On May 18, 1995, a group of men and women came together in St. Gabriel’s Catholic Church in Charlotte, North Carolina, to participate in a prayer service to commemorate the end of one of the city’s three hospital systems. The identities of the people whose giving and struggles had made Mercy Health Services a vibrant, essential part of Charlotte’s life for almost a century each seemed to hang, momentarily, in the lofty stillness of the church.
“Doctor Gerald Zimmerman . . . Colonel Francis Beatty . . . Beulah Squires . . . Mother Mary Raphael . . . Sister Stella Maris . . . Mother Mary Bride . . . .” One name followed another in slow procession as a choir recited each in the austere monotones of Gregorian chant.
Sister Mary Jerome Spradley, a short, gray-haired lady, sat quietly near the altar, relieved that her long struggle was ending. She had spent most of her career running the system, working hard to keep it focused on providing health care to the poor. But the order had made the fateful decision to sell 336-bed Mercy Hospital and a smaller suburban facility. Now she was about to take the plunge into a totally unknown world: philanthropy. From her job as president of the system, which had required substantial fund raising, she would graduate to become the head of the Sisters of Mercy of North Carolina Foundation, whose mission was to give away money.
At the time, there was no model, no guidebook explaining how this might be done. How does an aging order of Catholic sisters, women who took vows of poverty and spent all of their careers running their own institutions, suddenly shift gears to become donors? Sitting in her pew, still mourning the loss of the hospitals that had been home, job, and mission for many in her religious community, the North Carolina Sisters of Mercy, Sister Jerome faced the entirely foreign challenge of having to learn to spend money. A $197 million investment portfolio was eventually developed from the sale of the two hospitals in Charlotte and another Mercy-run facility in Asheville.
After consulting with members of her community and reviewing the work of other philanthropic foundations in the Carolinas, she still had only a vague notion of what she might do with the money. But six years later, her foundation has awarded over $12 million in grants, most to small community programs designed to reach into a wide variety of lives—the way three generations of Mercy sisters in Charlotte did—and provide a needed service. Around the country there are at least a dozen other newcomer foundations like this one, still feeling their way into the big leagues of giving.
Edward J. Schlicksup, who helped Sister Jerome manage the system in recent years, recalls the problem that led to its demise as a growing “tension between mission and margin.” The Mercy system was devoted to serving the poor. “If you do too much of that, it puts your survival in jeopardy.”
Many local Catholic hospitals resolve this dilemma by being folded into more competitive national or regional systems. Some have simply closed their doors. Others allow themselves to be put on the block, as was the case in Charlotte.
The general feeling among religious orders is that because they raised the money to build and operate the hospital from the community, most of the proceeds from the sale or merger of hospitals should return there through foundation giving. Needs of the poor remain paramount. “We are looking at maximizing the impact that we as a group can have,” explains Sister Maryanna Coyle, president of the SC Ministry Foundation in Cincinnati.
Her order, the Sisters of Charity, formed a foundation in 1995 after folding their large hospital system into an even larger one called Catholic Health Care Initiatives. Sister Maryanna formed an umbrella group for the new philanthropists, the Assembly of Catholic Foundations, which she convened for the first time in 1998. The goal was to exchange ideas with other orders experiencing this transition. On paper the combined assets of the 15 groups she assembled represents about $800 million in investments.
For most of the 20th century, sisters contributed their services, but with the average age of nuns in America topping 60, their service has become a scarce commodity. “For many congregations the personnel resources are no longer there,” she explains. “But they have financial assets that are capable of continuing their missions without the efforts of sisters.” Her assembly has wrestled with the challenge of using that money effectively as a kind of “virtual nun.”
During their first two-day session the assembly quickly developed a consensus about two causes they all wanted to address. One was poverty among women; another, the variety of problems that afflict the working poor, a niche that public welfare programs tend to ignore. There have been a lot of assembly meetings devoted to the art of screening grants. “If you don’t have that, it quickly becomes helter-skelter,” Sister Coyle explains.
The sisters are definitely not risk-averse. Most of their hospitals were financed, built, and managed by women in an age when men were supposed to run everything. On top of that, nuns built many of their hospitals amid the profound and sometimes violent upheavals of the American frontier, taking on huge risks in strange places and assuming back-breaking mortgages that many—a group that often included their own bishops—predicted would bankrupt them. When sisters had to, they raised money by begging on the street, but they soon developed a strong entrepreneurial streak, inventing some of the nation’s first hospital insurance systems and bartering with local merchants for merchandise.
Faith and Grit
Mercy Hospital in Charlotte is a typical example. To Catholics, most of whom settled in Northern cities or in the coastal cities of the South, Charlotte was a frontier. Largely settled by Scotch-Irish Presbyterians, one early Catholic history describes the area as a “desert.” Sister Jerome’s branch of the Sisters of Mercy—the nation’s largest order—came to North Carolina from Charleston, South Carolina, after the Civil War to help nurse victims of a yellow fever epidemic in Wilmington.
Gradually the Mercies spread throughout the state. In 1906, a team of young sisters scrubbed up an old church building known as Catholic Hall and opened it as Mercy Hospital. Two years later they started a nursing school in one wing. The hospital, sporting a Turkish bath that was open to the public, managed to scrape by for the first ten months with a positive cash flow of $19.
Still, it was a going concern. Charlotte’s town fathers quickly accepted the fact that they needed a new hospital. The sisters wangled a 50 percent discount from the water works as well as discounts from a local druggist and butcher. By 1913 they were building a bigger Mercy Hospital, which helped carry the city through the 1918-19 Spanish influenza epidemic, which claimed at least 800 lives.
It wasn’t so much cash flow but faith and grit that assured survival in those days. Mother Mary Raphael, who then ran the hospital, later wrote, “I don’t know how we ever lived through that . . . . We put beds in the hall, beds everywhere. Everyone who came in to help got sick too, except Mother Bride and me. It was nothing but God’s grace and strength that kept us going . . . .”
From the beginning, Mercy Hospital made it a point to cater to the poor in ways that set it apart. In 1954, Mercy Hospital became the first in Charlotte to desegregate, offering its services to African Americans who, up to that point, had to depend upon an overcrowded facility for blacks. The predecessors of the city’s two other hospitals, the city-owned Charlotte-Mecklenburg Hospital Authority and the Presbyterian Health Care System, integrated ten years later.
As Sister Jerome, who entered the hospital’s nursing school in 1947, notes, the entire nature of running a hospital was different then. “Health care then was primarily custodial. We didn’t have the technology, the pharmaceutical products we have now. Prior to Medicare, we had people who stayed in the hospital for up to a year.”
Instead of the current emphasis on advanced technology, in those days Mercy’s care focused on nurses. They were graduates of the hospital’s nursing school and they brought special skills and spirit to the job according to this song, set to a popular swing tune by a woman in the nursing school’s class of 1954:
Now when a Mercy nurse walks down the street
She looks a hundred per from head to feet
She has a word, a smile, a winning way
Recognize her and you’ll say
Now there’s a nurse I’d like to know,
She has that Mercy spirit, pep and go
And just to look at her it’s quite a treat.
It’s hard to beat a Mercy nurse.
According to Jack Claiborne, a columnist for the Charlotte Observer who reviewed the city’s hospital scene in the 1970s, it was hard to beat a Mercy nurse. “Some doctors called [Charlotte-Mecklenburg] Memorial a factory, Presbyterian a country club, and Mercy the hand of compassion. Colorful exaggeration, of course, but there was some truth too. Mercy might be short of science at times, but the sisters made sure it was long on tender loving care.”
By the 1970s Medicare rules forced Mercy to develop a more business-like balance sheet. And the nature of the business meant more serious competition for paying patients with the other two hospitals, which were larger. As one local financial analyst put it, it was “expand or die.” That meant new equipment and new additions. Sister Jerome launched several major fund raisers. Mercy Hospital was a class act, as were some of those who came to Charlotte to help save it, including Frank Sinatra and Liza Minnelli.
Fund raising became more critical in the 1980s after nearly 20 years of decline in the number of new sisters entering the order. Holes had begun to appear in hospital staffs once run almost entirely by sisters: by the early 1990s, only 1 of 22 managers at Mercy Health Services was a nun. While the system remained financially sound and competitive, it was getting harder to manage. Through the new managed care systems, insurance companies preferred to deal with only the largest, newest systems, and Mercy, with smaller facilities located in Charlotte’s inner city, was at a distinct disadvantage.
After much agonizing, the Mercy System negotiated a “collaborative relationship” with Charlotte-Mecklenburg. In theory, the deal would have allowed the Mercy System to compete favorably for managed care contracts, but it didn’t work out that way, and Sister Jerome found herself in a box. The “collaborative relationship” meant she had lost much of her hospital’s independence, yet if she broke out of the arrangement she knew that the Mercy System couldn’t survive very long on its own amid the heightened competition brought about by managed care.
The future she saw looked bleak. It offered “less control from the owners or providers, more government control at every level, more cost-cutting, less ability to help those people we went into health care to help”—the poor. That left the Mercies with one good option: sell the hospital and use the assets to carry on the order’s mission.
In January 1995, the order offered to sell the system to Charlotte-Mecklenburg. The city-owned hospital, acknowledging the reputation of the Mercy system, agreed to keep the hospital’s religious signs and its name. The sisters, whose convent is part of the hospital’s nursing school, leased it back as part of the deal.
In announcing the decision, Sister Pauline Clifford, then president of the North Carolina Mercies, told the Charlotte Observer, “We’ve done our share of crying. It’s like giving up the family home. Even though it’s time to do it, it’s still hard.”
Learning by Doing
In December 1996, a new group of millionaires, the Sisters of Mercy of North Carolina—which currently has 120 sisters—gave their first four grants. The Salvation Army in Charlotte got a $75,000 grant to add 56 beds to an emergency shelter for women and children. Charlotte’s office of Community Health Services got $18,000 to give health screenings to poor families.
Once again, the sisters were tackling a new frontier. They gave $52,910 to Program Esperanza, run by Geri King, director of Catholic Social Services in Charlotte. “They’re a wonderful order of nuns. It’s made all the difference in the world for us. They saw our vision and got on board,” explains King. The program serves the 75,000 Hispanics who’ve moved to the area since 1990, many of them poor and unable to speak English.
With money from the Mercies, King was able to develop a program for cross-cultural training, building a bridge to the established community. She also started a program for legal aid to Hispanics along with a training manual on available community services for strivers who took English language courses. The name of the manual: Saber es Poder, or “To Know is To Do.”
A Child’s Place, a program for homeless school children run by Debbie McKone, got $120,000. Philanthropy is an art and Ms. McKone knew that what she really needed—a program director—did not fit in with the missions of many foundations. They wanted results, not more overhead. That was the initial reaction of the Mercies, too. But when McKone reasserted her needs, they listened. “They said, ‘Make your case,’ and I did. The result is that we were able to double the size of our program because we had people to manage the growth.”
The program works with public schools to identify children who are at risk because their families often move from shelter to shelter or live “doubled up” with other families. The program handles 1,000 children a year, with close to a third of the children involved in domestic violence situations.
Another favorite with the Mercies is “Think College,” a mentoring program for public school students that seeks to help at-risk kids get into college. Kemal Atkins, who directs the program in partnership with the local high school system, says it was one of the foundation’s first grants—$95,000 for three years—that got the program going in 1997. Once that happened, two other foundations chipped in another $95,000. “It helped us considerably that we could say that the Sisters of Mercy Foundation is a supporter,” says Atkins.
Of course, there are disappointments in Sister Jerome’s new life as a foundation trustee, just as there were in her previous one as a caregiver and hospital administrator. For example, a recent $25,000 Mercy grant to a child literacy program fizzled, and Sister Jerome knows there will be other grantees who, for one reason or another, fail to deliver. But for her new mission to continue the sisters’ rich tradition of service, she explains, she must keep taking risks. Says she, “We’ll continue to take a chance on small organizations that are coming into being.”
John Fialka is a reporter with the Washington bureau of the Wall Street Journal. He is working on a book on the contributions of Catholic sisters to American culture.