The hospice paradox

At the end of May, Craig Duncan, Interim CEO of Hospice UK, wrote an article effectively arguing that the sector is in a paradoxical situation. Many, perhaps most (English) hospices, have stronger balance sheets than ever before, on the back of Covid funding. But the scale and range of challenges they face are unprecedented. These have since  increased further and were recently outlined in detail by the new CEO, Toby Porter. 

The situation Craig outlined echoes what I have heard from many hospice CEOs. He talks about the need for the sector not ‘to waste the limited amount of breathing space it currently has.’ I would go further. Many hospices have a one-off opportunity to make decisions now that can significantly help ensure their long-term sustainability. 

What might such decisions be? One might be to be braver in the approach to risk. I have worked in the sector since 1995. In all that time, there has been an under-current of fear that we will see hospices closing in the near future. Yet a study of the annual hospice accounts reports for the last decade or more shows that the sector as a whole has pretty much always been in surplus. Indeed, I can only think of one hospice that has actually shut down. As a failure rate, that compares very well with other sectors.

So, what would this mean in practice? Setting more reasoned and less conservative reserve policies is one example. The approach adopted by St Helena featured in this article is worth studying. 

Likewise, budgeting. Being ahead of budget is seen as a ‘good thing’. But when that is consistently the case, is it really? Or are you just being over cautious?  One group of hospices I work with had a collective budget deficit of £4.95 million for 2021/22, but achieved an aggregated actual surplus of £4 million. That’s quite a variance.

Maybe there’s a difference between saving for tomorrow and investing for tomorrow? The former is about building up the right level of reserves as an umbrella for a rainy day. The latter is about then investing appropriately so that you have already have a solid roof over your head when the rain comes. 

What would such investment look like? Here are some suggestions.

Legacy marketing. All the evidence is that we are going to see a boom in legacy giving in the years ahead. But hospices are losing market share to others. 

Now is the time to spread the message about what a difference leaving a gift in your Will can make. Getting that message out is not difficult, or complex. And the ROI will never be beaten. And, for hospices, the view that it will take years to pay back the investment is a misconception.  

Diversify income generation. Investment in mission related commercial income generation activities is still quite rare in the charity sector, but there are some interesting examples such as Arthr. 

Hospices were actually innovators in this field in setting up domiciliary care agencies, many of which did not survive. But there are many other opportunities. This might include selling expertise or services to other hospices – see the next example – or selling mission related products as Dorothy House are doing, or Prince & Princess of Wales latest initiative. 

Charging for some services, for example additional bereavement counselling after an initial course of free support, is another. I even know one hospice that is set to make a very good return on an angel investment into a new tech company. 

Collaborate. Why do most hospices run their own lotteries and incur all the overheads of doing so? For many, transferring into a model such as Local Hospice Lottery or Your Hospice Lottery will reduce risk, increase returns and needs no on-going financial investment. 

I think similar ‘white label’ opportunities exist in the digital retail environment. For some, on-line retail now brings in greater income (and at a much better ROI) than any traditional shop. I’m speaking to one such hospice considering offering services to others who are smaller players or new to the digital environment.

I’m not minimising the impact of the cost of living crisis, nor the need for appropriate governmental support. But many hospices have the chance to invest now and be better prepared for the challenges ahead than many other charities.