History of Our Organization
New Hampshire Bar Journal - Volume 44, Number 1
Healthy New Hampshire Foundation
By Sandi M. Van Scoyoc & Harry A. Schibanoff


The Making of a Foundation
In 1997, New Hampshire Blue Cross and Blue Shield (NHBC/BS) acquired the Matthew Thornton Health Plan (MTHP), a not-for-profit health maintenance organization, from Dartmouth Hitchcock Medical Center (DHMC). New Hampshire Charitable Trust law requires that proceeds from the sale of assets of tax-exempt entities continue to be impressed with a charitable purpose. There are a number of ways this requirement can be met. One is the establishment of a foundation to benefit the community and continue the charitable mission previously served by the not-for-profit organization.

According to the final agreement between NHBC/BS and DHMC, NHBC/BS agreed to pay forty percent (40%) of the proceeds from the acquisition of the MTHP to DHMC. The remaining 60 percent (60%) would be conveyed to an independent, charitable foundation, whose mission was as close as possible to the charitable mission of the MTHP. The new foundation would be subject to oversight by the New Hampshire Office of the Attorney General.

That independent, charitable foundation became The Healthy New Hampshire Foundation. It was incorporated on October 28, 1997. Approximately $10.5M in funds were held in escrow by the New Hampshire State Treasurer and released to the initial directors in April of 1998. The final agreement between NHBC/BS and DHMC included a provision for additional payments to DHMC and the Foundation based on the profitability of the MTHP, not to exceed $17,500,000. When Anthem Insurance Companies acquired NHBC/BS on October 27, 1999, Anthem assumed the payment obligations of NHBC/BS. Foundation directors negotiated a new agreement with Anthem providing payments for the endowment to the year 2004.1

The history of the HNHfoundation cannot be fully appreciated without an understanding of the confluence of children's health insurance programs in the 1990s, both nationally and in New Hampshire. In 1993, the New Hampshire Legislature passed the Healthy Kids Act and authorized an appropriation of $240,000 for administrative startup costs of an organization to provide affordable health coverage to uninsured children who did not qualify for public programs. In 1995 the New Hampshire Healthy Kids Corporation was created to enroll children in a health insurance program called the Healthy Kids Program. By 1996, the program was operating statewide and covered children through age 18. At the end of the first full year of statewide outreach activities, 800 children were enrolled in the program.

In 1997, a year later, Congress passed the Balanced Budget Act (Public Law 105-33) establishing the Children's Health Insurance Program (CHIP) under Title XXI of the Social Security Act. The purpose of the federal funding was to provide the means for states to initiate and expand health insurance coverage to targeted uninsured children. This legislation allowed participating states to claim an enhanced federal reimbursement match rate of sixty-five percent (65%). States were required to appropriate the difference of thirty-five percent (35%) in non-federal matching funds.

The efforts at the state level by the New Hampshire Legislature and the Healthy Kids Corporation and the national effort to insure more children through the CHIP significantly influenced the charitable mission of the new foundation. The purpose of the HNHfoundation as stated in its Articles of Incorporation is:

1. to financially support through the Healthy Kids Corporation, a 501 (c) (3) charitable corporation organized under RSA 126-H, or through any other corporation or entity organized for a similar purpose the acquisition of health care insurance for residents of the state of New Hampshire who, because of medical condition, income, or resource limitations are unable to obtain or afford adequate health care insurance;

2. to promote, through educational means and otherwise, behaviors and life styles among New Hampshire residents that are beneficial to good health and well-being; and

3. to undertake activities which are in furtherance of the foregoing purposes, except as may be restricted or prohibited herein or by law.

Shortly after the date of incorporation, Foundation directors discussed the possibility of participating in the CHIP. The directors recognized this new federal/state program as an opportunity to accelerate the Healthy Kids Program and fulfill the Foundation's purpose of acquiring health insurance coverage for residents of New Hampshire. However, matching funds were required before the New Hampshire CHIP plan could receive federal approval from the U. S. Department of Health and Human Services, Center for Medicare and Medicaid Services. In June of 1998, then Governor Jeanne Shaheen requested an opportunity to talk with the directors. During the meeting she asked the directors to consider granting the matching funds to begin a New Hampshire CHIP. This was indeed to be a unique partnership.

The Governor's request presented two challenges. The first related to the question of on-going funding for the required match. If the Foundation dollars were committed in 1999, would the Governor and New Hampshire Department of Health and Human Services (NH DHHS) assume there would be a steady and dependable stream of funding from the Foundation for this purpose in the future? Second, would the Foundation be viewed as assuming a public funding responsibility? Directors and stakeholders questioned why charitable funds should be used for what they believed was a state responsibility.

This time, a confluence of need and opportunity drove the decision to support the CHIP. According to IRS regulations, private foundations must distribute annually five percent (5%) of their net assets. Directors had to distribute five percent (5%) of the Foundation's assets before the end of 1999. There was little doubt that the New Hampshire CHIP would decrease the number of uninsured children in the state. In addition, the Foundation's funds would leverage significant funding from the federal government. With federal funds, the impact of the Foundation's funding would be expanded. After careful deliberation on other opportunities for funding in the immediate future, the directors requested a formal proposal from the NH DHHS and subsequently voted to provide the match for the first year of the NH CHIP.

In 1999, the NH DHHS requested $500,000 in matching funds in its first year of the expanded Healthy Kids Pro gram, with health insurance coverage provided through the New Hampshire Medicaid Program and the CHIP. No one could accurately predict how much in matching funds would be needed in the first year of the CHIP. Therefore, to avoid the possibility of IRS penalties for falling short on meeting the required minimum distribution, the directors issued a public request for proposals to communities to promote access to health care insurance and improve the health and well-being of New Hampshire residents. The Foundation received forty (40) applications for requests totaling $2M. Four proposals were chosen for funding for periods of one to three years. The four community grants included:

* $20,000 to Community Health and Hospice of Laconia for outreach efforts of the Young Family Program to find medically underserved and underinsured children, enroll them in local or state health programs and provide care management services where indicated.

* $68,865 to the Community Health Access Network for a coordinated chronic disease management and education system among the Community Health Centers in Southern New Hampshire, for diabetes and asthma with an emphasis on provider and patient education.

* $30,000 to the Greater Derry Community Health Services for general operating support to improve access to comprehensive primary health care and specialty referral services for individuals from ten communities that did not qualify for public assistance programs, but for whom the costs of commercial health coverage were out of reach.

* $70,722 to the North Country Health Consortium to involve communities and providers in designing a process to identify the areas of highest heath care utilization and to coordinate programs and/or services that reduced the costs of health care.

The Foundation distributed $446,958 in 1999 including the funding for the CHIP match.

After the management and operational systems were developed to identify and enroll children, the Healthy Kids Program began enrolling children at a rapid rate. Six months into the program, in June of 1999, 1,295 children were enrolled. In addition, outreach workers found and enrolled 2,610 Medicaid eligible children. In just six months, 3,905 more New Hampshire children had health insurance coverage. By the end of 1999, 6,488 children were enrolled in the Healthy Kids Program.

The New Hampshire Healthy Kids Program was an unqualified success…so successful that the need for the non-federal match for CHIP exceeded the Foundation's available grant funds. In January of 2000, the NH DHHS requested $800,000 to continue the program. At that time, the Foundation's five percent (5%) required distribution was approximately $600,000. The Foundation had also made multiple-year commitments of approximately $78,000 to two of the four community grantees from 1999.

Again, the directors faced a financial challenge. Without Foundation support, New Hampshire Healthy Kids Program's benefits could be scaled back, eligibility levels could be reduced, premiums could be increased, and outreach efforts would cease. The number of insured children would drop precipitously. If the Foundation committed the needed funds, part of its principal would be needed to meet the obligation. Contributing to the challenge was the opinion of Foundation stakeholders that the Foundation was doing the work of state government.

Again, the directors focused on the need for funding to insure New Hampshire's children. Two truths existed at the time: the Foundation was not willing to let the program fail and the Foundation could no longer afford to support its success. The Board committed funding for the needed match in 2000 that amounted to approximately $950,000, significantly higher than the required distribution of $600,000.

Another source of funding had to be identified for 2001. An effort had to be made to decrease dependency on the Foundation for the non-federal match. The Foundation met frequently with NH DHHS staff to inform them of the Foundation's financial situation and encourage them to plan for other funding in the future. The tension that existed between those who believed strongly that the match was the Foundation's responsibility and those who believed just as strongly that funding the match was a state government responsibility was resolved during the 2001 legislative session. The funding for the match was appropriated by the New Hampshire Legislature and became available in July of 2001.

The Healthy Kids Program mission to provide access to affordable, quality health coverage for New Hampshire's uninsured children is a perfect match for the Foundation's support. Indeed, the Foundation was created with this type of relationship in mind. Consequently, the Foundation continues to contribute funding toward the non-federal match, but in an amount that is within its current grant-making budget.

While the responsibility for funding the CHIP match was debated, the Foundation directors initiated a long-range planning process. In the summer of 2000, Foundation staff interviewed individuals who had an interest in the Foundation's mission. They told the Foundation that future opportunities included expanding health insurance coverage to adults, providing preventive health education, collaborating with other fundors who do similar work, engaging in public policy work, conducting research, and creating a public image for the Foundation. The challenges included a weak insurance market, a fragmented health delivery system, an inadequate insurance coverage system, a changing New Hampshire population, and an inadequate state budget.

The directors used this information and their experiences from the first two years of operating the Foundation to develop the Foundation's mission, vision, and values.

The primary mission of HNHfoundation is to evaluate and promote access to health care insurance for children and their families. We also promote healthy life styles for the people of New Hampshire.

All New Hampshire children will have access to health care insurance and engage in healthy life styles that will reduce the potential for disease and injury.


* In pursuing the Foundation's mission of promoting access to affordable health insurance coverage and public awareness of health issues, children and their families are our priority.

* The Foundation supports innovative projects that will facilitate systemic change in the health care system—projects with a potential for broad impact and measurable, long-term benefit.

* Though the Foundation values its independence as a decision-maker, it believes that the greatest potential to effectuate systemic change lies in the path of collaboration and constructive engagement with stakeholders in the health care system, including government.

* The Foundation will conduct its business in an environment of respect for diversity, awareness of the importance of public involvement and ongoing involvement with grantees, and commitment to be accountable to the broader needs of the community.

* The Foundation will conduct its business in a manner that is financially responsible and that preserves the founding endowment.

II. GROWING UP: 2002-2003
Currently, the Foundation's efforts are focused on three goals identified during the planning process. Most of the Foundation's resources are dedicated to the first goal of breaking down barriers to health insurance coverage for children. The Foundation currently funds three projects to help achieve this goal. They include the following:

The Foundation continues to financially support the Healthy Kids Program. In 2002 and 2003, the Foundation will provide approximately $450,000 toward the required non-federal match for the CHIP portion of the Healthy Kids Program. The total required matching funds needed to continue the program is approximately $1.7M in each year.

The second project resulted from an opportunity to partner with the Robert Wood Johnson Foundation (RWJF) for a New Hampshire Covering Kids and Families Initiative. RWJF is providing four years of funding to the New Hampshire Healthy Kids Corporation to insure children who live in hard-to-reach families. The Healthy New Hampshire Foundation has committed $160,000 toward this effort. The Foundation's funding has been awarded to two community organizations to enroll and retain minority and rural children in the Healthy Kids Program: the HUB Family Resource Center in Dover and Child Health Services in Manchester.

The third project invests Foundation funding in Carroll County which is located in northern New Hampshire. In a recent study released by the NH DHHS, Carroll County had the highest percent of uninsured children in the state. The Foundation is collaborating with health and social service leaders in Carroll County to fund a planning grant to identify the best methods for reaching families in need of insurance coverage for their children.

The second goal for the Foundation addresses the need to educate the public on the importance of health insurance coverage. The Foundation is partnering with the Endowment for Health to reduce the number of uninsured by fifty percent (50%) by 2010 from what it will be in 2005. The Foundation's role is to educate the public on the relationship between the lack of coverage and a variety of documented personal and social outcomes.

The third and final goal is to increase the Foundation's networking capacity. Current assets of $13,500,000, while respectable, are not enough to significantly impact the 90,000 uninsured residents in New Hampshire. Consequently, the Foundation looks for opportunities to collaborate on projects that have the potential to facilitate systemic change. The Foundation staff now networks with the New Hampshire Healthy Kids Corporation, the NH DHHS, Bi-State Primary Care Association, the NH Department of Insurance and New Hampshire Health Grantmakers. This last group consists of health grant makers from across the state who meet regularly to share information and work together on projects to maximize their resources.

The majority of the work of the Foundation to date has focused on promoting access to health insurance coverage for children. The directors are also addressing two other components of the mission statement. The first is the need to evaluate access to health insurance coverage. The Foundation has committed $100,000 over a two-year period to support evaluation of the Healthy Kids Program. Evaluators will analyze enrollment and retention data, link enrollment to encounter data and begin the work of setting quality improvement goals.

The second part of the mission statement addresses the need to promote healthy lifestyles. The Foundation funded a three-year project to develop the infrastructure for a disease management program for clients with asthma and diabetes through the Community Health Access Network. The goal of the project is to assist community health center clients in managing their own diseases to improve their health and be less dependent on their health care systems including their local hospital emergency rooms. Nationally, disease management systems have been recognized as one of many innovations to have a broad impact on reducing the cost of health care.

The state's newest health foundation, The Endowment for Health, has set a new and well-respected standard for public accountability through extensive public involvement. HNHfoundation will follow the example set by the Endowment by becoming more publicly visible and engaging with Foundation stakeholders. The Foundation's staff will construct a web site in 2003, develop grant guidelines, annual reports and information materials for statewide distribution.

The directors issued the first and only request for proposals in 1999. Since that time, the financial commitment to the non-federal match for the CHIP has left little grant funding available. Calendar year 2003 will be the first year the Foundation has the full amount of its grant funds available for its grantmaking activities since 1999. The directors will explore other opportunities for funding in 2003, including a public request for proposals.

The planning work initiated in 2000 will be evaluated and continue in 2003. However, organizations involved in health care activities cannot strategically plan for more than two to three years into the future. Health care system changes, both positive and negative, continue to develop. Now that the Foundation's funds are not predominately committed to providing the non-federal match for the CHIP, planning for the future will become more challenging. There will be more opportunities to fund programs that promote healthy lifestyles, similar to the Community Health Access Network's disease management project. Although more funding may be available for this purpose, it will be more targeted. To reduce the grant-writing burden on communities, the Foundation will focus on one or two health issues that could be impacted by the limited funds available.

Evaluation of the Foundation's own activities, including grantmaking results, will play a more important role in the future. During the first five years of operation, 12,000 insured children served as the measure of the Foundation's success. While the Foundation moves away from playing a major funding role in the CHIP non-federal match, more emphasis will be placed on evaluating other funded projects and on the Foundation's operating systems. An assessment of the overall performance of the Foundation will determine the impact of the Foundation's mission and purpose. Directors and staff will attempt to answer the question "What has been the social impact on the residents of New Hampshire since the creation of the HNHfoundation?"

HNHfoundation began operating with an endowment of $11.8M within it first full year of operation. No funds were credited to its portfolio in 1999 from the settlement agreement with Anthem based on profits from the MTHP. In 2000, the Foundation received approximately $460,000 through the agreement and $900,000 in 2001. Foundation policy dictates these payments be added to the endowment as part of the Foundation's original settlement. At the end of 2002, the market value of the Foundation's portfolio was $13,800,000.

The Foundation began making investments with a conservative strategy, with the majority of its investment in bonds. Consequently, the Foundation's portfolio did not experience the dramatic loss in assets that most foundations experienced when the equities market began to decline in 2000. More recently, to ensure growth and preserve the endowment in perpetuity, the directors have adopted a strategy to migrate from security to equity investments.

The Foundation celebrated its fifth anniversary on October 28, 2002. Its directors and staff take enormous pride in playing a key role in providing health insurance coverage to 12,000 New Hampshire children. Not many new foundations can boast a similar accomplishment. Much work remains, however, and there will be no shortage of opportunities to decrease the number of uninsured residents in the state.

One hazard of working in a foundation is having to reject many more proposals than can possibly be funded. The weakened national and state economy will make it difficult to respond to unprecedented demands on the Foundation's limited resources. Foundations can reduce the hazard, however, by clearly stating and widely distributing their grant guidelines, focusing their funding on one or two areas of social concern, and by collaborating with communities and networking with other funders to make the best use of everyone's resources. By becoming more accountable to the public and building collaborative and networking relationships, the Foundation will be able to find ways to invest relatively small amounts of money to make significant changes for the better.

1. Also in the final agreement that resulted from the acquisition of MTHP by NHBC/BS, $560,000 was held in an escrow account for abandoned property claims under the New Hampshire Unclaimed Property Laws (RSA 471-C). The final settlement called for Anthem to remit to the state administrator of unclaimed property, a portion of the funds held in escrow while remaining funds were distributed fifty percent (50%) to the foundation and fifty percent (50%) to DHMC.

The Authors:

Ms. Sandi M. Van Scoyoc is the President of the HNHfoundation located at 14 Dixon Avenue in Concord, New Hampshire.

Mr. Harry A. Schibanoff is Chair of the Board of Directors of the HNHfoundation, Concord, New Hampshire.