Published in Nonprofits
Taste of Heaven is a for-profit venture wholly owned by a nonprofit parent company. The food business generates revenue that goes to support the organization's missions. Taste of Heaven is a for-profit venture wholly owned by a nonprofit parent company. The food business generates revenue that goes to support the organization's missions. COURTESY PHOTO

Nonprofits turn to food businesses for revenue streams

BY Sunday, October 14, 2018 10:58am

GRAND RAPIDS — Cookies made by volunteers and residents of Degage Ministries are providing people with tasty treats and helping the organization access much-needed funding.

While many nonprofits use food products as a way to make money, Degage has transformed the tool from a casual fundraising technique into an established revenue stream with growth opportunities.

Since selling the first "Pauls’ Moms’ Cookies" in 2015, Degage’s revenues from the program have more than doubled, according to Marketing Manager Bob Kreter. The products now come in seven varieties, which are sold in retail operations around the Grand Rapids area.

Kreter declined to specify how much money the nonprofit generated from the cookie sales.

"It’s not about making money, it’s more about how the proceeds go to help women in our ministry," Kreter said.

Scott Pease, general manager of Taste of Heaven in Kalamazoo, said the same is true for his operation. Taste of Heaven sells a dozen varieties of popcorn produced by volunteers and youth involved with various ministries — most notably Youth for Christ of the Kalamazoo Area, which receives funding from the proceeds.

"It varies from year to year. We’re talking in the thousands," Pease said of the annual popcorn sales. "It’s a substantial and impactful number."

Both Pauls’ Moms’ Cookies and Taste of Heaven are organized as for-profit entities that are wholly-owned by their nonprofit parent organizations.

As demand for the popcorn increased, executives at Taste of Heaven eventually expanded to a location on West Main Street in Kalamazoo. The first retail operation was located near the Kalamazoo Gospel Mission, its partner for the first nine years.

"The Gospel Mission provided us with some space on their downtown campus," Pease said. "As we grew and developed a following, we weren’t able to produce the amount of product demanded. At the same time, (the Gospel Mission) was adding on and restructuring.

"It was a good, mutual parting of the ways. We outgrew them and they outgrew us. At that time, Youth for Christ came in."

All proceeds collected at the end of each year benefit the Youth for Christ ministry in Kalamazoo. The group offers hands-on engagement with teenagers and has ministries that pair young people with adult mentors, as well as a ministry at the juvenile detention facility that works with at-risk youth in the system. Youth for Christ also maintains additional partnerships, including with ARK, a shelter for runaways, and the Michigan Youth Challenge.

Many of the youth served through these ministries also volunteer at Taste of Heaven, Pease said.

In-store sales account for 40 percent of revenues, while the remainder is made up of corporate gift purchases and online sales. The popcorn also is found on the shelves of businesses and organizations such as Kazoopy’s Pizza in Kalamazoo and a pharmacy and gift shop in Paw Paw.

In Grand Rapids, Degage sells the 1,000-plus cookies made each week at various retailers, including Forest Hills Foods, Kingma’s Market in Ada, the new Meijer Inc.-owned Bridge Street Market and via ecommerce.

Word of mouth and friends of the nonprofit have spread good publicity for the cookie venture, which launched three years ago at a local farmers market, Kreter said.

Pease said some of his volunteers have been with his organization since it began.

"We have an opportunity to recruit and engage volunteers to our mission who may not be working or comfortable working directly with teenagers," he said. "The majority are retired folks who may not directly interact with teens, but indirectly they make an impact. We have a regular collection of 15 to 20 volunteers who come weekly."

At Degage, Kreter said the mix of volunteers and individuals who work for these business enterprises and benefit directly from the services offered make it a win-win for everybody.

"The money raised is secondary to the life-changing work it provides for the people we serve," he said.

SUPPORTING CAUSES

Because Degage’s kitchen in downtown Grand Rapids focuses on preparing and serving daily meals for residents, the cookie operation relocated to a local church under the guidance of a retired physician and nurse who founded Pauls’ Moms’ Cookies.

Within the next two to three years, Degage wants to find a storefront and additional kitchen space to create the cookies, Kreter said.

The founders and volunteers, many of whom live at Degage’s Open Doors Women’s Ministry, a residential program, gather once a week to make the cookies.

"We have three employees that are women who once stayed at our shelter," Kreter said. "Now, they have apartments and work part-time making cookies. The beauty of this is that people who were homeless can now earn some money and women staying in our Open Doors ministry are selected to do this.

"We have one volunteer who was homeless for 10 years and literally off the grid. She stayed at Open Doors, moved out, got some skills and a job and now comes back to volunteer because she wants to give back. To me, that’s a success story."

Paul Knudstrup, founder and president of Kalamazoo-based Midwest Consulting Group Inc., said nonprofits are increasingly coming up with creative ways to raise money. He said Taste of Heaven and Degage are two of many examples of the growth that is possible when nonprofits adopt a strategic approach.

One of the earliest examples of this, he said, was a Methodist Church in Evanston, Ill., that began serving lunches out of its commissary to the general public five days a week during the 1940s. He said the pastor saw an opportunity because there was a lack of restaurants in the community.

"They probably served more than 100 people per day for years and years. They certainly charged for it and it raised money to help other ministry services in the community," Knudstrup said.

"I suppose that there are some private businesses, namely restaurants, who would object to this because they might see it as taking business away, but I think the people that patronize these businesses do so because they want to support a cause and contribute."

RECRUIT AND ENGAGE

This is something Peg Throop was confident of when she accepted a challenge in 1999 that signified the start of Taste of Heaven. Throop was listening to a church message about investing time, talents, and finances in order to multiply impact. At the end of the message, as she left the church, she was handed an envelope containing a $10 bill. The church members were asked to return the money 10 months later along with any additional funds that were earned by investing it.

"I’m really good at two things: eating chocolate and procrastinating," Throop said at the time. Throop used the chocolate she purchased with that $10 to drizzle over homemade caramel corn, put it in coffee cans and delivered it to some local school secretaries. After hearing much raving about the drizzled caramel corn, she started making it and selling it.

"I went back to church in November with $800," Throop said.


MiBiz new coverage of Michigan’s nonprofit sector is made possible through a generous sponsorship by the Grand Rapids Community Foundation, a leader in funding, initiating and leading programs that benefit the Grand Rapids area in the arts, community development, education, environment, health, and human services. For more information, visit grfoundation.org. This sponsorship is advertising. It has no effect on editorial consideration in MiBiz.

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