2009 Report from Gates Family Foundation Board Chair and Executive Director

We are pleased to share the Gates Family Foundation's 2009 Annual Report. In addition to listing and describing 2009 grant payments, the report explains the application process and details financial information about the Foundation. The mission of the Gates Family Foundation remains unchanged. We invest in "Colorado-based projects and organizations primarily through capital grants which have meaningful impact and enhance the quality of life for those visiting, working and living in the state." The Foundation's funding priorities and goals for each follow in this report.

In 2009, the Foundation made payments totaling $10,252,903 to 113 Colorado nonprofits. Forty-three percent of the grants were designated to organizations in rural communities while the rest were directed to larger cities throughout the state. Additionally, three "Family Funds" held by the Foundation distributed $9,087,839 to 59 nonprofits within and outside of the state of Colorado. Each of these Funds has its own mission and focus; grants are initiated by the Gates families that created the Funds.

As reported last year, the stock market collapse in 2008 significantly impacted the Foundation's grant capacity. Because the required payout of grants is based on the previous year's endowment market values, the impact of the downturn will stretch out through 2010 and 2011. Challenge grant awards made last year declined about 30% from the previous year. Since the Foundation does not establish a dollar limit for each funding priority, the total awarded in each category fluctuates according to the number of requests received. Last year, about 38% of Gates' payments and awards were directed to human services, a reflection of the recession's impact on Colorado citizens.

In response to the challenges confronting nonprofits, Foundation staff have dedicated more time to consultation with grantees, working to identify strategies to help complete their fundraising objectives. Most Gates' grants are made in the form of challenges, which require the nonprofit to complete its capital campaign before the grant is paid. Gates has extended challenge deadlines to help its grantees finish campaigns and maintain fundraising momentum. For some organizations, the Foundation has offered an alternative matching program, whereby Gates will match $1 for $1 up to a specific amount to help stimulate campaigns for nonprofits that have limited fundraising capacity.

On the brighter side, the Foundation's endowment rose in value 31.8% in 2009, which, while not making up for the 2008 losses, should have a positive effect on the Foundation's grant capacity in future years. Gates has also found Colorado nonprofits to be exceptionally resilient and disciplined in their efforts to raise funds and reduce costs. Campaigns have been temporarily suspended during the panic of 2008 and then restarted successfully in the summer of 2009. Projects have been phased and reduced in scope. Many nonprofits have reduced staff and operating costs by finding ways to collaborate and share back office expenses with other organizations. In most cases, Gates' grantees have been able to reach their capital improvement goals.

Finally, we want to report on a change in Foundation leadership that will occur in mid-2010. Tom Kaesemeyer informed the board in 2009 that he would retire in July 2010, after 13 years of service to the Foundation. Last fall, the Gates trustees initiated a search for Tom's successor, which was concluded early in 2010. The Foundation is very pleased to announce the appointment of Thomas A. Gougeon as President of the Gates Family Foundation, effective August 2010.

Tom comes with broad experience in business, philanthropy, government service and civic engagement. For the last 10 years, he served as Principal for Continuum Partners in Denver with major responsibility for the redevelopment of Belmar and Union Station. Previous to that role, Tom served as executive director of the Berger Foundation and CEO of the Stapleton Redevelopment Foundation. From 1983 to 1990, he worked in the Office of the Mayor in Denver with responsibilities in planning, construction, transportation, and budget.

Among his current civic activities, he is a Commissioner with the Denver Water Board, and a trustee of the Urban Land Conservancy, the Stapleton Foundation for Sustainable Urban Communities, and A+ Denver. In the past, he has served as trustee and chair of The Nature Conservancy (CO) and of Volunteers for Outdoor Colorado. Tom earned his BS in Economics at the University of Denver and his MA in City and Regional Planning at Harvard University.

On behalf of the board and staff, we welcome Tom Gougeon and look forward to him continuing the strong leadership tradition at the Gates Family Foundation.

Sincerely,
Charles C. Cannon, Chair
C. Thomas Kaesemeyer, Executive Director