How Hospitals Can Increase Charitable Giving

By Betsy Chapin Taylor	July 31, 2012
Health care organizations that invest in philanthropy will reap the rewards.

Many senior health care executives are trying to navigate increasingly complex and constrained health care finance. But with industry outlooks warning that sluggish operational revenue will continue for the foreseeable future, it's not enough to figure out how to "get by." Most health care organizations that eke out the median industry bottom line of about 2 percent are failing to generate enough revenue to maintain their operations.

Rather, successful organizations must find new and more effective ways to maintain competitive market positions, advance new opportunities, and enable the organization's aspirations for growth and progress.

Health care philanthropy (also known as community charitable giving) is a viable revenue resource, but it's underused. Health care organizations that engage in fund development, or cultivating charitable resources, will benefit from an extra revenue source. These organizations can deploy a range of strategies to encourage effective giving and to increase the impact of giving. These strategies include:

• investing in fund development;
• selecting strategically aligned projects;
• providing excellent clinical service;
• improving organizational culture;
• enhancing accountability.

Investing in Fund Development

It is a leader's job to ensure the health care organization is investing adequately ? and sometimes disproportionately ? in fund development. Health care organizations face a range of competing priorities for annual investment and, understandably, clinical "revenue centers" tend to win out over seemingly administrative "cost centers." But fund development should be considered a revenue center worthy of operational investment.

Hospital leaders need to create a fund development program and to sustain, expand and optimize its initiatives. In that way, investing in fund development is akin to making an investment in a new clinical program: You must create infrastructure and secure qualified staff to build a high-quality program that will achieve the intended return on your investment.

While fund development can deliver incremental net revenue in its early years, the greatest financial value comes over a longer time horizon. Relationships between donors and the organization mature, and donors gain the trust, confidence, understanding and buy-in to make larger, investment-level gifts in the organization.

Selecting Strategically Aligned Projects

Health care leaders should select high-value, high-impact needs from the health care organization's strategic plan as funding priorities. Fund development exists to support the mission of the health care organization, but maximizing the benefit relies on tight alignment between the organization's strategy and the projects selected as funding priorities.

Priorities for charitable giving should be built on a clear, compelling, urgent, well-articulated, inspiring and transformational strategic vision of what the organization could be or could do. Thus, creating a structured process for identifying and selecting appropriate projects enhances the impact of philanthropy by ensuring it advances high-value work.

Projects also must resonate with donor values and motivations: Significant donors generally are not interested in projects they feel are the basic responsibility of the health care organization in running their business; rather, they generally seek high-priority projects that achieve a social impact central to the hospital's core mission and inspirational vision.

Providing Excellent Clinical Service

An excellent clinical service experience often will turn a grateful patient into a donor. Engaging grateful patients has become increasingly important to organizations seeking to attract "the best" new donors to support long-term program growth.

Multiple studies show that the majority of top donors to health care organizations have had a previous personal or family clinical care experience. In addition, dollars given through investment-level programs represent more than half of all dollars donated to health care. Thus, it makes sense for health care organizations to create an environment that generates the warm feelings, confidence and gratitude that can motivate a grateful patient to give.

A national study of health care decision-makers by the research firm PRC also found that those who have made a charitable gift to health care were more likely to rate the overall quality of care as excellent, to say the hospital exceeded their expectations and to have their loyalty most affected by the hospital staff. In fact, hospitals that successfully delivered on these three objectives found that the percentage of donors nearly doubled.

Improving Organizational Culture

Organizational culture depends on the verbal support, physical presence and active modeling of the CEO and other health care executives. The entire health care team ? from the front line to the boardroom ? needs to understand and embrace philanthropy as an activity that advances the organization's ability to offer excellent patient care.

The nonprofit health care organization should embrace its role as a charitable organization and strategically build high-value partnerships with community donor partners. To do this well, the organization must have a culture that supports and advances philanthropy.

The more individuals who initiate and nurture meaningful community relationships, the more authentic connection points there are for the organization. If the organization as a whole has not embraced a culture that supports and extends philanthropy, the capacity for success is more limited, and a valuable opportunity is lost.

Insist on Accountability

Leaders should hold fund development to the same level of accountability as other strategic endeavors. While evaluating quantitative aspects of the health care organization (e.g., quality indicators or financials) may be more straightforward in their measurement, even qualitative aspects of the fund development effort (e.g., relationships) can be meaningfully measured. For example, many organizations track such metrics as the number of face-to-face visits by a gift officer, since activities like this are leading indicators of the likelihood of a gift.

Many organizations consider a mix of quantitative measures that benchmark progress along with qualitative metrics. Evaluation not only provides feedback for program correction and refinement, but including key performance indicators for philanthropy along with the health care organization's other important goals signals the worthiness and seriousness of fund development.

As in so many things, the CEO and senior executives create the environment and expectations that will in large part determine whether fund development will flourish ? or not. It is time to elevate philanthropy on the health care organization's agenda and to reinforce the program by ensuring the strategic support and culture to enable charitable giving.

Betsy Chapin Taylor, M.S.J., M.B.A., F.A.H.P., is a principal of Third Sector Strategy and the president of the Erlanger Health System Foundations, both in Chattanooga, Tenn. She is also the author of Healthcare Philanthropy: Advance Charitable Giving to Your Organization's Mission (Health Administration Press, 2012).

The opinions expressed by authors do not necessarily reflect the policy of Health Forum Inc. or the American Hospital Association.

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