Minnesota nonprofits rethink office space as employees opt for hybrid work

While some companies are downsizing office space to adjust for more remote-working employees, Dean Orton's St. Paul nonprofit added office space and still managed to cut costs — thanks to a unique collaboration.

Twin Cities in Motion merged its offices this month with three other running-related nonprofits, sharing conference rooms and common spaces that are needed less often since many employees are opting to work at home.

"Could we do more for less if we join together? And the answer was yes," said Orton, president of Twin Cities in Motion, which organizes the Twin Cities Marathon and other events. "Costs keep going up. None of us were happy, so let's change the model."

Like many businesses, many Minnesota nonprofits are downsizing or rethinking office space as the COVID-19 pandemic continues to reshape work culture. Nonprofits also are confronting tighter budgets as their costs rise and donations decline.

In St. Paul, the Bush Foundation is re-evaluating its office space before its lease ends in 2025. Most of the foundation's 34 employees work remotely four days a week. That leaves its 16,000-square-foot office downtown largely empty most days.

"It's an interesting time because you're trying to solve not only for today — what hybrid looks like today — but you're placing some bets on what hybrid will look like in a year, or two or five years," said Christopher Romano, the foundation's chief operating officer. "There's a level of comfort to think creatively, where there wasn't that same level of comfort [pre-pandemic]. Sometimes necessity is the mother of invention."

The Mankato Area Foundation opened a nonprofit co-working facility, Shared Spaces, in 2015 — still the only one of its kind in the state. Interest since has grown so much that the foundation expanded the building in 2020 to house six nonprofits, and is starting construction next week on a second building just for arts nonprofits.

"It raises the level of visibility and professionalism for the nonprofit sector," said Nancy Zallek, the foundation's CEO. "You don't have to have an office in the basement somewhere because that's what you can afford."

Nonprofits at Shared Spaces split the cost of office space, paying about $10 per square foot instead of $25 per square foot elsewhere, Zallek said. They can invest the savings in their programs, and sharing office space can pay dividends in terms of collaboration. For example, the Mankato Area Foundation and the local United Way created a community response fund at the start of the pandemic that grew out of a hallway conversation between their leaders.

"It's really a hub for the nonprofits in the community," Zallek said. "There are a lot of communities that are trying to replicate this."

Shared space doesn't work for all nonprofits. For employees at social services that help people in need, working from home may not be doable. Many Twin Cities food shelves and homeless shelters are even expanding to bigger buildings as they respond to more Minnesotans in need.

But the growing trend in hybrid work and financial challenges faced by nonprofits have heightened interest in co-working, said Sarah Clyne, the executive director of EquaSpace. It's hoping to open a co-working space next year for nonprofits in the Twin Cities, and looking for a building to purchase.

"It was a blessing, in some ways, that EquaSpace didn't open pre-pandemic because I think the model might not have worked," Clyne said. "Now ... there's a greater need for smaller footprints for a lot of organizations."

Funded by grants, EquaSpace plans to house about a dozen nonprofits in a 15,000-square-foot building and offer accounting and other services that nonprofits can't afford on their own. Clyne said she hopes it leads to a bigger collaborative nonprofit space in the future.

In a survey last year of nearly 300 Minnesota nonprofits taken by the Minnesota Council of Nonprofits, 23% said hybrid work was here to stay. The survey found that a work mix of home and office is becoming the standard for many nonprofits hoping to attract and retain employees in a competitive job market. Nearly 60% of respondents said that meeting employees' expectations for remote or hybrid work has had an impact on hiring and retaining employees.

Crews are wrapping up construction on the Motion Center, a nearly 19,000-square-foot building at the River Bend Business Park in St. Paul's West Seventh neighborhood. Twin Cities in Motion, the Brave Like Gabe Foundation, Girls on the Run Minnesota and Mile in My Shoes will have their own office wings and share common spaces and a large warehouse — all near Mississippi River running trails.

Mile in My Shoes — which organizes running groups at homeless shelters, addiction recovery programs and re-entry centers for people getting out of prison — previously operated out of a co-working space that closed at 5 p.m. Executive Director Mishka Vertin had to hold evening events at coffee shops or libraries.

Now, Vertin and her two colleagues have a space of their own and can share ideas with three similar organizations that often tap the same volunteers or supporters.

For Twin Cities in Motion, which has 24 employees who now work two days a week at the office, sharing offices will also save an estimated $100,000 a year during its five-year lease, Orton said. He hopes the revamped work space inspires employees to go to the office more often and maybe join a lunchtime group going out for a run, as it did last week.

The nonprofit also hopes to use the larger space to host community programs and sell merchandise from all four nonprofits, adding another revenue source.

"It's a leap of faith that you're stronger together, and I think that's hard for nonprofits," Orton said. "We'll see more growth and relevance if we work together."