The Hit to Hospitals

November 15, 2010

The recession has reduced incomes for many Americans over the past couple of years and as a result, charitable donations have declined significantly. Hospitals have been hit especially hard in this recession according to a study released by the Association for Healthcare Philanthropy. The study collected fundraising data from 66 hospitals and medical centers for 2008 and 2009. In 2009, one dollar of fundraising costs yielded an average return of $3.57, a decline of 23% compared to the $4.63 it raised the year before. There are two main schools of thought to deal with the declining donations. The first is to increase fundraising spending and hopefully charitable revenues to counteract the decline in donations. The second school of thought believes that hospitals should not reduce their fund-raising staff, even as donations decline and fundraising spending should remain stable. The second group believes that they will be better positioned to take advantage of increased charity giving when the economy improves.

These hospitals need to step back and think about the cost-benefit relationship between increasing costs or keeping them steady, even as donations decline. It could be that the recession will last longer than anyone anticipates and fund raising costs will continue to increase compared to donations at an unsustainable rate. There are no easy answers for hospitals, but they should be cautious in these tough economic times. For more information see the Chronicle of Philanthropy.