At the same time, it is a misnomer to believe that because of the not-for-profit tax designation, that Lutheran Services Carolinas does not attempt and expect to generate earnings in excess of expenses, which appear as an accounting “profit.”
First, some of the accounting “profit” is the result of investment income and unrealized investment gains. LSC is able to let those earnings remain in the investment account to provide future financial stability or, if the funds were restricted by a donor, income from the funds is used according to the purpose specified by the donor.
Other “profit” earned in excess of expenses may be used for capital investment into the repair of things like roofs or for building maintenance. It may be used for equipment needed to provide care for residents such as new beds, patient lifts, room furniture, or room renovations. It may be used to enhance resident activities, staff training, or educational opportunities.