Special considerations come into play when nonprofit
organizations want or need to engage in real estate transactions.
With very few exceptions, nonprofits have a focus on something
entirely unrelated to real property - real estate transactional
dealings are quite foreign to the purpose and outside the
experience and day to day activities of the vast majority of
nonprofit organizations. The typical nonprofit, whether its mission
is educational in nature, or health related, or is directed to
social issues or addresses other causes, will rarely engage in real
estate transactions. When the need to do so arises, the
contemplated transaction must be evaluated with a recognition of
the particular needs of the nonprofit. The organization's tolerance
for risk and its appetite for complex deal structures is likely to
be much lower than would be the case for a business whose central
purpose is to achieve economic goals and generate profits. The
nonprofit faced with navigating its way through the purchase, sale,
leasing or development of real estate may very well find itself on
shaky ground. Nonprofit staff members may well be unfamiliar with
real estate dealings. Taking into account the combination of staff
inexperienced in conducting such activities and the fairly low risk
tolerance threshold that characterizes most nonprofit organization,
this is an area where creative, alternative or complicated deal
structures, which might make sense with different actors and in
another context, should probably be avoided.
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