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Continue LogoutFor years, hospitals and health systems have been raising larger amounts of philanthropy in support of capital and programmatic investments. Private donations have played an indisputably valuable role in cushioning hospitals against poor margin performance and supporting the launch of new initiatives.
But, hospitals have been earning a decreasing share of philanthropy relative to the broader nonprofit health sector. For context, charitable giving to all health-related nonprofits in the U.S. grew by 23% between 2014 and 2018. Over the same period, giving to hospitals and health systems grew by only 12%.
There are many potential causes, such as frustration around rising individual health care costs, perceived corporatization of local hospitals, and media scrutiny around surprise billing. But all we can prove with the data is that hospitals have been struggling to attract health-focused donors.
The question now is whether this trend will reverse in light of health systems’ critical role on the front lines of the Covid-19 crisis and their significant need for financial assistance.
Historical evidence is clear about what happens to philanthropy during times of economic crisis: it goes down. All U.S. donations dropped by 7.2% in 2008 and then another 8% in 2009. However, these precedents may not be helpful when an economic recession coincides with a global pandemic.
As of early June, $7 billion in grants had already been issued by U.S. donors in response to Covid-19, and a Fidelity Charitable survey from late March found that nearly 80% of individual donors plan to donate at least as much in 2020 as they did in 2019.
Will hospitals and health system benefit from this spike in generosity? Yes. One recent survey found that public health clinics and hospitals are the not-for-profits most likely to gain new supporters during this time. But that support must not be taken for granted.
The lasting impact of Covid-19 on hospital philanthropy is far from certain. We know from past crises that emergency donors are especially difficult to re engage once the urgency subsides. We also know that near term gains in hospital support could be offset by the combined impacts of further economic decline and delayed or cancelled fundraising activities. It’s even possible that hospitals may find themselves further out of favor with donors once the final public narrative settles in. Negative reviews of hospital performance, the ongoing affordability crisis, problems with billing related to Covid-19, and concerns over unfair allocation of government relief funds could all weigh down donors’ interestin future giving.
Nevertheless, health systems will have sizable financial wounds, due in large part to the cancellation of scheduled procedures. Philanthropy’s high return on investment (nearing 5 to 1 at the median organization and surpassing 10 to 1 at high performers) cannot be overlooked by organizational leaders. But those same leaders will be sorely disappointed if they expect donors to translate on their own a case for crisis relief into a case for long term financial restoration.
The typical health system can expect 5% to 20% of their fundraising revenue to be unrestricted in a given year. While those numbers may be higher in 2020 due to the urgency of your Covid-19 relief appeal, it is unlikely that donors will change their fundamental desire to restrict their gifts for specific purposes. Organizational leaders must offer restricted funding opportunities that cleanly align with the financial needs of the health system. And development professionals must approach loyal donors about re allocating their commitments from less urgent priorities, like capital, toward more immediate needs.
Donors will be looking to be part of the solution to the problems exposed by Covid-19, but they will need to be convinced that health systems are worthy recipients of assistance. That work was worth doing before this crisis hit, and it is now more important than ever.
The swift and dramatic response by the philanthropic community to Covid-19 has several implications for hospitals and health systems. Below are four that will matter greatly.
One health system in New York reported raising $10 million for its Covid-19 response efforts in the first eight weeks following the statewide lockdown. Eighty percent of those donors were new to the organization. This outpouring of support, while striking, represents one of the core challenges to come.
The best precedent we have for how donors respond to an emergency – albeit a far from perfect one – is a natural disaster. When hurricanes and wildfires wreak havoc on communities, Americans respond by opening their checkbooks. One study found that 31% of U.S. households made a disaster-related donation in 2017. However, those donors tend to have very short-lasting allegiance to the nonprofits they select. The same study shows that in 2018 only 5% of households provided ongoing charitable support for disasters that had occurred the year prior.
The takeaway for hospitals and health systems is simple: spikes in giving during the Covid-19 crisis are unlikely to sustain themselves, and hard work lies ahead to regain a growth trajectory. One of the most difficult challenges hospital philanthropy teams will face is scoping the amount of time and strategic attention paid to retaining first-time donors. Some will be available for long-lasting support and relationship-building, and creative measures should be used to steward their partnership (think: personal thank-you notes from nurses). Many others will not renew their support. An over-investment in crisis-donors should not come at the expense of long-standing donors and those for whom the hospital aligns more centrally with their philanthropic goals.
For new and existing donors alike, the attractiveness of giving to hospitals depends in large part on how the public looks back on the events unfolding now. If hospitals and health systems emerge as heroic and empathetic actors in the common narrative, that’s going to help your case with donors. If the storyline is less favorable—you fail to protect your staff, take the blame for supply shortages, or appear to receive an unfair share of government relief funding— then you will likely earn less attention from health-focused philanthropists.
Early indications are favorable for hospitals. One public opinion poll found that 65% of Americans have a more positive view of hospitals and health systems because of how they’ve reacted to the crisis, and 88% approve of how they are responding to Covid-19. Clinicians continue to enjoy very high levels of trust and approval by the broader public.
There is also the question of what will happen to the public’s views on health payment reform. One poll found that 41% of survey respondents said that the pandemic has made them more likely to support universal health care, in which all insurance is provided by the government.
America’s status as the most philanthropic nation on earth is intricately linked to the limited role tax dollars play in providing for public services relative to other Western nations. If this crisis further pushes public opinion in favor of government-funded health care, for example, that might have a correlative dampening effect on personal donations to provider organizations.
While hospitals do not have full control over public perception, they do have control over their own storytelling. Donors need to see hospitals as valuable social investments. Leaders in philanthropy and across the organization must actively promote stories about the selflessness of clinicians, the generosity of local community members and businesses, the ingenuity of supply chain managers, and other cornerstones of the organization’s Covid-19 response. Consider ideas such as virtual town halls, local media op-eds, and digital impact stories.
In addition to proactive storytelling, hospital leaders can influence the impact of post-Covid-19 philanthropy with the funding opportunities they present to donors. Philanthropists rarely want to use their resources to cover operating losses—or just to keep your lights on. They want their gifts to build and create change, to make a measurable impact on their communities. While your organization's financial needs are acute, they won't necessarily resonate with donors after the immediate health crisis has subsided. Instead, you must make a case for support that is rooted in a vision for a better health system and show donors how they’ll be instrumental in making that vision come to be.
Each health system will need to identify for itself what those opportunities are, but it is likely that Covid-19 will illuminate powerful new opportunities to support virtual access to care, create inflection points in social determinants of health, design new approaches to disaster-preparedness, and more. These are the concepts that will be most energizing to your newly acquired crisis-donors, provide the strongest counterbalance to shifting attitudes around government’s role in health care, and best position your organization to capture charitable revenue for months and years to come.
Strong funding priorities will be necessary for future fundraising success, but they won’t be sufficient. Development leaders and their teams will also need to build a new toolkit for performing their functions at a high level.
Why? Most significant, the return to normalcy will be slow across all facets of society. Only 1 in 5 Americans say they’re ready to resume their pre-Covid-19 routines today. Many individuals will think twice about going to large, in-person events—including fundraising galas—for a long time to come. Donors whose age puts them at high risk may not be interested in seeing development officers face to face, or touring a hospital, until an effective vaccine is widely available.
That’s to say nothing of the fact that prior fundraising goals and forecasts for the next one to two years are now unreliable. Or that current campaigns may seem out of alignment with the environment by the time standard fundraising activities resume. For instance, if digital health transformation and behavioral health weren’t campaign priorities before, should they be now?
Some modifications are a given, and are already being used successfully. For instance, video visits with donors are a more-than-adequate stand-in for in-person visits. Other ideas are being tested. While virtual happy hours might not be for everyone, online town halls are likely to provide the type of access and engagement that funders desire. And there are plenty of other tactics that haven't yet been discovered.
The organizations that innovate their philanthropy strategy today will find themselves with a stronger footing in the emerging new normal. Institutional leadership must take active roles in facilitating that innovation.
The Covid-19 crisis is creating a philanthropic opportunity for providers—but capturing it depends on the actions they take.
Questions for hospitals and health systems:
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