Expert Insights from Benjamin Osgood, Managing Director, Recreate Commercial Real Estate
As a nonprofit leader, you want your organization to be financially resilient so you can fulfill your mission no matter what — and build lasting trust with donors, stakeholders, and the communities you serve. But nonprofit financial resilience isn’t only about revenue streams, budgets, and reserves.
One of the most overlooked sources of financial risk for nonprofits?
Your facilities decisions and commercial lease agreements.
Leases, operating costs, repair obligations, ownership structures — these factors can quietly expose nonprofits to financial shocks that jeopardize programming and undermine long-term sustainability.
To help nonprofits navigate these issues, Fairlight Advisors regularly engages subject-matter experts to highlight risks leaders may not anticipate. Recently, we chatted with Benjamin Osgood, Managing Director at Recreate Commercial Real Estate, who has 20 years of experience representing tenants — many of them in the nonprofit sector.
His message to nonprofits was clear:
What you don’t know about your lease can threaten your financial stability.
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Don’t Just Look at the Rent — Look Beneath It
Many nonprofit leaders focus on one number: the rent.
But as Osgood notes, the rent is only the beginning of a thorough nonprofit real estate risk assessment.
“People focus on rent and whether it’s above or below market, but they often overlook the cost basis and ownership structure of the building,”
— Benjamin Osgood, Managing Director, Recreate Commercial Real Estate
Understanding a landlord’s cost structure is especially critical in California, where property tax reassessments under Proposition 13 can lead to significant increases in operating expenses. Those increases often become unexpected pass-through costs, creating silent but significant risks for nonprofits.
Osgood shared an example of a nonprofit considering a long-term lease in a building owned by a single family for generations. When an interim CFO flagged the potential tax exposure and asked for protections, it proved critical.
“The rent was around $17 per square foot, while the market was $600. A reassessment would have put them out of business,” Osgood explained.
The lesson: Facilities decisions have major implications for nonprofit financial health. They are more than operational choices: they’re strategic risk-management decisions.
- Know Who Pays When Something Breaks — Before It Breaks
HVAC failures. Roof leaks. Flooded toilets. A tenant upstairs has a burst pipe, damaging your workspace.
These are not rare occurrences, but many leases lack clarity on who is financially responsible. This exposes organizations to significant unexpected facilities expenses, a common blind spot in nonprofit budget planning.
Osgood warns:
“A $100,000 HVAC system at the end of its life can be a huge bill. Day-to-day issues can be $5,000. These aren’t insignificant for nonprofits.”
Critical elements nonprofits must clarify:
- Repair and replacement responsibilities
- Whether major repairs are treated as capital expenses
- Required landlord response times
- What financial remedies are available if repairs aren’t made
A key element many nonprofits overlook? A self-help clause, which allows tenants to make repairs and deduct the cost from rent when the landlord fails to act.
While often resisted by landlords, it is an essential protection for nonprofit operational continuity.
- Protect Your Organization If You Can’t Use Your Space
If an emergency renders your facility unusable, do you still owe rent?
Your commercial lease should answer that — clearly.
Without these protections, nonprofits can be stuck paying full rent even when they cannot access or operate in their space. There are ways to structure contracts that directly support nonprofit financial resilience by preventing financial losses during unavoidable disruptions.
- Strengthen Your Position — Even Mid-Lease
Many nonprofits assume leases are fixed commitments. Not true.
According to Osgood, there are strategic opportunities to:
- Renegotiate leases early
- Reset base years for pass-through expenses
- Add stronger tenant protections
- Sublease to offset costs
This can be especially beneficial when nonprofits are paying above-market rent.
“Tenants think they’re stuck if there are two years left. They’re not,” Osgood emphasizes.
Monitoring these opportunities is vital to improving nonprofit cash flow, reducing long-term financial risk, and maximizing operational flexibility.
- Get Broad, Favorable Sublease Rights
Subleasing is often the only practical exit from a costly or ill-suited space. Yet many nonprofits unknowingly sign away their rights during lease negotiations.
Osgood highlights:
“Your baseline right to sublease can be negotiated down during the lease process. Preserve it — and make sure you can deduct attorney fees and concessions before sharing profits with the landlord.”
Robust sublease rights help nonprofits protect budget stability and reduce exposure during leadership transitions, program changes or funding shifts.
- If You Lease 100% of a Building — Know Your Tax Options
A hidden opportunity many nonprofits don’t know about:
If you lease an entire building, your landlord may qualify for a property-tax exemption for nonprofit occupancy.
This can create room for better lease terms — but only if you raise the issue.
Osgood advises:
“There can be meaningful tax incentives. It’s worth consulting with a tax professional. Landlords are usually happy to cooperate.”
This is an excellent example of how facilities strategy intersects with nonprofit financial planning — and why nonprofits benefit from advisors who can evaluate the full financial picture.
Facilities Decisions Are Financial Decisions
At Fairlight Advisors, we believe nonprofit financial resilience comes from understanding the full spectrum of risks and proactively managing them — especially facilities-related risks that can quietly jeopardize program delivery and long-term stability.
Because real estate is often the second-largest expense after personnel, every lease decision influences:
- Nonprofit financial sustainability
- Cash flow stability
- Budget predictability
- Risk exposure
- Mission continuity
That’s why we consult with experts like Benjamin Osgood to ensure nonprofits make informed, strategic facilities decisions that strengthen, rather than undermine, their financial health.
If you want to strengthen your nonprofit’s resilience, protect your mission, and build confidence with donors and stakeholders, facilities due diligence must be part of your financial strategy.
Fairlight Advisors
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