The invested funds of the Association amount to $230,375.78, yielding an income last year of $10,936.46.  These funds are chiefly invested in mortgages in the city and State of New York and in Government bonds.  In view of the forgeries of real estate mortgages recently discovered in New York City, the mortgages of the Association in New York and Brooklyn have, at the request of the attorney of the Association, been personally examined by a member of the Finance Committee and all found to be valid and correct.  An examination of the schedule of securities held by the Association shows that there is not a single poor investment among them, or one on which the interest is in default.

Besides the invested funds the Association owns real estate in various Southern States and in the Northwest to the value of $600,274.  This is the working plant of the Association.  The buildings, apparatus and fixtures upon this property are protected by insurance.

The expenditures of the Association during the past year have been $328,788.43.  This is an increase over the expenditure of last year.  The Association commenced the year with a balance of $2,193.80; it closes the year with a debt of $5,641.20.  It has therefore spent $7,835.01 in excess of its receipts.  This debt is to be greatly regretted, for it should be the policy of the Association to plan its work in accordance with the funds at its disposal.  They are obliged, however, to make their plans partly on faith, and it is not to be expected that their faith will always exactly measure the benevolence of the people.

The increase in expenditure has been entirely in the work done upon the field; the cost of agencies and administration being less this year than last.  This increase has been mostly in the Southern field, and has been imperatively demanded by the natural growth of the work.  Very little new work has been undertaken, four new schools only being added during the year; but the schools already organized have grown in size and therefore in expense.  Eleven hundred and twenty more pupils are in attendance than one year ago, an increase of over 12 per cent.  This has required the employment of twenty additional teachers.

Friends of the Association have added new buildings at some of the schools, and these new buildings, greatly needed and greatly increasing the effectiveness of the schools, also bring increased expense.  The churches and schools of the Association are doing all they can for their own support.  The spirit of self-help is constantly encouraged among them, but they are too poor to bear any considerable part of the expense.

The Association must therefore meet one of the three following alternatives:  First, the growth of its work must cease, and the increasing number of pupils who apply to its schools year by year be denied admittance; or second, some of the schools which have been fostered by the Association for years must be abandoned, that funds may be left to strengthen and develop the remainder; or third, the churches and Christian givers of America must largely increase their gifts to this Association to meet its increasing wants.