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From an Ask-NCN Discussion, 5/11/16


Katie Edwards, The Nonprofit Centers Network
We’ve gotten a request for more information about how centers collect fees on late rent payments.

1. Can you share your clause from your lease or license about late fees?
2. How much do you charge? Is it a flat fee or a percentage of rent?

Please share any insight you have into this process!


Alan Ziter, The NTC Foundation
See the clause below from our Lease Agreement that outlines Late Fees for late rent payment. We encourage any Resident Group that may need to pay late to notify us in advance regarding the circumstances as we want to work with them to stay current. This is more for those that casually or habitually pay late without notification.


“Late Charge: With the exception of Real Property Taxes paid as Additional Rent which carries a higher late charge pursuant to Section 13, if any payment due hereunder is not received by the 5th day after the date the payment is due, a late charge in the amount of 5% of the payment amount shall be charged to, and payable by, Resident Group.”


Nada Zohdy, OpenGov Hub
Our rent is due from tenant members on the first of the month but we always offer a one week grace period of them to get payments in. After that time a late fee takes effect, which is always 10% of the total amount due.


This is the stock language in our licensing agreements:
“Licensee shall pay all fees to Licensor on April 1, 2016, and by the first of each month thereafter. Licensor will offer a one-week grace period each month to collect license fees. If Licensee fails to make any payment of the License Fee by the seventh day of each month (after the one week grace period ends), then Licensee shall pay Licensor a late charge of ten percent (10%) of the amount of such payment.”


Pam Mauk, Together Center
Our clause says the following, and I don’t think in 26 years we have used it, although we have mentioned it a time or two.


4.3 Late Charge. If any installment of rent is not paid within ten (10) days of the due date, a late charge of five percent (5%) of the rents owed with a minimum of fifty dollars ($50) shall be added as additional rent. In the event that any installment of rent or any late charge is not paid in full on or before the thirtieth (30th) day of the month, interest on the unpaid amounts shall begin to accrue at the rate of eight percent (8%) per annum until paid in full.


Online Resource Center

Space Usage and License Agreement – The Alliance Center

Virtual License Agreement – The Alliance Center

Coworking Membership Agreement – Nonprofit Village

Coworking Agreement – Tides

Lease Template – Hannan House
Standard Lease – Children and Family Services Center
Standard Lease – MarinSpace
Sublease Agreement – E4C
Subleasing Office Services – Tides/Thoreau Center
License Agreement – Plantory
Short Term License Agreement – East Bay Asian Local Development Corporation


Short Term Lease Pricing
Full Term Lease Arrangements
Paid Legal Counsel to Develop Lease?


Short Term Lease Pricing

From an Ask-NCN Conversation, 1/7/16


Max Scharfenberger, Jerry Forbes Centre Foundation, 1/7/16
Good Afternoon:

A question has been posed to me by our team.


We will have a warehouse which will have both space that is leased long term (5 years or more) and we have requests for short term (seasonal) leases (could be as short as a month and as long as 6 months). We have a rate for the long term leased space but are undecided about the short term leased space.


Does anyone have experience with charging a premium or a surcharge on the short term leased space.
Our thinking is to leaning towards charging a surcharge since we cannot be guaranteed revenue from this space for the full year. We think that we can fill the space about 80-90% of the year.


Any advice would be greatly appreciated.
Max Scharfenberger
Manager Facility Commissioning


James Thomson, New Path Foundation, 1/7/16
Currently for any group leasing space shorter than the standard terms or requiring part/time usage, we do charge a premium as our experience has shown that there is often difficulty filling the remaining space (due to scheduling or timing of when it is vacant). As our rent charge is based on sq/ft of leased space plus any applicable MITU (Maintenance, Insurance, Taxes and Utilities) and common roof charges (pro-rated by amount of leased space), short term leases usually have an additional amount added to the sq/ft lease portion…the other charges stay the same.


Dustin Barrington, HNS Life Center, 1/7/16
We charge a small premium that covers our projected vacancy based on our projected annual expenses.


Robert Zeidler, The Cotton Factory, 1/7/16
That depends on how you look at it. If the space is challenged (i.e. no windows, odd shape, etc.) you may offer it as a big discount to get it rented. If they only want part of the space, what are they leaving behind? Is that rentable? Will you need to build partition walls, install electricity or plumbing, or other costly items?

My advise would be to look at what your long-term vision is for the space is. Does this new short-term lease match it (in terms of subdividing the unit, spending money on improvements, etc.). If it does, move forward. If not, it is better sitting vacant.

While a landlord will normally charge a premium for a short rental, you make look at putting it on the market at a discount to get someone in until you can find a long-term match.


Kerry-Lynn Wilkie, Langs @ Cambridge and North Dumfries, 1/7/16
We also charge a premium rate for those requesting a 1-2 year lease of one day or two days a week vs the full week. This rate was determined by taking the total annual lease rate (which includes common fees and business services fees) of the office and dividing by three. The reason being is that we can most likely lease an office 3 days a week with agencies interested in a lease of 1 or 2 days per week.

Not many agencies would be interested in leasing only a Friday – which has an impact on revenue. In taking this approach, we have been able to fill a shared office up to 4 days per week with up to 4 leasing ½ day per week up to 2 days per week. It is first come first served on the choice/availability of days in this shared office space.


Follow-up Discussion on 4/21/16

Max Scharfenberger, 4/21/16

Does anyone have any experience with offering short term leases for offices?


We are currently space planning and have an area that would possibly work for some short term rental office space. We are planning a number of hot desks but some of our research in the for profit world shows that a number of them have offices that can be rented for a little as a day and as long as a month or two.


Any insight would be appreciated.


Alan Ziter, NTC Foundation
There have been numerous opportunities to lease unoccupied office and studio space for short term. Usually it is for an existing tenant that needs short term space, a nearby project that is building out their space in the neighborhood but needs office space in the interim (ie a hotel management team for a hotel under construction)

Here is some information that may be helpful:

  • The benefit of doing these short term leases is only for spaces that you do not anticipate finding a long term tenant for the space so as to cover your operating costs and bring in unanticipated rent. Sometimes this is hard to determine as your dream tenant could show up tomorrow and you’ve locked up a space short term that you could have leased long term.
  • Don’t let the user make significant changes to the space that will have to be reversed at the end of tenancy.
  • We use a Venue Use Agreement rather than a lease. We usually include all the pass through expenses (utilities, property taxes, CAM) into a single monthly amount.
  • Include a damage deposit in the VUA

Let me know if you want to talk offline about this.


May Mui, East Bay Asian Local Development Corporation
We use a License Agreement for temporary and short term usage of our commercial spaces. Here is a copy. Hope this help you.
*See Short Term License Agreement link at top of the page*

Full Service Lease Arrangements

From an Ask-NCN Discussion, 9/10/13


Mary Jo Dike, COO, Foundation for a Healthier Kentucky, 9/10/13
Does anyone offer full service lease arrangements? For example, furnished offices or workstations with either included/or options for IT, telephone and various other amenities. If so, would you be willing to share your pricing structure? I know there are a million variables that can affect price, but it would be great to see how others have considered these types of arrangements.
Thank you!


Bruce Demartini, Thoreau Center for Sustainability San Francisco, 9/10/13
Tides, the master lease holder for the Thoreau Center, subleases its internal office spaces. We describe the spaces as executive suites with a total square footage of around 200 for $900/mo. Remember, this is San Francisco so this probably isn’t going to help you much with comparisons, but I’ve attached in this email the office services that are included in the rent; maybe that may help you.
*See Subleasing Office Services document at the top of the page.*


Katie Edwards, Nonprofit Centers Network, 9/11/13
Just a question for clarification purposes: Are you interested in hearing from folks with co-working models that provide all-inclusive drop-in space that use a membership model? In these situations, usually more than one person uses a particular desk or workstation. Or are you interested in more traditional office spaces with more typical lease or licensing arrangements with one designated space per user or organization? Perhaps both perspectives would be useful?


Let us know!


Mary Jo:
Both, Please! We are looking at doing a combination of “executive suite” type offices, drop-in space and project space with a design that fosters collaboration.


Jody Ensign, Third Street Center, 9/12/13
This must be the season for rethinking shared conference spaces and recreating mixed use performance spaces, as we at Third Street Center are doing the same thing. So all of the attachments and ideas have been very valuable.


First, we have three common rooms available free of charge to our tenants and a minimal fee of $10 – 25 per hour for other outside nonprofits. We also make them available for large private events such as parties and weddings at a higher rate of $50 per hour but with a $750 cleaning/damage deposit. After three years of very comfortable working relations, tenants have raised the question of some tenants using the common spaces more often and for larger events, not just meetings. The question was raised asking if these heavier users pay more so that our Common Area Maintenance fee that all tenants are charged equally, does not go up for cleaning and repairs. After much deliberation by all tenants it was agreed to not charge for the number of usage, but to charge $75 for events which have 75 people or more, to cover extra cleaning, wear and tear and bathroom supplies. So far this is working well and tenants are happy, but I do like the suggestion of charging for more than 10 hours of bookings per month. Will keep this in mind if the problem is raised again. All our rooms have free WiFi, conferencing equipment and one room has A/V equipment. We do have white boards to use and 15 large tables and 100 chairs.


And we also have a 4,400 sf multi-purpose/ performing space that one organization rents, made minimal improvements to the old gym space, and then books concerts and various events. We are now taking another look at how to manage this space as we feel it is underutilized and the tenant is having difficulty paying the rent.


We are thinking, for a wide variety of reasons, that perhaps this large of a space should have a lower rental rate than the smaller, more traditional office spaces we have. We are also looking at the possibility of Third Street Center managing the space and the current tenant could just book the space whenever he presents a concert.


Currently the nonprofit rental rate for the space is $300 per day or night, then extra charges for lighting and sound, necessary for productions. Large events such as private parties are charged $500 plus cleaning and any extras mentioned. If it is managed by TSC, we may have a lower rental rate of $150 for TSC tenants.


We are struggling with a workable operating system that allows for concerts at night but then transforms easily into a day time use for children’s drop in center, exercise classes, conferences, etc. Daytime and night time uses are not very complementary. Any thoughts?


And, if we hire a separate person to book outside events to keep it heavily used and as a revenue generator for TSC, do we begin by paying on a percentage of bookings, a salary, or combination? Again, any thoughts are appreciated.



Paid Legal Counsel to Develop Lease?

From an Ask-NCN Discussion May 24, 2016

Melissa Graves, Graceful Growing Together
Have nonprofit centers typically used lease templates or found pro bono legal support to create leases with tenants (especially with one or more larger anchor tenants) or is this typically a document for which centers have opted to use paid legal counsel?


Shelby Fox, Knight Nonprofit Center
We use lease templates that were created originally by lawyers that were on our board of directors so it was pro bono. If things stray from the template they will review it but we have never had to pay for legal counsel with contracts. I highly recommend having lawyers on your board it is very helpful.


Pam Mauk, Together Center
Our lease was developed by the lawyers attached to many of our nonprofit tenants years ago, along with an attorney on our board. After I became more familiar with leases I realized that it is pretty close to any template one would get anywhere, other than we reference our campus association of agencies in one section. We do update it at times with the help of a pro bono attorney.


Diana Higuera, Aurora Welcome Center
We used pro-bono legal counseling.


Kameron Hodgens, Glasser Schoenbaum Human Services Center
Our original lease was done with pro bono legal services but subsequent updates have been from a mix of pro bono and paid legal counsel.


Dustin Barrington, HNS Life Center
We borrowed another Center’s lease, modified it to our context and then had a lawyer look it over.


Peter Barrett, Ukiah United Methodist Church
Our new Nonprofit Center in Northern CA uses a Commercial Property Management firm to sit down with our new tenants and review all the lease terms. The lease is a standard template approved by the California Association of Realtors. This has worked great. They know all the legal ins and outs. They are very affordable. No lawyers are needed.


Karen Maciorowski, CT Community Nonprofit Alliance
We utilized the Pro Bono Partnership, a 501c3 group of lawyers across some of the largest firms that donate their time. Pro Bono connects legal hours with nonprofits. We utilized them to develop the entire nonprofit center, over $150,000 in legal costs at no price. Amazing team. I know they serve NY, CT, RI, but I wonder if they have a similar model in other states under a different name. Can’t imagine they are the only ones working on this service model. The National Council of Nonprofits might know.


Kim Jones, The Nonprofit Village
Nonprofit Village has lawyers on our board, but we have a separate real estate/land use firm as our pro bono counsel. Our original sub-tenant lease was designed by our landlord and was flawed in many ways. We used our counsel to renegotiate the master lease and designed a new subtenant lease that we now use. It directly correlates to some of the unique factors in our shared space. Some of the terms have been lifted from other shared space leases/templates, but we shared those with the legal team and they designed specifically for us. Just like any in-kind work that you would typically pay for, I also suggest you get a report/invoice of the hours spent over the year and have it reflected on your balance sheet.


Judy Lind, Kukui Children’s Foundation

We use a lease provided by our property manager and modified to our particular needs by an attorney on our board.


Additionally, I am attaching our Collaboration Agreement which is part of our lease. It saves a lot of problems going forward to have something like this in writing.


Online Resource Center

NCN Webinar I Transitions
NCN Webinar I Better Build Outs: Managing Tenant Improvement

From the webinar “Better Build Outs: Managing Tenant Improvements,” October 26, 2011.


Broker Perspective – Anthony Shell
Listing Representation – works on behalf of landlords, leasing and marketing space on their behalf
Why hire a listing broker?
You have someone who will market the space to the entire market and puts a professional face on the building.

Hire a broker: If the building is Large, lots of vacancy, absentee landlord, or repositioning and rebranding the space.


Building Team

Architect – important that they are willing to learn what can or cannot be done with the building. Smaller, one-person firms are usually very economical and very valuable

General Contractor – very important from the cost side of this, and can help to reduce the tenant improvement costs for what they do

Project Manager – helps with the move-in/move out process. Time saver



  • Creates lease document with landlord for use with all tenants
  • Negotiates lease terms with tenants, tenant’s attorney
  • Important from liability standpoint for landlord


Tenant representation – works on behalf of tenants, surveying market, available options, touring, negotiating, proposals, and leasing


Work done on specific suite for tenant
Usually completed by landlord for tenant as part of lease transaction
Landlord benefits from controlling who does construction in building on behalf of tenant
Tenant is occasionally permitted to do construction, however with authorization from landlord on who does work/what work is to be done“


SOFT COSTS: Any non-construction items related to build out of space
Architectural drawings (space plans, construction drawings)
Permitting costs“


Actual construction done in space
Includes items such as demo, framing, sheetrock, paint, carpet, etc.


“TURNKEY” TENANT IMPROVEMENTS: • Tenant improvement package done on behalf of tenant by landlord that includes everything related to work • Both hard & soft costs • Pros:Great selling point to prospective tenants, excellent if proposed tenant improvements are inexpensive for landlord • Cons:If landlord is not aware of total hard/soft costs, can leave landlord exposed • For smaller projects, turnkey is best solution


Landlord provides a dollar allowance per sf for tenant to use as they want for the space
Landlords traditionally want to use building general contractor for work, even if tenant is deciding what to or not to build in space
Whether allowance includes hard & soft costs is part of deal negotiation


Important for landlord to understand/price likely tenant improvement requests from tenants
Walk all available spaces with general contractor
Determine tenant improvements for each individual space
Bid all work through general contractor to understand price ramifications of work
Factor likely work in to rent numbers
Full understanding of likely tenant improvements will allow landlords to push turnkey tenant improvement packages at higher rental rates



  • Suite:1,000 SF
  • Estimated improvements:Carpet, paint & some demo/touch up items.Est. = $10/SF
  • Total tenant improvement costs:$10,000
  • Proposed lease length:3 years
  • Interest rate:7%
  • Cost to tenant:$.31/SF
  • Proposed asking rent w/ no tenant improvements:$1.50/SF
  • Proposed asking rent w requested tenant improvements:$1.81/SFIn short, you will need to charge tenant $.31/SF/month extra on rent to complete tenant improvements.


• Overall, space use should be in line with project “feel”
• For office buildings, lease to office tenants
• If retail building, lease to retail
• Willingness of project to handle tenant improvements on behalf of incoming tenant is based on overall deal terms, as well as ability to reuse new tenant improvements in future.


Generally, any build-out that is outside of traditional tenant improvement or office use should be paid for by tenant (either directly or through add on to rent).

  • Huge private offices (“ego offices”)
  • Dense office or conference room build out
  • Pony walls (half height wall with a built in cubical) or built-in cubes
  • Extra plumbing


• For smaller projects, “As-is” leasing can be utilized
• Important to get spaces in clean, ready condition
• Paint touch-up, carpet shampoo are alternatives to new carpet & pain
• Explanation to tenants is any tenant improvements will be at their cost & expense



  • Market property in local paper, craigslist, social media (facebook/LinkedIn/Twitter)•
  • If procuring broker brings tenant to project, explain that commissions are paid by tenants at project
  • Still important to put together marketing flyer for building



  • Following points above, get spaces into market-ready condition and have space plan done for each space
  • Include space plan for lease or sublease exhibit
  • No new space plans for tenants who do tenant improvements on space themselves/Space planning is at tenant’s cost, as is build-out


If tenant improvements are to be done, landlord’s contractor is one doing it
Work that is done is per the lease negotiations, nothing more
If tenant improvement allowance situation, landlord’s contractor still does work
Any contractor working in building on behalf of tenant is approved by landlord

•Lease and sublease documents will have sections outlining how and who will handle the build-out
•One of main issues in section is what happens if delivery of possession is delayed
•If work is delayed, offer free rent as landlord penalty
•Traditional penalty timeframe is 30-90 days past when space was supposed to be delivered to tenant
•Landlord should push for 90, tenant will push for 30


Lease Exhibits
Delivery of Possession
Turnkey Tenants Improvements
Tenant Improvement Allowance


Project Management Perspective – Kim Frentz Edmonds
Project Management – comprehensive from financing, pre-construction, construction, and tenant move in.

Project Management is planning everything possible ahead of time, and then it’s all keeping things on track.

What is your schedule? What are the activities that have to go into it?
Time is money
-Lease payments and interest
-Tenants have to give notice in their existing space, so you don’t want to leave too much delay
-Lost rent if the tenant could’ve been move in.


Who is the project manager?

  • If you have a large enough organization and center, where you have in house staff with construction experience and can have dedicated time for the project, then do it in house
  • If it is really small, the architect can be the project manager. You still need a liaison from the landlord. to make sure the timing and financing is working.
  • Bring on a third party project manager for large, complex projects, especially if you don’t have staff with construction expertise.


The Work Letter
This is a lease exhibit that identifies who is doing what, landlord vs. tenant.
-Submission requirements and Landlord review: Schedule, Budget, Plans, Permits, Insurance, Subcontractors
-Schedule for completion and delivery of space
-Define terms
-Landlord needs oversight of the work if the tenant is doing the work


Common Terms
-“Core and Shell” -Core and shell covers base building elements such as structure, envelope, common areas, elevators and the HVAC system.
-“TI” –Tenant Improvements includes the components of the space not included in Core and Shell.
-“TI Allowance” -Tenant Improvement Allowance is funds provided by Landlord for use in construction of Tenant Improvements.
-“Approved Plans” –Plans reviewed and approved by Landlord and then approved and permitted by relevant agencies.
-“Specifications” –Detailed descriptions of components, fixtures and equipment included in construction scope.
-“Substantial Completion” –When construction is sufficiently complete so the owner can occupy or utilize the work for the use for which it is intended.

  • WHO MANAGES THE BUILD-OUT? Tenant-Sophisticated tenants with construction management capacity -Limited scope improvements with specialized knowledge requirements Landlord-Projects that involve work with complex or major building systems -Projects that are time sensitive and cause potential disruption for other tenants
  • HOW TO MANAGE THE FINANCES? Tenant Disbursements -Evidence of Tenant funds -Typically must be made before Landlord funds invested -Track disbursements and require lien waivers from contractors Landlord Disbursements -Two party to contractor/Tenant -Reimbursement to Tenant -Directly to contractor with Tenant review and approval
  • HOW TO MANAGE THE LOGISTICS? -COMMUNICATION with all tenants -Specifics of scheduling –hours of work, hours for deliveries, hours for noise, utility disruptions -Specifics of deliveries –paths of travel and storing materials -Use of elevators and other common areas -Planning ahead to mitigate unforeseen problems . Triggering alarm systems . Damage to building systems . Other
    Must have continuity from the beginning to the end of the project, making sure that all of the specifics are documented, as well as milestones which may trigger legal requirements.


Landlord – Paula Mayo, The Interchurch Center
The Interchurch Center

  • Located on the Upper West Side of New York City
  • Houses offices and agencies of various religions, and of ecumenical and interreligious organizations
  • All organizations housed in the building are 501(c)(3) not-for-profit corporations
  • Construction was completed on this 19 story office building in 1960
  • This steel and masonry building with a facade of limestone and granite, occupies one city block. It includes mechanical spaces, parking and a cafeteria in the sub levels, meeting rooms on the first level, Medical Offices and a research library on the 2nd floor, and office space on the 2ndthrough 19thfloors
  • This building is occupied and operational seven days a week
  • Has its own zip code
  • Has a chapel


Tenant Work Policy

  • Tenants accept space as-is
  • Tenants are responsible for building out their space, in accordance with their lease agreement with the policies of The Interchurch Center (TIC)
  • Work in the building must be done with union labor


The Lease

Building Standards are outlined in the lease documents:

  • Design and construction standards include wall construction, ceiling tiles specifications and other finishes
  • Building rules and regulations are also outlined in the lease
  • Rent commences with possession of the space not occupancy (when they sign the lease)


Pre-Construction: Construction Document Review
Documents are reviewed from various angles:

  • Building management reviews for compliance with building standards
  • Building engineer staff reviews for coordination with existing systems, and to avoid possible interruption to other tenants’ services
  • Engineer of record (usually an outside entity) reviews for compliance with state and local codes
  • Tenants must file all work with the proper authorities once landlord has reviewed and approved work


Pre-Construction: Contractor Selection
Contractors are selected by the tenant but must be approved by The Interchurch Center:

  • TIC provides a list of preferred building contractors for reference
  • Tenant must provide references for contractors new to the building
  • Contractor must have performed work similar in scale to the current project


Pre-Construction: Filing

  • All work must be filed with the NYC DOB and other local authorities:
  • A pre-construction inspection must be done to ensure there is no disruption of positive materials(i.e. asbestos) (if present), and proper paperwork must be filed depending on the work required
  • Work cannot be performed until permits are in hand and displayed
  • All forms are signed by the President & Executive Director of TIC



  • The tenant is responsible for the construction financially and from a management perspective (and they require financial statements)
  • Weekly job meetings are held and include the tenant PM, their contractor, the building manager and building engineer
  • During construction building management ensures access to all building systems is maintained
  • During construction building management coordinates with the tenant’s contractor to ensure work disruptive to other tenants (i.e. core drilling) is coordinated and does not interrupt their operations. Demolition is to be scheduled after normal business hours, Monday –Friday or weekends.
  • Staging of all materials must be done within the tenant’s space


During construction building management coordinates with the contractor on items such as:

  • Deliveries
  • Removals
  • Tie-in’s to building systems
  • Bringing systems offline
  • Sprinkler drain downs


All overtime for building personnel is billed to the Tenant. Some work the tenant performs must be done by base building vendors such as:

  • Mechanical controls
  • Fire alarm work
  • Keying of door hardware
  • Voice/Data cabling


Delivery of furniture is coordinated with the building
Installation of internet connection is provided by the in-house building team
Installation of phones is done by in-house building team
Tenant is responsible with setting up computers and other equipment


Completion of Build Out and Move In

  • Any punch list work is managed by the tenant
  • Move in is coordinated with building management for freight availability
  • Weekend move ins are preferred
  • TIC can provide porter services at a cost to the tenant
  • Building management prepares an abstract of tenant’s lease terms for distribution to ownership and The Interchurch center accounting department for billing purposes once lase has been executed by tenant and landlord.


Do you charge the same rate of rent during build out as occupancy? Yes. The lease is the lease. You are incentivizing the tenant to complete their work on time. Some generous landlords provide free rent for a f reasonable period of time.


What about groups that want to do TI through volunteers. ? TIC couldn’t allow this because of insurance complications. That’s a very dangerous area to get into.


Furniture Standards: TIC has base furniture standers for cubicles and similar resources, but the rest is open to interpretation. Colors on the wall and ceiling tiles are standard as well.


When would you bring a broker in?
Depends on the amount of available spaces
10 little suites or one large one
that determines the amount


IS there a standard broker commissions – varies by market . In NYC the rents are high and the brokerage commission is usally a percentage. On the west coast it’s usally a dollar amount per square footage over a period of years.

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