This article was originally written and published on Forbes.com. 

Health conversion foundations have emerged as pivotal players in the public health landscape, bridging gaps in healthcare funding and policy advocacy to meet the evolving needs of underserved communities.

These entities not only channel significant financial resources into public health initiatives but also embody a strategic approach to tackling the root causes of health disparities. By focusing on the social determinants of health and fostering broad-based partnerships, health conversion foundations are uniquely positioned to drive systemic change, making them an indispensable asset in the quest for equitable health outcomes.

A health conversion foundation (also known as a health legacy foundation) is a type of charitable organization that is created when a nonprofit healthcare entity, such as a hospital or health plan, is sold or transitions to a for-profit business. The proceeds from this conversion are used to establish a foundation that continues the original mission of improving community health. These foundations have grown dramatically since the first was established in 1973.

However, creating one from scratch can be daunting. This Roadmap outlines the essential steps to create and launch a health conversion foundation, providing practical advice and strategies for each phase of the process.

Step 1: Establish a Community Advisory Panel

The establishment of a community advisory panel is a foundational step for any health conversion foundation. After all, the assets from the sale of the nonprofit health entity, in the form of this new foundation, belong to the community. This panel, comprising diverse local experts and community leaders, ensures the foundation’s initiatives are aligned with genuine community needs. It acts as a vital link between the foundation and the community, fostering trust and collaboration from the outset. The advisory panel’s diverse perspectives and expertise can guide the foundation’s strategic direction, ensuring initiatives are based on the community’s articulated needs. Additionally, it can help embed community engagement as a perpetual core aspect of the foundation’s operations.

Step 2: Understand Legal and Regulatory Requirements

Understanding the complex legal and regulatory landscape is crucial for the successful establishment of a health conversion foundation. Foundations must navigate state-specific laws governing the conversion process, which typically require approval from state attorney generals or other regulatory bodies and may impose specific requirements on the conversion process, including the valuation of assets and the structure of the resulting foundation. Further, they must comply with IRS regulations to maintain tax-exempt status. This step involves consulting with legal experts specializing in nonprofit and health law to ensure compliance and safeguard the foundation’s charitable assets. A thorough understanding of these requirements ensures the foundation’s operations are transparent, accountable, and aligned with the public good, laying a solid legal foundation for all future activities.

Step 3: Formally Establish the Foundation

The formal establishment of the foundation involves selecting an appropriate legal structure, registering with state authorities, and complying with IRS requirements. This process lays the legal groundwork for the foundation’s operations and governance, involving drafting articles of incorporation, developing bylaws, and obtaining necessary licenses. Establishing a solid legal foundation is essential for operational integrity, regulatory compliance, and the establishment of governance practices that promote transparency, accountability, and ethical governance.

Step 4: Ensure Strong Governance

Establishing strong governance is critical for supporting the foundation’s mission and ensuring accountability. The board of directors should be diverse, reflecting the community’s diversity and bringing together expertise in relevant fields. This governance structure is essential for informed decision-making, strategic oversight, and ensuring the foundation‘s efforts are ethical, transparent, and aligned with community needs. A committed and knowledgeable board is crucial for guiding the foundation’s strategic direction, overseeing financial and operational management, and fostering a culture of integrity and accountability. Term limits are important to foster a dynamic governance structure, welcoming fresh perspectives and preventing stagnation.

Step 5: Create a Solid Infrastructure

Achieving operational excellence is crucial for the foundation’s success and involves hiring a strategic CEO and key staff early, developing robust internal systems and processes, and ensuring the foundation’s infrastructure supports its strategic plan and community engagement efforts. This includes establishing efficient grantmaking systems, financial management practices, and evaluation mechanisms. Operational excellence enables the foundation to manage resources effectively, engage with grantees and partners efficiently, and measure the impact of its programs accurately. The foundation’s commitment to operational excellence ensures it can fulfill its mission, respond to community needs, and achieve its vision for healthier communities.

Step 6: Conduct a Comprehensive Community Health Needs Assessment

A comprehensive community health needs assessment is critical for understanding the specific health challenges and resources within the community. Start by reviewing existing data and assessments that may have recently been completed by other local organizations, such as community and private foundations, hospitals, health departments, universities, and nonprofits. Fill in gaps by engaging directly with community members and experts to gather additional data and personal insights. This assessment will inform the foundation’s strategic direction and funding priorities. Additionally, it will establish a baseline to measure impact. Engage health departments, community organizations, and residents to ensure a holistic view. This early engagement fosters trust and collaboration, setting the stage for effective community-focused initiatives.

Step 7: Define the Foundation’s Mission and Vision

Defining the foundation’s mission and vision is a critical step that sets the tone for all future activities. These statements should be developed with insights from the community health needs assessment, reflecting the foundation’s commitment to addressing identified health challenges and disparities. A clear mission and vision not only provide direction but also inspire stakeholders and ensure that the foundation’s efforts are aligned with its overarching goals. They serve as the foundation’s north star, guiding strategic planning, daily operations, and decision-making processes, ensuring that every initiative undertaken advances the foundation’s mission to improve community health.

Step 8: Develop a Strategic Plan

Developing a strategic plan is essential for outlining the foundation’s goals, strategies, and metrics for success. Informed by the initial community health needs assessment, the strategic plan acts as a roadmap for the foundation’s priorities and activities, ensuring efforts are focused and aligned with achieving measurable health improvements. The plan should be adaptable, allowing for adjustments based on new insights and changing community needs. It serves as a living document that guides the foundation’s decision-making, program development, and resource allocation, ensuring that all efforts contribute to the foundation’s mission and vision.

Step 9: Advance Equity and Address Social Determinants of Health

Embedding diversity, equity, and inclusion (DEI) principles into every aspect of the foundation’s work is crucial for ensuring initiatives are accessible to all community members, especially those historically underserved. Focusing on programs that address social determinants of health enhances the foundation’s impact, contributing to more equitable health outcomes. Integrating DEI principles requires a commitment to understanding and addressing the root causes of health disparities, fostering inclusive engagement strategies, and supporting initiatives that promote health equity and access. To effectively advance DEI, foundations must also look inward, ensuring that their internal policies, practices, and culture reflect these values.

Step 10: Launch Grantmaking Programs and Foster Partnerships

Launching grantmaking programs that align with the foundation’s strategic goals and fostering partnerships with other organizations is essential for amplifying the foundation’s impact. To fully realize their strategic goals, foundations should consider a broad spectrum of grantmaking approaches, including offering general operating support, making muti-year grants, advocating for systems and policy change, and building nonprofit and community capacity. Collaborative grantmaking and strategic partnerships enable the foundation to leverage resources, expertise, and networks to address complex health issues more effectively. These efforts should be guided by a commitment to collaborative, community-based solutions and evidence-based approaches ensuring that the foundation’s resources are used to support innovative and sustainable health improvements.

Step 11: Implement Monitoring, Evaluation, and Adaptation Processes

Implementing robust monitoring and evaluation frameworks is key to assessing the impact of the foundation’s programs and initiatives. This step involves using data and feedback to inform continuous learning, strategic adjustments, and program improvements. An adaptive approach allows the foundation to refine its strategies, enhance program effectiveness, and share learnings with the community and stakeholders. Commitment to ongoing evaluation and adaptation is crucial for maximizing the foundation’s impact on community health.

Step 12: Foster Transparency and Communication

Effective communication and transparency are foundational for health conversion foundations, underpinning trust and accountability with stakeholders and the public. An ongoing commitment to openness, through regular updates and open dialogues, ensures that the foundation’s activities, achievements, and challenges are transparent. By establishing diverse communication channels, such as digital platforms and public forums, foundations can engage in meaningful exchanges about their work and impact. This approach not only highlights successes but also openly addresses setbacks, fostering a culture of honesty and continuous improvement.

Step 13: Effectively Manage Financial Resources

Securing and managing financial resources involves developing a sustainable financial model that includes diversified funding sources and prudent endowment management practices. Establishing financial policies that promote transparency and accountability is crucial for the foundation’s long-term ability to support community health initiatives. Investments should align with the mission and values. Sound financial management ensures the foundation’s resilience in the face of economic fluctuations, enabling it to invest in impactful health programs, respond to emerging community needs, and pursue opportunities for growth and innovation.

Creating and launching a health conversion foundation is a comprehensive and multifaceted process that requires careful planning, community engagement, and adherence to legal and regulatory standards. By following these detailed steps and maintaining a commitment to principles of equity, transparency, and community partnership, founders can establish foundations that make a lasting impact on community health.

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