Investment in fundraising urged

Health-care providers in 2010 saw slow recovery from the recession years of 2008 and 2009, when they saw fewer new major-gift pledges and planned-gift commitments, as well as smaller gifts from individual donors, although the commitment of individual donors has continued, a new report says.

At the same time, individual fundraising programs have experienced improved efficiency and effectiveness in raising cash gifts, and organizations are getting smarter about how they run their programs, says the report on “performance benchmarking” from the Association of Healthcare Philanthropy.

“Growing the foundation’s donor pool is essential in raising success rates in a down economy,” says the report, which is based on data for fiscal 2010 from 63 organizations throughout North America. “Organizations must work harder than ever to engage the public and bring new donors into the fold through annual and special-event activity.”

The report found a slow recovery from the recession years of 2008-09 in terms of both “cash” and “production.”

Cash consists of all outright gifts made during the reporting year in the form of marketable securities and other liquid assets, including payments on pledges and planned-gift maturities.

Production consists of total gifts of cash actually raised, excluding payments on previous years’ pledges, plus new gift commitments made in the reporting year.

Fundraising cash grew 14 percent during between fiscal 2008 and fiscal 2010, although 8 percentage points of that growth occurred between fiscal 2009 and 2010 alone, mirroring an overall increase in charitable giving to health-care groups of 8.1 percent in the U.S. and 7.1 percent in Canada that the Association of Healthcare Philanthropy previously reported.

Fundraising production, in contrast, grew only 2.5 percent in new pledges and planned-gift commitments between fiscal 2008 and 2010, recovering from a loss of 0.3 percent between 2008 and 2009.

“These results point to a faster pace of growth in outright cash gifts combined with payment on previous years’ pledges,” the report says. “In the long term, if production growth continues to remain flat, then we might expect declining cash revenues in future years.”

The report also looks at fundraising “efficiency,” or the cost to raise each dollar, as well as fundraising “effectiveness,” or the return on each dollar spend on fundraising, based on charitable revenues raised between fiscal 2007 and fiscal 2010.

The median cost of fundraising production, or identifying and securing major and legacy gifts, grew 5 cents on the dollars during that four-year period, while returns on investment fell 25 percent, the report says.

Returns on fundraising cash also fell since fiscal 2007 but experienced a faster rebound in fiscal 2010, it says.

“Overall, these results point to the importance of remaining flexible in attracting annual gifts of all sizes from a large donor pool – particularly during periods of rough economic activity for donors,” the report says. “At the same time, it does not negate the value of previous years’ work in attracting pledge or gift commitments, typically raised through programs such as planned, major-giving campaigns.”

The biggest share of contributions to health-care organizations continued to come from individual donors, with individual giving representing 49 percent of total gifts in fiscal 2010, up 3 percent from fiscal 2009, and the average gift totaling $415, the report says.

External donors such as government entities, other foundations and other sources all increased their gift sizes.

Major gifts continued to represent the largest share of total fundraising revenues, 51 percent, a category that includes gifts of $10,000 or more from individuals,  including campaign gifts, as well as gifts of any value from corporations and foundations.

Planned giving represented smaller share of total revenue, or 14 percent, although new pledge commitments averaged nearly $60,000, outpacing every other fundraising program analyzed.

Gifts from public sources posted the highest return on investment, or $14.51 per dollar invested in fundraising, mainly because few organizations have full-time staff devoted exclusively to raising those gifts.

Major giving and planned giving also had comparatively high returns on investments, near or over $5 per dollar invested.

The report shows that “central factors that are likely to influence high returns are sustained investment in fundraising coupled with the judicious allocation of human resources to cultivate and nourish donor relationships,” William C. McGinly, president and CEO of the Association for Healthcare Philanthropy, says in a statement.

That will take “dedicated work to accomplish,” he says. “It will require continuous, objective observation of the philanthropic landscape, the knowledge set to meaningfully interpret findings, and the leadership skills to put lessons learned into practice.

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