For Mike Mazzola, $72,000 was a good start, but it wasn’t enough. In the three years Mazzola has operated Mountain Equipment Recyclers on South Tejon Street, he has returned that amount of money to the community, often through donations supporting programs with ties to the military.
Mazzola’s concept, along with other established social enterprises like Blue Star Recyclers, Seeds Community Café and AspenPointe Café and Catering, engineered a community of ever-growing businesses designed with doing good before (but not at the expense of) making a profit.
Last month, Mazzola opened Shift Thrift, a thrift store that has partnered with six local nonprofits. When items are donated, organizations including the Rocky Mountain Field Institute, the Trails and Open Space Coalition and Springs Rescue Mission can be selected to receive a portion of the proceeds upon sale. The model differs from Mazzola’s other operation in that Mountain Equipment Recyclers is a for-profit and Shift Thrift is a 501(c)3. The outdoor retailer has been so successful, it doubled in size this year, and Mazzola said he hopes the societal side he sees spills over to his newest enterprise.
“With social enterprise businesses, Millennials are known for supporting those,” Mazzola said. “But it’s not just the Millennials now. It runs from the Baby Boomers on down. … People are making a shift. That’s our tagline. Shift the way you shop, shift the way you give.”
Kris Harty is the host of “Beyond the Bottom Line: Business on a Mission,” a radio show on KCMJ (93.9 FM) as well as online at KCMJ.org. The show highlights social entrepreneurs and support services throughout the state. Harty said the effects of supporting social enterprises spread far and wide.
“As consumers, we work hard for our money,” Harty said. “Why not spend it in an intentional way and get the most bang in spending my bucks? Why not spend where it does great things for the community?”
Harty said social enterprises often hire at-risk employees who otherwise may rely on public assistance. Some social enterprises, like AspenPointe Café, have an educational component that prepares students to work as prep cooks in commercial kitchens.
Brian Toon, director of business operations at AspenPointe, said 150 students will utilize the program this year.
“We have a 65 percent completion rate, and of those, a 93 percent [job] placement rate,” Toon said. “We’ve done the calculations and the training will generate a $14 million fiscal return on investment. It saves the community the cost of food stamps and other subsidies we’d be paying these people not to work. Training them to perform and find a job helps all taxpayers.”
But AspenPointe Café and Catering is a self-sustaining business that faces traditional challenges.
“Unlike the vast majority of social enterprises out there, we operate on 100 percent earned income,” Toon said. “Most depend on some donations. We earn all our profit.”
Toon said social enterprises and nonprofits often have the support of a foundation or can get grants.
“We have a double-bottom line. We have to make money and serve the community. Just for-profits have to make money. Nonprofits just have to serve the community. We have to do both. It makes it tough.”
Toon said AspenPointe doesn’t pursue grants.
“You become restricted by those who give you money,” he said. “They specify how the funds should be dealt with. That’s OK if you’re both in agreement, but over time it becomes something of a crutch. You lost money, but it’s OK because the grant will make up for it or you have foundation support. We want to stand on our own two feet because we want to instill that in our students.”
And because it’s a business, quality matters.
“We always have to compete and product comes first,” he said. “People might buy from you once because they pity you, but they won’t return unless you’re providing a product that’s just as good as from a non-social enterprise.”
Simply make money
Lorrie Myers’ husband died a week before Christmas nearly a decade ago.
“We went from a huge income to a part-time secretary’s income overnight,” Myers, a mother of three, said. “As a family unit, we had to rethink things and lighten our load. In 2005, before the economy took a dive, we ended up in a situation of scaling back. We went from a house and a country club membership to a 600-square-foot cottage downtown. If it wasn’t sentimental and if it didn’t serve a purpose, it had to go.”
Myers, along with friend Jayne Blewitt, will open their social enterprise, Who Gives a Scrap, in the Ivywild School in early November. Myers said she was forced to scale back, but so many consumers are making the choice to do the same. There’s a desire to simplify, reuse, upcycle and give back, with the latest recession forcing many to re-evaluate the impact of their own careers.
“It’s Pinterest heaven,” Myers said of their business. “From trophies to ribbon to buttons to canvases new and old -— boxes of yarn! Craft items are expensive. [Crafts are] expensive to start. You may decide it’s not for you and have all these bits left over. What do you do with it?”
Who Gives a Scrap, a public benefit corporation, is a for-profit that provides a public good. Myers and Blewitt must have transparent books and follow government guidelines. But the business will keep scraps out of landfills, return a portion of the profits to charitable causes and, as it grows, create jobs.
“It’s about being in control of your own destiny,” she said of starting the business. “You’re seeing an upswing [in social entrepreneurs] because people are trying to take control of their lives again. The downturn in the economy took peoples’ breath away … and a lot of people don’t want to be dependent on a company, they want control of themselves.”
Who Gives a Scrap will occupy about 500 square feet when it opens, but Blewitt and Myers said they would like to grow into a space that’s about 4,000 square feet. Shift Thrift is located below the interstate on West Colorado Avenue, also temporary space. Mazzola said.
“It’s a temporary location. We have a short-term lease while we’re seeking permanent space,” he said. “We’re hoping to move downtown and help create a cool, urban core where people can ride their bikes and walk and create a good community vibe. We want to move because this spot is not big enough. We’ve been looking for six months but haven’t found a place that works.”
Michael Hannigan retired in 2014 after 16 years as CEO of the Pikes Peak Community Foundation. He said the city’s social enterprise scene has “grown dramatically in the last four or five years. They went from about 10 to 15 a year or two before I retired to around 150 or 160 today.” Hannigan said despite rapid growth, there are common challenges to starting any business, but especially a social enterprise.
“Vision without funding is just a hallucination,” he said of covering startup costs. “You can have all the vision on the planet, but without a funding stream, it will be incredibly difficult.
“One thing you have to look at is how you can create diverse sets of revenue streams. There’s earned revenue, intellectual property — a business might include five or six or 10 sources of revenue that protects from downturns. They also allow them to see what’s working and worth paying attention to. What’s succeeding in the marketplace?”
Even with funding in place, be prepared to work, Hannigan said, because social enterprises are not easy to keep afloat. But they are worth it, Harty said, adding the social enterprise movement has influenced larger corporations to modify their behavior.
“Jump to Whole Foods. There’s some discussion as to whether they’re a social enterprise or not, but they do a heck of a lot of good on a lot of levels,” Harty said. “They have components of a social enterprise. Many larger corporations now have some kind of arm or philanthropic bent. They may adopt a nonprofit and channel funds into it. … Corporations are saying, ‘We’re making some good money, let’s pour it back into the community and make a difference.’ Consumers are driving big business to change how they operate as well, and many are responding.”
With such broad implications, social enterprises serve as neutral ground for both sides of the political aisle, Harty said.
“It’s one of the few topics Democrats and Republicans can agree on,” she said. “It’s a common playground. One party may like it more for its social aspects; the other for the reduction of taxes. But [social enterprises] employ people and often take them off government programs. They become employees and taxpayers.
“What a cool thing. No one wants to raise taxes to solve problems. It’s nice to not have to. It’s also nice to not have another organization looking for a handout. There’s nothing wrong with that, but there are so many in our community already. This is truly about business.”
Links to organizational funders and investors for social enterprise within Colorado: