With its recent purchase of a downtown office building, local nonprofit Canadian Parks and Wilderness Society (CPAWS) is tapping into a new – albeit unconventional – source of revenue.
Investing in real estate is a somewhat non-traditional approach for charities and nonprofits that carries an unfamiliar amount of risk and requires the support of donors. But the reward is a steady and reliable source of funding, which is attracting a handful of organizations such as CPAWS to explore tools more commonly used in the private sector to raise money to support their cause.
The idea had been forming at the back of former national executive director Éric Hébert-Daly’s mind for a while, ever since his success with a similar project during his time working in politics. When a donor looking to make a large endowment-style contribution approached CPAWS, Hébert-Daly told him about the idea.
“His eyes lit up,” says Hébert-Daly. With the groundwork laid, he set about trying to fundraise to complete the project, which proved an interesting challenge.
“We didn’t actually have a building to point to,” he explains, adding that the city’s strong real estate market led their real estate broker to look for buildings that weren’t actively up for sale.
Hébert-Daly was nearing his last three months at CPAWS and had raised $1.3 million for the project when the broker came to him with the perfect opportunity – a downtown office building at the corner of Gloucester and O’Connor streets.
Over the next three months, CPAWS raised that total to $3.5 million – just over half of the building’s purchase price. CPAWS celebrated the purchase a few months later, in October 2018.
“The building is going to turn almost a quarter-million-dollar profit each year that is going to go into conservation work,” says Hébert-Daly, who left CPAWS in May with this project as his parting gift. With a property manager and board to take care of the day-to-day, that profit is essentially worry-free for CPAWS, a reliable source of income in an often competitive sector.
"It's a stability that you just can't measure."
“That level of confidence in a stable revenue source is a rare thing indeed for most charities,” he says. “It’s a stability that you just can’t measure.”
Hébert-Daly admits it’s not a common move for a charity, but says he sees it as a creative way to use the tools of business for charitable benefit.
“It puts the economic model into a much more creative space,” he says, adding that the term “venture philanthropy” is one increasingly being used as charitable organizations look for new ways to guarantee funds.
He says that when it comes to such ventures, it’s important for organizations to get experts involved, such as a real estate broker and property manager. As well, when fundraising for the purchase, he learned that he needed to be creative and find ways to help potential donors connect to the project’s potential impact.
“It really was a question of knowing your audience,” says Hébert-Daly, adding that for many donors, the model made a lot of sense.
“People who have the capability of making sizable contributions are people who understand the business world,” he says. “There's a real understanding on the part of the economic sector of what venture philanthropy means ... the question is, can we get the philanthropic sector to understand what venture philanthropy means?”