Why – and How – to Boost Healthcare Philanthropy
By Ashley Buderus, Mark Andrew and Jim King
Healthcare is going through tremendous financial upheaval. Margin constraints and budgetary pressures are forcing hospitals, health systems and other organizations to search for new means of funding key programs and projects. A recent Kaufman Hall Flash Report suggests that margins, which have decreased steadily in recent months, figure to remain flat for the near term.
This is happening without an appetite from Congress for additional dollars to support hospitals and other providers. The net means that everywhere we turn there are headlines about massive losses year over year, staff lay-offs and budget cutting. There is little room, of course, to further increase patient fees. What does this mean for philanthropy? Two things in particular:
Healthcare organizations are increasingly dependent upon contributions from individuals, foundations and corporations. Philanthropy is becoming a strategic imperative and source of new revenue for hospitals and health systems. According to the Association for Healthcare Philanthropy’s 2021 Report on Giving, the average hospital or health system foundation returned $4.16 for every $1 invested. Some saw more than twice that. Therefore, charitable giving is critical. AHP notes it takes about $75 in gross patient revenue to have the same net income impact as $1 in charitable giving. That’s a remarkable statistic.
Not surprisingly, healthcare philanthropy is expanding. According to the Blackbaud Institute, giving to healthcare foundations and charities is increasing annually by roughly 10%, with online giving ascending in importance. Research suggests that supporting access to basic health services, mental health and medical research are some of donors’ favorite causes and will continue to be in the future. Younger donors are particularly valued and targeted as a source of giving, as are smaller donors who – when added together – can make significant contributions.
What the Dollars Can Do?
Philanthropy can help healthcare organizations meet rising needs, such as:
- Equity and Access. Fidelity Charitable’s 2021 survey showed that donors found “access to basic health services” their second priority, following hunger.
- Population Health. “There are unlimited opportunities for donors to fund population health initiatives at every interest level and financial level such as providing start-up capital for new models of care, services and programs that are not covered by insurance, and community programming extending outside the walls of the hospital,“ writes Amy Dorrill of Accordant Philanthropy.
- Mental Health. Wealthy donors have shown an increased willingness to help advance mental health programs, as “many are becoming more comfortable talking about their personal experiences with mental-health challenges,” writes Maria Di Mento. Philanthropists are leaning into mental health initiatives and finding ways to partner with healthcare organizations in this critical mission. The Children’s Hospital Colorado Foundation recently received a $15 million donation to advance Children’s Colorado’s mental health key initiatives with a focus on expanding and developing the organization’s mental health workforce. This was the largest donation for the private foundation and the largest single gift that Children’s Colorado has ever received.
- Staffing Retention. Attracting and retaining clinical staff remains a key priority for hospitals. From providing nurses with tuition reimbursement – and even free educations – opportunities to funding clinical chairs that attract and retain the best medical teams, philanthropy can play a critical role in helping organizations keep talented staff.
How to Capitalize on These Trends?
How can healthcare philanthropy executives move ahead and achieve greater impact in their work and with the funds they are able to secure? The following are practical recommendations:
- Evaluate philanthropic teams. Over the past several years, donors’ interests and employees’ priorities have evolved. To engage top philanthropists, healthcare organizations need to create dynamic teams that can engage philanthropists in meaningful conversations, and establish lasting relationships with organizational leaders. “Transformational donors want to co-create big visions” with those organizations to which they give, says Sharon McMeel, chief development officer of the Children’s Hospital Colorado Foundation. “They want to walk alongside the leaders to help inform and have collective ownership.”
- Strategically grow your team. Philanthropy is a relationship-based business and requires a collaborative team that can relate to donors and translate hospital priorities into meaningful gift discussions and impact reports to steward gifts effectively. To succeed, organizations must hire the right people, at the right time, into the roles that match the organization’s current needs and priorities. Allowing work-from-home schedules is one way to retain a diverse, top-tier staff.
- Clearly articulate priorities. Impactful leadership requires people to engage with each other in ways that build value. Organizations must ensure that fundraising efforts are “aligned with the institution around big ideas that attract big gifts,” says McMeel.
- Lean into grateful patients’ and families’ philanthropy. Grateful patient fundraising has evolved over the past decade. Many of our clients share that their physicians and healthcare professionals are more aware of how to partner with philanthropic partners to help identify and engage potential grateful patients. To continue to accelerate grateful patients’ and families’ philanthropy, it is critically important that development staff demonstrate the highest level of professionalism, discretion and collaboration with patients and caregivers alike. Many of our clients look to hire a point person for this fundraising program while training all staff on the importance of the program.
- Engage younger donors. For the past several years, organizations have looked for ways to engage younger generations in philanthropy. While Baby Boomers will remain a strong base of supporters, the most recent Giving USA Special Report, Giving by Generations, shows that philanthropy is steadily increasing from both Gen Z and Millennials. Furthermore, in 2022, the giving from both of these generations shifted away from houses of worship and towards nonprofit hospitals and healthcare organizations. Younger donors often engage in philanthropy differently than their parents, and therefore require different strategies. Children’s Hospital Colorado Foundation created a volunteer-led giving circle to engage donors between the ages of 30 and 40. After five years, the group has raised more than $2.5 million, become more engaged in the organization, and served as community champions. In addition, the Foundation was able to identify several new board members for the Foundation from this group. For healthcare organizations, now is the ideal time to consider how to engage younger generations.
- Engage the board. It is usually a given that if you serve on the board of a mission-based healthcare provider, you are expected to give. Boards that understand and embrace their roles in fundraising (including personal commitments) lead by example and help to create cultures of philanthropy from the top down.
- Adapt to new giving models from ultra-high-net-worth donors. Historically, fundraising shops looked to hire major and principal gift fundraisers who could work with donors of high or ultra-high net worth. Many of today’s new mega-donors, such as former Twitter CEO Jack Dorsey and MacKenzie Scott, have generated headlines because of their new giving methods. To engage principal donors, hospitals need to engage philanthropic teams that include hospital leadership, doctors and multiple fundraising professionals. We are seeing many organizations reimagine what their corporate and foundation relations teams can look like to engage top donors who might have a staff managing their philanthropy.
A Time of Opportunity
Even the most successful healthcare providers must dedicate renewed attention and resources to their philanthropical efforts. In fact, fundraising success is often a telltale sign that an organization’s mission and messaging resonate and that it is positioned for success in the marketplace. Donors large and small believe in the vital importance of healthcare to their communities and promise to serve as willing and enthusiastic givers in the years to come.