The biggest expense for nonprofits is payroll. And just behind that?Real estate. But an old shared services concept is making a comeback. (And by comeback, we mean you first learned how to share in kindergarten.)
The idea of sharing office space is becoming more appealing: it trims overhead and brings more client services under one roof.The Nonprofit Centers Network membership services coordinator Katie Edwards (left, with colleagues) says there are at least 500 already operating or in development in the US and Canada. And many are cropping up internationally. "We haven't done any forecasting, but my belief is that we'll continue to see nonprofits come together in these shared space arrangements," she says.
The Nonprofit Centers Network, based in San Francisco, lists about 10 multi-tenant centers in the DC region, including Loudoun Cares in Leesburg, Va. Executive director Andy Johnston says the health and human services organization is weeks away from getting its site plan approved by the Town of Leesburg. Once completed, the $2.5 million project will house health and human services-focused organizations in 15,000 square feet of space. Andy and his board of directors are raising funds and trying to get some building materials and labor donated. They'll also rent out part of the space for events.
Loudoun Cares bought the building in 2009 and started renovation a year later; it has another 18 months before completion.Four organizations have already moved in, including a regional United Way of the National Capital Area office. Once completed, the tenants will share resources like meeting space, copiers, Internet access, and back-end services. Katie says the model is particularly appealing for startup nonprofits because they may get discounted rental rates and access to admin people who they couldn't afford to hire as full-time employees. A 2010 study found overhead costs for tenants in the centers drops 11%. Meanwhile, the variety of water cooler conversation jumps 22%.
Katie says Denver and Ontario, Canada, have recently become hubs for multi-tenant nonprofit centers. Many local governments like Denver are expressing interest in partnering with nonprofits to create shared spaces. The organizations launching centers also take advantage of tax credits and grants. (Loudoun Cares received HUD Community Development Block Grants through Loudoun County.) One of the most recent trends is themed centers like Loudoun Cares, where similar mission nonprofits are under one roof. In cities where public transportation is lacking, they're able to offer clustered services.
