Not-For-Profit vs. For-Profit Retirement Communities

When deciding on a retirement community, one important thing you should take into account is its financial structure.

Life plan communities (also known as Continuing Care Retirement Communities or CCRCs) can be separated into two basic financial structures: not-for-profit and for-profit.

What’s the Difference Between Not-For-Profit and For-Profit Retirement Communities?

First, a quick definition of each term. As you likely already know, not-for-profit organizations do not exist to garner profits for owners. Instead, the money earned by a not-for-profit goes back to the organization and its mission.

By comparison, a for-profit organization exists to make a profit, with a portion of those profits going to investors or owners.

How does that apply to retirement communities? Well, Brad Breeding, president and co-founder of myLifeSite, does a wonderful job of breaking down the difference between for-profit and not for profit retirement communities. At a basic level, “not-for-profit CCRCs keep earnings in the organization” while “for-profit communities have a responsibility to investors and/or shareholders.”

Does that mean that for-profit communities exist solely for the benefit of investors and disregard the wellbeing of residents? Of course not. However, as Breeding points out, when it comes to not-for-profit communities “many prospective residents are attracted to the idea that earnings stay in the organization.”

Two other differences between not-for-profit and for-profit communities are:

• Not-for-profit communities are granted 501(c)(3) status; for-profits are not eligible.
• Not-for-profit communities are run by a board of directors and management teams while for-profits are usually run by a corporation.

Which is Better: Not-For-Profit or For-Profit Retirement Communities?

The short answer to this question? Whatever’s best for you.

As we briefly touched on above, some do prefer the not-for-profit structure—the thought being that the focus is more on the community and the people living there, and less on turning a profit.

However, Breeding suggests that it shouldn’t be the deciding factor since current research on the two types of senior living communities isn’t conclusive about which provides the better overall experience.

So in addition to the financial structure, Breeding advises that you also take into account factors such as “available services and amenities, professionalism of the staff, culture and lifestyle, proximity to places you frequent, financial viability of the organization and the quality of healthcare services.”

Not-For-Profit Senior Living Communities: A Closer Look

There are two main hallmarks of a not-for-profit retirement community: they’re often associated in some way with religious or faith-based groups, and they offer financial transparency and security.

Religious or Faith-Based Origins

Because of their charitable backgrounds, many not-for-profit communities have religious or faith-based founders.

This does not mean, however, that communities associated with a certain religion or faith are limited to members of that religion.

Financial Transparency and Security

Some may assume that because a not-for-profit’s main focus is their mission, they aren’t as financially stable as a for-profit community. That simply isn’t the case.

While a not-for-profit isn’t accountable to the public or shareholders, it is accountable to a board of directors. In order to continue the mission of the community, the management team must ensure that a not-for-profit is financially sound.

In addition to financial security, not-for-profits also offer financial transparency. A reputable community should be able to provide financial reports and information to interested residents upon request.

Kendal on Hudson: A Not-For-Profit Retirement Community

Kendal on Hudson is a not-for-profit life plan community with Quaker roots. With a focus on respect for the individual, excellence in service, social responsibility and fiscal integrity, we’ve been a part of the historic lower Hudson Valley for over two decades.

If you’d like to learn more about Kendal on Hudson or its not-for-profit structure, contact us online or call us at 866-358-5802 today.