These Health Foundations Are Everywhere. And They're Stepping Up Their Game

photo:  PongMoji /shutterstock

photo: PongMoji/shutterstock

We've been writing a lot about health legacy foundations lately, especially in our coverage of regional philanthropy scenes. These institutions are sometimes referred to as health conversion foundations and are set up when a nonprofit health organization is sold to a for-profit entity or transitions to for-profit status. The endowments created from such sales and transfers can be substantial, with the use of funds often restricted locally to the surrounding communities.

At an impressive pace, these emerging foundations are changing the landscape of local healthcare philanthropy and giving small health organizations some new and exciting opportunities. Nearly every day brings news of new grants and initiatives by these funders, as we've been reporting. But what we haven’t yet explored is the overall impact of health legacy foundations and what their larger role is within the uncertain and turbulent American healthcare system.

So it's great to see that the Bridgespan Group has been digging into these grantmakers, with an eye to helping funders and nonprofits get a big-picture view of health legacy foundations. Bridgespan's research reveals how such funders are creating the nation’s largest pool of health grantmaking funds. These health funders are now pumping out over $1.3 billion in grants annually in their local areas, largely to assist low-income Americans gain access to care. And the assets of these foundations have swelled, with Bridgespan's researchers finding 228 conversion foundations with $27.5 billion of assets. The endowment of some of these foundations is especially striking in certain relatively small states. For example, the Colorado Health Foundation has assets of $2.4 billion, and has given out as much as $97 million in some recent years—big money in a state with 5.5 million people. 

But beyond the popular topics of uninsured patients and access to care, health legacy funders are starting to think bigger and broader, too. Rather than just treating the problem of poor health, they’re looking to address its causes. Like many other health funders, they're engaged in "upstream" grantmaking on issues like housing, access to healthy food, and parks for recreation and exercise—all of which are linked to health outcomes. 

Some of these funders are also engaging more on the advocacy front, as we've been reporting. The Colorado Health Foundation created a 501(c)(4) organization, Healthier Colorado, that's emerged as important player in state policy battles over healthcare—and national ones, too, with work to defend the Affordable Care Act.

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With the future of the ACA still in question, there's immense interest right now among health funders in ensuring access to care for low-income Americans. Even if the ACA survives, many states still haven't expanded their Medicaid rolls, as Obamacare originally provided. The rising grantmaking power of health legacy foundations offers new resources for patching the health safety net safety net and filling the gaps between wavering government support and inadequate philanthropic dollars. 

One question is how many such new foundations are likely to emerge. Many health conversions were created in the 1990s, but the trend has lately slowed to a trickle. That said, Bridgespan predicts at least 50 new health legacy foundations by the early 2020s, which could add around $8.5 billion to the pool of endowment assets held by these institutions. Meanwhile, existing endowments—and grantmaking budgets—are likely to keep climbing. 

Health legacy foundations are unique in that they are almost always hyper-local and have a finger on the pulse of local needs. In addition, to the degree that more of these institutions do turn to policy and advocacy, they have the potential to make a broader impact, mobilizing local providers, community health organizations, and others to speak up in state and national debates. As we reported earlier this year, a range of local health funders worked in their regions to defend Obamacare.