When exploring the benefits of retirement communities, many people overlook an important distinction among communities that offer senior living benefits: whether they’re for-profit or nonprofit.
Both types may offer a range of amenities, services and levels of care and the quality of life residents experience may be similar in both. Yet, there’s a compelling argument to be made for choosing a nonprofit community such as La Posada at Pusch Ridge.
A Primer on For-Profit vs. Not-for-Profit Retirement Communities
Like any for-profit business, retirement communities with a for-profit structure have investors they need to satisfy. Their goal is to generate a return on investment for their owners or shareholders. As a result, their financial decisions may be based more on profit than on residents’ welfare.
In contrast, nonprofit retirement communities operate according to their stated mission. Our mission at La Posada is to maximize the well-being of seniors. Our executive team and board of trustees work in partnership with residents to ensure they have input about decisions that affect their community.
How Nonprofit Communities Use Their ‘Profits’
Since nonprofit senior care residential communities don’t have to focus on generating profits for stakeholders—profits that the owners could choose to withdraw for other purposes—they can instead reinvest surplus revenue into the community. They might do this by:
- Making physical improvements to the community
- Adding more amenities, activities and enrichment programs for residents
- Hiring additional staff to better accommodate residents’ needs
- Offering financial assistance to residents who are experiencing challenges
Nonprofit Communities Have Tax Advantages
As 501(c)(3) organizations, nonprofit senior living communities are exempt from paying income tax and, in some states, including Arizona, property tax. For-profit communities must pay taxes on the income they generate and, in most cases, the properties they own.
Differences in Debt
Another distinction between for-profit and not-for-profit retirement communities is the manner in which they can borrow, according to La Posada’s Senior Vice President and Chief Financial Officer, Chris Simon.
For-profit communities generally borrow from banks and other lending institutions, which means they typically pay the prime lending rate, which can be 9% or higher.
When nonprofit communities want to raise capital, they can turn to donors (who receive tax benefits in return for their support), or they can take advantage of financial vehicles such as tax-exempt bonds, which often have a much lower rate of perhaps 3% to 5%.
Benefits such as the tax advantages and the ability to borrow through inexpensive debt “stack on top of each other,” Chris notes, increasing the financial stability of nonprofit senior living communities.
Charity Care
Many nonprofit senior care organizations, including many nonprofit assisted living facilities and nonprofit nursing homes, provide some type of charitable aid. Some are affiliated with a social cause or religion. Others may operate as a benefit to the public.
The La Posada Foundation is a free-standing nonprofit organization that operates separately from, but provides support to, La Posada at Pusch Ridge and La Posada at Green Valley.
Through the La Posada Foundation, we are able to offer a Life Lease to residents, which means they can remain a resident of our communities as long as they live, even if they eventually deplete their financial assets through no fault of their own.
As Chris, our CFO, puts it, “If you come to our community, you will always have a home.”
We are not aware of any for-profit retirement communities offering this type of agreement.
Ownership Changes
It’s not uncommon to read about for-profit senior communities being sold. This can happen for any number of reasons—the owners may want out of the business, for instance, or the community might not be generating sufficient profit (or may be operating at a loss).
A multitude of changes can ensue when new owners take over a for-profit community.
Changes in ownership are less common among nonprofit senior living communities, though mergers to enhance financial viability do occur from time to time.
Community Involvement
The majority of nonprofit retirement communities prioritize community-building activities and programs among their initiatives.
That’s certainly true at La Posada at Pusch Ridge. We encourage residents to collaborate in shaping the culture and personality that will define our brand-new community going forward. We actively seek their input and participation in choosing new programs and policies.
The more residents interact with one another and with staff, the greater the true sense of community grows. At La Posada, we’re well aware of the crucial role socializing plays in healthful aging and longevity—and how detrimental isolation can be to older adults.
For example, research has shown that social isolation is associated with a variety of negative health outcomes, including a 30% increased mortality risk, according to an article published by Hopkins Bloomberg Public Health.
Community engagement doesn’t stop at the property line, either. Many nonprofit retirement communities have strong ties with the greater community surrounding them.
Leadership at for-profit communities may or may not make the effort to foster and support a sense of community, but generating revenue will always take precedence.
Our Focus on Health Sets La Posada Apart, Even Among Nonprofit Communities
One of the primary benefits of senior living communities, particularly Life Plan Communities (also known as continuing care retirement communities, or CCRCs) like La Posada, is the availability of advanced care options such as assisted living and memory support, which will be the main focus of our second phase of development at La Posada at Pusch Ridge.
But even in most nonprofit retirement communities, offering healthcare to residents in independent living is atypical.
We take a different stance on this at La Posada through our Posada Life program, led by our RN Navigators, who provide certain basic health services in residents’ homes. In doing so, we’re supporting residents in their goal of remaining independent as long as they possibly can.
La Posada at Pusch Ridge: A Rare Nonprofit Senior Living Community in Southern Arizona
The Tucson area and southern Arizona offer only a few nonprofit senior living communities. La Posada at Pusch Ridge is proud to be among them.
To learn more about our brand-new community, La Posada at Pusch Ridge, call 520-531-3480 to arrange a visit. Or complete a short online form and we’ll be in touch promptly.
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