By Hannah Savage and Eileen Divringi, Housing Matters, January 27, 2021
This past year reminded us how important hospitals are to society. Treating COVID-19 patients and vaccinating countless Americans are just two ways they maintain our health and safety. But providing care to patients isn’t all hospitals do. As a condition of their tax-exempt status, nonprofit hospitals also invest in community health–promoting activities, such as care for low-income people, medical research, and addressing social determinants of health, like housing, the environment, and workforce development. A new study by the Federal Reserve Bank of Philadelphia explores how much nonprofit hospitals spend on community development–related activities.
The authors analyzed 2012 to 2016 data from Internal Revenue Service Form 990 Schedule H (a form dedicated to hospital organizations’ activities). The form has two areas where hospitals can report community-development spending: Part I for community-benefits expenditures and Part II for community-building expenditures.
Although there can be some overlap between these two areas of spending, in general, activities qualified as community benefits are those that provide subsidized or free health care to low-income people and those that improve the medical field, like conducting health studies and training health professionals. On the other hand, the form’s community-building activities section is where a hospital reports expenditures that are not required for tax exemption but are used to protect or improve the community’s health or safety.
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