November 8, 2010 | Read Time: 2 minutes
The recession has increased the cost of raising money, according to a new study released today by the Association for Healthcare Philanthropy.
The study, which is based on detailed data collected from 66 hospitals and medical centers, found that each dollar spent on fund raising generated $3.57 in contributions last year, down from $4.63 in 2008, a decline of 23 percent.
“Costs are going up and returns are going down, which is to be expected in this economy,” said Bill McGinly, the association’s president. Cash donations and payments on pledges declined by 5 percent for the institutions in the survey.
Among those organizations that have held onto their fund-raising staffs and resisted making other big cuts to their development budgets, Mr. McGinly said, “it is costing the same to raise less money.”
He predicted those same institutions will reap the benefits over the next five to six months as the economy continues to improve. “The smart players who held onto staff will have the advantage,” he said. “It is shortsighted to make cuts in so many cases.”
Efforts to secure annual gifts increased the most last year, the study found: Annual-giving programs accounted for 27 percent of what the institutions in the study spent on fund raising, up from 19 percent in 2008. At the same time, annual giving generated only 17 percent of all donations in both years.
The cost of special events, generating 10 percent of the money raised, was also high, accounting for 19 percent of what hospitals and medical centers spent on fund raising.
Large gifts of $10,000 and above accounted for the largest portion, 55 percent, of what the institutions raised in 2009 and 41 percent of what they spent on fund raising.
One bright spot in the study was a growth in gifts from doctors and physician practices, as well as other employees. The average gift from doctors grew to $5,000, up from $3,000 in 2008, accounting for 7 percent of all donations. The average gift from other employees also grew, from $250 to $350 last year, and their gifts made up 3 percent of all donations.
“Typically we see much lower levels of support coming from internal sources,” the study said. “But this may mark a change with the growth in the internal culture of philanthropy that many chief development officers have been working to grow.”
The association said it would post results of the study, “Benchmarking Overview: October 22, 2010,” on its Web site, www.ahp.org, in coming weeks.
