✨ Governance of CCRC/LifePlan Communit

Yes, Paul, you're correct that the seminal IRS analysis on nonprofit retirement communities is the 1972 Revenue Ruling 72-124. It explains what an organization that operates a retirement community needs to do, and what behaviors it needs to embody, in order to qualify for -- and to maintain -- tax-exempt nonprofit 501(c)(3) status. As a retired attorney, I can tell you that even though it is more than 50 years old, it is still considered good law.

Many of our retirement communities that are organized as 501(c)(3) charitable nonprofits (such as the one where I live in Colorado) recite in their organizing documents -- e.g. in their initial Form 990 Annual Report filed with the IRS -- their intent to comply with that IRS Ruling.

Among other things, the words of that Ruling require that the organization satisfy the special needs of Seniors for: (1) housing that meets physical, emotional, recreational, social and religious needs of Seniors; (2) health care needs; and (3) financial security needs of Seniors, including the following two key components:

(1) There must be an established policy or practice of maintaining Seniors in residence even if any are unable (through no fault of their own) to pay residential charges. AND

(2) The organization must be operated so as to provide services at "lowest feasible cost". Unfortunately, those 3 words have not been well defined in practice, but those words expressly include maintaining "adequate reserves" to cover expenses and ensure the life care of residents.

Anyone interested in understanding CCRCs maintaining it's tax exempt status may want to search Google for "Revenue Ruling 72-124, 1972-1 C.B.145"

I realize this is a late reply to your question. I see that you asked about resident associations, NOT about the tax-exempt status of the CCRC itself.

The Residents Assn (RA) of The Village at Brookwood (Burlington, NC) is its OWN 501(c)(3), separately from the 501(c)(3) status of our CCRC itself. Due to the diligence of a long-serving RA Treasurer we've always filed the appropriate documentation to the IRS over the years. We were purchased by a single-site, non-profit CCRC about 30 miles west of us, and its RA is NOT a 501(c)(3).

Our RA 501(c)(c) status can be a bit confusing to our population, since many don't realize the implications of what we can or cannot do with our RA funds. Our bank account was "fed" by the proceeds of sales of our Gift Shop, which was entirely run and staffed by residents, with residents making decisions about what to stock and buying inventory.

Covid really "did in" the Gift Shoppe, with people seeing how easy it was to get home delivery of almost anything they'd need --- from gifts to toiletries to snacks, etc. Management brought in vending machines for snacks, which are available 24/7. The Shoppe was only open 3 days/week in the afternoons. It was a mutual decision between the RA and management to permanently close it. Now we're donating our depleting funds to permitted "causes" as the well runs dry.

How long the RA will remain its own 501(c)(3) is up in the air, since we're in the middle of being part of a fairly significant merger. Our current "family" of 2 CCRCs will merge with an outfit that has 3 CCRCs, with management of another 2. I don't think any others of the RAs of the coming "seven" are 501(c)(3)s like we are, and we're the smallest of the 7 -- definitely an outlier.

Hope this helps.

JY

Friends House Retirement Community, Inc is a CCRC, Type C, 501c3 in Sandy Spring MD.

Here is some info:

• Not for-profit CCRCs fall under section 501(c)(3) of the Internal Revenue Code. According to the IRS, a 501(c)(3) organization “must be organized and operated exclusively for exempt purposes” and “none of its earnings may inure to any private shareholder or individual.” Such entities are usually referred to as “charitable organizations. Indeed, many prospective residents are attracted to the idea that earnings stay in the organization.

READ MORE:

For-Profit or Not-for-Profit CCRCs- What’s the Difference? - myLifeSite

My CCRC is registered in Pennsylvania as a "domestic nonprofit corporation" and is a private corporation.

Not-for-profit and nonprofit are not the same. Explanation: "Nonprofits can have a separate legal entity; not-for-profits cannot have a separate legal entity. Nonprofits run like a business and try to earn a profit, which does not support any single member; not-for-profits are considered “recreational organizations” that do not operate with the business goal of earning revenue.

READ MORE: Nonprofit, Not-for Profit & For-Profit Organizations Explained (uschamber.com)

Linda Kilcrease

Resident of a CCRC

I don't know how many but the Residents Association here at Collington (Bowie MD) is an independent 501c3.

How many non-profit CCRC resident associations are independent 501c3 status?