Around the Atlanta business community, we hear all the time that Atlanta is a major hub for large for-profit companies. There are 16 Fortune 500 headquarters located in the metro area, behind only New York and Houston among U.S. cities.
You don’t hear nearly as often how important Atlanta is to the nonprofit community, but the metro area has attracted five of the top 30 organization headquarters on the Chronicle of Philanthropy’s 2015 Philanthrophy 400 list. Eleven more Philanthropy 400 HQs reside in Georgia, giving the state — and the Atlanta area — a robust collection of nonprofit organizations serving a wide variety of causes.
Why is Atlanta so attractive for nonprofits? We talked to Chip Grizzard, CEO of Atlanta-based Grizzard Communications, one of the country’s leading organizations focused on nonprofit fundraising and direct marketing communications, and he gave four reasons:
Whether an organization is for profit or nonprofit, a major draw is the busiest airport in the world. For large international charities, like the ones near the top of the Philanthropy 400 list, the airport means quick, convenient access to people and dollars. It means knowing you can quickly get anywhere in the world to make a big face-to-face pitch for a major donation.
Even for smaller nonprofits, Hartsfield-Jackson International Airport can be a boon. It allows them access to frequent, inexpensive, direct flights anywhere in the country. Many Atlanta nonprofits cite the airport’s presence as a reason they’re better equipped to accomplish their goals than a similar nonprofit in another city without access to the same superior transportation infrastructure.
With 19 universities and graduate institutions – along with another 13 colleges – within 75 miles of Atlanta, the area adds more than its share of prepared, educated young people to the workforce every year. And with three of those universities – Emory, Georgia Tech and the University of Georgia – being listed among U.S. News & World Report’s top 60 in the country, there are plenty of high-quality graduates to choose from, many of whom would like to stay and work in the Atlanta area.
In addition, both Georgia State and UGA have nonprofit management degree programs ranked among the top 15 in the nation. This means many graduates are not only well educated but are trained to help area nonprofits directly, whether that’s through internships while in school or bringing fresh, new ideas to the job post-graduation.
Critical mass of potential corporate donors
Atlanta’s reputation as a Fortune 500 hub can also be seen as a boon for nonprofits. Home Depot, UPS, Coca-Cola and Delta are just a few of the more prominent Atlanta-based multi-national corporations that regularly make significant charitable contributions to a wide range of causes.
Local nonprofits have a chance to work closely with these sorts of companies, building relationships, partnerships and potentially receiving significant donations. And it doesn’t have to be donations. Nonprofits can benefit from corporate partnerships in many ways, including strategic marketing approaches that can benefit both parties.
Low cost of doing business
Because the cost of living in the Atlanta metro area , it has become one of the most affordable large cities in the country. This makes it particularly attractive to nonprofit organizations, especially the smaller ones dealing with tight budgets. It also allows them to keep salaries at a manageable level compared to other major metros that are substantially more expensive like New York or Los Angeles.
Combine this with Atlanta being the most cost-friendly business location among large cities, and it’s not hard to see why the area attracts plenty of interest from the nonprofit sector. Much of that modest cost comes back to office least rates, which have consistently been more cost effective than in most other major metro areas, sometimes coming in at half the cost of comparably sized cities. When less of the nonprofit’s donations are going toward overhead, more of the money can flow toward the people who need it.
Problems and Solutions for Nonprofits
The acquisition of real estate is one of the most important decisions many organizations ever make. But because real estate is not their area of expertise, some nonprofits are underprepared to both make and act on the decisions necessary to provide adequate housing for their operations and client services. Why does this happen? How can you avoid it? Read on.
Five Mistakes Some Nonprofits Make
- Procrastination – Everybody does it, especially for tasks perceived as difficult, taxing, costly, or time-consuming. Unfortunately, procrastination in exploring a real estate solution can be financially and operationally disastrous, as options and negotiation leverage decline the closer you get to lease expiration.
- Undercapitalization – Many nonprofits lack detail about the market in their area, and in using their existing lease as a baseline, underestimate the current cost of leasing or purchasing. They also do not account for the price of constructing new space and moving, which can often equate to two to three years of rent.
- Time Underestimation – People often frame all real estate activities in the context of buying a house or finding an apartment — stressful, but relatively short processes. In reality, the commercial space search is a very different process that requires more resources, more effort, more preparation, more funds, and more time. Failing to accommodate the “mores” results in fewer options that cost — you guessed it — more. Signing a lease or purchase agreement is one of many steps in a process that can take as long as two years.
- Organizational issues – Most nonprofits operate in a collaborative environment, which can create challenges in the real estate process. Due diligence and decision making take longer, and unless all constituents are consulted throughout the process, a “done” deal can be shot down at the last minute, costing time, leverage, and possibly the location itself.
- Excess thriftiness – Nonprofits are protective of their funds, but real estate success usually requires brokerage, architectural, and engineering expertise beyond the knowledge of even the most savvy in-house staffers. Without professional assistance, an organization can end up in inefficient space ill-suited to their everyday operations and overall mission.
- Get all your ducks in a row. Determining operational, financial, and qualitative requirements is a difficult task. Staffers’ opinions may differ from funders, board members, and other constituents; wish lists do not reflect the funds available; and gaining consensus among all those stakeholders can be a challenge. Gathering documentation and doing due diligence before the process begins will streamline this exercise and set the stage for the activities that follow.
- Start early. Coming to a consensus about what the organization needs, going out to find the right location, negotiating to acquire it, and building out the space takes a long time. Renewals and expansions happen faster, but nonprofits considering relocation should start the process at least 18 months in advance of lease expiration.
- Understand the Benjamins. Knowing how much the organization spends on real estate — and can spend in the future — is an important part of due diligence.
Raising funds for a dream location should take place in advance of the real estate process, as the capital assumed available for rent, investment, and construction is one of the baselines on which all activities, financial modeling, and decisions are made.
- Assemble the best team. People say you get what you pay for, and in the case of the real estate process, paying for expertise and experience supports the best possible outcome. Pro bono brokerage, legal, architectural, and other representation sounds good on paper, but their priorities sometimes remain with paying clients. And unless an internal resource has training in a related specialty field, activities such as term negotiation, financing, design, and construction should be left to the professionals.
- Support internally. Allocating an internal resource as project lead and/or creating a real estate committee to oversee the initiative are also smart ideas as they act as a central point of contact/coordination for activities, communication, and decisions. Until the objective has been achieved and the new location occupied, this designated point person should have a singular focus: the initiative.
The process of finding a location that fits an organization’s needs and contributes to the successful serving of its subject constituents does not have to be a terrible experience. A little preparation can go a long way — as 5.2 million Boy/Girl Scouts across the U.S. would say!