JOURNAL OF THE ASSOCIATION FOR HEALTHCARE | WWW.AHP.ORG | FALL 2013

healthcareCONNECTING PEOPLE n ENRICHING LIVES philanthropy

Surviving a hospital Best practices for maneuvering merger an often tricky path Also in this issue

22 Targeted solutions for small shop capital campaigns 33 Making the case for your cause

Forward Forward  Benchmarking your way Thinking Thinking to success Sponsored by Blackbaud Sponsored by page 29 Forward Thinking Sponsored by Blackbaud

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FEATURES Surviving a hospital merger 12 By James DeLauro, Ph.D. These best practices can help in maneuvering the tricky—and often secretive—path of a for-profit conversion or nonprofit merger or partnership.

Success with a small shop capital campaign 22 By Guy J. Guarino Jr., M.B.A., M.H.A., FACHE, with Dan Rogge With the help of engaged hospital staff and targeted solutions, a medical center was able to turn a one-man initiative into a robust, successful capital campaign. 22 Taking the mystery out of metrics 29 By Nancy PlemensF oMayes,rwa rAPRd Forward Three veterans inT thehin fieldking of health care Thinking philanthropy shareSponsored how by theyBlackbaud use benchmarking Sponsored by Forward and demonstrate its value and impact on their Thinking organizations’ success. Sponsored by Blackbaud

Make a remarkable case for your cause 33 By Febe Galvez-Voth, M.A. Put forward a case for support that will get people talking about your organization—and turn donors into passionate Forward advocates. Thinking Sponsored by Blackbaud 29 Forward Thinking Sponsored by

2 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013

Forward Thinking Sponsored by healthcareCONNECTING PEOPLE n ENRICHING LIVES philanthropy

President, Chief Executive Officer: William C. McGinly, Ph.D., CAE Editors: Vicki Meade, Paula Novash, Susan Simolunas AHP Journal Advisory Council: Aline F. Lasseter, CFRE, chair; Georgina A. Altman, CFRE; Jill M. Bramblett; Marite M. Butners, J.D., LLM-TAX; Maureen E. Gerard, CFRE; Kim Kaiser, CFRE; Jessica McLain, MHA, CFRE; Maeve O’Byrne; Susan Piergallini; Thomas J. Sloan, CFRE, FACHE; Arlene A. Snyder, CFRE AHP Board of Directors: Chair: William S. Littlejohn DEPARTMENTS Chair elect: David L. Flood Secretary/Treasurer: William H. Kiel, CFRE Immediate Past Chair: Susan J. Doliner, FAHP, CFRE From the Chair President: William C. McGinly, Ph.D., CAE 4 Enterprise engagement Vice Chairs: Sharon A. Jones, FAHP, CFRE By William S. Littlejohn, Randy A. Varju, FAHP, CFRE Chair, AHP Board of Directors Julie E. Cox, FAHP, CFRE The future and success of health Regional Directors: David K. Burghart, CFRE; AHP Midwest care philanthropy will be driven Theresa M. Law, J.D., CFRE; AHP Mid-Atlantic by engagement across the AHP Jeffrey A. Lea, FAHP, CFRE; AHP Southeast enterprise—members, colleagues, Jory Pritchard-Kerr, FAHP; AHP Canada AHP associates—and the institutions James McL. Dale; AHP Pacific and communities we serve. Sandy L. Ogletree; AHP Rockies & Southwest Jack Dresser, CFRE; AHP New England

Published by: Stratton Publishing & Marketing Inc. As I See It 5285 Shawnee Road, Suite 510, Alexandria, VA 22312 8 The future of health care 703.914.9200 philanthropy Publisher: Debra Stratton By William C. McGinly, Ph.D., CAE, VP, Custom Media Services: Josephine Rossi Editor: Lia Dangelico AHP President, Chief Executive Art Director: Janelle Welch Officer Sales Representatives: Laure Curva, 800/335-7500 ext. 23 As health care philanthropy changes Alison Bashian, 800/335-7500 ext. 21 and evolves, it is necessary to invest in the structures that can build The Association for Healthcare Philanthropy (AHP) is the leading authority an effective, thriving for standards, knowledge and leadership in health care philanthropy. As the program. world’s largest association for health care fundraising professionals, AHP represents 5,000 members who raise more than $9 billion each year for community health services. AHP supports its members and serves the public through high performance standards, expert knowledge development and executive leadership that advance the practice and performance of health care philanthropy at both the local and national level.

Healthcare Philanthropy mission: Healthcare Philanthropy will be an authoritative resource for health care development professionals by providing a timely, informative and insightful collection of literature that will raise the standard of individual and organizational performance. Serving as the premier forum for health care philanthropy literature, Healthcare Philanthropy will educate, empower and inspire development professionals and, thereby, help strengthen the case for philanthropic support and 33 the mission of AHP.

3 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 PUBLISHED August 2013/AHP-B0111/5193 By William S. Littlejohn Chair, AHP Board of Directors ISSN 2162-2493 (print), 2162-2507 (online)

Association for Healthcare Philanthropy 313 Park Avenue, Suite 400 Falls Church, VA 22046 703-532-6243 • Fax: 703-532-7170 • www.ahp.org ©2013 by the Association for Healthcare Philanthropy. All rights reserved. Article submissions should be sent to: Editor, From the chair Healthcare Philanthropy, Association for Healthcare Philanthropy, 313 Park Avenue, Suite 400, Falls Church, VA 22046. Article submission guidelines and deadlines are located in the Publications section of the AHP website at www.ahp.org. Enterprise The Association for Healthcare Philanthropy endorses no opinion or statement of facts by the authors of Healthcare Philanthropy articles except by action of its board of directors, nor does it lend engagement or imply endorsement of the goods and services offered by advertisers.

For information on advertising in Healthcare Philanthropy Journal, contact Laure Curva, 800/335-7500 ext. 23, or ne of the three strategic priorities of Sharp HealthCare Alison Bashian, 800/335-7500 ext. 21. Foundation is “enterprise engagement” to high- ADVERTISERS INDEX performance major gift philanthropy. We realize that the Aria ...... 17 success of the philanthropic program at Sharp is highly dependent upon Peter Wallace, 608/423-1338, www.ariacallsandcards.com O engaging across the health care enterprise—executives, physicians, staff, Blackbaud, Inc...... 1 800/443-9441, www.blackbaud.com board members—and those we serve. The same is true for AHP and our Bliss Direct Media...... 6 strategic initiatives. The future and success of health care philanthropy Cindy Fish, 877/355-7435, www.blissdirect.com will indeed be driven by engagement across the AHP enterprise— Brakeley Briscoe Inc...... 28 Alden F. Briscoe, 650/344-8883, www.brakeleybriscoe.com members, colleagues, AHP associates—and the institutions and Brook Recognition...... 5 communities we serve. Shawn Plater, 877/608-6987, www.brookrecognition.com Major gift training and development has frequently been built Campbell & Company...... 9 Sarah Barnes, 877/957-0000, www.campbellcompany.com around the concept of Carl Bloom Associates, Inc...... 25 being “donor-centric”—for Luke Vander Linden, 914/468-8949, www.carlbloom.com/ good reason. Major gift We are all allies, healthcare success comes from strong CCS ...... C4 Joseph F. X. Lee, 800/223-6733, www.ccsfundraising.com and powerful relationships no matter our Corporate DevelopMint...... 10 between the donor and Lee Mikell, 842/853-9999, www.corporatedevelopment.com the institution, often institution, title, Crescendo Interactive, Inc...... 7 Ardis Schultz, 800/858-9154, www.CrescendoInteractive.com facilitated by philanthropy Gobel Philanthropy Group, LLC...... 11 professionals. Yet, role or function. Lauren Kline, 585/598-1171, www.thegobelgroup.com what makes health care Graham-Pelton Consulting Inc...... C3 And the more Elizabeth Zeigler, 908.608.1388, www.grahampelton.com philanthropy unique is Heaton Smith Group...... C2 the impact and influence we engage Dave Smith , 404/812-1722, www.heatonsmithgroup.com of allied relationships on Kidzpace Interactive...... 17 David Meyer, 800/594-9184, www.kidzpace.com donors—most often as a together, the MD Designs by Metal Decor...... 20 result of the health care Dan Marshall, 800/637-8591, www.mddesigns.com experience. So we have to be greater success RuffaloCODY...... 27 Timothy Logan, ACFRE, 319/362-7483 or 800/756-7483, “ally-centric” in our roles as www.ruffalocody.com well. we will enjoy both Thompson & Associates...... 18 The future of AHP will Bethany Witt Rozell, 615/369-1416, www.ceplan.com professionally and Pennsylvania State University...... 21 be built upon the ally-centric http://apptrkr.com/348243 concept and enhancing enterprise engagement. We where we work. are all allies, no matter our

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AHP Advert Full Page.indd 1 13-07-17 3:40 PM institution, title, role or function. involved with AHP in ways that the AHP strategic plan: becoming And the more we engage together, fit your unique needs and those of a stronger, sharing association— the greater success we will enjoy our allies. We know the success in person, virtually or just both professionally and where we of all these initiatives—especially through association relationships. work. in knowledge development and A colleague once remarked at AHP recently launched www. learning—are dependent upon a meeting that AHP member ahp.org/yourahp to share the strong enterprise engagement of institutions are like snowflakes; opportunities we have in enterprise members in both their design and no two are alike. That has engagement. There you can facilitation. We learn best from resonated with me, leading me to learn about face-to-face learning each other. understand that I have to engage through unique educational Another fundamental for more of my colleagues across the opportunities, such as conferences success I have learned in both entire AHP enterprise to gain on big ideas in health care my Sharp HealthCare and AHP knowledge and skills. philanthropy and forward thinking experience is the role and value of As philanthropy professionals, in leadership and management. sharing. When we embarked upon we spend a great deal of time Our convenient new e-learning our Malcolm Baldrige National training and preparing others to opportunities are designed around Quality Award journey at Sharp, ask. Now we have to ask ourselves staff competencies to help you we knew we needed to be a and each other: to get involved, sharpen your skills and grow your sharing organization—to learn to share with others, to be part of programs. And most importantly, from others and to share with the future leadership of AHP—to there are new opportunities to get others. That is a cornerstone of engage across the enterprise.

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www.CrescendoInteractive.com 800.858.9154 By William C. McGinly, Ph.D., CAE AHP President, Chief Executive Officer

AS I SEE IT The future of health care philanthropy

ealth care philanthropy is changing, especially level skills. In building an effective, results-oriented in the U.S. With the passage of the Affordable fundraising program while taking advantage of the Care Act (ACA), American health care drive for more philanthropy dollars, there will be the Horganizations are facing an unprecedented array of absolute need to invest in the structures necessary to challenges. The ACA will reduce payments by the federal dramatically increase philanthropy. government to hospitals by more than $200 billion What are the key strategies for growth for U.S. over 10 years. The fee-for-service model is shifting to member organizations, as well as those in Canada and an outcome-based reimbursement structure. At the elsewhere abroad? Results from AHP’s Performance same time, commercial payers are reducing annual rate Benchmarking Program in FY 2011 show that having increases and changing their reimbursement structures. the right programs and the right people in the right Many members and hospital executives I speak with see places is essential. High Performers in the program the potential for a possible 15-20 percent reduction in government and commercial reimbursements over the next four to five years. With the American Hospital Association estimating that hospitals will have to cut 93,000 jobs this year alone, health care executives have been developing their What are the key own initiatives to deal with the change. Many hospitals are instituting LEAN management programs to raise strategies for growth? productivity and increase the morale of remaining staff. Hospital mergers and consolidations are on the rise again, as you will read in this issue’s cover article. Having the right And there certainly is a new level of expectation being placed on our member executives and foundations to programs and the right bring in money for hospital programs. This is both a challenge and an opportunity. As hospital CEOs seek to use philanthropy to help the people in the right bottom line, this environment can lead to a more robust integration of philanthropy into hospital places is essential. operations. And this reality will require not only a more integrated position for philanthropy, but also a growing specialty for development executives in health care and the need to demonstrate greater executive-

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(877) 957-0000 TOLL-FREE • www.campbellcompany.com raised nearly 11 times more in revenue of $561,000 for those program? Through the years, net production revenue than their that spent the least on total AHP has discovered that the All Other counterparts, with a fundraising expenses ($59,000- following principles lead to the direct staff size that outnumbered $428,000). greatest success: All Other organizations by 3 High performers had at least • Work toward integrating to 1. The High Performers also one full time equivalent (FTE) philanthropy as a core strategy at compensated their staff at higher in each category of fundraising your health care organization. levels. On average, professionals programs: major giving, planned • Adopt philanthropy reporting employed by High Performers giving, annual giving, special standards (benchmarking) to earned $157,000, compared to events and public support. If identify the factors that influence $98,000 earned by their All Other your organization is not yet at fundraising performance and peers. This salary gap contributes this capacity, start by focusing maximize overall returns to major differences in the average on the programs that are most from philanthropic resource amount raised per professional. successful in terms of return on investments. For High Performers, the average investment (ROI): major gifts • Focus on ROI to measure individual return was $11.46 for and planned giving. Fluctuations fundraising effectiveness and each (direct) compensation dollar in the economy and localized look for areas of opportunity. spent, while the return for All factors (such as whether or not Development experts agree Others was $6.45. a capital campaign is underway) that ROI is the most important A strong investment in often affect the relative success of metric in measuring fundraising philanthropy really pays off. annual giving or the revenue raised performance, more so than cost Also according to the FY 2011 from corporate grants and special to raise a dollar (CTRD). benchmarking data, those events. However, benchmarking • Execute a plan to communicate organizations that spent the most data consistently indicate the community benefit. on total fundraising expenses overarching effectiveness and • And, as always, lead with your ($2 million-$4.8 million) had a efficiency of major gifts and organization’s mission. median net fundraising revenue of planned giving. Here’s to a bright and healthy $9 million—substantially higher What else can you do to build a future for health care than the median net fundraising strong and thriving development philanthropy.

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10 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013

FEATURE | By James DeLauro, Ph.D.

Surviving a hospital merger What does the upswing in mergers mean for foundations and development leaders?

ospital mergers are on the rise again—climbing from 92 in 2011 to 109 in 2012, an increase of more than 18 Hpercent.1 During that same two-year period, 10 nonprofit hospital owners agreed to deals that changed the ownership of more than 160 hospitals, and the number of hospitals in merger and acquisition (M&A) deals rose from 212 to 352. This upturn represents a level of merger activity not seen since 2006, when access to low-cost debt drove a flurry of private- equity-fueled buyouts and mega mergers.2 Before that, a wave of merger activity Now, according to an article in Healthcare occurred in the mid-1990s, driven by the Financial Management, three significant threat of managed care and the power of factors appear to be driving consolidation:3 larger health systems to negotiate favorable • A decrease in payment rates, which will reimbursement rates with insurers. At force hospitals to reduce costs in new ways the time, the growth of for-profit hospital and increase their negotiating clout with companies was particularly dramatic and suppliers and payers. of great concern to nonprofit hospitals and • An increase in the cost of doing business, their fundraising offices. because hospitals will need to spend more

12 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 on compliance, technology and developed to the point that leaders physician employment. feel confident about an agreement do • TheA ccountable Care Organization they let more people know what is (ACO) model promoted by the being planned. Medicare Shared Savings Program, Unfortunately, hospital which will encourage hospital foundations are often an networks to form as a way of afterthought when negotiations are reducing costs and improving quality. going on—and if they are small, with few assets, they are likely to Foundations are often an be ignored completely. Perhaps it’s afterthought because the people involved in the During the 1990s, circumstances put negotiations are not particularly me in the middle of many hospital attuned to philanthropy, or because mergers. At the beginning of the they think fundraising is a local decade, I was the chief development enterprise and therefore will not be officer (CDO) for a foundation at an impacted by the new arrangement. independent hospital that affiliated No matter the reason, no one wants with a larger system. After that, I to risk ruining a deal involving was CDO at a hospital that left a several hundred million dollars in religious hospital system and joined assets over a failure to agree on a a nondenominational system. Both small piece of the whole picture— Be proactive. times I was directly confronted the foundation assets. with the challenge of trying to keep If merging hospitals’ foundations Ask questions, foundation board members and have significant assets, their place in donors interested in giving when the future organizational structure seek information they were distracted and concerned is more likely to be a factor in about the future of “their” hospital. negotiations. Sometimes a hospital and talk to as At the end of the decade, I worked foundation may be used as a safe many people as for a rapidly expanding hospital haven to segregate assets from a system that added more than 30 merger. In that case, there is likely possible—both independent hospitals and small to be more emphasis on keeping the in your own systems during my tenure. foundation “separate” from the assets Throughout that period, I merged into the system. organization and discovered that negotiations for Some important points: hospital deals are often conducted • CDOs must be aware that in the system you in secrecy. The thinking seems to negotiations are happening before are about to join. be: If the talks go nowhere, why they can have any input about the arouse anxiety and questions? Even future of their foundations. some members of the hospital’s • Even if no foundation exists, a senior leadership or board may not potentially significant change know how far negotiations have in hospital identity, ownership progressed. Only when the deal is or management causes internal

13 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 and external anxiety that affects development efforts. • Maintaining strong trust A hospital decides to join or form a system relationships with your hospital as a strategic action to preserve or chief executive officer (CEO) and influential board members is always strengthen its future. The organizations extremely important, but becomes we work for are struggling to survive in a essential when some kind of new relationship is being considered. turbulent time. As their agents and employees, If those leaders understand the importance of philanthropy to the our charge is to serve our organizations’ best institution and the importance interests for the long term. of maintaining strong donor relationships, they will be more aware of the need to prepare the CDO for what may be coming. privatization of their public asset information technology support, and proceeds from the sale must office space, insurance, etc. Implications of for-profit be used in a manner consistent If you’re the head of a foundation conversion with the acquired nonprofit’s supporting a nonprofit hospital that Because it is engaged in promoting charitable purpose. To protect the is being acquired by a for-profit health, a nonprofit hospital is public’s interest, the state attorney company, start planning as early as classified as a public (501(c) general usually must approve sales possible for a very different future. (3) organization). In exchange, the of nonprofit hospitals to for-profit Engage competent legal counsel hospital is accorded tax-exempt operators. knowledgeable in nonprofit taxation status and allowed to grow without What does the change mean issues. Important and legally the burden of taxation, which is for hospital foundations that have complicated decisions must be made how the community invests in the supported their nonprofit hospital? about your ongoing tax-exempt hospital. A community board of • Your hospital will likely no longer status. Will you try to meet the trustees is appointed to oversee the have public charity status. requirements to remain qualified as community’s ownership interest in • Your foundation will no longer a public charity? Will you become the hospital. be raising money to support your a ? The questions To qualify as a 501(c)(3) hospital; it will either cease to exist and considerations involved in organization, hospitals must do the or have to develop a new purpose. planning for the conversion of an following: Your mission will have to be existing foundation are detailed in • Take care of everyone who comes redefined. the chapter by Patricia M. Ashmore, in for treatment, regardless of • If your foundation is to receive Best Practices for a Conversion, in a ability to pay (provide charity care). the proceeds of the sale, you will book I edited for AHP in 1997 as • Base decisions about their services become a much larger, more part of a “think tank” on hospital on community need rather independent and different type of M&A issues.4 than profitability (the basis for organization. the requirement for periodic • Your operating and legal structures Implications of a nonprofit community needs assessments). may need to be different. Will merger/partnership • Reinvest any excess revenue you be a grant maker only, or will If your nonprofit hospital will (profit) in the business rather than you operate programs? Will you become part of an existing benefiting owners or shareholders. continue to raise money? nonprofit system or will be creating When a for-profit hospital • Your board and staff members may a new system by joining with system acquires a nonprofit hospital, not be the right people for the new another nonprofit entity, your community assets that have grown organization. considerations and challenges are with the benefit of tax exemption • You will have to buy all the totally different—but they may be will be sold and used to produce support services you now get no less daunting. In this situation: a profit for private investors. The from the hospital, such as payroll, • Your beneficiary hospital’s public must be compensated for the benefits, human resources, finance, nonprofit status will not change.

14 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 • Management and governance will hospitals before, it is more likely Hospital partners in the same probably change. to have a plan for handling staff service area will find it easier to • Your hospital’s name, identity and department functions such as share staff and management and to culture may change. finance, human resources, planning consider centralizing service lines • Eventually, changes may occur in and perhaps fundraising— at one or another of the hospitals. the services offered at your hospital. especially if a system executive is Large systems with widely • Your foundation’s purpose will leading the development effort. dispersed and rural hospitals will probably continue to be linked to • Independent hospitals in not have the same options. the needs of your hospital. financial distress will also see • When there is no mature system Changes may happen changes sooner. More aggressive or immediate financial distress, rapidly or slowly, depending on changes in staffing levels, pay change is likely to start slowly and characteristics of the joining scales, debt refinancing and other accelerate as the system matures. organizations, but change is measures will be likely when • As the hospital system inevitable. In my experience: hospitals and systems experience develops, strategic planning and • Independent hospitals joining declines in profitability. administrative decisions are more mature existing systems are more • The geography in which the likely to be made at the system likely to see changes sooner. If system’s member hospitals exist level, which, of course, affects the system has incorporated new also impacts the pace of change. planning for fundraising and can

Foundation separateness

Whether your foundation is a • Use of the hospital’s name. subsidiary corporation of your • Advance knowledge of publicity hospital or a totally separate and initiatives. self-sustaining entity, you are not • Access to physician, patient and really separate. Foundations exist employee groups. to harvest goodwill created by their You function as the exclusive hospitals. Foundation executives fundraising agent for your and board members who believe hospital because it benefits the that their separate corporate status hospital—and people donate insulates them from changing to express support for the or agreeing to collaborative work of the hospital, not the development programs have totally foundation. Hospitals do not missed the symbiotic nature of require separately incorporated their relationship. foundations to receive or manage Even if your foundation is a charitable support. legally separate entity, it’s unlikely Because foundations to be functionally separate. You have functionally dependent may get direct or indirect economic relationships with their hospitals support, such as free or reduced- and enjoy exclusive franchises, it’s rate office space, inclusion in obvious that hospitals should seek, hospital benefits programs, and use and foundations grant, reasonable to administer significant assets of hospital facilities and services, involvement, communication that are in trust and intended to for example. But even if your and direction of the foundation’s further the hospital’s mission. In foundation is economically self- activities. If a system retains granting this exclusive franchise, supporting, it requires other forms independent foundations, it gives the system can and should set of support to be effective, such as: them exclusive rights to raise requirements for the cost, quality, • Access to the hospital’s funds for a specific hospital. The term and performance of the strategic plans. foundation also may continue foundation’s services.

15 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 impact donor confidence and trust in your hospital’s leadership. As soon as your foundation board, donors, employees and physicians learn of potential partnership discussions, they are likely to have concerns. You may call it a partnership rather than a merger, but they will understand instinctively that change is coming and the way things have always operated is not going to stay the same. If not managed carefully, their anxiety can have a paralyzing effect on their willingness to make donations. Some things to keep in mind: • Your hospital’s leaders decided to seek a partner because the future did not seem viable as an independent entity. Is your community better served by a Common terms for hospital deals hospital that is part of a system, or by a closed hospital? That is the The chart below defines six terms frequently used to describe central issue. People will disagree hospital deals. Other terms sometimes used are “amalgamation,” about how dire the future really is “partnership” and “alignment,” but these describe what are as an independent entity, but the actually mergers, acquisitions or long-term leasing arrangements. financial pressure on hospitals is Other terms such as “buy outs” or “takeovers” are routinely real and increasing. avoided because of their negative connotations and the public • As a foundation director and anxiety they might arouse. hospital executive, you are not being paid to preserve the past or serve your personal interest. Your DEAL TYPE DESCRIPTION job is to help your organization adapt to the future and stay true MERGER Two or more health care organizations combine to donor intent. You may not look to form a new entity forward to the new world order or want to work in it. But even if ACQUISITION An existing organization is purchased your future diverges from that of the organization, the patients, the JOINT VENTURE Two or more organizations combine resources on donors and the need for a solid a specific project philanthropy program will still be there after you are gone. AFFILIATION An organization joins another for a specific • Once the partnership decision purpose (such as contracting) is made, CDOs must be strong, positive advocates for the LEASING Lease of facility with retained ownership partnership if they are to have any hope of raising money through the MANAGEMENT Contract to manage with retained ownership transition. Expressing personal CONTRACT concerns about your future or role will worry board members and donors and give them a reason to

16 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 hold off on giving until they can see typical pause in giving and make the funds, including undesignated funds, how things go. transition as smooth as possible. will be spent at the local institution. Will the new health system Otherwise, you will shake donor Nonprofit merger: raid our endowment funds for confidence and cause concerns about What to agree on use elsewhere? As part of the the use of donated money. Foundation board members and partnership agreement, donor- What will become of the donors have predictable, almost designated endowment funds local foundation board’s universal concerns about their should be guaranteed for the uses ability to make final decisions donations when a nonprofit merger intended by the donors. In the final about fundraising initiatives is on the horizon. The most MOU, clearly define the existing and methods? Formulate a common ones are discussed below. endowments and their donor- compromise position in which Rather than ignoring philanthropic designated purposes—a practice that the local board retains decision- considerations, it serves the interests conforms with the ethical standards making authority regarding of all parties to incorporate specific of AHP and most major fundraising fundraising programs but conforms reassurances and guarantees in the professional organizations. Knowing with existing system policies and memorandum of understanding that the use of these funds is consults with system leadership. (MOU) or whatever document guaranteed in writing is tremendously The board will need to meet will memorialize the partnership reassuring to interested parties and existing or future system policies agreement. In my opinion, system has great public relations value. on development program costs or development executives and hospital What will happen to other productivity, which will directly foundation heads alike should donor-designated funds? Similarly, affect the types of fundraising advocate for including provisions the use of donor-designated funds programs to be considered. such as these in the MOU in order to should be guaranteed as intended by Can we maintain local control reduce donor anxiety, minimize the the donor. Make assurances that all of assets? Foundation board

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members and staff often assert that their relationships with local banks CEOs, attorneys and others who negotiate and asset managers produce annual gifts and event sponsorships. The agreements need to understand the partnership agreement can allow local financial management to continue, powerful role foundation executives as long as the local board carefully can play in influencing community opinion- exercises its fiduciary responsibility to manage the assets prudently and makers about the merger’s desirability. at the lowest possible cost. If the new system has an investment program, you can easily compare investment easier by having all foundations hospital’s foundation executive is at returns minus management fees at conform to the system’s fiscal year. the center of it all. How you manage local institutions with the system’s • Specify that all foundations use your board and their concerns programs and decide which provides a standard fundraising chart about the future determines how the best total return. of accounts for budgeting and the entire relationship will unfold. Will the local foundation donate reporting, which allows an I am convinced that foundation funds to the hospital on a regular annual opportunity for internal executives who are afraid for their and timely basis? Proceeds from benchmarking review. own jobs and suspicious about what endowments and current gifts should • Have all parties to a partnership will happen create boards that are be granted according to an agreed- or merger agreement pledge that anxious and suspicious. upon schedule, such as five percent they will collaborate to improve Unfortunately, development of the value of endowment accounts fundraising capability throughout officers are often given little to go and at least 50 percent of current the system. A host of shared back- on about the merger arrangements. funds granted each year, with transfer office services, training programs Thus, they are left to imagine the within 90 days of the close of the and best practices are possible when worst. Too often they lack a good fiscal year. foundations or development offices trust relationship with their hospital Fiscal year and miscellaneous work together.5 CEO or do not have influential issues: From direct experience, I’ve foundation board members with such learned that including the items What’s a CDO to do? relationships. As a result they have no below in the agreement can also avoid Anxiety and defensiveness tend accurate information about the future future problems: to dominate the premerger and no voice in helping to design it. • Make accounting and reporting atmosphere—and the joining CEOs, attorneys and others

20 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 who negotiate agreements need decide what you want to do as References to understand the powerful early as possible. Could there be 1. Barr, Paul, and Kutscher, Beth. Taking role foundation executives can a growth opportunity for you as a different path: Annual M&A report shows year of strong growth, rise of play in influencing community a part of the new organization? nontraditional deals. Modern Healthcare, opinion-makers about the merger’s Would you want it, if it were January 28, 2013, S1–7. http://www. desirability. Many of those opinion- there? If it looks like something is modernhealthcare.com/article/20130126/ MAGAZINE/30126995 (accessed May makers probably sit on the foundation possible and attractive, get all the 28, 2013). board. Because foundation executives way on board, help smooth the 2. Saxena, Sanjay B., Sharma, Anu, and are rarely brought into the loop, transition and be positive about the Wong, Anne. Succeeding in Hospital & they are tempted to share fears with new arrangement. If you feel you Health Systems M&A: Why So Many Deals Have Failed, and How to Succeed in the members of the board. will not be happy or welcome as Future. Booz & Company Inc., 2013. How can a foundation executive part of the new organization, start 3. Brown, Thomas Jr., Werling, Krist, serve the organization in those looking elsewhere. Walker, Barton, Burgdorfer, Rex, and Shields, J. Jordan. Current trends uncertain circumstances? Here are • Serve the institution, not yourself or the current board. in hospital mergers and acquisitions. some attitudes and prescriptions that When Healthcare Financial Management, March I think can work: the whole world changes, it’s 2012, 114–8, 120 Be proactive. 4. Ashmore, Patricia M. Best practices for •  Ask questions, seek natural to think about how you’re a conversion, in Health Care Philanthropy’s information and talk to as many affected, and it’s hard to imagine Challenge: Managing the Movement to For- people as possible—both in your how anything can work out better profit Conversions. Ed. James DeLauro. own organization and in the system if the board goes away or the Falls Church, VA: Association for Health Care Philanthropy, 1997. you are about to join. Sometimes it’s hospital’s name changes. You may 5. DeLauro, James. Issues for system easier to do this unofficially rather feel the need to mourn the passing development, in The Nonprofit Handbook, than through official channels, since of the freestanding hospital you 2nd ed., 1999 Supplement. Ed. James M. Greenfield. New York: John Wiley & the general rule for negotiations knew. It’s a mistake, however, Sons, Inc. seems to be not to say or explain for development leaders to get anything until all is signed, sealed, too wrapped up in lamenting or and delivered and widely known in resisting changes. No one can raise Major Gifts officer 4 the community. much money in an atmosphere of (Director of chilDren’s health) Work out requirements and Penn State’s Office of University Development is seeking a •  worry, doubt and pessimism—so Director of Children’s Health for Penn State Hershey Medical freedoms in advance. Center and Penn State College of Medicine. Penn State is in If the system don’t foster that atmosphere. the public phase of a $2 billion plus capital campaign. Penn already has an entity responsible A hospital decides to join or State Hershey Medical Center’s goal of $300 million will play an integral role in the University’s successful completion of this for fundraising, go see them and form a system as a strategic action campaign. The Director for Children’s Health reports directly to the Executive Director of Development and also has a close ask how they’re organized. Find to preserve or strengthen its working relationship with the Associate Vice President of Development, Chief Executive Officer and Dean, and Penn State out what plans, if any, they have for future. The organizations we work Children’s Hospital leadership. The successful candidate will focus on prospects with gift capacities of $50,000 or greater you and your board. If the system for are struggling to survive in a and will need to think strategically to help plan and implement already has an organizational turbulent time. As their agents and a major gift fundraising initiative within Children’s Health in order to identify, cultivate, and solicit alumni, grateful patient structure, will you be expected employees, our charge is to serve our families, friends, faculty and staff, and other key constituents. In consultation with the Executive Director of Development, the to conform to it? Find out what’s organizations’ best interests for the Director for Children’s Health will work on gift strategy, proposal development, prospect/donor visitation and related follow-up. flexible and what isn’t. long term. The Director is expected to complete a minimum of fifteen (15) • Make an early decision. monthly visits with prospects and donors. The Director provides Do James DeLauro, Ph.D., has supervision to Children’s Miracle Network and Four Diamonds you like the person in charge of worked in health system teams ensuring their growth and success.The candidate must possess exemplary interpersonal skills and demonstrate development for the system? Could fundraising for more than 30 a genuine appreciation in working with diverse audiences. years. He was foundation Familiarity with academic medical centers or large scientific/ you accept working for him or her? head during the mergers of health care research institutions and supervisory experience is desirable. This position requires that you operate a motor vehicle If no one holds this position now, two independent hospitals as part of your job duties. A valid driver’s license and successful into larger systems, was the completion of a motor vehicle records check will be required in will someone be named? Will you lead health system development executive addition to standard background checks. Typically requires a have a chance at the position? Will Bachelor’s degree plus four years of work related experience. during the incorporation of 30 hospitals, and Within your cover letter, please describe your experiences working your CEO or another CEO be has consulted with many health systems over in a collaborative or team environment. Please highlight how you the past 12 years. His firm, DeLauro & worked to engage donors and build trust and touch on the types heading the merged organization? Associates, specializes in strategic planning of relationships you were able to foster with donors/clients and the outcomes that resulted from your work. and management counsel for a range of The answer to the CEO question Apply to job 39664 at http://apptrkr.com/348243 clients, from complex organizations with could make a big difference in your Penn State is committed to affirmative action, equal opportunity multiple development offices to start-up and the diversity of its workforce. chances for the top development fundraising programs. job. Think about your future and

21 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 FEATURE | By Guy J. Guarino Jr., M.B.A., M.H.A., FACHE, with Dan Rogge Success with a small shop capital campaign A cash-strapped hospital exceeds fundraising goals by defining clear objectives, cultivating personal relationships and using resources efficiently

didn’t know the hospital was a philanthropic cause. I guess I’ll put you eleventh behind the soup kitchen.” “IThis donor prospect’s response to a proposed capital campaign for Catawba Valley Medical Center in Hickory, N.C., illustrates our starting point. Few were optimistic about our proposal to raise $3 million to fund a new patient pavilion. Timing and conditions were bad; it was 2009 and the unfolding recession was devastating the wealth and industry in this one-time furniture-making capital of the country.

22 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 Our foundation worked with various stakeholder groups well in advance of the campaign

Not only was this to be the hospital’s which we conducted face-to-face kick-off to first capital campaign since its founding interviews with prospective donors, make sure in 1967, it also was my first fundraising including members of our board of job—and not my only responsibility. As trustees and foundation board as well they felt vice president of community services as community leaders—we uncovered and chief development officer, I also had more bad news: 42 percent of our best included and marketing, public relations, business prospects rated our medical center were well development and physician recruiting as low on their list of philanthropic under my direction. My “staff” consisted priorities. Worse, many mistakenly informed. of a part-time administrative assistant. believed county taxes funded the And in our campaign study—in hospital.

23 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 Despite these challenges, we were able to leverage good relationships in the community, support from our chief executive officer (CEO) and strategies developed with the help of an excellent fundraising consultant into a robust, successful capital campaign. This article outlines our approach and offers useful ideas for other small shops to consider. Preparation and planning Our CEO, Tony Rose, was optimistic about the campaign. He recognized that our theme, Planning your own “small shop” “Building a Tradition: Caring for campaign Your Future,” not only described this effort, but heralded a shift These were the major factors that contributed to our success: in our fundraising methods as •  Your CEO must be involved Make sure you have CEO support. charitable becomes an and engaged. increasingly important revenue • Choose the right consultant. To find the right person for your source for hospital funding. campaign, get recommendations and check references. But Tony believed the campaign even more important, spend time with the consultant (and would chart a new course for his/her team if there will be one) to see if they are people you our foundation and be a good can work with. Chemistry and trust are very important. opportunity for us to build a • Strengthen the foundation board. First, make sure you have larger network of friends and the right people on your board—if your mission is to raise supporters. funds, you need members who are able to contribute as well From the beginning, we as identify and cultivate prospective donors. Then work with realized we needed to emphasize your members to prepare them and their networks for the personal interactions to gain campaign before it begins. support—specifically, we needed • Form a steering committee. Our steering committee was vital to connect potential donors to engaging our top potential donors and leaders. with something they care about in a meaningful way. To be • Connect and share your message with your donors. People successful, we would need to don’t give money because they like you or the organization. help donors understand why this They give because you are serving a need that is important to project should proceed in the them. recession, why their giving was • Maintain a manageable volume of activity and focus on so important and how meeting one thing at a time. Break the work down into manageable this goal could fit into their components and really take the time to do each step right. personal values and priorities. • Always follow up. Good follow-up has been central to our Expanding staff was not an campaign success. I’ve stayed in touch primarily via phone option, but Tony supported calls and letters with our donors and people who helped me our hiring a consulting firm, connect to others. Corporate DevelopMint, LLC. • Create a positive and meaningful experience for your Lead consultant on this project supporters and volunteers. Make it fun so people enjoy the was their Vice President, Dan process of doing a good thing. Rogge (now head of Rogge and Associates). His firm provided

24 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 guidance and experience in best plans. Working together, we them not just for their capacity practices to build stronger donor created a three-part approach: to give, but for their perceived relationships, develop campaign willingness as well. infrastructure, facilitate meetings Part one: Limit the scope of and formulate strategy. Working the campaign to the best and Part two: Engage in intensive with Dan’s firm during our three- most promising donor prospects. personal and group cultivation month planning process also We focused on the top donors to create more favorable helped us determine that they first—those who could provide circumstances for better giving. would be a good fit for helping us the first 70–80 percent of our goal Our foundation worked with manage the campaign. in the shortest time. These top various stakeholder groups well in In addition, Tony released prospects were identified through advance of the campaign kick-off additional funds when necessary a long and broad cultivation to make sure they felt included for items such as an event we did process and were qualified and were well informed. These not plan on, donor recognition, through direct conversations and groups included: etc. He saw these expenditures screening and rating sessions as important investments in the conducted with community • Community leaders: To clarify medical center’s future and they leaders. We did not rely on funding misconceptions and made a tremendous difference at wealth screening and physician outdated knowledge of the key points in the campaign. referrals to the extent that hospital medical center, the foundation systems in larger and more embarked on a six-month Clear objectives transient communities might; we cultivation campaign of key Dan emphasized setting clear had personal connections to our people of influence—including objectives to guide our campaign potential donors, so we qualified county politicians and

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25 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 administrators, major donor prospect of the new facility, During our campaign prospects and community most board members were planning phase, we formed leaders in geographic areas of uncertain of their role in the a 15-member steering interest. Our CEO, board chair proposed campaign. committee—a temporary and I personally conducted tours We developed and shared team of recognized and and visits for these individuals. an “elevator speech” and respected community leaders Developing these FAQs for the campaign, and whose major goal was to relationships helped us learn also presented an overview generate and cultivate top more about potential donors of potential objections and donor prospects, as well as and connect them to causes responses board members provide input during our that were important to might encounter as they campaign preparations. These them. One couple toured our discussed our goals. In individuals worked together Neonatal Intensive Care Unit addition, we provided for nine weeks, helping us to (NICU) and the wife came solicitor training (conducted develop the case from a donor out with tears in her eyes after through role playing) to perspective, identify possible seeing the tiny preemies. They help board members become donor questions, determine primary themes that would resonate with the community, develop a campaign slogan Because our staff was so small, we and identify potential donors who were likely to support were not able to directly engage as and contribute to our efforts. many donors as a more traditional Steering committee members developed a deep commitment campaign might. Instead, we to our campaign; giving from this group was generous and 10 concentrated on strengthening key of our top volunteers agreed to relationships with donor leaders serve on our campaign cabinet. After the steering who played significant roles in the committee phase was completed, we developed campaign. our 14-member campaign cabinet, which operated during the campaign. This was the pledged a quarter of a million more comfortable with group we relied on to solicit dollars soon after that visit, fundraising activities. We donations from prospects realizing what a difference met with members regularly identified by the steering they could make by helping us throughout the campaign and committee. They secured gift expand the NICU from 1,500 key leaders from both boards commitments from our top to 15,000 square feet. gave generously and helped us donors, eventually raising more to engage major donor/leader than 70 percent of our final • Our board of trustees and prospects in the community. contributions. foundation board: The chairman of the board of • Top prospects: Because our • Mid-level prospects: During trustees also serves as the staff was so small, we were not the last three months of the chair of the foundation, and able to directly engage as many campaign, board members and both boards are composed of donors as a more traditional volunteers hosted a series of individuals dedicated to helping campaign might. Instead, we “Cocktails & Conversations” our medical center provide high- concentrated on strengthening events for our mid-level quality, compassionate health key relationships with donor prospects, to connect with them care services to our community. leaders who played significant and make them more familiar While they were excited at the roles in the campaign. with our efforts.

26 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 • Employees: We wanted employees were prepared to The campaign and our employees to feel ownership discuss these issues. results for the campaign and also have The official campaign goal opportunities for meaningful Part three: Be very efficient was set at $3 million (toward involvement. We organized in the use of campaign a $34 million Patient Pavilion focus groups around the hospital activities to ensure a close building). Over a two-year system to identify motivators, correlation between donor period, we raised $3.6 million. such as how employees would identification and the levels of Our campaign costs—including benefit from the new facility. An the gift table. For this objective, a portion of my and my staff employee campaign committee we organized campaign phases assistant’s salaries, consultant reviewed the findings from and activities to use our resources fees, marketing materials and these focus groups and assisted sequentially. First, because many functions for donor cultivation— in determining messaging, key individuals told us they totaled approximately $250,000. promotion and key campaign- would likely only help with one Here is a breakdown of our planning activities. to three prospects, we sought to campaign contributions by We also made sure raise more than half of our goal category: employees were informed through recruiting our leader • Physicians—Gave more than about our strategy and plans. volunteers, identifying the most $1,070,000 in gifts. If community members asked promising donors and securing • Administration—The CEO, why we were building a new their major gifts. Following VPs and directors have given facility if we couldn’t afford it these activities, we concentrated more than $410,000. without donations, or wondered on larger events for mid-level • Auxiliary—Contributed the how the project might benefit donors. Later outreach included largest single gift, $1,000,000. them and their families, our the sessions for employees. • Board of trustees and

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27 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 foundation—Contributed the planning phase, physicians and our infusion center (which $418,000. and staff were really invested in formerly was located two miles • Employees—Committed the details. For instance, they away from our facility). In Taking the $117,448. would run drills to see how fast addition, we hosted a dedication • Campaign cabinet—Total they could get patients from the ceremony for public servants, gifts of $310,000 (exempting new pavilion to some operating staff and community leaders. physicians and board members, rooms that remained in the older With these campaign celebrations reflected in previous entries). facility. Their support and input behind us, our attention has mystery • Community—Community were key. turned to stewardship and donors have donated $871,510 Our employees really stepped creating a robust annual campaign and the number is climbing. up at all levels and seem to see to raise money for programs, out of We were delighted that their gifts as an investment in capital needs and equipment. our physicians gave more their workplace and in themselves. Our capital campaign was than $1 million, a result that an amazing experience and a really demonstrates their What’s in our future real lift for a community that support for the hospital and an When our pavilion opened has experienced some economic metrics understanding of the importance in January of 2013, we held stresses in recent years. It felt like a of philanthropy to its future. a celebration that included a significant step toward creating They were very involved in the cocktail event for donors who gave a positive vision for our planning and design of the new $10,000 or more. We conducted community’s future. I don’t know pavilion, so they knew what a VIP tours of the new facility, if we will get the additional difference having this state-of- which houses our brand new foundation staff members we’ve the-art facility tailored to their level-3 NICU, our women’s and requested, but I no longer worry needs would make in their ability children’s birthing center, the about having good volunteer to care for patients. During inpatient oncology department partners in fundraising and networking. And now I’m sure that our community believes our medical center is a highly valuable and worthy philanthropic cause. Guy J. Guarino Jr., M.B.A., brakeley briscoe M.H.A., FACHE, joined POWERFUL THINKING | CREATIVE CONSULTING Catawba Valley Medical Center as vice president for giving ight to great ideas Brakeley Briscoe is the strategic management and proud sponsor of the development in 2003. He George A. Brakeley Jr. AHP Awards currently serves as the chief development officer with responsibilities over marketing and public relations and the Catawba Medical Foundation. Guarino earned his Masters of Business Administration and Masters of Health Capital and Endowment Campaign Counsel Administration from Pfeiffer University. He Fundraising Capacity Building also is a fellow of the American College of Campaign Management Healthcare Executives. Campaign Planning/Feasibility Studies Development Audits Major and Annual Gifts Dan Rogge is president of Planned Giving Rogge & Associates, a Volunteer Leadership Development consulting firm providing International Fundraising collaborative capital to help national, regional and community NPOs advance www.BrakeleyBriscoe.com their mission by funding [email protected] facility, endowment and operational revenue 800-416-3086 aspirations. With 15 years of consulting experience, Dan founded Rogge & Associates in 2013 to create the next generation of client services characterized by quality, flexibility, thoughtfully assembled resources CALIFORNIA • CONNECTICUT • METRO DC • TENNESSEE • BRAKELEY FAMILY WORLDWIDE and personal attention.

28 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 FEATURE | By Nancy Plemens Mayes, APR Taking the mystery out of metrics Three AHP members discuss the value and practical uses for shops of all sizes

o matter the size of your development program, data can be your strongest ally and most valuableFor wasset.ard It can help Forward Nyou make the case for growth and expansion,Thinking including the Thinking Sponsored by Blackbaud Sponsored by Forward need to invest in more staff. It can show if your programs are Thinking headed in the right direction and where to make changes for Sponsored by Blackbaud greater success. Perhaps most important, data that’s presented the right way can increase your credibility with your C-suite and make a compelling case to donors.

Business leaders in all industries use benchmarking data every service line leader uses benchmarks—whether it’s to inform decisions, set goals, monitor progress, measure for cancer Fcareor wor behavioralard health—especially with a performance and embark upon change and growth. Three focus on quality.Thin kWhying shouldn’t philanthropy?” veterans in the field of health care philanthropy share how Randy SponsoredVarju, byFAHP, Blackbaud CFRE, chief development they use benchmarking and demonstrate its value and officer and foundation president of Advocate Health Forward impact on their organizations’ success. Care in Park Ridge, Ill., also says that senior leaders Thinking “Data is extremely important in all business, and I think see him and his team in a more credible way due to Sponsored by that’s especially true in health care,” says Mark Larkin, benchmarking. CFRE, vice president of philanthropy at CentraCare “It broadens their understanding of the important Health in Saint Cloud, Minn. Larkin is responsible for 15 measures in philanthropy and connects us to the other FTEs and a $7.2 million budget, supporting his 600-bed successes of the organization,” he explains. A large and health system. growing health system with more than 3,500 beds, “Benchmarking gives us instant credibility with the Advocate Health Care has 35 FTEs for development. C-suite and our colleagues,” Larkin says. “In health care, Credibility with donors is another value of

29 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013

Forward Thinking Sponsored by Collingwood General & Dashboard: in fundraising. Staff allocation and Marine Hospital Foundation productivity are additional valuable metrics. Collingwood G&M Hospital Foundation “Benchmarking allows you to Median Production ROI—5 Year History drill down into the variables and examine other measures, such as the $8.00 CGMHF number of new donors in a year,” says $6.00 Pritchard-Kerr. “The metrics allow $4.00 Canadian you to make informed decisions, not Participants $2.00 just kneejerk reactions.” $0.00 All Participants You don’t have to measure 2006 2007 2008 2009 2010 2011 everything, however. The most important step in benchmarking “This chart shows our board comparative data that focuses on year-over-year is making sure your metrics are improvement. In 2006, we invested in a small planned giving/endowment campaign targeted to and aligned with your with a goal of increasing our gift expectancies. We saw a better ROI on production goals and objectives. around planned gifts, but our major gift pledges fell off. In 2010, the board agreed Varju says benchmarking has to launch a capital campaign based on 2008 data. We told the board there would been helpful in educating others on be a drop in production ROI during the planning phase in 2010, but that it should rebound significantly in 2011. All of this is shown on the chart.” which variables are important. “We —Jory Pritchard-Kerr, FAHP, CFRE, executive director of Collingwood General & Marine have a good baseline to illustrate Hospital Foundation in Collingwood, Ontario improvements and the efforts we are making that impact bottom line results. The tracking over time shows benchmarking, according to Jory Start with your own, the experts the value in the decisions we are Pritchard-Kerr, FAHP, CFRE. say, but be aware of the industry making.” Pritchard-Kerr is the executive data that is available through He advises streamlining your director of Collingwood General organizations such as the Association metrics and even the terms you & Marine Hospital Foundation in for Healthcare Philanthropy, the are using to report information Collingwood, Ontario, and oversees Health Care Advisory Board, the to ensure everyone is on the a staff of five FTEs for a foundation Committee Encouraging Corporate same page. “Benchmarking data supporting a 70-bed community Philanthropy (CECP) and others for drives symmetry in reporting and hospital. comparative and trending purposes. nomenclature. It’s a reassurance that “Our major gift donors are When beginning your data tracking we are looking at industry standards surprised when we pull out our and benchmarking, avoid recreating and is another valuable resource we graphs and explain where we are the wheel. Explore available can offer to our own organization.” and where we want to go,” she says. resources and options to ensure you’re “Donors are impressed we can show building your program correctly from Planning for growth the hard data and that we are looking the beginning and that you will be Hard data is extremely valuable at all the aspects. More and more able to make effective comparisons. when making the case for growth donors are going to be expecting this Pritchard-Kerr, Larkin and Varju and expansion; it can be a catalyst type of data.” concur that return on investment for change. Pritchard-Kerr says by “Once we could show data, we (ROI) is the most important metric comparing her small foundation were finally viewed as a genuine in your benchmarking. to other similarly sized, high business unit or service line,” adds “Return on investment is a critical performing shops, she was able to Larkin. “It really comes down to success factor in our ongoing plan,” defend her request for more clerical credibility. We are now viewed says Larkin. “If you can show ROI, and administrative staff to free up as a viable, critical part of the in particular, to a board of business time of the fundraising professionals. organization.” professionals, they understand it.” On another occasion, she justified Cost to raise a dollar, net dollars adding a staff person dedicated for What to measure raised, major gifts, planned gifts, planned giving. Tracking and comparing data annual gifts and event revenues are Larkin doubled his staff in a metrics is good business sense. also important and typical metrics three-year plan supported by his

30 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 board, thanks to benchmarking Dashboard: CentraCare Health data. “Each time we’ve wanted to add staff, we’ve backed up the AHP Benchmarks Median request with benchmarking data. It Results and CentraCare System Overall data Staff Size Size of provides credibility when asking for Benchmarks Foundation Foundations (4 base (58 8-10 Expenses more FTEs.” Fiscal Year orgs.) orgs.) (13 orgs.) Budget 1.5 2011 to 2.5 M (15 Programmatic changes can be orgs.) supported by benchmarking data, too. At Advocate Health Care, the Funds Raised $7.8M $ 6,227,786 $3,788,643 $ 6,547,973 $8,631,507 foundation board took a closer look Net Returns $6,097,371 $4,175,006 $2,798,600 $5,091,895 $6,988,426 at the role of major gifts with the aid FR Expense $1,691,710 $1,737,992 $1,060,179 $1,456,078 $1,643,082 of benchmarking data. “We refined our focus to develop ROI $4.60 to $1.00 $3.05 to $1.00 $4.06 to $1.00 $4.88 $5.34 deeper portfolios,” explains Varju. CTRD $0.22 $0.33 $0.25 (25th $0.32 $0.31 “This was done with far more percentile =$0.20) strategy than before, thanks to the data available to us.” Direct Fund 8.9 9.25 5.13 7.53 7.31 Raising FTEs Larkin says data also has helped him illustrate to his board and “This dashboard compares CentraCare’s fiscal year 2011 with four different cohorts, leadership what’s realistic. “We including institution type, staff size and budget. We use it in reports and strategy were able to convince the board we discussions with our executive leadership.” could double or possibly triple our –Mark Larkin, CFRE, vice president of philanthropy at CentraCare Health in St. Cloud, Minn. fundraising per year; however the market numbers would not justify a six to eight fold increase that the most difficult,” Pritchard-Kerr says. benchmarking, according to CEO was challenging us to raise. “It requires a lot of time, but gets Boersma, is capital campaigns. “They By presenting the data it moved an easier every year.” are difficult in comparisons. You need emotionally charged discussion into There’s also a financial cost to make adjustments to allow for a logical one.” involved if you are participating in those special campaigns.” “In the end, we all want to see industry benchmarking programs, but What may seem to be a given net revenues growing,” contends it’s not cost prohibitive, she says. “For challenge doesn’t always have to Pritchard-Kerr. “We can use a small foundation, without dedicated be: staff accountability. Measuring benchmarking data to decide on financial analysts and staff, we think staff resources and productivity can whether to invest in staff or make it is completely worth it. The real make people nervous. However, at tweaks to programs to achieve that value lies in how you use the data.” CentraCare Health, Larkin says it is end goal.” In this current environment of the accepted way of doing business. mergers and expansion, cultural “They like the clarity and depth,” Preparing for challenges issues can present challenges, too. Larkin says of his team. “If you take While the benefits are many, “Integration of a new hospital means a balanced look, over time, it is more there are some challenges with a new level of variability,” explains valuable.” benchmarking. Being aware of them Varju. “Cultures are different.” “Is being accountable stressful? and preparing in advance can go a Michael Boersma, director of Absolutely,” he adds. “But it’s used long way in lessening the degree of prospect development and analysis on as a guide, not a club. There is some difficulty. Varju’s team, says you have to make comfort in that guidance.” “Benchmarking is a fairly rigorous sure all your different development Varju and his team agree the undertaking,” Varju warns. “The key offices are using the same definitions. worth of the data far outweighs is to anticipate that on the front end.” “We had to do some recalibration any angst associated with it. There’s also an investment to accommodate the parameters of “Benchmarking has helped us build required—of time, personnel our reporting and to ensure we had a efficiencies with staff allocation; and dollars. Appropriate internal common understanding among our it has helped us identify what is resources need to be allocated to set team of the reporting definitions.” necessary and required to meet our up your system. “The first year is the Another challenge in goals.”

31 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 recognize this is business. Choosing Benchmarking wisdom to benchmark is a sound business • Embrace the data. Don’t let a fear of not measuring up impede learning and decision that will lead you to more process improvement. sound decisions.” • Dedicate and invest the appropriate resources—personnel and time—to get “Not everyone who participates is proper systems in place for collecting benchmarking data. exactly alike,” adds Boersma. “Given • Focus on the key metrics that will help you achieve your goals. You don’t have to measure everything. that, we’re still able to glean valuable • Analyze data annually. The accumulation of data over time adds value and information about ourselves and provides data points for progress checks. other systems.” • Think of benchmarking as a journey, not a destination. You’ll be continually refining and adjusting as years go by. A solid reputation Benchmarking can be important to successfully integrating philanthropy “It’s not just the foundation as Canadian organization participating with the overall business and a whole stepping on the scale, it’s in AHP’s benchmarking service, strategic plan of your organization. also each individual team member,” yet still benefits greatly. “We are Benchmarking your program’s he says. “The data determines the benchmarking against ourselves, year successes—and shortcomings—can timing and dosage of any necessary after year, but also other Canadian solidify your reputation as a business changes and drives the outcomes we hospitals.” She’s been participating in professional. can then celebrate.” the service since 2007. “If you use benchmarking “Don’t let size or fear hold you the way it is intended, you’ll be A good fit for all sizes back,” Larkin advises. “We have to very successful in launching your Benchmarking has no size get beyond the idea that the data will organization—and your personal boundaries. Pritchard-Kerr says be used against us. If we want our career—to new heights,” says Larkin. her foundation is the smallest field to have credibility, we need to “People think fundraising is about glad-handing and parties; they don’t SPONSOR SHOWCASE always see it as part of the strategic mission.” How does your organization measure up? Larkin says he’s always amazed In the crowded nonprofit industry you need to stay ahead of the when colleagues complain competition for donors, grants and mindshare. Understanding a few key about chief financial officers not trends should help you prepare for success:* • At hospitals and other care facilities, after declining through much understanding what they do. “If you of 2012, fundraising revenue grew through the latter part of the year are benchmarking, you can speak and the early part of 2013, dipping slightly in the spring. Health care their language. The entire concept is organizations rely heavily on major gifts, which are far more dependent grounded in business practices and on the stock market. When people are feeling confident in their principles.” investments, and they have the resources, they’re much more generous He says he takes great pride with big gifts. when a volunteer comments on • Overall giving for health care organizations in recent months has the running of CentraCare’s been relatively flat, while online giving has grown by double digits. Organizations should consider integrating online giving channels (such development department. “They as email marketing, online donations and peer-to-peer fundraising) into are successful business people. their marketing and fundraising strategy to capture and retain more They understand data and how donors. we are using it and engaging • An important way to gauge how your fundraising stacks up to your them on planning and strategy. I competition is by benchmarking your organization against your peers. take their positive comments on The insights gained can help you fine-tune your fundraising strategies for our benchmarking as the highest future success. compliment.” * Statistics highlighted are from Blackbaud’s new specialty index focused on fundraising revenue for hospitals and other health care centers. The new health care index is drawn Nancy Plemens Mayes, APR, from The Blackbaud Index (www.blackbaud.com/blackbaudindex), is a communications which provides the most up-to-date information on consultant with more than charitable giving today, tracking approximately 20 years of experience in $12 billion in US-based charitable giving on a the nonprofit health care monthly basis. industry.

32 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 FEATURE | By Febe Galvez-Voth, M.A.

Make a remarkable case for your cause Inspire your donors y husband and I recently attended a party; it was our realtor’s show of to become your Mappreciation for his long-time clients. His sprawling estate, aglow in candlelight, advocates looked like a page out of House and Home, and the food and wine were worthy of a feature in Wine Spectator. The setting and ambiance were truly memorable—remarkable, even.

33 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 About 50 guests filled the rooms of the home. We Converting donors into advocates heard stories of properties purchased and sold, and we So how do we inspire our supporters to do more than also heard many inspiring stories of philanthropy. write a check a few times a year? How can you present One couple had made multiple trips to Africa your charity in ways that will motivate donors not only where they support an orphanage. Most recently, to give regularly, but to be so engaged, so all-in that they had helped to fund and build an extension to they become your advocates? Here are a few ideas. a facility that was home to children orphaned by the HIV/AIDS epidemic. The couple shared their Create a strong value alignment heart for the work along with a now-funny story of People give to advance the things they value. If a how the husband had fallen into crocodile-infested donor is looking to infuse his or her retirement years waters. Their enthusiasm made me want to join their with purpose and meaning, a message about how a adventure, although I would pass on the encounter piece of medical equipment will reduce wait times will with the crocodiles! not resonate. The values are misaligned. Another couple spoke of their commitment to In The Realm of Rhetoric, Chaim Perelman, help erode the stigma that is still attached to mental philosopher and expert on rhetoric, identifies two illness and to help ensure that families faced with this kinds of values: concrete and abstract. Concrete challenge receive the care and support they need and values, simply put, refer to things you can touch— deserve. This couple spoke with passion about using such as a home or even a spouse. Abstract values refer their home and their voice in the community to raise to intangibles like love, health, freedom, purpose, significant funds to advance the work of their chosen solidarity and relationships. Abstract values, says charity. Perelman, “serve more easily as a basis of critiques of And so it went. One couple after another told society, and can be tied to a justification for change, to remarkable stories about charitable work they believed a revolutionary spirit.” 1 The point here for a fundraiser in, invested in and were passionate about. We encountered philanthropic missionaries that evening. I left that event wondering why those specific causes Carefully crafted narratives had made their way into our conversations. After all, whisk new life into familiar there are hundreds of charities in the area. Of course, with only 50 attendees the capacity for charitable ideas and present them in a way representation was limited. But the question of why those specific causes rose to the fore, while others that stimulates the imagination. were overlooked, is an important one for anyone who And when your donors view your works in the charitable sector. For whatever reason, the causes were remarkable (literally worthy of a remark) cause in fresh ways, they may to those individuals that evening. What if your donors had been at the party? Would be inspired to support them they have been talking about your cause? Is your case close enough to their hearts that they would remark more actively. on it? Are they your evangelists, your missionaries—in their workplace and their social sphere? is to identify the values inherent in his or her cause, to It is through our discourses—the sharing of know what donors value and to align the two—paying ideas, stories and experiences—that a cause or an particular attention to abstract values. organization advances. If we accept the notion that You do this by knowing your donor. An easy way to to thrive, our organizations and our causes must be find out what motivates someone to give is simply to remarkable, then the challenge for a nonprofit is to ask. Donors will appreciate your curiosity and interest put forward a case for support that will get people in their giving. What a person talks about, how they talking—remarking. spend their time and money, how they dress and what Being the topic of conversation at next year’s party they drive can also provide insight on what they value. is not the point. That is the result. The point is for A donor who has weekly dinners and annual vacations the cause and the case to be so remarkable that they with children and grandchildren is likely to value become the topic of conversation at gatherings, dinner family, for example. tables and boardroom tables throughout the year. In health care philanthropy, passion for the cause

34 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 can be born from personal experience. For example, determine how people understand our vision, our a real estate developer whose elderly father has been mission and our way of operating. Ultimately our treated in a crowded emergency room following a narratives can inspire our donors to action (or not). horrific car accident is invited to join the hospital foundation’s property committee. He becomes a Make it about the donor. In East of Eden, John champion for a new emergency room. Steinbeck writes, “If the story is not about the hearer, Equipped with knowledge and information about he will not listen.” From this I extrapolate that if the what your donors value, you can begin to engage them case for your cause is not about the hearer, he will not in exactly the ways they want to be engaged. support it. I recently reviewed a case narrative that was written Take a risk from the perspective of the organization. It was all Another strategy is to take a risk, to be bolder in the about its programs, accomplishments and funding way you present your cause. In his book Purple Cow, needs. As I read it, I was struggling to stay engaged. marketing expert Seth Godin tells the story of how he Yet if the narrative had told stories about people and his family saw cows grazing in picturesque fields whose lives had been changed by skilled and talented and started to “ooh” and “aah” over the visual feast.2 individuals, how donors stepped up to lead the way, After they watched the cows for a while, though, the how programs and, most importantly, families and scene became familiar and less interesting. Although society are benefiting—in other words, if it had had the animals were charming, there was nothing more direct appeal to the reader—I would have been extraordinary about them. much more interested and inspired. However, Godin says, if in the midst of the field they had seen a purple cow that would have been Make it solution-focused. Donors want to invest in something. A purple cow would have caused them to the promise of something better, not in a sinking ship. sit up, pay attention, stop the car, take a picture and Though it may be tempting to focus on the less-than- release it into the world of social media. state-of-the-art operating room, for example, place The point of marketing is to differentiate your cause the emphasis on the potential and promise of a new, from other like causes. When a cause is presented much like every other, it blends into the landscape and few stop and take note (or pictures). How can your cause become the purple cow that your donors will notice and remark about? I recently worked with a team to create a short video that was used to open a gala fundraiser for a hospital foundation. The footage featured an ambulance, sirens blaring, making its way to the hospital through the familiar streets of the community. When it arrived, the attendants stepped out of the cab and opened the back doors. The stretcher was pulled out. On it, in a tuxedo, was the evening’s master of ceremonies: a local TV personality, all smiles. From the stretcher, he welcomed guests to the gala. We took a risk and included a fun element of surprise. That short clip got people talking and laughing, and it set the stage for the evening. Change your words, change your world French philosopher and social theorist Michel Foucault defines discourses (narratives) as “socially constructed knowledges (plural) of some aspect of reality.”3 Foucault’s message is that if you change your discourses—your messages—you will change the impact you have. How we present our case will

35 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 modern facility and you will experience a change in camera and asked people who had been helped by the the mood of your narrative. charity, which worked with the homeless community, to share their stories. He edited the footage of formerly Make the donor feel something. A giving decision is homeless interviewees on his laptop and showed the made with both the head and the heart, which means amateur but heart-touching piece at the event. The the case for your cause must appeal to both. To make result: an unexpected flood of donations. the case appeal to the head is relatively easy and can be done by presenting such things as demand for service, Engage your donors population growth, availability of new technology, The people I spoke with at the party, the ones who aging infrastructure, etc. To appeal to the heart takes were remarking about their charitable work, were in more thought and creativity, and it links to Perelman’s the story. They were on the ground, building. They advice on appealing to abstract values. were in their community, using their voice and their I once worked on an appeal to raise funds for a new influence. They were in, wholeheartedly. To be truly swallowing station for a hospital’s occupational therapy remarkable, charities need to facilitate this type of department. The draft appeal letter focused on the new engagement. It won’t be through key messaging technology and what it could do for patients. It was (although staying on message is important). It won’t an okay letter, but it lacked emotion. One of the big be by writing a dynamite thank you letter (although problems for a patient who can’t swallow is ingesting that is important, too). And it won’t be by developing medicine. With this in mind, we framed the appeal a five-step strategic plan (although that may be an around the song “Just a spoonful of sugar makes important factor as well). It will happen by being an the medicine go down.” We tapped into childhood agent who cultivates a pervasive, integrated culture for memories and launched a happy tune in the mind of engagement. It will require a fundamental shift from the reader. That inclusion reinforced the need for the “we are raising funds for such and such” to a mindset equipment, added emotion and changed the mood of of “we care about such and such; if you do, too, let’s do the appeal from impersonal to sing-along friendly. this together.” Carefully crafted narratives whisk new life into familiar ideas and present them in a way that stimulates Your “remarkable” cause and case the imagination. And when your donors view your cause How does your charity become an ongoing topic of in fresh ways, they may be inspired to support them conversation? By continually exploring ways to engage more actively. your donors so your cause is in their hearts as well as their minds. The power of story If your charity is already the talk of the town, keep By our nature, we are curious about each other; we like up the good work. But if more airtime around dinner to hear each others’ stories. One of the most effective tables and boardroom tables will advance your cause, I ways to present information about your cause and to challenge you to examine your case and decide to give demonstrate results is to share stories, because we can donors something remarkable to talk about. often relate to what someone else has experienced. In the New York Times Bestseller Made to Stick: References Why Some Ideas Survive and Others Die, authors Chip 1. Perelman, Chaim. The Realm of Rhetoric. Translated by Heath and Dan Heath assert that: “The story’s power… William Kluback. Notre Dame, IN: University of Notre Dame Press, 1982. is twofold: It provides simulation (knowledge about 2. Godin, Seth. Purple Cow: Transform Your Business by Being 4 how to act) and inspiration (motivation to act).” Notice Remarkable. New York: Penguin Group (USA) Incorporated, how both benefits—knowledge and motivation—point 2009. 3. Foucault, Michel. The Archeology of Knowledge. Translated by toward action. A.M. Sheridan Smith. New York: Pantheon Books, 1972. Few things demonstrate philanthropic impact like 4. Heath, Chip, and Heath, Dan. Made to Stick: Why Some Ideas a story of a life changed or a community altered. A Survive and Others Die. New York: Random House, 2007. Vancouver-based nonprofit had contracted with a big- Febe Galvez-Voth, M.A., is a case consultant and deal, high-priced speaker to address donors at an event. communicator with close to 15 years of experience in the charitable sector. She earned her Master of When the speaker cancelled at the last minute, the Arts degree in applied communication in 2006, and nonprofit’s executive director scrambled to fill the agenda her thesis examines the language of fundraising. Follow her blog at www.thecaseforsupport.com. Visit with meaningful content. In an act of desperation that her website at www.febegalvezvoth.com. turned out to be a stroke of genius, he took a video

36 | HEALTHCARE PHILANTHROPY JOURNAL / FALL 2013 Right start? Discover our strategic approach to fundraising. Graham-Pelton Consulting professionals are the trusted advisors and partners to leading healthcare institutions.

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CaBiNET MEMBERS Emilie Roy Corey, Chair Mary ann alexander irwin Garsten J. Gordon Huszagh Richard israel Cristina Kepner Joan S. Levan David McCann Sherry Patterson Richard Winslow, Ph.D.

HONORaRY CHaiRS John and Elaine Kanas Nancy and Edgar Goodale andrew J. Mitchell, President & CEO Sherry Patterson, Chair, Board of Directors J. Gordon Huszagh, Chair, Foundation Board of Directors Scott Sheren, MD., President of the Medical Staff

Peconic Bay Medical Center — Riverhead, NY

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