It's a good time to be a healthcare fund-raiser. According to the Falls Church, Va.-based trade group the Association for Healthcare Philanthropy, healthcare-related donations have increased by an average of about 7% a year for the past decade, reaching $5.7 billion in 1999.
The merger craze among hospitals and hospital systems that began in the early 1990s is slowing down, causing providers to refocus on philanthropy.
"At one point, healthcare was 35% of our business. It went down to 10% in recent years, but in the past year it's back up to 20%," says Robert Carter, president of Ketchum, a fund-raising consulting firm in Pittsburgh.
According to AHP President and Chief Executive Officer William McGinly, two economic and regulatory road bumps were the only things that have slowed healthcare fund raising in recent years: a major overhaul of the federal tax code in 1986, which changed how gifts of appreciated property were deducted; and the trend of mergers and acquisitions in the mid-1990s, which, McGinly says, caused donor confusion about where gifts were going.
But now, three more obstacles loom: the slumping stock market, patient privacy regulations from the Health Insurance Portability and Accountability Act of 1996 and the possible repeal of the inheritance tax.
The stock market slump of the past year already has affected some major gifts, healthcare fund-raisers say.
"We're not seeing people call up and cancel their pledges because of the stock market, but I'm aware of one contributor who wanted to make a seven-figure gift and he now wants to hold off," says Lisa Hillman, vice president of development and community affairs at 308-bed Anne Arundel Medical Center in Annapolis, Md., and executive director of its foundation.
"We were getting more activity among people with appreciated stock in the past. But we were sitting with one individual who planned to make a stock gift, and it nose-dived," says Gary Leo, senior vice president of development at 849-bed Cedars-Sinai Medical Center in Los Angeles.
Although the stock market downturn has yet to have a major impact on fund raising, observers say the downturn and the possibility of a recession mean they should expect larger gifts to be stretched out over long periods of time.
"I think it would be na?ve to think that the tremor in the current marketplace doesn't create anxiety for potential donors," says Steve Meyerson, vice president of Inova Health System Foundation in Falls Church, Va. "We have to be more flexible."
HIPAA itself could create another tremor. The federal legislation initially banned hospitals from obtaining any sort of patient demographics for fund-raising purposes-a hit that McGinly says would have cost healthcare philanthropy $3.5 billion in the short term.
Now, the pending HIPAA administrative rules would allow hospital fund-raisers access to patient names and addresses but would bar them from knowing what kind of treatment patients received or even what part of the hospital they stayed in. McGinly's organization says fund-raisers can live with the new rules-major donors, for example, are traditionally developed in one-on-one settings where specific information about medical needs isn't critical. However, greater creativity will be required when developing large numbers of patients as donors.
Meanwhile, the Bush administration's push to repeal the estate tax has sparked a debate about how that will affect philanthropy. Estimates say repealing the estate tax could cost charities $6 billion in the short term. The AHP, which says about 9% of all healthcare philanthropy comes from bequests, is against total repeal, although it does support increasing the $650,000 floor on estates that qualify for the tax.