An underutilized property refers to a vacant or abandoned land or space in an already existing industrial park or manufacturing facility. It is a brownfield site as defined in article twenty-seven of the environmental conservation law, or a distressed or abandoned property, and shall be determined by factors such as poverty and identified by the county, town, village or city that contains such distressed or abandoned property.
Large donations, like office space to a nonprofit, can mean a substantial reduction in taxes to the business making the donation. These office space donations are called in-kind donations by the Internal Revenue Service. The IRS allows individuals and businesses to take a tax deduction for the fair market value of the service. For office space, this is the sale price of the business space if it were placed on the market or the fair market value of a lease. The recipient nonprofit must be a tax-exempt charitable organization or 501(c)(3).
The IRS rules do not allow donations for a part of the owner's interest in a property. For instance, if a donor owns a multi-story building and allows a nonprofit to occupy one of the floors without payment, they are ineligible for a deduction. The responsibility lies with the nonprofit to find donors and solicit the right space for its objectives, except there is a relationship in place with a certain business. The nonprofit must draft a written solicitation or request including the desired size of the office space, and whether it will be required indefinitely or for a certain period. This ensures that the donor business be able to benefit from the in-kind donation tax break.
The nonprofit can utilize the information in its end-of-year reporting with the IRS. Both the nonprofit and donor should have copies of the request on file. Though the donor is responsible for documenting the donation, the nonprofit can streamline the process. Donors are required to file a separate form for any in-kind donation that is valued at more than $5000. Since IRS rules put limits on deductions, possessing information about whether the space is being utilized for work directly related to the organization's mission is vital. If the donation was gifted and the organization plans to sell the office space, the donor must add that in the IRS report. This can be carried out when the nonprofit submits its written acknowledgement of the donation.
The 2021 Economic Development Bill authorizes $40M for the Underutilized Properties Program, to be administered by MassDevelopment, for the purpose of funding capital improvements and code compliance projects, alongside the design of these improvements. The program is part of the Community One Stop for Growth, a single virtual application portal designed to allow applicants to apply for consideration of different sources of funding to support multiple phases and facets of a project. The review criteria considers eligibility, public purpose, capacity and readiness, project benefits, financial need, and diversity.
In January 11, 2021, Alta Housing (formerly Palo Alto Housing)—a Palo Alto, California-based nonprofit affordable housing developer—celebrated the groundbreaking of Wilton Court, a residential rental community. The project is renovating an underutilized property that formerly housed two single-story commercial and retail buildings. After the site was rezoned to be included in the Affordable Housing Combining District Overlay, it was approved by the City Council on January 14, 2019. The fifty-nine-unit residential development provides independent living for a combination of single and two-person households earning between 30% to 60% of the area median income.
The under-utilized site prior to redevelopment
All Good Work is a Collaboration of Industry Leaders and Social Impact Organizations working to offer a program that creates an avenue for workspaces to offer their unused space to deserving organizations that need it. Workspaces can donate some of its space for use by program participants and organizations can apply for available spaces in their area. The foundation curates and connects organizations with spaces.
Organizations can become patrons in three levels:
- GOLD PATRON—Annual pledge of $25,000 in support of the All Good Work Foundation
- SILVER PATRON—Annual pledge of $10,000 in support of the All Good Work Foundation
- BRONZE PATRON—Annual pledge of $5,000 in support of the All Good Work Foundation
