May 4, 2022

The Role of Philanthropy in Addressing Health Equity

Tym Rourke

Tym Rourke

Co-authored by Senior Director Tym Rourke and Managing Director Meghan Phillipp

Meghan Phillipp

The stark disparities that were exposed during the COVID-19 crisis necessitated that both individuals and organizations commit to eliminating health inequities. As we emerge from the pandemic, communities, providers, and other members of the health care ecosystem are universally embracing these commitments. Even at Third Horizon Strategies, we are prioritizing health equity through the launch of the Health Equity Project.

However, eliminating inequities in our health care system is complex. It requires a deep commitment to examine every facet of how we as an industry operate, analyze whether it reduces or exacerbates inequities, and then proceed with structural, regulatory, policy, and payment model reforms to build new ways to incentivize, expand, sustain, and improve access to care. And at every level, stakeholders must show up in community differently – and most critically, do so side-by-side and in relationship with individuals and communities who the health care system has routinely ignored, silenced, or otherwise marginalized.

For investors of all kinds, there is ample need and opportunity to leverage resources differently to advance health equity. This includes philanthropists – both individuals and philanthropic institutions, whose capital can play a pivotal role in tackling both near- and long-term efforts to address disparities in care.

A 2021 report from Grantmakers in Health notes that many intuitions that self-identify as health-focused philanthropies have been at the forefront of the issue for some time. Eighty-seven percent of survey respondents noted their involvement in health equity-related work prior to the onset of the pandemic, with 81 percent noting plans to increase their level of giving on issues of race, equity, and inclusion as a result of the pandemic. Beyond funding levels, 38 percent also noted an increased focus on transforming the health care system to make it more just and equitable for all.

While many philanthropies already occupy this space, how can new funders enter the arena, and how can existing health and equity funders play a more catalytic role in reducing health disparities? Our work with nonprofits, community leaders, and innovators offer some insights around where to lean in.

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  1. Go to the ground level. Funders should focus on organizations that are bringing people from the margins into the fullness of health and wellbeing. These could be grassroots advocacy organizations that are working to change conditions in their local communities, led by people from the community. Or, health care institutions that can demonstrate how they authentically engage the target population in decision-making and organizational leadership, and how their broader operations embrace practices that align with values of diversity, equity, and inclusion (DEI).
  2. Support practice change. Good philanthropy is always about leverage. Private philanthropic dollars offer flexibility because they are administered through financial structures that are often less cumbersome, complex, or regulated than other sources. This makes assessing the best fit for these types of resources even more paramount. Even though nonprofit health care organizations – especially smaller ones like Federally Qualified Health Centers (FQHCs) – receive federal funding that covers the cost of care (albeit barely), the funding does not cover the cost of innovation or infrastructure improvements. When federal and state funding is available for such things, it is often episodic, and harder to come by for smaller organizations without scale because of limited capacity and resources. Philanthropic capital can be deployed wisely in this arena, giving providers the breathing room necessary to innovate towards better practices which can then be financed through existing payment channels once implemented.
  3. Fund policy work. Many philanthropies can directly fund policy and advocacy work – and many more can fund community education and organizing that can help ensure policy and regulatory changes foster more equitable care. Improving service delivery is important. However, without a focus on policy and regulatory change, health care systems will be forever trapped in cycles of equity projects that do not stick, and payment models that limit their ability to innovate. The Alliance for Justice is a great resource for philanthropists to understand how donors and philanthropies can consider centering policy change in their grantmaking.
  4. Fund services that public financing won’t. While advocacy can ensure that financial policy matches what is needed long-term, the nation’s health care system is at a moment of crisis that public financers haven’t fully stepped up to address. In the behavioral health arena, one such example is harm reduction programs. Harm reduction is a myriad of services – syringe exchange programs, naloxone distribution, fentanyl testing, safe injection sites – designed to engage active users in services to reduce their risk of overdose, and build pathways towards treatment and recovery. Even though the literature continues to build around the important and positive outcomes for individuals engaged in harm reduction programs, federal, state, and local regulations still prohibit the use of public funding to cover many elements of comprehensive harm reduction services. With overdose death rates continuing to increase, philanthropies with an interest in behavioral health would maximize the benefits of flexible philanthropic capital to expand the scale and scope of harm reduction services in the U.S., while supporting the attendant policy and advocacy efforts to ensure that existing policy barriers to expanding and sustaining such services are addressed.
  5. Fund flexibly. While specific projects with workplans and specific outcomes may tell a compelling story, flexibility ultimately represents the highest value of philanthropic capital. Unrestricted grants provide the best path to ensure community organizations and providers can be nimble, innovate in real time, and address the constantly changing landscape for their communities that can challenge best laid plans to advance health equity. Funders should consider unrestricted operating grants whenever possible.
  6. Fund longer-term. Where possible, funders should also consider awarding multi-year grants. The march towards health equity will not be completed overnight – it is long term work, and nonprofits and the communities they serve need ongoing support as they navigate these waters.
  7. Funders should accept new and alternative methods for accepting proposals and reporting outcomes. The burden on smaller organizations to apply for grants, and measure impact, can be challenging. It is important for funders to cultivate a trusted relationship with organizations they fund to develop proposals and potential outputs that are manageable and not unattainable administratively. Outcomes are very much part of the exchange, but it is important to have reasonable expectations and to build trusted relationships with community funded organizations.
  8. Finally – and most importantly – funders should approach the work with humility, and awareness of the conflicting views of philanthropy and wealth generation forged through institutional racism. Philanthropic institutions are not without fault in creating the inequitable systems we are now attempting to tear down. Further, some philanthropies are deploying grant funds from wealth acquired by those who benefited from such systems. While this is not to suggest malice intent by those individuals and institutions, situational awareness of one’s role in fostering and sustaining inherently inequitable systems – even unintended – is critical if funders are to authentically lean into a commitment to addressing disparities in health care.

COVID-19 has taught – and continues to teach – us that our nation can no longer tolerate a health care and social service ecosystem that is not accessible, affordable, and welcoming to all. In this “all hands-on deck” moment, private philanthropy is called to a higher level of engagement. In a recent discussion with local philanthropists in Chicago, panelists discussed that early on in the pandemic community organizations expressed the need to finally address decades of divestment in public health, eliciting an explicit desire to leverage the crises to support emerging practices and bolster the infrastructure to support health equity into the future, and establish a new norm. 

Over the past two years, nonprofit organizations have proven their resiliency and flexibility to addressing the basic needs of a crisis, while thinking differently and critically about how they better meet the needs of their communities. COVID-19 relief funds helped to stabilize and address some of the immediate challenges. Philanthropists lifted the weight of their influence, listened, and supported faster than ever before. The question is, how do we bottle this momentum and trust that has been built moving forward? As a donor or private funder, what will your next move be? As a nonprofit or community leader, how can you inform and inspire your local funders to listen more actively? At Third Horizon Strategies, we are humbled and honored to be part of these ongoing discussions, and look forward doing our part to listen and learn with all of you.