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Toward a Higher Standard is the first publication from our rigorous comparative analysis of hospital development performance nationwide. The report shares lessons on the drivers of fundraising success, and provides specific quantitative standards for evaluating an organization’s performance in terms of funds raised and return on investment (ROI). Across the diverse participant sample, two findings ring soundly: the importance of strategic resource deployment to achieve highest return and the enormous untapped potential in hospital philanthropy.
Benchmarking the baseline for fundraising performance
Hospital development is at a critical moment, suddenly in the spotlight due to pressing capital needs and the inadequacy of traditional funding sources. Development offices and foundations have an unprecedented opportunity to elevate philanthropy as a key strategic asset and an important window in which to demonstrate credibility and garner support.
Today’s report shares the first benchmarks from our research, establishing a baseline for continued study of fundraising performance. Our methodology focused on two metrics: funds raised and return on investment (ROI), both of which varied dramatically across the study sample. To be successful, foundations must maximize both of these metrics.
Assessing potential for hospital development
Our research found a strong positive correlation between the resources of foundations (number of FTEs and total expenses) and the amount of funds they raised. Not surprising: a bigger staff raises more money than a smaller one. Our findings regarding ROI, however, were somewhat different. Our statistical analysis found that only market affluence has a significant relationship with ROI. Supporting this finding, a multivariate regression analysis revealed that 10.2% of variability in ROI across foundations is driven by the presence (or lack thereof) of high net worth individuals in the market.
While statistically significant, this finding explains only 10% of variability in ROI. The more interesting finding is the lack of causation between any of the other variables and return on investment. In fact, in hundreds of analyses we conducted looking for patterns related to uncontrollable characteristics, we frequently found median ROI to be similar across dissimilar groups. Regardless of foundation age or size, market circumstances, bed size or complexity of care, the range of ROI performance was more or less consistent.
Assessing performance in hospital development
Assuming no limits on potential, how does a foundation reach the pinnacle of performance? We uncovered several key drivers of performance and share related details within this study.
The most significant lesson is simply that every effort should be made to maximize the size of gifts. Gift size emerged in our analysis as the single most important determinant of ROI. Multivariate regression analysis indicated that 30.3% of variability in ROI is accounted for by gift size, with a statistical significance of virtual certainty.
This finding dictates that hospitals emphasize development approaches that entail personal cultivation. As expected, major and planned giving emerged in this analysis as important contributors to funds raised and ROI. The surprise finding was the extent to which corporate and foundation giving played a part—accounting for fully 35% of funds raised across the study sample, accompanied by the highest ROI of all programs. The forward agenda of development executives (and our own research) must explore the full value of both individual and corporate benefactors.