The Hidden Power of Philanthropy: How Hospitals Can Thrive in Tough Times
The Secret Weapon for Financial Survival in Healthcare: It’s Not What You Think!
Achieving financial stability in today’s healthcare environment is more challenging than ever. Hospitals and healthcare systems are feeling the squeeze from rising costs, increasing competition, and shrinking margins. To stay financially sound, leaders need to approach funding from multiple angles. One of the most overlooked yet crucial sources of financial support is philanthropy.
Why Philanthropy is the Key to Healthcare’s Financial Future
Healthcare systems have traditionally relied on two major funding sources—operational revenue and financing—but philanthropy is emerging as the critical “third leg” of the stool. The Association for Healthcare Philanthropy (AHP) reports that the average hospital or health system foundation returns $4.16 for every $1 invested in philanthropy: that is more than a 300% return on investment. According to Strata Decision Technology, the median year-to-date health system operating margin was just 1.6% in September 2024. The difference in return on investment is staggering.
“Although philanthropy traditionally represents a smaller percentage of a healthcare system’s revenue, there is no better return on investment to help ensure organizations fulfill their missions,” says Daniel Sullivan, Vice President and Chief Advancement Officer at Parkland Health Foundation in Dallas, Texas. “Philanthropy can be the difference maker in driving catalytic change to address a community’s greatest challenges, ensuring quality care for all patients in perpetuity.”
This means it’s not just about short-term fundraising efforts anymore. Consistent, strategic philanthropy can serve as a stabilizing force for organizations facing uncertain financial times. Bond rating agencies, in fact, look favorably on systems that demonstrate steady, year-over-year fundraising success. This can ultimately improve bond ratings and lower the cost of borrowing, giving organizations more flexibility to invest in growth.
For philanthropy to play its rightful role, healthcare leaders—CEOs, CFOs, and CDOs—must be fully committed. Fundraising is not the sole responsibility of the development office; for fundraising to succeed, it needs to be embraced across the leadership team. Each member must take ownership of their part in making philanthropy an integral part of the organization's financial health.
Giving Philanthropy a Seat at the Table
For philanthropy to reach its full potential, the fundraising leader and a fundraising mindset must be embedded into the heart of healthcare operations. Chief Development Officers and Senior Vice Presidents of Development need to have a prominent seat at the leadership table, involved in discussions about service line expansions, physician partnerships, and long-term growth strategies. This involvement enables them to engage donors more effectively by aligning their passions with the system’s priorities.
When Bryant Group is recruiting chief development officers in healthcare, candidates who serve on a healthcare system’s executive leadership team are better positioned to understand the challenges and opportunities across the healthcare system and in healthcare generally, positioning them to influence where philanthropy can play its biggest role for greatest impact.
Having this level of involvement also allows philanthropy leaders to communicate with donors more effectively, sharing the system’s vision and how philanthropic investments will directly impact the future of healthcare. It's about telling a compelling story—one that resonates with both current and potential benefactors.
Equally important is the role of Foundation Board presidents and chairs. These community leaders should be integrated into system boards, where they can influence and demonstrate the value of philanthropy to their peers.
Building Strong, Long-Term Relationships
In this fast-changing healthcare landscape, philanthropy leaders must focus on cultivating long-term, meaningful relationships with donors, physicians, and community leaders. It’s no longer about short-term wins or flashy events. What will ultimately provide financial stability is a deep focus on fewer, but more committed, relationships.
Physicians, in particular, are increasingly playing a pivotal role in fundraising efforts. As more doctors become employed by healthcare systems, rather than operating independently, their connection to the organization grows stronger. By engaging them in service line fundraising and encouraging their involvement on Foundation boards, systems can strengthen physician partnerships and build trust with donors who value their expertise.
Navigating a Rapidly Changing Landscape
The healthcare environment today is in constant flux. From mergers and acquisitions to private equity buyouts and shifting C-suite priorities, the industry is experiencing unprecedented disruption. This turbulence is compounded by rising patient demand, physician burnout, staffing shortages, and evolving payment models, such as value-based care.
With so much uncertainty, philanthropy provides a critical buffer. But to be successful, healthcare philanthropy leaders must be nimble. The era of five-year fundraising plans is behind us. Today, organizations need to adopt a more agile approach, allowing them to respond quickly to new opportunities and challenges as they arise.
Building the Next Generation of Philanthropy Leaders
One of the most important yet often overlooked components of philanthropy’s success is leadership development. At Bryant Group, we’ve seen that when fundraising leaders learn emotional intelligence, engage with a coach, and invest in their own growth as a leader, they are better positioned to deliver results. Developing the next generation of philanthropy leaders is essential to maintaining healthcare’s financial stability in the future.
