Philanthropy As Strategic Investment

Philanthropy As Strategic Investment

Beyond the buzzwords, what does it really mean?

Children’s Hospital and Clinics of Minnesota exceeded a $150 million capital campaign goal earlier this year, and it was the first such campaign since Minneapolis Children’s construction in the early 1970s. I sat down to talk to Theresa Pesch about the campaign components and how they met goals even though the campaign timeline fell right in the middle of the recession. Pesch, a registered nurse, is the president of Children’s Health Care Foundation, affiliated with Children’s Hospital and Clinics. On the job since 2007, she’s transformed Children’s development effort, not only completing the capital campaign, but leading a stronger annual fund whose results speak for themselves: Children’s raises much more money than ever before, and expects annual giving to increase from $25 million to $40 million by 2020.

What are the keys to Children’s success? The answer lies in its innovative approaches to philanthropy, approaches that have made Pesch an in-demand speaker and philanthropy educator.

Children’s believes that donors should be deeply engaged, not merely asked for money, and that today’s donors expect measurable impact. Pesch and the foundation board have set themselves up to deliver both engagement and results.


Emblematic of Children’s approach is a $17.5 million gift from UnitedHealth Group (UHG) that was one of the campaign’s cornerstones. In fact, neither Pesch nor Richard Migliori, UHG’s executive vice president and chief medical officer, characterize their relationship as one of grantor and grantee. Both describe their relationship as “strategic,” and Migliori says that the investment was “the best and largest example of how we’ve envisioned our philanthropic agenda would operate.”


The relationship was contractual. UHG’s gift was committed for a very specific purpose: to enable Children’s to become a verified Level 1 pediatric trauma center, the highest designation of the American Council of Surgeons; it requires specific facilities, services, and competencies. An initial assessment identified gaps between Children’s capacities and those needed to attain Level 1 status. Children’s created a detailed timeline and budget that UHG signed off on. A team of senior executives from both organizations met quarterly to review progress and troubleshoot when needed. This senior team made sure that the CEOs of both organizations were regularly informed.

The Level 1 project was a key priority of the campaign. Children’s is one of the busiest pediatric emergency medicine programs in the United States, with more than 90,000 visits annually. About 40 percent of pediatric trauma cases in the Twin Cities are treated at Children’s; trauma is the leading cause of death and disability in children. Some of the new requirements Children’s needed for Level 1 verification were additional emergency department staff; 24/7 coverage by an in-house pediatric surgeon (modest living quarters at Children’s now allow a surgeon to be on-site at all times); construction of large “trauma bays,” additional resuscitation rooms, and a dedicated orthopedic room with advanced X-ray capabilities; and a helipad.

Unlike most philanthropic relationships, the parties agreed to specific contractual requirements against a timeline, and decided to make assessments at quarterly meetings. Children’s and UHG both agreed on the underlying value of the work to be completed. “No one could argue with the priority,” Migliori explains when discussing the conditions for a successful grant on this scale. “Level 1 pediatric trauma status is a relatively new standard, and the American College of Surgeons recommends that an injured child be able to reach a Level 1 center within 30 minutes.”

Whereas Regions Hospital in St. Paul has Level 1 status for patients of all ages, Children’s is now the first hospital in Minnesota to be Level 1-verified specifically for children. According to Migliori, this has clear benefits. “There are things in a child that physicians can do that could be harmful for adults and vice versa,” he says. “The depth of expertise needed for children is distinctive.” Plus, Migliori says that new facilities, new staff, and deeper expertise at Children’s in trauma cases is creating a “halo effect” for other diseases and conditions. “The protocols necessary for trauma care are paying off in the quality and effectiveness of the other work Children’s can do.” Beyond the historic UHG gift, the Children’s campaign incorporated just about every kind of charitable fund-raising mechanism imaginable. The 40-member Children’s development team made a major push toward online giving, used direct mail to reach a broad base of contributors, developed a major gifts program, and created campaign events, many of which were designed to engage corporate volunteers in children’s health and wellness activities.

Pesch’s advice for fundraising in the 21st century? First, she attributes Children’s success to a knowledgeable and committed board of directors that used its expertise and contacts to lead the campaign. Second, she thinks that all nonprofits must become good partners. “No one can do it all anymore,” she says, and cited Children’s partnerships with the Ronald McDonald House, with the cultural community through its Arts and Healing program, and with mother-baby initiatives as examples of how nonprofits need to “show up differently as colleagues and partners with shared goals.” Third, she thinks donors want “meaningful, respectful, transparent experiences” that Children’s can deliver through taking them on building tours and talking directly to staff who deliver care to patients. “Donors want interactions that are experiential and real.” Fourth, remember that every gift counts. “It’s a relationship, not a transaction. We’ve built our team around that value system.”

Finally, nonprofits are in a position to energize those whom they ask for money. It is not merely a passive relationship where one asks and the other gives. “Philanthropy is about energizing a community,” she says.

Pesch told me that the percentage of children needing public medical assistance that Children’s treats has increased from 25 percent to 42 percent in the past 10 years. One in five families needs interpretive support because English is not their primary language. Further, some services that Children’s wants to provide are not covered by health insurance or through state and federal reimbursement policies. Children’s also wants to be a driving force in children’s health and wellness education in our region, and to join with others who are working to improve child welfare. As Children’s is able to increase its private sector fundraising, these goals can be advanced. That’s good news for the region’s youth.

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