The stronger U.S. economy is having a positive impact on philanthropy and many nonprofit hospital CEOs are coming to understand that fundraising is part of the job description.
A steadily improving economy and more sophisticated fundraising strategies have help U.S. nonprofit hospitals and health systems raise $9.6 billion in 2014, according to the Association for Healthcare Philanthropy's annual Report on Giving.
Steven W. Churchill, president and CEO of AHP, says giving was up 4.5% when compared with 2013. Fundraising efficiency—measured as the cost to raise a dollar (CTRD)—was 25 cents, a 3-cent drop over the past year. Return on investment jumped 14% over the past year to $4.05 for every dollar spent on fundraising, a 50-cent increase over 2013.
"The trend has been steady since the downturn of 2008. The stronger U.S. economy is definitely having an impact on gifts received from philanthropic organizations in the healthcare arena," Churchill says.
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"Also, we saw in the recession individuals who were prospects to make major gifts were less likely to make multiyear commitments. Some of those individuals who were concerned about the economy are now more comfortable and making more multiyear pledges."
The Better Business Bureau says the general benchmark for CTRD for all fundraising is between 25 and 30 cents, and Churchill says that healthcare philanthropy has worked hard to "move the needle so that those making the gifts can feel better about the efficiency of the organization."
"Obviously, organizations that have a sophisticated major giving program are generally going to have a lower CTRD," he says. "As organizations get more sophisticated, they get more folks in the bucket moving through the system. They are going to have more planned gifts and that is going to drive down the CTRD."
Traditionally, fundraising by nonprofit hospitals and health systems has lagged behind colleges and universities. Churchill says that the gap appears to be "narrowing."
"Healthcare reform has changed the way in which hospitals generate revenue," he says.
"Because of that, the CEOs of hospitals often for the first time are looking for other sources. At one time, the CEOs didn't pay much attention to their foundations or considered them icing on the cake. Now, they recognize that turning to the foundations is probably more cost effective than a new clinical application."
In addition, Churchill says, many nonprofit hospital CEOs are coming to understand that fundraising is part of the job description.
"If you work as a university president you recognize that fundraising is going to be a big part of your job to be successful," he says. "That has not been the case with CEOs of hospitals and healthcare institutions. Fundraising has not always been a part of their job description and for many of them it probably still is not. That is changing."
"Higher education institutions have been in the business of raising money for a long time. They are more sophisticated and they recognize that their president is their strongest ally in terms of asking for a gift," Churchill says.
"Healthcare institutions are very complex. The skills that an individual has to lead a healthcare institution may be much different from those of someone leading an academic institution. The expectations have not been there because the income model for hospitals was much different for hospitals 10 or 20 years ago than it is today."
John Commins is the news editor for HealthLeaders.