (decrease) in net assets to net cash used in operating activities:

Net realized losses on sales of marketable securitiesUnrealized net (appreciation) depreciation of marketable securitiesNoncash grants of technology investmentsUnrealized appreciation of other investmentsDepreciation and amortization(Increase) decrease in accrued dividends and interest receivableIncrease (decrease) in prepaid pension costDecrease in other assetsIncrease in grants payable(Decrease) increase in other liabilitiesOther

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of marketable securitiesProceeds from sale of marketable securitiesPurchase of other investmentsProceeds from distribution of other investmentsInvestment in other program related investments Proceeds from distribution of other program investmentsContributions to joint ventureDistributions from joint ventureProceeds received for repayments on notes receivablePurchases of property and equipmentProceeds from termination of pension planContribution to replacement pension planCash received for restricted purpose

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings on line of creditRepayments on line of creditRepayments on notes payable

Net cash (used in) provided by financing activities

NET INCREASE IN CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents—Beginning of year

Cash and Cash Equivalents—End of year

Supplemental Disclosures of Noncash Transactions:Receipt of notes receivable in exchange for viewing rights

Issuance of note payable in exchange for viewing rights


2003

24,379,207

415,255 (24,249,702)

(6,739,000) 20,922

(135,461)372,598

1,104 751,727

(178,046)(201,264)

(5,562,660)

(13,800,000) 15,800,000(350,000)5,533,806 (388,580)

500,000(2,006,500)

1,000,0001,800,000(239,710)5,061,653

(1,470,818)(250,000)

11,189,851

6,425,773 (8,425,773)

(866,667)

(2,866,667)

2,760,524

753,229

$3,513,753

$

$

2002

(26,961,516)

5,397,648 11,482,1812,674,000

(72,316)22,917

269,049(488,676)

10,597 191,132617,021

(225,153)

(7,083,116)

2,064,401(4,500,000)

3,352,382 (1,353,500)

1,300,000 (528)

862,755

14,406,522(7,551,973)

6,854,549

634,188

119,041

$753,229

$8,281,929

$2,789,544

FORTY-ONE

Notes to Financial StatementsYears ended December 31, 2003 and 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESResearch Corporation (the "Foundation") prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The following are the sig-nificant accounting policies followed by the Foundation:

a. Nature of Business-The Foundation is a New York not-for-profit corporation dedicated to theadvancement of science.

b. Basis of Accounting-The financial statements are prepared on the accrual basis of accounting andare prepared in accordance with standards set forth in the Statement of Financial AccountingStandards ("SFAS") No. 117, Financial Statements of Not-for-Profit Organizations, and the AmericanInstitute of Certified Public Accountants' Audit and Accounting Guide for Audits of Not-for-ProfitOrganizations.

c. Securities Valuation-The Foundation carries its investments in marketable securities at fair marketvalue (see Note 2). Realized gains and losses are computed based on the difference between the netproceeds received and cost at time of acquisition using the average cost method. Unrealized netappreciation or depreciation of investments in marketable securities represents the change in thedifference between acquisition cost and current market value at the beginning of the year versus theend of the year.

d. Other investments consisting of unconsolidated limited partnership interests are recorded at esti-mated fair value in accordance with SFAS No. 124, Accounting for Certain Investments Held byNot-for-Profit Organizations. Investments in limited partnerships are valued at the quoted marketprice for securities for which market quotations are readily available or an estimate of value (fairvalue) as determined in good faith by the general partner. Investments without a readily deter-minable fair value are recorded at cost. The cost of investments sold is determined using the specificidentification method. Other than temporary impairments are recognized in the period in whichthey occur and are included in net loss on investments.

e. Revenue and Expenses-Interest income is recorded as earned; dividends are accrued as of the ex-dividend date. Grant expense is recorded at the time the awards are approved by the board of direc-tors.

f. Contributions-Restrictions on contributions received are generally satisfied in the year the contri-butions are received. The Foundation reports contributions as restricted support if they are receivedwith donor stipulations that restrict the use of donated assets. When a donor purpose restriction isaccomplished, temporarily restricted net assets are recognized as unrestricted net assets and report-ed as contributions released from restrictions in the statements of activity and changes in net assets.

g. Property and equipment are stated at cost. Depreciation is calculated using the straight-linemethod over estimated useful lives as follows:

Tenant improvements. . . . . . . . . . . . . . . . . . . . . . . . . . 5 yearsFurniture, fixtures and equipment. . . . . . . . . . . . . . . . . 5-10 years

Maintenance and repairs are charged to operations as incurred. Major renewals and betterments arecapitalized.

h. Income Taxes-The Foundation qualifies as a tax-exempt private operating foundation underInternal Revenue Code Section 4940(d).

i. Statements of Cash Flows-For purposes of reporting cash flows, cash and cash equivalents includecash on hand, demand deposits, savings accounts and highly liquid debt instruments purchasedwith an original maturity of three months or less which are not carried in the Foundation's portfolioof marketable securities.

FORTY-TWO

j. New Accounting Pronouncements-In November 2002, the Financial Accounting Standards Board("FASB") issued Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirementsfor Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 addresses the disclosurerequirements of a guarantor about its obligations under certain guarantees that it has issued. FIN 45 alsorequires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obli-gation undertaken in issuing the guarantee. The disclosure requirements of FIN 45 are effective for theFoundation for 2002. The liability recognition requirements are applicable to all guarantees issued ormodified after December 31, 2002. The Foundation had no guarantees requiring recognition or disclosureat December 31, 2003, except as disclosed in Note 5.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), Consolidation of Variable InterestEntities, which will be effective for the Foundation as of January 1, 2005. Under FIN 46, companies arerequired to consolidate variable interest entities for which they are deemed to be the primary beneficiary,and disclose information about those in which they have a significant variable interest. The Foundationhas no variable interest entities.

In December 2003, the FASB issued SFAS No. 132, (Revised 2003), Employers' Disclosures aboutPensions and Other Postretirement Benefits, which is effective for the Foundation for the year endingDecember 31, 2004. SFAS No. 132 revises employers' disclosures about pension plans and other postre-tirement benefit plans but does not change the measurement or recognition of those plans required byFASB Statements No. 87, Employers' Accounting for Pensions, No. 88, Employers' Accounting forSettlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and No.106, Employers' Accounting for Postretirement Benefits Other Than Pensions. SFAS No. 132 will result inrevised disclosures for the Foundation's pension and postretirement plans in the year ending December31, 2004. Certain provisions of the revised disclosures were implemented in the current year, as set forthin Note 9.

k. Use of Estimates-The preparation of financial statements in conformity with accounting principles gen-erally accepted in the United States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenues and expenses during thereporting periods. Actual results could differ from those estimates. The Foundation utilizes variousinvestment instruments. Investment securities, in general, are exposed to various risks, such as interestrate, credit and overall market volatility. Due to the level of risk associated with certain investment secu-rities, it is reasonably possible that changes in the values of investment securities will occur in the nearterm and that such changes could materially affect the amounts reported in the statements of financialposition.

2. MARKETABLE SECURITIESMarketable securities consist of the following at December 31:

2003 2002

Market Value Cost Market Value CostCapital Guardian Trust Funds:

Emerging Markets Growth FundU.S. Value Equity FundWashington Mutual Investors Fund Global Equity FundAmerican High Income Fund

Total

Notes to Financial Statements

FORTY-THREE

$5,418,980

15,766,75464,263,874 4,039,317

$89,488,925

$5,557,494

13,821,93245,953,1174,708,058

$70,040,601

$3,653,753 11,924,603

48,692,007 3,384,115

$67,654,478

$5,557,49413,523,439

8,666,8654,708,058

$72,455,856


FORTY-FOUR

The objectives of the funds, according to each fund's prospectus, are as follows:

a. Emerging Markets Growth Fund seeks to obtain long-term growth of capital through investment inequity securities of businesses located in developing countries.

b. U.S. Value Equity Fund seeks to outperform the Russell 1000 Value Index over a full market cycle, witha similar level of risk, by investing primarily in U.S. large CAP stocks with value characteristics.

c. Washington Mutual Investors Fund seeks to provide current income and the opportunity for growth ofprincipal consistent with sound common-stock investing.

d. Global Equity Fund seeks to achieve capital growth and future income through investments in a port-folio of securities of U.S. issuers, American depository receipts for securities of foreign issuers and securi-ties whose principal markets are outside of the United States.

e. American High Income Fund seeks to achieve monthly income through investments primarily in bondsand also U.S. and foreign securities.

Annual activity for marketable securities consists of the following at market value for the years endedDecember 31:

2003 2002

Opening Balance $67,654,478 $86,598,708Purchases 13,800,000Sales (15,800,000) (2,064,401)Net appreciation (depreciation) 23,834,447 (16,879,829)

Ending balance $89,488,925 $67,654,478

Proceeds from sale of marketable securities in 2003 and 2002 were either reinvested in other marketablesecurities or used to fund purchases of other investments.

Net gain (loss) on investments in marketable securities consists of the following for the years endedDecember 31:

2003 2002

Net realized loss on sales of marketable securities $ (415,255) $ (5,397,648)Unrealized net appreciation (depreciation) of

marketable securities 24,249,702 (11,482,181)

Net gain (loss) on marketable securities $ 23,834,447 $ (16,879,829)

3. OTHER INVESTMENTS

Other investments consist of the following at estimated fair value at December 31:

2003 2002

Limited partnership interest (AG Super Fund L.P.) $ 9,933,252 $ 7,111,592Limited partnership interest (AG Realty Fund IV L.P.) 4,676,784 4,609,480Limited partnership interest (AG Realty Fund V L.P.) 1,956,630 1,682,834Limited partnership interest (AG Capital Recovery Fund) 2,173,607 3,998,674Limited partnership interest (AG Capital Recovery Fund III) 3,907,233 3,689,732

Total other investments $ 22,647,506 $21,092,312

Increase in other investments in 2003 relates to additional investment in AG Realty Fund V L.P. of $350,000. This increase was offset by distributions received from AG Capital Recovery Fund in the

amount of $2,408,788, from AG Capital Recovery Fund III of $1,884,701, from AG Realty Fund IV L.P. of$400,000, and from AG Realty Fund V L.P. of $250,000. In addition, unrealized appreciation of$2,821,660, $467,306, $173,800, $583,723 and $2,102,200 was recorded in AG Super Fund L.P., AGRealty Fund IV L.P., AG Realty Fund V L.P., AG Capital Recovery Fund and AG Capital Recovery Fund III,respectively, as included in net gain (loss) on investments.

At December 31, 2003, the Foundation was committed to additional funding of $3,400,000 in the aboveinvestments and $5,000,000 in a new real estate fund, AG Core Plus.

The objective of AG Super Fund L.P. is to achieve capital appreciation through specialized investmentstrategies, including investing in merger arbitrage, distressed debt, special situations and convertiblehedging.

The objective of the AG Realty Funds IV and V L.P. is to invest in opportunistic real estate assets, includ-ing options and mortgage loans.

The objective of the AG Capital Recovery Fund and AG Capital Recovery Fund III is to invest in the dis-tressed credit sector of the fixed income market. Investment in these companies consists largely of com-mercial bank loans and publicly traded debt securities.

4. PROGRAM-RELATED INVESTMENT IN RESEARCH CORPORATION TECHNOLOGIES, INC.

On March 2, 1987, as amended on March 25, 1994, in accordance with Section 1605(c) of the Tax ReformAct of 1986, the Foundation and Research Corporation Technologies, Inc. ("RCT"), a nonprofit corpora-tion subject to regular corporate income tax laws, entered into agreements through which RCT assumedresponsibility for the Technology Transfer Program (the "Program"), which the Foundation had operatedfor many years. In addition to the transfer of the Program, the Foundation transferred $35,000,000 incash and securities in exchange for a $35,000,000 fully subordinated unsecured note from RCT (the"Note") due February 28, 2017.

RCT has prepaid $10,000,000 of the Note, and the remaining $25,000,000 principal amount of theamended Note is due on February 28, 2017, subject to acceleration at the option of the Foundation afterDecember 31, 2012, provided RCT's retained earnings exceed $100,000,000. Basic interest at the rate of7% per annum on the outstanding principal amount is due semiannually.

To qualify as a program-related investment under Section 4944(c) of the Tax Reform Act of 1986, theterms of the loan were required to be less than prevailing terms. In addition, this investment is a vehiclefor the Foundation to continue one of its charter purposes, the furthering of technology. As there are nocomparable alternative program-related investments available to the Foundation, the Foundation believesit is not practicable to estimate the fair value of this investment.

Interest income on the Note for each of the years ended December 31, 2003 and 2002 was $1,750,000.

5. OTHER PROGRAM-RELATED INVESTMENTS

The Foundation has invested in and made advances to various entities that engage in the advancement ofscience and technology. Such investments are not readily marketable and are carried at cost.

Seaphire International, Inc.-At December 31, 2003 and 2002, the Foundation had investments inSeaphire International, Inc. ("Seaphire") totaling $4,318,580 and $4,430,000, respectively.

The largest portion of the investment in Seaphire consists of a note receivable in the amount of$3,750,000 and $4,250,000 at December 31, 2003 and 2002, respectively, bearing interest at the LondonInterbank Offered Rate ("LIBOR") plus 2% (3.25% at December 31, 2003). The note is payable as fol-lows: $750,000 (2004), $750,000 (2005), $1,000,000 (2006) and $1,250,000 (2007). The Foundationreceived payment on notes receivable in the amount of $500,000 and $600,000 from Seaphire in 2003and 2002, respectively, which reduced the investment balance. The remaining amounts representadvances, which are collateralized by real estate and personal guarantees.


FORTY-FIVE

Large Binocular Telescope Project-The Foundation is a partner with a 12.5% interest in the LargeBinocular Telescope Project (the "Project"), which is building and will manage an astronomical observato-ry. The Foundation has sold or granted to other astronomy research institutions (the "Institutions") all ofits viewing rights in the observatory along with the obligation to pay related operating costs. TheFoundation remains liable for its proportionate share of observatory construction costs and at December31, 2003, has accrued an estimate of $1,482,000 for these costs. The Foundation remains contingentlyliable for its proportionate share of future operating costs, to the extent the Institutions become unableto pay and forfeit their viewing rights. At December 31, 2003, the Foundation is unable to estimate whatits maximum potential amount of future payments would be in the event the Institutions are unable topay their share of the operating costs, and is also unable to estimate the amounts recoverable from anyforfeited viewing rights due to the unique nature of the Project.

In 2002, the Foundation sold or granted all remaining viewing rights available under the Project toresearch institutions in exchange for notes receivable with original balances totaling $8,281,928 (net oforiginal unamortized discounts of $718,072 based on an imputed interest rate of 3.375%). Remainingprincipal and interest amounts to be received on the notes receivable are as follows: $1,800,000 (2004),$1,800,000 (2005), $1,800,000 (2006) and $1,000,000 (2007). Included in the sales prices to these insti-tutions was compensation for viewing rights on other University of Arizona telescopes that theFoundation purchased from the University of Arizona. These rights were purchased in exchange for anote payable with an original balance of $2,788,914 (net of original unamortized discount of $211,086based on an imputed interest rate of 3.375%). Remaining repayments of principal and interest on thenote payable are as follows: $600,000 (2004), $600,000 (2005), $600,000 (2006) and $333,333 (2007).In connection with these transactions, in 2002 the Foundation recognized a liability for future amountspayable to the Project of approximately $1,421,000, which is included in other liabilities, and recognizedgrants expense of approximately $2,874,000 representing a new grant of viewing rights valued at$1,750,000 on the Project, and recognized an additional grant expense of approximately $1,124,000, rep-resenting a final adjustment on viewing rights granted in prior years.

LSST Project-During 2003, the Foundation's Board of Directors approved investment of up to$10,000,000 to the LSST Corporation. At December 31, 2003, a third party had contributed $250,000cash to the Foundation to be used for the LSST project, and the Foundation has accrued an additional$250,000 for contribution in 2004, which is included in other liabilities.

LSST Corporation was formed to build a large-aperture synoptic survey telescope. The LSST Corporationis a 501(c)(3) organization made up of universities and other not-for-profits focused on astronomy, ofwhich the Foundation is a member.

6. INVESTMENT IN JOINT VENTURE

During 2003, the Foundation entered into a joint venture to acquire an office building (the "Venture").Both venturers contribute equally and receive equal allocations of income and expense. A managementagreement is in place with the other venturer to manage the property. During 2003, the Foundation con-tributed cash of $2,006,000 to the Venture, and received $1,000,000 in distributions from the Venture.The Foundation is committed to contribute to the Venture, proportionate to its share, as required, infuture years.

At December 31, 2003, the Foundation occupied approximately 33% of the building under a 10-year non-cancelable operating lease. The Foundation believes rent under the operating lease is at fair value and iscomparable to what could be obtained with a third party. Future minimum rental payments under thelease at December 31, 2003 are as follows:


FORTY-SIX

2004 $ 209,6102005 209,6102006 209,6102007 209,6102008 209,610Thereafter 1,048,050

Total $ 2,096,100

In March 2004, the Foundation entered into an arrangement to occupy an additional 17% of the building.It is anticipated that rent payments will commence in September 2004, and that most of the additionalspace will be sublet by the LSST Corporation (see Note 5).

7. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31:

2003 2002

Tenant improvements $ 145,204 $ 358,289Furniture, fixtures and equipment 410,963 316,314

Total property and equipment 556,167 674,603Less accumulated depreciation 301,013 638,237

Property and equipment--net $ 255,154 $ 36,366

8. LINE OF CREDIT

The Foundation has a $20,000,000 revolving line of credit that expires April 30, 2004 and bears interestat the prime rate (4.0% at December 31, 2003) or LIBOR plus 1.25% as determined at the date of bor-rowing (2.50% at December 31, 2003), at the Foundation's option. Borrowings are collateralized by cer-tain of the Foundation's investments in marketable securities. At December 31, 2003 and 2002, borrow-ings of $9,000,000 and $11,000,000, respectively, were outstanding under the line of credit. TheFoundation recognized interest expense of $315,606 and $308,746 for the years ended December 31,2003 and 2002, respectively, which is included in interest and other expense.

9. PENSION PLAN AND POSTRETIREMENT BENEFITS

Pension Plan-The Foundation had a noncontributory defined benefit pension plan (the "Plan") coveringsubstantially all of its employees. The benefits provided by the Plan are generally based on years of serv-ice and employees' salary history. It is the Foundation's policy to fund pension cost accrued; however, atDecember 31, 2002, the Plan was in an overfunded status and no contributions were required. The meas-urement date for the Plan was December 31.

During 2003, the Foundation terminated the Plan, and replaced the Plan with the Research CorporationEmployee's Replacement Plan (the "Replacement Plan"). Accumulated benefits totaling approximately$3,600,000 under the Plan were paid out to participants. The remaining prepaid pension cost of$5,061,653 reverted to the Foundation, of which $1,470,818 was contributed to establish theReplacement Plan. The Replacement Plan benefits are substantially the same as the benefits under thePlan. Following the initial funding, the Replacement Plan was in an overfunded status and no additionalcontributions were required at December 31, 2003.

The measurement date for the Replacement Plan is September 30.

A reconciliation of the funded status of the Replacement Plan (2003) and the Plan (2002) at December31 is as follows:


FORTY-SEVEN

FORTY-EIGHT


2003 2002

Projected benefit obligation $(704,152) $(2,987,938)Plan assets at fair value, primarily invested in stocks and bonds 1,534,646 8,022,314

Funded status 830,494 5,034,376Unrecognized transition net asset (227,179)Unrecognized net gain (5,553) 312,418Unrecognized prior service cost 514,013 138,818Adjustment for net pension cost September 30-December 31 (43,954)

Prepaid pension cost $1,295,000 $ 5,258,433

The change in the prepaid pension cost and Plan assets for the years ended December 31, 2003 and 2002,including the effects of the curtailment and settlement due to the termination of the Plan in 2003, are as fol-lows:

2003 2002

Prepaid pension cost--beginning of the year $5,258,433 $4,769,757Curtailment gain 183,913Settlement loss (380,693)Reversion of assets upon termination of the Plan (5,061,653)Net periodic pension (cost) income (175,818) 488,676Employer contributions 1,470,818

Prepaid pension cost--end of the year $1,295,000 $5,258,433

The accumulated benefit obligation for the Replacement Plan and the Plan at December 31, 2003 and 2002was $360,439 and $2,579,968, respectively.

The components of new periodic pension (cost) income are as follows for the years ended December 31:

2003 2002

Service cost--benefits earned during the period $(153,448) $(191,380)Interest cost on projected benefit obligations (36,316) (202,916)Expected return on plan assets 45,952 727,771Net amortization and deferral (32,006) 155,201

Total pension (expense) income $(175,818) $488,676

Pension expense in 2003 is included in other expense and pension income in 2002 is included in otherincome.

Weighted average assumptions used to determine benefit obligations are as follows at December 31:

2003 2002

Discount rate 6.25% 6.75%Rate of increase in compensation levels 4.25% 4.75%Expected long-term rate of return on assets 7.50% 7.50%

The Replacement Plan's assets at December 31, 2003 were fully invested in a balanced mutual fund. The Plan'sassets at December 31, 2002 were invested in a similar investment.

During 2002, total benefits paid were $422,719. There were no benefit payments in 2003 due to the termina-tion of the Plan. There were no other participant or employer contributions in 2003 or 2002.

Postretirement Plan-In addition to providing pension benefits, the Foundation provides certain healthcare benefits to retired employees and their spouses. Substantially all of the Foundation's employees maybecome eligible for these benefits if they reach normal retirement age while working for the Foundation.

The components of net periodic postretirement benefit cost are as follows for the years ended December31:

2003 2002

Service cost−benefits earned during the period $40,299 $39,633Interest cost on accumulated postretirement

benefit obligation 77,075 76,551Net amortization and other 55,017 44,739

Net periodic postretirement benefit cost $172,391 $160,923

During 2003 and 2002, benefits paid were $143,508 and $81,454, respectively.

A reconciliation of the accumulated postretirement benefit obligation to the liability recognized in thestatements of financial position in other liabilities is as follows at January 1:

2003 2002

Accumulated benefit obligation $1,336,568 $1,284,802Unrecognized net gain subsequent to transition 363,717 462,412Unrecognized transition obligation (909,745) (985,557)

Accrued postretirement benefit liability $790,540 $761,657

The actuarial calculation assumes a health care inflation assumption of 10% in 2003, decreasing uniform-ly to 4.25% by 2011 and remaining level thereafter. The assumed discount rate is 6.0% and 7.25% in2003 and 2002, respectively.

The Foundation's postretirement medical plans are not funded.

10. LITIGATION

The Foundation is subject to claims arising out of the conduct of its business. Management believes thesematters are without merit and intends to contest them vigorously. These claims, when finally concluded,in the opinion of management based on information it presently possesses, will not have a materialadverse effect on the Foundation's financial position, results of operations or cash flows.

During 2003 and 2002, the Foundation incurred legal fees to defend itself against certain litigation relat-ing to the Program transferred to RCT in 1987. These costs totaled approximately $225,767 and$2,007,000 for the years ended December 31, 2003 and 2002, respectively, and are included in generaland administrative costs.

The Foundation believes it may be entitled to recovery of certain legal fees paid, in whole or in part,under certain insurance and indemnity agreements. No amounts have been recognized for any possiblerecoveries.

11. RELATED PARTY TRANSACTIONS

The Foundation and RCT have certain agreements under which:

a. The Foundation has an office facilities lease agreement with RCT that expired July 31, 2003. Leaseexpense paid to RCT under this agreement for the years ended December 31, 2003 and 2002 was approx-imately $210,000 and $248,000, respectively.

b. At December 31, 2002, the Foundation had amounts payable to RCT of approximately $480,000 relat-ing to expenses paid by RCT on behalf of the Foundation, included in other liabilities.

FORTY-NINE


OfficersStuart B. Crampton, Chairman

John P. Schaefer, President

Raymond Kellman, Vice PresidentSuzanne D. Jaffe, Treasurer

Sherri R. Benedict, Secretary

Daniel Gasch, Chief Financial Officer

Board of Directors

Herbert S. Adler2,3,4,6, Halcyon Management Co.LLC

Patricia C. Barron2,3, Corporate DirectorStuart B. Crampton1,2,3,5, Barclay Jermain Professorof Natural Philosophy, Department of Physics, WilliamsCollege

Peter K. Dorhout3, Professor of Chemistry, ColoradoState University

Robert B. Hallock3, Distinguished Professor,Department of Physics, University of MassachusettsRobert Holland Jr.1,2,3,4,5, President and Owner,Rohker-J Inc.

Gayle P.W. Jackson2,3, Managing Director, F E. CleanEnergy Group Inc.

Suzanne D. Jaffe1,2,3,4,5,6, President, S.D.J.AssociatesPatrick S. Osmer2,3, Chair and Professor, Departmentof Astronomy, Ohio State University

John P. Schaefer1,2,3,4,5,6, President, ResearchCorporation

Joan Selverstone Valentine3, Professor, Department ofChemistry and Biochemistry, University of California,Los AngelesG. King Walters1,3, Sam and Helen Worden Professorof Physics, Department of Physics, Rice University

1 Executive Committee2 Finance Committee

3 Science Advancement Committee4 Audit Committee

5 Nominating Committee6 Employee Benefits Commitee (also constituting the

Pension Committee)

a Deceased November 2003

Directors Emeriti

R. Palmer Baker Jr., The Baker Company, Inc.

Carlyle G. Caldwell, Chairman Emeritus,National Starch and Chemical Corporation

Paul J. Collins, Vice Chairman, Citibank

Burt N. Dorsett, Chairman of the Board, DorsettMcCabe Capital Management Inc.

William G. Hendrickson, Chairman Emeritus,St. Jude Medical Inc., Chairman, Intellinet

John W. Johnstone Jr., Chairman, Governanceand Nominating Committee, Arch Chemicals Inc.

Colin B. Mackaya, President Emeritus, Universityof New Brunswick

Frederick Seitz, President Emeritus, TheRockefeller University

George L. Shinn, Chairman and Chief Executive Officer Emeritus, The First Boston Corporation

FIFTY

Science AdvancementProgram

Raymond Kellman, Vice President

Jack R. Pladziewicz, Program Officer

Leon Radziemski, Program Officer

Silvia Ronco, Program Officer

Brian Andreen, Consultant

Pamela Busse, Program Assistant

Sofia Fontana, Support Services Coordinator

Shannon Ritchie, Program Assistant

Christina A. Scavo, Program Assistant

Dana Speed, Program Assistant Coordinator

Tommy Goodenow, Support Staff Technical Assistant

Carmen Vitello, Editor

Published by

Research Corporation4703 East Camp Lowell Drive, Suite 201

Tucson, Arizona 85712Phone: 520-571-1111; Fax: 520-571-1119

email: [email protected]

Annual Report Design and Production

Dena McDuffie, Annual Report Editor

Randy Wedin, Science Writer

FIFTY-ONE

Program AdvisoryCommittee

John P. Schaefer, ChairmanPresident, Research Corporation

Donald R. DeardorffDepartment of ChemistryOccidental College

Peter K. Dorhout Department of ChemistryColorado State University

Nancy M. HaegelDepartment of PhysicsNaval Postgraduate School

Brent L. IversonDepartment of Chemistry and BiochemistryUniversity of Texas at Austin

Michael A. MorrisonDepartment of Physics and AstronomyUniversity of Oklahoma

Mats A. SelenDepartment of PhysicsUniversity of Illinois at Urbana-Champaign

Thomas D. TulliusDepartment of ChemistryBoston University

Timothy S. ZwierDepartment of ChemistryPurdue University

KEY TO ILLUSTRATIONSPAGE 1 Research Corporation headquarters,Research Corporation photograph. PAGE 3 Detailof a comic print by Tagawa Kuniyoshi of an onisharpening lightning bolts which were used tosnag and haul in evil doers. PAGE 5 ResearchCorporation photograph. PAGE 7 top: FrederickGardner Cottrell, Research Corporation photo-graph; bottom: Wilhelm Ostwald. PAGE 8Rainstorm off the Coast at Brighton by JohnConstable. PAGE 9 Van de Graaff generator,Research Corporation photograph. PAGE 10 top:Courtesy of Peter J. Bruns; bottom: Courtesy ofArthur B. Ellis. PAGE 11 Research Corporationphotograph. PAGE 12 Courtesy of Lee S. Shulman.PAGE 13 Courtesy of Norman Hackerman. PAGE14 Photograph of “double lightning” petroglyphby Mary Colter (circa 1931) from Petrified ForestNational Park. PAGE 15 Shepherd peering beyondthe edge of the world at the workings of the uni-verse, Sixteenth Century German woodcut, hand-colored. PAGE 16 top: Lightning strike; bottom:Courtesy of Neal O. Thorpe. PAGE 17 top left:Courtesy of James M. Gentile; top right: Courtesyof Neal B. Abraham; bottom: Benjamin Franklinexperimenting with lightning. PAGE 18 top: Photoby Morey Milbradt, Getty Images; center: Photocourtesy of Ben Cox; bottom: Zirconium complexwith bound N2 molecule (nitrogen atoms shownin blue). Courtesy of Paul Chirik, CornellUniversity. PAGE 19 Photo of soybean field byDon Farrell, Getty Images. PAGE 20 Botanicalillustration of clover. PAGE 21 Courtesy ofUniversity of Colorado at Boulder, Office of NewsServices. PAGE 22 top: Courtesy of Michael E.Nelson; bottom: Detail of a print of the Japanesegoddess of Thunder by Torii Kiyoshige. PAGE 23left: Courtesy of Luciana Fontana; right: Detail ofan 1881 print of Sugiwara no Michizane conjuringa thunderstorm on Mt. Tenpa by Taiso Yoshitoshi.PAGE 24 Touching the top of a Leyden jar to astatic generator creates and stores static electricityin the jar. PAGE 25 Lightning strike. PAGE 26 top:When they were first invented, lightning rodswere so popular that some people included themin their attire; bottom: Eighteenth Century illus-tration of a thunder house in operation as well asa real house being struck by lighting. Notice howthe experimenter uses a Leyden jar to provide thestatic electricity for the thunder house. PAGE 27Lightning atop Kitt Peak, looking to the north-west, with the Mayall 4-meter telescope silhouet-ted against the stormy sky. Photograph by AdamBlock, July 1998, Courtesy of NOAO. PAGE 28Research Corporation photograph. PAGE 31Courtesy of Lawrence University. PAGE 32Research Corporation photograph. PAGE 34University laboratory. PAGE 33 ResearchCorporation photograph. PAGE 34 Courtesy ofArizona Historical Society. PAGE 36 Courtesy ofArizona Historical Society. PAGE 37 Courtesy ofHope College. PAGE 52 Research Corporationphotograph.. PAGE 51 Zeus holding a thunder-bolt.

FIFTY-TWO

Research Corporation4703 East Camp Lowell Drive, Suite 201, Tucson, Arizona 85712

Phone: 520-571-1111 Fax: 520-571-1119email: [email protected]

Research Corporation · Research Corporation is a private foundation, established in 1912, that...

Documents

Transcript of Research Corporation · Research Corporation is a private foundation, established in 1912, that...