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Bringing in donations requires personnel

Hospitals most successful at fundraising didn't cut philanthropy staff during the economic downturn

David Weldon, Contributor

Hospitals are dependent on donations to help offset huge operating expenses. And in this turbulent time of rising costs and shrinking reimbursements, they need all the financial kindness they can get. That’s why investing in philanthropy personnel is important.

When the 2008 recession hit, many hospitals downsized their fundraising staffs, including their biggest money chasers, and lost ground maintaining donation levels, said William C. McGinley, president and CEO of the Association for Healthcare Philanthropy.

Many organizations are now playing catch-up as a result, McGinley said.

While the strengthening economy has improved the donation outlook, McGinley said, the industry is not seeing the growth in donations that it needs.

“In terms of the big picture, we were running about $8.9 billion [in donations] in 2012 and about the same for 2013,” McGinley said of the collective fundraising efforts in healthcare. That is a considerable improvement from fundraising levels in 2008, he noted, but is essentially flat.

It is a focus on relationships and awareness of an organization’s strongest donor base that separates the successful fundraisers from the less successful ones, McGinley said. And the difference maker for some may have been how they decided to ride out the recession.

“In the high-performance groups (the more successful fundraisers), they made the tough decision in the economic downturn to not reduce staff,” McGinley said. “Revenues were down, but they retained those relationships with donors.”

Maintaining donor relationships – and the staff needed to nurture them – even in leaner times, may be the key strategy to a strong philanthropy program, McGinley said, especially with competition so tough for donor support, and with reduced healthcare reimbursements.

To keep the focus on donor relationships, hospitals may want to create a separate fundraising foundation.

A 2012 report, “Endowments and Foundations,” prepared by financial services firm, Wilmington Trust, found that 40 of the healthcare organizations it studies (70 percent) had foundations. Of those 40, 32 (or 80 percent) managed their foundations as long-term endowment funds and therefore tended to follow long-term investment strategies.

While foundations are effective fundraising tools in and of themselves, the Wilmington Trust noted, they must by operated by staff who understand the importance of defining and considering appropriate objectives, spending and liquidity requirements, and risk tolerance of long-term financial assets.