Giving back to the community is the right thing to do, but is it good for business?
The answer for Mike Mazzola, founder of Mountain Equipment Recyclers and pioneering social entrepreneur, is a resounding yes.
The store, which sells new and gently used outdoor equipment and clothing, began as a consignment shop that had a mission of giving back to the community.
Now Mazzola has partnered with the Beanstalk Foundation, a Denver-based organization that funds and advises local businesses to help sustain local community wealth, jobs and nonprofits.
As a result, Mountain Equipment Recyclers has become a unique amalgam of a successful business and social enterprise that has donated more than $186,000 to local charities.
Beanstalk Foundation founder Ted Stolberg calls this model “a more mature form of capitalism.
“I used to work on Wall Street, where the first order of business was maximizing returns for shareholders, but there’s another option.”
The model bridges the gap between for-profit businesses and charities.
“Nonprofits need a path to sustainability; the for-profit world has business processes but needs to make a contribution to the community as well,” Stolberg said. “Mountain Equipment Recyclers is a perfect example of finding the middle ground.”
Mazzola, who was looking for a different kind of life after working as a real estate appraiser and broker, opened Mountain Equipment Recyclers in 2010 with his wife, Julie.
The store sold outdoor gear on consignment, returning 50 percent of sales prices to owners and donating a portion of the proceeds to programs that assisted soldiers returning from combat.
“We started with the intention of giving to charity from Day 1,” he said. “A lot of people say, ‘At some point, after I become successful, it’s time to give back.’ I’ve always rejected that. I believed the community would rally around a model built around giving to the community.”
He was right.
The shop broke even in its first year and started generating profits in 2011. Mazzola was able to hire three employees and expand the list of charities that benefited from his donations.
Between 2013 and 2016, “we grew an average of 30 percent,” he said, adding that success came because Mazzola was selling the right products at the right time for the right prices. But it was enhanced by the store’s growing reputation for giving back.
“The more we promoted that, the more support we received,” Mazzola said. The store was so successful that in 2015 it moved down the street into a larger space at 1024 S. Tejon St., where it is helping to revitalize the South Tejon corridor. It now has 11 employees and a solid customer base.
Some customers sell goods on consignment; others simply donate merchandise and choose a charity to benefit from its sale. But many also make purchases in the store.
The floor and walls teem with high-end outdoor equipment — clothing, skis, skateboards, backpacks, camping gear and lots of bicycles.
Last year Mountain Equipment Recyclers came to the attention of the Beanstalk Foundation, which was seeking to nurture the kind of small business/social entrepreneurship Mazzola was successfully operating.
Stolberg amassed more than 40 years of business and finance experience, including founding Stolberg Equity Partners. He recognized that socially minded leaders were key to protecting and growing local economies and began reaching out to investors and entrepreneurs.
In 1999, Stolberg became chairman of the Children’s Seedling Fund, which gave small grants to leaders and projects that focused on helping children. From that seed, the Beanstalk Foundation grew.
“We always say, wouldn’t it be great if no business ever got sold outside Colorado Springs again,” Stolberg said. “Outsiders may pay high prices, but often good things don’t happen to those companies. We’re trying to keep ownership local and keep jobs, managers, cash and customers there.”
Beanstalk took over ownership of Mountain Equipment Recyclers last year. Profits from the store go toward paying for the debt incurred for the purchase.
Once the debt is paid off, all the store’s profits will be given to Kids on Bikes, an organization that aims to make it possible for all children to own and ride a bike. Last year, the organization opened a store within Mountain Equipment Recyclers, offering used and reconditioned bikes, parts and accessories.
Pedal Station, the social enterprise arm of the nonprofit, takes in donated bikes and equipment, solicits volunteers to work on them, resells reconditioned bikes and recycles parts that don’t get used. It also provides resources and classes to encourage bike riding.
“It has been a really successful ‘arranged marriage’,” Mountain Equipment Recyclers General Manager Jake Eyermann said. “Having a large selection of bikes helps our business to grow and allows us to give back even more to the community.”
Buying businesses is not the only way the Beanstalk Foundation supports local social enterprises. Through its community wealth-building program, Business Owner Legacy Transition Services, it also invests in local businesses to increase their value and sustainability.
In exchange for an option to purchase in the future, the program provides a path to liquidity for owners interested in preserving their business’s legacy.
The cash flow that is generated can be used to support local nonprofits, reinvested to enhance the business or used to purchase another local business.
Everyone benefits, including community-oriented investors, who can earn 5 to 7 percent return on capital, Stolberg said.
Besides Mountain Equipment Recyclers, the Beanstalk Foundation has partnered with Blue Star Recyclers, a nonprofit organization that recycles electronics and provides meaningful work for people with disabilities.
Beanstalk’s $73,000 loan to the organization has produced a social return on the investment in terms of jobs, environmental impact and economic strength.
Mazzola, who worked full time at Mountain Equipment Recyclers until last year, now is working with the Beanstalk Foundation.
“The BOLTS program is on the leading edge of creating a new way of doing business and charity in Colorado Springs and Colorado,” said Mazzola, who is helping to identify and recruit potential partners.
“Our model is all grassroots, based on relationships and introductions,” Stolberg said. “Ultimately, we’d like to do five to seven more of these in Colorado Springs.”
For more information about the Beanstalk Foundation, visit beanstalkfoundation.org.