Diakon Lutheran Social Ministries

“The organization delegates management duties including supervising personnel, operations, and budgeting to lutheran senior services, the sole member.”

“During the year, the organization executed a member substitution, effective 7/1/2024. As a result of this member substitution, the organization amended its articles of incorporation to change the organization's name from "diakon lutheran social ministries" to "lutheran senior services east". The organization also approved amended bylaws as a result of the member substitution. Significant changes to the bylaws are as follows: the sole member of the organization is now lutheran senior services ("lss"), a missouri legislatively chartered benevolent corporation; the organization's board of directors is now comprised of the members of the board of directors of lss; treasurer and secretary officers roles have been established, and the organization's president/ceo no longer carries voting rights on the board of directors; the member reserves the right to approve actions of the organization, including further amendments to the bylaws and other governance decisions (see explanation for part vi, line 7b for full list of actions requiring approval).”

“Prior to the member substitution, the sole member was diakon, a pennsylvania non-profit corporation. After the member substitution, the sole member is lutheran senior services ("lss"), a missouri legislatively chartered benevolent corporation.”

“The sole member reserves the right to approve the following governance actions: sale, lease, encumbrance or other disposition of substantially all of the organization's assets; sale, lease, encumbrance or other disposition of any of organization's real property, other than as included in the approved capital budget; organization's merger with, acquisition of, or sale to another entity other than an affiliate of lss; filing for bankruptcy or insolvency, dissolution or liquidation by organization; approval of organization's annual operating and capital budgets; adoption of any changes in organization's budget, which changes will cumulatively exceed in capital or expenses such amount as lss may designate from time to time in any fiscal year; any transaction, or series of transactions, the result of which would cause the organization to incur debt in excess of such amount as lss may designate from time to time, which transaction is outside of the ordinary course of business; any guaranty of the organization's debt by lss; contribution of additional capital to organization by lss; organization's organization or acquisition of a subsidiary or affiliate, or the authorization by organization of the organization or acquisition of any subsidiary or affiliate by a related entity; amendment to the bylaws or the articles of inorganization of organization; any other matter that by law would require the approval of the members of a nonprofit organization in pennsylvania.”

“The governing body is provided a copy of the form 990 for review prior to filing. Approval of the form 990 is delegated to the audit committee of the governing body prior to filing.”

“Prior to the member substitution: the compliance officer of the organization reviewed the organization's conflict of interest statement and certification forms with the board on a regular basis. All board members and all officers and key employees were required to complete a certification form and disclose possible or actual conflicts of interest. The completed forms were reviewed by the compliance officer and by the organization's outside auditor on a regular basis. After the member substitution: all directors, officers and key employees will disclose a conflict of interest on the "conflict of interest form" in the following situations and in other circumstances which he/she thinks might cause a conflict between his/her personal interests and his/her fiduciary duty: financial interests, inside information, conflicting interest other than financial, gifts and favors. The following employees of the sole member are required to sign a "conflict of interest form" annually: president, chief operating officer, chief financial officer/treasurer, vice president of construction and it, vice president of human resources, all directors, administrators and assistant administrators. The corporate compliance officer follows up with any conflicts of interests and documents the resolutions of the conflicts. These forms are kept by the corporate compliance office.”

“Prior to the member substitution: a compensation committee of independent directors of the diakon (the former sole member), which included directors from the organization (compensation committee), utilized external consultants to assist with the development, administration, and determination of compensation, welfare, benefit, pension and other plans, which take into account appropriate industry benchmarks and the compensation policies followed by organizations similarly situated to the organization. The board compensation committee adopted a written "charter," which set forth the purpose, membership and responsibilities of the committee. In addition, it conducted its activities in compliance with the organization's "excess benefits transaction" policy, which required review and approval by independent persons, comparability data and contemporaneous substantiation of the deliberation and decision. The organization and diakon's executive compensation program consisted of a base salary which reflected the value of an executive's capabilities, experience and success through meeting mission, financial, operational, and quality objectives. Information about executive compensation issues and decisions was reported to the full board of directors at regular meetings. After the member substitution: the filing organization did not compensate any officers, directors or key employees. The compensation process used by the sole member, lutheran senior services, is as follows: the board of directors established a separate compensation committee charged with performing an annual performance review of the ceo and reviewing the ceo's compensation package. The compensation committee engaged a third-party global human capital consulting firm to: (1) develop an annual ceo performance review process, including a new evaluation form, and (2) develop a compensation package based on its knowledge of similarly sized non-profit organizations in order to ensure that the compensation paid to the ceo is reasonable. All members of the board complete an annual evaluation, which the compensation committee summarizes and reviews. The compensation committee then makes a recommendation to the full board of directors for any compensation adjustments.”

“Although not a requirement, the organization provides photocopies of its governing documents, conflict of interest policy, financial statements and other documents to all who request one or more of the items.”

“It is possible that a portion of the amounts reported for wohlsen construction, epic building group and alltask construction, llc were related to materials in addition to amounts paid for services, however, the amounts are not distinguishable.”

“The organization completed a member substitution during the year.”

“Contracted services: program service expenses 9,919,364. Management and general expenses 648,891. Fundraising expenses 0. Total expenses 10,568,255. Therapy services: program service expenses 3,218,796. Management and general expenses 210,563. Fundraising expenses 0. Total expenses 3,429,359. Maintenance: program service expenses 689,196. Management and general expenses 45,085. Fundraising expenses 0. Total expenses 734,281. Housekeeping: program service expenses 2,722,102. Management and general expenses 178,071. Fundraising expenses 0. Total expenses 2,900,173.”

“Change in value of interest rate swap 124,175. Net periodic pension cost 4,658,570. Other changes in plan assets and benefit obligations 1,427,680. Fair market valuation adjustment from member substitution 131,529,383.”

“The organization has an audit committee overseeing the audit process. This procedure was modified after member substitution occurred during the year. The entity now adopts the process implemented by its parent company, lutheran senior services.”