NSV House

Like many American cities during the 1960s and 1970s, Washington, DC, experienced declining population, economic challenges, and growing social problems, as many middle-class families and businesses moved to the suburbs. In addition, in 1963, Congress passed the Community Mental Health Center Act, leading to the deinstitutionalization of people who were mentally ill. There were inadequate services available to assist that population, a situation that led to an increase in the number of homeless people on urban streets. Riots followed the assassination of Martin Luther King, Jr., in 1968, leaving burned-out stores on streets that had been commercial corridors, accelerating economic decline and the flight of middle-class families. By 1970, the area near 14th and N Streets, Northwest, in the Logan Circle neighborhood of Washington, was a dystopian scene, known primarily for prostitution, drug dealing, and the visibility of homeless people.
In 1970, Pastor John Steinbruck and his wife, Erna, arrived at Luther Place Memorial Church, in the midst of the troubled neighborhood. By 1972, an interfaith organization called ProJeCt (standing for Protestant, Jewish, and Catholic) was distributing food and clothing in the area. Other organizations were created to provide housing for homeless women. With leadership by the Steinbrucks, those and other efforts led to the founding of N Street Village in 1973. Its mission was “[to empower] homeless and low-income women to claim their highest quality of life by offering a broad spectrum of services and advocacy in an atmosphere of dignity and respect” (N Street Village, n.d.-a).
Services expanded in the decades that followed, and by 2014, what had begun with housing provided with sleeping mats on the floor of the church and food served in a parking lot had evolved into an organization providing a comprehensive continuum of care for homeless and low-income women, including a day center, health and wellness programs, and shelter and housing (N Street Village, n.d.-a).
From its founding in 1973, NSV experienced periods of growth as well as periods of crisis. Mary Funke, who had a background in counseling and education, was appointed as executive director in 2004 and immediately faced a financial crisis. She recognized that urgent action would be needed, but also that the current crisis was deeply rooted in long-term problems, which would require more complex planning and change. Funke implemented emergency measures, including budget cuts, staff reductions, and intensified fundraising. She also put in place new policies and practices intended to provide long-term stability, including performance measurement, strategic planning, strengthened governance, and a leadership succession plan (N Street Village, 2011). She also worked with the board and staff to create a culture of accountability and performance. By 2006, N Street Village was meeting its goals and its financial situation had been stabilized. It applied for the Washington Post Award for Excellence in Nonprofit Management. The staff benchmarked other organizations, developed the application as a team, and succeeded in winning the competition (Kee & Newcomer, 2008).
Despite N Street’s improved management and financial position, it could not escape the impact of the serious economic downturn that began in 2007, which some labeled the Great Recession. Overall philanthropy declined and foundation giving in the Washington region dropped 8 percent just from 2008 to 2009. Meanwhile, the recession was increasing the need for NSV’s services. Funders were encouraging grant recipients to do more with less and to seek partnerships with other nonprofits (Tomassoni, 2011).
In 2010, Mary Funke was followed as executive director by Schroeder Stribling, in a planned succession. Stribling was a social worker with a background in mental health programs, who had served as director of programs at NSV since 2003 and deputy executive director since 2008. Faced with the economic crisis, Stribling implemented a hiring freeze, reduced some employee benefits, and was forced to use some funds from the organization’s reserves. She warned the board that if the financial environment did not improve, NSV might be forced to cut programs, despite the growing need for services. As she reports, “The stress was really tremendous during those times” (Small, 2012). The board approved a strategic plan to deal with the continuing economic downturn, including the pursuit of partnerships with other nonprofits serving low-income women (FitzGerald, 2013; Small, 2012).
Meanwhile, the recession also was having an impact at Miriam’s House.2 Miriam’s House had been founded in 1996 to provide transitional housing for women living with HIV and AIDS. The founder, Carol Marsh, had retired as executive director in 2010 and was followed by Sam Collins. Like Stribling, Collins walked right into the economic maelstrom. Just prior to his arrival, Miriam’s annual revenue had declined from $800,000 to $600,000 in only a year. A fifth of the staff had been laid off. Despite reductions in costs, Miriam’s reserves had been exhausted in just three years. “We were trying to carve pieces off of our budget until in 2010, there was nothing left to shave off,” said Miriam’s executive director Tim Fretz (Small, 2012). In addition to the economic downturn, Miriam’s House was adjusting to changes in the need for its services. Miriam’s hospice model was becoming outdated, as medical advances were extending the lives of people with HIV and increasing the need for HIV treatment programs (Small, 2012). Given the environment, Miriam’s House, like NSV, began looking for a partner.
The partnership began with NSV offering mental health and employment services at Miriam’s House, which Miriam’s would have been unable to provide with its strained resources (Tomassoni, 2011). But talk soon turned to the possibility of merger. As Stribling recalls, “Given the very strong mission-fit and positive chemistry between our two organizations, it occurred to me right away that we could make a successful merger that would strengthen our collective impact.… [We] quickly progressed to candidly proposing a merger—a ‘partnership on steroids’” (FitzGerald, 2013).
NSV retained Peter Shields, an attorney experienced in corporate mergers, to manage the process. It began with an exchange of formal letters covering points such as real estate, programming, intellectual property, corporate structure, government contracts, and human resources. Both boards began considering the tough questions: What would happen to the executive director of Miriam’s House? What about other staff of both organizations? What about the name of Miriam’s House (FitzGerald, 2013)?
In September 2011, N Street Village and Miriam’s House agreed to merge. Miriam’s would continue to house homeless women in one of its facilities, but its board would be dissolved and its programs would become a part of N Street Village. The Miriam’s name would be preserved, but as a program of NSV. Reflecting on the merger, Stribling stated, “This feels like a marriage” (Tomassoni, 2011). The process had required 10 months. As Shields explains, “In a for-profit merger, it’s full speed ahead and get it done as soon as possible. This was the opposite. The driver was the mission, so it required sensitivity and attention” (Small, 2012).
How had success been achieved, when obstacles had derailed other proposed mergers in the nonprofit sector? Reflecting on the experience, Stribling cites three factors. First, the merger had positive endorsements from key constituents, including key funders, founders, and donors. Major Washington foundations provided financial support for the merger. Stribling conducted “insider previews” for other donors and constituents throughout the process to keep them informed and prepare them for what might result. Second, both executive directors kept their staff members informed and planned social activities to build relationships and trust among them. As Stribling describes, “We did a lot of gathering, greeting, socializing, processing, and celebrating both during and after the process … to try and honor and preserve and promote the positive culture and morale that both organizations enjoyed” (FitzGerald, 2013). And, third, the process was carefully managed, by Shields and by Tracy Cecil, an NSV senior staff member who was assigned as project director. Shields’s involvement was critical, as Stribling explains, because “He was able to represent our board in the negotiations and also take some sensitive staff elements … offline and into the board-to-board communication” (FitzGerald, 2013).
But the period following the merger also required continued sensitivity. One member of Miriam’s former board who had financial expertise was added to the NSV board, and Tim Fretz moved from Miriam’s staff to become operations manager at NSV. Sam Collins went on to serve as president of the Lutheran Volunteer Corps. NSV implemented combined staff training programs and clients adjusted to the change. As one client explained in a newspaper interview, she previously had lived at Miriam’s House and was reluctant to go to another organization at a different location to receive services. Following the merger, she continued to live at Miriam’s but also attended classes and groups at NSV, several blocks away. Despite her initial discomfort, she eventually reported, “It pretty much feels like a family” (Tomassoni, 2011).
Looking back on the merger process, Stribling offers advice to other organizations, frankly noting costs as well as benefits. She observes that while mergers offer the efficiencies of larger scale in the long run, there are high immediate investments that need to be made and hidden costs over the long run, both tangible and intangible. Those include, for example, needed investments in IT infrastructure and the greater commitment of effort required to maintain organizational culture in a larger organization (FitzGerald, 2013). The principal benefits relate to mission:
By joining forces with Miriam’s House, we were able not only to reinforce the financial position of both organizations, but we have been able to expand HIV services to hundreds of of women, AND we have opened the potential to add to our supportive housing inventory even further at more moderate cost than we could have otherwise. These are significant positive outcomes that will have a lasting impact for the people we exist to serve. (FitzGerald, 2013)
As the economy improved and the benefits of the merger came to be realized, N Street Village sought new ways to grow and increase its impact. But growth would require new strategies and new partnerships.
NSV “had exploited every inch” of space at its flagship property on N Street, which occupied an entire block (Neibauer, 2012). Expansion at that location had been foreclosed by changes in the neighborhood. Ironically, what had been an urban wasteland in the 1970s had become, by 2013, a remarkable example of urban gentrification, with the development of expensive new condos, restaurants, theaters, and clubs along a booming 14th Street (Shin, 2013). The women living at NSV were now residents of what had become an expensive neighborhood. Although its facility was worth millions, NSV could not sell it and relocate, since there were restrictions on the use of the building (Neibauer, 2012). Future growth would require distributing NSV’s facilities and services to other parts of the city.
In 2008, the city’s Human Services Department had become concerned about troubling trends. People who became homeless were remaining homeless for longer periods and were returning frequently to emergency and temporary shelters. The department initiated a plan that adopted the “Housing First model,” which had been tried with success in other cities. The idea was to move homeless people into sustainable permanent housing first and then provide services to help them advance their lives, such as medical care and counseling. In addition, this approach called for a break from the previous model, which placed people in scattered housing units with city subsidies. The new program would place them in a common location, with the goal of building a sense of community and facilitating the provision of services. Stribling described the benefits of this approach, saying, “When there’s a community, there’s a sense of support you can’t get elsewhere. [Adopting the Housing First model] is a direction we’ve been hoping the district would move in” (Driessen, 2012).
Consistent with the city’s new strategy, in 2012, N Street Village opened its third residential site to provide supportive services for 31 of the city’s most vulnerable homeless women. Located five blocks from NSV’s main building, the new residence was named Erna’s House, in honor of Erna Steinbruck, cofounder of N Street Village (N Street Village, n.d.-a). The building, once foreclosed by the U.S. Department of Housing and Urban Development, was purchased and renovated in 2011 by private developers and then was leased by the city’s Department of Human Services for $750,000 a year. Operation of Erna’s House would be the responsibility of NSV and would cost about $400,000 a year, with NSV covering about $100,000, and the city funding the balance (Neibauer, 2012).
NSV initiated a new round of strategic planning in 2014, focusing on strategies for continued growth. In 2016, the organization opened its fourth housing site, the Patricia Handy Place for Women, offering emergency housing and housing for women receiving on-site intensive medical care (N Street Village, n.d.-a) Using funds from its successful capital campaign, NSV also completed renovations to Miriam’s House and added new units and amenities at that location (N Street Village, n.d.-b). Growth continued in 2017 with the opening of new programs at the Phyllis Wheatley YWCA, giving NSV a presence in three of the city’s eight wards (N Street Village, n.d.-a).
Amid the dramatic gentrification of Washington, DC, during the first two decades of the 21st century, some of its most vulnerable citizens had been left behind. A rapidly decreasing supply of affordable housing and growing income disparities increased the number of such citizens and exacerbated their needs. Fifty-three percent of NSV clients were at least 50 years old. Seventy-five percent had chronic health problems, and 11 percent were living with HIV. Eighty-four percent had a history of trauma. Ninety-two percent had a history of mental illness, substance abuse, or both (N Street Village, 2014). There were more than 6,500 homeless people in Washington in 2012, about 24 percent of whom were women (Neibauer, 2012). N Street Village served 1,400 of them.
As Stribling (2014) explained,
We have a lot of work to do … and it will take every community—every board/group/mission/organization AND our government partners—to make progress and to address deeply entrenched poverty and its related problems.… I always encourage us to remember and share the idea that ‘we are more alike than we are different.’ A few small turns of fate or circumstance could render us in one another’s position. Whether we are motivated by our faith or a sense of justice or compassion, we should fulfill a social compact that ensures equity, dignity and opportunity for everyone.
Questions Related to Case 8.1
1. Which of the drivers of mergers discussed in this chapter were at work in the case of N Street Village and Miriam’s House?
2. Which of the obstacles to merger discussed in this chapter existed in the case of NSV and Miriam’s House and how were they overcome? Could the successful process used in this case be adopted by other organizations or were there unique conditions and circumstances that worked in favor of NSV and Miriam’s House?
3. How does the evolution of the relationship between N Street Village and Miriam’s House reflect the collaborative map developed by La Piana Consulting?
4. Do NSV’s relationships with the city government seem to be collaborations or partnerships or is it principally a government contractor?
5. How would you define NSV’s relationships with Unity Health Care, Mary’s Center, Luther Place Memorial Church, and private real estate developers?
6. How might the perspective of N Street Village as a nonprofit organization be different from that of government agencies and for-profit real estate developers when considering partnerships?