Hospitals that are most successful at raising funds are those that use metrics to determine how to allocate their fundraising resources and those that put an emphasis on major donors, a report on philanthropy finds.
Despite challenging economic conditions, nonprofit hospitals and health systems in the U.S. raised $8.941 billion through their philanthropic efforts in fiscal year 2012, the Association for Healthcare Philanthropy announced Tuesday.
According to the AHP's 29th annual Report on Giving survey, total donations in FY 2012 were steady compared to FY 2011 and up by more than seven percent compared to FY 2010.
Gift sources for FY 2012 included
- Major gifts (22.2%)
- Corporate and foundation gifts (20.9%)
- Annual gifts (19.5%), special events (14.9%)
- Planned giving (9.5%), and
- Government grants (4.0%)
The report also examines the characteristics of the top 25% of healthcare organizations in terms of total production, which it characterizes as high performers.
William C. McGinly, PhD, AHP's president and chief executive officer, says high performers are devoting more resources to their philanthropy efforts than low performers, noting the "break point appears to be about $2 million" for the amount an institution needs to invest in order to see strong fundraising results.
"They are not just throwing money around," he says. "They are carefully planning where to invest. They are spending more, but they are targeting those dollars."
McGinly says successful hospitals are also putting an emphasis on major gift donors and are using metrics to determine how to allocate their resources.
"The high performance group is using metrics and doing an analysis of those metrics in a big way. They are doing a bang up job of this in the area of major gifts," he says, noting the example of one organization that identified a need to go after major gifts between $100,000 and $10 million. "They used metrics to show they were not getting as many smaller-sized major gifts, and they put a greater emphasis on that."
McGinly acknowledges that small organizations may not be able to spend $2 million per year on fundraising efforts and says that high performers tend to be in urban areas where there is a greater diversity in the population and in the care the hospital or health system provides. He says, however, that small organizations in rural settings can still be effective fundraisers.
"Even in a rural area you can do things like hold your annual campaign four to five times a year targeted to different donors," he says. "There are activities that are able to generate more ROI. You are not going to achieve what a large hospital in New York does, but you can still make jumps in your fundraising levels."
The effectiveness and efficiency of fundraising efforts were little changed over the year, according to the report. For every dollar spent on fundraising programs, median ROI was $3.22 in FY 2012, only two cents less than in FY 2011. The cost to raise a dollar (CTRD) also remained steady, with a median of 31 cents.
The median CTRD for children's hospitals and academic hospitals was lower than the overall median at 25 cents and 19 cents, respectively.
"With children's hospitals and university-based hospitals, the ROI is higher and the cost to raise a dollar is lower," McGinly says. "They do have advantages. For example, children's hospitals have a tremendous appeal, so some of those dollars are going to come with less effort."
Other key survey findings include:
- Nearly three in 10 of the high performers were academic institutions, and nearly one-fifth were either a children's hospital or community hospital.
- 43.9% were affiliated with a healthcare entity that had over $1 billion in net patient services revenue.
- 81.5% had more than $2 million in total fundraising expenses in FY 2012.
- Median total fundraising expenses for high performers was about five times the median total for all surveyed institutions.
- 82.4% of institutions employed more than seven or more FTE direct fundraising staff.
- High performers raised nearly six times the median production funds compared to all responding institutions, at $19.1 million versus $3.2 million.
For the first time, this year's report incorporates standard performance benchmarking, which is designed to facilitate comparisons among philanthropy programs of varying sizes, from large hospital systems to community hospitals and long-term, hospice and home care facilities.
McGinly says standardizing the reporting is important to providing meaningful comparisons. For example, with uniform benchmarks, hospitals will all include the same expenses when determining their cost to raise a dollar.
"We desperately need this standardization in our profession, and we find our high performers are leading us in that direction," McGinly says. "There needs to be consistency across the board."