A CEO’s Viewpoint Part 1: The Importance of Philanthropy to Your Organization

Gobel Group

As any hospital/health system CEO can tell you, the nature of today’s healthcare environment and the characteristics of leadership needed, is changing rapidly. The transition to value-based care, the case for managing financial as well as clinical risk, and a targeted focus on the consumer are but three (3) examples of the changes taking place. These changes are demanding that hospital and health system leaders be nimble and flexible, while adjusting to varying and different inputs at breakneck speed. It is certainly a different, and more challenging daily life for a C-Suite member than when I entered into the profession several years ago.

One of the areas that was usually not discussed much by hospital and health system administrators of the 1970’s and 1980’s was the role the CEO plays with fundraising. For example, in my many years of working in the industry and attending many, many meetings and conferences I never had formalized training or even a “mentor” who guided me towards the journey of what raising money is, how to do it, what it takes, etc. And even today, if you attend a multi-focal healthcare conference, there are likely four (4) or (5) days of presentations about healthcare operations and strategy but most likely only one (1) or two (2) sessions on fundraising. Yet over the last decade within our healthcare system, more and more of the best philanthropic shops in healthcare have CEO’s, and the entire C-Suite, deeply engaged in building great relationships with community leaders, donors, and key constituents.

While healthcare leaders and healthcare boards have been tracking/monitoring “Return on Investment” (ROI) for years, philanthropy has joined the effort in profound ways. What I was able to learn over my time as a CEO, was the value that fundraising contributed to the organization in terms of pure ROI. The Association for Healthcare Philanthropy (AHP), the international association for the industry, meticulously tracks best practice for healthcare fundraising. You may be surprised to learn the following:

  • Over the past 5 years, the average ROI for fundraising in healthcare was more than 4:1
  • At the 75th percentile, fundraising will return more than $6 for every $1 dollar invested
  • More than $10 billion dollars is given to hospitals annually

Another significant study Gobel Group did with a client, with data from the Advisory Board, looked at fundraising from a different but related perspective. They found that for IU Health in Indiana, with a pretty normal payor mix, it would take 7,000 new inpatient discharges to increase net revenue by $1 million. (With today’s trend towards outpatient care, imagine how many outpatient visits would be required to achieve that same $1 million). However, that same increase could be achieved by properly investing less than $215,000 in an organization’s fundraising infrastructure, along with creating the appropriate partnership with the CEO. While every healthcare organization today is trying to capture “market share,” it is hard to imagine finding 7,000 new patients each year, year over year. Yet finding just one new one (1) million-dollar donor is not impossible…in fact it is quite normal for organizations that are committed to unearthing the philanthropic potential in their communities.

When you add a wider perspective of “wealth,” the case for prioritizing fundraising becomes even more evident. According to an article published in 2018 by Gabriel Garcia, the managing director and head of relationship management at BNY Mellon’s Pershing Advisor Solutions, the baby boomer generation will be retiring with the greatest amount of wealth of any generation that has ever lived – $30 trillion. At the same time, the article suggests that “boomers are more likely to gift their wealth to charitable causes, making the wealth transfer to heirs smaller than anticipated.” In other words, more and more people are and will be making philanthropic decisions every day. At the same time, healthcare organizations are having an immediate and substantial impact on people’s lives every day. Fortunately, grateful patients are a norm for hospitals and health systems and I can tell you from my own experiences that many patients and their families want to say “thank you” for their care by helping to support your mission of caring for your communities.

Lastly, I want to note the recent release of the Giving USA annual study of philanthropy. That study indicated that the total amount given to non-profits has increased almost every year. However, in the past couple of years, the number of individuals making charitable gifts is diminishing. This highlights the fact that “principal” gifts from the very top of the giving pyramid are occurring at higher levels, creating more significant impact, while asking for more “return” on their philanthropic donation today than at any other time in our history. And those organizations that one, steward those people in their communities with philanthropic capacity, and two, continue to drive positive and innovative change that impacts the overall health of their communities are the organizations that will benefit the most from the gratitude and wealth of those who are in a position to give.

Let me know if I can help you with this challenge….your investment of leadership, time, and vision into fundraising will be rewarding to not only your organization, but to you personally.

This series of articles is written by Jeff Fried, Executive Consultant for Gobel Group and former President and CEO of Beebe Healthcare. Click here to read the next article in the series. 

References

  • Higher Calling: The Rise of Nontraditional Leaders in Academia Hardcover – September 12, 2017 Scott C. Beardsley
  • The View from the Top: What Presidents Think About Financial Sustainability, Student Outcomes, and the Future of Higher Education is based on a survey conducted by Maguire Associates, Inc., was written by Jeffrey J. Selingo
  • Giving USA 2019: The Annual Report on Philanthropy for the Year 2018.
  • Association for Healthcare Philanthropy, 2018 Report on Giving: By the Numbers