EXECUTIVE BRIEFING

9 Things Philanthropy Executives Need to

Know in 2021

9 Things Philanthropy Executives Need to Know in 2021 2

The year 2020 held the promise of a blank slate for health care leaders—a period of symbolic transition to

a new decade of stories and strategies not yet crafted. By early March, that promise dissipated.

Instead, Covid-19 erupted as a global public health emergency, quickly redefining the terms of success and failure in the year—and years—to come. The United States health system experienced supply shortages, capacity constraints, uneven testing infrastructure, and colossal loss. But alongside those lows, we saw collaboration, generosity, and innovation on an almost unimaginable scale. Health care workers showed us the best of humanity.

Philanthropy rose to the forefront of the public response. Donors stepped up to provide financial relief to their neighborhood hospitals, food banks, and even restaurants. Health system development teams pivoted from strategic campaigns and annual events to leading PPE drives, funding Covid-19 relief efforts, distributing meal donations to workers, and more.

The bright spots of the past year are worth celebrating, but the challenges ahead remain great. For development professionals, the traditional engagement toolkit remains sidelined by the inability to safely gather in-person. Other near-term challenges, such as goal setting in a fluctuating economic environment and stewarding first-time “crisis” donors, require thoughtful intention and flexibility in 2021.

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Read on to learn the top 9 insights about the state of the health care philanthropy industry in the wake of the Covid-19 pandemic.

More significantly, Covid-19’s impact on philanthropy strategy won’t be limited to the duration of the public health crisis. The pandemic has accelerated the arrival of inevitable long-term challenges and opportunities to health care philanthropy. Once distant ambitions, such as a rich digital engagement platform, a strong focus on community health, and a modern pipeline growth strategy, are quickly becoming requisites in the current environment.

While no one would have chosen to see a global pandemic and concurrent economic recession in 2020, these convergent challenges have created a unique moment for health care philanthropy leaders and their teams. Successful leaders will understand that their response to the challenges of the Covid-19 era is inextricably tied to their post-pandemic growth. Solving for the problems of the next 12 months should be viewed as an accelerated effort to solve for the problems of the next 10 years.

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9 Things Philanthropy Executives Need to Know in 2021

01 Amid a historic public health crisis, individual donors and institutions gave generously to fight the pandemic while largely waving off their own economic anxieties.

02 First-time crisis donors fueled many Covid-19 relief efforts, but most won’t continue their support after 2020.

03 Covid-19 made virtual engagement a nonnegotiable part of donor strategy. Development professionals should ensure it stays that way.

04 As uncertainty continues to dominate regular life, fundraisers must embrace storytelling and communicate their Covid-19 impact to key stakeholders.

05 The combined forces of the pandemic and economic downturn are accelerating the impact of generational change on donor preferences and behaviors.

06 Last year magnified long-standing inequities in U.S. health care from racial disparities in Covid-19 outcomes to the impact of the social determinants of health—and donors have noticed.

07 Health systems are formalizing new roles to address social determinants of health—and it’s time for philanthropy to step up its involvement.

08 Development executives and their boards must use the current national environment as a catalyst to set concrete goals and make specific investments in diversity, equity, and inclusion.

09 Given an uncertain economic environment and plenty of new ambitions, 2021 is a year to focus on developing new measures of success.

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01Amid a historic public health crisis, individual donors and institutions gave generously to fight the pandemic while largely waving off their own economic anxieties.

In just the first few weeks following the initial spike of Covid-19 cases in the United States, billions of charitable dollars were

poured into the crisis. From grassroots efforts on crowdfunding platforms to multimillion-dollar commitments from large foundations, the rapid philanthropic mobilization around Covid-19 is impressive and perhaps unprecedented. As of December 2020, Candid, a nonprofit research organization, estimates that $21.5B worth of grants had been allocated to nonprofits fighting the pandemic, more than 55 times the amount of philanthropy allocated during the first six months of the 2014 Ebola outbreak.

Hospital and health system foundations received a share of that generosity through their emergency relief funds. Donor appeals to bolster patient care, employee safety, and testing infrastructure were largely successful despite wild stock market fluctuations and overall economic turmoil. Development professionals also stepped into new roles as their health care colleagues captured the national spotlight. Many professional fundraisers delivered meals to staff from restaurants and community donors looking to make an impact. Others collaborated with their supply chain colleagues to manage PPE collection sites in their community.

9 Things Philanthropy Executives Need to Know in 2021 6

BUSINESSES

of individual donors surveyed by Fidelity Charitable in September say they gave notably more in 2020 than normal because of Covid-19

Covid-19 has galvanized support across the country and the world. All corners of the funding community have stepped up.

LARGE SCALE PHILANTHROPIC MOBILIZATION TO SUPPORT RESPONSE EFFORTS

46%in grants were made by U.S. corporations and their foundations in response to Covid-19*

$5.8B

U.S. foundations signed a pledge to provide funding to emergency response efforts and ease restrictions on funding for grantees*

792

in Covid-19-related grants originated from U.S. funders as of December 2020$16.8B+

increase in value of grants recommended by National Philanthropic Trust account holders in March–May 2020 versus March–May 2019

64%

* As of November 23, 2020.

INDIVIDUALS

FOUNDATIONS DONOR-ADVISED FUNDS

Sources: “Record-Breaking COVID-19 Philanthropy Topped Giving for Other Disasters but Overlooked Those Most Affected by Pandemic,” Candid, 2020; “Philanthropic response to coronavirus (COVID-19),” Candid, 2020; “Key observations about initial COVID-19 response funds,” Advisory Board, 2020; “Donor-Advised Fund Giving Has Surged During Covid-19—and You Can Keep the Generosity Going,” National Philanthropic Trust, 2020; “Study: Pandemic drove donors to give more and differently in 2020,” Fidelity Charitable, 2020; “Restaurants Find Hope in Delivering Donated Meals to Hospitals,” New York Times, 2020.

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02First-time crisis donors fueled many Covid-19 relief efforts, but most won’t continue their support after 2020.

In keeping with America’s strong sense of philanthropic responsibility during times of crisis, many individuals and

institutions donated to organizations this year that they have never supported in the past, including hospitals and health systems. In fact, 80% of health care organizations say their number of new donors increased in FY2020 compared to the previous fiscal year. While unquestionably positive, this reality also risks creating a false hope around the lasting impact of new donor acquisitions in 2020. Crisis donors do not have a strong history of renewing their support.

Although the scope and duration of the Covid-19 pandemic is undoubtedly different from natural disasters, these events provide the best precedent for how donors respond to an emergency. When hurricanes and wildfires wreaked havoc on communities in 2017, 31% of U.S. households made a disaster-related donation. However, in the next year only 5% of households continued to provide charitable support to the organizations addressing the impacts of the previous year’s disasters.

Health system philanthropy leaders should pursue reengagement of their first-time donors, but that investment should not come at the expense of long-standing donors or those for whom the hospital is better aligned. The practical

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and cost-effective solution is to pursue stewardship at scale for most new donors, particularly those with no other obvious relationship to the organization. Virtual educational events for new donors, mass-customizable impact reports, and appeal language that builds a bridge from pandemic relief to your long-term priorities are all useful techniques to pursue. Ultimately, development professionals will benefit from filtering out donors who aren’t invested in their organization’s long-term mission, creating room to focus on those who are.

FIRST-TIME DONORS DROVE UP NUMBERS ACROSS HEALTH CARE

ASSESSMENT OF NEW DONOR NUMBERS IN FY2020 COMPARED TO FY2019 n=1,822 nonprofit organizations

Health care

80%

20%

0%

Higher education

20%

50%

30%

K–12 education

20%

7%

73%

Arts and culture

50% 50%

0%

Increased Stayed the same Decreased

SPOTLIGHT

• Montefiore Health System in New York raised $10M in eight weeks following the state’s lockdown

• 80% of Montefiore’s funds came from first-time donors

Sources: “Americans Giving More to Health Causes Since the Pandemic and Cutting Back on Environment and Education,” The Chronicle of Philanthropy, 2020; “Survey of COVID-19 Impacts on Fundraising Operations” GG+A SurveyLab, 2020; “Household Giving: How Donors Responded to 2017 & 2018 Disasters,” Center for Disaster Philanthropy, 2020; Montefiore Health System, Bronx, NY.

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03Covid-19 made virtual engagement a nonnegotiable part of donor strategy. Development professionals should ensure it stays that way.

The pandemic quickly and deeply impacted the ways people interact with one another. Social distancing and

travel restrictions kept people at home and wary of in-person gatherings. The impact on fundraising strategy was significant.

Large galas, small cultivation dinners, and one-on-one home visits—staples of the traditional development toolkit—were rendered unsafe and undesirable for many communities across 2020. As a result, many health care philanthropy teams were forced to experiment with new digital tools and virtual engagement tactics, in some cases for the first time. A mid-2020 Advisory Board survey of senior development leaders found that 82% of organizations had started using video visits with donors, and 69% had already hosted virtual education events.

We didn’t need a pandemic to predict that the modern philanthropy engine will be tech-enabled and digitally rich, both internally and externally. But it is clearer now that virtual engagement will become expected by donors as it permeates all facets of their professional and social experiences. And while in-person events will resume at some point, philanthropy leaders should take a hard look at which of those traditional strategies are worth keeping.

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HOW TO SEIZE THE VIRTUAL MANDATE OF COVID-19

CRITICAL CONSIDERATIONS TO ACCOUNT FOR WHEN CRAFTING YOUR VIRTUAL STRATEGY

1 Don’t be afraid to experiment

Start with a virtual brainstorming session with your team. Draw on the intellect of those who have community- or events-focused roles. Consider formal workshops or “shark tank” competitions to get ideas rolling.

2 Focus on your short-term strategy

Don’t feel the pressure to schedule an entire year’s worth of virtual engagement—start with a three-month strategy. Think about your cadence, time constraints, and resource needs.

3 Operate at top of license

Consider collaborating with other departments, such as marketing, volunteer services, and community health. Utilize everyone’s expertise to achieve a common goal.

Source: Covid-19 Impact Survey for Development Leaders, Advisory Board, 2020.

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04As uncertainty continues to dominate regular life, fundraisers must embrace storytelling and communicate their Covid-19 impact to key stakeholders.

A culture of philanthropy is one in which your institutional and community stakeholders value, encourage, and

participate in the activities of fundraising. And it is built by putting the power of philanthropy on full display. Covid-19 has brought about one of the clearest examples of that power, and philanthropy leaders must not let that story go untold.

Donors and health system executives alike are more aligned with philanthropy’s goals when they see hospitals as valuable social investments. In the face of donor fatigue and persistent economic uncertainty, leaders in philanthropy and across the organization must actively promote examples of the selflessness of clinicians, the ingenuity of supply chain managers, and the critical role that the generosity of local community members and businesses played in the organization’s Covid-19 response. Development teams and their donors deserve to be proud of their contributions during 2020—and 2021 is a year to convert those contributions into cultural capital.

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LEADERS PLACE BIG BETS ON PHILANTHROPY’S VALUE GOING UP

“How do you think the pandemic will change the perceived value of philanthropy among your institutional leadership?”n=34 senior philanthropy leaders at hospitals and health systems

Decrease value of philanthropy0%

Increase value of philanthropy

73% Stay about the same27%

Reflect on your hospital’s strategic assets and liabilities throughout 2020. Where do you see the best opportunities for philanthropy to help your hospital become stronger in the future?

Your donors are paying special attention to your hospital and developing new impressions. What story do you want to make sure you’re telling the market as the public health crisis continues to unfold?

CONVERSATIONS YOU SHOULD BE HAVING

Source: Covid-19 Impact Survey for Development Leaders, Advisory Board, 2020.

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05The combined forces of the pandemic and economic downturn are accelerating the impact of generational change on donor preferences and behaviors.

Hospital development teams have long known they need to adjust their strategies to attract next-generation donors.

In fact, a majority of development leaders predict Generation X will become the most important donor generation by as early as 2025—and millennials will surpass them by 2030. What the industry must contend with now is that Covid-19 is accelerating the impact of certain generational changes. For instance, 2020 precipitated a marked increase in estate planning, which is evidence of accelerating inter-generational wealth transfers. FreeWill reports that there was a 300% increase in new bequests in August 2020 compared to August 2019.

Simultaneously, the pandemic is blurring distinctions between generations. Baby boomers, Gen Xers, and millennials are suddenly and unexpectedly demonstrating similar behaviors.

For example, the eventuality of virtual care was in large part predicated on the preferences of younger patients, many of whom are not yet significant users of the health system. As has been well documented, the pandemic dramatically increased telemedicine utilization and preference across age groups. Virtual care visits increased sharply in 2020 according

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to an Advisory Board survey. And the trend wasn’t limited to younger generations: baby boomers represented nearly half of all new users. For grateful patient program leaders, the shift to alternative or virtual sites of care is no longer a “next-generation” challenge, it is an “all-generation” challenge.

Development leaders admitted to a lack of preparedness for generational change as it was meant to unfold before the pandemic struck (grading their preparedness as 2.73 on a 5-point scale). With those changes arriving faster than anticipated, 2021 is now the time to prepare a toolkit that meets the future donor pipeline on its terms.

VIRTUAL VISIT USE INCREASED SUBSTANTIALLY DURING COVID-19

Prior to Covid-19 During Covid-19

Virtual visit use prior to Covid-19

19%

Virtual visit use during Covid-19

29%

VIRTUAL VISIT USE ACROSS GENERATIONAL COHORTSVIRTUAL VISIT USE(n=7,452)

40%37% 37%

30%27%

18%

23%

9%

28%

11%

Gen Z Millennials Gen X

Percentage of new users (n=1,133)

Babyboomers

Silentgeneration

10% 18% 17% 47% 8%

Sources: “2020 Planned Giving Report,” FreeWill, 2020; Advisory Board Covid-19 Consumer Survey, June 2020.

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06Last year magnified long-standing inequities in U.S. health care from racial disparities in Covid-19 outcomes to the impact of the social determinants of health—and donors have noticed.

Social determinants of health have an undeniable impact on health outcomes and spending. Up to 50% of patients’

health can be attributed to their social, economic, and physical environment. Left unaddressed, these risk factors can drive avoidable utilization and unnecessary spending.

The Covid-19 pandemic is exposing this reality in striking and alarming ways. Racial disparities in outcomes have been at the forefront of the public health conversation—the latest data shows that Black Americans are dying from the effects of Covid-19 at a rate almost triple that of white Americans. Long food distribution lines have become all-too-common reminders of the broad impacts of the virus and job loss. FeedingAmerica, the largest hunger-relief organization in the United States, estimates that the pandemic has increased the number of Americans experiencing food insecurity by 45%, to a total of 17 million.

An Advisory Board survey found that 63% of senior development leaders think health equity and social determinants of health will be more important to donors after Covid-19 than before—reflecting the broad societal recognition of these intractable challenges.

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LONG-STANDING INEQUITIES DRAW SOCIETAL ATTENTION

Mass unemployment during the pandemic could lead to a 40%–45% jump in homelessness in a year

Black Americans are dying at a rate 2.8 times higher than that of white Americans from the effects of Covid-19*

The pandemic may increase the number of Americans experiencing food insecurity by 45%, to a total of 17 million

ECONOMIC INSTABILITY DISPARITIES IN OUTCOMES ACCESS TO FOOD

say Black Americans are more likely to get sick or die by Covid-19

50%

of development leaders say health equity and social determinants of health are going to be more important to donors following Covid-19

63%

say Black Americans are less likely to access health care

45%AMERICAN PUBLIC RECOGNIZES RACIAL

DISPARITIES

DONOR PRIORITY SHIFT UNDER WAY

Sources: “Mass unemployment over coronavirus could lead to a 45% jump in homelessness, study finds,” Los Angeles Times, 2020; “COVID-19 Hospitalization and Death by Race/Ethnicity,” Centers for Disease Control and Prevention, November 2020; “The Impact of the Coronavirus on Local Food Insecurity,” FeedingAmerica, 2020; “KFF Health Tracking Poll”, Kaiser Family Foundation, June 2020; Covid-19 Impact Survey for Development Leaders, Advisory Board, 2020; Market Innovation Center’s Consumer Survey, Advisory Board.

* Number is an age-adjusted rate.

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07Health systems are formalizing new roles to address social determinants of health—and it’s time for philanthropy to step up its involvement.

Most hospitals don’t have enough dedicated funds to address social needs for all of their target populations.

But many are increasing their investment of time and resources into underlying drivers of poor health: food insecurity, unstable housing, lack of access to quality education, and more. Nearly 80% of hospitals have existing community partnerships designed to address one or more of the social determinants of health. On average, those hospitals have nine such partners.

Meanwhile, Advisory Board’s philanthropy benchmarking survey found that the median hospital raised less than 4% of its funds in FY2019 specifically for population health programs. That number is not commensurate to the community health challenges in front of us.

Fortunately, philanthropy teams are well positioned to provide added value to a health system’s community health strategy. Not only can philanthropy teams put more emphasis on direct fundraising related to the social determinants of health, but they can also provide new forms of support to their health systems’ community partnerships. Foundations

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and development departments have deep expertise and established processes for fund procurement and distribution, project selection, and stakeholder engagement, all of which are essential for health systems that provide funding to their external collaborators. Community partnerships also provide the context for mutually beneficial joint fundraising activities, a promising yet underutilized strategy.

THREE APPROACHES TO IMPROVE COMMUNITY HEALTH THROUGH PHILANTHROPY

1 Advise internal stakeholders on a funding strategy

Use fundraising expertise to advise health system on the most effective ways to create high-impact investments.

Manage external grantmaking

Select external funding opportunities and manage a community health grantmaking process.

2

3 Fundraise jointly with community partners

Leverage brands, expertise, and programmatic contributions to fundraise in collaboration with external partners.

Sources: “Social determinants of health: How are hospitals and health systems investing in and addressing social needs?” Deloitte, 2017; Philanthropy Performance Benchmarking Initiative, Advisory Board, 2020.

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08Development executives and their boards must use the current national environment as a catalyst to set concrete goals and make specific investments in diversity, equity, and inclusion.

Beyond supporting external initiatives to reduce health disparities, development leaders also need to focus

internally. Diversity, equity, and inclusion in philanthropy demand more focused attention and greater energy from sector leaders. Development executives should identify and change policies that foster bias at their organizations, amplify underrepresented voices on their teams and among their donors, and take specific action to ensure their boards and staff are representative of their community.

Many development leaders acknowledge the need to make changes—and some have begun the hard work of building a diverse and inclusive culture. Some leaders are creating new pathways to employment through internship opportunities and revisiting legacy job requirements that may favor certain types of candidates. Others are diversifying their board composition through new member recruitment and demographic tracking.

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KEEP DIVERSITY, EQUITY, AND INCLUSION ON THE AGENDA

Sources: “In Philanthropy, Race Is Still a Factor in Who Gets What, Study Shows,” New York Times, 2020; “Nonprofit leaders of color continue to face structural bias,” Philanthropy News Digest, 2020.

Align with diversity in your community

• Consider what diversity looks like in your community—gender, race, age, etc.

• Determine what specific types of diversity you need to increase in your board, staff, and donor base to mirror your community.

Prioritize key areas to increase diversity

• Examine which parts of your philanthropy enterprise (staff, board, donors) are lacking diversity.

• Focus on the internal processes and policies where you can inflect the most change.

Define your goal

• Determine how much you want to increase diversity over the next three years in your board, staff, and donors.

• Develop ways to establish shared accountability.

• Learn what local partnerships you need to seek out to expand and diversify your organization’s network.

Track progress toward your goal

• Identify process metrics (e.g., number of non-white candidates for board roles).

• Monitor retention of underrepresented staff.

• Report progress toward your goal to board and C-suite at least quarterly.

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09Given an uncertain economic environment and plenty of new ambitions, 2021 is a year to focus on developing new measures of success.

Halfway through 2020, health system chief development officers were split on whether they would hit their annual

revenue goals, despite many having outperformed their prior year to date. Going into 2021, leaders grapple with setting new revenue goals amid persistent uncertainty. In the absence of anything resembling stability and predictability, there’s less utility in linking overall success to a specific revenue forecast. That’s not to say financial goals should not exist—they should—but it is to say that 2021 presents a unique opportunity to prioritize alternative measures of success.

Leaders should take this opportunity to develop metrics and performance goals that foster innovative donor engagement strategies, promote a greater focus on community health, and bring diversity and inclusion to the forefront of your day-to-day operations. This will be a year of important work that could set the table for a post-pandemic renaissance in health care philanthropy. Make sure your goals enable that possibility.

Source: Covid-19 Impact Survey for Development Leaders, Advisory Board, 2020.

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“If we were 100% successful, what would our community look like? What would be different? For whom?”

Hildy GottliebTEDx speaker and co-founder of Creating the Future

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PROJECT DIRECTOR

Katie Everts

PROGRAM LEADERSHIP

Nick Cericola

Rob Lazerow

DESIGNER

Kate Young

CREDITS

LEGAL CAVEAT

Advisory Board has made efforts to verify the accuracy of the information it provides to members. This report relies on data obtained from many sources, however, and Advisory Board cannot guarantee the accuracy of the information provided or any analysis based thereon. In addition, Advisory Board is not in the business of giving legal, medical, accounting, or other professional advice, and its reports should not be construed as professional advice. In particular, members should not rely on any legal commentary in this report as a basis for action, or assume that any tactics described herein would be permitted by applicable law or appropriate for a given member’s situation. Members are advised to consult with appropriate professionals concerning legal, medical, tax, or accounting issues, before implementing any of these tactics. Neither Advisory Board nor its officers, directors, trustees, employees, and agents shall be liable for any claims, liabilities, or expenses relating to (a) any errors or omissions in this report, whether caused by Advisory Board or any of its employees or agents, or sources or other third parties, (b) any recommendation or graded ranking by Advisory Board, or (c) failure of member and its employees and agents to abide by the terms set forth herein.

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