September 10, 1998 | Read Time: 4 minutes
A five-year grant of more than $1-million to a grassroots organization for general operating support seems almost unbelievable in the current grant-making climate. Yet the South Bend Heritage Foundation, an Indiana charity that works to fight poverty, was recently the recipient of just such a philanthropic rarity.
What makes the gift even more astounding is that the donor is Memorial Hospital, a non-profit institution in South Bend that “tithes” 10 per cent of its operating surplus each year for grants to community programs and projects run by the city’s non-profit organizations.
According to Brooke Rosman at the American Hospital Association’s Health Research and Educational Trust, in Chicago, some 20 hospitals currently commit about 10 per cent of their operating surpluses for grant making in their communities. A few others, while not tithing, are also acting as grant makers to support local non-profit organizations.
Virtually all of the hospitals that participate in such programs are non-profit institutions, though there is nothing to prevent for-profit hospitals from getting into the act as well. At a time when so much attention has been focused on the philanthropic foundations being created with the assets of non-profit health-care entities that convert to for-profit status, another source of philanthropic funds has often been overlooked. Indeed, tithing by hospitals represents a potentially rich vein of support for needy charitable organizations.
The philosophy behind tithing is both simple and pragmatic: It rests on the belief that community health is as much a social, economic, and environmental matter as it is a medical one. Major community problems like health, crime, and poverty, tithing hospitals believe, are interrelated and cannot be resolved in piecemeal fashion. By investing in community partners, those hospitals realize that they receive an extremely positive return: more productive non-profit groups and programs from which they can learn and through which they can extend their outreach and effectiveness in the health field.
“Tithing doesn’t cost you a penny,” says Phil Newbold, president of Memorial Hospital. “You get much more back than you put in.”
Memorial Hospital, part of the area’s Memorial Health System, established its Community Benefit Fund five years ago from the previous year’s excess operating revenues. At the time, it distributed about $1-million to worthy non-profit groups that were working to improve the health of the community.
This year, the Community Benefit Fund will distribute more than $3-million in grants to charitable organizations in South Bend. In a departure from previous grant making, the fund will provide large, multiple-year grants to a few of the city’s most-effective groups, including the South Bend Heritage Foundation. The fund will also award smaller amounts to many other institutions.
The five-year commitment from Memorial Hospital will provide the financial stability that the 20-year-old South Bend Heritage Foundation requires. One of the most productive and impressive community organizations in the country, the charity, headed by Jeff Gibney, boasts a formidable track record of accomplishments, including the development of more than 500 units of low- and moderate-income housing, the construction and management of a major youth center and shopping center, the establishment of a community health clinic, and success in persuading city government, through advocacy, to devote more of its resources to the poorest parts of town.
Despite its impressive record and importance to the city, however, the charity has continually struggled to maintain its operations and small core staff of nine people. South Bend and its environs have few foundations. The large foundations in Indianapolis, such as the Lilly Endowment and the Moriah Fund, have been somewhat reluctant to spread their bounty to the northern part of the state, while the major national foundations haven’t demonstrated much interest in supporting grassroots organizations, especially those located in small or mid-sized cities. Were it not for the charity’s creativity in earning revenue from its community-development projects, including housing, it could not have survived.
The financing of non-profit organizations through hospital funds represents a wise use of community and private resources, especially in small and mid-sized cities and regions with few foundations and corporate headquarters. The payoff for participating hospitals in terms of credibility, community outreach, and sounder community-health programs can be considerable. South Bend’s Memorial Hospital has blazed a noteworthy trail that others, one hopes, will soon follow.
Pablo Eisenberg, co-chair of the National Committee for Responsive Philanthropy and former executive director of the Center for Community Change, in Washington, is a regular contributor to these pages.
