2021 ANNUAL REPORT

Letter from the President & Board Chair

Despite challenges, 2021 was a very full and productive year for the Foundation. Regrettably, it was the second year of the pandemic, with another round of disruptions and uncertainly. The arrival of vaccines in the spring was a welcome milestone, followed by boosters for many in the fall. Summer was a period of relaxed restrictions and increased optimism.

Unfortunately, by late summer the situation had changed once again. By year-end we were all forced to recognize the emergence of the highly transmissible Omicron variant and the surge in infections that would follow in early 2022. This pattern did allow the Foundation to hold its first in-person board meeting and annual retreat in June of 2022. It marked the first in-person board gathering since December of 2019. We were also able to hold an in-person board meeting in Colorado Springs in December. The Foundation staff were able to return to the office on a more regular basis in June and July, but by August had reverted to a predominantly remote mode of work. That pattern continued through March of 2022. Currently the staff is once again in a hybrid mode, splitting time between in-office and remote work.

While the pandemic continues to impact communities and daily life in many ways, for the most part in 2021 the Foundation’s focus largely returned to its core areas of interest. 2021 did not see the substantial repurposing of resources to support a variety of COVID relief needs that was a critical part of Foundation activities in 2020.

Strategic Planning

Every five years the Foundation undertakes an in-depth strategic plan review, with the board and staff devoting significant time to update the Foundation’s priorities and strategies. This process spanned most of 2021, with the Foundation board adopting the updated strategic plan for the next five years (2022-2026) in December, which is available here. The Foundation partnered with Boldly Go Philanthropy in the design and management of the process. Summaries of the plan and recordings of staff-led informational webinars are here. Our website is currently under construction and will soon reflect our updated strategies, as well.

This strategic planning process began with an in-depth review of the Foundation’s experiences and learning from the previous five years. We also assembled a great deal of information on trends in Colorado and the philanthropic sector. The process also involved the most extensive outreach we have ever undertaken as part of such a process. Staff used a variety of tools including surveys, focus groups, one on one interviews, empathy interviews with those most directly impacted by issues of interest, and other approaches to solicit feedback from grantees, partners, stakeholders, community leaders and others. Staff members shared top takeaways from what we learned throughout 2021 via blogs on our website here.

Major themes of the new strategic plan include:

• Updated mission, vision, and values: The Foundation works with partners and communities to build a more equitable, resilient, and sustainable Colorado for all.
• Elevating diversity, equity and inclusion and climate as two critical lenses through which all Foundation activities need to be viewed. The board and staff also produced the Foundation’s first equity statement.
• Maximizing the Foundation’s capacities to partner, convene, catalyze, and lead that the Foundation has built over the last five to 10 years.
• K-12 education: Continuation of the strong focus on educational equity, with increased emphasis on innovative school models and learning environments (including out-of-system options) and rural education needs, particularly the challenges of recruiting and retaining diverse talent.
• Natural resources: Continuation of a strong emphasis on private land conservation and land trust community capacity, balanced water solutions, and climate, with an elevated focus on forest health and watershed restoration.
• Community development: Prioritizing economic mobility strategies and affordable housing, while continuing to engage in historical areas such as community planning, food systems, mobility options, and small business support.
• Informed communities: Extending the Foundation’s commitment to continue to include this work in its core priorities, focusing on evolving and strengthening the civic news ecosystem, addressing gaps in coverage in the Foundation’s core areas of interest, and advancing more inclusive civic news leadership, voices, and models.
• Capital grants: Continuing to be a resource for a wide range of capital grant needs and exploring how we can provide support earlier for smaller, diverse organizations that may not yet be ready to undertake a significant capital project. Also exploring ways to share information on capital grant projects throughout the state with a wider universe of potential donors and supporters. Continuing Gates’ history of supporting the next generation of diverse leadership throughout the state.
• Impact investing: Expanding the Foundation’s impact investing program, increasing program-related investment (PRI) program capacity, and targeting a higher percentage of mission-related investments within the Foundation’s private equity portfolio. Using available analytical tools to better understand ESG issues in the public equity portfolio and to move towards a net-zero carbon posture over time.

2021 by the Numbers

Over the course of 2021, the Foundation distributed just over $23 million in grant funds through 230 grants. Of this total, 105 grants totaling $9.3 million were made through the main Foundation. Just over 42 percent of these grants were focused in rural communities, and another 31 percent had statewide benefit. The balance of $13.74 million in grantmaking occurred through the eight family funds held at the Foundation. These funds allow individual or groups of family members to use the infrastructure of the Foundation to engage in philanthropy that may have a different topical or geographic focus than the main Foundation.

Highlights of the Foundations grant commitments in 2021 include:

• K-12 Education – 20 new grant commitments totaling $1.44 million
• Natural Resources – 11 new grant commitments totaling $638,000, as well as another $1.02 million committed to land conservation work in priority focus landscapes
• Community Development – 13 new grant commitments totaling $530,000
• Informed Communities – one new impact investment totaling $750,000
• Capital Grants – The Foundation received 107 requests and made 57 new capital grant commitments totaling $2.44 million. 51 percent of these commitments supported projects in rural Colorado communities. The Foundation paid out a total of $3.37 million in capital grants in 2021 (a combination of current year and prior year commitments)

Impact Investing

Colorado Community Media newspaper group, a 2021 Gates impact investment

The past year was also a busy year for impact investing. The Foundation approved four new MRIs within the portfolio focused on climate solutions, deep tech startups associated with the University of Colorado Boulder, social inequality, and water sharing between agricultural and urban water users in the Colorado River Basin. These commitments totaled $6.4 million. The Foundation also approved nine new PRIs. These concessionary uses of capital totaled $17.4 million. These commitments were largely low or no interest loans of capital, but one took the form of a guarantee, and another a direct borrowing and re-lending to support a second round of access for Colorado nonprofit and Community Development Financial Institutions to participate in the final round of the federal Paycheck Protection Program. Overall, these PRI commitments addressed a diversity of needs, including supporting local journalism, producing affordable housing, providing capital to small businesses, promoting homeownership for Black households, protecting high value agricultural land and water rights, and providing access to healthy food and affordable housing in a food desert.

In total, counting all forms of capital deployed for mission-relevant purposes, the Foundation put $46 million to work for philanthropic purposes in 2021 (including grantmaking, impact investing, investment in human capital, and use of Foundation-owned real estate).

Other Noteworthy Items

Despite the ongoing challenges of the pandemic, the Foundation’s portfolio earned a total return of 20.4 percent in 2021. This robust performance will support higher levels of grantmaking and impact investing in 2022.

Due to the pandemic, the Kennedy School program for state and local government leaders was again not offered in 2021. As a result, the Foundation did not accept applications last year. A new class was selected in 2022, and the Foundation will be sending both those individuals and the 2020 cohort of Gates fellows who were selected but unable to attend. In total, the Gates Foundation will be sending 15 state and local government leaders from Colorado to the program in the summer of 2022.

Gates Rubber Company tower

The Foundation also had two staff transitions late in 2021 and January of 2022. Russ Schnitzer accepted a conservation-focused position out of state in the fourth quarter. Program Officer Whitney Johnson was promoted at year-end to senior program officer to take over the role of leading the Foundation’s natural resources work. In January of 2022, Abby Schaller accepted a position with the Walton Personal Philanthropy Group here in Denver. We are excited for these new opportunities for both Russ and Abby, and Whitney’s opportunity to play a greater leadership role. The Foundation will be hiring a second natural resources team member in the summer of 2022 and a senior program officer for the education team towards the end of the year.

While the pandemic has presented challenges, it has also presented opportunities to deepen our relationships with grantees, partners, stakeholders, and fellow funders. Last year’s strategic planning process also provided an important opportunity for the staff and board to learn, reflect, and engage a multitude of perspectives. 2021 marked the 75th anniversary of the founding of the Foundation. In many ways it was the perfect time to reconnect with our roots as a place-based philanthropic organization, the people and communities we attempt to serve, the realities of our time, and the challenges and opportunities that may lie ahead.

We are eternally grateful for all of the people who have helped, encouraged, and challenged us along the way. We remain immensely proud of and committed to Colorado, with all of its magnificence and imperfections, its deep rooted inequities, and still limitless potential. We continue to be grateful to work with so many amazing people that contribute so much to making Colorado a more equitable, resilient, and sustainable place for all.

Sincerely,

Thomas A. Gougeon
President
Gates Family Foundation

2021 Financials