Bar Journal - Spring 2007
The Endowment for Health: Six Years of Service and Counting
By: James W. Squires
More than 40 years ago, former U.S. Attorney General Robert F. Kennedy remarked upon the overwhelming social inequality and injustice of his day. Seeking to provide words of inspiration, he chose a message of personal commitment that could lead to incremental change.
“Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring, those ripples build a current which can sweep down the mightiest walls.”1 These powerful words still provide inspiration as we look at the issues of social inequality and injustice of our day. Indeed, we have mighty walls to sweep down in our country and in our state, not the least of which is the barrier to health and health care.
The last six years have witnessed a major shift in the priorities of organizations such as the Endowment for Health. Federal and state budgets are becoming increasingly strained. If left unchecked, health care spending will represent nearly 20 cents out of every dollar Americans spend by the year 2016, far outstripping the growth of the U.S. economy.2 This mounting pressure on the system is forcing foundations to use their resources for support of public policies. As a result, foundations must understand the role of government toward those who suffer from life’s infirmities and the best use of not-for-profit resources. For the Endowment for Health, infirmities mean issues of health. These issues prompt us to use our voice to send out a ripple of hope to those who cannot find optimism in their lives because they cannot tear down the barrier to health on their own.
II. The Starting Point
The creation of the Endowment for Health3 (the Endowment) occurred when nearly all nonprofit insurance providers had disappeared. The issues that surrounded the sale of New Hampshire Blue Cross and Blue Shield to Anthem Insurance in 1999 underscored the debate over who owns the assets from the sale of a nonprofit health plan to a for-profit corporation. The New Hampshire Attorney General’s Office had been intimately involved in the transaction. The outcome ultimately led to the creation of the Endowment, New Hampshire’s version of a health care conversion foundation – a growing national trend. In forming this foundation, the Attorney General had clearly done his homework. Nine public hearings4 were held throughout the state to consider the public’s views concerning how the Endowment should be structured and how its funds might be allocated in accord with its mission of improving the health and reducing the burden of illness for the people of New Hampshire – especially the vulnerable and underserved. These early efforts proved invaluable.
“What several observers describe as the ‘largest redeployment of charitable assets’ in history offers significant opportunities and potential risks…The creation of more than 110 health care conversion foundations, established when nonprofit hospitals or health plans were sold or converted to for-profit status, has pumped billions of dollars into health care philanthropy….The relative secrecy surrounding many early conversion transactions led to a good deal of controversy. In the recent past, notes Anne L. Schwartz, Ph.D. of Grantmakers In Health, “not a lot of attention was paid to how nonprofit assets were valued and what was done with them, and the community got angry.”5
Clearly, on the continuum of health care conversion foundations, the early structure of the Endowment was based on the principles of fairness and concern for serving the needs of New Hampshire. The Attorney General (Phillip S. McLaughlin) and the head of the Division of Charitable Trusts (Michael S. Delucia) deserve credit for getting it right. These efforts were complemented by the work of the newly formed Board of Directors and Advisory Council who spent the first year further defining the Endowment’s governance structure.
The Endowment, Board of Directors, Advisory Council, and staff have worked tirelessly since 2001 to create a foundation that is in tune with the needs of our state. We take our role seriously as stewards of the public’s money – exercising great care in how these assets are managed and invested. We also set about establishing a fair and thoughtful process for grantmaking and programmatic work as well as ensuring integrity concerning our ongoing involvement in matters of public policy. The Endowment’s assets have grown substantially to $100 million.
III. Grantmaking – A Means to an End
Many who come to work at foundations for the first time wonder, “How hard can it be to give away money?” They soon realize, however, that grantmaking is not an end to itself but a tool to accomplish a mission. Therefore, a rigorous process for reviewing proposals and making grants is necessary, along with an understanding of the difference between charity and philanthropy. The two terms, often seen as interchangeable, are very different pursuits.
“Foundations should primarily concentrate on philanthropy (root causes) as opposed to charity (meeting immediate needs)….on supporting innovation as opposed to supporting ongoing programs…on leveraging funds as opposed to being the sole funder….(and) on helping good ideas get a trial and a start as opposed to funding tested and proven approaches.”6
Espousing this basic difference between charity and philanthropy, the Endowment has set its strategic objectives. We are committed to advancing leadership within the organizations we fund and support; to enhancing knowledge within these organizations and among key opinion leaders; to fostering networking and collaboration with our community partners in order to build momentum and make a meaningful impact on health care problems; and finally, to strategically fund critical services, acting at times as an additional tier of support to the existing health care safety net.
IV. Defining our Focus:
In March 2001 the Endowment’s board chose four themes to focus our grantmaking activities. The Endowment studied how other foundations target their work and selected the best practices to accomplish its mission. There exists a misconception that health care produces good health. Most surgeons, for instance, are taught that removing disease creates health. The Endowment, however, approaches health from a broader and more holistic vantage point. It embraces the World Health Organization’s definition: “Health is a state of complete physical, mental, and social well-being, not merely the absence of disease or infirmity.”
The Endowment therefore welcomes any public or private organization or legal collaborative to apply for a grant, provided their proposal improves primarily the health of New Hampshire residents. These grants are usually awarded to entities that qualify for exemption under section 501(c)3 of the Internal Revenue Code. Chief among the Endowment’s grant types are Theme Implementation Grants, which provide funds to implement model solutions that address one or more of the Endowment’s four themes.
One of these key themes is, to reduce economic barriers to accessing health and health-care for the people of New Hampshire. This presents a great challenge requiring deep system change. Health care is financed by a tripartite system consisting of “public funds,” (largely, but not exclusively, Medicare and Medicaid), “private” insurance (most likely employer based) and “self-payment.” A step-by-step plan for systems-level change is needed to address spiraling costs and a system that doesn’t always adequately promote health, prevent disease, or provide high-quality care.
Another key theme, reducing geographic barriers to accessing health and health care for the people of New Hampshire, recognizes the fact that the very features that make New Hampshire special – lakes, mountains, rural areas and historic urban centers – oftentimes make access to health and health care difficult for some New Hampshire residents. A rapidly growing population in the southern tier with densely populated suburbs sharply contrasts with the sparsely populated northern regions of our state, which confront an array of difficult obstacles. For example, Coos County, with an area equal to approximately 20 percent of the state of New Hampshire, contains a population smaller than the City of Concord!
Reducing the social-cultural barriers to accessing health and health care for the people of New Hampshire is an Endowment theme that acknowledges our quickly changing demographics that including people with language barriers, cultural differences and a disparity of economic statuses. These factors severely curtail access to health care and other basic services for vulnerable populations, particularly those from minority and refugee groups. Add to this the stigma often attached to vulnerable populations, and a burning need is identified to remove these barriers through education, public policy change, and empowerment initiatives.
Improving the Oral Health of the People of New Hampshire has also been a key focus for the Endowment for the past five years. Oral health is increasingly understood in the context of overall health and is now included in New Hampshire’s Prevention Guidelines as a crucial care component for young children. New Hampshire has made excellent progress toward integrating oral health into overall primary care protocols. The work in Oral Health is now sustainable; and while the Endowment is exiting this theme in order to address other systemic issues, it will continue to fund public policy work in this area.
Looking ahead, the Endowment has identified a new theme, Improving the Mental Health of the Children of New Hampshire and their families. The Endowment’s Board of Directors and Advisory Council selected this theme after an exhaustive analytical process involving community stakeholders. The process took into account current federal- and state-level initiatives that have the potential to leverage additional resources. The Endowment began investing in Children’s Mental Health in October 2006, focusing on planning, applied research and public policy projects; and it will begin investing in implementation projects in FY 2008 with an emphasis on early mental health screening, assessment and referral services.
V. The Public’s Money – Where it’s going
Since 2001 the Endowment has awarded 435 grants totaling nearly $19 million dollars. While theme implementation grants continue to be the mainstay of the Endowment’s work, it also funds other critical initiatives. The organizations we support to do this work include community health centers, small and large nonprofits, advocacy, capability-building and knowledge-based organizations, as well as those that serve vulnerable and underserved populations within our state.
This variety of grants reflects the diversity of activities needed to accomplish the desired impact of our work. The Endowment is just as likely to fund initiatives that allow people to learn and plan as it is to fund specific services. These efforts include Planning, Convening, Technical Assistance and Applied Research Grants, as well as Discretionary and Emergency grants that respond quickly to unpredictable needs and opportunities. Public Policy Grants round out the Endowment’s grantmaking portfolio, with an eye toward implementing sustainable, systemic change.
VI. Sustainability – The Ultimate Impact
The Endowment views sustainability as a key outcome of both its grantmaking and non-grantmaking work. In fact, we have embarked on a body of research to ensure that the organizations we fund can continue to gain momentum even after an Endowment grant concludes. This can be considered a foundation’s version of Return on Investment (ROI), a battle cry more often heard in business circles than in the hallowed halls of nonprofits.
But making a grant investment is different from merely funding a proposal, and we do, in fact, seek a tangible return on our grantmaking investments. Funding implies that a check is written and some charitable need is answered. Investing dictates that the funder understands the grantee’s overall strategy for long term sustainability, and further, that the funder and grantee embark on a partnership to generate real and lasting results. Investing as a philanthropic concept, then, entails an outlay of not only money, but also of time and resources combined with a shared vision of and commitment to generating the desired outcomes.
“In some ways, impact is what happens after the project is completed…Of course impact can begin before a project is closed, but in nearly every case, the greater impact is felt after the project has been institutionalized; after the funding and sometimes the governance have been assumed by other entities.”7
The Endowment’s experience has identified several key factors that point to the likelihood of long term sustainability. These include external factors such as funding availability, community support, committed partners, and admittedly, some good luck. But more intrinsic factors are also responsible for creating sustained effort. These internal factors include leadership, early planning and passionate organizational support. This is why the Endowment continues to invest in new ideas and organizations, embarking on sustainability planning from the start of the grant in partnership with the grantee. An independent assessment of Endowment grants made since 2001 reveals that 80 percent of the work funded has either been sustained or expanded over time.8 Thus, the Endowment serves as a launch pad for innovations and new ideas that will lead to lasting change. Therefore, we are less interested in a short-sighted funding opportunity that leads only to finite outcomes.
VII. Investing in Long Term Systemic Change of New Hampshire’s Health System
The Endowment’s role in public policy is focused intently on far-reaching systemic change that will generate different results – outcomes that create a lasting and positive transformation of our health and health-care systems.
In New Hampshire, as we also see nationally, our health-care system is anything but a system, because the system was never really built. Instead, as the Wall Street Journal recently wrote, it is, “a dog’s breakfast of private providers and insurers that has weak and inconsistent incentives for quality control and cost containment. Many consumers cannot obtain health insurance at reasonable cost, and financing the system is stressing employers, pension funds, and the government’s Medicare and Medicaid programs.”9
Our state health-care infrastructure seems to mirror this conundrum. A recent survey outlined the top concerns of New Hampshire’s residents: concerns over limits to treatment due to cost; holding down the overall cost of health care; providing coverage for people without health insurance; reducing insurance company bureaucracy; and addressing medical errors.10
To address these and other health and health-care concerns, the Citizens Health Initiative was convened by Governor Lynch in September 2005. This effort includes more than 150 leaders representing government, business, unions, health-care providers, insurance carriers and concerned citizens.11
The group is currently examining issues such as e-prescribing, access to primary care, and pay-for-performance incentives as approaches to improving our health-care system, making it easier to navigate while providing broader access to a larger population at a more affordable cost. Other focus areas for 2007 include health promotion and disease prevention policy; study of tobacco usage, alcohol consumption and physical activity and nutrition; system cost research; and best practices for the expanded use of electronic medical records.
The Endowment is proud to participate in the Citizens Health Initiative as well as to provide partial funding for its work. The effort is helping our state leaders understand that the weight of the health-care system is growing, even as the pillars that support it are breaking down. Nationally, employers are exiting the traditional system of job-based health insurance at a rapid pace, and there are similar trends in New Hampshire. At its current rate of growth, the total expenditures on health care in New Hampshire will nearly double in the next six years and health-care expenditures will consume 18 percent of the Gross State Product by 2011.12
“It has been well said that so-called liberals are always surprised at the way people behave, while so-called conservatives are constantly shocked by the same facts. New Hampshire is fortunate in that it has relatively few extremes in either of these groups, and has always been able to face the future with common sense and humor.”13
This is still the case today and recent research supports this premise. The people of New Hampshire still approach problems in a step-by-step fashion, with a practical, can-do attitude. The problem of health care is no different for us as a state. A recent survey showed that the people of New Hampshire want to see health care reform, but do not believe the state’s health-care system is completely broken. Half (52 percent) believe ‘there are some good things in our health care system, but fundamental changes are needed to make it work better,’ while far fewer think that it needs to be completely rebuilt (20 percent) or believe that just minor changes are needed (23 percent).14
Clearly, this body of work on health-care system reform is important, but it in no way represents the full reach of the Endowment’s support of public policy initiatives. The Endowment has also funded initiatives that include lead poisoning prevention; Seniors Count public policy improvement; the Commission to Develop a Comprehensive State Mental Health Plan; End of Life Care; the Policy Leadership for a Changing Region Initiative; a Medicaid Waiver Analysis issue brief; the Divorce-Health Access Project; the Oral Health Implementation Plan; the Medical Language Services Project; and an analysis of health coverage bidding practices, to name a few. Although the Endowment’s public policy grants represent less than a third of its overall grantmaking activities, it is clearly a key element necessary for affecting lasting systemic change.
VIII. A New Entity - Health Strategies of New Hampshire, Inc.
In February of 2007, the Endowment formed an operating foundation called Health Strategies of New Hampshire, Inc. This new entity accomplishes several important objectives:
1. It allows us to lead complex projects involving diverse organizations;
2. It enables us to serve as fiscal sponsor when necessary;
3. It affords outside entities an acceptable way to join us in investing in projects; and
4. It provides transparency – especially financial transparency – to our work outside of grantmaking.
Other foundations that provide direct services have set up similar operating foundations. Importantly, Health Strategies of New Hampshire will not make grants. Rather, it will serve as a tool, allowing us to lead on behalf of other organizations when appropriate. The Endowment staff and Board of Directors worked closely with the Attorney General’s office to ensure that this entity is set up in such a way as to use the bulk of its resources to provide services and run programs to forward collective objectives when many organizations share one unifying mission. 15
IX. The Vision and Values
That Lead the Way
The Endowment’s mission and its vision of social justice and fairness are informed by a set of values that lead the way. This is important because we have oftentimes seen in society that achieving an outcome without stated values can lead to disastrous results. From the very beginning, the Endowment has espoused a set of values to help guide us and inform our work. In 2006 the Endowment’s Board of Directors and Advisory Council recognized that the foundation was evolving and our values needed to follow suit. Thus, we convened a retreat to redefine these guiding principles and eventually arrived at a revised set of values reflecting all of the integrity of the original set, yet with a fresh perspective that acknowledges the work ahead. These values reflect the Endowment’s intent to move beyond grantmaking. They reflect our desire to coach, teach and leverage; to establish ongoing relationships with our grantees; and to model the way with our own behavior.
Chief among these values are stewardship for all of the Endowment’s resources; integrity in all of our actions and relationships; respect for the many social and cultural differences within our State; fairness, dictating that we will not advocate for any political party and that we will ensure all funding requests are handled with a clear and equitable process; compassion for our partners and all of the people in the larger community of our State; and the courage to do what needs to be done to meet our mission and live up to our values. We will speak up when one or more of us are not acting according to our values. We will consider risking Endowment resources for uncertain but important outcomes. We will speak the truth as we see it.
Pouring money into systems that are already dysfunctional is simply not a long term approach. As a foundation concerned with far-reaching, systemic change, the Endowment is engaging with other organizations pursuing agendas and causes similar to our own. To that end, knowledge, skills, and strong advocacy are our best friends.
When we first formed the Endowment, we thought about using philanthropy to support health services. We now assert that this is properly the role of the public and private sectors. The Endowment therefore has turned its attention to systemic issues that contribute heavily to the expense of health care in New Hampshire. As the problem of cost-effective, quality health care becomes increasingly severe, we will confront this issue unafraid and undeterred. We are owning up to the reality that the health care system as it is now simply doesn’t work – certainly not for every resident of New Hampshire and certainly not for millions of Americans, whether they be working parents, young adults, underprivileged children, or resource-strapped employers. As long as these issues persist, the Endowment will be involved. After all, the state of our health-care system is not akin to a natural disaster like Hurricane Katrina or a tsunami. Rather, it is a problem created over time by well-meaning parties who lacked a collaborative strategy and the collective will to create the necessary infrastructure. But it is a problem we can fix, step-by-step – together, and along the way, send out tiny ripples of hope.
The author wishes to thank the entire Endowment for Health staff for contributing to this article.
1 From a speech given by Robert F. Kennedy in Cape Town, South Africa, 1966.
2 National Health Statistics Group (NHSG), Office of Actuary, Centers for Medicare and Medicaid Services, Baltimore, MD, 2007.
3 Squires, James W. M.D., “New Hampshire Based, Non-Profit Health Insurance: The Rise, The Fall, and The Legacy,” New Hampshire Bar Journal, March 2003, pgs 47 - 54.
4 The Endowment for Health took the learning from the original public hearings and has created a tradition of hosting annual Listening Sessions” throughout the State of New Hampshire.
5 Grantmakers in Health, Coming of Age report, 1999.
6 Orosz, Joel J. The Insider’s Guide to Grantmaking. Jossey-Bass, San Francisco, 2000, pgs. 18 – 19.
7 Orosz, Joel J. The Insider’s Guide to Grantmaking. Jossey-Bass, San Francisco, 2000, pg. 196.
8 Endowment for Health, Grant Sustainability Study, Karen Horsch, 2006
9 Wall Street Journal, Friday, February 16, 2007.
10 New Hampshire Speaks Out on Healthcare: An analysis of Survey Research, Meg Bostrom, Public Knowledge LLC, 2004. pg. 3.
11 2006 Year End Report/2007 Preliminary Work Plan, NH Citizens Health Initiative, Concord, NH, 2006. pg. 15.
12 The Pillars Project, NH Citizens Health Initiative, Concord, NH, 2004. pg. 3
13 Squires, J. Duane. The Story of New Hampshire. D. Van Nostrand Company, Inc. Princeton, New Jersey, 1964, pg. xxi.
14 New Hampshire Speaks Out on Healthcare: An analysis of Survey Research, Meg Bostrom, Public Knowledge LLC, 2004. pg. 3.
15 Private operating foundations are private foundations that use the bulk of their resources to provide charitable services or run charitable programs of their own. They make few, if any, grants to outside organizations and, like private independent and private family foundations, they generally do not raise funds from the public. Council on Foundations: Defining Philanthropy for the 21st Century. www.cof.org.