In the current economic climate, many charities are finding that revenue from fundraising has reduced or that the funds they have are not going as far. If your charity is struggling to make up for a shortfall in fundraising it might be worth looking at your use of any property assets to see if there's anything that can be done to help.
The increase in flexible / remote working has reduced the amount of office space many organisations need. There are guides available for undertaking your own audit of space use or you can employ professional advisors.
Alternatively, the charity may own land that could be better utilised - for example the land might have been bequeathed to the charity and is currently vacant while the trustees consider what to do with it.
Does the charity make the best use of all the property it owns or occupies? If you find that you have under-utilised property, here are a few things to consider:
Let or sublet the property
If there is space you don't use, could someone else use it?
If you own the property, this might be a relatively simple process. If you hold a lease then landlord's consent is likely required for subletting, your lease will specify. The charity will still be responsible for all the rent and outgoings, but the new occupier will pay the charity for the space they use, reducing the burden on the charity.
An agent or property consultant may be able to introduce you to people who are looking for space, perhaps even an organisation who shares your values or represents an opportunity for collaboration beyond the financial benefits.
There will be initial set up costs and a variety of statutory requirements you might need to comply with, including health and safety and EPC requirements. You should check your objects and articles to ensure you are not prevented from letting/subletting your premises and ensure that any impact on rate relief is taken into account.
However, if it is possible and a suitable partner can be found, sharing your premises could represent an excellent way to share your property costs as the third party will share rent, property maintenance and outgoings with you.
Sell or dispose of the Property
Could you do without the property permanently?
If the property is owned outright, you could sell it.
If the charity holds a lease, there are several different options:
- Reviewing the end dates of your leases. It could be possible to find smaller, cheaper premises or combine two offices in nearby locations when one of your leases ends.
- Some leases contain an option to end the lease early. These are often subject to conditions and notice periods so knowing when these dates are and seeking early advice is vital.
- Your landlord might be open to you surrendering or renegotiating the terms of the lease - it is worth asking.
- You might be able to assign the lease to a third party. Unlike subletting, the new occupier will take on the outgoings and responsibilities, although the charity might be required to provide a guarantee for the new tenant.
Before disposing of your property, it is important to ensure that there is nothing in the charity's governing document or the title deeds of the property that prevents that. You will also (in most cases) require advice from a qualified surveyor to ensure the property is marketed correctly and the terms on which the property is disposed are the best that can be reasonably obtained.
Other options
What if you think you might need the space back in the future and want something more flexible?
Part of your space might be suitable as a flexible working hub where individuals or homeworkers rent a desk, either by the hour or per day or longer term. It represents a less secure but more flexible income - however, if subletting to a single organisation doesn’t work for you, it is an alternative to consider.
Finally, many charities own interesting or historic properties - could yours be used for hosting events, either your own fundraising events or hiring to others?
There might be set-up and running costs, fees and charges, landlord's consent, planning permission and additional liabilities to consider with all these options - however, if there was ever a time to think creatively about saving costs or generating additional income it is now.
Lily Langlois is senior associate at VWV
Related Articles
