Treat Donors As If They Are Investors

March 6, 2012       Samuel Fanburg      

Viewing direct mail as “costly” and “disappointing,” William Kiel, vice president of development for Allegiance Health, said the three-year-old organization has had to take a more innovative approach toward fundraising given its youth.

“Our direct mail program has pretty much boiled down to straight donor acquisition,” Kiel said. “It is very costly and we’re seeing people give between $20 and $25. We are seeing fewer people giving this way and people over 60 are the ones we are seeing with the best response. It is just getting so hard to convince people to open their mail. When you’re hoping for a 1-percent response, it’s getting expensive.”

Successful fundraising for the Jackson, Mich., group came through engaging more corporate support and expanding the ways people could donate.

A restructuring of fundraising activity is something that has taken hold sector wide because of the recession. According to the Association of Healthcare Philanthropy’s (AHP) newest survey, most types of fundraising activities have increased since 2006. Now, 17.1 percent of funds raised are from major gifts, 20 percent from annual giving, 14.8 percent from special events and 10.7 percent by grants, the remainder derived from more traditional means. These rates have increased, respectively, from 14.9 percent, 16.6 percent, 14.3 percent and 9.3 percent.

As an example, this past year Allegiance Health was able to build a $1-million matching gift into a $2-million gift through simply expanding the channels through which supporters could donate. After receiving the gift, Kiel said his organization went to major donors, securing $450,000 for the campaign. The rest came from corporate gifts and foundations.

“We raised more than the $2 million expected,” said Kiel. “We are really seeing corporate giving beginning to come back. One company in town came dangerously close to closing down for good, but was able to give us a $50,000 gift.”

In addition to securing funds through varying techniques, the organization takes stock of where they are every three to five years. Currently, Allegiance is taking the next year to 18 months to steward the people who made contributions. They have a couple of planned gifts that will go into effect during the coming months and an annual giving program focused for its hospice.

“I think people are still being cautious,” said Kiel, “and probably more cautious than they were months ago. It’s just difficult to make long-term commitments when we are still in this economy. They are still willing to give, but remain cautious.”

Factoring in the “bumps and volatility” of the economy, Bill Littlejohn, CEO and senior vice president of the Sharp Healthcare Foundation, said the group has rolling five-year plans. “We try to have aggressive long-term engagement,” said Littlejohn. “We create projections based on philanthropy distributions that have helped us in sustaining both forward momentum and smoothing out volatility. Even though our fundraising may be down, our distribution went up.”

Sharp Healthcare, based in San Diego, Calif., is not a “pure” charity, said Littlejohn, so they don’t raise money for charity care. Instead, they engage in a mix of bonds, borrowing and philanthropy. The organization just finished a $60 million capital campaign, originally slated to raise $33 million. Funds were directed toward 23 initiatives. Philan­thropy only ends up being 15 percent of its op­er­ating budget.

“I think there is something to say for the idea of thinking of philanthropy as an investment,” said Littlejohn. “We’ve had success doing testamentary pledges, reserving part of what’s coming through their estate. We’ve also done life estate gifts and use a supporter’s home as a charitable asset. We don’t like to silo contributors. Some organizations have pigeonholed people in roles when they are people, all the same. I think that kind of thinking is starting to evaporate.”

Littlejohn said he considers donors just like shareholders and sees a need to produce tangible results for them. The organization figures for every $1 donated, supporters get back $8 because of the money the hospital infuses itself. “The idea is we want to build a philanthropic relationship that be built over time and isn’t just maximized once a year,” said Littlejohn. “We try to focus on acquisition, bringing in a bigger pool of donors and helping to fund the future.”

On the cusp of a new $100-million capital campaign, Littlejohn said the hospital will continue to use its investment model, operating what he termed a “unique enterprise.”