2020 Nonprofit Anti-Displacement Report

Page 1

2020 NONPROFIT ANTI-DISPLACEMENT REPORT


2020 Nonprofit Anti-Displacement Report


PROJECT PARTNERS About Community Spaces Created in 2009, Community Spaces is a program under Radian that creatively and strategically connects mission-driven businesses, social enterprises, and nonprofit organizations with one another in affordable commercial spaces to meet the needs of the residents of the Denver Metro Area. Community Spaces partners with commercial building owners, developers, nonprofits and government entities to create, manage, and improve mission-driven shared spaces in Metro Denver. About the Denver Office of Strategic Partnerships Since 2004, the Denver Office of Strategic Partnerships (DOSP) has served as a bridge between the nonprofit sector and the City of Denver. DOSP believes that strong collaboration between the public and nonprofit sectors is the most efficient and effective way to strengthen communities in Denver. DOSP offers a range of programming focused on creating cross-sector partnerships, skill-building, and active collaboration. Through programs such as Community Spaces, they pioneer new ways to leverage financial, and real estate resources. Special Thanks We are so grateful to all the organizations and individuals who contributed to the 2020 Nonprofit Displacement Survey's development, distribution, and data collection. We offer a special thanks to Alicia Leitgeb and Kelsey Clark Consulting, who supported creation and analysis of the survey and report.


2020 Nonprofit Anti-Displacement Report

1 5 9 19


EXECUTIVE SUMMARY METHODOLOGY RESULTS RECOMMENDATIONS


1I

2020 Nonprofit Anti-Displacement Report

EXECUTIVE SUMMARY METHODOLOGY RESULTS RECOMMENDATIONS


2

Background

01

Denver nonprofits are highly vulnerable to involuntary displacement due to rising real estate costs and COVIDrelated pressures, leaving the communities they serve at risk of not having access to critical services. While it is too soon to grasp the full impact of COVID-19, nonprofits are being even more cost conscious and creative to best meet the needs of the communities they serve. While many nonprofit renters are re-evaluating and negotiating current and future leases, several nonprofits who own their spaces are looking to relieve economic pressure by renting out unused space.


3I

3 | 38th & Blake Anti-Displacement Station 2020 Nonprofit Report


4

EXECUTIVE SUMMARY

Denver’s decreasing affordability, both in residential and commercial spaces, continues to threaten the sustainability of many organizations, and in some cases, leads to involuntary displacement. Building off of 2015 and 2018 data, the purpose of the 2020 study is to support new Community Spaces programming and help inform City of Denver policies aimed at protecting mission-based organizations from displacement. The 2020 Nonprofit Anti-Displacement Survey was co-created from January to February 2020 with input from the Denver Office of Strategic Partnerships, local nonprofit leaders, and the real estate community. It was originally released on March 9, 2020, coinciding with the arrival of COVID-19 and the closing of office spaces throughout

the United States. Due to the onset of this global pandemic, nonprofits increasingly found themselves facing new exaggerated challenges throughout the year: managing the organizational transitions of working from home, meeting the increased needs of the communities they serve, facing economic uncertainties and staff layoffs, and adapting to changing health and safety regulations. Nonprofits in 2020 were overwhelmed and under-resourced, and in many cases, additionally stressed by their rent and mortgage obligations. Acknowledging that nonprofits were over-surveyed in 2020, we are grateful to the 73 organizations that responded to the 2020 Nonprofit Anti-Displacement Survey to help the Denver Office of Strategic Partnerships and Community Spaces better advocate for increased availability of affordable nonprofit spaces throughout Denver. Several nonprofit real estate trends, including COVID-related pressures emerged. Concerns about affordability is nothing new for nonprofits in Denver; however, the COVID-19 pandemic

exacerbated these pressures at an unprecedented scale, leaving Denver’s nonprofit and real estate sectors uncertain about how to proceed with existing and future leases and grappling with the size and type of space that is needed in the near future to successfully execute their missions.

Organizations that own their property are nearly two times more likely to feel more protected from COVIDrelated pres sures than those non profits who rent.

Background

Every two years, Radian, in partnership with Denver Office of Strategic Partnerships, collects data from Denver mission-driven organizations, including nonprofits, social enterprises, and other socially-minded businesses, to better understand the impacts of rising commercial rents and gentrification.


5I

2020 Nonprofit Anti-Displacement Report

EXECUTIVE SUMMARY METHODOLOGY RESULTS RECOMMENDATIONS


6

Methodology

02

Despite this year’s unprecedented and evolving climate, Radian is grateful to those who participated and is pleased with the wide range of valuable data collected. Although survey outreach was particularly challenging this year, our focus was to respect the urgent priorities of Denver’s nonprofits and continually adapt our engagement strategy and expectations to survey feedback.


7I

2020 Nonprofit Anti-Displacement Report

METHODOLOGY The inaugural Nonprofit AntiDisplacement Survey was conducted by the Rose Foundation and Daniels Fund in 2001. Community Spaces has since produced subsequent surveys in 2015, 2018, and now, in 2020, to continue to collect data and follow nonprofit real estate trends. Report findings focus heavily on the current nonprofit real estate landscape within the context of Denver’s rapid economic growth and COVID-related pressures. The 2020 Nonprofit Anti-Displacement Survey is divided into three main categories: • • •

Organizational Demographics & Mission Displacement Risks & Concerns COVID-19-Related Pressures

Survey Outreach & Promotion

After coincidentally releasing the survey at the onset of the COVID-19 pandemic, Radian heard and responded to the rapidly changing needs and priorities of the nonprofit sector and temporarily paused the survey for six months. Radian adapted the original survey outreach plan by increasing the nonprofit database by

more than 500 organizations, all of which received an industry-specific email requesting that they take and share the survey. In addition to individually reaching out to more than 40 organizations, including personalized emails and Zoom meetings, the survey was distributed to and promoted by three Denver City Council members and other community partners through their social media, internal email distributions, and e-newsletters with an approximate reach of nearly 10,000 unique viewers. Several organizations that promoted the 2020 Nonprofit AntiDisplacement Survey include: • • • • • • •

Denver Office of Strategic Partnerships Denver City Council Members Posner Center Consultants For Good Housing Colorado Colorado Nonprofit Association Denver Office of Economic Development (DEDO)

Lastly, Radian updated the survey to include both pre- and post-COVID-19 survey questions to learn more about

how our current global pandemic is locally impacting organizations.

Challenges

While the timing of the 2020 survey offered a ripe opportunity to collect real-time data, it also displayed several challenges. A few include: •

• •

• •

Lack of time and capacity for nonprofits to complete the survey due to the prioritization of COVID-19 related client/patient crises. A rapidly changing context that required nonprofits to take on expanded scopes with reduced budgets. Survey fatigue caused by multiple, simultaneous nonprofit surveys. Survey trauma that forced nonprofits to revisit their organization's challenges and struggles at a time when they felt most vulnerable. Inability to meet in-person due to social distancing restrictions. Compounded COVID-related uncertainties, making it difficult (and sometimes impossible) to answer detailed real estate questions.


8

Hesitation from organizations to share with their networks in an effort to not overwhelm their partners or desensitize them from other urgent information.

Learnings

In an effort to gain learnings for future research, Radian sought feedback from respondents and other nonprofits leaders on the design and distribution of the survey. Prominent feedback suggested a more hybrid approach to engagement and slight modifications to the survey.

Hybrid Approach To Engagement

For future studies, Radian recommends additional qualitative research, such as focus groups and one-on-one interviews. Many nonprofits are unsure how COVID-19 pressures will impact their organizations and communities. Due to these uncertain times, nonprofits shared that they would feel more comfortable offering personal information, divulging organizational struggles, and brainstorming creative solutions in a more intimate setting.

Modification To The Survey

Crafting a shorter survey (roughly 5 minutes or 10 multiple choice questions) is recommended to attract more respondents. Respondents shared they felt overwhelmed taking the survey and believed that some of the questions did not apply to their organization. Several participants stopped filling out the survey midway and never submitted the responses they had completed. During the second round of survey outreach, Radian decided to incentivize nonprofits with a chance to win $500 to use as they wish for their organization. Radian saw a slight increase in respondents after communicating this incentive and would recommend incentivizing the survey in a variety of relevant ways in the future. Despite this year’s unprecedented and evolving climate, Radian is grateful to those who participated and is pleased with the wide range of valuable data collected. Although survey outreach was particularly challenging this year, our focus was to respect the urgent priorities of Denver’s nonprofits and

continually adapt our engagement strategy and expectations to survey feedback. It is now our priority to advocate for the implementation of these data-driven recommendations so that all Denver nonprofits can benefit from the feedback.

The 2020 survey was fairly lengthy and included detailed real estate questions. The success of this survey was the quality of data collected and analyzed rather than the quantity of respondents.

Methodology


9I

2020 Nonprofit Anti-Displacement Report

EXECUTIVE SUMMARY METHODOLOGY RESULTS RECOMMENDATIONS


10

Results

03

In total, 73 mission-driven organizations, serving a widevariety of populations from low-income to persons with disabilities to immigrants and refugees, responded to the survey. Organizations range in age from start-ups to 162 years operating with a healthy mix of owners and renters.


11 I 2020 Nonprofit Anti-Displacement Report

SURVEY PARTICIPANTS Type of space the organizations currently working from

Privatively Owned (18) Privatively Leased (29) Co-Working Space (13) Remote (10) Others (3)

Age of organization (in years)

100 50 10 1


12

RENTER

What type of space do you primarily work out of?

AGE

What is the age of your organization?

28

76%

14 6

Rented (46) Owned (14)

86%

19- 37 yrs

Nonprofit

38- 72 yrs 73- 162 yrs

Remote Locations (10)

70 ANSWERED

What type of organization do you work for?

1- 18 yrs

24

Rented

MISSION

72 ANSWERED

Nonprofit (501(c) status) (36)

Mission-driven Business (10)

Social Enterprise (10)

Others (10)

“Our nonprofit tenants are struggling to pay rent and are unlikely to renew their leases in 2021. This puts our organization in a precarious position as we are still responsible for paying our rent while we manage an empty co-working space.”

72 ANSWERED

Seventy-three mission-driven organizations, serving a wide variety of populations from low-income to persons with disabilities to immigrants and refugees, responded to the survey. Seventy-six percent are renters (or have donated space, but do not own) and 24 percent own their property.

Most respondents, 63 out of 73 (or 86%) claimed a 501c3 status, with the remaining 10 respondents comprising for-profits, social enterprises, and other mission-driven organizations. Respondents represent many industries from health care to foundations to social service agencies, with the majority of nonprofits working in direct/public services.

Results

SUMMARY


13 I 2020 Nonprofit Anti-Displacement Report

DESIRED LOCATION Is your current location ideal for serving your mission?

Adequate No Yes

What is your organization's geographic area of focus?

1-2 3-5 6-11


14

How important is access to transit (bus, train, light rail)?

MOVE

Did you move in the last 5 years ? If so, why?

37%

74%

Yes

Important

Important(51)

Not important (7)

Neutral (11) 69 ANSWERED

Better Location (9)

Less space (4)

Unaffordable (7)

Did not move (16)

More Space (3)

Others (21) 60 ANSWERED

SUMMARY Universally, nonprofits (particularly those working directly with communities) desire locations close to the populations they serve. Ninety percent of respondents (62 out of 69) shared that it is ‘important’ to ‘very important’ for their organizations to be close to public transportation, such as light rail and bus. Preliminary data suggests that 19 out of 42 (or 45%) of nonprofits believe that COVID-19 will exacerbate their

displacement risks. It is important to note that organizations that own their property are nearly two times more likely to feel more protected from COVID-related pressures than those nonprofits who rent.

“If property taxes keep rising, we just won’t be able to afford it and we will have no choice, but to sell and move.” “We bought our space in 2019. Our plan was to rent out space starting in March 2020, but have not been able to. I worry that without this income it will be hard to keep our space under current restrictions on visitation and limits on fundraising.”

Results

TRANSIT


15 I 2020 Nonprofit Anti-Displacement Report

GENTRIFICATION OF NONPROFIT NEIGHBORHOODS Do you perceive gentrification as a problem in the area where your organization is currently located? If so, at what stage? Already gentrified At Risk of gentrification Currently gentrifying Not Applicable

Neighborhood Gentrification Levels According to Blue Print Denver

Already gentrified Vulnerable to gentrification


16

MOVE

Was your organization's most recent move a result of direct or indirect displacement?

SPACE

How do you expect your space needs to change in the next 2 years? (previous to COVID-19)

RISK

21%

40%

Agree

Displacement

26

18 Agree(16)

Other

56 ANSWERED

2 Different Location

Due to COVID-19 (3)

5 Less space

Neither (34)

Indirect/Other (6)

More space

Direct (13)

Do you currently perceive your organization to be at risk of displacement? (previous to COVID-19)

Disagree (41)

Neutral (13)

51 ANSWERED

“Our building is nearly 100 years old. I worry that there will be many costs associated with upkeep in the near future.” “We may have to lay off staff and then will not need so much space.”

70 ANSWERED

SUMMARY

Twenty-four out of 64 respondents, or nearly 40 percent, shared that their nonprofit has moved in the last 5 years. The top reasons being to find a better location, followed by seeking more affordable rent.

Of 56 organizations who shared they have moved recently, nearly 40 percent (or 22 out of 56 responses), contributed their most recent move to either direct or indirect displacement pressures, including COVID-related reasons." Nonprofit property owners of nonprofits owning their building had two concerns emerged: the ability paying for rehabilitation on aging buildings and rise in property taxes.

Of the nonprofit spaces that are not complying to ADA standards, the main reason why is due to the cost associated with making updates to the building. Many nonprofits own older spaces making it cost-prohibitive to rehabilitate.

Results

Overwhelmingly, nonprofits who own their properties are far less afraid of being involuntarily displaced than their peer nonprofits who are renting.


17 I 2020 Nonprofit Anti-Displacement Report

ASSISTANCE

Have you applied for COVID-related government assistance?

89%

ASSISTANCE

37

Yes

Have you requested rental/ mortgage relief from your landlord or lender? 8

NO 77%

YES 17%

RISK

Do you perceive that COVID-19 has exacerbated displacement pressures for your o rganization?

YES (19) 40 %

3

NO (22) 46 % Yes (41) No (5)

46 ANSWERED

RENEWAL

Within the context of COVID-related pressures, do you expect to renew your lease?

45 ANSWERED

CHANGE

Which of the following is true for your organization as caused by the COVID pandemic?

44 ANSWERED

23

11

15

12

6 Other

41 ANSWERED

Funders and clients reduced

No Space

No (2)

Not Sure (10) Other (15)

Reduced services, programs, projects, or events

More space

Yes (14)

Working Remotely

How do you expect COVID-19 will change your organization’s relationship to space needs in the future?

Less space

Yes

SPACE

Same Space

34%

43 ANSWERED

46 ANSWERED


18

COVID - 19 PRESSURES Nonprofits are trying their best to re-strategize, predict, and adapt to an uncertain future in a post-pandemic context. There are concerns that even small incremental increases in rent, coupled with a reduction of fundraising dollars due to current economic pressures, may impact a nonprofit’s ability to stay in their current space. COVID-19 social distancing restrictions

are also increasing operational challenges, particularly for those nonprofits that operate with the public. More than half of renters shared that even prior to COVID-19, their space was not optimally functional for their needs.

Size of Space

Nonprofits are reconsidering the type and amount of space their organizations need due to a variety of reasons, such as, changing budget

considerations, health concerns, reduction in number of staff, personal comfort levels, and/or an increasing desire to work from home. Many direct/public nonprofits like food banks and homeless shelters are requiring additional space to adhere to the growing community needs and comply with social distancing requirements.

“The need is overwhelming. It has been a challenge to accommodate all of the need, while complying to social distancing guidelines. Our fundraising dollars have been nearly slashed in half. We have so many things to consider for 2021.”

Results

“Most employees are working from home and fundraising revenues have decreased dramatically. So, we are considering moving, offering space for sublet or returning some of the offices to the landlord.”


19 I 2020 Nonprofit Anti-Displacement Report

LANDLORD

Who is your Landlord ?

BUDGET, LEASE AND SPACE TYPE Current & Future Leases

Private

25 19

Non Profit

1 City 20

Others (Donations)

65 ANSWERED

SHARED

How has COVID-19 changed your interest of shared spaces?

30 %

Of the 35 respondents, 60 percent (or 21 out of 35) report that their lease will be ending by the second half of 2021. Many nonprofits who are renting, are exploring the advantages and disadvantages of extended leases.

Real Estate Budget

61% Same

9% Remained same (27)

The majority of leases, 24 out of 35 (or 69 percent) of respondents are 1-3 years followed by 29 percent of organizations (or 10 out of 35 respondents) signing 3-5 year leases. With the remaining leases ranging from month-to-month to 99 years. There is nearly a 50/50 split between gross and non-gross leases. How nonprofits learned about their current space varied greatly from leasing agents to word-of-mouth to Zillow to for-profit sponsors.

Increased (13)

A majority of respondents (90%) reported their total annual real estate budget was $40,000 or less, with 61 percent of the total respondent’s real estate budgets being $20,000 or less. Of those who are renting (or have a mortgage), the cost per square foot

Decreased (4) 44 ANSWERED

ranges from $10.50 to $40 per square foot. Several nonprofits have had their space either 100 percent donated or partially subsidized by their landlord. In every case, the landlord was a nonprofit or government entity.

Co-working Spaces

Co-working space continues to be desirable in the long-term with the advantages of affordability, shared resources, and increased opportunities to collaborate with complementary organizations. However, the cost to accommodate new regulations regarding office safety and social distancing, as well as COVID-related design improvements, such as way finding and acoustics, are a concern for both landlords and tenants. A prominent trend among nonprofits is securing affordability through renting out additional spaces to other nonprofits, acting as informal coworking spaces to generate revenue and increased collaboration. These nonprofits, who manage formal or informal co-working spaces, are especially at risk as nonprofit tenants are increasingly unable to pay rent.


20

6

2

46 ANSWERED

LEASE

In the future, will you prioritize more flexible or shorter lease terms?

7

11

18

No

Not Sure

12

Yes

15

75K -100K

A top priority for organizations continues to be finding quality spaces that are aesthetically appealing, such as having access to natural light, and in close proximity to the populations they serve.

11

50K - 74K

Quality of Space

What is your annual budget for real estate?

20K - 49K

Will our tenants return to working in our building? We own our building and have too much space. We are thinking about renting our space out, but honestly, are not sure how to start the process. Are there resources available to help us with this transition? What will we have to do to make our space safe from COVID-19? How much will that cost us? How long will it take? How will social distancing impact our established building culture? Will demand for co-working spaces eventually be higher? If so, will we get priced out? How do we keep our building community focused while also keeping everyone safe?

BUDGET

1K - 19K

I am a contractor and am currently deciding if I should renew my co-working space lease. I still love the idea of shared space and truly miss the creative collaboration and vibes. How will the building keep the amazing culture of collaboration it created when it reopens? I believe in the value of nonprofit co-working spaces long-term, but how will we get through 2021? We have 3 more years on our lease.

Donations

Landlords and tenants posed the following questions:

36 ANSWERED

“Accessibility advocates have reached out to me and candidly shared the challenges they face entering and exiting our co-working space in a wheelchair. It really affects which nonprofits will rent space with us or not. A mechanical ramp would cost $10,000. We are all pursuing equity and inclusion, but haven’t been able to find a grant to cover those types of tenant improvements.”

Results

Nonprofit landlords of formal and informal co-working spaces are reviewing what types and lengths of leases maintain affordability, meet their needs, and offer the least risk. While more flexible leases can be more attractive to risk-averse tenants, this option comes with heightened instability due to potential increases in rent, and/or lack of protections longterm.


21 I 2020 Nonprofit Anti-Displacement Report

EXECUTIVE SUMMARY METHODOLOGY RESULTS RECOMMENDATIONS


22

Conclusion

04

In conclusion, nonprofits in 2020 were overwhelmed and under-resourced, and in many cases, additionally stressed by their rent and mortgage obligations. Nonprofits will require additional financial and programmatic support in 2021 while they take the time required to adapt to and recover from the after effects of a global pandemic and subsequent economic recession.


23 I 2020 Nonprofit Anti-Displacement Report


24

RECOMMENDATIONS 01 Funding 02 PROGRAMMATIC

03 RESEARCH

Adapt Community Spaces to respond to an evolving midCOVID context, including developing an inventory of shared space vacancies, formalizing a matchmaking database, and connecting nonprofits to affordable space. Encourage collaboration among nonprofit advocacy organizations to share existing research, develop a collective vision, apply for joint funding, align on priorities, and leverage complementary strengths that best support nonprofits and prevent duplication of efforts. Create a city-wide nonprofit equity scorecard to determine eligibility for financial assistance and subsidized space. Be a centralized resource and referral hub for nonprofits to existing nonprofit advocacy organizations and resources through a nonprofit website landing page.

Conduct an audit of current (and potential) co-working real estate opportunities in Denver. Evaluate the interest levels and underlying infrastructure of the potential for nonprofit co-op spaces in Denver.

Conclusion

Expand a rental assistance fund tailored to local nonprofits. Explore opportunities to subsidize nonprofits through an equitable selection process, including city and corporate sponsorships. Create and/or grow a relief fund for nonprofit property owners to support rehabilitation projects, including ADA accessibility tenant improvements and other important safety compliance upgrades. Create and/or grow a relief fund for nonprofits that promotes office safety protocols, social distance design, and COVID-related tenant improvements, such as wayfinding, acoustics, and enhanced cleaning.