As IFF CEO Joe Neri wrote recently in an article for Nonprofit Quarterly, facilities communicate, sending a message about what their organizations value. For many nonprofits, ever present pressure to devote as much funding as possible to programming means facilities too often fall by the wayside, preventing organizations from creating inspiring spaces that amplify the impact of mission-driven work and send a clear message to occupants, visitors, and the neighborhood that they are important, with intrinsic value, and a realizable vision of hope.
Operating in this environment, the perceived cost of developing a facility ideally suited to the organization’s mission can become an impassable roadblock to even considering such a project. And while cost is a real factor in a nonprofit’s ability to purchase, lease, renovate, or build a facility optimized for its needs and that of its community, getting a ballpark understanding of what’s needed to do a project is the only way for nonprofits to determine if it’s even possible.
With that in mind, we’ve compiled an overview below of real estate and construction costs associated with facilities projects. Our goal is to provide nonprofit leaders and their boards with a basic understanding of these costs as a starting point to estimate the financial capacity needed to create spaces that increase efficiency, maximize impact, and reflect the true value of the work that takes place in them.
While the list may look intimidating, and there’s no denying that real estate and development projects are significant undertakings, it’s important to remember that:
-Every project won’t incur every cost on this list
-Project budgets are living documents, and an initial estimate is just that. The project (and budget) will evolve as more information becomes known over time through a formal feasibility study and the predevelopment process, and the initial estimate will move closer to becoming a final project budget. Don’t devote too much time or energy to trying to fill precise numbers for every line in the budget when first assessing the potential cost of a facility project
-Breaking projects up into multiple phases can be an effective strategy to develop high-quality, functional spaces over time within the financial capacity of the organization
-There are a variety of partners nonprofits can lean on for support. Real estate and construction projects require specialized expertise that may not exist within the organization (nor should it). Working with partners who can help bridge those gaps and reduce the time burden for the organization by helping solve financial, real estate, and construction challenges is essential, both in developing a budget that aligns with the available resources and as the project progresses and evolves over time
Keeping that in mind, here’s what to consider when estimating the cost of a project:
- Acquiring a Building or Land
- Furnishings and Equipment
For help calculating an initial estimate of the cost for any of the categories above, or to discuss how to assess what costs are necessary based on specific organizational needs, please contact Cheryl Baur at cbaur@iff.org or Robin Toewe at rtoewe@iff.org, our real estate experts.
IFF has helped more than 1,100 nonprofits across the Midwest develop almost 36 million square feet of real estate since 1988, and that experience can be an invaluable resource in assessing whether a facility project is possible based on the organization’s needs and budget.
