Nonprofit co-location provides financial, programmatic benefits June 6, 2017

Nonprofits often struggle with the financial burden related to purchasing and renovating the high-quality facilities they need to best serve their clients. A growing trend may be emerging to help ease the economic pressure and better serve clients at the same time: co-location.

When two or more organizations with similar missions share a physical space, they both experience economies of scale – one rent/mortgage, one electric bill, one construction project to manage and to finance. But the benefits of space-sharing go beyond fiscal.

“Co-locating among nonprofits may be a natural extension of ‘the sharing economy’ that we are seeing in other parts of the marketplace – like car-sharing platforms, peer-to-peer rentals, and business incubator spaces,” says Terri Haymaker, IFF’s Vice President of Real Estate Services. “For nonprofits, it’s as much about sharing costs as it is about furthering mission. Like-minded organizations are finding that by aligning their spaces, they can do more.”

Consider the Chicago Literacy Alliance’s “Literacenter,” which brings together nonprofits serving learners from pre-K through adulthood to meet their literacy needs. This first-of-its-kind shared workspace for literacy involves 108 member organizations – some are headquartered in the space, some rent a single office in the shared space with their primary headquarters elsewhere, and still others pay membership dues for the right to use conference rooms, classrooms, cubicles, event space, and office space priced significantly below market rate.

According to Chicago Literacy Alliance co-founder Stacy Ratner, simply sharing workspace with like-minded nonprofits has led the groups to brainstorm new collaborative projects and funding opportunities. And with the majority of the groups’ programs and services targeting low-income populations, affordable rental space allows the organizations to dedicate more funds to programming.

IFF’s Chicago lending team helped finance the Literacenter project. Meanwhile in Milwaukee, our lending and real estate staff teamed up to help locate and finance shared space for the Running Rebels Community Organization, a 35-year-old nonprofit that provides youth programming.

Running Rebels started out at a basketball court in a park and eventually moved to their own building – but their eight basketball teams never had their own gym until this year. Running Rebels had the confidence to purchase a new, 48,000-square-foot facility in part because it has rental income from two like-minded organizations – NOVA Tech High School, which is located in Running Rebels’ new facility, and Express Yourself, which is located in Running Rebels’ original central facility.

“Together, these agencies offer a variety of youth programs to a larger community in a synergistic environment,” says Sarah Moloney, IFF’s Senior Project Manager serving the Milwaukee Area. “NOVA Tech students are welcome to take advantage of after-school programming at both Running Rebels and Express Yourself, and all three organizations anticipate higher attendance thanks to the shared spaces.”
According to IFF’s Haymaker, co-location should be considered as a cost-effective, mission-minded option for organizations looking to expand services and maintain high-quality facilities.