The Colorado Trust Alan L. Otten

The Colorado Trust, one of the earliest and still one of the largest conversion foundations, had a fairly quiet birth, went through a slightly troubled adolescence, and now seems to be settling into productive maturity. Its efforts to improve the health and well-being of Coloradans extend far beyond its birthplace in central Denver and reach all across the state––into cities and suburbs, farmland towns, mountain villages, and Indian reservations.

The Trust story really starts way back in 1881, when a group of Denverites working under the sponsorship of the Episcopal Diocese of Colorado raised enough money to open St. Luke's Hospital on the edge of the downtown district. In 1926, the Presbytery of Denver sponsored a similar effort that built Presbyterian Hospital, not quite a half-mile away. In the decades after World War II, the two hospitals gradually grew closer together through various shared arrangements, and in July 1979, to eliminate duplication and achieve other cost savings, the two hospitals merged, calling themselves the P/SL Medical Center. The Center included a suburban Presbyterian affiliate, Aurora Presbyterian Hospital, built in 1975.

Then in September 1982, a new corporation, P/SL Healthcare Corp., was created to oversee the operation, with one unified board taking control. All three hospitals had been nonprofit corporations, as was P/SL Healthcare Corp.

P/SL fared quite well. Both Presbyterian and St. Luke's were teaching hospitals that had reciprocal staffing and other agreements with the University of Colorado Medical School. But as the 1980s went on, the Denver hospital market became steadily more competitive. Population was moving to the suburbs, outpatient surgery was replacing inpatient, a certificate of need process required state approval for expansion, Medicare was tightening its payment system, and other unsettling changes were taking place. Stand-alone nonprofit hospitals were having a hard time all across the country.

John Casey, then P/SL's chief executive officer, thought it necessary that the P/SL board consider what it might do to keep up with the competition, and he ordered the staff to prepare possible long-range plans. The staff came up with proposals to rebuild and modernize the two downtown buildings, put in new ambulatory care services, acquire expensive but needed new technology, and initiate other new services. The price tag would be more than $150 million.

P/SL already had more than $40 million in outstanding debt, and board members weren't sure how much further into debt they ought to go. They realized, moreover, that with large for-profit hospital chains seeking to enter the Denver area or enlarge their footholds there, the P/SL hospitals constituted a highly valuable asset. Maybe they ought to see what they could get for them.

"We put out an elaborate RFP," Casey recalls, "and got half a dozen offers, including three that the board felt came from companies with credentials good enough to consider seriously."

Those three were Humana Inc., the Hospital Corporation of America, and American Medical International, Inc. (AMI). Humana was offering the most money, with AMI next, but all three offers were very close in price. Throughout the last few months of 1984 and the early part of 1985, the board considered these offers.

Says Richard F. Walker, a Denver utility executive who was chairman of the P/SL board at the time: "There was an obvious need to upgrade the hospitals––they were getting fairly obsolete––and that would require major fund-raising. At the same time, for-profits were seeking market share. It turned out to be a great time for us to sell."

It's not completely clear whether the P/SL board did or did not have outside help in evaluating the offers. As far as Casey can remember, the board relied only on its own accountants. However, as part of its consideration of the long-range problem, the hospital planners had consulted with the investment firm of PaineWebber, and its estimate of the corporation's value was much in line with the bids P/SL was receiving.

As word of the board deliberations leaked out, Casey says, many doctors on the P/SL staffs expressed strong reservations about Humana, based largely on what they had heard about its treatment of staff physicians in other hospitals it had taken over. The board also was worried about possible antitrust difficulties if it sold to Humana, since the company already owned hospitals in the Denver area. Moreover, says P/SL board member A. Gordon Rippey, a Denver businessman who was later to become the first chairman of the Colorado Trust board, he and other board members felt that AMI seemed to understand best the tradition and interests of Presbyterian and St. Luke's: it was ready to commit itself to a high level of indigent care, it undertook to continue to provide service to outlying rural communities, and it promised to maintain P/SL as teaching hospitals with an active program of medical research, a matter of considerable moment to the doctors.

Ultimately, the P/SL board decided to enter into an agreement with AMI, subject to a number of caveats, and in February 1985, it received a formal letter of intent from AMI. Once it had decided on AMI, the board turned over to its executive committee the detailed week-by-week negotiations, though the committee's decisions remained subject to full board approval. Throughout the spring and summer of 1985, negotiations continued between AMI and the executive committee of the P/SL board, and in late September, final agreement was reached.

The sale was the first sale of a nonprofit to a for-profit in the Denver area; there would not be another until 1994, when Columbia/HCA Healthcare Corp. acquired the Rose Medical Center.

"It looked like a win-win situation," Rippey says. "The needed improvements would be made by AMI, we would be turning over the hospital to an aggressive company that would continue programs we wanted, and a new foundation would likely be set up to spread charity throughout the state. It was a very exciting prospect."

The agreement of sale provided that AMI would pay $178 million to P/SL for the three hospitals. It formally pledged to provide care for the indigent at a level at least equal to that which the three hospitals had been providing and to continue medical education and research at about the same level as before. Though not mentioned in the agreement, the negotiations had made it clear that AMI's plans also included building a new $150 million, 261-bed hospital and medical office building and acquiring or building several outpatient clinics. AMI also indicated that it would eventually close St. Luke's and consolidate all the beds it needed in downtown Denver in Presbyterian and the large new facility it would build adjacent to Presbyterian.

The New Foundation is Formed

It was up to the P/SL board to decide what should be done with the net proceeds of the sale––that portion of the $178 million that would be left after it had paid off its outstanding debt and taken care of several smaller obligations. However, the Colorado law governing nonprofit corporations required (and still does) that the net proceeds of the sale or liquidation of the assets of a nonprofit corporation cannot accrue to the benefit of an individual or a for-profit enterprise but must be distributed to another nonprofit corporation.

The executive committee of the P/SL board had been in charge of the negotiations with AMI, subject to the full board's approval, but the committee decided to turn over to a small ad hoc group of five of its members the question of deciding what to do with the net proceeds. Though the Denver Presbytery and Episcopal Diocese of Colorado had sponsored Presbyterian and St. Luke's hospitals, they actually owned no part of the hospitals' assets.

According to Rippey, the ad hoc committee felt it had three options: to turn the proceeds over to the already established Presbyterian/St. Luke's Community Foundation, a support group that raised funds for the hospitals and did charity work there; to turn the money over to some other existing foundation; or to create a new foundation to receive it. The ad hoc committee (later backed by the board) promptly chose the third option as by far the most suitable––a new foundation to carry forward the health, welfare, and other benevolent activities of the three hospitals.

On June 7, 1985, the Colorado Community Foundation was incorporated by the ad hoc committee. Its mission statement set forth two main principles: it would spend its moneys "to promote and enhance the health and well-being of the people of Colorado," and it would, as its name implied, serve not just the Denver area but communities all over the state. The ad hoc committee of five, plus four other people chosen by them––all previously connected in one way or another with the old P/SL hospitals––combined to form the board of the new foundation. On October 8, 1985, the new foundation received a wire transfer in the amount of $123,093,988. (Over the next few years, it would receive another $70,741,123 from Medicare finally processing presale billings from P/SL and from a large escrow account that had been set up to cover potential liability claims against the P/SL hospitals but never used. Thus, the total amount the Foundation eventually received from the P/SL sale exceeded $194 million.)

Says Rippey, the new foundation's first chairman of the board: "We wanted a health care mission for this new organization but realized it was an opportunity to expand the mission beyond simply caring for the ill. And everyone was comfortable with the statewide mission since there were so many opportunities to be of help around the state, where frequently there weren't many resources to tap."

However, the new foundation was committed to certain expenses under the terms of the P/SL sale agreement. The P/SL board had insisted, as part of its decision to sell, that the nonprofit organization receiving the proceeds must agree to make certain annual payments. The Foundation was therefore obligated to make annual payments to both the Presbytery of Denver and the Episcopal Diocese of Colorado in recognition of their role in helping to found Presbyterian and St. Luke's––an amount equal to 5 percent of that year's total grants. In 1997, for example, payments in the amount of $656,290 were made to each of the two organizations; the money ultimately goes to various charitable church activities.

In addition, there was a commitment to pay a qualified tax-exempt organization, later named as the Presbyterian/St. Luke's Community Foundation, an annual amount equal to 30 percent of all grant disbursements (excluding the payments to the two church groups) to finance continued medical research and education programs at the hospitals. The 30 percent formula had a ceiling of $5 million a year, but payments never rose that high; in 1991, the last year the Trust made such a payment, it paid $2.6 million. The money went to the Presbyterian/St. Luke's Community Foundation because the Trust didn't want to impair its own nonprofit status by giving it directly to the hospitals; moreover, it didn't want to become involved in administering medical research and medical education programs.

The proposed P/SL sale was submitted under federal antitrust statutes to the Federal Trade Commission for approval. It was also submitted to the Colorado attorney general, who, it was believed, might choose to exercise jurisdiction under common law. Neither replied. At that time, there was no requirement that the state approve the sale; demands for public scrutiny and government approval of sales of nonprofit hospitals came later. The Colorado Health Facilities Authority, a quasi-governmental state agency that issues tax-exempt bonds to raise funds to lend to nonprofit health groups, had to pass on the structure of the payoff to make sure that money was being put in escrow. This was done to ensure payment of interest due on the $40 million-plus tax-exempt bonds the Authority had issued earlier on behalf of P/SL and that AMI was taking over.

When the AMI-P/SL sale was agreed to in 1985, the press release announcing the sale got routine coverage in the local press and there was comparatively little public reaction, according to participants in the transaction. A few longtime donors to one or the other hospital and some of the doctors at each hospital voiced concern, but there was no organized outcry or major opposition.

Not quite one year later, in the spring of 1986, the board of the newly formed Colorado Community Foundation voted to change its name to the Colorado Trust in order to avoid any suggestion that it was a community foundation under the Internal Revenue Service's (IRS's) sense of the term. To head the new foundation, the board chose Bruce G. Rockwell, former president and chairman of the board of the Colorado National Bank and a longtime leader in the Denver philanthropic community. His initial title was executive director, but this was later changed to president. Rockwell was one of only five employees; the new foundation was starting small. The board also named as general counsel John R. Moran, Jr., a well-regarded bond lawyer who had been a consultant to P/SL during the sale negotiations with AMI. Moran eventually succeeded Rockwell as president.

The Trust's original mission statement––"to promote and enhance the health and well-being of the people of Colorado"––was made more explicit in 1991 and 1992 as part of the board's decision to overhaul its grant-making procedures. At that time, the trustees adopted two specific goals that reflected how the Trust intended to improve the state's health: "accessible and affordable health care programs" and "the strengthening of families." In its current announcements, the Trust declares that "to fulfill its mission, the foundation supports innovative projects, conducts studies, develops services, and provides education to produce long-lasting benefits for all Coloradans. Within the framework of human development, the Colorado Trust advances accessible and affordable health care programs and the strengthening of families."

As is the case with most nonprofit organizations and private foundations, the Trust board is self-perpetuating: existing members decide on its size and makeup, including the choice of new members. All nine of the original 1985 board members continued to serve until 1996. At that point, under rules adopted in 1990, the two oldest of the original nine trustees retired. Under these rules, the next two oldest of the original nine retired in 1998, three more will retire in 2000, and the final two will leave the board in 2002. The 1990 rules also instituted mandatory retirement at age 72 for future trustees.

The articles of incorporation of the Foundation specified that at least one-third of the board be doctors connected with Presbyterian or St. Luke's hospital, a provision that has since been loosened slightly. The rules still say that one-third must be doctors and that preference is to be given to those connected with Presbyterian or St. Luke's hospital, but P/SL affiliation is no longer absolutely required. Three of the original nine board members were indeed doctors on the staff of one hospital or the other.

Though the sale itself did not occasion much controversy, the makeup of the new foundation's board did draw critical notice. One complaint was that the Foundation board was controlled by Presbyterian/St. Luke's loyalists who would be sure to give the hospitals a helping hand whenever needed. "It gave the appearance of P/SL insiders having control of the Trust board," a local foundation official declares.

Another objection went to the fact that several members of the Foundation board who had been on the old P/SL board took positions on an oversight committee set up by AMI. The object, say those who joined the committee, was to provide some liaison for AMI with the Denver community and to try to make sure that AMI carried out its parts of the sale agreement. The committee was purely advisory and had no real power, these members say. Nonetheless, this dual membership––on the AMI oversight committee and on the foundation board––brought a scattering of conflict-of-interest charges in the Denver media.

AMI Seeks to Bail Out

In 1990, a new development came along to complicate the Colorado Trust's life. In 1987, and more so in 1988, AMI began to experience financial difficulties. Its cash flow was down, and it was having difficulty raising money to finance its new building programs. In the summer of 1989, the Pritzker family and several of its traditional business partners arranged a leveraged buyout, and in early 1990, it announced––as had been expected––that many of its properties, including those in Denver, were up for sale. At that point, AMI's Denver holdings consisted of the three P/SL properties, several new outpatient clinics, and the 261-bed acute-care hospital/medical office building under construction adjacent to Presbyterian.

A number of Denverites––including several members of the Colorado Trust board, several members of the old P/SL board, and many Presbyterian and St. Luke's doctors––had been taking note of AMI's financial troubles, and they decided to explore the possibility of organizing a new locally run nonprofit corporation to purchase AMI's Denver properties. A new organization, P/SL Healthcare System, was soon organized and approved by the IRS as a nonprofit 501(c)(3) organization.

At the same time, efforts were undertaken to raise the money for this purchase. Negotiations with AMI had established a purchase price of $101,781,000, a figure significantly lower than the $178 million AMI had paid in 1985. But the new P/SL Healthcare System would need a lot more money than that. It would require another $82 million to complete the big new hospital AMI had started, and many additional millions would be needed for initial working capital. The Colorado Health Facilities Authority would issue bonds to cover most of the new organization's needs, but substantial sums would still have to come from other sources.

One of the "other sources" to which P/SL Healthcare System naturally turned was the Colorado Trust. P/SL backers argued that since the Trust owed its existence to the sale of those long-established Denver hospitals, it had an obligation to help bring them back under local control. Members of the Trust board––practically all of whom had participated in the earlier sale to AMI––obviously felt that sense of obligation. All board members pretty much agreed that it was a good idea to bring the hospitals back as a not-for-profit under local control, and debate within the Trust board centered not so much on whether P/SL should be helped but rather to what extent.

Anticipating just such a request for help from P/SL, however, the Trust board had taken steps to defuse possible conflict-of-interest criticism of whatever decision it might make, Moran relates. The Trust's rules on conflict of interest specified that a trustee must disclose any possible conflict, that this must be noted in the minutes of the meeting at which the matter came up, and that the trustee would not be permitted to vote on that matter. However, the rules also stated that any trustee involved in a conflict-of-interest situation could still be permitted to state his or her position on the matter and answer questions from other board members.

Out of the Trust's nine board members, five had constituted the ad hoc committee (of the old P/SL board) that had organized and established the Trust. The Trust board agreed that these five must be disqualified from any decision on the new P/SL request for financial help. This left the decision to the remaining four board members, who were regarded as having no conflict of interest. These four were designated as a committee, with complete authority to act for the board in this matter––though with the additional safeguard that they would have to be unanimous in their decision. An outside counsel was hired to pass on the ethics of this arrangement, and he found the committee free from any conflict of interest and fully entitled to make the decision on behalf of the Trust.

These four trustees, Moran says, engaged two outside consulting firms for help. One firm, Brown, Bortz and Coddington, was to determine the impact upon the community if the hospitals were not saved by the new P/SL organization, while the second firm, Deloitte & Touche, was to assess the capitalization plan and financial viability of the new P/SL corporation. The two reports, along with other information, helped persuade the four members of the special transactions committee that it would be a good idea to give P/SL the help it needed. They then voted unanimously to provide a grant of $30 million and a loan of another $30 million, the loan (to be paid off over 25 years) taking the form of uninsured and taxable subordinate bonds carrying an interest rate below current market rates. This was considered a program-related investment, allowed under the Internal Revenue Code, Moran says. A full IRS audit in 1992 and 1993 took no exception to either the grant or the loan.

Rippey says that the five disqualified members of the board were being thoroughly briefed as the special transactions committee did its work and that everything they were hearing made the committee's decision seem the logical thing to do. "Getting the hospitals back into community hands––if all of us had voted, we would have all voted the same as those four did," he says.

"Since we had gotten the money from that source, it seemed fair for us to make a contribution to get it back into the community," Walker says. "Not a lot of analysis went into the amount. It just seemed the right thing to do."

In any case, in return for the new $30 million grant, which would save it several million dollars in debt service each year, the new P/SL group agreed to assume the Colorado Trust's commitment to provide the annual 30 percent grant to finance medical research and education at the P/SL hospital. That saved the Trust close to $3 million a year, money it could use for other grants. (The Trust's commitment to the Presbytery and Episcopal Diocese remained.) Finally, in April 1991, AMI's properties were transferred to the new P/SL Healthcare System.

The grant and loan gave the local media and many community activists new ammunition for sniping at the Trust. Despite the steps the board had taken to insulate itself from criticism, charges were made that a cozy old-boy network had been at work, and that the trustees were simply bailing out their old buddies at the hospitals. Several stories pointed out that the four members of the "special transactions committee" were hardly free from conflict, since two were doctors practicing at the hospitals and the other two had been members of the old P/SL board that had sold the properties to AMI.

"The grant and loan to the hospital system was highly unseemly," an official of another Denver foundation says. "A lot of people raised their eyebrows, but nothing happened."

Several stories noted that counting the $30 million grant and another $11 million in payments from 1986 through 1991 to the Presbyterian/St. Luke's Community Foundation for medical research and education, more than 40 percent of the Trust's total grant disbursements during those six years had gone back to P/SL hospitals.

Moreover, journalists and others asked what would happen to the money––both the state-backed bonds and the bonds held by the Trust––if the new company didn't make it. Weren't there already too many hospital beds? Why not let AMI keep the hospitals and swallow any losses? A sharp critique by Denver Post editorial writer Al Knight challenged the long-term prospects of the new P/SL Healthcare System and the propriety of the Colorado Trust loan to it. "As to the Trust's own mission statement, it says nothing about rescuing financially shaky hospitals," he wrote. He characterized the Colorado Trust loan as being "in the risky junk bond category."

Trust President Rockwell sought to refute the conflict-of-interest charges at the time, saying (according to the Denver Post), "We recognized there were a lot of problems involved with board memberships, both the old selling board, our board, and the creation of the new board. We were very sensitive to those issues." For that reason, they had set up the special transactions committee and hired an outside counsel to review the situation.

"We believe," he told the Denver Post, "that the return [of the hospital] to local management, the restoration of medical staff confidence in management coupled with completion of new facilities will result in an even higher standard of quality medical care in this community. . . ."

Despite these statements, friends say that while Rockwell definitely thought the hospitals should be returned to local control, he did have misgivings about the Trust helping out financially. In any event, not long after this Rockwell resigned and the board chose Moran as its new president.

Controversy over the grant-loan served to turn the spotlight on another Trust practice: the pay and perks of board members. The board awards its members a substantial annual retainer plus a per-meeting fee that now add up to as much as $24,000 a year; the fees were only slightly lower in 1991. Most board members get the full $24,000 and the others come very close, losing $600 for any meeting they miss. Critics at the time of the grant and loan to P/SL (and critics today) charged that the fees were very fat fees for being on the board of a nonprofit foundation and that directors of most other area foundations were either unpaid or received only modest fees.

In rebuttal, Moran notes that until this year trustees met at least twice a month––typically from 90 minutes to three hours each time––plus one day for an annual retreat in addition to occasional committee meetings and special board meetings. This year the twice-monthly meetings have been combined into one much longer monthly meeting. "I tell prospective candidates to expect a minimum of 72 hours a year of meetings, plus other work for the foundation," Moran says. "Board membership involves the responsibility of administering a very large asset base." Moran doubts that any trustees do it for the money. "There is an excitement about what we're doing," he says. "The board members have the view they are participants in very interesting work."

"We were also paid as directors when it was a nonprofit hospital back in the 1980s," Walker recalls. "John Casey said he wanted directors who were good and whom he could call on at any moment." As for the payments by the Trust, he says, "We intended to be a hands-on board. We were asking for a lot of time from people who were working hard at other jobs at the same time."

The criticism flared up again briefly when the Denver Post revealed that five members of the Trust board also served from 1991 to 1993 as members of the new P/SL Healthcare System board at similarly generous fees. Each was making between $30,000 and $40,000 a year in combined fees from P/SL and the Trust. "All the old boys who were associated with the [Presbyterian and St. Luke's] hospitals ended up on two boards, the Trust and the new hospital corporation, with nice fat incomes," the head of a local foundation says.

More recently, local reporters revealed that the Trust not only provides two-for-one matching, up to $5,000 a year per person, for charitable contributions by both staff members and board members, but since 1995, has also allowed each trustee and officer to direct up to $50,000 a year to any Colorado charity he or she chose so long as it worked in the same areas the Trust did. Again, this was attacked as a far more generous perk than most companies or foundations provided. Moran notes that these directed contributions typically go to nonprofits that provide direct services to Coloradans and "are an acknowledgment of the value of nonprofits in our Colorado communities."

To bring the hospital side of the story up to date, P/SL Healthcare System completed the large new hospital/office building that AMI had started, integrated it with the old Presbyterian, and then closed St. Luke's. St. Luke's stood empty for several years and ultimately was razed.

About a year after it acquired the AMI properties, P/SL Healthcare System merged with the suburban-based Swedish Medical Center to form HealthONE, which would still be obligated to the Trust for the $30 million in bonds. In 1994, Columbia/HCA Healthcare Corp. entered the Denver scene by taking over Rose Medical Center, a leading nonprofit hospital closely connected to the Jewish community, and later, Columbia and HealthONE entered into a 50-50 joint venture. Included in that deal was the requirement that Columbia pay off HealthONE's by-then almost $400 million debt, including what it owed the Colorado Trust. Thus, the Colorado Trust was ultimately repaid its $30 million loan, including accrued interest and a premium for premature redemption.

A final note: Casey, who back in 1985 was CEO of P/SL Healthcare Corp. when it was sold to AMI, several years and two jobs later, joined AMI in 1991 as president and chief executive officer and remained in that post until 1995, when National Medical Enterprises took over AMI and formed Tenet Corp. When he joined AMI in 1991, Casey says, the sale of the Denver facilities to the new P/SL Healthcare System was virtually completed.

The Trust Today

Careful investing and the stock market boom have increased the Trust's assets from the original $124 million (plus the additional $70-plus million from the escrow account and Medicare payments) to $354 million as of June 30, 1998. The foundation raises no money and receives no bequests or grants; its sole income is from capital gains and earnings on investments. Investments are overseen by a finance committee of the board, subject to full board review. The Trust's investment goal, Moran says, is to earn enough each year to cover inflation plus the amount required for grants and administration.

The Trust's 1997 grants amounted to $15,613,078. This figure includes the payments to the Presbytery and Episcopal Diocese, evaluation expenses, and a good part of salaries and overhead. Grant administrative expenses totaled $2,132,248, and investment expenses (including legal fees and parts of overhead) were $2,782,593. Top people are well paid. Moran's 1997 salary was $163,368 plus a $47,969 contribution to his retirement plan. Peter A. Konrad, vice president for administration and chief financial officer, was paid $131,046, with an additional retirement plan payment of $16,250, and Jean D. Merrick, vice president for programs and public information, received $125,575 plus a $15,624 retirement plan payment. All three have been with the Trust from the beginning.

The Trust's current 20-person staff occupies a large historic building in downtown Denver. Built in the 1920s, the neoclassical building was long owned by a life insurance company, but the company encountered financial difficulties in the 1980s and went out of business in 1986. The building stood vacant for several years and was then leased briefly by the Denver Chamber of Commerce. Then, in 1993, after leasing the building for two years, the Trust bought it and two adjoining properties at what Moran calls a firesale price. The Trust completely renovated the building––rewiring it, installing an elevator, and refurbishing the interior decorations. The building's huge, two-story central hall is surrounded by impressive columns and arches and has an ornately decorated ceiling. An adjoining taller office building houses several nonprofit organizations and state agencies, while the other adjoining property provides parking space for Trust employees and employees of the tower tenants.

As new trustees have been chosen, the board also has become more diverse. Originally there were eight men and one woman; now the ratio is six to three. The composition of the board also has shifted from banker/business types (except for the three doctors) to include more traditional community workers. For example, the two new board members elected in 1996 were Jean Jones, executive director of the Mile High Council of Girl Scouts, and Sister Lillian Murphy, president and chief executive officer of the nonprofit Mercy Housing, Inc. Two more members were elected in 1998––Dr. Jerome M. Buckley, chairman and chief executive officer of COPIC Insurance Company, and Judith B. Wagner, a security analyst and portfolio manager who heads Wagner Investment Management, Inc. New board members are chosen for five-year terms, with the right to a second term providing they don't bump up against the age ceiling of 72.

Early Grant-making Policy

The Trust's first grants were made in 1986, one year after it was created. Most grants during its first five or six years were fairly traditional, providing broad-based support for existing strong nonprofit organizations that offered beneficial medical and social services. Almost all grants were in response to specific requests submitted to it. Merrick describes the grants during these early years as "somewhat scattershot."

In the Trust's first annual report, for 1986, Rockwell noted that the Trust had received almost 300 "meritorious" proposals, requesting a total of $80 million, and had approved slightly more than $7 million in grants, including the funds required for medical education and the two church organizations. The University of Colorado Health Sciences Center received $500,000 in challenge funds for a new chair in internal medicine and another $300,000 to help establish health clinics in the Denver schools. Grants of $250,000 and $200,000 were awarded to the Salvation Army and Samaritan House, respectively, to provide shelter for the homeless. Goodwill Industries received $250,000 toward new job-training facilities in Denver. The Trust's first statewide initiative, designed to help rural communities develop local health care systems, received $625,000.

One grant that drew media attention gave $1 million to the Colorado Amateur Sports Corporation to help set up a U.S. Olympics Hall of Fame in Colorado Springs and to develop a sports medicine program. (The grantee, incidentally, failed to use the grant, and the Trust asked for and was returned the money.)

During the early years, there was what Moran describes as "healthy discussion" (and what other onlookers call "considerable skirmishing") among the staff and between the staff and the board over the future direction of the Trust. Rockwell tended to favor more help for existing strong community service organizations, the doctors on the board urged more for medical research, and several board members searched for programs that would make a bigger splash for the Trust.

Finally, in 1992, the Trust did switch directions. At the board's annual retreat in 1990, several board members asked insistently how they were to know whether the Trust was making any real difference. Was it really addressing the problems that needed addressing? They suggested that the Trust carry out a broad survey of economic, social, and technological trends likely to affect Colorado over the next five to 10 years. That way, they said, they might be able to develop a more coherent plan for the Trust's future.

A major research effort was undertaken by Trust research director Walter F. LaMendola, aided by a large number of consultants and regional review panels. The result was a huge report entitled, "Choices for Colorado's Future." In the fall of 1991, the findings were presented to the board, and they were made public in the spring of 1992.

The report didn't present a very rosy scenario for the decade ahead. It predicted that the gap between the state's rich and poor and the state's educated and illiterate would continue to widen; that demands would grow for health, education, and other basic social services but that the capacity of government to meet those demands would decrease; that technological advances would continue to occur so rapidly that they were likely to be implemented without adequate consideration of their impact and consequences; and that conflicts would sharpen between economic practices and the preservation of the state's natural resources.

The survey indicated that one way for the Trust to have greater impact was to involve local citizens and organizations more deeply in solving community problems––to help build "community capacity." The board decided to adopt this "initiative" approach as its future funding strategy.

The Trust would no longer consider or accept unsolicited requests from organizations seeking financial help. Instead, through continued surveys and consultation with advisors throughout the state, members of the Trust staff would research needs in the state and analyze how Trust money could best be spent to improve the health and well-being of Coloradans. The board would consider and refine the staff plans, and the Trust would then announce a detailed description of a specific new "initiative"––to build healthy communities, to reduce youth violence, to improve school health education programs––and invite local organizations to submit proposals for receiving Trust funds under the initiative.

Those communities that seemed to have a worthwhile project in mind and some sort of organization capable of carrying it out might be given a planning grant––to be followed later by an implementation grant. If the community proposal seemed fairly well developed, the Trust might give both a planning and implementation grant right at the start. For each initiative, the Trust would contract with a managing agency––an organization with experience and expertise in that particular subject area––to provide technical assistance to help the communities put their plans in place. For example, the National Civic League would administer an initiative called the Colorado Healthy Communities Initiative.

The Trust's official explanation of initiative-based grantmaking to community-based organizations describes it thus: "In contrast to many other foundations, the Trust funds programs within an initiative framework. Under this approach, the Trust (a) establishes objectives that it believes to be important milestones in the advancement of its two goals; (b) based on empirical research, establishes approaches that appear able to achieve those objectives; and (c) recruits, through a request-for-proposal process, organizations that are interested in implementing those programs. Most initiatives last for three to five years and involve a number of grantees from throughout Colorado." Actually, many initiatives last longer, being renewed after the first three to five years are completed. Each initiative involves constant evaluation by either Trust staffers or outside consultants.

"We had moved from reactive to proactive," says Moran, who by then had replaced Rockwell as Colorado Trust president. The initiative approach, he adds, was one way to carry out the Trust's mission of covering the entire state, since it allows counties, small towns, school districts, hospitals, and other groups from all over to come up with their own ideas for attacking local problems. Also underlying the new emphasis on building "community capacity" is an argument most fully advanced by Doug Easterling, the Trust's director of research and evaluation, that "a growing body of research indicates that an increase in community capacity produces tangible payoffs in health status."

The definition of just what constitutes a "community" can vary widely, says Merrick, who was one of the staunchest advocates of moving to the initiative approach. "We allow communities to define themselves," she says. "A community can be a Denver neighborhood, or six counties joining together, or a string of cities along the I-70 corridor. Does their definition make sense to us? Then it's okay."

The Trust's requests for proposals under the initiative approach require a tremendous amount of detail from the applicants. For example, the Summit County Youth and Family Services' application for a Violence Prevention grant covers nine single-spaced pages, answering at considerable length and specificity questions that range from "What is the target population to be addressed?" to "What lessons have you learned from previous planning efforts?" The nine pages of answers are then followed by five more pages of precise proposed budget details.

About the time it was moving to the initiative approach, the Trust also moved away from a traditional, relatively narrow concept of what constitutes health care to what is in effect a very broad World Health Organization concept. Or, as the Trust puts it, "a broad definition of health that goes beyond the absence of disease to address underlying factors that create a high quality of life." In this approach, health is construed as including a clean and safe physical environment, a good educational system, a diverse and vital economy that provides people with good jobs and decent housing, and a number of other ingredients along with––of course––high-quality, accessible health care.

It was in connection with the change in grant-making strategy that the trustees added the specific goals of "accessible and affordable health care programs" and "the strengthening of families" to the Trust's overall mission statement. The broader definition of "health" completed the change in approach.

The Trust currently has under way 15 initiatives and one special project. Seven of the initiatives are grouped under the overall heading of "accessible and affordable health care programs," and the other eight fall under "the strengthening of families." The special project is a seven-year, $2.1 million program to train Coloradans as future managers of nonprofit organizations. Since the spring of 1996, 37 graduate students have been chosen as "Trust Fellows" for the program conducted at Regis University, and additional fellows will be chosen in 1999 and 2000.

Ten years ago the Trust began publishing an elaborate newsletter, The Colorado Trust Quarterly, filled with information about Trust initiatives. However, Trust officials recently decided that people no longer wanted to wade through so much written matter and replaced it with a compact monthly folder, "QuickRead," aimed mainly at highlighting new funding opportunities. The Trust also maintains a Web site (www.coltrust.org) with information about current and future activities.

Current Trust Grantmaking

Among the Trust's more extensive current initiatives are these:

The Colorado Healthy Communities Initiative was the first major initiative launched after the Trust announced its new grant-making approach in early 1992. It was a five-year project and later extended to run through the year 2000, with a total expenditure of just under $9 million. The goal is to have local citizen groups undergo a comprehensive planning process to figure out what disease prevention or health promotion projects would be most helpful and practical for their community and how they would use Trust money to carry out the project. As already noted, the project is administered for the Trust by the National Civic League. Twenty-eight communities have taken part, with the term "community" ranging from a single town or city to a group of six neighborhoods in northeast Denver and a string of five towns along I-70.

But health is defined very broadly. Three counties in the Aspen and Parachute Valley area, for example, have joined to try to develop better local transportation systems so that local residents can get more easily to service jobs in the vacation communities. Several communities are using Trust grants to study the problems created by recent growth and/or to hold meetings at which local residents can discuss those problems. In northeastern Colorado, six counties have been cooperating on a major recycling effort.

Fifteen of the communities have received additional grants to develop and use a "Healthy Communities Index," a set of indicators of community health and well-being that will be regularly collected and reported to the community: how many children have been immunized, the ratio of health care workers to population, the quality of the air, the distance people travel to work. The grantees have organized a Healthy Communities Council, a statewide network to exchange information and experiences. The Council holds regular meetings, publishes a newsletter, and maintains a Web page (www.peaknet.org.).

As distinct from the Healthy Communities Initiative, which involves large-scale, community-wide planning efforts, the Community Action for Health Promotion Initiative involves small grants to small grassroots organizations––a total Trust commitment of $4.5 million for the five years from 1995 to 2000. More than 50 communities have received small grants––up to $10,000 a year––to conduct a community health needs assessment and develop plans for specific health promotion and disease prevention projects. Each program must involve local public and private cooperation.

"This program works with groups that probably wouldn't get help anywhere else," says Susan Hill, director of Colorado Action for Healthy People, the nonprofit organization that administers this initiative for the Trust. "At least half have never had any experience in building local capacity to do things. It's really exciting to watch them begin to put things together."

In one Denver neighborhood with aging houses, many elderly people were reporting that they had had bad falls at home. A citizens organization applied for a grant to carry out home safety audits. A volunteer electrician put in new outlets to do away with the need for treacherous extension cords. Volunteers scavenged the neighborhood alleys and dumpsters for discarded lumber to build ramps.

To deal with a large number of infant injuries due to improper use or non-use of car seats, the Delta County Health Department is using a Trust grant to try to get more parents to use car seats or to use them properly. For instance, parents getting a car seat earn a $5 rebate if later they get a friend to come in for one. To reach migrant workers, employers are putting "how to use your car seat" stuffers in pay envelopes.

A small, largely Hispanic, rural county in south central Colorado is seeking to reduce child abuse and spousal abuse in the families of children enrolled in the local Head Start program; one key element in the effort is a discussion/support group at which the fathers discuss parenting problems.

The Colorado Violence Prevention Initiative, a four-year, $6.4 million project started in 1995, aims at reducing violence in Colorado communities––but each grantee community decides whether it wants to tackle youth violence, child abuse, spousal abuse, or some other type of violence. Grants of $75,000 to $225,000 per community––$130,000 over two years is the average––have been given to 15 community organizations that had already conducted "a comprehensive, community-wide violence prevention planning effort." Another 11 communities have received small grants to undertake a planning process, the completion of which will then make them eligible for implementation grants. The program is administered for the Trust by the Center for Public-Private Sector Cooperation at the University of Denver, and technical assistance is provided to all communities by the Center for the Study and Prevention of Violence at the University of Colorado at Boulder.

Several grants have gone to groups that seek to provide elementary school children with training in how to manage their anger, how to deal with bullies, and how to use peer mediation to resolve disputes. The North Colorado Medical Center Foundation in Weld County has developed guidelines for social service agencies and law enforcement personnel to use when dealing with abuse of the elderly––a methodical process to assist in identifying, reporting, and tracking elder abuse. The Northeast Denver Housing Center drew up a "safe neighborhood" plan identifying five particular buildings as contributing to local violence. It then organized the residents, housing managers, school officials, police, and others in and around those buildings to get rid of the drug dealers, prostitutes, and gangs.

In Archuleta, a citizens coalition decided, after consulting with local teenagers, that the best way to reduce adolescent violence was to provide after-school activities for seventh to twelfth graders. The county used the Trust grant to organize after-school tutoring, an after-school art program, a monthly magazine the teenagers could work on, and school-to-work training classes.

A second major component of the antiviolence initiative involves a statewide public education and awareness campaign funded by the Trust and conducted by local station KRMA-TV. The station's efforts have included a statewide teleconference for community activists in 25 communities, which focused on a discussion of the root causes of violence and possible ways of reducing it; short television fillers about people who have made a difference in a community's fight against violence; new curriculum materials to teach children how to cope with stress and anger; and a new curriculum that seeks to teach school children how to view critically all the violence they see on television.

The third component of the antiviolence initiative has the Trust dipping its toes into a highly controversial area: guns. It has given $100,000 to the Center for the Study and Prevention of Violence at the University of Colorado at Boulder to study gun violence among Colorado youth––how young people get access to guns, how Colorado youths' use of guns compares to national trends (homicide rates lower but suicide rates higher), whether any intervention or prevention programs have been effective in Colorado or in other states. Researchers hope to have their first report ready in early 1999.

The Teen Pregnancy Prevention 2000 Initiative is a five-year, $7.5 million program to help five communities develop and carry out strategies aimed at reducing teen pregnancy, largely by seeking to increase community awareness of the problem and by developing a community willingness to devote more resources to the problem. Teen support groups and mentoring by older people are common ingredients, and efforts to get schools, service agencies, parent groups, and others all working together on the problem are another important part.

A second component of the program provides "case management" to assist those teens who do become pregnant. In one community, this may simply be a referral service, while in another, it might involve more traditional counseling, with a nurse or social worker trying to make sure the pregnant teenager sticks to a healthy lifestyle, stays off alcohol and drugs, gets proper medical and neonatal care, and intends to return to school after giving birth.

Arvada's teen pregnancy program is called A STEP UP, an acronym for Arvada Supports Teens' Efforts to Prevent Untimely Pregnancy. Designed by a 60-member board that included local church leaders, school officials, officials of local social service agencies, and other residents, this program features mentoring programs that target at-risk youngsters in late elementary school and middle school as well as educational programs that emphasize abstinence and proper precautions.

The Assets for Colorado Youth Initiative was launched in January 1997 and is to run for five and a half years, through 2002, with a Trust investment of $10 million. It is based on an approach developed by Peter Benson and his Search Institute in Minneapolis, which claims to have identified 40 "developmental assets"––qualities and experiences––that children and adolescents need in their lives. The more "assets" the child or adolescent has, the better his or her chances of developing into a successful, responsible adult.

These "assets" include such varied items as family support (Does the family eat together? Do parents help with homework?), a feeling of safety, the ability to meet people of different racial and cultural backgrounds, positive adult role models and positive peer influences, having a useful role in the community, knowing how to take responsibility, and knowing how to plan ahead. The idea behind the Trust initiative is to promote ways that families, schools, religious groups, youth organizations, businesses, and other local organizations can help provide children and adolescents with more of these assets. The Search Institute will carry on a statewide campaign to educate the public and raise awareness of the assets approach, make grants to individual communities that have promising programs, provide resources the communities can use in their programs, and provide networking to help involved communities learn from one another.

For example, Catholic Charities is training staff members of 40 community organizations in Denver in the assets approach and how to apply it in working with young people and their families. Six school districts in the Colorado Springs area are using a Youth Initiative grant to figure out ways local schools can provide students with a more caring climate.

Some Trust initiatives aren't aimed at building community-based problem solving but rather at carrying on research to develop new or more effective health promotion programs. The Home Visitation 2000 Initiative, for example, provides service to young women who are about to have their first child. A nurse or trained paraprofessional helps these women with health and other needs, offering services they might not otherwise seek or be able to afford. The visiting starts when the woman knows she is pregnant and continues until the child is two years old. Director David Olds, a developmental psychologist, has since the early 1970s been testing the possible benefits––in terms of maternal health, birth outcomes, infant health and development––when this service is performed by a nurse. The Trust gave Olds a six-year, $7.1 million grant to test whether a nurse or a trained paraprofessional gets better results. The visits under the Trust program started in 1994 and are now finished, and Olds and his staff expect to finish analyzing and release the results in early 1999. The Trust grant covers dissemination of the findings to policymakers and other home visit practitioners.

The Interconception Health Promotion Initiative seeks to help women who have had a bad birth outcome––miscarriage, congenital anomaly, low birthweight baby––and yet want to try again. A nurse or other caseworker visits these women, tries to figure out what might have gone wrong in the previous birth, checks out possible genetic causes, counsels them on better health habits, works with the fathers, makes sure the women get proper medical care when they do become pregnant, and refers them to the appropriate agencies to get whatever additional help they need.

"It was the Trust's idea," says Mary Martin, who coordinates the project at the Denver Health and Hospital Authority. "They had heard that a number of doctors were concerned about the number of repeated poor birth outcomes, and the Trust did the research and saw the need for this sort of program."

Not only have a number of women in the program had subsequent successful pregnancies but none have needed the intensive care units or other expensive medical help required in the earlier pregnancies. The initial Trust grant ended in December 1998, but the Trust's board recently awarded another 18-month grant to the project to refine the model and prepare the findings for possible dissemination to other health care facilities.

In addition to its research initiatives and those aimed at building community-based problem-solving capacity, the Trust notes, an important Trust interest is helping to get expert people together to consider and suggest possible answers for basic changes in the health care system. The Trust has, for example, joined the Colorado Medical Society and the Rose Community Foundation in supporting the Coalition for the Medically Underserved, a 35-member group that is brainstorming to develop new ideas to improve access to quality health care for the medically underserved. A report issued in September 1998 suggested the first steps the Coalition thinks must be taken to ensure that by the year 2007 "all Coloradans have unimpeded access to affordable, quality health care and prevention programs."

"We are sketching out a roadmap for where we want to be by 2007 and how we think we can get there," says Chet Seward, director of health care policy at the Medical Society.

When the panel does make its proposals, Moran says, "we hope there will be advocates for them in the public arena, but we will not be advocating them ourselves." He says there is a "general disposition" on the part of the Colorado Trust board and on his part to avoid the political process. "If we are invited to talk about some legislative proposal and we have relevant information, we will be glad to provide it," he says, but Trust officers and staffs will not get into anything that might be construed as lobbying.

The Trust has also been helping to underwrite the work of the Colorado Collective for Medical Decisions, a nonprofit organization seeking to develop community-tested guidelines for appropriate end-of-life medical care––for the terminally ill, the permanently vegetative, the newborn with lethal birth conditions. In its efforts to shape guidelines that might be broadly acceptable, the Collective has been conducting focus groups, surveys, and other types of interviews with doctors, nurses and other caregivers, patients and their families, religious leaders, and many other men and women. The Collective is also studying the legal implications of such guidelines, trying to develop a model for resolving conflicts between doctors and families regarding end-of-life decisions, and establishing a speakers bureau to facilitate local discussions of these issues.

"It's a first step, just to see whether the medical community would endorse some sort of guidelines," Rippey says. Moran holds the view that the guidelines are endorsed by the medical community and adds that now that the concepts have been developed, "they are in the process of being subjected to community input––professionals, community leaders, faith leaders."

A key component of practically all Colorado Trust activity is a thorough evaluation of its projects. A three-person evaluation unit is headed by Easterling, and the Trust hires academics and research firms to do independent evaluations of each initiative. Moreover, practically every grant involves self-evaluation by the grantee.

Each Trust evaluation has three objectives, Easterling says: to see how well the initiative is achieving the objectives set for it by the staff and the board; to find ways to increase the initiative's effectiveness, either by improving the program design or identifying the types of settings where it has proven particularly effective; and to help the Trust refine its grant-making techniques. Evaluations are done while the initiative is in process so that regular feedback can bring immediate changes to improve the project, but the evaluation also tracks long-term outcomes. Evaluation results are used to guide the Trust staff and board in future grants. They are also given to the grantee for its use and may be used to guide other grantees.

"We have to be very careful not to feel we have to keep on finding new initiatives," board member Rippey says. "The research and evaluation is beginning to show us where we are hitting home runs. If we find we are making inroads into some of these problems, we'll go back and expand funding." He admits it's probably unusual for a foundation to have three out of 20 employees working on research and evaluation, and he says he had to be convinced that evaluation was a useful exercise. He became convinced when the Trust switched to the more proactive approach. "We are rolling the dice for big bucks," he says, "and the only way we can tell whether we are stewarding this money properly is to keep track of what works." As a rough guide, he says, the board doesn't want to spend on research and evaluation an amount that is more than 10 percent of a particular grant, though this limit has been exceeded marginally in particular cases.

Criticisms and Lessons

Certainly the Colorado Trust has its critics, extending beyond those who complain about fat fees for the board members.

"It has all this money and yet it's not seen as having much impact on health policy," says one academic who follows health affairs closely. "Physicians on the board don't want to see anything that might inform or affect the practice of medicine." Similarly, a community activist criticizes the Trust for not becoming more closely involved in the ongoing debate over a proper health care system. "What do they do," she demands, "to influence public policy, to contribute to the debate about how public resources are used to meet unmet health needs? How can you pretend to be a health foundation and not try to influence health policy?" Moran replies that this criticism just won't wash, and cites the Trust's support of the Coalition for the Medically Underserved and other activities aimed at improving the health care system. He also argues that the Trust's philosophy is to influence public policy through its initiatives and through the communities with which the Trust works, believing that if change is warranted, the Trust's grantees and the communities will become the forces for change.

Mary Boland, vice president of the Catholic Charities in Denver, regrets the Trust's reluctance to put money into direct care for the poor and indigent. "There are community health clinics across the state that treat street people, migrant workers, abused women," she says. "Here's where the Trust ought to be putting at least some of its money." A recent Trust grant of $2.5 million to the Denver Health Medical Center, matching a $2.5 million Kellogg Foundation grant, is aimed specifically at helping the Center improve health access for uninsured families and other poor Coloradans.

Colorado health activists did manage this year to get legislation enacted requiring state approval of nonprofit hospital conversions and guaranteeing local citizens more notice of such transfers and an opportunity to voice their views. But the Presbyterian/St. Luke's conversion back in 1985 was at most a very remote factor in the passage. Support for the bill stemmed far more from publicity about recent conversions in other states and concern over a pending proposal by Blue Cross and Blue Shield of Colorado to change from nonprofit to for-profit status.

In 1996, in response to these more recent developments, Colorado enacted strong legislation requiring that any nonprofit health insurance company converting to for-profit status must hand over its assets to an independent nonprofit foundation. That law also required advance notice to the Colorado insurance commissioner, public hearings, approval by the commissioner, and public nomination of the board of the foundation getting the proceeds of the conversion. A hearing by the state insurance commissioner on the Blue Cross/Blue Shield request had been scheduled for the summer of 1998, but in early June, the insurer asked for a delay until September 1999, claiming that market conditions for managed care stocks were "too volatile" for Blue Cross to proceed at that time.

In early 1998, the state legislature passed and the governor signed into law a measure with similar restrictions for nonprofit hospitals and other nonprofit health care organizations, except that the process would be overseen by the Colorado attorney general rather than the insurance commissioner. The new law is strictly prospective, however; neither the Colorado Trust nor the Rose Community Foundation would in any way be affected.

"Changes in the health system have been so radical," says Moran, "that there may not be any more conversions." But a community activist counters that "there are still plenty of hospitals around the state that are prospects for takeover, and this law will give the affected communities a chance to take part in the process."

Moran says that if there are indeed more conversions, "the single most important thing is for the participants to be totally open and communicative with the public and with any group or community being affected." He believes that a nonprofit hospital has "an overriding responsibility to be completely open and frank with the community it serves. No spin. Play it straight."

But he also thinks that "the lessons should run both ways. Some regulators today feel that if an asset sale is occurring at all, it must be suspect, that it's somehow inappropriate. I don't think that is the case. These people [people in the hospitals and the foundations] are upright and ethical. It's unfortunate if a few foundations do things that bring the rest of us under scrutiny." For example, he says, "it's not automatically wrong if people from the seller's board go onto the board of the acquiring company. That provides some continuity in the organization's culture."

Former Trust President Rockwell sees it differently, though. "When these foundations are set up," he says, "they must have a completely independent board, one that is not involved with the selling or the buying hospital. It should be an independent board with a highly professional staff."

And Rippey sees arguments on both sides of the conflict-of-interest problem. "If we were doing it all again," he says, "it probably would have been cleaner or better if those of us setting up the foundation had severed all connections with the hospitals" and not served on the AMI advisory board or any other hospital board. "But we had the experience with the hospitals and felt we knew why we had done what we had done and that we should stay with it."

Summary

The Colorado Trust, one of the earliest conversion foundations, was created in 1985 from the proceeds of the sale to American Medical International of three Denver nonprofit hospitals––Presbyterian, St. Luke's, and Aurora Presbyterian.

A small, five-person group from the selling board organized the new foundation, and they and four additional Denverites, also connected with the three hospitals, became the first Colorado Trust board, choosing as its mission the promotion and enhancement of the health and well-being of the people of Colorado. Several years later, when the same trustees adopted a new grant-making strategy and a broader definition of "health," they added "accessible and affordable health care programs" and "the strengthening of families" as specific goals within the general mission statement.

Though the Federal Trade Commission and the Colorado attorney general were notified of the proposed sale, neither responded, and no further government approval was needed except to qualify the new foundation for tax exemption as a nonprofit 501(c)(3) organization under the Internal Revenue Code. The Trust each year files with the Internal Revenue Service the 990PF financial report required of all private foundations; there is no other direct supervision by federal, state, or local governments, though Colorado fiduciary laws and the federal Internal Revenue Code provide general standards of responsibility.

Early Trust philanthropy was fairly traditional––grants of money in response to specific requests for help from established nonprofit organizations working in health and related fields. In the early 1990s, however, as part of an effort to achieve greater impact and greater visibility for the Trust, the board announced it would stop accepting unsolicited requests for support and instead would disburse money only for certain "initiatives." These initiatives would seek to build the capacity of local community organizations throughout the state to plan and carry out plans for handling local health problems. The Trust staff would research and make recommendations, and the board would refine and earmark funds for, a specific initiative to deal with a specific problem area––for example, health promotion or the reduction and prevention of violence or teen pregnancy. Local community organizations would be invited to submit detailed proposals telling how they would use Trust grants to carry out the initiative's goal locally. Intensive evaluation also became an important part of Trust grantmaking.

The Trust has frequently come under criticism from local media and community activists for having sustained too close a relationship with the hospitals whose sale created it. In the early years, several members of the Trust board continued to serve on an advisory AMI board, and the Trust was also obligated to make substantial annual contributions to another foundation to finance medical research and education at the hospitals. This criticism became particularly strong in 1991 when a local group of doctors and citizens formed a nonprofit corporation to buy the Denver hospital properties from AMI, and the Trust gave the corporation $30 million and loaned it another $30 million toward the purchase price. Complaints have also been voiced about the substantial fees the board pays its members.

There continues to be dispute in the community about the sale of nonprofit hospitals; some of those involved in the 1985 sale to AMI still see nothing wrong with the way relationships were maintained, while other community leaders take a distinctly opposite view.

In any event, the Colorado Trust continues to learn from its less-happy past experiences and from its current initiatives and is working diligently to use its substantial resources to improve the health of Coloradans.