Abstract:
Forty years after its founding, the Friends Rehabilitation Program Inc., a Quaker-affiliated nonprofit housing developer and management firm in Philadelphia, finds itself facing an unexpected dilemma: what should an organization, founded to help the poor, do when one of its properties becomes unexpectedly valuable? FRP learns that its 172-unit PennTowne apartment complex, located in an increasingly desirable part of North Philadelphia, is estimated at $5 million, should it be sold to a private, for-profit developer. The board of directors finds itself divided on how to proceed. Should it sell the complex and use the proceeds to ensure adequate maintenance of its remaining 16 properties? Should it use the money to develop new housing in one of Philadelphia's many distressed neighborhoods? Or, should it retain and improve PennTowne as part of an historic commitment to the neighborhood and long-term tenants? As per established board processes, Friends Rehab would have to reach a consensus before the organization could proceed.
Learning Objective:
This case opens discussion to the issues commonly faced by nonprofit housing developers, as their properties age and cities change. It also sheds light on the decision-making process within a nonprofit organization-particularly the relationships between a board of directors, and their executive director.
