Indianapolis not-for-profits grappling with rising rents may soon have another option-leasing space from one of their own.
Health Foundation of Greater Indianapolis bought the former St. Mary’s Catholic School in September and has undertaken $2.5 million in renovations expected to be complete by year-end.
A diverse group of for-profit tenants-everyone from architects to violinmakers-already occupy about 80 percent of the 38,000-square-foot building at 429 E. Vermont St.
But when the time comes to fill vacant space in The Academy, the foundation will give priority to health-related not-for-profits and other charitable organizations before private businesses, CEO Betty Wilson said.
Health Foundation leaders want to give their not-for-profit brethren an alternative to often-expensive rentals, but they aren’t ready to discuss specific pricing yet.
Still, their desire to share space with similar agencies is not uncommon, said Diana K. Vinokur, co-founder of the University of Michigan’s Nonprofit and Public Management Center. She has researched the trend since 1997, and her “Under One Roof” study identifies several reasons not-for-profits shack up.
First off, landlords-often foundations-who want to accommodate charities typically offer space at 20 percent to 30 percent below market rates. Not-forprofits appreciate that, because donors prefer to support programs, not overhead.
“It’s a cost a private business can fold into price of products” but charities can’t, Vinokur said.
Just two blocks from The Academy, the English Foundation Building at 615 N. Alabama St. has offered below-market rates to charities for more than 20 years. Tenants pay $10 per square foot, compared with average downtown rates of $16 to $20.
“Every dollar they don’t have to use for space in another place is a dollar they dedicate to client services,” said Greg Lynn, vice president of real estate and facilities for Central Indiana Community Foundation, which manages the building.
Edie Olson, president of Family Service of Central Indiana, said she appreciates the benefits of being under English Foundation’s roof.
“This is a wonderful gift,” she said. “Not only is it helpful to convert more money to services, but to be close to other like agencies.”
Lynn described a possible scenario: A single mother visits Legal Aid Society of Indianapolis, where she is advised to check in with Momentive Consumer Credit Counseling Services and Family Service-all of which can be accomplished in one trip.
By offering preference to organizations that share the Health Foundation’s goals, The Academy could have a similar story.
In hopes of fostering a sense of community, the renovation project will convert the former school chapel into shared meeting space available to tenants and civic groups alike. Sharing resources is common among agency “roommates,” Vinokur said, partly because charity leaders see one another as kindred spirits.
Co-location also can protect not-forprofits from the sometimes-volatile real estate market, Vinokur said.
Indianapolis-based Muscular Dystrophy Family Foundation knows all about the ups and downs of a for-profit landlord. After years at 2330 N. Meridian St., the agency moved last year when its rent jumped 40 percent. Leaders found a new home in the Nuvo building, 3951 N. Meridian St, paying $9,000 less each year than their old landlord wanted.
The space race is “a real challenge for nonprofits,” MDFF CEO Judith Duncan said. “You want to have a nice location because you work there every day, but you don’t want to pay a ridiculous amount of money.”
That’s one of the motivations behind the Health Foundation targeting not-forprofit tenants, Wilson said, since board members have heard similar stories from some of their grantees.
Renovations to the Academy, which the foundation bought for $800,000, are in the hands of Heartland Design and Mansur Real Estate Services. Plans call for a new roof and windows, handicap-accessible entrances and rest rooms, and an elevator.
Several local agencies already have expressed interest in renting space in The Academy building, and Wilson hopes to have a full house by 2007.
The Health Foundation expected to move from its nearby Massachusetts Avenue offices this month.
Krissy Borden splices electrical junctions in the old St. Mary’s Catholic School, which is undergoing a $2.5 million renovation.