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A Strategy for Nonprofit Hospitals

May 16, 2012

Piggy-bank-maskOver the last few years, eight- and nine-figure gifts like those received by New York University's Langone Medical Center and Sandford Health have obscured the fact that not-for-profit hospital revenue is growing at its slowest rate in two decades.

Indeed, a new report from Wilmington Trust suggests that one of the drivers of revenue growth in the sector, however modest, has been high-net-worth families -- households with a net worth of over $1 million or net income of $200,000. In 2009, for example, 70 percent of high-net-worth families gave to healthcare organizations, compared to 23 percent of the families in the general population.

In response to this trend, a growing number of not-for-profit hospitals and healthcare organizations are establishing standalone foundations to lead their development efforts. According to the report, the benefits of such an arrangement include increased leadership and volunteer opportunities for trustees; clearer lines between the fundraising/administrative functions of the hospital and its core operations; a more focused marketing and branding strategy; and the flexibility and security that comes with having a separate endowment.

The report includes results from Wilmington Trust's own research, which found, among other things, that 70 percent of the healthcare organizations it surveyed in the mid-Atlantic region had foundations, as well as a short profile of one medium-sized nonprofit hospital, Ellis Medicine in Schenectady, New York, that has raised $12.1 million over the past five years and even managed to boost its fundraising revenue in 2009, thanks largely to the efforts of its foundation.

To download the report (8 pages, PDF), visit the Wilmington Trust site.

-- Mitch Nauffts

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