Hospital fundraising hit hard by COVID-19 when money is needed more than ever

Fundraising for hospitals likely has never been so needed or so difficult.

The lasting impact of the COVID-19 pandemic on hospitals’ fiscal health will likely be felt for years as U.S. providers face mounting costs related to treating infected patients while losing millions from postponed or canceled elective procedures.

For David Flood, senior vice president and chief development officer at Salt Lake City-based Intermountain Healthcare, the current financial challenges brought on by the pandemic coupled with the foreseeable future’s economic uncertainty have raised the urgency of its fundraising operations to alleviate the fiscal strain.

“Right now we’re all in the eye of the storm,” Flood said.

A March analysis from not-for-profit healthcare finance watchdog FAIR Health projected the outbreak could cost the country’s healthcare system from $362 billion to more than $1.4 trillion in hospital charges, depending on the infection incidence rate.

Meanwhile, the outbreak has created its own set of operational challenges for hospital fundraising. Social-distancing practices that have led many states and cities to ban large gatherings in an effort to stem the virus’ spread have caused hospitals to either cancel or postpone many of their scheduled charity events.

“The lack of the ability to get to in-person events and in-person donor meetings has really made a negative impact on the ways that hospital fundraisers have been doing their work,” said Alice Ayres, CEO of the Association for Healthcare Philanthropy.

Ayres said the results of a survey AHP conducted March 13 to better understand how the COVID-19 pandemic was affecting healthcare organizations found more than 80% of the nearly 500 participating providers reported they had already canceled or postponed charity events.

The anticipated donation losses from those cancellations have forced many providers to rethink their approaches to fundraising. Many hope to find opportunities to develop campaign and outreach strategies that will help them retain and even grow their donor pools for the long term.

“There’s a heightened understanding around the importance and precariousness of the financial situation of hospitals around the country,” Ayres said. “So that’s an opportunity for healthcare fundraisers to continue to expand the universe of people who want to engage and invest in hospital missions and want to be a part of it.”

When the Great Recession began in late 2007 the economic uncertainty facing the country caused healthcare organizations to fall into two distinct camps when it came to how they approached fundraising, Flood recalled.

While some providers decided to be “respectfully distant” from donors and constituents, allowing them to adjust to the new economic realities, others intensified engagement efforts to fortify their supporter relationships.

“As we look back, many of those organizations that chose the former lost a lot of their donor pool,” Flood said. “When people had to make cuts, if you were out of sight and out of mind you were likely cut away.”

Overall, fundraising has steadily grown to make up a bigger part of revenue for many healthcare organizations. Total funds raised by the philanthropic arms of healthcare organizations went from $7.6 billion in fiscal 2009 to more than $10.8 billion in fiscal 2018, according to AHP’s annual report. In early April, AHP partnered with the American Hospital Association to launch the “Protect the Heroes” campaign allowing the public to donate directly to the hospital of their choice to support outbreak response efforts.

Despite a slight dip in fundraising in fiscal 2009 due to the recession, the numbers indicate healthcare organizations tend to receive steady support in both good and bad economies. While providers are often just one of many organizations vying for donations during emergencies, Flood said the current crisis’ healthcare-specific nature highlights providers’ needs.

He felt the situation brings both opportunity and pressure for healthcare organizations to grow their donor pools.

Intermountain has been doing what Flood terms “reactive campaigning.” The approach includes a special webpage offering guidance for the influx of new donors who have inquired about providing financial support as well as those offering to volunteer. “It’s not a full-on blitz, but rather putting information out and letting people react to it,” he said.

To maintain relationships with existing donors, Flood said the foundation has been busy making frequent phone calls and holding online meetings to perform well checks rather than outright requests for money.

Fred Najjar, executive vice president and chief philanthropy officer at CommonSpirit Health, said the system has adopted a similar communications strategy to keep in touch with board members and donors.

With 82 fundraising entities across 25 states, Chicago-based CommonSpirit receives approximately $220 million in charitable donations annually from more than 64,000 donors. Even with such a large donor pool, Najjar said, the system is calling most of its donors and has found people willing to have more meaningful conversations.

“We’re seeing that people have more time to engage, and I think that our donors are getting closer to us in some ways more than they ever have,” Najjar said.

Like Intermountain’s Flood, Najjar said safety concerns over the pandemic have caused CommonSpirit to cancel fundraising events scheduled for this spring. He said the in-person events account for about 10% of its annual donations.

Although it was difficult to forecast what impact the cancellations might have on fundraising for the year, Najjar said the donations CommonSpirit received as recently as March allowed the system’s fundraising department to remain above budget.

A key factor in CommonSpirit’s fundraising strategy was mobilizing the response early to quickly adapt as the outbreak evolved into a full-blown pandemic, Najjar said. All the system’s foundations met in early March to establish a communication strategy for providing current and potential donors with clear and current information on how to help.

The current situation has made it clear that stewarding existing donors is as vital to fundraising strategy now as seeking new opportunities, Najjar said. “Having all our staff to check in on our donors even more regularly than we have in the past—I can’t stress enough how important that has been over the past couple of weeks.”

Jeanne Jachim, president of Virginia Mason Foundation, the philanthropic arm of Seattle-based Virginia Mason Health System, said being among the first providers in the country to experience the coronavirus outbreak made it difficult to take a rapid response approach since no one knew then how quickly and widely the virus would spread.

Within two weeks of the first reported cases, the foundation had assessed the situation and its ramifications and begun creating ways for people to offer support. Virginia Mason created two COVID-19 relief funds, supporting both the clinical response and related research.

Jachim said the one fundraising event the foundation had planned for the first half of the year has been postponed instead of canceled, while no decisions have been made about events scheduled for later this year.

Among the pandemic-related changes to the health system’s fundraising approach was the early launch of several strategies. Jachim said advertising campaigns scheduled for later this year have been moved up to take advantage of the support the health system is receiving from its local media partners and sports teams that are providing free advertising in response to the crisis.

Jachim said the system has also moved up the start of its active fundraising to target donations from donor-advised funds. Such funds have exploded as a major philanthropic vehicle in recent years, receiving more than $37 billion in contributions in 2018, according to a report from the National Philanthropic Trust.

The arrangement allows philanthropists to donate to a fund and receive an immediate tax benefit; the fund will later pass on that contribution to a charity.

“You can tell there’s a lot going on with those funds, and we had intended to use that as a strategy to increase our fundraising later in the year,” Jachim said. “We have now pulled those plans forward, and we’ll focus on individuals with those funds much sooner.”

Many hospitals throughout the country say they have received an influx of new support from community members since the pandemic began.

But some of those same stakeholders expect the pandemic’s fallout to significantly affect donations, much like the outbreak has already hit most providers’ operating revenue. The question remains whether any increase in community support will be enough to help offset the economic impact.

“Longer term we will be facing some challenges that right now we don’t see,” said Randy Varju, chief development officer for the Advocate Aurora Health system and president of Advocate Aurora Health Foundations. “A lot of this awareness will hopefully hold true and be more enduring.”

Varju predicted philanthropy will play a major part in helping sustain operations at many community hospitals; they’ll likely find they have suffered significant losses once the pandemic is over and they assess the response effort’s cost.

“There is no way that FEMA funds or the government will fill all of that void,” Varju said.