Plan for sale of Inglis House faces objections and a review in court

A resident of Inglis House and a donor whose brother lived there for 45 years have filed an objection in Philadelphia Orphans’ Court to the sale of the nonprofit facility and an apartment building to a fast-growing for-profit firm for $22.3 million. It’s an unusual step in the sale of nonprofit businesses and signals that Inglis House’ sale could take longer than the Inglis board hoped, forcing the organization to continue absorbing losses.

Frances Satoru Amagasu, who is active in the Inglis House resident council, and Scott Sanderson, a donor, expressed fears in their filing that conditions would worsen for residents after the sale and questioned whether it was appropriate for the Inglis board to negotiate with just one potential buyer. Inglis House, founded in 1877, is a nursing care facility that provides long-term residential care to people with disabilities.

“The apparent failure of the board to even consider other potential purchasers seems at odds with its fiduciary duties when contemplating a sale of charitable assets of this (or any) magnitude,” the filing said.

In July, Inglis announced its agreement to sell the 252-bed nursing home at the intersection of Belmont and Conshohocken Avenues to Tryko Partners of Brick, N.J. Amagasu and Sanderson’s filing, by lawyer Timothy Holman, was in response to Inglis’ Dec. 27 Orphans’ Court petition for approval of the sale.

Inglis officials said they must sell the West Philadelphia nursing home because it is losing too much money and could eventually jeopardize the Inglis overall mission to use its more than $200 million endowment to serve people with disabilities by building affordable housing and providing services that help people with physical disabilities live more independently in the community.

In many cases, sales of nonprofits, such as the one Inglis has proposed, sail through Orphans’ Court, a Colonial-era name for a division of the Court of Common Pleas that has jurisdiction over charitable trusts and nonprofits. That’s because nonprofit boards have a great deal of latitude over how to fulfill their organizations’ charitable missions.

For example, Abramson Senior Care of Blue Bell sold its its well-regarded nursing home in Horsham to a for-profit after an extensive marketing process — with no Orphans’ Court opposition. Abramson sold for similar reasons to those of the Inglis board: It wanted to protect its overall mission, which has gravitated toward community-based services, from the significant financial losses facing many nursing homes.

Some transactions, however, capture significant attention and resistance. Two recent cases in Philadelphia were the ownership transfer of the city’s historical artifacts collection to Drexel University, filed in 2021, and the 2019 case involving the sale of the Painted Bride Art Center’s Old City building, which is decorated with mosaics from acclaimed local artist Isaiah Zagar.

By filing the objection in Orphans’ Court, Amagasu and Sanderson could force Inglis to do more to justify turning over a business built through charitable donations to a for-profit company.

Another key player with influence on charities is the Charitable Trusts and Organizations Section at the state Attorney General’s office. A nonprofit typically asks for “a letter of no objection” from the attorney general when it undertakes a significant transaction. Inglis sought such a letter before filing its petition in Orphans’ Court but did not get one, even after months of communication.

Instead, senior deputy Attorney General David Dembe said in a Dec. 14 letter that his office would share its views on the sale in Orphans’ Court. “We think a judicial determination, based on a fully developed record, is the appropriate way to proceed,” the letter said.

Dembe filed a response to the Inglis petition, but the document gave no clues to his thinking.

As of Jan. 24, Judge George W. Overton had not scheduled a hearing.

Inglis House, founded as the Philadelphia Home for Incurables, is an unusual nursing home in that many families have cherished it as a place that gave them confidence their loved ones would be safe and happy.

Last summer, Janice Nachbar recalled how much her daughter, Joanna Manusov, enjoyed the eight years she spent at Inglis until her death in May 2021. Manusov had dystonia, which caused her to lose her voice and the use of her hands, according to her obituary.

“As she was dying in Pennsylvania Hospital, she kept asking if she could go back to Inglis. It’s that good,” Nachbar said.

Now, Nachbar is fearful of the changes a for-profit owner could make at Inglis House. Nachbar and her husband had planned to make a large donation to Inglis from their estate. “We are now removing this, as we have no confidence it will be used for the benefit of the residents,” she said.

Inglis House residents, who have a long history of activism, reacted with dismay to news of the sale, including holding a rally outside the facility in September to protest. Residents say they fear that if the sales goes through, they will lose amenities such as high-quality food, computers, museum visits, music, and shopping trips — things they may not find at other homes that can accommodate their physical needs.

Sanderson and Amagasu acknowledged Inglis’ expansion of services beyond the nursing home but argue that “any expansion of services and support does not diminish the simple fact that Inglis House and its residents are at the very core of the charitable mission of Inglis House.”

Inglis on Tuesday asked the Orphans’ Court to declare that Sanderson and Amagusu lack legal standing to challenge the sale.

The Inglis petition for approval of the sale painted a dreary picture of the future if the sale is not completed.

“The status quo is not an option,” the petition said. Inglis “will immediately stop admissions while it explores all alternatives that will likely include changes in the the current level of service as well as the potential closure” of the facility, which had 177 residents in late December.

The sale is designed not to raise money, but rather to end the operating losses that have averaged $15 million a year for the last five years, the petition said.

Inglis says it has covered those loses with money from a pool of investments that have built up over many years thanks to donations from families who were grateful for the care loved ones received. If it keeps operating this way, Inglis said, it will run out of money during the lifetime of the current residents.

Nearly 40 years ago, an Orphans’ Court ruling allowed Inglis to split its endowment between Inglis House and an new corporate parent, Inglis Foundation, which received most of the investment securities. Tax returns for fiscal 2021 showed that the foundation had $258 million in investments while the nursing home had $32 million. It’s not certain that all of those investments count toward the endowments.

If the $22.3 million sale to Tryko goes through, most of the proceeds — $13 million to $15 million — would be used to pay what Inglis owes to a pension plan for workers. In addition Inglis estimated that it would use $2.5 million to pay for employees’ accrued time off and other employee benefits, according to the petition.

In addition, $1.8 million in credits would be given to Tryko for anticipated expenses at the nursing home and the apartment building.

That means the net proceeds for Inglis could be as little as $3 million.