When hospital foundations are merged into system-level foundations, donors who want their money to stay local might fear it will be funneled elsewhere.
"If you give to, say, Memorial Hospital in Chattanooga, Tenn., you know they're part of CHI, but if you ever thought your money was going to Denver, you would be deeply offended," Taylor said. "You gave that money to benefit local healthcare." Taylor added such a situation wouldn't happen at CHI, as the system operates individual hospital-level foundations.
But even when there's a parent foundation in place, donors can still designate that their contributions go toward specific facilities or purposes. In fact, the majority of donors already do that. When that happens, parent foundations manage the money, but are legally obligated to ensure it's used as intended.
"If you give a gift to a hospital and we move it to another hospital, we've broken the law," Flood said.
A recent report by the New York-based financial advisory firm Wilmington Trust studied the fundraising models of 160 hospitals in New York state and found that 62% followed the local foundation model, while 19% used the parent model. Another 20% did not operate separate foundations and instead did their fundraising through hospital development departments, like Burke Rehabilitation Hospital.
Initially, it might seem like the parent model is the most efficient, said Walter Dillingham Jr., the report's author and managing director of endowments, foundations and healthcare for Wilmington Trust. But once administrators drill down, they tend to see the regulatory hurdles involved and the importance of the existing hospital development teams. "Those people have the relationships," he said.
The laws differ in every state, but by and large, when a local not-for-profit organization's assets, such as a foundation, are acquired by another organization, state attorneys general are likely to get involved. In some cases, health departments might have an interest, too.
That's not as big of a problem for systems like Northwell and Intermountain because their coverage areas are centralized largely within New York state and Utah, respectively, Taylor said. "When you get into these big ones with really geographically dispersed foundations, they definitely would have problems bringing all that money back to central," she said.
However systems go about it, the most important piece for any fundraising campaign is that it's a personal experience for donors, said Susan Holt, president and founder of Vision Philanthropy Group, a healthcare consulting firm.
"Ultimately, it's absolutely imperative that deep local connections and relationships occur with those in the community and that they feel the closeness with that brand and with the delivery of care," she said.