Barberton lessons: What a foundation created by proposed Summa sale could do for Akron
Assuming the sale of Summa Health to national venture capital firm HATco goes forward, the new entity is expected to establish a hospital conversion foundation, Summa officials said recently.
It wouldn't be the first in the Akron-Canton area, but it could end up with the largest endowment.
Dr. Cliff Deveny, Summa’s president and CEO, suggested the new foundation would be comparable to the GAR Foundation, which awards more than $7 million annually to greater Akron nonprofits.
For perspective, the GAR Foundation has about $200 million in assets. Summa, on the other hand, reported $950 million in assets at the end of 2022, down from $1.25 billion at the end of 2021.
The Barberton Community Foundation experience
When residents approved the sale of Barberton Citizens Hospital in November 1996, proceeds from the sale went into an endowment for the newly created Barberton Community Foundation.
The new entity promptly took on the responsibility of funding a $32 million high school for the community, making the final payment in November 2021.
It's a prospect that has some observers of the tentative Summa sale hoping for a similar big-ticket outcome if the deal goes through.
That's not likely — at least not the funding of a high school, Barberton Community Foundation officials said during a recent interview at the foundation's headquarters on West Paige Avenue in Barberton.
"Barberton is different, and that goes back to our history," said Tom Harnden, a founding member and former chairman of BCF's board of directors.
The high school funding required that voters approve a bond issue that was then paid by the foundation year by year. It was a unique undertaking and limited the funds available for other, more traditional, investments in the community.
The foundation was established with $86 million in funds and securities from the sale of Barberton Citizens Hospital. At the end of 2022, it reported $80.8 million in total assets and revenue of $3.3 million, primarily from investment income and contributions.
The foundation reported grants and other distributions of $1.186 million in 2022. In 2023, the foundation budgeted $1.2 million for grants, scholarships and economic development.
Dealing with social determinants of health
The details and mission of a possible community foundation following a Summa sale haven't been announced and would be determined in large part by its first board of directors.
Once Summa becomes a for-profit institution, it will no longer be able to accept donations, including funds from the current Summa Foundation, Summa spokesman Mike Bernstein said Tuesday in an email.
"With this in mind, Summa Health will work closely with the current Summa Foundation Board and leadership to create a community foundation that advances our mission through increased, focused investment into social determinants of health that benefits the Greater Akron region," he said.
The created foundation could have a significant and enduring impact on the wider community in which Summa operates, said Harnden and Josh Gordon, BCF's new executive director.
"It's going to benefit the community, the greater community," Harnden said.
Every hospital or health conversion foundation is different in its approach, but they tend to be focused on social determinants of health, according to Health Affairs, a prominent health policy journal.
The list of social determinants of health is wide and deep, covering non-medical factors that influence health outcomes, and can range from adequate housing to political systems.
Nationwide, there are about 242 conversion foundations, including the Austin-Bailey Health and Wellness Foundation in Stark County. The foundation was created in 1996 following the sale of Doctors Hospital of Stark County.
Since its inception, the foundation has made more than $10 million in grants, concentrating on prescription drugs and oral health issues.
What has the Barberton Community Foundation funded?
The BCF has helped fund the Lake Anna YMCA, the Barberton Active Adult Center, playground equipment and preschools. It funds the city's popular Barberton Mum Festival and helps with the Labor Day fireworks display.
It also helps play a role in economic development, with the creation of jobs and adequate housing seen as significant factors in long-term health.
"The most positive impact on the most people — that's the lens we have to look at things," said Gordon.
Limitations of a foundation
Hospital conversion foundations do have limitations, though, including a need to preserve and grow the original endowment.
Sometimes individuals in the community foundation's designated coverage area aren't aware of those limitations, Harnden and Gordon said.
"You have to reeducate almost on an annual basis," Harnden said.
A recent example occurred last year with an anticipated request of $1.6 million a year for the city's proposed new city hall.
City Council voted against asking the foundation for that sum, but it became a topic of discussion in the city.
In a letter to the community on Oct. 5, the foundation argued that the $1.6 million exceeded what the organization could responsibly commit. Another commitment to a large capital project would diminish its ability to make other grants, the BCF said.
"The Board has also considered that the lack of growth of the endowment coupled with the funding of this project may pose an existential threat to the Foundation itself," the BCF said in the letter.
'Going to take a lot of discussion'
Harnden, who was also the last president of the Barberton Citizens Hospital board, said questions about the scope and mission of the Summa 2.0 foundation will remain until a sale is completed.
Based on his experience, though, a few things are a solid bet.
"I'm sure it's going to take a lot of discussion," he said. "[And] lots of attorneys."
Leave a message for Alan Ashworth at 330-996-3859 or email him at aashworth@gannett.com. Follow him on Twitter at @newsalanbeaconj.
This article originally appeared on Akron Beacon Journal: What a foundation created by proposed Summa sale could mean for Akron
