Philanthropy in Hard Times

Carrie Vaughan, for HealthLeaders Media, October 31, 2008

With tightening credit markets, healthcare facilities will need to rely on philanthropy more than ever. Unfortunately, now is not the best time to hit up members in your community for large donations given the current economic crisis.

At the recent Top Leadership Teams in Healthcare Conference, Kelby Krabbenhoft, president and CEO of Sanford Health in Sioux Falls, SD, told me that healthcare executives are facing two obstacles when it comes to philanthropy. The first challenge is the decline in asset values and market values, which is where a lot of donors hold their wealth. The second challenge is dependent on the election. "If our country moves in this election away from more independent and individual opportunity and moves more toward government solution, philanthropy will take a major back seat because it will be taxed at higher rates," Krabbenhoft says.

But just because charitable gifts may be harder to come by doesn't mean healthcare executives should abandon their focus on philanthropy. You never know when or where the next charitable gift will come from. For instance, Annette Bloch, the widow of H&R Block co-founder Richard Bloch, announced earlier this month that she was giving a $20 million gift to the University of Kansas Hospital. Bloch was treated at the hospital for breast cancer earlier this year, and she was impressed by the wonderful compassion and quality of the staff, according to the Kansas City Star.

That is why it is important for senior leaders and board members to be out in the community establishing relationships with potential donors. Thomas C. Dolan, PhD, president and chief executive officer of the American College of Healthcare Executives, says that asking for modest gifts gets people in the habit of viewing the hospital or health system as a worthy organization for charitable giving. "Developing those relationships with individuals throughout the community is what you can do during an economic downturn," Dolan says.

Unfortunately, large gifts in healthcare are rare—even in the best financial times. "You have to have timing and a little bit of luck," says Krabbenhoft, who is no stranger to receiving large donations. His organization received a $400 million gift from businessman and entrepreneur T. Denny Sanford in February 2007. But there are ways that healthcare executives can make sure their organization is viewed as a worthy cause to potential benefactors.

Perhaps the most important thing that CEOs can do is show potential donors that they are trying to do great things. For instance, Bloch hopes that her gift would help the University of Kansas Hospital obtain a National Cancer Institute designation. And part of Sanford's gift is to fund pediatric medical research. "You have to go beyond the core business of the institution. You have to talk about a vision and an ultimate place where you want to take your organization," says Krabbenhoft. "In some ways that is the bait that is in the water and it is just a matter of how big the fish is that comes swimming by."

Carrie Vaughan is leadership editor with HealthLeaders magazine. She can be reached at
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