I am often asked about the dollars that support the efforts of the Health Care Foundation of Greater Kansas City. When a foundation grants $20 million annually, those questions are inevitable because so many depend on those funds to serve the uninsured and underserved. I am thankful that our history of fiscal decision-making makes this an easy question to answer.
Initial Nest Egg
In 2003, HCF was entrusted with dollars from the sale of Health Midwest hospitals (a not-for-profit system) to HCA (a for-profit system). Then-Attorney General Jay Nixon directed the proceeds of that sale to a newly created conversion entity and thus HCF was born.
As an inaugural board member, I remember the excitement about the foundation in the community and the work that it could do. With that excitement came questions such as who would be eligible and how much money was available.
The inaugural board had to make those decisions and manage the expectations of the community. The board was thoughtful in its decisions to roll out funding in a deliberate and steady way. We used (and still do) investment earnings to fund grants, leaving the principle intact to generate income in a well-managed and closely watched portfolio.
Our board is charged with the responsibility of determining our current grantmaking spending, in addition to managing our investment portfolio. Early in the foundation’s history, the board of directors decided it had an obligation to use resources to support grantmaking in the present, while also preserving assets to support future grantmaking for many decades to come.
Some years are easier to balance these obligations than others. As I said, grantmaking dollars have to come from what we earn on investments. The ebb and flow of the market makes this approach an annual challenge.
The Great Recession
In the historic economic downturn of 2008-2009, HCF decided not to deviate from our grantmaking spending policies or reduce our community funding, even though our investment losses were significant. This dilemma was true for foundations and endowments worldwide who invested in a diversified portfolio. We knew that restriction would only hurt those we had promised to work for at a time when their need was greatest, so we continued to fund the necessary services in the community.
One of HCF’s core values is transparency with those we have an obligation to serve
As a consequence though, we spent part of our “nest egg” to do so. We don’t regret this decision. It was a deliberate choice to support agencies so they could weather the unprecedented financial storm and accommodate increased demand for services from so many who suffered job and housing losses, among other tragedies.
Nonetheless, we are coming into a time when the projected long-term returns will be more modest. This financial forecast has left our board, in addition to most foundations across the country, pondering if the long-term projected returns could necessitate a future spending adjustment. The board will continue to balance the need to support grantmaking, HCF operations, and inflation pressures, and on the other end, the available returns.
Current finances and transparency
Rest assured, there will be no reduction in grantmaking in 2017. At the December board meeting, the board approved its 2017 grantmaking budget with over $20 million to use to support the areas of safety net, mental health and healthy communities. That’s the same amount we have funded in previous years.
I don’t write about this topic lightly, nor do I write to cause anxiety. I have a history with HCF as an inaugural board member, a former grantee and now the current president/CEO, and I personally know how important HCF grants are to the community. I share this because one of HCF’s core values is transparency with those we have an obligation to serve. I share this because I value HCF’s history of transparency. I feel it is important that you know these discussions are beginning, whether any change occurs or not. That’s what transparency means to me.
As we begin our 12th year of funding, we can celebrate the positive effects that the $238 million in grantmaking has meant to our community over the last 11 years. These dollars have supported hundreds of thousands of visits to providers of mental health, oral health and primary and specialty care, have invested in work to reduce food insecurity, have reduced tobacco exposure for youth, and supported efforts to improve physical activity in all communities.
Our board is cognizant of its commitment to be sound fiscal stewards of this entrusted money. As such, our board will continue to look at the policies that govern its fiscal and community responsibilities ever with an eye on the future. We will continue to communicate broadly our investment returns and resources available to support grantmaking, advocacy and system-level change as we work together toward a lasting, healthier heartland.