Saturday, November 10, 2007

UT Southwestern: A Case Study in the Core Problem with Major Gift Fundraising

The Dallas Morning News recently ran a series of articles about how "UT Southwestern Medical Center at Dallas keeps a detailed list of wealthy, high-profile and influential people and their family members to ensure that they get favored treatment if they become patients."

This 'favored treatment' is getting the University into some very hot water, particularly with implications that people on the "A-List" are getting better medical care than people off the list (which the Medical Center denies here).

Read the latest story here.

The DMN's James Ragland wrote an interesting follow-on piece for this article entitled, "Hospital can offer extra courtesy, not better care." In the piece, Mr. Ragland states that, "UT Southwestern's operating budget in 2005-06... was $1.27 billion, of which 11 percent came from the state and another 16 percent came from federal grants and contracts. (Grants, gifts and other income account for 31%). That's why UT Southwestern is busy courting potential donors and why its Special Assistance Office is shamelessly using its growing list to make sure no one with special needs leaves disappointed."

Several observations about all this mess:

  • Every non-profit treats their donor differently than non-donors. Highlighting top prospects for "star treatment" is considered a best practice among fundraisers. Since the majority of donations are provided by a minority of an organization's donors, that minority gets disproportionately better treatment per capita. This is simply good fundraising.
  • Such a practice is considered "good business" in other fields. For-profit corporations roll out the red carpet for their shareholders. When I was a waiter at a restaurant, we were always put "on alert" when the owner came in for a meal. Companies like Neiman-Marcus have excelled by knowing when one of their elite customers is in the store and having their staff treat them appropriately. UT Southwestern is simply cultivating stronger relationships among its top donors; the problem, which I describe below this list, is that this practice makes the rest of us feel less valuable once we are aware of it.
  • The fact that this list was "secret" should be no surprise. As much as they might enjoy the star treatment, wealthy donors do not like to think that they have a target on their back. The perception that you are being "watched" makes most people uncomfortable, even if its for the purpose of treating you well. More on this below, as well.
  • Similarly, think of the common Internet practice of tracking a Web site visitor's reading habits so that the most relevant content can be put on the screen. When I go to Amazon, the Web site puts content in front of me that I am interested in. Do I like being tracked? Of course not. Do I enjoy the experience more because Amazon shows me what I like rather than showing me the same thing it shows everyone? Of course I do. UT Southwestern is simply tracking its donors the way that effective sales programs track their customers.
  • UT Southwestern's core mission happens to be providing a service that its top donors can utilize (healthcare services). By contrast, look at my organization (Central Dallas Ministries). Our mission is about providing services to the poor -- food pantries, health clinics, housing programs, etc. By virtue of their wealth, our top donors will never utilize our services. For me to criticize UT Southwestern by saying I would never implement their practice of giving preferred service to donors is ludicrous. The fact is, UT Southwestern should be praised by its peers for its advanced donor stewardship practices. They realize that their donors are not bank accounts: they are people.
  • By comparison, think about how universities and schools give preference to the children of alumni and donors in the admissions process. This is no revelation, and yet there are no "expose" articles in The Dallas Morning News about such practices. Again, it is simply considered good business practice for the universities.
  • Perhaps the reason for this backlash is that, whereas education has historically been more accessible only to the wealthy, access to healthcare is seen as a much more universal right. The idea that the wealthy would receive better treatment within the context of a healthcare system is therefore much less acceptable to us than in the educational environment. This is exacerbated by the fact that, in healthcare, lives are on the line.
Last night, I watched Michael Moore's film "SiCKO." Although I greatly enjoyed the film, and agree that we need universal health care, I am sure that Mr. Moore would have differing opinions on this issue than I do. I am sure that he would see this as another example of the rich beating down the poor.

And perhaps he would be right.

But the problem is not UT Southwestern. It is the American healthcare system's finance model.

UT Southwestern should not be blamed for acknowledging that their resource engine is driven by charitable contributions, and then implementing a system that would strengthen this engine. They should not become a scapegoat for the fact that, in America, poor people do not have access to quality healthcare.

The reality is that UT Southwestern needs donations to do its work, and those donations primarily come from wealthy people or through the influence of powerful people like politicians. Since these people utilize UT Southwestern's healthcare sevices, the organization has made the good business decision to pay special attention to the services delivered to those people.

Delivering inferior service to anyone would be a bad thing. But delivering bad service to someone on UT Southwestern's "A-List" would have the double impact of both hurting that individual as well as their potential to help UT Southwestern serve others.

That being said, the aforementioned articles all contain quotes from UT Southwestern's staff about how these "A List" donors are not receiving disproportionately better medical care, and they also contain some quotes from the donors themselves to back this up.

Of course, this is the problem with Major Gift fundraising:
you can't talk about it

Imagine if your "non-major" donors were told that they were second tier in terms of your concern about them or their relationship to your organization. Some could be greatly hurt -- particularly those who consider your organization to be one of their "major charities."

If a middle- or low-income donor is stretching to make a three- or four-figure gift to you, but you only consider donors who annually give $10,000 or more to be major donors, you could irreversibly hurt your relationship with those "minor donors" if you somehow make them aware of the fact that they are not on your "A-List."

We all want to be special. Particuarly as donors, we want to feel that we are important. We intuitively know that we are not all equally important, but we don't like to acknowledge that fact.

This is why I have never understood the use of titles such as "Major Gifts Officer." It acknowledges a tiering system that cannot help but make major donors feel like they are seen as nothing more than a bank account. And what about minor donors?

"Oh, hello there Mr. Ben E. Factor. What's that? You're here to see our Major Gift Officer? I am sorry. According to your gift record, you're only in the portfolio of our Annual Fund Director. Let me give them a ring and see if they can squeeze you in. Did you bring your credit card today?"

I realize that a title such as "Relationship Manager" or "Friendship Builder" would likely raise too many questioning eyebrows, but I think that fundraisers need to consider themselves to be much more in the business of building sustainable relationships with donors than simply in the business of securing gifts.

I applaud UT Southwestern for developing and implementing this advanced system of donor cultivation. I can guarantee you that the majority of the staff interviewed from UT Southwestern's peer organizations are going to consider implementing such a practice soon, even though they expressed such outrage at the idea.

I regret that this series of articles has forced UT Southwestern to take the blame for what is in reality the nature of their business.

But more importantly, I regret that we have all created a system in which these kinds of practices are necessary for a healthcare institution to do its basic work of healing the sick.