Hospitals, clinics, and medical research and educational institutions have complex needs. For these organizations to run smoothly and effectively serve their patients, many moving pieces must fit into place—and they all rely on funding.
Healthcare fundraising plays a critical role in the healthcare revenue puzzle, and it can make a significant difference in the long-term effectiveness of an institution and the outcomes it drives for its patients and community.
If you’ve been tasked with refreshing your organization’s approach to fundraising and philanthropy, you probably have quite a few questions. This guide will cover all the essentials to help you approach your task from an informed position. Here’s what we’ll cover:
- Healthcare Fundraising Fundamentals: FAQs
- How Fundraising for Healthcare Works
- 15 Foundational Fundraising Strategies & Tactics
- Grateful Patient Programs: The Highest-Impact Form of Fundraising
- Seeking Professional Support for Healthcare Development
Healthcare Fundraising Fundamentals
Let’s start by laying out some context. These frequently asked questions will orient you and your team to the world of healthcare fundraising.
What is healthcare fundraising?
Healthcare fundraising consists of any revenue-generating activities that a healthcare institution conducts outside of receiving payment for patient services, namely soliciting donations and applying for grant funding. These activities are also generally referred to as healthcare development and are managed by a hospital’s or institution’s development department. The process of building relationships with individual donors to solicit gifts is also called healthcare philanthropy.
Healthcare fundraising can be conducted by any institution that provides medical services and accepts donations, including:
- Ambulatory care centers
- Medical research institutions, teaching hospitals, or other programs
This is a broad category, but, in general, if an institution provides medical services and is held to HIPAA requirements, it will benefit from following healthcare fundraising best practices when soliciting support from its community.
How does healthcare fundraising differ from typical nonprofit fundraising?
Healthcare fundraising uses many of the same strategies of typical nonprofit or charity fundraising—running fundraising and community outreach campaigns, identifying potential major donors, hosting events, applying for grants, forging partnerships with sponsors, and more.
After all, you have quite a different relationship with your favorite local charity than you do with the regional hospital that has provided life-changing services to you or a loved one. These are especially sensitive and personal relationships. As such, healthcare development employs a different set of best practices and compliance concerns than charities typically encounter, which we’ll cover below.
Why is fundraising important for hospitals and other institutions?
While payment for medical services represents a major portion of many institutions’ overall revenue, it’s important to remember that these services are costly to provide and are highly resource-constrained. Healthcare fundraising is important because it enables growth, allowing institutions to expand access, fund research, secure life-saving equipment, and more. Consider these statistics:
- In 2022, the operating margins of United States hospitals averaged .2%, meaning nearly all of the year’s incoming revenue was accounted for and spent. This can be a sign of great efficiency, but it also signals budgetary constraints and difficult paths to growth.
- Healthcare fundraising delivers uniquely high returns on investment, an average of $5.41 (and $7.78 for the highest performers). Some measures of cost per dollar raised in healthcare settings find CPDRs as low as $0.19 (and $0.13 for top performers).
These findings indicate that investments in fundraising—building the right infrastructures, training staff, using effective tools, and more—can have major benefits for a healthcare institution’s big-picture revenue strategy. Modern, streamlined development practices bring the budgetary flexibility needed to increase capacity, improve operations, and drive better outcomes (and for much lower costs than upfront major service expansions).
What fundraising challenges do healthcare institutions face?
Simply put, healthcare fundraising is complicated because healthcare settings and institution-patient relationships are complicated. Chief among the challenges of healthcare fundraising are:
- Compliance. HIPAA (The Health Insurance Portability and Accountability Act) sets strict protections on patient health information and significantly impacts how institutions and their employees can use and share medical information. HIPAA requirements must be taken into account across all aspects of the fundraising process that involve patient interactions or data. A wide range of other regulatory concerns can also come into play depending on the institution’s unique context. Always do your research and consult with compliance experts as needed when launching or updating your fundraising programs.
- Institutional complexity. Healthcare institutions are complex, with many specialized departments and teams. To effectively build relationships with donors and communities, cross-organizational communication and alignment are paramount. Without a strategy for reducing communication silos and established central fundraising practices and protocols, the complexity of these institutions can bog down their fundraising efforts and waste resources.
- Economic trends. Hospitals, clinics, and research institutions aren’t immune to macroeconomic trends, which can directly and indirectly affect fundraising results. The 2023 Giving USA report found that overall giving to nonprofits fell more than 3.4% (10.1% inflation-adjusted) from 2021 to 2022, a downward trend that’s only been seen three other times in the past four decades. This decline has been attributed to inflationary pressures and economic turbulence of recent years which have caused many donors to rein in their spending.
Even amid these challenges, healthcare institutions create and maintain thriving development programs. In fact, the same Giving USA report found that giving to healthcare institutions was one of the few positives, with overall giving increasing by 5.1% in current dollars (and down just 2.6% inflation-adjusted).
By building strong community and donor relationships, investing in resilient fundraising systems, improving communication, and centering compliance, you can overcome all these challenges and complexities.
How Fundraising for Healthcare Works
Let’s take a brief look at the big picture of how healthcare institutions generate revenue, how fundraising fits in, and the different forms that it can take.
A healthcare institution (in this example, we’ll consider a typical hospital) generates revenue through several sources. These can include:
- Payments for medical services
- These payments come from both private sources (paid by individual patients and insurance companies) and public sources (reimbursed by state and federal governments through programs like Medicare and Medicaid).
- Sales of goods, food, and merchandise
- Grants from government agencies and foundations
- Donations from individual donors
- Endowments and other investments
All of the sources outside of payments for services could be considered part of the hospital’s fundraising efforts. Grants, donations, and endowments in particular would be part of the hospital’s development efforts. These are often pursued and managed through an associated foundation set up by the hospital rather than run directly through the hospital itself. Grants may or may not be included depending on the hospital’s status as a research institution.
Zooming into the hospital’s development efforts, we might find a diverse range of fundraising activities, including:
- Annual giving campaigns
- Peer-to-peer fundraising campaigns
- Event fundraising
- Capital campaigns
- Major gifts
- Gifts from grateful patients and families
- Planned gifts like bequests
- Non-cash donations of assets or equipment
The exact mix of fundraising strategies and events that a hospital plans will vary depending on its needs and community of donors.
But keep in mind that diversity is key to maintaining an enthusiastic base of support. Remember the statistics cited above—hospital operating margins are tight, and fundraising ROIs are quite high. The right combination of ongoing development efforts and regular campaigns and events to engage the community can fuel a highly effective fundraising program that sets up an institution for long-term success.
Essential Elements of a Robust Development Program
We’ve established that healthcare development fits into a larger picture of diverse revenue sources, but what exactly constitutes an effective healthcare development program? What elements and practices come together to produce robust, sustained fundraising results that give healthcare institutions the breathing room to grow and improve?
These are among the most important elements of a healthcare development program:
- Gift or development officers. Institutions need dedicated staff to focus exclusively on managing relationships with donors, funders, sponsors, and partners. These team members do more than just solicit gifts. They steward and grow fundraising relationships, sustaining pipelines so that development efforts generate consistent returns and benefits.
- Moves management and prospect portfolio structures. These processes help organize and facilitate gift officers’ work, simplifying the process of tracking donor touchpoints and making it easier to strategically grow relationships (and gifts) over time.
- Prospect research resources. Identifying and learning more about potential donors requires specialized resources and skills. Dedicated prospect research databases and software exist to support this process, but it’s crucial to consider the privacy and healthcare-specific compliance considerations that they bring when making new investments.
- Stewardship plans. Stewardship is the process by which gift officers maintain and build relationships with donors over time. To do so sustainably and effectively, they need clear processes and priorities, allowing them to most effectively allocate their time.
- Marketing strategy and collateral. When engaging with individuals and the broader community alike, a healthcare institution needs to present itself well and lay out compelling cases for support. At the individual level, these may involve customized messaging and campaign brochures, while posters, publications, and press releases may be used for larger audiences.
- Tech and data resources. Institutions need a variety of logistical tools to keep their development programs running smoothly. Chief among these is a database or CRM to house data, with additional marketing, prospect research, and even AI tools filling the gaps. Again, you must always consider data privacy and compliance must always be considered when implementing new technology.
15 Foundational Healthcare Fundraising Strategies & Tactics
Let’s review some specific strategies and tips for healthcare fundraising programs. We’ll break them down into three general categories: big-picture strategies, relationship-building best practices, and logistical tactics.
Big-Picture Healthcare Fundraising Strategies
Your fundraising efforts should cohere as a whole, with each initiative supporting the big picture of your institution’s success. Use these strategies to first build a solid fundraising foundation and then branch out into additional fundraising methods to diversify and sustain your revenue.
- Understand the fundraising lifecycle. Relationships with donors, particularly major donors, follow a general pattern of identification, cultivation, solicitation, and stewardship. Develop processes and compile tools with the big picture of this process in mind.
- Create clear lines of communication. Across your organization, ensure that everyone with a role to play in the fundraising process knows that role, what information to report, and to whom. Identify communication silos over time and work to resolve them where possible (always ensuring full HIPAA compliance).
- Plan your fundraising campaigns carefully. Major fundraising campaigns make up an important part of healthcare development. When planning one, research best practices, conduct a feasibility study, and seek outside support to help safeguard the investment of your time and resources.
- Start (or expand) a grateful patient and family program. This form of healthcare fundraising is extremely impactful and should be prioritized by your institution. We’ll specifically cover grateful patient fundraising in a later section.
- Explore planned giving and non-cash options. This is a diverse category of gifts, and they’re increasingly important for many organizations. Study up on planned gifts, gifts of stock, and other charitable financial arrangements, then ensure you have the correct processes in place to accept and manage them over time.
Relationship-Building Best Practices
Relationships are key to success in healthcare fundraising. The sensitive relationships between patients and clinicians should be safeguarded and fostered through intentional, thoughtful touchpoints. These best practices will help ensure every fundraising interaction is a positive one.
- Make donor stewardship a key priority. Keep donors engaged for the long run by maintaining active relationships with them. Have a plan for prioritizing outreach, tracking your touchpoints, sending event invites, and generally checking in with them.
- Tell compelling stories. People donate to organizations because they believe in and support the work they do. The best way to articulate the impact of your work is through meaningful, human-centered stories. Infuse storytelling into all your messaging, from broad campaigns to more targeted cases for support.
- Foster increased giving through your annual giving program. Your hospital’s annual giving program creates a helpful space to engage broader donor audiences, identify those who may be open to giving more, and intentionally grow your relationships with them over time.
- Engage the community and deepen relationships. Become a prominent fixture of your community through events like 5Ks, community partnerships, and corporate philanthropy. These opportunities will not only generate revenue but strengthen your relationships and help you reach wider audiences.
- Create a smooth donor experience both on- and offline. Consider the donor experience any time you design a new campaign, event, or giving program. Streamlined online steps, clear communication, and organized in-person processes are essential.
- Stay in touch to maintain engagement. Be sure to maintain contact with donors over time. For major donors, personal outreach will be important, and for broader segments, automated email streams and periodic direct mail can be efficient ways to foster ongoing communication.
Logistical Tactics for Healthcare Fundraising
You already know that healthcare fundraising is logistically complex. Between the various institutional stakeholders, compliance considerations, and technology, there’s a lot to juggle. These fundamental tactics will help you build adaptive, continuously-improving fundraising systems.
- Build a reliable data infrastructure. Information will need to flow smoothly for your program to deliver consistent results. A central database and software integrations are musts. Work with technology experts to develop the integrations, custom solutions, and compliant protocols you need to thrive.
- Center compliance in all your work. As mentioned above, HIPAA compliance is critically important. It and any other relevant data regulations must be built into your data processes from the start and regularly audited to ensure ongoing effectiveness.
- Continuously refine your approach. Use your fundraising and donor engagement data to keep improving your strategies over time. Learn from your wins and shortcomings to identify the specific tactics that resonated with your audience segments, qualify your prospects on an ongoing basis, and keep learning and experimenting from there.
- Use modern tools to streamline your work. Technology like AI-driven predictive modeling and resources like prospect research databases can take your program’s effectiveness to the next level. Stay on the lookout for new tools to invest in as your program grows.
Grateful Patient Programs: The Highest-Impact Form of Healthcare Development
Grateful patient and family programs are among the most impactful ways for healthcare institutions to generate fundraising revenue. They involve building relationships with and soliciting donations from patients and family members who have had positive care outcomes and/or especially meaningful interactions with your clinicians while receiving care.
Grateful patient programs are a highly personal form of major gift fundraising, requiring not just the typical identification-cultivation-solicitation-stewardship cycle but also a much deeper understanding of donor motivations and experiences.
For a closer look, please explore our complete guide to grateful patient fundraising.
When done effectively, grateful patient fundraising is a rewarding experience for everyone, resulting in:
- Financial support for your institution’s work and continued growth, driving significant returns on invested time and resources
- Opportunities for patients and families to express their gratitude in line with the immense impact that medical care has had on their lives
- Improved outcomes and experiences for all patients thanks to improvements and capacity increases funded by major gifts
The deeply personal nature of grateful patient and family fundraising means that a truly patient-first approach is needed. This process should never be approached as a straightforward philanthropic solicitation process. Rather, it’s a healing process for many patients and families and should be treated as such.
Grateful patient fundraising requires careful planning and organizational communication. Graham-Pelton’s Beyond Gratitude™ methodology is designed to help your institution handle all of the logistical and compliance essentials while building a deeply patient-first fundraising culture:
Broken into the Relational, Analytical, and Operational Domains, our methodology provides a comprehensive framework for building an organized and robust fundraising program that always puts patients and their families first.
Most importantly, Beyond Gratitude™ makes clear that asking for gifts is not the clinician’s job and that transactionality can (and must) be avoided through practice and communication. These aspects of the Relational Domain are unique to Graham-Pelton’s methodology. By fostering a deeper, more accurate understanding of patient gratitude and giving motivations, our approach empowers healthcare institutions to center the patient experience in ways that traditional processes don’t.
If your institution wants to take its philanthropy efforts to the next level, unlock higher ROIs, and drive greater fundraising efficiency, grateful patient and family fundraising is a must. Learn more about our approach and its guiding principles, or reach out directly to ask about how we can support your institution’s goals.
Seeking Professional Support for Healthcare Development
Healthcare institutions of all sizes seek professional support from fundraising consultants because, as we’ve seen, healthcare fundraising can be complex. With busy schedules and tight resources, it can be very difficult to find the time and money to make intentional strides toward improved fundraising.
Fundraising experts can help hospitals, clinics, and research institutions in a wide variety of ways, from comprehensive strategic planning to highly targeted operational support and interim staffing. For example, Graham-Pelton offers these healthcare development services:
- Assessments and growth planning
- Beyond Gratitude™ grateful patient support
- Capital campaign counsel
- Capital campaign planning studies or feasibility studies
- Case for support development
- Data analytics and integration services
- Interim staffing for development programs
- Staff and clinical engagement and philanthropic training
Fundraising Success Stories: Best Practices in Action
How have professional healthcare fundraising services and consulting benefited real institutions? Take a look at these impact stories:
- The Children’s Hospital of Los Angeles committed to an ambitious capital campaign that would reach more of their donors than ever before. With an in-depth planning study, assessments of its annual giving programs, and institution-wide buy-in, the CHLA successfully launched the quiet phase of its transformative $1B campaign.
- Hartford HealthCare, Connecticut’s leading healthcare system, needed a comprehensive development strategy to unify efforts across its seven hospitals and two networks. Working with Graham-Pelton, Hartford HealthCare conducted thorough capacity assessments and developed a truly integrated philanthropy roadmap that aligns all eleven of its diverse philanthropy programs.
- TSC Alliance, a nonprofit that funds research to combat tuberous sclerosis complex (TSC) wanted to make faster progress toward its mission but felt constrained by capacity and lengthy donor cultivation processes. With professional support, the organization launched an ambitious research-centric campaign and trained staff on next-level fundraising practices. This resulted in quicker cultivation movement for the top 50 prospects and over $9 million raised through adaptable virtual fundraising in 2020. Graham-Pelton continues to provide strategic counsel and services to TSC Alliance as it pushes forward to improve the lives of its constituents.
Professional guidance, organization, and support help healthcare institutions transform their approaches to philanthropy. The Graham-Pelton team can help you unlock strategic growth and new levels of impact for your community. Contact us today to discuss your needs—we can get started laying out a custom strategy for your unique institution and community.
We also encourage you to keep learning with these additional resources about development best practices:
- Grateful Patient Fundraising Essentials: Gratitude to Impact
- Hallmarks of a Strong Culture of Philanthropy in Healthcare
- What Healthcare Can Learn from Higher Education Capital Campaigns
- Prospect Portfolio Management: The 3-Step Strategy You Need