When food sales aren’t strong, restaurants survive on their cocktail tabs. When cities that depend on tourist dollars break down from where the funds actually roll in, it’s largely booze sales. So what better way to raise the Benjamins for charity than to open a bar that donates its profits to philanthropies?
This purposeful business model dates back to five years ago, when The Oregon Public House (OPH) in Portland, generally considered the first of its kind, began to raise funds for just such a venture. Run by a board of directors led by director Ryan Saari, OPH’s mission is to pair the city’s love of great craft drinks with its national leadership in the nonprofit realm (it boasts more nonprofit organizations per capita than any other city in the country) by creating a place that fosters community and allows locals to support meaningful causes. Their slogan puts it simply: “Have a pint, save the world.” Every penny of profit, minus what’s paid to certain staff positions (such as head chef/manager), is donated to nonprofits.
Sounds easy, right? Patrons eat and drink as they normally would, all the while supporting good causes. What better reason to drink than making a contribution to the good of society? It’s a win-win situation.
Of course, reality departs greatly from theory. After conceiving the idea, formulating a plan and finding a location, it took almost three years for OPH to open its doors. And when they finally did in 2013, they opened as a not-for-profit bar, having been refused full nonprofit status from the IRS. But for the arduous time it took, “We opened with no owners. No investors. No shareholders. No money. And no debt. We did it all by donations,” Saari says.
Saari and his other board members were essentially crowdfunding before the term started to trend. With no precedence to rely on, they had to feel their way, but this lack of precedence is also the main reason the federal tax bracket failed to recognize the pub as an actual nonprofit.
“Learning to run a successful business, a restaurant nonetheless, is challenging on its own. But learning how to make this model as successful as possible is a whole other animal,” he says.
Two years later, he and his board rely on both sales and continued donations to keep OPH lucrative on a monthly basis. They sell an in-house “Do-Gooder” IPA made in partnership with Dean Ivester and Pints Brewery, and donors have the opportunity to become one of the three levels of “founder” and receive free “Do-Gooder” for life. “This model requires us to be profitable every month. Donating every month. If we don’t, what makes us different? This proves to be very challenging, but so far, we’ve never had a month where we didn’t donate something. And our average is almost $3,000 each month.”
In Melbourne, Australia, Shebeen also launched as a nonprofit business with no conceptual model to follow. But unlike OPH, where the food and beer are disconnected from the charities except as a means to an end, Shabeen donates profits directly back to developing countries of each drink’s origin. So earnings from the sales of South African wines, for instance, are handed over to Room to Read, which works in Africa with children, especially girls, in education and literacy. Similarly, profits from every Tusker beer go to One Acre Fund, which assists farmers in Kenya and Rwanda to plant and harvest crops.
Houston, Texas’s OKRA Charity Saloon opened in December, 2012. Formally established a year before, OKRA – an Organized Kollaboration on Restaurant Affairs – was conceived by restaurateur, mixologist and James Beard Award nominee Bobby Heugel. He put together a charity model similar to OPH. “It was primarily [Heugel’s] idea and it was his drive and passion that made everything work,” says current board president Scott Repass.
Repass and his colleagues understand the value of community for OKRA, which has been key to its success. “The impetus behind [OKRA] has deep roots in the bar and restaurant industry. We are an industry whose success is based on the community we help build. For a bar to be successful, it has to be a part of the community it serves. Really, it has to create its own community. And we in OKRA felt that, because the community in Houston had been so great to us, we wanted to find a way to give back.”
Thus Heugel enlisted the help of about 20 other nationally renowned, yet local industry professionals. He moved into a space that had been a bar since 1890 (The Original Casino Saloon). And although he did crowdsource initial funds, he didn’t apply for nonprofit status.
“This is an important distinction, I think, from other people who have tried similar things. We have a board that meets and makes big decisions about the direction the organization is going,” Repass says. “But, because we operate like any other business, we have a lot of freedom in the way we operate.”
That means OKRA runs just like any other bar: staff is paid, taxes are assessed, and freebies for board members are forbidden. The only difference is how profits are managed. Whenever a patron purchases an item of food or a beverage, she also receives a ticket. She uses that ticket to vote for which charity — one of four — should receive that month’s funds. “That way, the charity is motivated to try to drive people in, both during the month they are up for the vote and during the month when they receive the profits.” Repass says.
It’s clever, and it works: In three years of operation, OKRA has donated nearly $600,000.
Rather than donating to multiple or rotating charities, Gabriel Orta, co-owner and mixologist of Bar Lab and Broken Shaker in Miami and Chicago partnered directly with Pan de Vida Cer, an organization that helps feed underprivileged children in Bogotá, Colombia (where Orta himself is from). Together, the partnership opened Huerta Cocktail Bar inside The Bio Hotel, an all-organic and sustainable lodging in Bogotá. As the children aided by Pan de Vida Ver grow up, Orta will also bring them into the hospitality business, teach them the ropes and give them jobs at Heurta.
“I first heard about the organization a couple years back and loved how they help poor families with resources and [teach them] how to survive. But when [Bio Hotel] partners Winston Franco and Brian Aarons asked to come on board, I wasn’t sure,” Orta admits. “We are extremely busy back home and opening a bar is a lot of work. But when I saw the opportunity to help the place where I grew up, we jumped right in. Bar Lab opened a GoFundMe account, and the money we make from profits will go here.”
Still, it’s not a straightforward endeavor. While more tourists are arriving by the day, thanks to the reduction in wars and violence for the first time in 40 years, Orta says that running a bar in Columbia is very different than how he’s used to doing it in Miami. “The country itself is going through a facelift. More businesses are thriving, so now more bars are opening and more bartenders are serious about their careers. We also want to have a platform for them to shine. But the rules here are different and so is the process,” he notes. “You don’t get that many kinds of spirits here like back in the U.S. So we just have to be more creative and resourceful, using the ingredients we find here and improvising a lot.”
While Orta’s vast experience in the industry and his familiarity with the country will help him find his footing, fruitful results are not always the case for these Pollyanna pubs. In Washington, D.C., Cause — The PhilanthroPub closed 14 months after opening in October 2012, after initially raising $23,000 on Indiegogo, getting write-ups in major media (as did OPH, Shebeen and OKRA), and initially earning neighborhood favor. In this case, it came down to what OPH and Shebeen founders had discovered for themselves — you really need to know how to run a bar.
Or, as Repass advises, “If there are other people who want to attempt something like OKRA, my advice would be [to] find a big group of people in the industry that you respect and really like, find a great space, and do what you know how to do … Do what you know and love, and do it for the good of the community you rely on.”