How to Leverage Real Estate as a Social Impact Organization

Creatively reimagining space

Why It Matters

For decades, social impact organizations needing property were limited to commercial leases, or relied on their donor bases for funding. Increasingly, Canada is seeing the repurposing of old and affordable properties, and collaborations between real estate and social organizations. This series on social impact real estate is crafted in partnership with Windmill Developments and Urban Equation.

Welcome to Future of Good’s series into the intersection between social impact and real estate (if you’re just joining us, you’ve only missed the introduction). To kick this series off, we’re exploring the perspective of social impact organizations — a broad group that includes charities, non-profits, co-operatives, social enterprises, and other community-based groups.

While many social impact organizations operate remotely, it’s hard to imagine them doing ‘place-based’ work fulfilling their mandate without being involved in real estate in some way.

 

Looking for real estate to support your mission

For a long time, the choices available to social impact organizations seeking real estate were limited to a conventional commercial lease, or, for those with a large enough donor base, to run a traditional capital campaign and raise the funds to purchase their own property.

A different option — multi-tenant shared spaces — has steadily become more mainstream over the past 30 years. Repurposing old and affordable properties, social impact leaders have successfully transformed underutilized buildings into vibrant places for organizations whose mission, culture, and finances benefit from clustering in close proximity to those of like mind and heart. Between 1994 and 2004, a variety of examples popped up in Toronto alone: from art and cultural hubs created by both for-profit and nonprofit developers, to social service hubs made up of different providers and agencies that opened up shop in a retail storefront.

In order to provide this new type of real estate to their members and tenants, organizations behind some of these shared spaces have had to pursue creative ways of acquiring property themselves. Centre for Social Innovation was an early pioneer in the use of community bonds, a then-groundbreaking financial instrument enabling their supporters and stakeholders to become investors — not donors — to purchase their buildings. Artscape has cultivated a particularly fruitful partnership with the Daniels Corporation, who (with the involvement of a great many other collaborators) built a community cultural hub and an arts business hub that is integrated into their real estate developments in Toronto’s Regent Park and waterfront, respectively. 

Despite these options, not all social impact organizations are in a position to purchase, lease or rent space, especially when shared spaces are not any less affected by local real estate prices and property tax assessments — a pressing issue in cities with runaway property markets and high costs of living. Ensuring the availability and affordability of real estate for community benefit is near impossible if properties are on the open (and often speculative) market. 

One solution slowly but steadily gaining traction is to sell, lease, donate, or otherwise transfer vacant or underutilized publicly-owned properties to social impact organizations committed to retaining and maximizing its public benefit. All levels of government have mandates and initiatives to develop affordable and/or community housing on surplus land. In Montréal, Entremise is partnering with the municipal government on a pilot project to turn a vacant, City-owned industrial building into a ‘transitory laboratory’, leveraging existing but underutilized assets into affordable space for social impact organizations, and protecting the local neighbourhood from the risks of both neglect and gentrification. 

 

Leveraging your real estate for social impact

Organizations who are long-established property owners may not have given much thought to maximizing the impact of their real estate assets until circumstances compel them to do so. For instance, many places of worship are confronted with dwindling congregations and soaring maintenance costs. Heritage-designated structures face expensive upgrades to bring them up to date with accessibility standards or safety requirements. Often located on prime real estate in the heart of mature neighbourhoods, these spaces are grappling with difficult decisions, being forced to choose between gambling with the health and safety risks of crumbling infrastructure, or selling off their assets and losing their community’s home

But some have found a third way. Many faith-based groups have decided that finding new, mission-aligned uses for their real estate is worth the additional time, energy, and effort it takes over the much simpler route of selling to the highest bidder — leading to unexpected and creative partnerships with like-minded developers.

Some may be surprised to learn that there are nonprofit developers (like New Commons Development or Catalyst) who exist to help social impact organizations develop or retain their real estate assets. Faith-based groups have also had success finding private sector partners with shared values and vision — and the patience and willingness to do business differently — to develop their property into something that generates a net benefit to the church and community, as well as revenue for both parties. 

The Anglican Diocese of Ottawa’s historic Christ Church Cathedral is an excellent example of this scenario. Their requirements were considerable: the cathedral’s ongoing restoration and the upkeep of its energy-intensive parish hall meant that Christ Church needed both upfront capital and ongoing income. Its congregation and leaders had embraced their role in a pluralist, inclusive Canada, which included respecting and repairing their relationship with the environment, making lower carbon footprint a priority. Additionally, the church’s prominent place in the nation’s history meant they were not interested in selling their land outright.

 

Collaborating with real estate companies

Their solution? A partnership with Windmill Developments, a developer with a focus on social impact and environmental sustainability, and previous experience collaborating with local community organizations. The deal centred on a long-term lease of their surplus land, upon which Windmill built a 21-storey, target LEED Platinum certified condo tower sold at market rates. 

In exchange, Christ Church and the Diocese received a lump-sum in addition to annual payments to fund a full suite of upgrades, such as an environmentally sustainable gathering space to replace their obsolete parish hall — all while retaining ownership and control of the land. 

This unique partnership has also inspired a second phase: in 2020, construction will begin on an 18-storey retirement home on what is currently the Cathedral’s parking lot, using the same land lease arrangement that Windmill first established.

This kind of social purpose real estate partnership is unconventional, but given its massive capacity for impact, there is no reason why we shouldn’t see more of it in the future. 

Don’t miss the next article of our series on SPRE, where we’ll explore the different ways that building developers, designers, and real estate companies can build and measurable environmental, cultural, and social impact into their projects. 

 

This series is crafted in partnership with Windmill Development Group, a visionary real estate company with a triple bottom line approach that aims for zero ecological footprint, and its sister company, Urban Equation, a consulting company that advises those in the real estate industry on innovative practices for sustainable development. Future of Good retains full editorial and creative control, just like every other story it publishes.