Non-profits being creative to cope with recession

During the recession things have been tough for non-profits as donations are down for almost all of them. It has forced the charities to be creative to continue their services to the needy while having less to do it with. Some non-profits have merged with others with a shared goal, partnered with for-profits, or have gone to outsourcing.

An article in Maryland's Gazette explores all of these steps that non-profits are taking to cope. For our snippet, we highlighted a couple of examples presented by writer Lindsey Robbins.

The Arc of Prince George's County and Melwood in Upper Marlboro, both organizations that support people with developmental disabilities, have long partnered their missions. This year, the Arc took the partnership even further, taking over Melwood's 23 group homes and increasing its total operation to 54 group homes. Melwood could no longer support the group home program through its resources, which have been heavily hit by fewer vehicle donations, usually a significant funding source.

The Arc, which increased its annual budget to $24 million this year from $22 million last year due to the acquisition, still had to consolidate five of its homes, start charging for lunch and day programs and stop contributing to employee retirement funds in the last quarter of 2009, said Mac Ramsey, executive director. The latter move, which other nonprofits are taking, saved the organization $100,000, he said.

Because 80 percent of The Arc's money comes from the state — which is facing a budget shortfall of close to $2 billion next fiscal year — Ramsey said he is particularly concerned about funding. He and other nonprofit officials have been touring Maryland, telling their clients' stories in hopes of encouraging people to pressure the government not to cut funding.

"The state of Maryland is in very, very bad shape. We have to stay vigilant," he said.

No longer going it alone

Elsewhere in the state, local Habitat for Humanity chapters are pooling their resources through a merger.

Arundel Habitat for Humanity and Chesapeake Habitat for Humanity formed Habitat for Humanity of the Chesapeake in July, providing volunteer-built homes to people in Baltimore city, Baltimore County and Anne Arundel County. The merger ups the organization's annual budget to $8.8 million and will support 35 homes this year, compared with 12 to 14 homes they were constructing individually, said Anne Rouse, director of resource development and marketing. The organization's goal is 100 homes each year.

"We didn't do it to streamline. We did it because we're now of efficient size and scale to attract new partners and make more of an impact," Rouse said, adding that the Halethorpe nonprofit has already been "blown away" by the response to its requests for partnerships. "We're not seeing a downward cycle in donations. But we can also specialize our divisions now and have a robust development staff."

Although many nonprofits are mulling mergers, Pollock said the process can be complicated, as nonprofits must consider each other's leadership culture as well as their respective missions, which many not be perfectly aligned. He said most mergers are essentially back-office collaborations, with nonprofits sharing infrastructure tied to operations that are not necessarily intrinsic to their missions.