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Nonprofit Hospital Donations Up 8% in FY2010

John Commins, for HealthLeaders Media, June 14, 2011

In fiscal 2010, as in previous years, healthcare organizations used most of their donated dollars – 22% -- to fund construction and renovation, down from 27% in fiscal 2009. New and upgraded equipment purchases were the second-largest category, at 21%, followed by general operations at 18% -- both up slightly from FY 2009.

McGinly says hospitals are using more donations to pay for operational costs, especially with anticipated reimbursement reductions from Medicare and Medicaid. "Somehow hospitals are going to have to make that up and that is where more and more of the philanthropic dollars will be going," he said. "Ten years ago, 7% or 8% of philanthropy was going towards operations. That need is growing as hospitals struggle with the bottom line because of the cuts to reimbursements."

While philanthropy still provides a good return on investment, McGinly says the cost of raising money continues to go up. At 33 cents in fiscal 2010, the cost-to-raise-a-dollar through philanthropy remained stubbornly above 30 cents for the third year in a row. Return-on-investment declined, on average, more than 4% to just $3.05 raised for every dollar spent on fundraising.

The bottom line: Fundraising has become more challenging and, therefore, more expensive. Additional resources are needed to raise the same amount of funds during difficult economic times, the report said.

Higher than average success raising money donations was seen by fundraising programs that help to sustain hospitals associated with academic institutions and children's hospitals, by programs that have been in existence for 15 or more years, and by programs with at least four professional fundraisers on staff. McGinly says healthcare organizations with strong philanthropic arms will be best positioned to collect donations if the economic recovery – however uneven – continues.  

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