For many charities and not-for-profits, property has long been seen as a safe, tangible asset. Bequests often come in the form of land or buildings, and over time many organisations have built sizeable portfolios. Property can provide stable income, and a sense of permanence. But it can also quietly hold you back.

Across New Zealand, charities collectively manage more than $86 billion in assets, a significant portion of which is tied up in property. While these holdings may look impressive on paper, the question boards need to ask is: are these assets really helping us deliver on our mission—or are they limiting our ability to act?

The Hidden Costs of Property

Property is never “free.” Even when bequeathed, it comes with rates, insurance, potential compliance obligations, and ongoing maintenance. In a recent survey of the sector, more than one in three charities said they struggled to keep up with property compliance requirements (Community Governance NZ, 2024). Deferred maintenance can quickly turn into a costly liability—diverting funds away from the very purpose the property was gifted to support.

Opportunity Cost Matters

Every dollar tied up in bricks and mortar is a dollar that can’t be deployed elsewhere. For example, a property worth $5 million delivering a net yield of 2% might look stable, but if the same capital was diversified across income-generating investments at 4–5%, it could double the annual income available for programmes and services.

This isn’t about selling every property. It’s about asking: is this asset working as hard as it could for our mission? Sometimes the right answer is to retain; sometimes it’s to repurpose, redevelop, or release.

Governance Responsibilities

Trustees and board members carry both legal and fiduciary responsibilities. That means ensuring property is not only maintained but also optimised for mission. Not to mention requirements under the Health and Safety Act as a PCBU. The Charities Act requires trustees to act in the best interests of their organisation—sitting on underperforming or burdensome assets can fall short of that duty.

Making Property Work for You

Here are three steps boards can take:

1. Audit your portfolio – understand the value, its condition, current financial performance, compliance, and opportunity cost of each property.
2. Clarify your mission lens – evaluate whether each asset helps or hinders delivery of your purpose.
3. Explore alternatives – consider leasing, alternatives uses or reinvesting proceeds into diversified or values-aligned funds.

At Trust Management, we work alongside charities to align property and financial decisions with mission. Sometimes the bravest step is letting go of an asset that no longer serves its purpose.

FAQs

Q: Should our charity always sell property if it’s underperforming?

Not necessarily. Sometimes retaining a property makes sense for strategic, community, or historical reasons. The key is to weigh opportunity cost and compliance obligations against your mission goals.

Q: How do we know if a property is a liability?

Warning signs include high maintenance costs, low rental returns, compliance issues, or vacant/underutilised space. An independent portfolio review can clarify the true financial and mission impact.

Q: What are alternatives to selling?

Options may include entering into a long-term prepaid ground lease, leasing out unused space or regearing existing lease terms, redeveloping, or restructuring ownership. Each can release additional income without losing the underlying asset.

Q: How often should trustees review property holdings?

Best practice is to review annually or sooner if major costs or compliance changes are imminent, critical lease events are scheduled, local infrastructure or surrounding development is underway or contemplated.