Behind the Scenes: Fundraising in Medicaid-Heavy Markets
Rick Scott and Dan Murphy
Photo by Scott Graham
This is a guest post by AHP members. Rick Scott, CFRE, is president of Presbyterian Healthcare Foundation and chief development officer for Presbyterian Healthcare Services. His co-author, Dan Murphy, is vice president and chief philanthropy officer for Dignity Health Foundation–Inland Empire and Glendale Memorial Health Foundation.
It has been said that every long-lasting success starts with a good foundation. This sentiment was at the heart of our discussion as we began our first meeting of the 2018-19 AHP Philanthropy Residency Program, a customized training and information-sharing program for executive-level development professionals.
As two of the many chief development officers in communities with large Medicaid populations, we hypothesized that one of the major challenges to creating a strong base for long-term fundraising success was a payer mix with a high prevalence of Medicaid. In an age when big gifts rule the day, we set out to answer whether major gifts success could be found in communities with high Medicaid enrollments and, if so, to understand the keys to success.
To our surprise, we found that our colleagues in some of the most challenging, Medicaid-heavy markets were not only achieving major-gifts success, but they were also leading the way with innovative approaches.
Development officers at seven hospitals and health systems participating in the Medicaid Transformation Project, a national initiative to develop digital solutions to improve healthcare for the Medicaid population, completed an informal, 14-question survey, plus follow-up emails and phone interviews.
On average, respondents worked for organizations with 45 percent Medicaid patients, far greater than the national average of 20 percent. Respondents reported raising an average of $9.3 million in the most recent fiscal year with an average cost to raise a dollar of $0.35. Major gifts accounted for 80 percent of fundraising revenue.
Heavier Reliance on Corporations and Foundations
Nationally, individuals account for 68 percent of all charitable giving. By contrast, many respondents in our study relied more heavily on foundations and corporations. In some cases, giving was almost equally distributed among individuals, foundations and corporations.
For example, Geisinger in central Pennsylvania reported a distribution of 31 percent from individuals, as well as 54 percent combined from foundations and corporations, with a focus on community health and traditional programs like women’s, pediatrics, and neuroscience.
Advocate Illinois Masonic Medical Center, located in Chicago’s north side, reported that 55 percent of major gift income came from foundations and state grants for community health programs focused on dentistry, autism and behavioral health.
Across the board, respondents noted that major gifts, particularly “top of pyramid,” from grateful patients were anemic or virtually non-existent. Larger gifts from individuals often came from board or community members with an affinity for the hospital’s mission.
Conventional wisdom suggests that the socioeconomic makeup of these communities accounts for the lack of major gifts from grateful patients, but we also found other issues at play. For example, some respondents noted that competing job responsibilities pulled them from major gifts work. Others said their organization prioritized planned gift efforts for other markets or dismissed planned giving entirely, given the need for current-use dollars.
One outlier was New Mexico-based Presbyterian Healthcare Foundation, where 58 percent of major gift revenue in recent years came from planned gifts (mostly realized). Presbyterian secured 90 percent of major gifts from individuals, a necessary step because of its location in a rural state with few large corporations and foundations.
Funding Benefits Larger Community Needs
The most striking revelation from our study relates to use of funds. Our respondents reported raising, on average, only about 20 percent of major gifts for capital needs. More than 70 percent of major gifts were used for programs with a predominant focus on community health, wellness, and other initiatives related to social determinants of health.
For example, Dignity Health California Hospital Medical Center in downtown Los Angeles reported that nearly 90 percent of their major gifts were focused on programs like their after-school program, serving over 5,000 parents and children each year.
Dignity Health Foundation–Inland Empire in San Bernardino, CA, and Dignity Health St. Joseph’s Foundation–San Joaquin in Stockton, CA, reported success in major gift fundraising for nursing staff education and graduate medical education for physicians.
The Path Forward
The world of healthcare philanthropy is likely to experience lasting changes in our post-COVID world. The impact could be most seismic in Medicaid-heavy markets, where the need for charitable dollars for capital improvements and core operations has never been greater. At the same time, the COVID-19 pandemic has magnified community and population health needs in these locations.
How we balance organizational and community needs with donor interest will be a major challenge in the months ahead. It will require flexibility, new ways of thinking and, perhaps most importantly, open and honest conversation with our hospital leadership and donors.
Our study is only a small snapshot of the many fundraisers and institutions doing fine work in some of the most challenging communities in America. A larger, follow-up study is needed and, we predict, will reveal some remarkable adaptation to the current crisis.
We began our 2019 AHP International Conference presentation with a quote from Ovid: “Let your hook be always cast; in the pool where you least expect it, there will be a fish!” This sentiment, which speaks to the importance of not retreating at a challenging time, is even more applicable today.