Pursuing Philanthropy During COVID-19
How to sustain charitable support in a pandemic
By Betsy Chapin Taylor
Today “health” has taken center stage in our national consciousness. News and social media are consumed with the novel coronavirus (COVID-19). The majority of Americans are sheltered at home to protect themselves and do their part in flattening the curve. However, amid the chaos, COVID-19 has been a powerful reminder that hospitals and health systems serve as the ultimate safety net for saving lives in their communities—and never before has the relevance, value and importance of charitable support for health care organizations been so clear.
Hospitals and health systems are making significant investments to meet an array of evolving demands for battling COVID-19; some of which will be reimbursed through the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, while some will not. Simultaneously, hospitals have canceled elective surgeries and other routine care to protect patients, so their typical revenue and daily census have decreased. As financial markets respond to the crisis, investment income that many hospitals rely on to fill financial gaps also has evaporated. All this comes on the back of years of hospitals facing slim operating margins and creates incredible and unanticipated financial vulnerability.
Even before COVID-19, nonprofit hospitals depended on philanthropy—voluntary charitable giving from individuals, corporations or foundations—as an alternative revenue source. Philanthropy often funds capital, clinical programs and more. To provide context, $427 billion was given in charitable contributions to U.S. not-for-profit organizations in 2018, with almost $40 billion of that benefiting health causes. Of money directed to health causes, $10.8 billion specifically went to U.S. not-for-profit hospitals and health systems. Philanthropy also has a strong return on investment with four dollars returned for each dollar invested, while hospital operating margins continue to hover at around 2.1%. While charitable gifts to hospitals are generally tax deductible, the CARES Act also encourages charitable giving by providing a $300 above-the-line charitable income tax deduction; this will not only give nonitemizers a tax break but also will reduce their adjusted gross income, which could trigger other tax benefits.
So how can your board and organization harness the power of philanthropy during this critical time?
Crisis Response Won’t Wait for Your Next Board Meeting
Health foundations must be agile in their response. The time is now to galvanize your constituency to support needs related to COVID-19, so you cannot be thwarted by an inability to respond quickly. For example, it would be poor stewardship to wait until your next scheduled board meeting to take action. Instead, the board executive committee should convene a video conference call to make meaningful and informed decisions now. Simply, exceptional circumstances demand exceptional responses.
Your Organization Needs a Crisis Response Fund
Donors typically are activated to provide solutions in a crisis. However, funding needs may keep evolving during the crisis. While securing unrestricted contributions that allow hospitals or health systems maximum flexibility in using charitable dollars for their crisis response would be ideal, many significant donors prefer to restrict the purpose of their gifts to ensure resources are used in alignment with their intention. Therefore, it is important that foundations create a crisis response fund that enables donors to confidently achieve their objectives while giving the health care organization some flexibility.
Look for Other Ways to Step Up
Many foundations have funds with donor- or board-designated restrictions that would allow them to be disbursed now. This is not a time to talk about how we are “saving money for a rainy day” when we are in the midst of a full-blown pandemic. It has been more than 50 years since the last broad pandemic: The influenza pandemic of 1968 killed about 100,000 people in the U.S. Therefore, progressive foundations are looking at their potential to unleash access to resources for this rare event—we hope—and enable hospitals to build capacity, acquire supplies, care for clinicians and more. The health care foundation exists to strengthen and sustain the supported health care organization; at no time in our lifetimes have health care organizations needed us to step up more than now.
Take the Donor’s Perspective
Many organizations are hesitant about asking donors to give during a simultaneous health and financial crisis that is having an impact on everyone. However, many donors aren’t dissuaded from giving, even in a time of ambiguity. History shows donors step up in times of crisis. During the 2008 recession and the terrorist attacks of 9/11, donor focus shifted to the impacted sector to provide relief. Many donors will be moved and motivated to provide solutions during this crisis too. While it is important to be respectful, compassionate and sensitive to the ambiguity and fear of the current situation, as well as the certainty of economic impact to us all, it is shortsighted to assume donors don’t want to participate. If donors are empowered with the choice on how to respond, health philanthropy organizations must illuminate how donors can support your hospital or health system—a trusted and ready resource positioned to address the complex issues presented by COVID-19.
Serve as a Connector
This is a time to proactively connect with key donors and friends to check on their well-being, thank them for their past support, share the hospital’s response to the crisis, and more. Donors will remember who called them during this crisis to recognize their valuable part in the mission. Many organizations have board members and staff calling key donors. It is a meaningful time to build goodwill and deepen relationships, and many organizations are finding that donors are anxious to connect and talk.
Philanthropy can provide significant value in advancing the response to COVID-19. The needs are clear. The urgency is now. So it’s time for board leaders to position their organizations to harness the potential of philanthropy to support their health care organizations.
Betsy Chapin Taylor (Betsy@AccordantHealth.com) is CEO of the health care consulting firm Accordant.
Please note that the views of the author do not always reflect the views of the AHA.