The Philanthropic Behavior of Nonprofit Hospitals

Abstract

The study of the nonprofit sector has traditionally focused on nonprofit organizations as recipients of charity. A perspective that has been relatively neglected is that of nonprofit organizations as not only recipients but also as donors of charitable resources. This dissertation explores the phenomenon of philanthropic behavior of nonprofit organizations, using studies of the contributions and community health programs of nonprofit hospitals in Indiana as an example. Philanthropic behavior is defined as actions and programs initiated by a nonprofit organization to meet additional community needs – beyond its primary mission or services. It presents the hypothesis that such activities are undertaken for reasons similar to for-profit organizations – and have comparable organizational benefits. The studies reported in the dissertation show a wide variation in reporting such activities as well as of the organizational structures in place to manage such behavior. This variation is seen even in seemingly similar hospitals such as religious hospitals within an identified system. The dissertation discovers that while nonprofit organizations may engage in philanthropic behavior, these practices go largely unrecognized. Because the actions are not systematically noted or recorded, some very significant residual benefits that nonprofits provide for their defined communities are also unrecognized. It also finds that when these activities are evident, they are driven more by the professional values and actions of individual employees than by organizational policies. The dissertation concludes that drawing conclusions from this study of the data on Indiana hospitals – both from state reports and the IRS Form 990s – is difficult. There is an inconsistency between the two databases as well as within each of the datasets that makes any specific conclusions as to the relative values of different hospitals or to standards is suspect. It notes that while the revised Form 990 should help in overall transparency, the reporting of areas such as health education and donations will most probably continue to be inconsistent. This inconsistency makes the information difficult to use as either an evaluation tool or as policy to encourage community-serving behavior.