July 2, 2008

Philanthropy is Not Asking for a Favor, It is Giving a Favor

By Maynard, George F III

IN HIS BOOK, Servanthood: Leadership for the Third Millennium, the Reverend Bennett Sims states boldly, "To challenge people to give is to do them a favor-the favor of acting out of their highest selves..." (Sims 1997, 33). As development professionals, do we really embrace and live that statement when we are working with our donors? When we ask someone to give, do we believe we are doing them a favor? I believe Kelby Krabbenhoft, president and CEO of Sanford Health, deeply understood that when he invited Denny Sanford to make a transformational gift, he was truly doing Mr. Sanford a favor.


In challenging people to give, our greatest effort should be the establishment of meaningful donor relationships. Too often, we approach our work as a science-fundraising with financial goals and objectives, dedicated mailings and special events, prospect lists and institutional objectives-all designed to generate immediate revenue. At times does our concentration on the science deter us from the art of philanthropy? If inviting someone to give is doing them a favor, then our job as philanthropic officers is to connect the philanthropists to a worthy cause within our organization that has the most meaning for that individual.

Establishing affinity that leads to an enduring philanthropic relationship is not to be confused with fundraising. Traditional fundraising is quite different. Traditional fundraising uses an interventional approach. Philanthropy is based on a series of connected interactions with the philanthropists that ultimately leads them to an investment of time, talent, and/or treasure.

Fundraising has a short-term orientation: get the money and get out. Philanthropy focuses on the person and his or her personal commitment to the institution. The money will follow once the commitment is secure. Finally, and perhaps most important, philanthropy ultimately is achieved when the donor is deeply involved with the mission and vision of the institution on a personal, not a social, basis. Relationships that lead to major gifts, perhaps over and over, are relationships that are established through an intersection of the giver's needs and the organization's mission and vision.

Real philanthropy is designed to build loyal relationships. In Dr. McGinly's scholarly article, he refers to the pyramid of philanthropy. This model is well known to professionals in our field. In theory, the underlying premise of the pyramid is that a relationship is underway and movement should be seamless. In reality, the pyramid is indeed valuable and important as a tool for guidance-but sometimes we push too quickly to move up the pyramid and thus risk a truly meaningful relationship between the donor and our institutions. In other cases, we organize around the type of giving in the pyramid and the relationship becomes bifurcated. Even more often, we spend too much time with the donor at the base of the pyramid, discussing interventional activities and shortterm results, and not enough time building a genuine relationship.

Perhaps we should turn the pyramid upside down and look at it as a philanthropic vortex that captures the philanthropist with the mission and vision of the institution in a whirl of positive energy. Kelby Krabbenhoft's story of his relationship with Mr. Sanford demonstrates this idea beautifully and should be read by every hospital and health system CEO in the United States and Canada. Every relationship with the prospective donor is an absolute necessity for any healthcare organization. The relationship between Mr. Krabbenhoft and Mr. Sanford resulted in multiple significant gifts of time, talent, and treasure and a partnership that is lasting and transformational.

As fund development professionals, we create the philanthropic vortex by thoughtfully sharing our organizational story and inspiring the potential philanthropist to participate in that story in a meaningful way. The deeper one becomes involved in a relationship, the more deeply committed one becomes to the mission and vision. The philanthropist realizes he or she is not giving to the hospital or the health system, but instead to the community it serves. The vision becomes much bigger. Mr. Krabbenhoft and Mr. Sanford have a deep and lasting relationship solidified by the commitment they both have to transform healthcare in Sioux Falls and South Dakota, and, it is hoped, nationally.


The following quote from a Moody's Investor Services special report reflects another strong reason for hospitals and healthcare systems to take philanthropy more seriously as a revenue source. "We believe a strong fundraising program, as a complimentary strategy to a hospital's patient care operation, is an important consideration in our credit assessment and can positively impact bond ratings. A small segment of the healthcare industry has been successful in fundraising, including children's hospitals, academic medical centers and cancer hospitals. As providers of essential healthcare services, these types of institutions have benefited from a strong and well-marketed 'brand name' and support from their boards and communities. For many, the consistency and depth of their long- established programs have resulted in these organizations achieving financial success and solid bond ratings" (Moody's 2006).

In order to generate $400 million, a hospital or healthcare system operating at a 3 percent margin would have to generate over $13 billion in gross revenue. Mr. Krabbenhoft understands the math and has made a decision to focus on the higher return rate of philanthropic revenues. In addition, the generation of this source of revenue is much more rewarding. While the relationship between the two men has been in development for over five years, the actual time and effort Mr. Krabbenhoft put into securing the cumulative gifts of Mr. Sanford would be minuscule compared to the amount of time to secure $13 billion in revenue through traditional hospital/ healthcare methods.

Philanthropy is the only revenue source in healthcare that can create a return on investment of this magnitude. In a white paper from the Governance Institute on philanthropy, the following appeared: "Maximum philanthropy yields better stakeholder relations, and better stakeholder relations yield more funds. More funds yield greater range and quality of services. Great hospital services yield more friends-in the community, among employers, and among physicians, politicians and payers" (Governance Institute 2006, 5). So why do not more hospital/health system trustees and chief executive officers get involved with generating philanthropic revenues?


Today, the healthcare industry is in massive transformation and the role of hospitals in communities is becoming blurred. As Paul Starr said in The Social Transformation of American Medicine: "Understanding the evolution of hospitals belongs to the general movement and social structure from 'communal' to 'associative' relations. Communal relations refer to the bonds of family and brotherhood and other ties of personal loyalty or group solidarity; associative relations involve economic exchanges or associations based on shared interest or ends. The shift from the communal to the associative has taken place in two ways. Not only have the households and communities given up functions to formal organizations; the organizations themselves have also changed.... The modern history of the hospital has seen a steady stripping away of its communal relations and has more closely approached the associative structures of business organizations" (Starr 1982, 147).

As these communal relations are stripped away, vocal observers are increasingly claiming that not-for-profit hospitals are no longer charitable, but rather are becoming healthcare businesses. Many healthcare executives have chosen to focus on what Starr refers to as associative relations at the expense of the communal relations.

To survive and thrive in the current competitive environment, an independent not-for-profit hospital/healthcare system must emphasize stewardship and communal relations. Stewardship is an essential element of the independent not-for-profit hospital/healthcare system's community responsibility. Stewardship is a trust. A steward is one called to exercise responsible care over possessions entrusted to him or her. Stewardship involves a sense of being accountable to someone or something higher than self. The shaping of the local community's quality of healthcare should be that interest, and that should be considered to be higher than the selfinterest of the organization. Both Krabbenhoft and Sanford get it!


In the latter part of December 2007, my wife, Crissy, who is vice president of philanthropy at our local performing arts center, and I had the opportunity to work with the University of Pecs Medical School in Pecs, Hungary. We were asked by the dean of the school to develop a program of philanthropy in support of their expansion efforts within the school. While the University of Pecs was founded in 1367-before Columbus was born-philanthropy is infantile in the university and non-existent in the medical school. In reflection, as Americans, we sometimes take for granted the wonderful culture of philanthropy that pervades our society. Alexis de Tocqueville, a French nobleman, came to America in 1831. During his travels all over the young nation, he became inspired by America's charitable spirit and volunteerism. In his book, Democracy in America, he wrote, "I must say that I have seen Americans make great and real sacrifices to the public welfare, and I have noticed a hundred instances in which they hardly ever failed to lend faithful support to one another" (Tocqueville 1954, 112).

Yes, there will always be challenges in healthcare to face. In my 30-some year career as a philanthropic executive in healthcare, a time has never existed when healthcare systems and hospitals weren't facing myriad issues. However, in that same time period, philanthropists have continued to give their time, talent, and treasure to our institutions.

While we are certainly a young country, our culture of philanthropy runs deeper and wider than most, if not all, other countries. I believe the transformational gift given to Sanford Health confirms philanthropy to hospitals and healthcare systems is alive and well. If we are to transform the healthcare system in the United States, it will not be done by the government and Congress but at the grass roots, local level. The Sanford gift is a testament to that belief and time will tell if change will occur.

Relationships that lead to major gifts, perhaps over and over, are relationships that are established through an intersection of the giver's needs and the organization's mission and vision.


Governance Institute. 2006. "Modern Philanthropy: New Approaches to Raising Funds and Friends." White paper, spring. San Diego: Governance Institute.

Moody" s Investors Service. 2006. "Fundraising at Not-for-Profit Hospitals Largely Untapped but Increasing, Strong Philanthropy Strengthens Bind Rations." Special Comment, March. New York: Moody's.

Sims, B. J. 1997. Servanthood: Leadership for the Third Millennium. Lanham, MD: Cowley Publications.

Starr, P. 1982. The Social Transformation of American Medicine. New York: Basic Books, Inc.

Tocqueville, A. de. 1954. Democracy in America. New York: Vintage Press.

George F. Maynard, III, FAHP is vice president of Philanthropy & Partnership for Greenville Hospital System in Greenville, South Carolina. He is a fellow in the Association for Healthcare Philanthropy, and in 2007 received that association's highest honor, the Harold J. (Si) Seymour International Honors Award.

Copyright Health Administration Press Summer 2008

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