By Simon Hickman, CEO of Access Insurance
A narrated version of this blog is available at the bottom of the page
Many charities might consider downsizing their office space or looking at alternative arrangements. Sharing an office will be one of these options, with the primary opportunity to save on overhead costs such as rent, utilities, maintenance and service charges, leaving more to be used for core activities.
It also offers flexibility that can be brought alongside remote and hybrid working arrangements. In addition to a flexible work culture, there is an opportunity to share resources, and knowledge and build coworking or mentoring relationships across organisations.
Shared office setups usually come in the form of serviced co-working spaces or sub-letting agreements (with agreement from the landlord). There are a number of risks and challenges that you should look out for when considering sharing an office.
Due diligence
Due diligence will be crucial in managing the risk of a shared office. You will need to make sure leases, contracts and laws are complied with as well as take steps to ensure you manage your reputation as you associate yourself with other co-located entities.
- Assess whether your missions and values align. Contradictions, controversies and public reputation of the co-located organisation could negatively impact your own, depending on how public the arrangement is and whether location is an important part of your charity’s identity.
- Check that the co-located organisations comply with their own applicable leases and laws.
- Plan for contingencies and how you can exit agreements and responsibilities.
- Ensure clear financial and operational terms are set to avoid confusion.
Moreover, there is also the potential for conflicts of interest, depending on who the other company is. For instance, if a charity shares an office with a company that it also has business dealings with, it could create a situation where the charity’s decisions are influenced by its relationship with the company, rather than by the charity’s best interests. Relationships between staff members or board members between the two different organisations could also give rise to conflicts of interest.
Responsibilities
Each organisation has a legal responsibility to identify and mitigate risks for their employees and volunteers, and sharing office space can create challenges in ensuring this responsibility is met effectively.
- Responsibilities and terms will need to be clear from the outset. Whilst sometimes it might be the primary tenant organisation that takes on parts of the building management, it may be different if only one organisation works there at a time. Building management, maintenance, fire marshalling, completing risk assessments, and accident books all need to be managed day-to-day.
- Check your responsibilities and liabilities under the terms of the lease and make sure that sub-letting is allowed.
- Determine how resources, such as meeting rooms, equipment, and facilities will be used and managed by each organisation.
- Confirm that adequate insurance cover is in place for both parties, covering liability, property damage, and other potential risks associated with shared space.
- Review security protocols and measures to protect sensitive information, assets, and the safety of staff and beneficiaries.
Data protection
Sharing an office increases the risk of data protection and cybersecurity breaches, which can lead to reputational damage and legal implications.
- Minimise the amount of sensitive data kept in shared spaces.
- Review access controls and data protection policies.
- Use lockable cabinets or require paper-free data storage.
- Restrict access to IT systems and databases.
- Establish clear policies for data handling and if any data sharing agreements should exist, for example, sharing of employee/volunteer data for the purpose of building/fire safety.
- Evaluate cyber risks.
- If sharing IT infrastructure or networks, there’s a risk of data breaches across both organisations.
- Shared spaces might involve shared devices (computers, printers, etc.). Ensure these devices are password-protected, regularly updated, and have security software to prevent unauthorised access or malware attacks.
- Manage insider threats.
- Charities may be more vulnerable to insider threats due to a high turnover of staff, especially if a lot of volunteers are involved. Sharing an office could potentially increase this risk, as it may be more difficult to monitor and control access to sensitive information.
Insurance
When you move to new premises or enter into an office-sharing agreement, you should declare the new locations and details of third parties you will be sharing with to your insurer/broker.
- Check that the security measures of the new premises conform to the requirements in your policy wordings and that theft cover will respond to your circumstance. Many insurers will restrict coverage for theft to only provide cover when there is violent and forced entry to or exit from the premises, therefore excluding any items that just go missing.
- Although the landlord takes out building insurance, any contents you own as well as tenants improvements (those made by you or for which you are responsible) such as partition walls, air conditioning installations and other fixed improvements to the building to make it fit for purpose will be your responsibility to insure.
- Review business interruption cover to meet the continuity plans you have in place with the other third parties the office is shared with.
If you have any questions about your insurance cover, then speak to one of Access Insurance’s brokers for independent advice.
This non-exhaustive article shows the importance of careful risk assessment and management when charities consider sharing office space with a company or another charity. You will need to evaluate the magnitude of each risk such as handling of sensitive personal data or operational hazards in relation to the type of office sharing agreement you are considering. If in doubt about an office-sharing arrangement, employ the services of a Property Surveyor to advise and negotiate on your behalf.
