Ken Seeley, Founder, The Partnership for Families and Children
The Partnership for Families and Children (formerly the Colorado Foundation for Families and Children) is an intermediary organization offering training, technical assistance, and research to public and private agencies who serve vulnerable populations of children and their families. Founded in 1993, the Partnership was a tenant for most of its 20 year existence. We shared space as a nonprofit incubator for most of our history but lost the ongoing relationships as the new organizations spun off into their new and expanded activities. When we decided to buy a building six years ago, we looked for nonprofits with whom to share space and costs for the long term.
With lots of hope and unfounded optimism we purchased a large building that was 50% leased with a nonprofit and for profit tenants. We soon added two more nonprofits and we were operating in the black and gaining from the connections among the nonprofits to share resources, build capacity, and form close organizational connections to gain efficiency; all the benefits of shared space. Then the recession hit at the end of the decade. To make a very long story short, we lost our for-profit tenant and our nonprofit tenants lost income, staff, and the need for much of the space we shared. In the end we decided to sell the building and become a tenant again because we could not afford to spend so much of our human capital and financial capital in the real estate business. We are now happily moving into shared space, with a nice lease and wonderful nearby organizations with whom to collaborate.
Upon reflection, our journey could be a cautionary tale to nonprofits who contemplate owning rather than renting their space. There is no way we could have predicted the economic turndown, but we should have considered the general economic climate of nonprofit fund raising and capital formation. Briefly, the lessons learned that might help others:
- Donors do not like to contribute to general operating costs and too often give preferences to grantees that put most of their money into direct service, not organization operations like rent or administrative support.
- Capital funders and capital campaigns are a specialized and limited field of fundraising but should be a first consideration as a reality check in thinking about owning your space, because if you can’t raise money for upfront capital, you will probably have trouble raising money for mortgage payments.
- Shared space arrangements need to be solid business deals with a clear lease and specific payment schedules for shared administrative costs.
- Management of the space and facility maintenance and capital expenses need to be someone’s job and there needs to be funding allocated for this staff position and this includes realistic forecasting of the space expenses into the future.
The major takeaway for this me is that we who lead nonprofits must continue to advocate to have our organizations be recognized as legitimate small businesses. If we could attain that level of recognition, we should have access to capital, to negotiate favorable interest rates on loans with banks, and to recover our operating costs as a regular necessity of running a business, even if that business is designed to help others. We too often suffer under the burden that “those who do good should not do well”. We should aspire to do well as part of running a successful nonprofit organization and a small business.