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r Executive Vice President's Report Each year more and more Amcricans are aware of the American Cancer Society, believe in what we are doing, and generously contribute their time and money. This support has made us one of the largest and certainly among the best of volunteer health agencies. And, that is as it should be because we are fighting America's most devastating health problem. But, pre-eminence has the inevitable disadvantage of making us a convenient target for criticism. We expect to have criticism, and we would be surprised if there were none. Since we don't equivocate about cancer, it is understandable that promoters of unproven methods of cancer treatment would seek to discredit the Society. The only sure way to turn off strident critics is to stop working responsibly in the cancer field. A recent criticism of the ACS is that we maintain excessive reserves. This misinterpretation is under- standable because our fiscal operation is unlike most non-profit organizations. It has been our policy from the beginning not to commit funds we don't have in hand. Money contributed during the April Crusade is budgeted for the fiscal year beginning September Ist. In our judgment it is good management to budget only when we know the amount available. This policy has served us well. It has made possible careful and comprehensive planning. It has also meant that we have been able to maintain continuity of program so important to the research investigator. Most voluntary organizations operate differently. They spend money as they raise it. Accordingly, our prudent approach is not suited to the common accounting format used by health and welfare agencies. Our balance sheet should show a "current fund balance" at the end of every fiscal year equal to at least one year's income. This money is not with- held from the support of program activities but is put to work in the fiscal year which begins the next day. We continue to seek methods to assure more prompt and effective utilization of funds. For example, in the past, it has been our policy to permit our Divisions to maintain a contingency reserve, up to 10 percent of the proceeds of their most recent Crusade. In February 1977 our Board of Directors eliminated this reserve provision. We will now try, insofar as is feasible, to eliminate unassigned fund balances at the end of each fiscal year. A second criticism of the ACS is that our "over- head" is far too high because so large a share of what we spend goes for salaries. In fact, the biggest single category of cost in many organizations is the payments they make to peoplc. This is true of a voluntary health agency, a symphony orchestra, a university or a research institute. That we spend a high percentage of our budget for salaries does not mean we have a high overhead. Wc have 2,900 full-titne employees including physicians, nurses, writers, educators, rehabilita- tion therapists, statisticians, managers and scientists -to direct and support the work of 2.5 million volunteers, a ratio of almost 900 to one. That means we can do things money can't buy. The ACS is a. national organization of volunteers who are eager to do something about cancer. The following charts reflect the utilization of the cancer dollar for fiscal 1976. The figures to remember arc these: we spent 11.5% of our income for fund raising and 9.6% for administration. Two of the charts graphically portray this. The third chart shows that 78.9% of the funds were available for program activities. HOW 1975 INCOME WASSPENT IN 1976* Research Patient Services wmmuntiy aervices Available for Budget and Special Project Additions Professional Education I I Public Education Our financial soundness is a source of gr_eat---- strength in the fight against cancer. With reasonable assurance of continued funding, scientists can be more resourceful and imaginative in planning research projects and educators and social workers •-less restricted in developing and implementing cancer control programs. This is why we shall en- deavor to maintain the fiscal health of the American Cancer Society and work with dedication. And, we will do all this because it is in the best interests of the cancer patient. LANE W. ADAMS Executive Vice President *Percentabes relate to spending 1975 income dollars in fiscal year 1975-1976 and vary slightly f rom those on page 20. ~ 0 0 0 S7~ ~ 0 v Ln

used for 1976-1977 programs of research, education, service and related supporting activities covered by approved budgets. Amounts budgeted for special projects by the Boards of Directors are not expendable in the ensuing budget year but are ear- marked for program development over a period not to exceed three years. 5 Current Donor Restricted Funds Current Donor Restricted Funds were restricted by contributors for the following purposes: Research $1,729,656 Other programs 2,653,022 Use in specific geographic locations 2,958,027 $7,340,705 6 Lease agreements The Society's ]ease agreements for office space expire on various dates through December 31, 1985, with aggregate minimum annual rentals as follows: Year ended August 31: 1977 $2,782,223 1978 2,227,767 1979 1,649,278 1980 1,276,993 1981 1,014,906 1982-1986 2,785,100 7 Funds designated by Board of Directors for research support Under the terms of agreements with 21 educational and medical institutions, the Society is obligated to pay the annual stipends of 21 career professor- ships in cancer research, each of which terminates upon the retirement of the approved investigator. Under certain of these contracts the Society has been required to appropriate and deposit with a Trustee $1,061,153 as performance bonds. As of August 31,1976, the estimated aggregate con- tingent liability over the terms of the 21 active contracts, was approximately $8,855,000, exclusive of the liability for fiscal 1977 stipends which has been recorded in the accompanying financial statements. In addition, the Board of Directors has designated legacies in the amount of $2,000,000 to make possible the prompt exploration of unusually promising discoveries in cancer research. These funds are kept in temporary investments, the income from which is allocated to support the research program. 8 Research, professional education and medical project awards payable The Society's awards for research, professional education and medical projects, other than career professorships d iscussed in Note 7, are generally for terms of one to five years. Awards and grants outstanding as of August 31,1976, are payable as follows: Year ended August 31: 1977 $27,306,003 1978 1,363,496 1979 1,017,201 1980 ~ 492,487 1981 115,009 $30,294,196 9 Related party transactions The Society has adopted a policy whereby Board members are disqualified from voting with respect to any Board action affecting their affiliated organizations. Included among the Society's Board members and officers are volunteers from the banking community, who provide valuable assis- tance in the development of policies and programs. Approximately 42% of cash and temporary cash investments were maintained at August 31,1976, in banks with whom Board members were affiliated. Awards and grants are approved by the Boards of Directors, after peer review to establish scientific priorities for funding. In 1976, such awards included approximately $26,000,000 to individuals or insti- t,utions with which Board members from the medical and scientific community were affiliated. ' ® Prior year financial statements i The amounts shown for 1975 in the accom- panying financial statements are presented in accordance with the format recommended by the American Institute of Certified Public Accountants. This fipancial information is included to provide a basis for comparison with 1976 and, other than for the balance sheet, presents summarized totals only. I 26

.L. reasure.L s Repo.E. V The Society is pleased to report once again that our total revenue, fi-otn a1l sources, has reachcd record heights. The Ggure.s speak for themsclves and they are presented on the following pages. Significantly, this is the seventh conSecutive year in which the American Cancer Society has presented combined financial statements with an unqualified opinion from our independent auditors. These two facts are significant in and of them- selves; however, without the dedicated participation of nearly 2.5 million volunteers the Society would not be in a position to report record revenues, nor to exercise prudent and eflicient stewardship over the funds entrusted to it. Not only do ACS volunteers conduct our service, education and fund raising programs, but they also play a vital role in the financial adminis- tration of the Society. To illustrate thee importance of this role, often taken for granted or overlooked, here is what occurs at our National Headquarters. The Finance Committee, charged with setting and administering the Society's overall financial stand- ards and policies, is composed of eleven volunteer Auditors' Report To THE BOARD OF DIRECTORS OF AMERICAN CANCER SOCIETY, INC.: We have examined the combined balance sheet of the American Cancer Society, Inc., National Head- quarters and Chartered Divisions as of August 31, 1976, and the related statements of (a) support, revenue and expenses and changes in fund balances and (b) functional expenses for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accord- ingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We have previously examined and reported on the financial statements for the preceding year. In our opinion, the accompanying combined financial statements present fairly the financial position of the American Cancer Society, Inc., V members from the medical and lay leadership, and meets a minimum of four times a year. This Committee considers the plans of the Program Departments in financial terms, program thrust, and in relation to overall Society objectives. One of these mectings includes extensive review of the annual budget. In addition, the Finance Committee has two sub-canmittees, the Audit Committee, made up of six volunteers; and the Pension and Endowment Review Committee, which has five volunteers. Furthermore, this process takes place in much ihe same fashion in each and every one of our fifty-eight Divisions throughout the country. It is this direct involvement of volunteers-their commitment of time and experience-working with our dedicated staff that makes the Society work-and I think it works very well. = 9" JOHN S. LAWSON, Treasurer National Headquarters and Chartered Divisions, as of August 31, 1976, and the results of their operations and changes in fund balances for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Also, in our opinion, the sum- marized financial information for 1975 presented for cornparative purposes (see Note 10), presents fairly the information set forth therein. New York, N.Y. January 6, 1977. ARTHUR ANDERSEN & 00. 21

r Research The Society awarded a record number of basic research grants in 1976, and welcomed to its staff Dr. Frank J. Rauscher, Jr., former director of the National Cancer Institute. Dr. Rauscher comes to the Society wi th a thorough knowledge of cancer, an unusually clear perspective, and an ability to coordinate many diverse efforts without losing sight of central goals. After five years at the helm of the $700 million government cancer program, he assumes the ACS position of Senior Vice President for Research. The annual ACS investment in research has grown to over $32 million-more than 30 times what it was in 1946 and a 17 percent jump over the 1975 figure. In 1976, the Society issued 542 grants to 149 major institutions in this country, and to scientists working here and abroad. ACS grants are awarded only after careful screen- ing of applicants by scientific review committees, yet they give the researcher a maximum of flexibility in pursuing his work. Report from Dr. Rauscher The American Cancer Society holds a very special position in cancer research: It has the freedom and flexibility of a private organization and the strength of broad volunteer support at every level. The Society can concentrate or diversify its efforts, follow through as well as change direction- in short, it can adapt to meet the most pressing current needs in cancer research. ACS grants are directed toward individually developed programs and those areas of research that other kinds of awards normally do not reach. First, it is most important for the innovative cancer investigator to have in the ACS an alternative source of funds to that of the Federal government. Second, the Society specializes in grants for the advanced training of cancer experts, as well as the development of cancer teaching programs in major institutions. This emphasis on expanding knowledge gives many promising young scientists the boost they need. This is what yields results and saves lives. There has been real progress-in learning about cancer, in developing ways to detect it sooner and in finding more effective and longer-lasting treatments. But cancer is a single term for the most complex group of diseases man has ever sought to control. This is no mean challenge, and it will take a great deal of faith, patience, support and effort. There are many fronts on which progress can come. One of the most promising is the area of cell structure and the body's immune defense system. We now know, for example, that cancer"informa- A6~0 A greatly rnagni fied human lymphoid cell (top), and an ACS researcher at work in his laboratory. - tion"occurs in virtually all human cells. It is usually suppressed, but may be activated by exposure to irradiation, viruses or chemicals. This is very important because it may lead to a ~common denominator in the 100 forms of cancer known today. If we can find out how such a mechanism works, we could at one fell swoop prevent most cancers. Finally we must keep a global view of cancer. More than at any time in history, information is being exchanged that will help determine why a particular cancer is high in one country and low in another. We hope that in time, this will lead to the reduction of cancer throughout the world to the lowest possible levels. 5

Worldwide Fight .Against Cancer : "We have assumed a tnorc dominant international roleincancercotttrol than ever before," Dr. Benjamin F. Byrd, Jr., declared in recapping his completed term as ACS President. The year began with the Society's first Post- graduate Course in Cancer held in two cities of one country-Cairo and Alexandria, Egypt-and ended %vith the establishment of the Society's first inter- national fellowship in clinical oncology. In April, an international symposium on detec- tion ar,d prevention of cancer brought over 2,000 physicians from many countries to New York City. The Biennial meeting of the Council of the Inter- national Union Against Cancer in Toronto in May approved a number of new projects in public and professional education which involve ACS program planning and leadership. In June, a delegation of volunteer and staff officers were the guests of the Ministry of Health of the USSR, visiting a dozen medical and health education institutes in Moscow, Kiev and Leningrad. It was the first such official invitation to a voluntary health agency in the United States. The Ministry of I-Iealth paid all expenses within the Soviet Union, and a generous grant from the Coca Cola Company supported transportation. Dr. Byrd, who led the delegation, said: "We have been able to carry the message of freedom of research around the world, and promote cancer education among physicians, as well as share our public education techniques." This mission emphasized again that the Society's international cancer exchange is definitely a two-way street. Current studies of cancer risk patterns among the varied population groups of the Soviet Union will yield invaluable data in assessing our own. The high point came at year's end with the estab- lishment of the Audrey Meyer Mars International Fellowship in Clinical Oncology. The award will provide a year of advanced training in clinical cancer management in a top cancer institute of the United States for a physician or surgeon from a country where such training opportunities are limited. Supported by Mrs. Mars, it will be a tribute to the dynamic leadership she has given to the Society's Committee to Advance the Worldwide Fight Against Cancer, and to her personal dedication and efforts towards establishing programs of cancer control in many countries of the world. 12 !~; calp-M §P24 . ."14, American Cancer Society poster used in elementary school program on smoking and health. I The commitment and action generated by the 1975 World Conference on Smoking and Health con- tinued through 1976, culminating in TARGET 5-a forceful, five-year ACS campaign to substantially reduce smoking and eliminate harmful ingredients in cigarette smoke. Today, cigarette smoke is responsible for more deaths from cancer than any other single agent, including 80 percent of the 85,000 lung cancer deaths in 1976. TARGET 5 has three main goals: 1. To reduce the number of adults who smoke by at least 25 percent, or 12.5 million smokers. 2. To reduce smoking among young people by at co .L-

~ American Cancer Society, Inc. National Headqw-uters and Chaxtered Divisions Combined Stoai,ernent of Fun,ctional ETenses For the Year Ended August 31, 1976 with Comparative Totals for 1978 Piograin Scrvicrs Rescanch Supporting Scrvicet Mana~cment Public Professional Patient Cortunur.ity ,t Fund Education Education Services xn icis r,eneral Ralcfnj Awards and grants $29,358,975 $ 149,621 $ 4,400,073 ; 167,938 S 3,055,761 $ - $ - Salaries 1,416,594 8,995,657 3,354,190 4,691,935 3,789,753 5,556,826 6,780,121 Employee benefits (Note 1) Payroll taxes Professional fees Supplies Telephone Postage and shipping Occupancy (Note 6) Printing, publications, films, etc. Meetings, including related travel Other travel Specific assistance to 203,948 1,133,861 440,899 596,509 486,695 79,368 623,947 228,964 336,560 265,845 68,881 108,006 24,662 42,724 96,283 72,268 465,387 154,537 228,670 180,023 43,769 610,891 193,014 342,898 220,762 61,029 729,299 262,010 313,710 221,303 179,066 1,321,136 489,585 718,974 461,551 24,921 2,190,466 1,274,498 263,614 244,767 303,815 711,230 684,485 265,664 337,948 153,803 806,709 277,872 385,361 346,081 individuals - - - 5,926,826 196,166 Miscellaneous 21,684 258,028 64,348 61,606 107,658 740,857 793,303 393,304 466,447 991,809 192,796 I-- 321,390 457,291 299,684 502,702 308,458 735,566 1,083,218 867,395 287,726 687,104 399,997 286,124 Total expenses before depreciation and amortization 31,988,121 18,104,238 11,849,137 14,342,989 10,010,596 11,356,497 13,814,699 Depreciation and amortization (Note 1) 92,379 338,315 123,119 182,306 128,729 Total expenses $32,080,500 $18,442,553 $11,972,256 $14,525,295 $10,139,325 $11,635,220 $14,025,665 1976 3,370,432 2,120,876 1,507,733 , 1,979,652 2,006,616 2,314,679 4,408,635 5,940,002 3,744,813 $112,820,814 ~100,961,273 The accompanring notes to combined f nancial statements are an integral part of this statement.

TODAY AND TOMORROW 3,000,000 Americans are alive who have had cancer. - Our commitment to TODAY is the quality of survival... in better treatment and rehabilitation reaching cancer patients wherever they are. Our hope for TOMORROW is to seek to find ways to cure and prevent cancer. . . it is exemplified in our increasing support of research investigation. TODAY and TOMORROW shape the framework of our programs ... the support comes from the volunteers who help make it all happen. t ,~

•M t~ ~ Adult donor (inset) and child are blood-typed. Blood Donor The Society responded this past year to a crucial need for expanding blood donor programs by launch- ing a nationwide effort among ACS volunteers. In February of 1976, the National Board of Di- rectors began examining the problem to determine the most effective approach. In May, a work-study group met to draw up guidelines based on the success of some ACS Divisions which have been operating blood programs for years. Now Divisions across the country are organizing volunteer donor campaigns. Their goal is to provide cancerpatients with all the blood they need at greatly reduced cost. The importance of blood to cancer patients is linked to today's sophisticated methods of treat- ment. Leukemia and other blood-related cancers are being successfully controlled. Part of this success depends on an adequate blood supply. Chemotherapy-the use of anticancer drugs-is perhaps the most promising weapon against cancer today, but it can damage normal blood cells as welll as cancer cells. Whole blood or blood components must be replaced. "Blood," says ACS President R. Lee Clark, M.D., "has become the most vital commodity in cancer therapy." 8 The goal of the nationwide program is to make blood and blood components readily available and less costly to cancer patients. And volunteer blood donors also help to achieve a further goal: improving the quality of donated blood. Donors who are not paid have no reason to conceal histories of diseases that might still affect their blood. In Colorado, where cancer patients use a third of the state's blood supply, the Society has recruited 8,000 volunteer donors. It also has set up a volunteer- operated telephone communications center to handle arrangements. The program costs only $3,000 a year, and has saved patients $250,000 in just two years. Individual savings have ranged as high as $2,000. In Florida, a blood program sponsored jointly by the Society and the University of Florida Inter- fraternity Council can assist a cancer patient any- where in the state. Within five minutes of a request for blood, a donor is located and the patient's hospital contacted. - A Texas program also is getting under way, following pilot blood projects in five areas of the state during 1976. Four mobile blood units are being purchased to facilitate both the collection of blood in outlying parts of the large state, and the prompt processing of the blood for cancer purposes. M

Mammography: Detecting Breast Cancer Early Women with breast cancers detected early by mammography are achieving five-year survival rates as high as 95 percent, compared with only 45-50 percent for more advanced cases. The Society, together with the National Cancer Institute, continued in 1976 to make these valuable low-dose X-rays available to women through the 27 ACS-NCI Breast Cancer Detection Demonstration Projects across the country. The guidelines recommend annual mammograms for all women over the age of 50, because the benefits clearly outweigh any minimal X-ray risk. For women between the ages of 35 and 50, mam- mography is recommended for women who are at higher-than-normal risk of developing breast cancer, because they have: o chronic cystic mastitis, with or without pain o lumps and thickenings in the breast D nipple discharge or other nipple abnormalities D a personal history of breast cancer o a family history of breast cancer on the maternal or paternal side D a f amily history of breast cancer in sisters 10 - Somewhat less serious risk factors include: D early onset of menstruation D no history of pregnancy o first full-term pregnancy at age 30 or older These are only general guidelines, and women who have more than one, or who are uncertain as to their risk level, should consult their doctor on the advisability of mammography. Physicians report that about 80 percent of women between 35 and 50 have one or more of the above risk factors. In the ACS-NCI Breast Cancer Detection Demonstration Projects, 233 breast cancers already have been discovered in women under 50 years of age. Qne hundred of them were detected by mammogra- phy alone. The women under 50 who have no breast problem should still be taught the proper technique of breast self-examination, and urged to perform it regularly each month. . Since breast cancer remains the number one cause of cancer deaths among American women, the Society is constantly seeking the diagnostic tools and treatments which vield the greatest benefit for the least risk.

XOTES TO V OMMXiV! E.1Q1 Jl~'C .~.X~ARML"L /5TA.iLoZb=D= AU.°.~'UST 31 ~ 1976 Accounting policies Standards of accounting and financial reporting As a member of the National Health Council, the Society follows the "Standards of Accounting and Financial Reporting for Voluntary Health and Welfare Organizations" (Revised 1974). These standards are in conformity with the recommenda- tions of the American Institute of Certified Public Accountants. Land, building and equipment and depreciation Land, building and equipment are capitalized at cost or, if donated, at the fair market value at date of receipt. Depreciation is computed using the straight- line method over the estimated useful lives of the assets (buildings-20 to 40 years; office furniture and other fixed assets-2 to 10 years ). Donated materials and services A substantial number of volunteers have donated significant amounts of their time in the Society's program services and in its fund raising campaigns. However, since no objective basis exists for record- ing and assigning values to their services, they are not reflected in the accompanying financial statements. Similarly, the value of space and time contributed by various media for Society educational and fund raising advertisements is not subject to control or measurement and has not been recorded. Donated materials and equipment are reflected as contribu- tions at their estimated fair market value at date of receipt. Principles of combination The accompanying combined financial statements include the accounts of the National Headquarters of the Society, which is a New York not-for-profit corporation, and its 58 Chartered Divisions which are separately incorporated under the laws of the various states and Puerto Rico. All significant intra- Society accounts and transactions have been eliminated in preparation of the combined financial statements. Pension plan The Society has a noncontributory pension plan which covers substantially all employees. Monthly payments are made to the plan trustees in accordance with the Society's policy of funding accrued pension costs. Prior service costs are amortized over the average future service lives of active covered employees. At September 30, 1976, the date of the latest actuarial review, pension fund assets were in excess of the actuarially computed value of vested benefits. Pension expense for the years ended ' August 31, 1976 and 1975, was $3,217,306 and $2,110,516, respectively. Out standing legacies The Society is the beneficiary under various wills and trust agreements, the total realizable amounts of which are not presently determinable. The Society's share of such bequests is recorded when the Society has an irrevocable right to the bequest and the proceeds are measurable. P0 Tax status The Society is a-nonprofit voluntary health agency, exempt from income tax under Section 501(c)(3 ) of the U.S. Internal Revenue Code, and contributions to the Society qualify for the 50 per cent charitable contributions limitation. The Society has been classified as an organization that is not a private foundation and has been designated as a "publicly supported" organization. 3 Allocation of public support Support received from the public by the Divisions is shared with the National Headquarters. In accordance with National policy, which is re- viewed and approved annually by the Board of Directors, 40% of gross contributions, exclusive of approved special purpose gif ts, is allocated to sup- port the National research program and other program activities-for research (25% ), medical grants and fellowships (3 %) and other programs (12% ). Unrestricted legacy income allocated to National (40% ) is used principally in support of the research program. 4 Available funds and budgets To provide continuity of programs and to permit effective budgeting, substantially all activities are financed by public support received during the previous fiscal year. Accordingly, a substantial portion of the available Current Unrestricted Funds reflected in the accompanying balance sheet will be 25 0 0 0 m 0 ~ v