Real Estate Readiness: A Workshop Series for Arts and Culture Nonprofits

Transcription

1 Real Estate Readiness: A Workshop Series for Arts and Culture Nonprofits Movimiento de Arte y Cultura Latino Americana in downtown San Jose Presented by : The Northern California Community Loan Fund May 24, 2015 Stephaney Kipple Andrea Papanastassiou Jack Tse

2 AGENDA and Staff and Geographic Considerations Survey Tool Comments and Questions 2

3 Mission NCCLF promotes economic justice and alleviates poverty by increasing the financial resilience and sustainability of nonprofits and enterprises. Through flexible financial products and sound advice, we create opportunities to make socially responsible investments that revitalize Northern California communities. Vision NCCLF envisions financially strong and culturally vibrant communities where each person has access to decent jobs, homes, health care, education, and economic opportunities. We work in partnership with individuals and organizations who share our vision of sustainable communities and social and economic 3 justice.

4 NCCLF OVERVIEW Investing in opportunity, together. Lending & NMTC Consulting Socially Responsible Investing Policy

5 NCCLF OVERVIEW NCCLF CONSULTING & TRAINING PROGRAM Helping nonprofits use their resources strategically Real Estate Consulting Workshops and individual consulting engagements that help nonprofits manage their real estate resources. Lease vs. Buy Analysis NMTC Feasibility Analysis Facility Strategic Real Estate Coaching

6 NCCLF OVERVIEW NCCLF CONSULTING & TRAINING PROGRAM Helping nonprofits use their resources strategically Management Consulting Workshops and individual consulting engagements that strengthen the financial management capacity of nonprofit leadership. Assessments Business Model Optimization Budget Development Cash Flow Management Education 6

7 MISSION FIRST, THEN REAL ESTATE Neighborhood Impact Building Business Plan / Outcomes Programs Mission / Vision 7

8 DEVELOPMENT PROCESS Real Estate Readiness Feasibility & Facility Strategic Pre- Development Project Management Before is Secure After is Secure 8

9 REAL ESTATE READINESS, Staff, and Board Property/Asset Management NCCLF provided Flight Deck/Ragged Wing ensemble with Management and coaching.

10 FACILITY STRATEGIC PLAN What do you need? What is your plan? Considerations planning Program uses: current, ideal, and minimum Lease vs. Buy Analysis Lease negotiations/purchase agreements NCCLF provided consulting services for the space planning, site selection, financing for Girls, Inc s Simpson Center.

11 PREDEVELOPMENT Securing Financing Options (A&E) NCCLF provided consulting services to Destiny Arts; assisting in Assessment, and Acquisition consulting for the organization. NCCLF also provided financing for the purchase of their building.

12 PROJECT MANAGEMENT Design Coordination Construction Bidding Construction Management Reporting to and Compliance with Funders

13 REAL ESTATE READINESS What is your capacity? Look through three different lenses: Staff & Board

14 ORGANIZATIONAL CAPACITY Clear Mission, Vision & Strategy? Governance & Leadership? Business Plan for the Future? Strategic Relationships? Systems & Staffing for: Program Delivery? Impact Measurement? Resource Development? Internal Operations & Management?

15 Programs ORGANIZATIONAL CAPACITY What stage is your organization in? Start - Up Growing Maturity Simple Programs Mix of diverse programs Strong commitment to service delivery Programs begin to establish themselves More consistent program delivery Core programs established & recognized in the community Long-range program planning Programs function well Staffing Mostly Volunteers Small enthusiastic staff Family culture More staff Division of Labor No formal personnel policies Larger, more specialized staff Professional managers hired Systems Small Budget Limited accounting system Dependent on few funding sources Established relationship with key funder(s) Cash flow challenges Reliable and diverse funding streams Significant cash reserves Fundraising staff

16 ORGANIZATIONAL CAPACITY Plans that Shape Facility Decisions Strategic Plan: How your organization s programs carry out your Mission & Vision. Business Plan: How your programs operate to deliver their desired outcomes. Facility Plan: needs, corporate structure, financing and timing based on the Strategic and Business plans. Capital Campaign Plan: Marketing for donations and fundraising required.

17 STAFF & BOARD CAPACITY Indicators of Stable & experienced leadership team Dedicated Project Manager Staffing to continue operating programs Board Facility Committee Defined roles & responsibilities Defined decision-making process

18 FINANCIAL CAPACITY Indicators of strength: Increasing net income Healthy reserves Healthy financial ratios Fundraising capacity systems to track sources and uses of funds Strong budget development, variance monitoring, contingency planning processes

19 FINANCIAL CAPACITY Assessment Position: ability to pay debts, meet unexpected financial challenges, undertake new opportunities Performance: business model, changes in revenue & expenses, revenue diversity, fundraising strategies

20 FINANCIAL CAPACITY Assets Current Assets Cash and cash equivalents 6,843 Prepaid Expenses 12,760 Grants Receivable 155,264 Total Current Asseets 174,867 Property and Equipment Buildings and Building Improvements 594,600 Leasehold Improvements 370,156 Furniture, Fixture, Equipment 277,331 Less: Accumulated Depreciation (617,001) Total Fixed Assets (Net) 625,086 Total Assets 799,953 Liabilities and Net Assets Current Liabilities Accounts Payable 106,176 Accrued Expenses 144,679 Current portion of loan 15,405 Total Current Liabilities 266,260 Long Term Liabilities Mortgage Loan 331,186 Total Long Term Liabilities 331,186 Net Assets Unrestricted 181,471 Temporarily Restricted 21,036 Total Net Assets 202,507 Total Liabilities & Net Assets 799,953 Balance Sheet: Statement of Position Snapshot Overall financial health at a moment in time Assets What you own Liabilities What you owe Net Assets Difference between what an organization owns (assets) and what it owes (liabilities) Equity; retained earnings 20

21 FINANCIAL CAPACITY Multi-year Budget Tied to strategic goals and objectives Looks at long-term health Saves time and effort in preparing annual budget INCOM E FY1 FY2 FY3 Government 477, , ,000 Foundation Grants 415, , ,200 Individual Contributions 62,000 75, ,000 Earned Income 25,500 26,265 27,000 M iscellaneouse Total Income 980,700 1,021,245 1,051,882 EXPENSE Salaries 570, , ,000 Consultants 140, , ,410 Supplies 86,700 89,301 91,980 Training 1,800 1,854 1,910 Insurance 11,252 11,590 11,937 Rent 75,600 77,868 80,204 Dues and Subscriptions 1,500 1,545 1,591 Telephone 6,000 6,180 6,365 Utilities 3,600 3,708 3,819 Repairs & M aintenance 5,000 5,150 5,305 Accounting and Legal 12,000 12,360 12,731 Deprecaition 7,500 7,725 7,957 Advertising 5,600 5,768 5,941 Special Events 40,000 41,200 42,436 M iscellaneous 4,000 4,120 4,244 Total Expenses 971,385 1,013,427 1,043,830 Net Operating Income 9,315 7,818 8,053 21

22 FINANCIAL CAPACITY What are your trends and projections? Net Income, unrestricted cash Growth of donor/subscriber base (c) Northern California Community Loan Fund

23 FINANCIAL CAPACITY Healthy Reserves Operating reserves equal to 3-6 months operating expenses Capital reserves for repair or replacement of fixed assets Opportunity reserves for future expansion or alternative endeavors Measuring Your Organization s Reserves Days Cash = (Cash + Cash Equivalents) x 365/Operating Expenses-depreciation Indicates the number of days the organization can pay its obligations without any new cash inflows (Benchmark: 90 days of cash)

24 FINANCIAL CAPACITY BUDGET: FY1 INCOM E Government 477,900 Foundation Grants 415,000 Individual Contributions 62,000 Earned Income 25,500 M iscellaneous 300 Total Income 980,700 EXPENSE Salaries 570,000 Consultants 140,833 Supplies 86,700 Training 1,800 Insurance 11,252 Rent 75,600 Dues and Subscriptions 1,500 Telephone 6,000 Utilities 3,600 Repairs & M aintenance 5,000 Accounting and Legal 12,000 Depreciation 7,500 Advertising 5,600 Special Events 40,000 M iscellaneous 4,000 Total Expenses 971,385 Net Operating Income 9,315 BALANCE SHEET: Assets Current Assets Cash and cash equivalents 6,843 Prepaid Expenses 12,760 Grants Receivable 155,264 Total Current Asseets 174,867 Property and Equipment Buildings and Building Improvements 594,600 Leasehold Improvements 370,156 Furniture, Fixture, Equipment 277,331 Less: Accumulated Depreciation (617,001) Total Fixed Assets (Net) 625,086 Total Assets 799,953 Liabilities and Net Assets Current Liabilities Accounts Payable 106,176 Accrued Expenses 144,679 Current portion of loan 15,405 Total Current Liabilities 266,260 Long Term Liabilities Mortgage Loan 331,186 Total Long Term Liabilities 331,186 Net Assets Unrestricted 181,471 Temporarily Restricted 21,036 Total Net Assets 202,507 Total Liabilities & Net Assets 799,953 24

25 FINANCIAL CAPACITY Days Cash = (Cash + Cash Equivalents) x 365/Operating Expensesdepreciation Cash and cash equivalents= $6,843 Operating expenses= $971,385 Depreciation= $7,500 Days Cash= ($6,843) * 365/ ($971,385-$7,500) Days Cash= 2.59 days How much cash is needed to reach the recommended 90 day benchmark? One Days Cash= ($971,385-$7,500)/ 365 days= $2, Days Cash= $2,641 * 90 days = $237,690 Cash requirement is roughly 25% of operating expenses

26 FINANCIAL CAPACITY The 5 C s of Credit What do funders look for? : cash flow for loan repayment Capital: resources available for project equity Collateral: security pledged for the loan Conditions: requirements to mitigate risk Character: management & board, track record of organization

27 FINANCIAL CAPACITY Can you launch a successful campaign? Organization: 5 C s are strong! Clear programmatic need Clear plan for on-going programmatic support Board & Staff leadership with common goals Project: Site control and a clear plan Donors: ready to expand support Potential lead donors identified

28 FINANCIAL CAPACITY Capital Campaign Expenses (10-15% of funds): Campaign Consultant Capital Campaign feasibility study Campaign Staff Preparing for a successful campaign Fundraising Software & Training Marketing Material (renderings, mailings, photography, web presence, etc.) Marketing Events expenses

29 Strategic Plan / Business Plan Board & Staff with Common Vision Clear Mission & Program Strategy Track Record Reserves Dedicated Project Manager Increasing Net Income Strong Accounting System REAL ESTATE READY Staff & Board Clear Lines of Communication / Authority Able to Maintain Programs & Facility Project 5 C s & Ratios are Strong Budgeting System & Contingency Process Ability to Secure New Funds / Capital Campaign Stable & Experienced Leadership Team Operating Systems to Support New Staff / Programs /

30 MISSION FIRST, THEN REAL ESTATE Neighborhood Impact Building Business Plan / Outcomes Programs Mission / Vision

31 FACILITY PLANNING CYCLE needs can change with program changes. There is no perfect space, only best fit for particular time. Revisit facility needs when programs change or EVERY 7-10 YEARS! Operations (7-10 years) Renovate, Expand, Satellite, or move Strategic or Business Facility Strategic

32 Hardest Easiest WHEN TO START PLANNING Timeline Goal 1-2 Months Continue to rent your current location 3-6 Months Secure a new lease that better meets your needs 6-12 Months Purchase an as-is building that meets your needs 1 3+ Years Purchase a building that will require light renovation or remodel 3 8+ Years Purchase land and build a new facility

33 SPACE PLANNING CHALLENGES Facility is more difficult if you are: Driven by specific real estate opportunities In financial crisis In imminent danger of losing space If your space needs are immediate If Board and Executive staff do not agree

34 DECISION MAKING TOOL: SURVEY planning considerations when surveying your organization s staff and board (be specific): Proximity to transit: Regional/local/bus/or particular transit agency Located near: clients/audience; specific funders; complementary organizations considerations: traditional or open office; client meeting spaces Building features your program requires: kitchen; loading dock; ceiling height; theatre

35 DECISION MAKING TOOL: SURVEY Example: Proximity to Organizations, Funders, Individuals Located near: Clients/target audience Funder: City Hall Funder: XYZ Foundation Complementary organization: Partner organization (1 being highest priority) (c) Northern California Community Loan Fund

36 Survey resources: DECISION MAKING TOOL: SURVEY

37 DECISION MAKING TOOL: SURVEY Develop 2 planning considerations to survey your organization s staff and board Share your top priority for your organization

38 FACILITY PLANNING Considerations Where do you want to be located? What drives your location decision? What (and how much) do you need? What specific program features drive your space needs?

39 LOCATION CONSIDERATIONS Clients/ Audience Funders Volunteers Partners Employees Policymakers Collaborators Clustering

40 LOCATION CONSIDERATIONS San Antonio What neighborhood or area serves your Mission and Vision best? Havenscourt Elmhurst 40

41 FEDERAL FUNDING CONSIDERATIONS New Markets Tax Credit (NMTC) Eligible Zones in Purple Image: map created with PolicyMap, 2015

42 PRICE CONSIDERATIONS Neighborhood Market Rate Rent PSF (Class B and C) Downtown $2.48 Japantown $2.06 North San Jose $2.75 South San Jose $1.63 East San Jose $2.18 Horace Mann $2.29 Willow Glenn $2.31 San Jose Citywide Avg. $2.82 (Includes A) Source: Loopnet.com

43 BUILDING: SPACE NEEDS ANALYSIS Potential factors: Program Needs: Special features needed? Timing of growth or reductions Shared use opportunities Co-location opportunities (partners, collaborators) Existing Next 5-10 years Ideal

44 What Type of Use? Performing Arts Visual Arts Maker Workshops/Classrooms When do you need it? Time of Day Frequency Duration of Use SPECIAL FEATURES: BASIC CONSIDERATIONS In-Class Exercise 44

45 BUILDING: BASIC CALCULATIONS Private Offices: Cubicle: Conference Room: Classroom/Workshop range: sq. ft. per person

46 CURRENT, MINIMUM & IDEAL SPACE NEEDS How many square feet does your organization occupy? OR How many people in what kind of configuration do you have? Use Current Minimum Ideal Admin Program 1

47 MINIMUM & IDEAL SPACE NEEDS Uses: Program 1 Minimum Ideal Office: Desk (dedicated or shared) 50 sf each, dedicated sf each, dedicated Rehearsal & Classroom (size & frequency of use) Parking (frequency of use) 400 sf each 15 evenings per month 10 stalls 4pm-7pm 600 sf each 15 evenings & 10 days per month 20 stalls 4pm-7pm Other sf sound booth Totals 550 sf + 10 parking stalls 1,120 sf + 20 parking stalls

48 EXAMPLE Uses: Program 1 Program 2 Program 3 Office 3-4 desks sf 1 desk sf 3 offices@ sf 500 sf for 8 cubicles Classroom sf - - Theater ,000 sf - Parking Other stalls 4pm-7pm Sound 120 sf 0-2 stalls 9am-5pm Loading dock 10 stalls 9am-noon Server 50 sf Totals 550 sf - 1,120 sf 864 sf - 1,100 sf 742 sf 850 sf

49 MINIMUM & IDEAL SPACE NEEDS Uses: Program 1 Program 2 Program 3 Totals 550 sf - 1,120 sf Parking stalls- 4pm-7pm 864 sf - 1,100 sf 742 sf 850 sf 0-2 stalls 9am-5pm 10 stalls Other Sound Booth? Loading dock? Server room? Rough guess of space required 2,156-3,070 sf With 25% common area 2,700 3,850 sf parking stalls (Programs 2 & 3 share parking) 49

50 CURRENT, MINIMUM & IDEAL SPACE NEEDS How many square feet does your organization occupy? OR How many people in what kind of configuration do you have? Use Current Minimum Ideal Admin Program 1 50

51 CLOSING 1. What stage is your organization in? What are programmatic goals? 2. What are your reserves? Calculate your days cash 3. Facility Where in the facility planning cycle are you? Where would you prefer to be? What are your current space uses? What is your space plan?

52 PREPARATION FOR WORKSHOP 2 1. Discuss your space needs survey with your team Bring your planning considerations to Workshop 2 2. Conduct your space planning assessment Define your space uses (by admin and program) 3. Calculate your days cash Last year s and current year s 4. RSVP for Workshop 2 to receive your budget calculator 5. Bring your current year s budget, your budget calculator and your laptop to workshop 2 52

53 PREPARATION FOR WORKSHOP 2 1. Get input on your space planning considerations 2. Use the budget calculator on different space options 53

54 CONTACT INFORMATION Joanne Lee Director of Consulting Services Andrea Papanastassiou Deputy Director of Consulting Stephaney Kipple Real Estate Consultant Jack Tse Real Estate Consultant Lori Campbell Management Consultant