Nonprofit Hospitals Still Raising Money, Survey Finds

WASHINGTON — Despite the poor economy, U.S. nonprofit hospitals and healthcare systems managed an eight percent increase in philanthropic donations last year, to over $8 billion, with individual donors contributing almost 60 percent of that total. But fundraising costs climbed and return on investment dipped, according to the fiscal year 2010 Report on Giving USA issued by the Association for Healthcare Philanthropy.

 

The AHP’s annual survey showed that donations and grants to healthcare institutions in the nonprofit sector totaled $8.264 billion in fiscal year 2010, up $620 million over the $7.644 billion raised in fiscal year 2009.   While last year’s total was still short of the $8.588 billion raised in FY 2008 and the FY 2007 level of $8.347 billion, the eight percent growth rate was the healthiest rate of advance since FY 2006.

 

Annual giving was the largest source of funds raised in FY 2010, the AHP report noted, accounting for 20 percent of all funds raised, followed by major gifts at 17.1 percent, capital campaigns at 15.4 percent and special events at 14.8 percent. Planned giving, which includes bequests, charitable gift annuities, charitable remainder trusts, and similar long-term philanthropic arrangements, accounted for 9.5 percent of donations last year, similar to pre-recession levels.

 

“These outcomes for fiscal 2010 were not unexpected. They reflect the slow pace of our economic recovery and shifts in giving priorities that have resulted,” said William C. McGinly, president and chief executive officer of AHP. “Earlier studies AHP released this year also showed signs of progress beginning in 2010, but far from a full recovery from the recession.”

 

The donated funds were used to support a range of programs and functions. In FY 2010, as in previous years, healthcare organizations directed the largest single share of their donated dollars to fund construction and renovation projects; however, that portion has declined since FY 2009 – 22 percent compared to 27.3 percent, respectively. New and upgraded equipment purchases constituted the second largest category at 20.6 percent, followed by general operations at 17.6 percent – both up slightly from FY 2009. Community benefit programs remained constant at about 10.7 percent.

 

Over the past three years of the recession, foundations have experienced a falling return on investment. Likewise, costs to raise each dollar have climbed. At 33 cents in FY2010, the cost-to-raise-a-dollar through philanthropy remained above 30 cents for the third year in a row, and return on investment declined, on average, more than four percent to just $3.05 raised for every dollar spent on fundraising. 

 

Taken together, these metrics indicate increased expenses associated with raising the same (or for some foundations, less), than previous years, according to AHP. Fundraising has become more challenging and, therefore, more expensive, added AHP, and additional resources are needed to raise the same amount of funds during difficult economic times.

 

Higher than average success in obtaining donations was demonstrated by fundraising programs that help to sustain hospitals associated with academic institutions and children’s hospitals, by programs that have been in existence for 15 or more years, and by those with at least four professional fundraisers on staff.