I love the new report by TDC and commissioned by the Kresge Foundation: Too Good to be True? The Opportunity and Cost of the $1 Building.
This report sums up what so many nonprofits have discovered the hard way – that you often get what you paid for! $1 buildings aren’t the silver bullet they seem to be and need to be evaluated just like any other facility project. Acquisition costs are often just a small part of the overall development cost.
I find it interesting that this report looks at the type of buildings often offered up at amazingly low prices. Nonprofits sometimes overlook, or underestimate the cost of correcting, obsolete features in what are often older buildings that have suffered from deferred maintenance or vacancy. I would say that $1 buildings demand even higher standards of due diligence and yet they are often gleefully accepted without a second thought.
This report also notes that organizations sometimes take on these buildings because of emotional connections to the community or a legacy of times gone by. My parents once bought an old, run-down house that ended up having significant historical and architectural value (it was designed by Frank Lloyd Wright, but this was before he was well-known). The house survived, but my parents’ marriage didn’t. Beware the diamond in the rough. It can take you down.
Lastly, I love how this article examines the financial health of organizations after acquiring $1 buildings. Was it worth it? It’s a mixed bag, but it is surely no silver bullet that will stabilize your finances and easily build your assets. Caveat emptor! Buyer beware!