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EFPRnonprofit: Shared Space: Costs and Benefits

Young entrepreneurs using laptop while working at casual office. Copy space.

Reviewed by Christopher Johnston, CPA, Partner

If your not-for-profit is looking for significant ways to cut costs, one of the best ideas is to target your workspace. Sharing an office or other facility can help you slash rent or pay a mortgage, as well as cut utilities expenses. These arrangements can also provide other, less obvious cost-busting benefits, such as enabling you to share equipment, supplies, services and even staffers. But before you jump at this opportunity, consider potential snags.

Exploring options

Shared space usually refers to workspaces shared by nonprofits, small businesses, freelancers, consultants and others. Depending on their needs, tenants can pay for short- or long-term access to private offices, conference rooms and common areas. Office equipment and services, such as internet, copiers/printers/scanners, and coffee are shared.

You may have access to several types of arrangements. For example, you might join forces with another nonprofit — perhaps one that serves the same population. Together, you could rent a shared facility, enjoy cost synergies and even improve services you offer clients. You might rent additional unused space to other organizations, generating revenue to offset your rent obligations.

Other options include:

Dedicated shared workspaces. These commercial arrangements generally welcome a variety of organizations, but some cater primarily to nonprofits. In addition to other shared items, they might offer “back-office” services such as HR and IT.

Private foundation offices. Some private foundations have more space than they require and lease out the excess to charities. By leasing to tax-exempt organizations, they avoid steep property taxes and pass the savings along to their tenants in the form of reduced rent.

Donated space. A for-profit business in your community or an individual supporter of your nonprofit might be willing to donate space.

Mixed blessing

The most obvious benefit of sharing space lies in the cost savings compared with renting or buying your own space. But you may encounter obstacles when looking for a satisfactory arrangement. Some nonprofits, for example, might not want to share space with “competing” organizations that serve the same population or go after the same funding sources.

A culture clash after you’ve committed to sharing space with other organizations and have moved in is another possibility. Also think about potential legal issues, including lease obligations, compliance requirements and possible liabilities. You may be able to head off such problems by making site visits, both scheduled (to get the sales pitch) and unscheduled (to get a more realistic lay of the land) and by getting to know potential officemates before signing on the dotted line.

Your best move

Depending on location, your nonprofit may feel it’s being squeezed by rising rents. On the other hand, the opposite may be true and you’ve seen plenty of empty spaces in your community renting or selling for a song. If you’re ready to reconsider your current workspace, contact us for help determining the best move.

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