When it comes to selecting a retirement community, one of the most significant decisions you’ll face is whether to choose a for-profit or a non-profit organization. Many people are drawn to non-profit retirement communities, believing that these institutions prioritize care and compassion over profits. However, the reality can be more complicated. This article aims to shed light on some common misconceptions about non-profit retirement communities, particularly concerning the income of C-suite executives, the role of boards, and the true nature of faith-based affiliations.
Non-Profit vs. For-Profit: The Perceived Differences
Non-profit retirement communities are often seen as more ethical, community-focused, and service-oriented than their for-profit counterparts. The assumption is that non-profits reinvest any surplus revenue back into the community to improve services and care, while for-profits prioritize shareholder returns. But the distinction isn’t always as clear-cut as it appears.
The Income of C-Suite Executives: A Surprising Similarity
One of the most surprising revelations about non-profit retirement communities is that their C-suite executives often earn salaries comparable to—or even higher than—those in for-profit organizations. According to data from various industry reports, it’s not uncommon for CEOs of large non-profit retirement communities to earn six-figure or even seven-figure salaries.
For example, consider a well-known non-profit retirement community whose motto is “Do all the good you can,” inspired by Francis Asbury, one of the founders of the Methodist Church. Despite this noble mission, the CEO of this organization earns a seven-figure salary, even as the community struggles with a toxic work culture and financial instability. Several years ago, this organization faced the bankruptcy of one of its communities in Oklahoma, senior management stayed put. This is just one example highlighting the disconnect between executive compensation and organizational performance. This reality raises questions about where donor contributions and resident fees are truly going. Rather than reinvesting all surplus funds into improving resident care, a significant portion may be directed towards executive compensation, diluting the perceived ethical advantage of non-profits.
The Role of Boards: Token Involvement?
Another critical aspect to consider is the role of boards in non-profit retirement communities. Ideally, these boards are composed of individuals who are deeply invested in the well-being of older adults and who possess expertise in areas like geriatric care, community management, and senior services. Unfortunately, this isn’t always the case.
Many boards consist of individuals who, while accomplished in their respective fields, may lack the specialized knowledge required to govern a retirement community effectively. Their involvement often amounts to little more than a symbolic gesture, fulfilling a legal requirement without truly contributing to the organization’s mission.
For instance, a board member might be a prominent local businessperson or a well-known philanthropist but may have no direct experience in elder care or community management. As a result, their decisions might be more reputationally motivated rather than focused on the needs of the residents. Worse yet, mismanagement is nolt recognized due to the over reliance on the expertise of C-Suite management and at times, a glossed over view or deliberate lack of disclosure by management. This can lead to a disconnect between the board’s governance and the community’s actual day-to-day operations, potentially impacting the quality of care and finances of the community.
Faith-Based in Name Only
Another common draw for non-profit retirement communities is their affiliation with religious organizations. Many people believe that choosing a faith-based community ensures a higher standard of moral and ethical care. However, many of these communities are “faith-based” in name only.
Over time, some faith-based retirement communities have shifted away from their religious roots, operating more like secular organizations. While they may still use religious symbols or language in their marketing, the actual influence of the religious organization on the community’s operations, values, and care standards can be minimal.
For example, a retirement community may be affiliated with a particular denomination, but in practice, it operates just like any other non-profit or even for-profit organization. The community may offer religious services or activities, but these are often optional and may not be central to the community’s mission or daily operations. For residents seeking a community that aligns with their faith, this can be a significant disappointment.
Making an Informed Decision
When deciding between a for-profit and a non-profit retirement community, it’s essential to look beyond the labels. Here are a few steps you can take to make an informed decision:
- Research Executive Compensation: Look into the salaries of the top executives. High salaries are not necessarily a red flag, but they can indicate where priorities may lie.
- Examine the Board’s Composition: Review the backgrounds of board members. Are they experts in elder care, or are they primarily businesspeople and philanthropists with little experience in the field?
- Investigate Faith-Based Claims: If a faith-based community is important to you, investigate how closely the community aligns with its religious affiliation. Don’t rely solely on marketing materials—ask for specific examples of how the community’s faith influences its operations and care.
- Ask About Reinvestment: Inquire how the community reinvests surplus funds. A true non-profit should be able to demonstrate that it uses these funds to improve resident care and services, not just to increase salaries or expand facilities for profit.
Conclusion
While non-profit retirement communities may appear to offer a more ethical and community-focused alternative to for-profit institutions (and many do), it’s essential to approach these organizations with a critical eye. Executive compensation, board involvement, and the reality of faith-based affiliations can all reveal a more complex picture. By conducting thorough research and asking the right questions, you can make a decision that truly aligns with your values and needs for your retirement years.
