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How to Make Money with a Healthcare Nonprofit Organization

Nonprofit organizations are also known as not-for-profit organizations in common parlance. They are charitable organizations as opposed to commercial companies whose main aim is to make profit. Most of nonprofit organizations are 501(c) (3) tax-exempted charities. The money made by these organizations is ploughed back into their core mission to promote the common good of the society, rather than being shared among shareholders. In assessing how healthcare nonprofit organizations make money, it is important to examine parameters such the types of decision makers, their key motivators, and the source of funds.

Strategies for Making Money in Nonprofit Organizations

Some healthcare nonprofit organizations make money by focusing on causes that match with the present existing needs of a big share of people in the society at all income levels. These organizations manage this by developing well-structured ways which were previously non-existent. According to Naylor (2002), this strategy is called “Heartfelt Connector”.  Through the heartfelt connector strategy, nonprofit organizations are able to tap into individuals with particular political leanings religious beliefs or sporting interests to finance their operations.

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Beneficiary builder is another strategy used by healthcare nonprofit organizations. Basically, a significant majority of healthcare nonprofit organizations make money through charging fees from the beneficiaries of the various services being offered.  Other organizations such as Cleveland Clinic make money through reimbursement for the services that they offer to some individuals. Additionally, this may require that the people who have previously benefited from those services make extra donation at their will.

Some healthcare nonprofit organizations make money through individual donations.  This nonprofit financing model is known as “Member Motivator”. Individuals, who are members, make donations because they find the issue as essential to their daily life. Healthcare nonprofit organizations such as Stanley Medical Research Institute depend on major grants given by few foundations or even individuals to finance their operations. In this case, the founder is usually the primary donor.

According to Norton & Staiger (1994), other healthcare nonprofit organizations work with government organizations in provision of essential social services for which the latter has allocated funding. In this case, government outsources some service delivery functions but develops particular requirements for nonprofit organizations to receive funds. This model is known as “Public Provider”.

Not-for-profit organizations may also make money through beneficiary brokerage. In this case, organizations compete with one another to offer government funded healthcare services to beneficiaries. This model is called “Beneficiary Broker Model”. Others use a lesser-known model called “Market Maker” to make money. This model involves the provision of services in a manner that links philanthropic donors with the delivery of services based on the prevailing market forces. The American Kidney Fund (AKF), for example, uses this model to raise money through donations that are directly related to their core business (Protur, 2002). In 1971, philanthropists funded AKF to assist the poor people with kidney failure pay for dialysis (Protur, 2002).

Conclusion

In conclusion, there are many ways of making money with healthcare nonprofit organizations. Some of these strategies include: Heartfelt Connector, Market Maker, Beneficiary Broker, Public Provider, and Member Motivator.

References

Naylor D. (2002). Your Money and/or Your Life? Canadian Medical Association Journal, 116(11), 1416–1417.

Norton E. & Staiger, D. (1994). How Hospital Ownership Affects Access to Care for the Uninsured, RAND Journal of Economics, 25(1), 171–185.

Protur J. (2002). Newhouse, Pricing the Priceless: A Health Care Conundrum. Cambridge, Mass. MIT Press.

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