Strategic Grantmaking to Improve Community Health

For decades, storied independent organizations like the Robert Wood Johnson Foundation and the W.K. Kellogg Foundation have worked alongside newer philanthropies like the Bill and Melinda Gates Foundation to improve health through strategic grantmaking. More recently, health payers and hospitals have joined their ranks in an effort to improve the health of their members, patients, and community members. As the newest entrant, hospitals have a unique perspective, and we should consider their motivation, process, and lessons learned.

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Hospitals have recently made significant moves to address upstream issues and meet the needs of patients—and community members—outside the four walls of their institutions. As they do so, more hospitals are deploying grantmaking programs that support nonprofit partners, tangibly demonstrate commitment to the community, and tackle entrenched problems facing vulnerable populations.

Historically, the lion’s share of hospitals’ reported community benefit dollars has related to providing patient care services for free or at a reduced charge. Tax-exempt hospitals may also offer community benefit through supporting medical education, health services research, subsidized health services, community health improvement activities and cash or in-kind contributions.

Grantmaking is a powerful tool for hospitals to improve community health—one that more organizations should consider embracing.

Strategic Grantmaking Allows Hospitals To…

• Broaden their scope without re-inventing the wheel. By funding community-based organizations (CBOs), hospitals help to strengthen the nonprofit ecosystem needed to effectively address social determinants of health. Many local nonprofits are better positioned than a typical acute care hospital to meet the nonclinical needs of community members. Through grantmaking, hospitals leaders can help fellow organizations expand their capacity to provide urgently-needed, culturally-responsive services.
• More proactively, tangibly, and consistently contribute community benefit. With expanded insurance coverage promoted by the Affordable Care Act, many hospitals saw their charity care numbers decline significantly. This has exposed nonprofit hospitals to additional scrutiny from a variety of critics who question their tax-exempt status. However, as recent patient trends have demonstrated, hospitals have little control over how many un- or under-insured patients seek their services. Charity care is, by its nature, highly reactive. In contrast, making grants to community nonprofits allows hospitals to proactively honor their community benefit commitments in a directed fashion.
• Intelligently align mission and strategy. ACA-mandated community health needs assessments (CHNAs) routinely bring to light the most pervasive problems facing the populations in hospitals’ service areas. Meanwhile, clinicians, population health managers, case workers, and financial analysts witness the grinding devastation experienced by those with complex medical requirements and unmet social needs. Purposeful grantmaking can strengthen partnerships and programs that help restore human dignity and help bend the cost curve with better outcomes.
• Communicate a clear story. Healthcare is complicated. Grants offer hospitals a tangible, powerful way to demonstrate their community support. A transparent grantmaking process further builds trust with community leaders.
• Invest for the long haul. Unlike event sponsorships, grants let hospitals contribute funding to projects that will have both short-term and long-term impact. Hospitals are able to increase their grantmaking outlay in better fiscal years and continue to see a positive impact on the community in more challenging years as well.
• Expand the pie. Grants often have a multiplier effect. By making a financial commitment to nonprofit partners, hospitals underscore the importance of their shared mission. This, in turn, can attract more attention and more dollars from independent grantmaking foundations, government agencies, and individuals. In addition, both individual donors and large foundations are increasingly seeking to fund partnerships, which they believe are better-positioned than standalone nonprofits to tackle some of society’s most intractable issues.

Hospitals Moving into Funder Roles

As a whole, hospital-funded grants have received less media coverage than that of traditional major donors, corporate giving programs, or independent foundations. However, this belies a growing and significant trend. Recently, I explored the 30 largest private nonprofit health systems in the U.S. (by number of hospitals). Of these, 43% had a clear grantmaking program easily found through secondary research; another 17% featured grantmaking at least one subsidiary. Only 33% had no grantmaking program[1].

Read more about enticing donors to fund your community benefit program.

Grantmaking programs are present at much smaller health systems as well as standalone hospitals. While sizeable, complex impact investments like Kaiser Permanente’s $200 million to combat homelessness receive the most attention, most grantmaking programs are more modest, with hospitals investing about $500,000 to $2 million per year.

In the past five years, many hospital grant initiatives have focused on social determinants of health or health-related social needs. (A recent Health Affairs article includes these as a subset of impact investments when quantifying health systems’ spend.) Such programs predominantly include addressing homelessness and food insecurity, as well as improving nutrition and exercise. With an ongoing behavioral health crisis, hospitals have also funded programs to address substance use disorder, depression, and social isolation. The most common recipients of hospital grants include housing agencies, behavioral health providers, school districts, oral health providers, and nonprofits like Boys and Girls Clubs. Innovative grantmaking programs also fund capacity-building work of safety-net experts and associations. Importantly, hospitals are increasingly funding community clinics, recognizing these organizations’ critical role in maintaining well-being of low-income populations.

Grant goals include improving navigation and care coordination, expanding capacity for services that treat uninsured and under-insured individuals, and improving individual knowledge, attitudes, and behaviors. In 2020, some hospitals added or changed their grant programs’ goals to include support for individuals affected by Covid-19.

Hallmarks of High-Performing Community Grant Programs

On its surface, granting funds to community nonprofits may seem simple. However, new community grant programs can easily become bogged down by internal hospital politics and clashes about where to disburse funds, overly complicated application and approval processes that frustrate internal and external stakeholders, and challenges in measuring and impact.

Best-in-class community grantmaking programs have…

• Clear differentiation between event sponsorships and strategic grants
• A small number of coherent initiatives with a clear theory of change and metrics
• Alignment between grantmaking goals, community needs, and hospital strategy
• Good external transparency on program goals, process, timeline, and intended outcomes
• Straightforward, realistic expectations of grantee reporting and grantor recognition
• Respectful, partner-centered philanthropy that includes community members in conversation from grant initiative conceptualization through evaluation

Lessons Apply To Independent Foundations, Payers

Of course, hospitals are not the only ones seeking to strengthen community heath through grants. Independent foundations and payers both play a significant role as well. While these organizations have very different cultures and processes, they can benefit from learning from hospitals’ approach—and vice-versa. In some cases, these organizations are working collaboratively to speed and deepen their impact.

[1] Analysis conducted through research of health systems’ community benefit and related websites. For the remaining 7% of hospitals, community benefit materials made unclear whether they had a grantmaking program.