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Nonprofit Building Ownership: Is It Wise?

This question has been raised once again

More than a decade ago, NPQ published an article about the age-old conundrum of whether to lease or own their facilities. That article came from IFF, an organization familiar with the issue, and offers a detailed, step-by-step process nonprofits should undertake as they consider whether or not to buy a building. An even more important analysis came from Clara Miller in “Truth or Consequences: The Implications of Financial Decisions,” where she points out that “from a purely business point of view—one that is green-eyeshade-friendly—there is a greater likelihood that owning and operating real estate will leech an organization’s time, money, and attention from programs and, by increasing fixed costs and decreasing liquidity, will limit its programmatic and financial flexibility and ability to absorb risk.”

This question has been raised once again in an opinion piece at Shelterforce, written by Saul Ettlin, a consultant with the Northern California Community Loan Fund. Ettlin suggests there are many good reasons for a nonprofit to own their space. Over the past 11 years, the arguments remain the same in many cases. Ettlin’s work brings to the fore issues about how ownership might relate to an organization’s mission, the community around it, and the people whose lives are touched by its services.

The article starts with a reference to Eric Klinenberg’s Palaces for the People. That book focuses largely on libraries but makes the case that shared spaces, including some nonprofit institutions, are important as places where people come together to build social cohesion. In a related article in the New York Times, Klinenberg describes these “third spaces” as “social infrastructure,” shaping the way people interact. He goes as far as saying that to build a better society, we need this social infrastructure.

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