Trading Spaces: Nonprofit Centers Give More Bang for the Buck

Cartwheels in the hallway While moving into a nonprofit center may not cause workers to do cartwheels down the hall, 65 percent of nonprofit agencies reported in a survey that working in a nice facility did improve employee morale.
Image source: Flickr CC user DAXKO

A few years back, I stopped by the offices of a nonprofit in an old garage off Main Street. I found the director crammed at the far end of the room at a small desk. A cluttered metal table ran along the wall, where the other employees sat at their computers without a window. A small area on the opposite end was sectioned off by a standing divider, and that’s where they met with clients. All in all, it wasn’t a great office space – dimly lit and cramped.

Unfortunately, I’m sure that they weren’t alone. We all know that the directors of nonprofit agencies and NGOs often put every dime into serving their mission and paying their basic utilities. Little is left over to buy or lease impressive, or even comfortable, office space. The fact is, however, that these important community agencies don’t have to perform their important work in a cave.

Agencies and NGOs in numerous communities, including here in California, are sharing space in nonprofit centers, allowing them to save money and get the benefits of a modern building. Nonprofit centers have been around for at least 20 years. More have been popping up recently as budgets get tighter, the competition to raise money becomes fiercer, and the nonprofits realize that they can save money, serve more people, and collaborate more easily when they work in the same building.

Some of the most notable nonprofit centers that have opened around the country include:

  • The $6.2 million, 24,000-square-foot, Community Partners for Health and Human Services building in Colmar, Pennsylvania, opened in 2008 as the state’s first nonprofit center. The building has hosted more than 40,000 people and 2,600 meetings. The board estimates it has saved the nonprofit tenants $1 million in costs.
  • The Posner Center for International Development in Denver converted a 25,000-square-foot horse barn into classrooms and conference space, specifically to get Colorado’s roughly 200 nonprofits involved in international service work to collaborate more often. So far 60 nonprofits have come to the center to take on poverty and business development issues.
  • Here in California, the Sobrato family created centers in Redwood City, Milpitas and San Jose in three donated Silicon Valley business parks. Some 68 nonprofit organizations occupy a combined 333,000 square feet of office, conference, and storage space. The office space is rent free and fully occupied.

Although the size, cost, and ownership structures of nonprofit centers vary significantly, these centers all provide real benefits for the community and their nonprofit tenants. Between August 2010 and May 2011, the nonprofit groups TIDES and the Nonprofit Centers Network commissioned a survey of 146 nonprofit centers to determine how they were doing. The survey is worth reading in its entirety, but there are three findings that are particularly worth underscoring:

Cost Savings: Tenants reported an average annual cost savings of about 7 percent of operating costs. The tenants also ranked low cost as the most critical benefit of locating in a nonprofit center.

Efficiency: Some 86 percent of the tenants reported substantial or moderate improvement in their effectiveness and efficiency. The majority also reaped these specific benefits: increased awareness and credibility in the community (72 percent), enhanced staff morale (65 percent), higher visibility to funders (59 percent), and greater accessibility for clients (55 percent).

Financial Stability: Space was also in high demand. Forty-six percent of centers had no vacancies in 2010, while fewer than one in five had vacancy rates of greater than 10 percent. Fifty-three percent of centers had no turnover of tenants in the survey year, while fewer than one in eight had turnover of greater than 10 percent.

Many agencies also reported back that they were able to raise more money and serve more people by working in state-of-the art buildings with other nonprofits. The bottom line, according to the TIDES survey, is that nonprofit centers work out well for communities with the foresight to develop them. Best of all, the nonprofits get office and meeting space that matches the important work that they do.

Here at DCG Real Estate, we support the nonprofits in our communities. If your organization needs assistance finding facilities, managing property assets, or creating long-terms plans for real estate assets, we encourage you to contact us today.