Acquiring Donated or Discounted Property: A Guide for Nonprofit Leaders April 23, 2024

For nonprofits in need of a new facility better suited to support their work, the prospect of acquiring a publicly owned property can be extraordinarily appealing. In many cases, municipalities are willing to sell properties that will be redeveloped as community assets for as little as $1.  

While that price is hard to beat, a facility being sold for $1 or donated to a nonprofit outright is likely in need of renovations that can negate cost savings achieved through the purchase price. Additionally, any environmental remediation required is the buyer’s responsibility, which can add significant cost to a facility project. All told, the cost of renovating such a facility may be comparable to building a new facility from the ground up without the flexibility of being able to design the layout of the facility in a way that will maximize efficiency and impact. 

Timing is also an important consideration, since the sale of publicly owned properties sometimes requires approvals from the local municipality. And, if all of the funding and financing for the project must be secured before approval is granted, the process can become further elongated—with the added challenge that the organization will need to raise funds for the project before it actually owns the site.  

Despite these challenges, it may still be beneficial to proceed with the purchase and subsequent construction project. To avoid wasting time and money pursuing the acquisition of a donated or discounted facility owned by a municipality that won’t ultimately meet the organization’s needs, however, it’s crucial for nonprofits to understand how to define what type of space is needed, identify suitable properties during a site search that also considers privately owned properties, and complete a thorough due diligence process before committing to a property long-term.  

Toward that end, IFF’s managing director of Real Estate Solutions in Chicago, Kate Ansorge, led a webinar recently that covered best practices for nonprofit leaders and board members exploring the possibility of acquiring a publicly owned building. A recording of the webinar, which was presented by the Polk Bros. Foundation, is available below, along with a high-level overview of the content covered with timestamps for individual sections for easy reference.