Mel Trotter Ministries’ acquisitions of two other Grand Rapids nonprofits in 2020 marked the start of a significant, long-term shift for the nonprofit that executives say will fundamentally change the organization.
In early January 2020, Mel Trotter announced a merger with Heartside Ministry, which provides similar services for individuals experiencing homelessness. The primary driver of the deal was to reduce duplicate services, said Mel Trotter President and CEO Dennis Van Kampen. For about two years, officials with the two organizations had discussed ways to collaborate before the merger was finalized. That collaboration included sharing human resources responsibilities, facilities and maintenance and I.T. support that Heartside would contract through Mel Trotter.
Mel Trotter announced a second merger in July 2020, this time with Grand Rapids-based Next Step of West Michigan, a nonprofit that provides job opportunities and performs construction, property maintenance, assembly and production services.
The pair of deals earned Mel Trotter the Deal of the Year Award in the nonprofit category.
While Heartside provides similar services as Mel Trotter, Next Step is “really a business. They employ people to either create a product that goes to the market or to flip foreclosed homes into low-income housing,” Van Kampen said.
The Next Step merger aligned with Mel Trotter’s long-term vision of boosting its revenue through social enterprise businesses. Over the next 10 years, Mel Trotter seeks to derive 70 percent of its revenue through these enterprises, shifting from a mostly donor-based model.
“Our gain was a workforce development program we didn’t have to create,” Van Kampen said. “A social enterprise allows us to fund growth that’s necessary to fulfill our vision, which is ending homelessness. We have a massive housing crisis, which not only contributes to people becoming homeless but also makes it far more difficult for them to get out of homelessness.”
He added: “These mergers allow us to have a greater impact on the housing crisis.”
The wheels are already in motion since the Next Step merger. In December, Next Step acquired a vacant industrial property across the street from its south-side Grand Rapids headquarters. Van Kampen said preliminary discussions have already started around converting the site to low-income or market-rate housing.
Mel Trotter has also previously purchased two homes from Next Step to help move people out of homelessness. In 2021, Mel Trotter anticipates bringing another four or five houses online that Next Step has purchased and redeveloped.
In the end, the two mergers served separate purposes for Mel Trotter: merging duplicate services in the case of Heartside, and growing its workforce development and housing resources with the addition of Next Step.
Meanwhile, the COVID-19 pandemic brought some organizational challenges when merging the organizations, on top of what Van Kampen described as routine cultural changes that come when companies join forces.
The experience also taught company leaders about the value of having sound business decisions driving such a move.
“One thing that’s critical is the business plan — the numbers have to work,” he said. “One thing that frustrates me about nonprofits in general is they tend to not follow good business practices because they’re providing a social service. I’d argue: If you want to have the greatest impact with services you provide, then you have to follow the same principles and practices a business would.”
Van Kampen maintains that the deals position Mel Trotter well in a shifting philanthropic landscape.
“I’m very confident in saying the staff and leadership of all three organizations believe that what we did is the right thing to do,” Van Kampen said. “One way or the other, this is the future of nonprofits. In 10 years, we won’t have as many standalone nonprofits as we have today because the donor support isn’t there. I think we’re going to see many more nonprofits do exactly what we did.”
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