Relationship building, strong economy propel foundations

January 15, 2019

Charitable giving set records in the U.S. in 2017. For the first time, philanthropy passed the $400 billion mark, with gifts by individuals making up 70 percent of that total. That is according to the most recent annual report from Giving USA on the state of philanthropic giving in the nation.

Dr. Thomas Rydz of the St. Joseph Health Medical Group stays very still as "The Passing Zone" comedy juggling duo hurl sickles past him during a June fundraising event for the St. Joseph Hospital Foundation in Eureka, Calif. The sold-out show raised money for the new St. Joseph Hospital Family Medicine Residency Program.

Fundraisers at a sampling of Catholic health systems say the strong fundraising results they have achieved in recent years are due in part to a long economic expansion in the U.S. and in part to the foundations' disciplined approach to building lasting relationships with donors and delivering measurable results to show donors money is well spent.

"Donor generosity is rooted in the donor's relationship with the organization they support and the (foundation's) ability to convey a concrete need for support," explains Megan Mahncke, president of SCL Health Foundations.


She says, "We believe philanthropic giving is trending higher based on our targeted efforts to grow new donor relationships and strengthen our existing ones. (We're doing this) by providing a strong case for support and following through with true stewardship that demonstrates the donor's impact once a gift is made."

Smooth sailing
Joel Gilbertson is senior vice president of community partnerships for Renton, Wash.-based Providence St. Joseph Health. He says the foundations within that 51-hospital West Coast system have seen rising levels of giving over the last several years, with 2018 on pace to be their best year ever for philanthropy. Such results in recent years helped give the system the confidence in 2018 to say in its five-year strategic plan that it would double its philanthropy production to $360 million per year, a goal which would require a year-over-year increase of about 20 percent. Now closing out year one of the plan, Providence St. Joseph is ahead of pace to hit its mark, Gilbertson says.


Mahncke says SCL Health Foundations — which is comprised of the foundations of the system's eight hospitals as well as a children's home foundation and system foundation — saw a 12.7 percent increase in donations between Jan. 1 and Sept. 30 of 2018, over the same period in 2017.


Daniel McCormack is vice president of philanthropy for Hospital Sisters Health System of Springfield, Ill., and president and chief executive of the Hospital Sisters of St. Francis Foundation. He says that beginning in 2015, the foundations within that 15-hospital system have booked more gifts valued over $1 million than they'd received in the prior three decades combined. The foundations' combined fundraising totals are up by several million dollars annually, over the average achieved prior to 2015.

And, Richard Torres, president and executive director for the CHRISTUS Foundation for HealthCare in Houston, says that while Hurricane Harvey slightly stifled local philanthropic giving in 2017, the last several years otherwise have been strong for that foundation.

w190115_RelationshipBuilding-2-aAll year patrons and staff toss bills and coins to the ceiling of Kell's Irish Brew Pub in downtown Portland, Ore., and, with a little luck, they stick. (The pub owners are mum about how the money sticks.) Once each year, pub staff invite residents of Providence Center for Medically Fragile Children in to watch a "ceiling sweep." This year, the sweep yielded $22,808 to provide the special beds needed by kids who live at the center. Pub patrons tossed about $5,700 to the ceiling, the pub matched the community's donation, and Portland's Carr Subaru matched that combined figure.

Culture of philanthropy
Gilbertson says Providence St. Joseph has made increasing philanthropic gifts a strategic priority. All senior leaders including board members and physicians are encouraged to actively support the fundraising initiatives of their hospital or system-level foundations by cultivating donors and/or making donations themselves. "We've built a culture of philanthropy" at Providence St. Joseph, Gilbertson says.

Providence St. Joseph also educates its clinicians on where to direct patients who wish to express their gratitude through a financial gift.

HSHS and SCL Health are among ministry organizations that have centralized back office and other functions for their philanthropy operations in recent years. Foundation executives at those systems say the structure promotes the spread of best practices and increases efficiency in part by freeing up local foundation staff to focus on donor relations work. Providence St. Joseph has created a similar structure in which its local foundations can rely on the system for resources and support.

w190115_RelationshipBuilding-4-aSCL Health Saint Joseph Hospital in downtown Denver spends philanthropy proceeds to field this mobile shower unit and provide clean clothes and a meal to people who are homeless.

The systems use donor management technology that would be unaffordable for a small community hospital foundation. For instance, there are databases for managing "donor traffic" to strategically plan outreach to individual donors as well as technological tools for researching donor giving capacity. The systems employ philanthropy executives with expertise in estate and gift planning. Those executives are available to advise local foundations and potential donors who have estate planning questions.

Dancing with donors
While the tools have improved the efficiency of donor profiling and fundraising, the experts agree that the most significant catalysts of fundraising success in recent years have to do with a concerted effort to deepen relationships with donors and prospects in order to identify giving opportunities that are most meaningful to specific givers.

McCormack says HSHS foundations no longer view fundraising galas as "one-offs," but see them instead as opportunities to build ongoing relationships with donors and to advance and strengthen those relationships. Staff and volunteers at the galas are equipped with mini bios of prominent donors so they can engage them in conversations.

w190115_RelationshipBuilding-3-aThe CHRISTUS Foundation for HealthCare in Houston funds this mobile health clinic for people who lack regular access to medical care.

SCL Health's Mahncke says donors want to see direct results from their philanthropy and gain assurance that their contributions are being well spent.

Torres says the CHRISTUS Foundation recognizes as it courts older, higher net-worth individuals, it simultaneously must develop the next generation of givers, many of whom are minorities. He says while Generation X and the millennials in general have not yet reached the same level of wealth as their parents' generation, younger folks are motivated to support worthy causes, with the millennials currently more interested in giving their time than their money.

Torres says the CHRISTUS Foundation works hard to be creative and visible on social media platforms popular with young professionals.

Reason to give
Gilbertson, Mahncke, McCormack and Torres say it is essential in their donor relations work to continually illustrate how important Catholic health care is to local communities — and how essential philanthropic support is to their organizations' sustainability.

The foundations solicit stories from patients who describe how their lives were improved through the generosity of others.

Gilbertson says, "We see across our communities donors who are deeply passionate about improving other people's lives. And Catholic health care has a great story to tell because of our mission to aid the poor and vulnerable" and the opportunity donors have to support that mission.

Too soon to say how new tax law will impact giving

Executives at health ministry foundations agree it is too soon to gauge if or how the 2018 Tax Cuts and Jobs Act will affect philanthropic giving. The law lowered marginal tax rates for most individuals, changes that have historically impacted charitable contributions, according to "First look at the Tax Cuts and Jobs Act," an analysis published in the May 2018 CPA Journal. Author Mark A. Nickerson, a certified public accountant in Buffalo, N.Y., cites research indicating that when tax rates are highest, high net worth individuals give the most to capture a higher tax benefit and lower cost of giving.

The 2018 tax law also raised the standard deduction, and the expectation is that many individuals earning between $50,000 and $200,000 will no longer itemize their deductions. Charitable giving may decline along with the decrease in the number of taxpayers itemizing deductions. On the other hand, to the extent that reduced marginal tax rates increase disposable household income, taxpayers' capacity to give would increase.

But tax breaks aren't the only reason, and may not be the primary reason, for charitable giving. Nickerson makes note of a 2013 survey in which the majority of high net worth respondents said their primary motivation for giving is altruistic — they give to support the missions of nonprofits.

Nickerson concludes, "Not-for-profit organizations and their advisors need to be prepared for potentially negative impact on individual giving," as a result of changes in the U.S. tax code. He recommends that foundations work hard to develop new donors and deepen relationships with the ones they have.



Foundations use technology to maximize donor relations work

When systems centralize their foundations, they can pool operating resources to purchase technological tools that enable fundraisers to be smarter about donor outreach and donor relations work.


Daniel McCormack is vice president of philanthropy for Hospital Sisters Health System of Springfield, Ill., and president and chief executive of the Hospital Sisters of St. Francis Foundation. He says that HSHS foundation executives and staff use software from Blackbaud to record contacts made with individual donors and the donors' giving history and preferences. Foundation staff consult the database to avoid peppering a giver or prospect with multiple gift requests in a short time frame.

The foundations also use Blackbaud software to do wealth screening and wealth modeling. Wealth screening tools calculate estimates of an individual's capacity to give; wealth modeling adds in personal information and lifestyle preferences to point to causes that might be more likely to motivate an individual's philanthropic giving. According to Blackbaud's website, it collects and uses information on people's annual income, net worth, investments and discretionary spending.

HSHS foundations use a WealthEngine web-based service as well. WealthEngine collects publicly available information, such as the value of a donor's home, records of political and philanthropic contributions and biographical information, according to McCormack. WealthEngine feeds that and dozens of other public data points into an algorithm that generates information on people's capacity and propensity to give.

McCormack says HSHS foundations use these screening and modeling tools to develop strategies for cultivating donors, to build connections with donors, to cull mailing lists, and to determine how and when to contact potential or existing donors. Some donors are courted for big gifts while others are tapped in annual giving campaigns or for campaigns specific to a particular cause, such as the funding of a new piece of medical equipment.




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