Harness the Power of Philanthropy

The rapid speed and spread of change in health care is staggering. The field is expected to change more in the next ten years than in the last fifty. Biopharmaceuticals, AI, artificial organs and 3D printing will push the boundaries of medicine. New consumer expectations will move care from hospitals to ambulatory centers...and iPhones. The focus will shift from treating illness to elevating health status. Yet, in this era of promise and opportunity, financial challenges impede many health organizations from pursuing their potential.

Hospital operating margins eked up slightly in FY18 to a median of 2.1%, but it's still far less than adequate to fund today's priorities and opportunities. The stress of meeting critical needs and advancing powerful opportunities during a period of massively changing reimbursement mechanisms and uncertain government funding is taking its toll. Many organizations are pressed to absorb soaring technology and drug costs, to make sustainable investments in community health impact initiatives, to implement information technology to support new clinical and operational systems and to fund continued needs to modernize, renovate and replace aging inpatient facilities even as organizations shift their focus to ambulatory facilities. Many organizations have delayed or cancelled major investments that would add value due to market forces.  So, progressive organizations must find alternative revenue resources to ensure lack of financial capacity does not limit organizational progress.   

As more and more leading health organizations are finding out, one of the game changers can be voluntary, charitable giving from individuals, foundations and corporations--also known as philanthropy. Health philanthropy is a low-risk, sustainable revenue source with an exceptionally high return on investment of about $4.00 for every $1.00 invested. When fostered deliberately and utilized strategically, philanthropy can evolve into a powerhouse to support the health system’s vision and top strategic priorities.  Yet, many organizations squander the potential impact of philanthropy by treating fund development like a social endeavor or by allowing charitable dollars to benefit low value initiatives. 

To harness philanthropy’s potential, health care organizations must make two commitments:

• Recognize advancing philanthropy requires a diligent management process. Advancing philanthropy is not about "friend raising" or random social activity. It is about a deliberate and proactive approach to engaging donors, understanding their intentions and forging high value partnerships. It utilizes metrics, benchmarks and best practices. It requires solid data management, business intelligence, well defined processes and more. Also--like driving compliance or safety within the hospital--it is an everyone endeavor rather than something solely championed by a few professionals in the foundation office; the engagement of executives, clinicians, board leaders and other stakeholders is essential to maximize the opportunity.
• Align philanthropic funding opportunities with the health care organization’s strategic priorities and aspirations to maximize impact.  Health philanthropy should not be used for "nice to have" or "we would not do this otherwise" efforts. Philanthropy is a revenue source that should be utilized with the same high level of discretion with which the health organization would utilize any other valuable, financial asset. This means organizational leadership should work hand-in-hand with board and clinician leadership to proactively identify potential uses for philanthropic investment in advance rather than allowing a committee to distribute money afterward or to allow leaders across the hospital to dip into it like a slush fund. Simply, achieving integration and alignment between organizational strategy and philanthropy is an ambition worth pursuing that will reposition a key stream of revenue from “value added” to high impact and will inspire donors to give more as they have confidence gifts are being utilized for the highest and best use. 

In an era when abundant opportunity is too often throttled by inadequate financial capacity, it's time to get serious about philanthropy. It's time to ensure efforts to advance philanthropy are appropriately positioned, funded and staffed. It's time to ensure philanthropy leaders have access to the organizational allies and strategic information needed to achieve high performance. It's time to ensure philanthropic dollars are directed to high impact, strategic, smart endeavors that will help health care organizations achieve their vision of potential. If handled well, philanthropy can be your organization's catalyst to achieve competitive advantage and deeper mission impact.

Betsy Chapin Taylor, FAHP, is president of the health philanthropy consulting firm Accordant Philanthropy (www.AccordantPhilanthropy.com). You can reach her at Betsy@AccordantPhilanthropy.com.