Charitable remainder trusts provide a creative source of capital.
Operating margins for hospitals continue to shrink, making it increasingly difficult for hospitals to realize returns high enough to replace capital. Thus, accumulating capital through hospital earnings will continue to be difficult. Credit ratings will continue to drop as not-for-profit hospital operations remain marginal, making access to capital through debt markets more expensive. As a result, not-for-profit hospitals will need to develop creative ways of accessing capital through gifting programs. One such creative way is through the use of charitable remainder trusts--planned gifts that can take three to seven years to mature but can provide long-term-thinking hospital executives with an innovative source of capital.
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