By Jack Cumming
Aging is a family business. That’s true in many senses. Age impacts families directly. That’s obvious. Less obvious is that some of the best senior living providers are family businesses. Sure, they want money. Who doesn’t? But they also want to uphold their family reputation. And many are founded to honor their own aging family members.
Is Tax Exemption Positive?
The mythic pretense is that qualifying for tax exemption, i.e., becoming a not-for-profit, is a sign of excellence. It’s not. I believe that even those who spout this the loudest understand that not-for-profit providers often fall short of what’s best. To begin, family businesses don’t dodge the citizen obligation to pay taxes. Moreover, the family’s investment provides a financial cushion to shield residents from catastrophic loss. Family reputation can be a stronger motivator toward quality and good faith than a mere corporate entity.
Ever since I moved into senior housing in 2006 and began to experience the industry and its advocacy organizations, I’ve been puzzled that the most influential senior living trade association gives primacy to tax exemption. I expected that the industry advocacy organization would give priority to demonstrating that its provider members were trustworthy corporate citizens.
Yes, there are member providers who serve the indigent, and their tax exemption is as justified as any. But many tax-exempt provider members of LeadingAge offer market-priced housing for the affluent. They rely on an old revenue ruling that alleviating the distress of aging is charitable regardless of how profitable it is. Family-run senior housing enterprises tend to emphasize the resident experience long before tax status. Family reputation is at stake.
Family Purpose
Merrill Gardens is a family-built and family-owned enterprise with deep roots, originating from a timber business established in the 1890s by Richard Dwight (R.D.) Merrill. Now it is a fifth-generation family-owned business based in Seattle, Washington. It’s known for the high quality of its independent and assisted living communities.
ERA Living is another exemplary Seattle-based family enterprise. For founders and owners Eli and Rebecca Almo, it’s their family values that fuel their commitment to residents and staff every day. Unlike virtually all not-for-profit entrance-fee senior housing entities, ERA treats entrance fees as a first deed-of-trust claim against the property. The not-for-profits treat entrance fees as at-risk equity capital, but family investment absorbs that risk for ERA’s entrance fee communities. That’s a major protection for residents.
Continuing Life is likewise a family enterprise that wins praise for its integrity, value, and citizenship. The Spieker family specializes in full-care inclusive Continuing Care Retirement Communities (CCRCs), which evince their family values to provide the best, most comprehensive retirement option available to people today. As is the case with ERA entrance-fee communities, residents in Spieker family communities have a deed-of-trust financial shield.
Of course, not all families are as upright as these examples suggest. Any form of enterprise can succumb to dark forces, and there are tax-exempt as well as taxpaying enterprises that have fallen short. Aging residents in these communities are right to be wary. They cannot rest easy, and they don’t have the lifetime peace of mind that they are sold. Click here for a link to the story of a life plan community (CCRC) that fell short.
Why Not Collaborate?
The question raised by these examples of family-led senior housing enterprises is why LeadingAge doesn’t collaborate with them. In this series, we have urged LeadingAge to collaborate with residents. It’s hard to understand why LeadingAge, which seeks influence, is so limiting in its reach.
Media reports of financial failure have drawn a cloud over the industry. LeadingAge has circled the wagons, denying that it’s a concern to address. Collaboration, though, has the potential to lift the senior living industry to a higher standard of trust. Working together, we can provide better aging for America than what has been achieved so far.
LeadingAge, please take notice, and open the doors to elevate all stakeholders, particularly the residents who have placed their trust in this industry. The possibilities that are there to be grasped.
This is one in a series of articles exploring how providers, residents, and resident families might work together for better aging.
