Public health system courts Rauner to fund foundation

The Cook County hospital system is wooing investor Bruce Rauner for a gift of more than $10 million, as the cash-strapped public health care network tries to enter the crowded field of charitable causes.

A major gift would jump-start fundraising for a new foundation created to help pay for everything from high-priced medical equipment and costly renovation projects to new patient beds that the county cannot afford, says Warren Batts, chairman of the independent board that oversees the Cook County Health and Hospitals System.

Underscoring the obstacles county officials face in the new endeavor, billionaire philanthropist Lester Crown is not considered a prospect to make a multimillion-dollar donation, even though he is a member of the startup foundation’s board.
Striking out with Mr. Rauner would be a sharp setback. Without private donations, the pressure to cut services would mount on the county hospital system, which has an annual budget of $915 million.

Tough Proposition

The feeble economy adds to the steep challenges of starting up a nonprofit, fundraising executives say.
Raising money to help treat the poor, traditionally a governmental role, is particularly tough. Local hospitals and cultural institutions with track records of fundraising also are out looking for donors for glitzy new structures.

“The competition is fiercer than ever,” says Mae Hong, director of the Chicago office of New York-based consulting firm Rockefeller Philanthropy Advisors Inc.

At a Jan. 27 hospital board meeting, Mr. Batts indicated there’s “a potential benefactor who is interested in donating a large sum for two clinics,” according to the minutes.

In an interview, he confirms that he has been in talks for more than a year with a potential donor who would give the Cook County Health Foundation between $10 million and $15 million.

If the gift is made, “he’ll want a major splash,” Mr. Batts says.

He declines to identify the prospect, who sources say is Mr. Rauner, a principal at Chicago-based private-equity firm GTCR LLC, which manages investments totaling $8 billion.

Mr. Crown gave the foundation credibility when he was named to the six-member board in November. The patriarch of the billionaire Crown family might contribute a “very small, token amount,” says Mr. Batts, retired chairman and CEO of Orlando, Fla.-based Tupperware Corp.

Mr. Crown and Mr. Rauner did not return calls requesting comment.

While not a Crown, Mr. Rauner’s name would still carry a lot of weight with other potential contributors.

Mayor Rahm Emanuel publicly has called him a friend. They met during a deal in the 1990s when the mayor was an investment banker. Mr. Rauner, 56, who is chairman of Choose Chicago, the city’s convention and tourism arm, is mulling a 2014 run for governor as a Republican.

“When I see somebody smart and generous making a big gift, that’s going to have a positive impact,” says Sandra Guthman, CEO of Chicago-based Polk Bros. Foundation.

Civic Side

Mr. Rauner and his wife, Diana Mendley Rauner, have shown an interest in public education, giving money to build six charter high schools, including Rauner College Prep Charter School in West Town.

She is president of the Ounce of Prevention Fund, a Chicago-based social services agency for children. The couple also have helped fund construction projects for the YMCA of Metropolitan Chicago and the American Red Cross of Greater Chicago.

County health system CEO Ramanathan Raju says, “I think we have a good story to tell, and that’s what’s going to make the difference” in garnering foundation support.

He declines to say whether Mr. Rauner is the potential major donor.

Cook County is playing catch-up to many other large public hospitals in places such as Broward County, Fla., and Charlotte, N.C., which already have foundations.

The foundation for the 835-bed Parkland Health & Hospital System in Dallas has netted two gifts totaling $75 million as part of a $150 million capital campaign to build a new hospital.

Selling the benefits of a public hospital to the entire community is key, says David Krause, CEO of the Parkland Foundation.
“Our donors are people who likely will never set foot in our hospital as a patient unless they’re in a trauma,” he adds.
(Editor’s note: The annual budget of the Cook County Health and Hospitals System has been corrected in this story.)

– Crain’s Chicago Business