Executive Summary

The NonprofitCenters Network was officially launched in May 2004 to provide education and resources for the creation of quality nonprofit office and program space. Members of the network include Multi-tenant Nonprofit Centers and their philanthropic, government, academic and real estate partners.

In 2003, as part of its business planning process, the Network carried out research activities to understand the needs and interests of those who work to create, operate, and sustain colocation facilities for nonprofits. Through an online survey, over 85 respondents involved in nonprofit workspace issues gave feedback on potential goals, topics for learning and exchange, and membership structures and services in a national network. A first report, completed January 2004, highlighted the findings from this part of the research. The report concluded that interest in a resource organization for nonprofit centers was high and that practitioners across all sectors are hungry for information on developing, financing, managing and evaluating Multi-tenant Nonprofit Centers and other collaborative approaches to nonprofit workspace.

The research also provided an opportunity to collect data on Multi-tenant Nonprofit Centers as a starting point for learning more about the missions, development, operation and collaborative practices of these facilities. A total of 39 Multi-tenant Centers participated in the research through an online survey or through semi-structured interviews. They answered questions on their missions, development processes, management and governance, and shared services and impact. Given the limited number of respondents, the data cannot be considered conclusive. Nevertheless, some important patterns and themes emerge.

Key Findings about Multi-tenant Nonprofit Centers

Multi-tenant Nonprofit Centers (MTNCs) share a common purpose - affordable, quality workspace for nonprofits - and a common quality - innovation in responding to the needs of diverse nonprofits in diverse communities. This innovation plays out in facilities and strategies for financing, management and collaboration that are distinct to each Center - no two are alike. Nevertheless, the findings highlighted below show that MTNCs provide cost-savings, programmatic efficiencies, and valuable infrastructure and community resources.

• Centers in the survey come from 13 states and one Canadian province. They are evenly distributed across towns and cities with populations from 10,000 to 8 million.

• These Centers alone house an estimated 550 nonprofit organizations and community groups and serve thousands of other clients and constituents. The smallest MTNC houses three organizations; the largest 85.

• Half have policies to keep rents lower than market. Rents are lower by 33% on average, but can be as much as 75% lower. Those reporting no difference in rent are all situated in non-urban areas and are hubs of important services regionally.

• Nearly 80% have full occupancy, and half of these have waiting lists.

• Nearly 100% offer services not typically included in commercial rent, such as free meeting space, high-speed Internet, and parking.

• Over two-thirds employ a mix of lease lengths ranging from month-to-month to ten years. In some cases, this mix is intended to allow Centers to adjust flexibly to the needs of different organizations, including unincorporated or 'incubated' groups.

• Three-quarters have a programmatic focus, including arts, environment, coordinated family services, and economic development and job creation.

• Seven have renovated historic buildings, five have adopted 'green' building practices, and eight 'incubate' unincorporated groups by providing space and/or management support.

• Half offer large meeting space - seating 50 people or more - free or at minimal cost to non-tenant organizations.

• Client referrals, buying co-ops, joint-fundraising, monthly newsletters, a co-operative food service, co-sponsored community and staff training are just a few examples of collaborative practices that are generating cost-savings, revenue, awareness and improved service delivery.

• Most MTNC staff or board members who took the survey are optimistic about the future: over 80% believe that future opportunities will improve.

Ongoing Challenges facing Multi-tenant Nonprofit Centers

MTNCs face potential challenges in creating and sustaining facilities that are financially feasible, well-managed, and successful in supporting organizational and community needs. Most central among these, is the high occupancy rate and the prevalence of waiting lists. With nonprofits facing increased demands for their services and cuts in funding and contracts, the need for affordable, quality workspace is only likely to grow. Philanthropic, nonprofit and real estate leaders are increasingly looking at the Multi-tenant Nonprofit Center as a solution for addressing this and other demands in their communities. Practitioners who are both in the process of developing a considering establishing facilities for nonprofits, as well as those already running MTNCs, can learn from some of the trends highlighted below:

• Nearly half relied on a single source of financing for 80% or more of the costs of developing their facilities. Nearly 1/4 of Centers relied on capital campaigns for a significant proportion of their financing.

• Loan financing, particularly through community loan funds, appears to be under-utilized.

• Centers established 10 years ago or more, as well as those in older buildings, face additional challenges in financing and executing capital improvements and upgrades.

• Ownership by a nonprofit entity is the most common legal ownership structure, an approach which poses challenges for accessing financing incentives and tax credits available to the for private sector.

• Half of Centers in the study are able to cover operating costs AND debt servicing through rents…half are NOT able to cover these costs through rent. Scale may be a factor: MTNCs able to cover costs tend to have higher numbers of tenants and slightly higher average rents.

• Centers with mixed-use functions, such as housing, appear to be less likely to cover debt servicing and operating costs through rent revenues.

• Tenant involvement in decision-making structures and processes is uneven. Tenant involvement is highest in determining types and terms of shared services; it is lowest on MTNC Boards of Directors.

• The role of Centers in managing and fostering collaboration is difficult to measure but all cited examples of collaborative practice. These include those managed by the Center, those occurring organically between tenants, and collaborations with non-tenant nonprofits, businesses and public institutions. Approximately 30% of Centers require that tenants collaborate with each other as a condition in their lease terms.

• Half of Centers do not provide services for the disabled. Although it is unclear whether these facilities are generally accessible, these and other MTNCs would likely benefit from enhanced access for people with disabilities.

• Most MTNCs provide free parking to tenants and the public at large; however, overall, Centers appear to be lagging in creating services and systems that support use of alternative transport.

• Only a handful of Centers build on the 'economy of scale' to provide free or fee-based back office services. Several respondents highlighted this as an area of development for their Centers.

• Despite the overall optimism for the future, MTNC practitioners cited facility problems, financial concerns, and broad trends that will impact the health of their Center and their local nonprofit community. Seven respondents specifically cited the challenges they are facing in balancing financial feasibility with affordable rents.

Opportunities for Future Research and Learning through
The NonprofitCenters Network

As the only national resource dedicated to Multi-tenant Nonprofit Centers and other workspace solutions for the sector, The NonprofitCenters Network is in a central position to foster learning and exchange on the following key topics:

1. Documentation, understanding and support of non-urban models of nonprofit workspace;

2. Analysis of factors leading to Center financing and development strategies. This could include case studies that look at ownership and financing decisions as well as implications of these choices on Center financial sustainability and programming;

3. Opportunities and challenges for Foundation-led Centers;

4. Links between lease terms and structures, Center feasibility, and impacts on tenant organizations;

5. Links between governance and decision-making structures and collaborative practices;

6. Identifying and evaluating models and impacts of collaborative programming at MTNCs;

7. Structuring, staffing and funding shared services, including opportunities and challenges for shared management and incubation services; and

8. Measuring social, economic and environmental impacts of Centers