Are all Hospital Foundations Created Equal?

What do they do? And how much of your donation goes towards the cause?

Overview

Charitable foundations play an integral role in our health system, providing the necessary monetary support that our hospitals need to best care for its patients. Hundreds of millions of dollars in donations are allocated every year in Ontario towards funding many of the new healthcare capital expenditure, research and education initiatives that occur. That new Patient Care Tower that SickKids is building? Their foundation is raising $600 million towards it. Michael Garron’s campus wide redevelopment project? $100 million in fundraising. I’d argue that our province’s healthcare system is over reliant on charitable donations. If people were to stop donating, all these very cool and necessary initiatives would eventually grind to a halt. Creating an environment that is conducive to better patient care requires a constant focus on innovation, which is something that only occurs when our health system is properly funded. Hospital foundations make this possible.

How it Works

Here in Ontario, our provincial government is generally responsible for all the costs related to the day-to-day operations of a hospital (Employee salaries, electricity bills, patient food, etc). When it comes to things such as capital equipment spending however, it can be a very different process. This is where foundations come into play.

Example: A hospital wants a new MRI machine

• It must first receive approval from the province.

• If approved, the province usually only covers the operating costs of the new MRI¹.

  • The province is extremely stingy with approving new MRI machines. So much so that when it does happen, news articles are written about it

• The hospital must then be able to come up with its own funds to buy, install and maintain the machine. The money for this would be provided by their foundation.

  • The cost of buying and installing a high-powered MRI machine that hospitals typically use can run anywhere from $3-5 million².

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Foundations also play a massive role in supporting research occurring in a hospital through the provision of grants. SickKids as an example doled out $90.7MM in grant money in 2021³.

Comparing Hospital Foundations

With how important these organizations are to our health system, I wanted to take a closer look at a few metrics to help understand and compare some of Ontario’s foundations.

• Cents to the dollar of donated money going towards the cause, and how that percentage varies from foundation to foundation.

• Employee Compensation

• Revenue per employee

• Funding Reserves—Annual Revenue multiple (aka How many years would the amount a foundation has in the bank sustain them for if new donations were to suddenly cease)

Table Notes

• Almost all data collected/analyzed came from Charity Intelligence

• Foundation Revenue numbers are comprised of not only donations, but all other forms of cash inflows (I.e Investment income, lotteries, special events)

• Foundation Spending does not include grants. Only fundraising and administrative costs were calculated in Total Spending

Table 1: Donated Dollars-Cents to the Cause

Observations & Highlights

• The big Toronto academic centre foundations rake in $$$. The revenue generation discrepancy between them and the smaller regional/community foundations is extreme.

  • This discrepancy can best be seen when looking at William Osler’s numbers. Providing care to a large community of over 1.3 million people, they are pulling in 15x less revenue than any of the top 3 foundations. The geographic proximity to many of their rivals makes for a crowded competitive landscape. And truthfully, if you’re a large company looking to shore up some good will through charity, it’s much sexier to donate to child or cancer related cause than it is to donate to your run-of-the-mill hospital in the suburbs.

• Cents to the Cause: The percentage of revenue that end up being available for the cause varies quite materially, ranging from 60.23% all the way to 87.13%.

• The larger the foundation, the more cost efficient they tend to be.

Table 2

• SickKids is by far the largest foundation full-time employee wise, having double the headcount of its closest competitor.

  • The increase in manpower might have coincided with its lofty fundraising goals. Project Horizon, SickKid’s Campus redevelopment project looks to raise over $1.3 billion!!

• Revenue per Employee Range: $517K-$3.29M

• Foundations bring in a lot of value on a per employee basis. That number however varies significantly between organizations, with larger organizations generally being more efficient than the smaller ones.

  • Side note: This value is also impacted quite significantly by the amount of investment income generated/lost during the year, which is a factor that employees generally have no control over.

• There is decent money to be made working in the sector. I honestly thought that working for a charity meant you were in for a life of below-average pay but I was pleasantly surprised. Foundations do fantastic work and need to attract top talent to best reach their fundraising potential. This means offering competitive pay.

Table 3

• All the foundations have strong reserve level multiples of >2, with the majority operating between the 2-4 range. UHN leads the charge with a multiple of 4.15. This means that if UHNs were to suddenly stop generating money, they would still be able to fund initiatives at current levels for >4 years

• A significant portion of total revenue generated by a foundation is through the passive investment of their funding reserves. Passive income putting in WORK

  • A special shoutout goes to Princess Margaret and Sunnybrook, who in 2021 had a record gains of >20%, making $114MM⁴ and $50MM⁵ respectively in investment income.

  • SickKids on the other hand had massive (unrealized) losses in 2020, where their investment portfolio dropped by $160.6MM⁶

Takeaways

• Big Names Attract Big Money: The foundations tied to Toronto’s large academic hospitals push well above their weight, collecting most health care charity related revenue.

• Your Donations Make a Difference: Many new services, equipment and procedures are only made possible through the use of charitable funds.  

• The Little Guys Matter: Regional and community hospitals are the workhorses of our health care system and are most likely the sort of hospitals that you and your family will visit. Next time you look to donate, show these organizations love.

At the end of the day, all the various hospital foundations in Ontario are doing great and important work. These metrics should only be but one small factor in the decision-making process of where to donate your money. Browse through their websites, read up on the many initiatives that these charities support and donate to what speaks to you.

Now for what might be the most important part of this post—>

Ranking Foundation/Campaign Slogans

• 1) Princess Margaret: Together, we can Conquer Cancer in Our Lifetime

• 2) St Michaels: This is HUMANCARE

• 3) William Osler: We are Stronger Together

• 4) SickKids: Healthier Children. A Better World

• 5) Sunnybrook: Funding the Future of Healthcare

• 6) UHN: Help Create Clear Paths to Care

• 7) Trillium: A New Kind of Health Care for a Heathier Community

• 8) London Health Sciences: Choose to Care: When you believe, others thrive. You are the difference

1. https://healthydebate.ca/2015/02/topic/politics-of-health-care/philanthropy/

2. https://heartlandimagingcenters.com/2021/03/19/why-are-mris-so-expensive-at-hospitals/

3. https://www.charityintelligence.ca/charity-details/61-sickkids-foundation

4. https://thepmcf.ca/getmedia/9b96649e-83ba-490a-bacc-f961904b94c8/Annual-Report-2021_Digital.pdf

5. https://www.charityintelligence.ca/charity-details/62-sunnybrook-foundation

6. https://www.charityintelligence.ca/charity-details/61-sickkids-foundation