Giving Flat To Nonprofit Hospitals/Healthcare

September 17, 2013       Patrick Sullivan      

It was flat earth for nonprofit hospitals and health care systems in the United States during 2012, raising an estimated $8.94 billion in 2012, the same as 2011. That figure ties highest fundraising total since at least 2000, according to the Association for Healthcare Philanthropy (AHP) 29th annual Report on Giving.

Prior to 2011, health care philanthropy’s banner year was 2008, when nonprofit health care systems raised $8.59 billion. The median total production across all institutions was $3.2 million in 2012.

At 22.2 percent, major gifts represented the largest piece of the fundraising pie. The average major gift topped $53,000. Corporate and foundation gifts followed at 20.9 percent, with an average gift of $18,435, and annual gifts came in at 19.5 percent of fundraising. The average annual gift was $306.

Special events and planned giving rounded out the top five, at 14.9 percent and 9.5 percent, respectively. Though capital campaigns did not appear as a separate category in 2012, 39.8 percent of the 273 survey respondents said their institutions took part in a capital campaign in 2012. Gifts and pledges of more than $10,000 were classified as major gifts last year, and gifts and pledges of less than $10,000 were considered annual gifts.

Direct human resources expenses made up nearly half (49.5 percent) of total expenses, followed by 36 percent on operational expenses and overhead, and indirect human resources expenses at 14.5 percent. Direct costs include postage, printing, travel expenses and donor recognition, anything directly related to a solicitation. Indirect expenses are costs such as staff salaries, data processing, education materials and data processing.

Across the board, construction and renovation made up the largest use of funds raised, at 24.4 percent. Some 21 percent was spent on patient care program support (such as funding the salary of cancer support personnel), followed by capital equipment at 12.9 percent. Only 4.2 percent of funds raised was spent on charitable care in 2012.

Fundraising budgets were a key determiner of performance. Institutions that spent more than $2 million on fundraising had median net fundraising revenue (gross funds raised minus fundraising expenses) of $9.9 million. Those spending less than $250,000 had a median of just $186,160. Institutions spending between $750,001 and $2 million had the highest return on investment (gross funds raised divided by fundraising expenses) at $3.98 and the lowest cost to raise $1 at 25 cents.

The average net fundraising revenue across all institutions was $2.1 million, with a median return on investment of $3.22. Median cost to raise a dollar was $0.31, unchanged from 2011 and down from a high of $0.34 in 2008.

Children’s hospitals had by far the highest median net fundraising revenue at $19.1 million, followed by teaching hospitals at $7.2 million. Return on investment was at its lowest levels since 2003, barring the year 2010 when it was $3.05. The high water mark was 2004, at $4.22.

Nearly half (48.3 percent) of the top 25 percent of reporting organizations had more than $1 billion in net patient service revenue, and more than eight in ten, or 82.4 percent, employed at least seven full-time-equivalent fundraising staff. Some 81.5 percent had more than $2 million in fundraising expenses, which were more than five times higher than the average across all institutions: $4.68 million compared to $856,097. They also produced on average $19.1 million in funds raised, compared to the average of $3.2 million.

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