Charity Works: A match made in a recession

Best Practice: Mergers.

Nonprofit: N Street Village/
Miriam’s House.

Type of work: Services and housing for homeless and low-income women and families.

Area location: Northwest Washington.

Number of Staff: 44 full-time, 15 part-time.

Annual budget:
$5 million.

It was a marriage born during the Great Recession. Until then, both nonprofits were too engulfed in their own passions to entertain thoughts of companionship. Then the markets dropped and the plausibility of a union rose. Timing was everything.

Nearly one year since the vows, two nonprofit darlings of the District — N Street Village and Miriam’s House —are calling their merger a success.

It was not without discomfort and uncertainty, but after an economic downturn that swallowed fundraising dollars and government grants, the region’s nonprofits were forced to either find creative ways to adjust or shut down. Mergers were widely encouraged by fundraising professionals.

The combination of N Street Village and Miriam’s House, both providing human services to homeless women, has been one of the more high-profile, full-scale mergers in the region since the recession began in 2008.

For N Street Village, the economic doldrums sparked a hiring freeze, cessation of employee benefits and two years of deficits causing executives to dip into reserves. All the while, demand for services were increasing.

“The stress was really tremendous during those times,” said Shroeder Stribling, N Street’s executive director. She said she told board members that closing programs might be inevitable.

In 2010, the board and senior staff decided to pursue four strategies to adjust to the new economy. One included forging partnerships with other women services organizations. This included sharing funding or even a staff member. But the idea of an outright merger was “on the radical end of the spectrum.”

Meanwhile, Miriam’s House was undergoing an identity crisis. As a nonprofit created in 1996 to serve homeless women with HIV, the hospice model became outdated as advancements in medicine lengthened patients’ lives. Now HIV treatment is just one of many needs.

Collaboration was a possible answer, but when the economy dropped in 2008, it became urgent. Revenuewas slashed by $200,000, the budget shrunk from $800,000 to $600,000 and a fifth of the staff was laid off. After three years of deficits, there were no more reserves.

“We were trying to carve pieces off of our budget until in 2010, there was nothing left to shave off,” said Tim Fretz, executive with Miriam’s House and husband of its founder, Carol Marsh.

By 2010, Miriam’s House began looking earnestly for a partner, and after it changed executive directors, began talking with N Street about a merger.

N Street Village appointed a merger liaison, attorney Peter Shields, who facilitated the process. It began with an exchange of formal letters indicating expectations regarding real estate, programming, intellectual property, corporate structure, government contracts and human resources.

“In a for-profit merger, it’s full speed ahead and get it done as soon as possible,” said Shields, whose merger experience included work with the satellite radio companies Sirius and then-District-based XM. “This was the opposite. The driver was the mission, so it required sensitivity and attention.”

The two groups held social events, such as bowling, for staff from both groups. Both organizations’ executives met with staff regularly to address concerns and changes. N Street Village held regular trainings for its new employees. The merger was approved in September 2011.

Since the merger, revenue has increased, salaries are higher for Miriam’s House employees, programs have expanded, government funding has increased and new funding from AIDS groups has increased. A recent government grant will make way for another housing location.

“Frankly this is the time where we’re exhaling,” said Stribling. “We really knew that we could make it work but the proof was in the pudding … This is a promising sign for us and others.”

 
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