Healthcare Giving Bucks Trend, Heads Upward

November 9, 2009       Mark Hrywna      

With inflation and charitable giving stagnant or declining, gifts to health care institutions grew almost 3 percent last year, according to a recent survey by the Association for Healthcare Philanthropy (AHP).

Philanthropic giving to health organizations last year increased approximately $241 million to nearly $8.6 billion, up 2.9 percent, according to AHP’s new Report on Giving. The 2.9-percent spike was about half the growth rate reported for 2007 when donations totaled $8.437 billion. Giving to Canadian institutions fell more dramatically, down 12.9 percent last year to $1.07 billion after a 6-percent spike to $1.337 billion the prior year.

“Accounting for much of last year’s slight advance in giving was the fact that most nonprofit hospitals and healthcare systems in the U.S. closed their books before the last quarter of 2008, when U.S. gross domestic product plunged more than 5 percent,” according to the report. Those that closed their books on Dec. 31 saw a 0.2-percent dip in annual giving.

The survey was sent to AHP membership, which is made up of healthcare providers such as hospitals, medical centers, teaching hospitals, long-term care and hospices. The Giving USA 2008 report released this past June, that includes health organizations as well as hospitals, indicated a 6.5-percent dip in giving, to $21 billion last year.

Describing the growth as “tepid,” AHP President and CEO William C. McGinly said the data are a “wakeup call” for the Obama administration and Congressional leaders and efforts to limit the charitable deduction write-off. “The hit the wealthy individuals have taken in the total worth of their portfolios and holdings during the recession takes huge assets off the table and out of the giving equation,” he said. “Compounding this scenario would be the Obama administration’s and Congress’ attempts to limit the charitable deduction write-off, thus dampening donors’ incentive to give and further reducing charitable contributions to all philanthropic organizations,” he said.

“We were surprised when we saw the fact that we were up even slightly. We went back and looked at the survey and timeframes they’re using,” said McGinly. “So it [giving] was really flat if you took it through the calendar year,” he said, because the last three months of 2008 bludgeoned philanthropic support. “To be fair and equitable, we had to make comparisons as we always have done since we started the surveys in the ‘80s,” he added.

Given the timing of fiscal years and the giving trends of the last 12 months, McGinly said there’s little doubt that next year’s AHP report will paint an uglier picture. “No question about that in our minds because this downturn has continued all the way through 2009,” he said. Even with a modest uptick in the economy during the second half of the year, McGinly expects a steep drop in the next report.

Member surveys independent of this recent study have indicated 80 to 85 percent of respondents saying the economy is making it much more difficult to raise money, McGinly said. “In those surveys too, this is all localized, it’s not even regional. There are some communities and some hospitals that are doing outstandingly well both in operations as well as fundraising. But it’s because the local community is stable, and it has not been hit by the economy the same way other parts of the country have been hit or other sectors,” he said.

The vast majority (72 percent) of the total $8.588 billion raised in the U.S. was derived from cash contributions. The second-largest source came from pledges secured but not paid (19 percent), about $1.649 billion. The remaining sources included planned gifts secured but not paid (3.3 percent/$283 million), value of securities sold (3 percent/$258 million), other assets (1.4 percent/$120 million), and cash value of non-monetary gifts sold (1.1 percent/$94 million).

Total pledges for charity fell 6.2 percent while planned gifts secured but not paid fell almost 13 percent. Pledges accounted for more than $2 billion of the total funds raised, most of which were secured but not yet paid.

McGinly said it’s clear that donors have been much slower on fulfillment of pledges. “People who made a pledge a year ago or two years ago were not in this kind of economy, so pledge fulfillment is lagging much more than what it was before,” he said. “When people made pledges they were wealthier in their own mind than they are now,” he added.

AHP members also are doing the same, holding off on the next capital campaign or delaying acquisition of equipment, planned construction or renovations. “It’s a whole new world out there and people are thinking, ‘When it gets back to normal…’ Well, this may be the new normal,” McGinly said.

AHP emailed a Web-based questionnaire to more than 2,000 AHP members. Follow-up reminders were sent to non-respondents and by May 461 usable surveys were returned, netting a response rate of 22.2 percent. The data reported by institutions whose financial statements closed at any point during the previous calendar year, reflecting fundraising activity throughout 2008, regardless of when the organization closed the fiscal year books.



This article is from NPT Weekly, a publication of The NonProfit Times.

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