Two of Minnesota's oldest family service agencies announced on Wednesday that they will merge in response to deep declines in revenues from international adoptions.

Children's Home Society & Family Services, a 123-year-old St. Paul institution, will combine programs, staff and building space with Lutheran Social Service (LSS) of Minnesota, which has operated in Minnesota for 147 years.

Children's Home will retain its name and separate nonprofit status, as well as its boards of directors.

"We hope it will allow two organizations that have great strength and history in adoptions to do even better,'' said Children's Home CEO Maureen Warren, who will become a vice president of special projects at LSS under the arrangement.

Jodi Harpstead, CEO at Lutheran Social Service, will become CEO of both organizations. The merger takes place July 1.

Children's Home had been operating at a loss for four years, including nearly $2 million last year, tax returns indicate. The nationally known agency saw a 60 percent drop in international adoptions, a program that had generated up to 70 percent of its revenue, Warren said.

More than 900 international children were placed with families each year in the early 2000s, Warren said. That figure dropped to 380 in 2011 as many foreign countries began to revamp their adoption processes to meet new standards.

Harstead said LSS understood the problem from its own adoption programs. "It was a shift in international adoption, not mismanagement of operations,'' she said.

Merging with Lutheran Social Service, which has a strong domestic adoption program, made sense, Harpstead said. In recent years, the nonprofit has helped about 100 U.S. children a year find adoptive homes.

"We're excited about new possibilities we will create together," Harpstead said. "Both of our organizations have deep roots in adoption dating back to the 1800s. When we combine our strengths and passions, we'll be even stronger and more effective here in Minnesota.''

Would-be parents in the process of adopting through the agencies will not be affected by the change, staff said.

LSS is the largest statewide human service agency in Minnesota. It has $100 million in annual revenue, 2,400 staff members and serves about 100,000 people in 300 communities each year, Harpstead said.

Children's Home had revenue of about $15 million last year, 180 staff members and served about 600 children in its child care program and 300 in adoptions, Warren said. It has a unique place in the history of Minnesota adoptions. In the 1890s, it was among children's home societies across the country that took abandoned children from the East Coast who were sent west on so-called orphan trains in search of homes.

Harpstead said the two agencies began discussions about a merger a year ago. Children's Home had previously merged with Family Service Inc. in 2003. And LSS had taken on two nonprofits specializing in services for people with disabilities in the past five years.

The merger is among dozens occurring across Minnesota as nonprofits struggle with the economic downturn.

Details of the merger are pending. But adoption staff from the Minneapolis office of LSS are expected to move to the Children's Home Society building this summer. Said Warren: "We see a smooth transition ahead.''

Jean Hopfensperger • 612-673-4511