5 steps for harnessing philanthropic dollars to promote financial stability

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In the coming months, congressional committees will be deliberating to shape the FY2016 federal budget, which will include millions of dollars in competitive grants to fund primary care, healthcare workforce, rural health, innovative care delivery models and incentives to promote value-based care.

The federal government isn't the only sector investing in healthcare infrastructure and population health. The Foundation Center reports that U.S. Foundations gave over $2.8B to hospitals and other domestic health-focused programs and organizations in 2012, and Giving USA found that in 2013 private donors gave a total of over $30B to health organizations. Of the $335B contributed by private donors in 2013, only 15% were distributed through formal foundations. Thus, philanthropic fundraising and grantseeking efforts must be integrated and strategically aligned to capture all potential funding sources and leverage multiple revenue streams.

The dynamic nature of U.S. healthcare markets, policies and players has fundamentally shifted the role of the hospital Chief Financial Officer (CFO) from financial guru to master prognosticator. The American Hospital Association (AHA) 2014 guide, Navigating the Gap Between Volume and Value posits that financial modeling is now "more about ranges of outcomes and probabilities than it is about absolutes."
The guide suggests that financial planning should start with a comprehensive capital position analysis, which includes assessing all key areas of cash uses and resources. This "new normal" of healthcare delivery requires that hospital administrators strategically focus revenue-generating resources and cast wide nets for potential income and partnerships, including those yielded by philanthropic fundraising and competitive grantseeking.

Purposeful collaboration across administrative divisions and service lines can have real impact on a healthcare organization's bottom line. A recent Health Financial Management Magazine article demonstrates the benefits of breaking down silos between CFOs and clinicians to reduce costs over the long term, identify strategic investments and improve organizational insight. Across care delivery settings, CFOs are being encouraged to "move out of their comfort zones" to recognize new opportunities for strategic investment and improved efficiency.

The following five steps provide strategies to help hospital CFOs leverage traditional fundraising, grantseeking and internal investments to bolster hospital infrastructure and promote financial stability.

1. Identify and prioritize funding needs

Identify planned innovations, expansions and new programs that are aligned with institutional mission and community needs. In addition to routine resource needs assessments, consult with program and development staff to determine specific funding needs associated with program planning, expansion or leveraging of planned investments. Prioritize all funding needs (e.g., philanthropic, infrastructure, program) based on how well they align with organizational strategy and address community needs, as well as their potential for long-term return on investment.

2. Evaluate program "fit" for fundraising, grant seeking or internal investment

Working with philanthropic development officers and grant professionals, categorize projects into three pools of potential funding: donors, grants or internal investment. Grant professionals can assess whether a project is a good "fit" for grant requests, in general, as well as assess alignment with particular foundations and government funding sources. Development officers know the priorities and motivations of the hospital's major donors, and know when to solicit large gifts. Generally speaking, immediate infrastructure needs required for regulatory compliance will still be funded through internal investment (e.g., operating revenues). However, identifying external funding sources for any operating budget line items will shift resources that could underwrite critical infrastructure.

3. Encourage data sharing and communications across divisions

One of the most important things a C-suite champion can do to improve collaboration across divisions is foster communication and proactive data sharing. Fundraisers, grantwriters and finance personnel have reports, data and analyses that could be beneficial to their colleagues in other divisions, but often these colleagues do not know what to ask for or what kind of data is available to request. Seminal analysis of the synergy yielded from collaborative partnerships found that successful partnerships are more flexible and supportive and have "boundary-spanning leaders who understand and appreciate partners' different perspectives, can bridge their diverse cultures and are comfortable sharing ideas, resources and power." When administrative leaders work together to model cross-division dialogue, forums and reporting, they can make a meaningful impact on employee culture and achieve collaborative synergies.

4. Integrate strategic planning for fundraising, grant seeking and hospital investments

After the revenue and fund development teams have built trust and improved communications, the next step is to align the goals, objectives and activities of these teams through an integrated revenue strategy that leverages resources to increase bottom-line revenue. A recent whitepaper by Hanover Research — Integrating Grantseeking into Hospital Foundation Fundraising Plans — provides detailed recommendations and pragmatic guidance to help development teams integrate strategic planning and requests for external funding.

Comprehensive strategic plans that integrate grantseeking, fundraising and internal investment allow administrators to orchestrate the timing and focus of finite development resources, clinical provider support, and program staff time. Though healthcare market and policy volatility will likely continue, strategic investment of philanthropic outreach and revenue can help stabilize critical infrastructure and promote long-term fiscal health.

5. Promote ongoing collaboration to recalibrate plans and shift resources

As with any strategic plan, the integrated revenue strategy must remain a flexible blueprint that adapts and shifts as funding ebbs and flows. For example, a federal grant award can significantly shift infrastructure dollars and thus change the financial investment priorities of an organization. Award decisions for grants may take several months, and donor cultivation may take several years. The funding landscape will inevitably shift throughout the year, so the teams involved must stay engaged and connected to ensure that priorities continue to be aligned and strategies remain relevant.

Multiple teams and stakeholders will eagerly pursue and aggressively solicit competitive grant funds and donor contributions on behalf of an organization, regardless of whether the CFO is engaged in the process. These grants and private donations often include binding commitments that can launch new service lines or programs, require long-term maintenance of facilities and equipment or create new FTEs. When CFOs and other finance administrators closely monitor and coordinate efforts with hospital fundraising teams, the carefully cultivated donor relationships and grant funds can be precisely targeted to high profile, impactful infrastructure and population health priorities that reinforce the hospital bottom line.


Rebecca Huenink is a Grants Consultant at Hanover Research with more than a dozen years of experience providing program design, fundraising, and grant development support for educational institutions, healthcare providers, governments, and nonprofit organizations nationwide. Rebecca specializes in managing team-based development of complex proposals, with a focus on health and social services delivery, medical education, K-12 and higher education, youth development, food and nutrition programs, and program implementation in rural areas.

Teresa Wilke, MBA, is a Senior Grants Consultant at Hanover Research who develops innovative programs, strategies and competitive grant proposals for healthcare, higher education and social service sectors. She has secured over $40M in grant awards, and previously worked in several federal government agencies and executive departments, as well as regional and large private university settings. Teresa's specialties include health policy, funding trends, safety net care, chronic disease management, rural health, student retention and nursing education / workforce.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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