When the U.S. economy collapsed in 2008 and 2009, the effects stretched far across the healthcare sector.
According to a report from the Medicare Payment Advisory Commission, the total hospital margin for all payers — Medicare, Medicaid and private insurers — dropped from an average of 6 percent in 2007 to 1.8 percent in 2008. The lagging financials also spread to hospital philanthropy departments, as gift sizes fell in fiscal years 2009 and 2010.
However, philanthropic giving to nonprofit healthcare groups has surged in the past few years. In FY 2011, donations to hospitals and health systems hit a record-high, $8.94 billion, and that number was almost matched again in FY 2012, according to the Association for Healthcare Philanthropy.
For hospitals looking to improve their philanthropy department, or maintain their high-performing status, following a modern do's and don'ts list could be the difference between a successful or weak year.
Do: Invest in your staff
In January, the Association for Healthcare Philanthropy released two reports on the state of nonprofit hospital philanthropy programs. Bill McGinly, PhD, president and CEO of AHP, says one theme consistently appeared in the highest-performing organizations: investment in a high-quality fundraising staff and dedicated culture.
In the reports, AHP analyzed hospital philanthropy surveys and produced hard data that correlated with the best of the best. For example, fundraising revenue is maximized at systems that have at least seven full-time equivalent staff members, and optimal budgeting for salaries and benefits within the hospital fundraising department was $800,000 or more (equating to an average per-person compensation of $114,285).
Dr. McGinly says he has seen those benchmarks in play, anecdotally. He has worked with two hospitals, one in New Jersey and another in Massachusetts, that are similarly sized and located in comparable communities. The hospital in New Jersey had five people on its fundraising staff, while the hospital in Massachusetts had seven people on staff — and raised almost four times more in revenue per year.
"The difference is [the Massachusetts hospital] invested in those two people," Dr. McGinly says. "You have to be willing to take that plunge, and you do it in a business-like fashion. Bring on one person to do [a task], manage that person and judge what are meaningful calls."
April Box Chamberlain, president and CEO of the Methodist Health System Foundation in Dallas, says she has seen the value of a sizable staff firsthand. With seven employees and a volunteer board of directors, Ms. Chamberlain and the foundation raise an average of $4.5 million every year.
Don't: Focus only on the annual campaign
Methodist raises several million dollars every year, but Ms. Chamberlain says success is derived from diversifying their efforts. For example, the system has already brought in $18.8 million for a $20 million campaign to fund an expansion of the trauma center at Methodist Dallas Medical Center.
Jennifer Johns, director of Mercy Foundation within Janesville, Wis.-based Mercy Health System, says her system's philanthropy similarly focuses on other key events, which include a charity ball for the system's House of Mercy Homeless Center. "The center is a 25-bed facility that provides homeless families with short-term, emergency shelter and access to community resources," Ms. Johns says.
Dr. McGinly says it is successful alternative campaigns like those that lead to more opportunities. Too often, a hospital's foundation may put all of their eggs in the annual fundraising campaign basket. Instead, hospitals must focus on other special events, major gifts, planned giving and capital campaigns on top of the annual campaign — and one staff member should be devoted to each of those areas, if possible.
"We'll have hospital foundations, small ones, focusing on special events and the annual campaign," Dr. McGinly says. "But they are losing opportunities for larger donors."
Do: Make this a C-suite priority
In addition to her role as president and CEO of Methodist's fundraising, Ms. Chamberlain serves as senior vice president of external affairs for the entire Methodist system. She is embedded within the senior executive team, which she says shows her how overarching goals intersect with Methodist's fundraising goals.
"My position as part of the C-suite allows me the opportunity firsthand to understand the priorities of the system and how the foundation can support our ongoing mission," Ms. Chamberlain says.
In his experience, Dr. McGinly says one of the biggest mistakes a hospital foundation can make is not involving the CEO, CFO and other C-suite members in the philanthropy process.
"If you've got a CEO who is interested in this and willing to devote time to this, it makes a significant difference," Dr. McGinly says. "Donors want that appreciation from the top dog, so to speak, and that helps tremendously."
Don't: Badger patients
In January, a column in the Los Angeles Times explained a situation involving Evelyn Stern, a 75-year-old patient who received a solicitation from the her hospital's division of geriatrics for a donation. She said it was "a little peculiar when you get such a letter from someone you rely on for your well-being."
Mr. McGinly says although more than half of all hospital contributions come from "grateful patients and families," hospitals cannot take a crass approach. "High performers are not going to visit you in the hospital to ask for money," Dr. McGinly says. "They are visiting with you to serve as an ombudsman, to see how you're doing and how they can be helpful."
Ms. Chamberlain agrees, saying any sort of follow-up with patients must be conducted with tact and with genuine concern. "It is important to spend time to get to know the individual's or family's interest, and develop a relationship before ever asking for a gift," she says.
For Ms. Johns and Mercy, engaging patients requires a thoughtful approach. "In my opinion, engaging patients to ensure good relationships starts with three main elements: patient-centered care, communication and getting the basics right," she says. "It’s important for nonprofit hospitals to build a culture for high-performance philanthropy."
Do: Have an optimistic attitude
Fundraising, grant writing and pledging can sometimes seem like they are stuck in a miles-long traffic jam, inching forwarding only incrementally. This is another time when dedicated, knowledgeable, team-oriented, donor-centered, creative and communicative staff members are worth their weight in gold.
"The key to success in fundraising today is perseverance and persistence," Ms. Chamberlain says. "While the economy has compelled some donors to ask for greater flexibility in paying major gifts over a longer pledge period, in Dallas we are very fortunate to have a community that celebrates and supports philanthropy and understands how important it is for the health of the entire city."
Don't: Take relationships for granted
Individuals and big donors who have been most supportive of a hospital's mission need the full attention of fundraising and development officers.
"Know your industry," Ms. Chamberlain says. "Continue to build new relationships. Never take a relationship for granted."
Often, the most responsive donors are in a hospital's backyard. "As the healthcare industry business model shifts, healthcare providers are engaging in more thoughtful and strategic philanthropic giving," says Javon Bea, president and CEO of Mercy. "We are very fortunate to have donors that support the communities we serve, and we do a great job creating new fundraising opportunities so we can continue to meet those needs."
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