5 Advantages of Charities Owning Their Offices - and the Risks

We ran a seminar on real estate for charities last week, and a number of Executive Directors, Directors of Finance, and CFOs came out to share best practices, enjoy coffee and muffins, and review “Real Estate for Charities 101”.

If you ignore the largest (e.g. YMCA, etc.) or longest-standing (e.g. settlement houses, etc.) organizations, certainly most charities today are leasing their spaces. So one of the themes that we explored, especially since we have recently completed several projects where charities and foundations have purchased their own buildings and office spaces, was the pros and cons of buying / owning versus leasing / renting.

As I work with charities it’s easy to see the allure of owning your own space.

• Can be leveraged – in difficult financial times or to fund a project the option exists to take out a mortgage / secured line on the property
• Provides cost certainty – other than the fairly predictable cost increases in utilities, the main cost (the mortgage) can be predicted very accurately for years to come
• Potential for “upside” – your payments build equity and not the landlord’s bottom line, plus with no “middleman” owning can save money over time, and  you could even take in tenants or fellow charities to help them / increase your own revenue
• Greater control – while some landlords may not like / or even allow certain charities (or the mission or clients they bring into a building) this is less of an issue when you own
• Profile and pride – having a central location can bring greater confidence to prospective donors, allow for marketing and sponsorship opportunities, and give the staff and stakeholders a central theme to rally behind

However, the challenges and risks with owning a building for charities and non-profits are significant. Obviously a building is not very “liquid” so if cash flow is a concern it might be better to have the funds simply earning interest in a fund, bonds, or even just a bank account. Buildings require upkeep, so a reserve fund and on-going capital costs must be accounted for. For some organizations owning a building can send the wrong message to donors: “I don’t want you to put my gift towards your building, I want it to support your programs” goes the donor’s thinking.

Finally, a purchase of a building is a massive exercise. It can distract you from your Mission. Moreover, since charities are often looking at older “bargain” spaces, issues of hazardous materials and building code violations are more frequently a concern than in newer spaces.

So among many other topics, the bottom line from our Real Estate for Charities 101 seminar was that if purchasing your own office building or office spaces in on your wish list, do make sure you get the best possible professional advice and map out a clear strategy towards this goal.

Bullies Within Charities?

The tragedy of Rehtaeh Parsons has me thinking about bullying. The sad fact is that bullying is not just done by kids, nor only on-line or at school. It is also done by adults at the workplace. What’s particularly interesting to me is that bullying happens even in workplaces where you might not expect it – for example within charitable and philanthropic organizations.

An interesting article in the latest issue of Advancing Philanthropy makes some interesting points on this theme of workplace bullying, and how it differs from the private sector to the charitable world.

1. Bullying not only happens in the philanthropic world, but the impact can actually be more intense: bullying runs counter to the expectation / assumption that people in the sector want to “help others” so when it happens it magnifies the negative / unexpected impact.
2. Since staff at the charity are there to help others and make a difference in the world, they may be more willing to endure or forgive the bullying, rationalizing that it is an expression of the passion the bully has for the cause and a desire to drive it to success at any cost.
3. Many charities are small, tight-knit organizations driven by Mission and collaboration, so standing up to a bully may be seen as risking the cohesion of the team and hurting the effectiveness of the team. Charity staff in particular don’t want to hurt impact.

Finally, since bullies are most often higher up on the organization than the victim, there may be relationships with Board members or donors at stake if it’s a senior staff member who is the bully and they get “called out”. This will make charity organization staff all the less likely to complain or raise the issue.

So not only is the charitable world just as much at risk of bullies, but the impact may even be worse than in the for-profit sector. My commitment, as a Board member and as someone who supports the charitable world, is to be more attentive to this risk and make sure that staff and volunteers I work with know where I stand on the issue – and that I’ll stand with them against any bullying.