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Eight Strategies for Stronger Fundraising at Hospitals

 |  By HealthLeaders Media Staff  
   December 14, 2009

There are just 12 days left until Christmas. Yes, the season of giving is upon us, unfortunately this year, hospital philanthropic foundations didn't feel too much of that giving spirit—donations for hospitals are lower than last year and the forecast is a slow, if any, increase, for next year. However, there are strategies CFOs can employ at their facilities to see some changes in their fundraising divisions.

Presently, philanthropic efforts nationwide aren't booming. So, it's not surprising that healthcare philanthropy has also had difficult year. The Association for Healthcare Philanthropy (AHP) reports that its members nationwide have seen donations fall off considerably since mid-2008, and it's not clear when they will pick back up again.

"It's overwhelming if all of a sudden your funds dry up," says AHP President William C. McGinly, PhD. "When you're faced with it, you've got to get creative with your funding."

Philanthropy, especially at nonprofit hospitals, has long been a strategy for supplementing capital budget needs. However in recent years, some finance executives are finding ways to make fundraising an integral part of their financial planning efforts—recognizing that an operating budget funded in part by philanthropy can strengthen the overall bottom line.

However, not all facilities have set up strategic philanthropic divisions, and that amounts to financial loss that few can afford these days. The AHP reports that nearly three-out-of-four hospitals' philanthropy efforts have been squeezed by the recession, and the "giving forecast" at most hospitals is projected as lower than in years past.

William S. Littlejohn, Pacific regional director for AHP and CEO and senior vice president for Sharp HealthCare Foundation, knows that "squeeze" only too well. The Sharp HealthCare Foundation raises money for seven acute-care and specialty hospitals in San Diego County. Three of the foundations within the health system have raised a combined average of approximately $20 million per year over the past five years. Sharp philanthropies have raised about $100 million in the past five years and turned over about $92 million in cash over the past seven years.

However, Littlejohn says while Sharp's foundation managed good results through the end of 2008, by 2009 they felt "a contraction of about 20%, especially in large gifts." Philanthropic donations fund about 10% of the capital plan for Sharp Healthcare, so while the fundraising drop isn't positive, it hasn't stopped projects at Sharp Healthcare.

"Sharp is always rolling forward with the long-term plan. We had four good years and then one contraction, so we aren't taking a huge hit," he says.

Other philanthropic divisions aren't faring nearly as well as Sharp during the economic recession. The AHP reported earlier this year that nearly one-third of negatively affected hospitals are postponing the purchase of new equipment funded by philanthropy. Moreover, 20% of survey respondents said they were scaling back on areas, such as events and capital campaign programs.

Eight Strategies for CFOs Philanthropic Divisions
Though scaling back has become a fact of the recession, CFOs who take a different tack with their philanthropic divisions may find a strong strategic partner waiting to improve their bottom line.

1. Decide if it's fundraising or development. Fundraising is designed to focus on the next cause, says John B. Donovan, executive director at Dubuque Mercy Health Foundation in Dubuque, IA, part of the Trinity Health Network. The foundation, which was created in February 2008, gathers charitable contributions for the 288-bed, Catholic nonprofit Mercy Medical Center. Getting the foundation off to a swift start was difficult in the down economy, though Donovan says that realigning the focus to look at the larger picture for the facility is the key to long-term success.

"You may not develop long-term donors if your primary goal is to raise money for the latest project," Donovon says. Instead, he advocates for development, in which a regular team is used to cultivate donors and looks at the broader scope of capital projects for the entire facility and works toward larger goals. It's a tactic Sharp Healthcare Foundation has employed successfully for nearly eight years.

2. Use performance measures. You measure every other aspect of your finances, if you aren't tracking performance measures for your philanthropy division in the organization's monthly "dashboard" reports, then start. McGinly says when evaluated on net return philanthropy is sometimes the hospital's most valuable revenue producer.

Sharp HealthCare uses these measures, and Littlejohn says they take a strategic approach by reviewing the hospitals five-year capital plan and the five-year cash projection, then they determine how the foundations efforts will fit into the larger plan for the facility.

"Our approach is a bit of a departure from other organizations who may look at philanthropy [donations] as a 'nice thing' to have," says Donovan. "We want to know what role our team will play in funding the long-term projects, so we can articulate this to our donors."

3. Get the right tools in place. CFOs can be instrumental in helping the fundraising team evaluate information systems to track their financials. The information that is gathered can go a long way toward helping you set up performance measures and establish five-year projections.

4. Educate your team. Your finance team may need a better understanding of what the fundraising team does for the hospital. Have the philanthropy team explain the multitude of reasons people give to hospitals and the value their efforts bring to the bottom line. By ensuring your team has a clear understanding of the value of the donor-hospital relationship, they will be better able to support philanthropy.

5. Give at the office. If you want to show your team to value your philanthropic efforts, make a personal donation. Whether it's via a check or through event attendance, the more efforts you make to support philanthropy at your hospital, the more likely your team will follow suit.

6. Keep the team intact. In this economy, cost reductions are important and that means sometimes CFOs need to reduce staff. This is not the department to target first. Rather than cut personnel, first look for other ways to reduce their costs, such as reducing events.

"You have to keep the fundraising office as strong as you can and not lose seasoned people," advises McGinly. "You don't want to rebuild that infrastructure when the [economic] shift comes around."

McGinly continues that if you have a capital campaign that is currently being delayed and you cut your fundraising department to the core, "you are going to have some real rebuilding problems and that will impact the community as things start to turn around." Philanthropic relationship-building is no easy task and donors are more inclined to give to people and facilities that they have developed a relationship.

"There's always money for projects that are worth doing, you just have to make a case to the donors as to why the community will be better off when it's completed. But to do that you need to have the right people ask them for the donation, just as you need to have the right project for them to support," says Donovan.

7. Stretch the idea of donation projects. Certainly calls, letters, and events go a long way toward keeping you in contact with donors, but there are less conventional fundraising efforts that facilities can turn to, as well. For instance, Sharp offers potential donors a deferred gifts program called the Life Estate Gift Annuity. The program allows some people to donate their homes to the health system and live in them for the rest of their lives. Sharp takes ownership of the home when the donor dies and sells the property.

The majority of candidates are over 70 years old and either own their home or are close to it, and Sharp pays the donors an annuity based on the value of the house.

8. Say "Thank You." Now more than ever those two words mean a lot. For nearly seven years, Sharp's philanthropic team has focused on gathering larger numbers of smaller donors. The effort proved fruitful when the economy dipped. Littlejohn explains that all former patients are potential donors, and many make donations to express their thanks to the hospital. But the gratitude shouldn't stop with your donors. Personal "thank you" calls or notes from the CFO or CEO of a facility go a long way toward helping to build a strong relationship with your donor community. "Call them up and say 'Thank you.' Let them know their donations are touching lives," says Donovan. "Give them examples of positive ways their gifts will be used."

It's the season of giving, but if you haven't given your philanthropic division a once over in quite a while, your facility may be truly missing out on a great opportunity to not only live up to their mission, but also to bring in some greatly needed funds for your future capital projects.


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