2022 ANNUAL REPORT

Letter from the President & Board Chair

2022 was the third year of adapting to the ongoing pandemic, with the added challenges of spikes in the flu and other respiratory illnesses during the year. Despite those obstacles, it was a productive year. Heading into 2023, our staff is more regularly back in the office and in-person activity is becoming a more consistent part of our daily reality.

The past year was also the first year of implementation of the updated strategic plan we completed in 2021. More on that below and in the messages from each program team.

2022 by the Numbers

Over the course of 2022, the Foundation distributed almost $41 million through 357 grants. Of this total, 211 grants totaling $12.7 million were made through the main Foundation. About 34 percent of these grants (or 73 total) were focused in rural communities, and another 25 percent (or 53 grants total) had statewide benefit.

The balance of $28.2 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.

The family fund grant total was substantially increased in 2022 by the first payment of a five-year, $100 million commitment by the Gates Frontiers Fund to the acceleration of work in bioscience, regenerative medicine, and gene therapies at the University of Colorado Anschutz Medical Campus. This historic commitment, the largest single commitment in the Foundation’s 77 year history, will support the work of the Gates Institute in accelerating cutting edge solutions to a host of global health challenges.

Highlights of the Foundation’s grant payments in 2022 include:

• K-12 Education – 30 grants to 26 different organizations totaling $2.83 million;
• Natural Resources – 24 grants totaling $2.934 million, including$1.19 million to support land conservation work in priority focus landscapes;
• Community Development – 34 grants to 31 different organizations totaling $1.55 million;
• Informed Communities – 11 grants totaling $682,956, with $412,000 to the Colorado Media Project; and
• Capital Grants – 114 grants totaling $4.84 million. In 2022 the Foundation also received the most new requests it has ever seen in a single year and increased the number of capital grant commitments by 77 percent compared to the prior year. Since 2011 Gates has distributed more than $41 million through the Capital Grants program.
• Impact Investing – In 2022, the Foundation made eight mission-related private equity commitments totaling $9.95 million. In the PRI program, 2022 saw four new commitments totaling $2.3 million.

Consistent with the direction established in the strategic plan adopted in December of 2021, there was an elevated focus on climate and on diversity, equity, and inclusion in 2022. The Foundation found multiple ways to increase its support for organizations led by and/or serving communities of color. The Foundation was also able to use all of its tools to make contributions towards climate solutions, greenhouse gas reductions, and increased resilience and adaptation throughout Colorado and beyond.

In 2022, the Foundation also launched an exploration of the potential for mass timber building construction to provide a vehicle for improving forest health and increasing the state’s ability to deal with significant amounts of small and medium diameter timber that need to be removed from forests in order to reduce the risk of catastrophic fire.

Impact Investing

The past year was also an active year for impact investing. During strategic planning in 2021, the Foundation established the goal of targeting 30 percent of all new private equity commitments for mission-aligned opportunities. The Foundation also raised the cap on its Program-Related Investments (PRI) portfolio (these commitments are made above and beyond required minimum distributions) to 6 percent of a 36-month rolling average of the Foundation’s market value. In 2022, the Foundation made nine mission-related private equity commitments in a wide variety of areas including climate, social inequality, bioscience, deep tech, ed tech, rural  venture, and water. Four of these commitments were to managers in which the Foundation has previously invested.

In the PRI program, 2022 saw four new commitments: two focused on affordable housing, one focused on small business lending, and one to support an innovative pay for success model to expand an urban and rural teacher residency program. The Foundation also facilitated a favorable refinancing of an existing PRI commitment that supported the purchase of Colorado Community Media’s two dozen hyper-local metro area newspapers.

Board and Staff

The Foundation experienced several board and staff transitions during 2022. After 12 years of dedicated service, Wally Obermeyer reached the maximum term limit and stepped off the board at the end of December. Because Wally also served as the chair of the Foundation’s Investment Advisory Committee, trustee Wes Brown has agreed to assume that responsibility in 2023. Marshall Wallach also stepped off the board at the end of 2022 after serving his first term as a family trustee. Marshall and his wife and two children relocated to Maine in the summer of 2022. Everyone will miss Wally and Marshall and we are grateful for their contributions.

Taking Wally’s place on the board and Investment Advisory Committee will be Virginia “Ginny” Bayless. Ginny brings a long career of experience in business and finance, as well as a strong background in and commitment to philanthropy. We are excited to have Ginny join the board. This last year was also the third and final year in which Dane Harbaugh served as chair of the board. Dane was invaluable in helping the Foundation board and staff navigate all of the uncertainties and new demands that resulted both from the COVID pandemic and our nation’s racial reckoning triggered by the murder of George Floyd in 2020. We are all grateful for Dane’s service as board chair, and glad that he remains on the board. Rich Kiely has agreed to take on the role of chair starting in January of 2023.

There were also staff transitions in 2022. Abby Schaller left the Foundation early in the year to take an opportunity with the Walton Personal Philanthropy Group. Amanda Hill joined the Foundation in August as a member of the Natural Resources team. Amanda has a strong background in conservation having worked for the National Land Trust Alliance, Great Outdoors Colorado, and the Palmer Land Conservancy. Moving into the New Year, the Foundation will also be adding a Director of Learning and Evaluation to the team.

In 2022 the Foundation once again hosted two fellows from the Growing Insight and Voice (GIV) fellowship program operated in partnership with local nonprofit YouthRoots. The fellowship gives young adults an opportunity to be part of a cohort learning about philanthropy and the nonprofit sector as well as be embedded with the staff of a host foundation. Gates’ 2022 fellows were Jose Rogelio Manriquez-Hernandez, soon to be a graduate of the University of Colorado Boulder, and Peniel Owusu-Ansah, a student attending Colorado College.

Other Noteworthy Items

After the extraordinary performance of the Foundation’s portfolio in 2021, last year was a more challenging year. The Foundation finished the year with just under $557 million in assets and experienced a loss of 11 percent for the year.

Due to the pandemic, the cohort of Gates Fellows selected to attend Harvard University’s Kennedy School of Government Senior Executives in State and Local Government Program in 2020 was unable to attend in either 2020 or 2021 due to cancellation of the program in those years. Gates’ selection committee chose a new cohort of fellows in spring of 2022, and both cohorts attended the program last summer. The result was a record number of 14 Gates Fellows completing the three-week program last year.

Looking Forward

The board and staff look forward to the opportunity to engage with partners and communities in 2023 in service of the Foundation’s mission to build a more equitable, resilient, and sustainable Colorado for all. We are grateful for all of you we had the privilege to work with on so many important projects and issues in 2022, and thank you for your partnership and commitment to Colorado.

Sincerely,

Thomas A. Gougeon
President
Gates Family Foundation

2022 Financials