Should social service non-profit organizations ever own property?

For the last few weeks, I’ve been working pledge cards for one of my favorite charities. I must admit that I’m having a blast. The conversations with local philanthropists and donors are so engaging and thought-provoking. Frankly, I’ve been surprised by what some donors believe and in some instances those encounters have turned into interesting blog posts. Today’s post was inspired by one donor’s passionate belief that social service non-profit organizations shouldn’t ever own property.

Oh sure . . . hospitals and colleges are non-profit corporations, and there is little question that those organizations need to own the property and buildings in which they operate. However, some donors in my hometown of Elgin, Illinois don’t believe that the same is true for social service agencies.

Why?  Well, this is an interesting question that comes with a long answer.

Let’s just say that more than 10 years ago one of Elgin’s more stable non-profit agencies ran a capital campaign, expanded their building (dramatically), and couldn’t afford to operate within such a dramatically expanded building footprint. Long story short . . . the new building was “sold” within a few years of opening, and the agency had to merge with another organization from outside the community to ensure services continued.

So, what is this really all about? I think it is about donors having LONG MEMORIES. Additionally, the following old expression keeps echoing through my head:

“Fool me once shame on you; fool me twice, shame on me!”

As you can imagine, I did my best to engage this donor in a conversation. Here were some of the highlights of what I said:

  • Not all non-profit organizations go out-of-business.
  • Not all non-profits conduct business that can be accommodated by existing rental opportunities.
  • Not all non-profits have an unstable revenue model or operate under a cloud of financial uncertainty.

In the end, there was no changing this donor’s mind, and it is easy to understand why. He invested and now feels burned. He passionately argued the following powerful points:

  • Too many social service agencies lack organizational capacity and are stretched too thin. Funding expansion of an agency that has a culture of operating on a shoe string can be like stretching a rubber band too far.
  • Too many social service agencies don’t operate within a culture of transparency. They sell donors on a capital campaign contribution. Their operations expand, and the agency is back in no time asking for more operating cash to fund their larger footprint. If this was all explained at the same time as the capital campaign solicitation, then that would be one thing, but when that doesn’t happen it leaves a bad taste in the donor’s mouth.
  • What is the real estate market suppose to do with buildings that are built specifically around specialty functions of a social service non-profit agency? These buildings aren’t just office spaces with cubicles that can be re-sold to any number of potential buyers. Oftentimes, social service organizations are building spaces unique to their services.

I get it . . . I get it . . . Fool me once; shame on you; fool me twice, shame on me! I may not agree with this donor, but I definitely get it and respect his feelings.

So, what are your thoughts? Do you think social service non-profits should place a premium on renting rather than owning their home? What would you have said to this donor that I might not have? Is there a more donor-centered fundraising approach that should be used when soliciting for a capital campaign so that future annual support won’t be jeopardized?  Any suggestions on how a donor like this one can be re-engaged? Please use the comment box below and share your thoughts. We can all learn from each other.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847


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