For almost 40 years, the Catholic Archdiocese of Washington has operated four distinct organizations to help the region's needy: the Spanish Catholic Center for new immigrants, Anchor Mental Health for the mentally ill, the Kennedy Institute for people with developmental disabilities and Catholic Charities, which helps with child care, housing and addiction treatment.
Last month, the archdiocese combined all four organizations into one, Catholic Community Services. With $50 million and 1,000 employees, Catholic Community Services instantly became one of the area's largest social services nonprofit groups.
Ed Orzechowski, chief executive of the new group, said the restructuring was carried out in reaction to new realities confronting the nonprofit world: Governments, individual donors and foundations that fund charities are demanding that they operate more efficiently, achieve more and be more accountable to the public, he said.
"We see the future as not being easier," Orzechowski said. "It's going to get tougher."
Catholic Community Services is emblematic of the change that many nonprofit groups are undergoing as they struggle to recover from the funding crunch brought on by terrorist attacks in 2001. Many private donors diverted money to 9/11 causes, a recession reduced government funding, and foundations cut funding as the falling stock market hammered their portfolios.
A study to be released today of financial health of nonprofit human services organizations in the Washington area found that 60 percent of those surveyed reported an increase in the number of clients served during the past three years but sluggish revenue growth.
Forty percent reported increased private contributions, and most reported flat or falling government funding: Almost 80 percent, for example, reported no change or a decline in state funding.
Nonprofit groups are being "squeezed by rising service demands, but revenue is not keeping up," said Chuck Bean, executive director of the Nonprofit Roundtable of Greater Washington, which commissioned the study.
In response, some nonprofit groups are remaking themselves, and others are merging. Some have found inventive new sources of funding to make up for sources that have dried up. Some are blossoming financially, while others are still struggling. A few have gone out of business.
In the District, a high-profile civic group, DC Agenda, which researches economic and social issues, closed this month. Officials blamed a reduction in foundation funding. Last month, Public Allies, a nonprofit group that placed young adults in paid apprenticeships at local nonprofit groups, shut its doors, unable to raise operating funds, officials said.
As some nonprofits fold, others say they have had to pick up the slack.
The number of teenagers staying at Alternative House, a Vienna shelter for runaway teenagers, rose to 190 last year, compared with 150 in an average year, said Executive Director Judith Dittman. She blames the closures of shelters elsewhere in Northern Virginia and Maryland for the increase.
"We're seeing kids from a wider area," Dittman said. "It's just expanded."
To avoid closing, some nonprofit groups merged with more successful ones. But that has brought its own problems.
The Boys & Girls Clubs of Greater Washington swallowed the Metropolitan Police Boys and Girls Club last year after it went broke and could no longer run its six clubhouses in crime-ridden D.C. neighborhoods and its summer camp in Maryland.
But the Boys & Girls Clubs are having trouble raising the $2.2 million it needs to operate the additional facilities and had to forgo the summer camp this year, said Patricia G. Shannon, executive director of the clubs.
"We're struggling," Shannon said. "We need help."
Other groups are pushing ahead. In a national survey of nonprofit groups released this year by Johns Hopkins University's Center for Civil Society Studies, nearly 90 percent of those surveyed reported some fiscal stress. Nevertheless, the survey found, nearly two-thirds of organizations had expanded their activities.
"There is just this incredible entrepreneurship in the sector that causes people to find every way they can to avoid affecting services," said Lester Salamon, the center's director.
One local example is DC Scores, an after-school program for about 700 D.C. elementary school students that lost $100,000 in funding from the DC Children and Youth Investment Trust last year. Despite the budget hit, the group doubled the size of its summer camp to 100 children this year and is expanding to a middle school, Kelly Miller in Northeast Washington, this fall.
DC Scores director Holly O'Donnell said she is holding more innovative fundraisers, including a recent soccer tournament pitting local lawyers against corporate executives. That raised $45,000.
"The key for us has been just to be creative," O'Donnell said.
The news is brighter for some arts organizations, particularly in the District, where Mayor Anthony A. Williams (D) has made funding the arts a priority in hopes of bringing in tourists and tax revenue. The city has allocated millions to a second Shakespeare Theatre stage downtown and an expansion of Arena Stage in Southwest Washington.
Arena Stage executive director Stephen Richard said that after some lean years, the organization is thriving. "We're not running crazy surpluses," he said. "But we're in solid shape."
Vermick Powell takes a computer class at Catholic Community Services.