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Healthcare Philanthropy in North America: A Diagnosis

15 May, 2018

Jory Pritchard-Kerr, Chair of the Board of Directors, Association for Healthcare Philanthropy, US

Development departments and foundations provide important investment streams to hospitals in North America. The US’ unique situation in having a wholly privatized healthcare system means that much of the health system is still community-driven, and supportive funds often derive from philanthropy rather than taxes. Canada, while operating under a government-led system, still relies on community investments to fund what the government alone cannot.

It is rare to find any line item in a hospital’s budget that produces a return on investment (ROI) of four, but that is exactly what hospital foundations and fundraising organizations provide. Throughout North America, development professionals manage donations diligently to improve their healthcare institution’s ability to serve their communities.

To do so, they seek to create sustainable communities by building lasting connections with donors. On occasion, viral campaigns — like the 2014 ALS (amyotrophic lateral sclerosis) awareness campaign on social media, better known as the ice-bucket challenge, and crowdfunding on platforms such as GoFundMe — gain unexpected visibility, but viral fundraising is mostly a blip on the radar. Donor relations take time, effort, and consideration.

If a fundraising campaign is lucky enough to ‘go viral’, the foundation should act quickly to capture its momentum and continue to build donor relations. In Canada, for instance, SickKids VS campaign launched in 2016 and tapped into an existing community with an emotional video series. Today, SickKids continues to build its brand using the themes developed for the campaign, attracting celebrity endorsements and national press coverage. Its existing donor base not only supported its campaign but even defended the organization when a popular video from the series, ‘SickKids VS: Undeniable’, gained controversial coverage.

Ultimately, the major principals of healthcare philanthropy are casting a wide net, engaging with all patients, and ensuring there is a place for them to express their gratitude. Fundraisers recognize that there is a strategy to giving, and once they have found potential donors, there is never a one-size-fits-all solution. Philanthropy is the art of matching a donor’s needs to those of a hospital.

The Current Landscape of Healthcare Fundraising

Whether through mega-investments — such as major gifts donated to hospital systems — or through targeted donations — such as those to community hospitals — healthcare donors are a vital component of the healthcare system. Donations to non-profit hospitals and healthcare systems in the US and Canada totaled USD 1.68 billion during the 2016 fiscal year, according to the 2017 Association for Healthcare Philanthropy Report on Giving. Total funds raised by healthcare institutions increased by 5% in the US in 2016 to USD 10.1 billion. Funds increased for the first time in Canada since 2013 by 10% to USD 1.5 billion.1

The ROI for health fundraising organizations is generally high. The ROI for institutions in 2016 in the US was USD 4.1, and for institutions in Canada the median ROI was USD 4.07. Although ROI rates have fluctuated over the past decade, dropping to only a threefold return after the Great Recession, it continues to demonstrate the high productivity of healthcare fundraising as a hospital revenue stream and a high-impact investment.

Challenges Facing Healthcare Development

Costs in healthcare are increasing and reimbursements from private insurance and public programs are decreasing, all at the same time that donated funds are becoming a standard line item in hospitals’ operating budgets. Hospital CEOs now expect that foundations will produce a certain revenue stream every year, and development officers feel the pressure of increased expectations with falling internal budgets.

Lack of resources is one of the factors driving hospitals to systemization. Many stand-alone hospitals are, and have been for years, merging into a collection of hospitals under an umbrella name that allows them to allocate resources efficiently in a large community. Each hospital often has its own foundation, and a merger means that the foundations must either find a way to work together as separate entities or merge as well. The latter option seems to make the most sense on paper — if a hospital system is a better investment of resources, then it follows a foundation ‘system’ would be, too — but development organizations have found varying solutions to the challenge.

There are also significant ethical issues specific to healthcare philanthropy that one does not find in other fundraising sectors. Grateful patient fundraising (GPFR) is the most common example, with opinions ranging from “there is never an ethical issue for fundraisers” to “contacting patients is always morally wrong”. For clinicians and institutions and the populations they serve, GPFR can help support clinical care, research, community-based programs, educational initiatives, and capital projects. Philanthropy is also a way for patients to contribute to causes that they find meaningful and that impact the health and well-being of future patients. Clearly, however, there are points at which conflicts of interest, privacy concerns, and other issues may arise, which means development officers must approach physician and patient relationships with care.

Endnote

1 The report did not examine other North American countries

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