By Jack Cumming

Not long ago, the mail brought a huge envelope from an institutional sender unknown to us. Inside was a letter and a brochure. Why did they write? It’s simple. They wanted us to send them money for nothing in return. All in the name of charity.

An Entitlement Culture

Not only did they seem to feel that they were entitled to our money, but the very opulence of the mailing demonstrated that they were unlikely to use money well. The postage alone was $3.15, and the contents were so slick that they must have cost $5.00 or more just to produce.

Welcome to the world of fundraising in 2025. It’s moved from a mission and gratitude proposition to an entitlement concept. If you have a worthy cause – “neighbors who needed help with food and housing,” in this case – that’s all it takes to solicit “donations.”

In this solicitation, that cause comes wrapped in a slogan: “One Community, One Heart.” There is nothing in the slick contents to show how they address their mission more effectively with lower overhead than anyone else. There is a printed note made to appear handwritten to give it a personal touch. “Thank you for your consideration, let me know if you have questions,” writes the “Sr. Director for Donor Relations.”

Huckstering

The “pitch,” and that’s what it is, a sales pitch, comes with a purpose. “We are now reaching out to ask for your support to complete our fundraising for a new building.” There’s a Capital Campaign Honorary Committee to go with that and a Steering Committee to boot. I have to imagine that the staff is enormous since a “Sr. Director for Donor Relations” would expect to have a staff and there must be other corporate silos with “directors” and staff as well.

“By giving from your heart, you will help transform the lives of our community’s neighbors in need for years to come.” I’m guessing that the project will improve the lives of staff as well. One feature is a large rooftop terrace, which “will serve as a versatile area for staff self-care, presentations, and community gatherings.”

Moreover, spending on the project will build value in the surroundings as well. Rather than repurpose an existing building, the “charity” wants to build a brand-new building, and the City Council must be delighted with all the construction jobs that will be required. Moreover, those staff members will need a latte and more, and there will be jobs at Starbucks.

Costly Charities

Who knows how many copies of this costly mailing were sent out? One has to believe that someone, perhaps a fundraising consultancy, expects that there will be a substantial return on investment. The mailing has all the sterility of a consultant’s advice. There is a proliferation of these IRS-sanctioned businesses that meet statutory and regulatory standards for tax-favored investment solicitation.

Senior living is part of this entitlement culture. Although senior housing, by its very nature, is capital intensive, many senior living businesses remain tax-exempt, which bars them from the equity capital markets and denies their residents any semblance of ownership. It’s also common for senior residences to bar charitable solicitation on the premises except for the enterprise’s own foundation, which is given privileged access to residents.

Of course, there is a conflict of interest since the providers have the upper hand when it comes to the care and nurture of residents. When a provider-affiliated fundraiser knocks on the door with a smile and a request for money, some residents may feel intimidated into giving. Other residents become generous donors, hoping to curry favor with those in authority. It’s rare that residents are major donors to provider-affiliated foundations before they move in.

The Rise of Fundraising

With the rise of fundraising as a source of capital [Source], it’s not surprising that fundraising has emerged as a profession claiming status right up there with investment banking and similar financial advisory services. The difference is that the not-for-profits look for free money, while covenantal enterprises – cooperatives or mutual enterprises – promise a return to investing consumers.

Often with the not-for-profits, investor-donors are residents. In a co-op or mutual corporation, they at least have a say in governance. Residents are excluded from voting membership in most senior housing not-for-profits. Most such not-for-profits have no members or a single member.

Unwitting Investors

Having alluded to the parallels between fundraising and investment capital, we should not go without mentioning the subterfuge of entrance fees. For residents, entrance fees are partial consideration for a contract of adhesion that promises lifetime care and sustenance. Many providers, though, consider entrance fees to be equity risk capital used to secure debt financing, leaving the residents subordinate to the debt providers.

Entrance fees are not charitable contributions. Their use as security to meet the equity capital needs of the enterprise is seldom, if ever, disclosed to prospective resident “investors.” In fact, most residents have no idea that they are investors. Moreover, they generally receive none of the ownership rights of equity investors and none of the statutory investor protections.

No wonder that it is primarily the not-for-profits that get into financial straits, and it is their unsuspecting residents who are most impacted. It’s hard to justify the premise that residents provide the equity capital so that executives, with no skin in the game, can exercise the de facto ownership rights.

A Telling Example

LeadingAge, the not-for-profit providers’ national organization, is itself tax-qualified under IRS Code 501(c)(3). In contrast to the practice of most of the organizations it represents, LeadingAge does have voting members who have the authority to elect the board. The LeadingAge membership is comprised “of more than 5,000 aging-focused organizations providing services to older adults across the care continuum, from skilled nursing to home health, hospice, and senior living communities, including affordable housing for low-income older adults.”[Source] Residents of member enterprises are excluded from voting membership and are only represented as customers of their provider members.

There’s an old saying that “Charity is in the eye of the beholder.” That applies particularly in today’s world of fundraising and tax-exempt businesses. Fundraisers, like salespeople, have a different perspective from that of those they seek to influence and cajole. Market-priced not-for-profit executives sometimes flatter themselves that they are superior to those for profits, often beneficially-minded families whose investment absorbs business risks to protect residents and whose senior living properties pay their fair share of taxes. That’s all in the eye of the beholder.