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Corporate & Institutional

Trends in Healthcare Philanthropy and the Use of Separate Foundations

Walter J. Dillingham Jr., CFA
Director of Endowments & Foundations National Practice

September 12, 2017

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This research report was conducted in 2018 and highlights hospital foundations in New York State. Many hospital systems utilize separate fundraising foundations to implement their fundraising strategies. But as nonprofit hospitals continue to merge and change, what is the appropriate strategy for these separate foundations? While specific to New York State hospital foundations, these findings may be applicable to hospitals and hospital systems nationwide.

Over the past few decades, there has been significant change in the U. S. nonprofit healthcare sector as many smaller community hospitals have closed or become part of larger healthcare systems. The Affordable Care Act (ACA), which was implemented to control rising medical costs and reduce the uninsured, has also impacted the healthcare industry.

One can observe the changing healthcare landscape in many local communities as some local hospitals have closed, changed their names, or joined other larger regional systems. Many believe that the healthcare sector will continue to evolve, and there will be more consolidation in the hospital sector as systems become larger and seek operating efficiencies. It has been a challenging environment for nonprofit hospitals and systems.

One area that has not changed, since we first covered the nonprofit healthcare sector in our 2013 report, Trends in Healthcare Philanthropy and the Use of Separate Foundations, is the importance of philanthropy for hospitals and healthcare systems. Philanthropic dollars, while a small part of total hospital revenue, remain crucial for hospitals as they seek to establish and enhance new patient services and fund capital projects in these challenging times.

As overall program revenues continue to shrink and the industry faces regulatory changes, nonprofit healthcare organizations must seek to diversify their fundraising strategies and employ the best structures for reaching new donors and engaging existing ones. Many hospital systems utilize separate fundraising foundations to implement their fundraising strategies. But as nonprofit hospitals continue to merge and change, what is the appropriate strategy for these separate foundations? Is it best to have one parent foundation for the entire system? Or is it best to have separate local foundations? Or is it better to implement a hybrid model?

This research report provides some insights into how hospitals in New York State are starting to address these questions related to their foundations. Our intent is to provide findings and conclusions that may be applicable to hospitals and hospital systems nationwide.

This research study was conducted in 2018 and all data is relevant as of that year, unless otherwise noted. If you have any questions about this study, please do not hesitate to contact the author directly. Please see important disclosures at the end of the article.

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