GENERATING CAPITAL, BUILDING CAPACITY:
SECURING A KRESGE FOUNDATION CHALLENGE GRANT

By Rebecca Breuer, Director of Annual Programs, Advocate Charitable Foundation

A Kresge Foundation challenge grant is one of the most hotly pursued prizes in fund raising -- and no wonder. The gift’s financial impact is only the beginning: the grant process requires organizations to strive for high standards of community impact and philanthropic excellence, and achieving such a grant brings a new level of credibility. Indeed, the grant is a challenge not only for the donors, but for the grant-receiving organization itself. Advocate Health Care’s recent experience holds lessons for all fund raisers who aspire to secure the Kresge “brass ring.”

Background

We believe that a challenge grant toward an organization's capital project does more than just build a building or reward good programs. It presents an opportunity to build institutional capacity by helping an organization broaden and deepen its base of support from the private sector and by encouraging volunteer involvement in the fund raising effort and beyond.

- The Kresge Foundation website

This community has put its heart and soul into this hospital for more than 25 years. Many people in the local community worked very hard to make the case for the life-saving value that such a facility will bring to the community. The strong and vocal community support for Good Shepherd’s cardiac care expansion helped us secure the Kresge challenge and puts us on track to reaching our development goals.

- Paul Hills, Volunteer Chair,
Advocate Good Shepherd Hospital Cardiac Care Center campaign

In December 2003, Advocate Health Care was awarded an $850,000 challenge grant from The Kresge Foundation to support the Cardiac Care Center project at Advocate Good Shepherd Hospital in Barrington. The Cardiac Care Center is a $33 million project; $9 million is to come from philanthropy.

The Kresge Foundation, based in Troy, Michigan, is a national foundation dedicated not just to funding worthy projects, but to permanently strengthening “the capacity of charitable organizations to provide effective programs of quality.” Kresge meets its mission by providing challenge grants to support significant capital campaigns. In 2003, The Kresge Foundation awarded more than $104 million to 138 organizations.

What makes the Kresge grant so special? After all, it is certainly not the biggest gift that Advocate (the Chicago area’s largest health care provider, with eight hospitals) has ever received. However, this grant holds a particular significance for Advocate and Good Shepherd, especially as it comes during the public phase of Exceptional Care Without Exception, the $125 million effort that is our first-ever system-wide comprehensive campaign.

1. Building a Building AND Building Fundraising Capability

When a capital campaign truly succeeds, it leaves in its wake a stronger board and a giving constituency that is broader and deeper. Both will be useful to the organization when it faces the inevitable challenges and opportunities that occur when not in a capital campaign.

John E. Marshall, III
President and CEO
The Kresge Foundation

While the Kresge grant is a foundation grant, it is quite unique – its mission lies at the heart of what a campaign is all about:

• Increasing the donor base and demonstrating community support
• Increasing volunteer involvement
• Building institutional fundraising capacity

Kresge grants are unusual in that an organization is required to raise the rest of its fund raising goal before Kresge will award the grant and finish the campaign. By holding out that “carrot,” Kresge very intentionally motivates organizations to stretch their fund raising capabilities.

As explained by Kresge President and CEO John Marshall, “With a challenge grant, we aim to strengthen the leadership and to change the campaign from a funding obligation to an opportunity. Our ‘all or nothing at all’ bargain is struck when the leadership is already declared, through their own, personal gifts, and the campaign is reaching out to test the organization’s real potential in its community of support…”

The Kresge grant requires an exceptional fundraising plan – for major gifts and also for smaller, community-based contributed funds. The program officer came back to us repeatedly for clarification on our gift chart and approach to the community appeal. From a coordination point of view, securing the grant required a sophisticated fundraising organization and great partnership among the grant writers, the major gift officers, the annual programs team, hospital staff and Advocate Health Care administration.

Advocate Health Care applied to Kresge three times before receiving this grant. One application met with success; in the case of another, the timing was off (Kresge requires 2 years between completion of one project and submission for another). The third was denied: while all else was deemed appropriate (the project, the hospital, the team), there was not enough information on how that effort would have enhanced the fund-raising organization. Clearly, Kresge is serious - they want to support the overall development process. For them, it is about both capital AND capacity.

2. Prestige

A challenge grant award from The Kresge Foundation is a strong endorsement of the Cardiac Care Center’s importance. These grants are given only to projects that will have far-reaching impact on the community.

- Karen Lambert, Chief Executive
Advocate Good Shepherd Hospital

Receiving a Kresge Challenge grant is like getting the Good Housekeeping Seal of Approval. It lets the donor and fundraising community know that your organization has been deemed well-run enough and well-established enough to assure that contributed funds are well used. It is like getting an article accepted in a peer review magazine for publication. The grant demonstrates credibility and belief in the project, the organization, the staff, and the potential of each.

At Advocate Good Shepherd Hospital, the Kresge grant presented an opportunity to launch the community phase of the Cardiac Care Center’s fund-raising campaign. Good Shepherd had to demonstrate that it would raise a significant amount of funds from key donors prior to approval of the grant. Now the Cardiac Care Center campaign is entering the public phase, in which the task is to raise smaller gifts from a larger number of new donors. It’s the hard work phase – and we all know what that is about. The Kresge Challenge makes the work easier by allowing us to convey a new sense of urgency to prospects.

3. A thorough process

Some have been known to say they would rather pull out their hair than apply for another Kresge grant. It is indeed an arduous process to meet the many criteria. However, it is also an extraordinary partnership – one that encouraged Advocate Health Care’s development team to become even savvier at every stage of the process:

• Project selection – Kresge will only consider projects that are multi-year initiatives, with new capital requirements, community-based, in the process of raising funds, with demonstrated leadership commitment, and all regulatory approvals in place.
  
• Application process – Timing is key. First, you must identify when you would like your project reviewed. Your application is due 4-6 months in advance of Kresge’s quarterly board meeting. Then, you call the Kresge Foundation to set up an appointment to discuss your project prior to submission. Before you are allowed to schedule an appointment, you must pass a screening process to make sure it is the right kind of project. It takes six weeks to schedule the appointment and you want to coordinate the timing of this appointment with your desired date for their board to review the proposal… You get the idea – it’s a lot before you even fill out a single form!
  
• Meeting planning – Deciding who should attend is of utmost importance. Ultimately, with a lot of input from the chief development officer, Advocate sent a key volunteer, the hospital chief executive, and the vice president for development. The right volunteer and the hospital chief executive were the most crucial to the visit.
  
• Proposal submission – Must haves include community support, financial support, detailed (very detailed!) gift tables, advanced architectural plans, sound leadership, board diversity, etc…
  
• Market assessment – Kresge asked for names of people they could speak with about the Chicagoland health care market – which, surprisingly, took a bit of hunting. Academics are not always as tuned in to the local hospital arena field. Competitors don’t make sense. Advocate needed allies, but needed them to be independent enough so as to be credible sources to Kresge. This was no small challenge and took quite a bit of time to strategize and identify the right people.
  
• Waves of questions –The Kresge folks came back repeatedly with questions that required research, discussion, decision-making, positioning. They spot “weaknesses” quickly, and it is imperative that their concerns be addressed outright. These questions pushed Advocate Charitable Foundation to develop a more detailed fundraising plan, better articulate its volunteer strategy, and build new relationships with community organizations to gain and demonstrate support. It is not theoretical with these Kresge folks; it really is about helping the grantee increase its fundraising capacity.

Now What?

A challenge grant of this prestige and size is a truly motivational approach to community fund raising… Literally, every single dollar counts as The Kresge Foundation will award our new Cardiac Care Center with the final $850,000 of our fund-raising goal. We hope this will encourage everyone in the community to support our efforts to bring to the area the highest quality cardiac care that medical technology and experience can deliver.

- Karen Lambert, Chief Executive
Advocate Good Shepherd Hospital

Now that the challenge has been made, accounting begins. The Cardiac Care Center is a $33 million project, with $9 million to come from philanthropy. At the time Advocate submitted the proposal, it had raised $3.65 million and needed $5.35 million. Throughout the proposal review process, we were asked to provide fundraising updates. By the time the grant came to fruition, Advocate had raised a little over $5 million for the Cardiac Care Center. So our challenge now is to raise the remaining $3.15 million in order to receive the $850,000 that will complete the $9 million philanthropy initiative. Because it is a challenge grant, the gift does not count toward the campaign goal until fund raising reaches $8.15 million at Good Shepherd.

With the arrival of a well-timed Kresge challenge, the Advocate development team gained more than a financial boost to its efforts. It received a powerful endorsement that can be leveraged among its prospects, and a spur to both its current campaign and ongoing fund-raising capacity – just as the Kresge Foundation intended.