Nonprofit Developer of Retirement Communities Comes Under Fire

A Baltimore developer of retirement communities has come under scrutiny for financial dealings between his nonprofit and for-profit entities, reports The Washington Post.

Erickson Retirement Communities, founded by John Erickson, is in bankruptcy court and has been auctioned, pending court approval. While the company is a for-profit entity, it structured its retirement communities as nonprofit organizations. Among other dealings, the nonprofit divisions awarded contracts worth millions of dollars to Erickson’s for-profit arm to manage the communities and leased the real estate from the company.

With nonprofit status, Erickson communities were able to borrow money at low interest rates by issuing tax-exempt bonds, and with increased borrowing power, the nonprofit arm of the company could afford to pay the for-profit branch even more, the newspaper reports.

The nonprofit groups involved have said deals with the for-profit company were properly vetted. Mr. Erickson declined to comment for the story.

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