|
Strategic Restructuring: |
 |
 |
|
|
Case Studies The Schoenbaum Human Services Center of Sarasota, Inc., Management Services Organization Profile
Background Through the 1980s, clients of nonprofit organizations in the Sarasota, Florida area often found themselves challenged by the fact that the nonprofit service providers in their community were geographically dispersed, and not easily accessible by public transportation. This served as a barrier to many who lacked automobiles, and thus found themselves unable to take advantage of the services available. At the same time, the nonprofits in question found themselves facing both financial and programmatic challenges, as increasing operational expenses (e.g. rent in commercial buildings) consumed dollars needed for services. As the need and demand for services increased within the local population, organizations found themselves putting clients on waiting lists. Emergence of the Management Services Organization Idea In 1985 the United Way of Sarasota was in the process of looking for a building with adequate space to house itself and one of its agencies, First Call for Help, both of which were outgrowing their current shared location. A committee charged with leading the search was having no luck. In the midst of this process, a local developer who had heard of the problem contacted Dr. Kay Glasser, Planning Chairman for the United Way at the time, and presented her with an idea. He showed Dr. Glasser a set of plans that he had drawn up which contemplated restoring a historic railroad depot and transforming it into offices for the United Way, First Call for Help, and possibly one or two other agencies. He suggested that Dr. Glasser try to secure an Industrial Development Bond from the City of Sarasota, so that the United Way could purchase the property. Dr. Glasser informed the United Way board of the developer's proposal, and was encouraged to pursue the idea. She conducted a survey to see whether there were any other agencies that might be interested in coming into such a facility if there was adequate space. The survey was mailed out in May of 1985, and revealed a definite interest on the part of several agencies. Dr. Glasser then presented the idea to the City Commission of Sarasota, which was very receptive. The Commission passed a resolution approving the issue of an Industrial Development Bond on the condition that Dr. Glasser's group could secure funding from a bank for the purchase of the property. Several efforts were made to do so, but with no success. At one point the City of Sarasota even explored the possibility of buying the property, as the community was interested in retaining historic structures. However it was too expensive. At this point the Urban Development Director, Don Jakeway, suggested that Dr. Glasser and her group locate a piece of City-owned land on which they might be able to secure a 99 year lease for $1.00 a year. Glasser pursued this possibility, and once again the City Commission cooperated, agreeing to grant a lease for a plot of land across the street from the Department of Children and Families facility. The Commission felt that the proximity of the proposed center to the Department would further contribute to its "one stop shopping" character. The City stipulated that the agencies selected to participate would provide health, education, welfare, and social services. The lease was to be drafted by the City attorney, and approved by the City, representatives of the proposed Center, and the Agent Bank. The lease commitment was granted in December, 1985, and guaranteed a rate of $1.00 per year for 99 years. By this time it had become clear that it was necessary to have a formal organization which would have the authority to represent the agencies planning to locate in the proposed Center in future negotiations. (There were eleven which had committed at this point, with a twelfth to join later in the process.) Dr. Glasser led the effort to incorporate the entity, which was to be called the Human Services Center of Sarastoa, Inc. In November of 1985 George Dietz, an attorney who provided pro bono serivces to the Center, and Anne Stinnett, a member of the board of one of the agencies interested in renting space in the Center, organized a small committee of people representing the agencies to draft a set of By-laws for the new corporation. They decided to set up the Center as the "parent corporation," in the sense that it would represent the founding agencies' interests, and engage in all of the negotiations with the attorneys and others as the process moved forward. The By-laws provided that the board of directors would consist of a representative from each participating agency. Articles of Incorporation were secured in April of 1986, and in December of 1986 501(c)(3) status was secured. While efforts were underway to secure a site and incorporate the official entity, Dr. Glasser worked with Michael Pender, a certified public accountant and long-time volunteer associate of hers, to prepare projections showing that the Center would cost $2.5 million to build. In January of 1987 Jakeway (the Urban Development Director) and Commissioner Kerry Kirschner approached Northern Trust to request a $2.5 million mortgage for construction of the facility. In March of 1987 Northern Trust agreed to consider establishing a consortium with other banks to fund the mortgage. Before this could become a reality, however, certain conditions had to be met by the Center. One of them required that a $200,000 debt reserve fund be secured from United Way. The United Way Foundation, which had already pledged $100,000 toward the effort in order to reduce the size of the required mortgage, agreed to do this. Dr. Glasser continued to try to raise money from private sources as well. Early in the process the eleven agencies that had responded to the invitation to become founding "members" or renters in the Center were asked to commit $500 each to the initial fundraising efforts. While largely symbolic, their demonstrated commitment to the idea was helpful in securing other funds. Dr. Glasser was able to secure contributions from several local foundations, all of whom supported the mission of the Center. In March of 1987 Dr. Glasser approached local philanthropist Alex Schoenbaum for a major contribution toward the mortgage. Her hope was that such a contribution could reduce the size of the mortgage burden. Dr. Glasser had met Schoenbaum previously through her work as Chairman of the United Way's annual drive, and felt that he might be interested in the project. It would take several months of work before Dr. Glasser secured his pledge, but in September of 1987 Schoenbaum agreed to commit $450,000 to the project. In return, Dr. Glasser promised to hold a press conference to announce his generous contribution once work on the building had begun. It was also agreed that the Center would be named for Schoenbaum and his wife. In May of 1987, Arthur M. Wood, Jr. took over as President of Northern Trust. He immediately expressed an interest in proceeding with the development of the mortgage, and assigned two bank officers to enlist six other banks as members for the proposed consortium of lenders. By July of 1987 the consortium was established, and each member agreed to share in the funding of the Center's mortgage. Several challenges arose as the process continued. At one point the attorney for Northern Trust, the Agent Bank, raised several objections to the land lease, which by then had been approved by attorneys for both the City and the Center. It took several months to resolve these issues, and it was not until that time that the draft of the lease could be presented to the City Commission for its approval - a necessary precursor to the mortgage transaction. In addition, the builder hired to begin work on the site discovered that the tremendous pile of dirt located there was not usable, and would have to be sifted to eliminate the heavy trash which had accumulated in it throughout the years. It would then have to be disposed of. The cost for sifting and removing this dirt was estimated at $199,800. Dr. Glasser appealed to the City Commission for financial help, but was only able to secure a commitment for $20,000. This meant that the amount of the mortgage would have to be increased to cover this additional cost. A third challenge came when one of the agencies planning to rent space in the Center requested that additional space be built for offices. This of course translated into an additional construction cost, which in the end was covered by a loan separate from the mortgage. On September 26, 1988, the mortgage was finally consummated, and the groundbreaking for the Center took place on September 27, 1988. It was at this time that Dr. Glasser was able to fulfill her promise to Schoenbaum, and publicly acknowledge his support and financial contribution toward the future of the Center. The project did not stop growing at this point, however. On July 11, 1989, with construction well underway, the County Commission granted $285,000 to the Center for the construction of a Public Health Clinic for Children. On March 11, 1990 the Center was formally opened, with all of the participating agencies in residence. Implementation of the Management Services Organization At the time the Center was opened, there were twelve member agencies. These were the agencies which had put up the $500 in "commitment money" early in the fundraising process. These founding members were offered leases of varying lengths, according to their financial ability. Some leases were for 7 years, and some for as long as 99 years. If an agency raised money to pay for its space, it got a 99 year lease. All others got a 7 year lease. Michael Pender explains that this level of flexibility was one of the selling points when the agencies signed on. "Giving the agencies a choice helped them to make the decision that they were financially capable of," he said. The one exception to this was the Department of Public Health, which had to buy its space due to the government's prohibition against renting. A representative from each of the founding member agencies formed the original board of directors, along with Pender, who had been acting as the financial advisor for the Center since the early days of planning for the facility. The governance structure of the Center called for representation from all member agencies on the governing board. When the designated representative of an agency was not available for a meeting, an alternate could take his or her place. Each agency was given one vote on any proposal, regardless of the size of the agency. After the first few years of operation, Dr. Glasser recognized the need to expand the board by including representation from the community at large. As she explains, "it was difficult to raise the level of awareness among the agency representatives to the fact that polices had to be considered not just within their individual frame of reference, but within that of the entire corporate structure. It was important that the organization as a whole be a strong one, and therefore no agency could afford the luxury of thinking of the impact of policy only on itself." Thus the By-laws were amended to permit the addition to the board of seven community members not connected with any of the agencies on the Center's campus. Several years after that the board passed another amendment which provided for an increase in the number of community leaders on the board - provided that the agency representatives always had the opportunity to be in the majority, with one more vote than the community members. Looking back on these changes, Dr. Glasser believes that the presence of community members has been an important factor in developing the "sense of community" or "sense of common interest" necessary to make the Center successful. When the Center first opened in 1990, member agencies paid rent along with a fee to cover the cost of water, electricity, maintenance, and janitorial services. Once the mortgage was paid off in November of 1993, the agencies no longer had to pay rent. Since that time each agency pays $6.50 per square foot for all utilities, including water, electricity, maintenance, and janitorial services. Management Services Organization in Action The Center's member agencies have been pleased with the level and quality of services they have received from the Center over time. In fact, little has changed since the Center opened in 1990. The only exception was the recent addition of an off-duty police officer, which was requested by the board after a security incident pointed out the need for security in the evenings. Mary Helen Kress, ED of Suncoast Workforce Development, summarized the opinions of many when she stated, "We are in this building because space is hard to come by. The price for living here is right, and the building is centrally located. We love it here." Since the Center was created, four of the original members have moved out. One of these members was the United Way, which needed more space. The other three moved out in response to geographic changes underway in their regional or national membership organizations. The spaces vacated by these agencies were quickly filled by others. Dr. Glasser, Chairman of the Board, supervises Cathy Spruck, Manager of the Center's facilities. Spruck, in turn, supervises two part-time maintenance employees. Spruck is comfortable with the board's management style. "The board lets me do my job," she says. "The issues which I bring to the board deal with allocation of additional space, when needed, and unexpected necessary expenditures." Both Spruck and the board feel that the Center could use more publicity. "Not enough people know about this place," Spruck says. "Publicity is needed to enlist ongoing community support. The competition for funds among cultural, art and educational institutions presents an ongoing challenge." The Future As of now, there are no specific plans to change or expand the menu of services provided by the Center. This is not new concept, however. Ginna Downing, Executive Director of member agency The Child Protection Center, shares that the agencies at the Center have collaborated with those both on and off Campus and, as a result, have developed several creative programs. The co-location has facilitated more interaction and improved the quality of services offered by the agencies by encouraging greater face-to--face communication. Downing is hopeful that member agencies can take advantage of the co-location to continue to jointly increase and improve services for the community in the future. Currently, Dr. Glasser is working to develop a $2 million Endowment Fund, which has been established for the Center in the Community Foundation of Sarasota County. Almost three quarters of the goal has been raised in the seven years since it was established. The purpose of this Fund is to make available sufficient income to ensure the future physical integrity of the 13 buildings that make up the Center, the upkeep of which will inevitably require capital expenditures. By having this Fund available, there will be no need to assess the agencies for these costs in the future, leaving them with extra dollars for services to their clients. The successful operation of the Center and the attractive operating cost for agencies have attracted many requests for space from nonprofit agencies in the community. There is some land on the Center's property as well as nearby that is available, but expanding would require the resources necessary to construct additional buildings. Michael Pender, Treasurer of the Board, reports that "we would love to buy more land to expand this Campus concept. But it is easier said than done." Strategies for the future expansion of the Center are discussed by the Executive Committee of the board on a regular basis. Benefits The primary benefit of the Center is that it provides a one-stop-shopping experience for services, something that is desperately needed in a community where transportation is inadequate. The services provided at the Center are now readily accessible to individuals without cars, as there is a bus stop located in front of the facility. Another clear benefit has been economic - the Center saves its members money; money which they can invest in their programs. Pat Warbritton, Executive Director of member agency The American Cancer Society, explained that, "in our previous location, we paid $1600 for rent. In our new location at the Center, we pay $1400 for all types of maintenance combined - and no rent. So not only do we pay very low maintenance rates, but we put what we would be spending on rent into increased and improved services." The Center has also raised the profile of human services in the community. Since the opening of the Center, human service issues have moved much more to the forefront in the community's consciousness, according to Dr. Glasser. Indeed, the Schoenbaum Human Services Center is a model that other communities can emulate. It has already been replicated in South Sarasota County by the South County Resource Center, which was built in 1998. Some of the member agencies of the Center have opened up branch offices at the South County facility. The Center has generated much good feeling in the community. As Dr. Glasser explains, the quality of life of a community depends primarily on the quality of life of its individuals, children and families - and in this sense, the Center is making important contributions to the quality of life of Sarasota. Challenges and Costs One of the challenges of running the Center is deciding which organizations should be invited to move into the facility when space becomes available. Different prospective agencies add to the Center's continuum of services in a different way, and several of the executive directors of current member agencies mentioned that it was often difficult to justify how and why one prospective agency might "fit" better than another. A related issue is the natural desire of current members to expand. Spruck explains: "They all could use more space. It is hard to decide between giving space to first-time tenants, and allowing current tenants to expand into a larger area." She goes on to state that the board generally makes decisions regarding vacant space allocation. A second challenge has been that of building a "sense of community" or "common interest" among all of the agencies located at the Center. Each agency originally came to the table looking out for its own interests. However, in a partnership such as that facilitated by the Center, it has been necessary for all of the agencies to broaden their perspective, and consider policies in light of their impact on more than just their own organization. For example, some found it difficult in the beginning to see the importance of looking at a policy in terms of its effect on the Center's corporate structure. Yet it is essential to maintain the stability and strength of that entity if the agencies are to continue to benefit from the arrangement. This awareness has grown over time, and Dr. Glasser is proud of the fact that the Center has indeed achieved this "sense of community." She points to the addition of community board members - individuals not affiliated with any of the Center's agencies - as being very helpful in this regard. The costs of starting and building the Center were covered by the initial fundraising efforts, as well as the bank loan funded by the consortium of lenders. Ongoing operational costs are covered directly by the tenants' per-square-foot fees, and indirectly by the City's $1 a year lease policy. Lessons Collaboration between sectors. The resources needed to make the Center a reality came from multiple sources. Dr. Glasser and her supporters were able to pull together a combination of public and private philanthropy, as well as gain the support of several financial institutions. The project would not have been successful without such collaboration. Interestingly, federal funds, which are often sought by nonprofits considering large projects such as this, were not requested or used at any point. The need for broad community support. An effort such as the establishment of the Center requires the support of a broad range of individuals and institutions. Dr. Glasser notes that, "in a project of this magnitude, the best way to go about it is to gain the support of all stakeholders before too much planning goes on." Along the same lines, she points out the importance of organizing an active group of volunteers to assist in the various dimensions of the project. "A lot of help is needed to make things happen." Fundraising. There were no professional fundraisers involved in the start-up of the Center. Instead, a volunteer - Dr. Glasser - raised the money necessary. It took eight years to raise sufficient funds to pay off the $2.5 million mortgage, and fundraising continues to this day for the $2 million endowment. Dr. Glasser is clear that this approach is probably not the answer for most communities. "I do not believe that in most cases you would find a person to volunteer for this, as I did. It would have been nice if, even before the project took off, somebody had funded a professional to help raise the necessary dollars." The value of a model. When Dr. Glasser initiated the creation of the Center, she knew of nothing like it in the state of Florida, and thus had no model to follow. Had there been such a model, she says, "the development of the Center would not have evolved in the same way. It might have been much easier." Meeting specific needs. The Schoenbaum Human Services Center is not a typical landlord. The Center is run by and for nonprofits, and thus its practices and policies reflect nonprofits' needs. For example, the Center is flexible with regard to the length of each agency's lease. These types of accommodations, in addition to below-market rent, utilities, maintenance, and security charges, attracted many nonprofits. Planning for the future. When planning for a facility of this type, it is important to remember that funds will be needed not only to build the structures, but also to ensure their physical integrity in the future. This was not something Dr. Glasser envisioned when she initiated the Center project. The Endowment Fund, which was established in 1993, will eliminate the need to assess agencies when future capital needs arise. Postscript The Schoenbaum Human Services Center, which was 10 years old in March, was recognized on March 15 by the Sarasota Board of County Commissioners with a Proclamation declaring the week as "Human Services Center Week." On May 20, the Kiwanis Club of Sarasota honored Dr. Glasser with its first Outstanding Citizen Award. On May 23, Florida Governor Jeb Bush presented her with the One Thousand Points of Light Award. For more information on The Schoenbaum Human Services Center, including a list of member agencies and their contact information, please see www.humanservicescenter.org. Interviewed: Edie Anson Ginna Downing Dr. Kay E. Glasser Rick Hamm Dr. Dorothy Haney Mary Helen Kress Michael Pender Cathy Spruck Douglas Staley Stewart Stearns Pat Warbritton |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
© Copyright 2001-2008, La Piana Associates, Inc.
|
Facility
costs consume a large portion of many nonprofit organizations' budgets. After
personnel costs, rent is the second largest expense for most nonprofits. The
Schoenbaum Human Services Center in Sarasota County, Florida, an example of
a management services organization, helps nonprofit organizations to significantly
reduce this and other overhead expenses. Opened in 1990, the Center houses
16 human service agencies on one campus. These agencies provide services to
local low income individuals, children and families in buildings maintained
and operated at a lower-than-market rate. In doing so the Center allows those
organizations to devote more of their resources to programmatic services. The
Center was created through the hard work of Dr. Kay E. Glasser, a long-time
social worker and volunteer in the Sarasota community, and an alliance between
public and private philanthropic entities and a consortium of seven banks.