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News You Can Use

News You Can Use
Issue 118/October 2012

While You Are Waiting for Change…       

Mary Ellen Clark


By Mary Ellen Clark  
Senior Vice President 

The speculation over the outcome of the elections and any potential changes in the national healthcare policy has handicapped some hospital development offices. And in small rural hospitals that have no dedicated development staff, starting a fundraising program has now moved to the bottom of future plans. There are opportunities in this period of “waiting”.  

The Supreme Court’s decision on the constitutionality of the Affordable Care act was upheld by the justices. Within this policy, there are many implications for hospital fundraising and potential philanthropy programs.

  • Hospitals must have a flexible strategy they can quickly adjust to as controversy continues.
  • Charity care and bad debt costs may remain higher than previously reported or anticipated.
  • State healthcare, Medicaid coverage and disproportionate share payments remain uncertain.
  • Entitlement reform may increase the financial risk to hospitals.
Philanthropy is a vital and important revenue source for all hospitals, no matter the size of your hospital or whether you are located in a rural or urban area. Hospital executives will continue to look to philanthropic programs for significant, reliable and sustainable support. If your organization has not invested in fundraising operations, now is the time to do so. While your organization may have tabled plans for a new wing, there is much that can be done that will make a significant impact on the future for your hospital.
Hospitals increasingly adopt performance improvement measures in clinical areas, though rarely in fundraising. Consider what an investment in fundraising could do for your hospital. Profit margins vary from hospital to hospital and many make less than 5 percent from service line operations. The cost of fundraising however, could be as low as an average of 20 cents per dollar raised. Knowing the cost of fundraising, having a clear strategy tied to your hospital’s plans, getting the right people in the right positions and employing basic fundamentals will improve your fundraising outcomes. This calls for a change in how things are done.

If your organization has a “hold” on future expansion or new programs, use this time to improve your development capital within the organization. To do this you might consider:


  • Increased focus on major gifts with more involvement from your board in this program;
  • Less emphasis on special events and annual giving which result in high cost-per-dollar raised;
  • More involvement of the physician staff in the grateful patient program. The increased number of hospital employed physicians should increase their collaboration with the development office;
  • Dedicated activities in donor prospecting. Major gift donors are now looking at four or five organizations to support versus twice that many that they previously supported.

As we were recently reminded by Bill McGinly the CEO of AHP, “For many health care providers today, philanthropy is providing that critical difference in programs and in the lives of patients.” This is a proud time to be in health care fundraising.


Planning for Not-For-Profits

Jean BaconBy Jean Bacon
Stategic Partner 

It is the last quarter of the calendar year! It is also an Election Year which provides us all with a perfect beginning point to think of planning for what lies ahead during the next four years. For some, it is time for Congressional elections, which also provide a yard stick for expected outcomes in the near future. It is also the glorious change of seasons when we leave warm weather and summer activities behind us, and think of planning for the winter ahead. 

If the operational activities for your not-for-profit are organized around the calendar year, it is time for you to begin the budget process. This process should always begin with a review and update of the current Strategic Plan. In order to do this effectively, this plan should have been monitored and revised during each quarter of the current year. If your organization has not developed a viable Plan, now would be a good time to start!

The foundation for a Strategic Plan is built upon a realistic assessment of what your organization does. This is contained within the Vision and Mission Statements. Considerable effort should have been put into formulating these, and securing their meaning within the tenets of these statements. It is always important to test the clarity of both of these statements to ensure consistency and accountability, when measured against the budget process. If done correctly, there is a smooth flow into organizational Values.

If your specific Strategic Plan is well organized (or, if you are starting from scratch in developing a Plan), it should include a clear understanding of the following four components – STRENGTHS, WEAKNESSES, OPPORTUNITIES, THREATS – a SWOT analysis. It is often too easy to minimize the importance of this. If completed accurately and comprehensively, your organization will have a real road map for budgeting and future operations. Each component of the analysis must be looked at individually, as well as how it relates to the opposite component. Each component must also be examined from both internal and external perspectives. If we take the marketing component, and examine the strengths of this both internally and externally (if the organization is a senior living community, it has to be marketed to prospective residents and families, as well as internal residents and families), there are specific ways to measure the successes and failures of these efforts. To expand this concept to a more external perspective, we would ask if the community has defined its market advantage by defining its market share. The bottom line of how strengths/weaknesses are accurately measured will be reflected in the community census which provides the base line budget information. Community operational costs are measured against the number of residents at all different levels of care within the community.

And then, there are opportunities and threats – these may, too often, be dismissed as the negative legs of the planning stool, at least more negative than strengths and weaknesses. It is always fun to think of opportunities, but then to lapse into threats takes all the glitter out of planning. Once again, these two components have to be both accurately and comprehensively portrayed from internal and external perspectives. If we return to examining marketing in a senior living setting, the external opportunities will include “advertising” in the media, to community groups, etc. The internal opportunities will include enlisting all community stakeholders to assist with “advertising” the community. The threats can be formidable if there is extensive competition. That factor, alone, can seriously impact the SWOT analysis.

When the SWOT analysis is fully completed and every detail has been explored, it will be time to forge ahead with budget preparation. Ideally, the budget in a well-organized community is a multi-year document, 2-3 years. If that is not the standard practice, then one year will suffice. Every step of the budget process must be evaluated against the Strategic Plan. The justification for budget totals is held accountable through the Strategic Plan. A well formulated budget commensurate with a well organized Strategic Plan assures a not-for-profit of successful operations, and pleases all stakeholders within the organizational realm!



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