Hospital endowments provide an increasingly important source of income for the future. In some cases, hospitals' nest eggs are quite large.
According to the Association for Healthcare Philanthropy, endowments accumulated by its member institutions range from $5,000 to more than $600 million. The median endowment value among AHP members is $2 million.
However, the Falls Church, Va.-based association doesn't identify individual institutions' endowment levels. It only provides median endowment values for categories of institutions, such as children's hospitals and teaching hospitals (See chart, p. 102).
To obtain the data, the AHP protects the confidentiality of individual members' financial data, said William McGinly, the association's president. And, due to a lack of consistent reporting of data in the industry, apples-to-apples comparisons are very difficult, he said.
So, beyond the AHP's aggregate numbers, solid data is hard to come by, development experts acknowledged.
"There's no central place where this information is deposited," said Michael Moore, the AHP's immediate past chairman and vice president for development at Community Health Center Capital Fund in Boston.
Why is tracking endowment money such a problem? One reason is a discrepancy among hospitals on how such gifts are counted.
Most hospitals do "accrual accounting," which means they record revenues when they are pledged, even if those gifts haven't been received. So, a $100,000 pledge made over five years is recorded in full immediately. A sum designated in a person's will also gets the same accounting treatment.
However, hospitals on a "cash basis" accounting system will record revenues when they are received. So, a gift designated in a will can't be recorded until the donor passes and the gift is sent to the hospital. Likewise, a five-year, $100,000 pledge only can be recorded in annual increments of $20,000 as the money comes in.
Identifying all pools of endowment money available to a hospital also can be difficult. Because many hospitals have foundations that solicit philanthropic contributions, endowment funds may not appear on a hospital's financial statement at all.
However, that might not be the case if a proposed accounting change is adopted (See story, p. 100).
As a result, even fund-raisers don't know how their fund development programs stack up against comparable programs. "It seems to be a void that's out there," said Moore.
Moore and his wife, Rebecca, recently began a subscriber service designed to compare the performance of a healthcare institution's development program with peer institutions. Through their company, Millennium Advantage, based in Shrewsbury, Mass., development professionals will receive a benchmark against which they can measure the cost of raising gifts for endowment purposes, among other things.
Rebecca Moore, the company's chief operating officer, also is helping the AHP develop and publish a "chart of accounts" that will enable healthcare development officers to record their revenues and expenses in a more consistent way. Instead of lumping fund-raising costs and proceeds together, the chart of accounts will provide a standardized tool for tracking the effectiveness of separate fund-raising activities, such as capital campaigns and special events.
Meanwhile, the AHP and three other fund-raising associations are cooperating on a project to fill the industry's huge data gap. The group is attempting to figure out what data is needed, how it can be gathered and what it's going to cost to do so. By year-end, the group may have sketched out a preliminary data-gathering proposal that can be used to solicit project funding.
"Part of what we think we need to do in this sector....is public education," McGinly said. In order to attract donations, "you've got to have data and facts about this sector," he said. But not-for-profit fund-raisers haven't done it well "because it costs money."