D.C. Chamber Starts Venture To Replace Lost Revenue

Seeking to make up revenue lost from the departure of numerous members, the D.C. Chamber of Commerce is launching a for-profit enterprise that will sell health, dental and life insurance to local businesses.

Long a back-burner issue, the move to diversify its funding sources became a front-and-center effort when the economy began sputtering. The chamber, like many nonprofit trade and professional associations in the Washington region, is losing many financially distressed business owners who can no longer afford the dues.

"You can't support the chamber on dues and events," said Barbara B. Lang, the chamber's president and chief executive. The economic crisis "forced us to take a hard look at ourselves."

Now, Lang added, the organization is reinventing itself, finding new ways to make money and offering new services so that it won't lose the members it has. "We need to be agile and able to respond quickly," she said.

The chamber in the 1990s offered health insurance as a benefit to the businesses that belonged to it. But the benefit was discontinued when the insurance carrier went out of business, prompting many members to quit the chamber, officials said.

Chamber officials looked into the possibility of establishing their own insurance company until they learned how much it would cost. They settled on opening a brokerage to sell existing insurance plans to members.

"There was a charge from the board of directors to find more revenue," said Peter Chesner, a consultant who runs the chamber's employee benefit consulting service, adding that the organization will earn revenue from brokerage fees. The aim of the business, he said, is to "put a program together so the cost of the insurance is less than if the companies tried to shop for the products on their own."

Lang said the revenue will not fill the chamber's budget gap, so she is moving up plans to establish two more moneymaking ventures from late 2009 to early next year. She declined to say what the ventures are.

Chamber officials would not disclose how many members or how much money the chamber has lost. They said it lost some memberships through consolidations -- for instance when Fidelity & Trust Financial was bought by Eagle Bancorp. Dues range from $393 to $5,610 a year, depending on the number of people a business employs.

The chamber also lost money on its main fundraiser of the year, the October gala. About 1,300 tickets were sold, down by 150 from the 2007 event. "Fundraising was a little harder this year," Lang said. "People are scaling back. They're looking at that as discretionary spending. People who always participate -- some didn't this year or they gave us less."

She said she is delaying from the second quarter of 2009 to early 2010 plans to relocate the chamber from its street-level office on K Street NW to a new location. To save money, she said, the chamber may have to take old furniture to the new location instead of purchasing new pieces.

Moreover, she said, the chamber may have to look for a smaller space -- maybe 10,000 square feet instead of 13,000 -- and move out of the higher-profile retail space on the street level to an upper floor in an office building.

"We love retail space. But retail space costs more," she said. "You may have to take an elevator to get to us."

-- V. Dion Haynes