Underperforming or surplus properties present both challenges and opportunities for nonprofits. Deciding whether to sell, lease, or repurpose these assets requires careful consideration of mission alignment and financial impact. This whitepaper outlines a clear framework to guide these decisions.
What You Will Learn:
How to evaluate whether to sell, lease, or repurpose a property.
Steps to conduct a cost-benefit analysis for each option.
Real-world examples of nonprofits successfully repositioning assets.
Introduction
Nonprofit organizations often face difficult decisions regarding underutilized or surplus properties. Deciding whether to sell, lease, or repurpose these assets can have significant implications for mission delivery and financial sustainability. This whitepaper provides a framework to guide nonprofits through these critical decisions.
Key Considerations in Decision-Making
Mission Alignment
Assess whether the property supports current or future mission objectives.
Example: A large camp may be better suited for community programs rather than private use.
Financial Impact
Evaluate revenue potential from leasing or selling against costs associated with repurposing or maintaining the property.
Use financial modeling to project long-term outcomes.
Community and Stakeholder Needs
Engage stakeholders to understand how changes to property use will affect the organization and the broader community.
Address potential concerns regarding accessibility and continuity.
Regulatory and Zoning Considerations
Review zoning laws, easements, and other restrictions that may limit potential uses.
Consult legal experts to ensure compliance and explore rezoning opportunities if needed.
Decision Framework
Portfolio Assessment
Identify properties for evaluation based on performance metrics such as usage, cost-efficiency, and mission contribution.
Categorize properties into core assets, underutilized resources, or liabilities.
Option Analysis
Sell: Use proceeds to fund endowments, invest in core properties, or address operational deficits.
Lease: Generate steady income while retaining ownership for future flexibility.
Repurpose: Adapt properties for new uses, such as converting office space into community centers.
Cost-Benefit Analysis
For each option, analyze financial implications, timelines, and potential risks.
Include opportunity costs, such as losing future revenue from a property sold prematurely.
Implementation Planning
Develop a detailed plan for execution, including partner selection, contract negotiation, and stakeholder communication.
Establish metrics to measure success, such as revenue generation or program expansion.
Case Study: Repurposing for Revenue and Mission
A nonprofit repurposed a vacant property into a retreat facility, leasing it to a professional operator. This strategy preserved ownership, generated consistent income, and expanded community engagement.
Conclusion
By following a structured decision-making framework, nonprofits can maximize the value of their real estate assets while staying true to their missions. Balancing financial and community considerations is key to achieving sustainable outcomes.
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