By Patrick McGroarty
News Editor

Bay Cove Human Services has purchased Kit Clark Senior Services from Federated Dorchester Neighborhood Houses, Inc., a deal that will help Federated move toward financial stability and broaden Bay Cove's presence in the neighborhood.

Federated, one of Dorchester's most diverse non-profit agencies, has owned Kit Clark since the senior service organization was founded in1975, and also operates the Log School and Little House. The organization has struggled financially for much of the past decade. An independent report completed by The Bridgespan Group in 2002 recommended that Federated spin off Kit Clark, which serves 12,000 area seniors through a variety of senior programs, and consolidate around a mission specific to children and families.

"There weren't really synergies between the two parts of Federated," said Mark Hinderlie, executive director of Federated since 2003. "Bay Cove has a much more clinical approach to services. We are not clinicians, but in many aspects Kit Clark has a very intense clinical focus, so there's a skill synergy that wasn't involved with our programming."

Selling Kit Clark to Bay Cove for $3.2 million will allow Federated to pay down debts on several of their other programs and, according to Hinderlie, post their first surplus in five years.

"We can pay down this dramatically improved but still standing set of outstanding bills," he said.

The logic behind separating Kit Clark from Federated goes beyond a difference in mission statements. Kit Clark, like Federated, has operated at a loss in recent years, though it too is predicting a surplus this year. In addition, the wide gap in the type of services provided by Kit Clark and other Federated programs often left two Federated programs competing for the same crucial grant money, said Hinderlie.

"Because of the difference in missions, you couldn't go from both sides of the house," he said.

With that challenge in mind, Kit Clark Executive Director Sandra Albright first approached Bay Cove in 2005 about the possibility of a merger.

"I think we're going to improve the lives of all the people we see because we're going to mix the services of these two…very competent agencies," said Albright, who once sat on the Bay Cove board.

Stanley Connors, president and CEO of Bay Cove, said his organization's conservative board was initially hesitant to take charge of Kit Clark's uncertain financial future and took a great deal of time sifting through Federated's often disorganized financial record. In the end, said Connors, Bay Cove saw the acquisition as a healthy complement to services the organization was already running at group homes around the neighborhood.

"Our clientele, particularly around mental retardation as they aged, couldn't be serviced by the traditional day services, and the place that they started coming to was Kit Clark," said Connors.

Bay Cove was founded in 1959 with the opening of the Center Club, a social service agency in Government Center for adults with psychiatric disabilities. Today, the agency operates over 80 programs throughout greater Boston. Residents of at least six Bay Cove homes for mentally handicapped adults on streets like Marlow, Juliet, and Minot already frequent the Kit Clark Senior Center in Fields Corner.

The agency has in the past clashed with Dorchester residents for its efforts to open new residential facilities around the neighborhood. Most recently, Bay Cove's purchase of a home on Freeland Street in Lower Mills and plans to build a second structure on the property met with stiff resistance from the Lower Mills Civic Association.

"Sometimes when we try to open group homes, there's a feeling that there's too much of us in Dorchester, but we are Dorchester, we identify strongly with this neighborhood," said Connors.

In addition to the purchase price, Bay Cove will also inherit $1 million in billed operating expenses for which Kit Clark has yet to be reimbursed through promised governmental funding.

Connors said his organization, with an annual budget of $50 million and 1,200 employees, was strong enough to shoulder Kit Clark's $8 million operating budget and the burden of those outstanding operating costs.

"We're financially very sound," he said.

The new ownership will not mean any staff reductions at Kit Clark, though some administrative personnel (likely those who work in billing) may be relocated to Bay Cove's downtown office, said Connors.

Albright, Connors, and Hinderlie agreed that this was a sign of larger, increasingly challenging trends in the social service industry.

Each has horror stories of cited skyrocketing fuel prices, faulty fax machines, or outdated computer systems &endash; evidence, they say, that the operational cost of running a non-profit have risen drastically with little relief from governmental funding sources.

"There are these kind of superimposed influences in the political world that are coming down, and the funding sources are not paying for those," said Albright.

"The future is going to be challenging, for Bay Cove and for everybody," said Connors. "The fundamental economic issues that have been putting some agencies under…is the rates that we get paid by government are woefully inadequate to allow us to provide the services we want to provide."

That pinch has been felt most acutely by Federated.

Federated came under intense scrutiny in the spring of 2004 when the Boston Globe ran an editorial detailing the organization's extensive financial instability. Hinderlie says that the negative coverage damaged his ability to recruit private donors, and contributed to a major overhaul of the organization of which Kit Clark is the most significant change.

Hinderlie will leave Federated at the end of the month for Hearth Inc., an organization committed to ending elderly homelessness. He says he decided to leave because the goal he came to accomplish (stemming Federated's financial freefall) is in site &endash; and because that goal was reached by making touch choices to cut crucial programs, a decision that hurt many of Federated's longstanding community relationships. It's time, said Henderlie, for someone with new energy to take charge.

"The feeling that the corner has been turned and we're back in the sunshine is incredibly pervasive in the organization," said Hinderlie.