The Dollars Aren't Coming

John Commins, for HealthLeaders Magazine , November 12, 2009
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Despite delays and reductions by healthcare philanthropists, there are ways to tap into such resources.

Healthcare philanthropy has been hit hard by the recession, right at a time when it's needed more than ever.

The Association for Healthcare Philanthropy says its members across the nation report that donations have fallen off considerably since the middle of 2008, and it's not clear when they will pick back up again.

"In fact, there is a lot less happening financially. The dollars aren't coming," says AHP President and CEO William McGinly. "People are delaying their gifts or they are still giving but they're giving half or two-thirds of what they used to give. We are seeing somebody who was worth $100 million who is now worth $50 million. Most of them are still going to give, but they are cutting back and we don't know the impact of that yet."

The drop in giving comes at the same time hospitals are having a difficult time accessing capital markets, and they're sweating out narrowing operating margins as investments have suffered.

Greg Pope, chief development officer at St. Thomas Health Services, a four-hospital system in Nashville affiliated with Ascension Health, and the new board chair of the AHP, concedes that hospitals and health systems might not be able to raise as much money during a recession. However, he says they should still be out in the community, working existing donors and identifying potential donors.

Pope says his foundation has spent the recession "getting the right people in the right places from a volunteer perspective to be ready to move quickly when the economy turns. We've done that and believe that will pay some dividends going forward.

"The most important thing for us is for our long-time donors, the people who are being cultivated and who we've spoken to long enough so they would consider making a major gift, in the last year they have been hurting financially," Pope says. "We've been saying we must maintain the contact and spend a good deal of time being empathetic and understanding because the times will turn for them, too. What they will remember is that we were with them and we were empathetic and understanding."

Pope says he took to heart the advice of Tom Lilly, his colleague at St. Mary's Foundation in Evansville, IN, who said he was going to use the economic downturn to increase his "no quotient,"—which is the number of people who say "I can't help now."

"If we increase that quotient, that means we are talking to more people and there are going to be people who can help at this time," Pope says. "Tom was right. It's been a productive time for development staffs because we have had to focus and work harder and smarter and see more people and tell the story more."

William S. Littlejohn, CEO and senior vice president for Sharp HealthCare Foundation, which raises money for seven acute-care and specialty hospitals in San Diego County, says the three foundations within the health system have raised a combined average of about $20 million a year over the past five years, but have seen about a 20% decline in the number of larger gifts this year. "We have seen a contraction. We'll have less this year than last year," says Littlejohn, who is also the Pacific regional director for AHP. "We have some nervousness about the future. However, we feel confident that the size of our base and the market that Sharp has will allow us to get through the difficult times without completely falling apart."

Littlejohn says he's hearing the same thing from colleagues in other health systems across the nation, some of whom are reporting contractions of up to 40%.

Unlike colleges and universities, which have huge endowments from their decades of fundraising efforts, Littlejohn says Sharp and most other hospital systems don't have the luxury of establishing large investment portfolios. Sharp philanthropies have raised about $100 million in the past five years and turned over about $92 million in cash over the past seven years. As an upside, they didn't lose a lot of money in their investment portfolios when the stock market tanked. "Hospitals are incredibly capital-intense organizations. We spend this money as fast as we raise it," he says.

Littlejohn says Sharp's efforts over the past six or seven years to focus on small donors have helped to soften the drop-off in giving during the recession. Almost every discharged patient is a potential donor. "The bulk of our funds come from grateful patients and their families. We have thousands of relationships. Many express their gratitude through giving," he says. "It's sort of an untapped marketplace. It's not just the wealthy people in town. It's the people you already have relations with. Grateful patients equal people who might be willing to give."

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