KLINK Coffee

KLINK Coffee is a social enterprise that was created by St. Leonard’s Society of Toronto, a not-for-profit, non-religious charitable organization. St. Leonard’s Society of Toronto has since merged with the John Howard Society of Toronto (JHST) KLINK is now a social enterprise of JHST. We help to make communities safer and families stronger by providing jobs and training for people returning home from prison. We sell coffee roasted by our partner, Reunion Island, Canada’s “greenest” coffee roaster and one of its most respected. KLINK Coffee proudly contains 100% coffee beans grown on Rainforest Alliance™ Certified farms.

Community Background

KLINK Coffee as part of St. Leonard’s Society of Toronto is dedicated to ensuring a safer community by providing programs and services to help people become responsible community members. We work with people returning home from prison and offer many different levels of support depending on what the individual needs. Over the years, we have found that one of the largest obstacles for successful reintegration was stable housing. Attaining that housing is almost impossible without good and sustainable employment.

Today, too many job applications ask if you have not received a pardon for a conviction. People are faced with a decision and a dilemma. Answer the question “YES” and you are automatically screened out in many cases or you can answer “NO” but live with the anxiety of being discovered, fired and ostracized even further. KLINK was created to help inform society about how giving real second chances not only strengthens the particular families, it contributes to overall community safety. This is why we are working to open doors that would otherwise be closed to persons with a record. Our particular mission is to help people who are trying to re-enter the work force with a criminal record. We help them restart their life and reintegrate into our community, to their benefit, the benefit of their families and to the community as a whole.

Development History

St. Leonard’s Society and other community corrections organizations have agencies such as ours in communities across the country. When paroled or released, ex-offenders usually return to the communities where they had previously resided. Working with our clients, our case managers found that one of the largest obstacles for successful reintegration was housing and, that appropriate and stable housing has not been very well addressed by community housing agencies. People we support usually have very little money, which limits their housing choices. They often can only afford to rent boarding rooms, shelters, or similar places where there are triggers to their criminogenic behaviours such as an exposure to substance abuse and crime.

To help combat that problem, in 2013, St. Leonard’s Society of Toronto created KLINK Coffee with seed funding from the former Human Resources and Skills Development Department of the Federal Government. We identified meaningful employment as a key piece that increases ex-offenders’ self-esteem, as well as access to better housing options so they can live in a more stable environment.

The social enterprise seemed to be the solution as it is difficult to get donations for projects serving our clients. The concept matured between 2012 and 2013. We started with an advisory council, which included people with experience in the coffee industry, coffee roasting and community development. Our Executive Director and Board of Directors began to look for partners. St. Leonard’s employment placement staff played a key role in building a partnership with businesses willing to work with our clients. The first company that agreed to the idea was a coffee roaster, Reunion Island. The relationship progressed naturally as they had product that we could sell. Further this employer was compassionate, patient, and supportive of our cause.

We were doing two things at the same time. The first piece was our employment readiness program which started in April 2013, training a first cohort of six individuals at once. People spent one week at St. Leonard’s Society learning soft skills and then three weeks in employment training at the company. The placement helped break barriers of stigma: many people got hired by our employment partners or other companies who found the qualities of a valuable employee in them. The second piece was our social enterprise business; we started selling coffee so we could help pay for the employment training and also employ people ourselves. We now have two streams of training: one inside KLINK Coffee (sales and delivery positions) and the second one with our employment partners (café and coffee roasting business).

With the first sale made in July 2013, we have been expanding our customer base ever since. A significant indication of KLINK Coffee’s growth was when our part-time manager switched into full-time hours. Our Board of Directors has decided that now it is time to separately incorporate KLINK Coffee since it appears to be maturing beyond the pilot phase.

Revenue Model

At the beginning, we planned to target other voluntary sector organizations that support our cause. However, we found that nonprofit customers had the same standards and values as for-profit businesses: they wanted good quality and would not buy something just because it was a charity selling a product. Nonprofit organizations wanted good products, but also were concerned about the price. This shifted our thinking: we could never compete with large companies that offered lower prices as they operated based on huge volumes and very low if any social mission-related costs.
In developing the social enterprise, we did extensive market research and consulted industry experts on our advisory council. Our research indicated that a higher end product had greater gross margin, and, some people were willing to pay premium prices for coffee associated with a cause they supported. Based on these findings, KLINK Coffee positioned itself as a high quality product with a cause combined with great customer service.

Most of our current revenue comes from the wholesale stream. A majority of our clients resell coffee, e.g. at cafes or office coffee service. We have also partnered with an online coffee supplier so people can buy our products online. Our first clients came from a personal network of organizations – employment partners and individuals our team knew. These people were willing to spread the word about KLINK Coffee. From there, we have increased our connections through a conscious presence at events as a supplier and/or vendor. We reach out as much as possible to achieve two goals: selling more coffee so we can train more people and promoting awareness to reduce barriers for our clients.

Challenges

Originally, we did training for six people at a time, but realized that it was more feasible to train our clients as they became available. Matching our client availability with the timing of the company willing to do that has been a challenge, but it is a challenge that is eased by greater numbers of employment partners.

As the business developed, shipping costs started to take up most of our gross margin. We did our pricing with shipping included, a common standard in coffee industry. Initially, we looked at local shippers and picked the one that seemed to do the best job for the lowest price. But with increased volume, we now use a social enterprise and our own employees to deliver. We also negotiated a deal with our roaster to ship directly from their factory the orders that are large volume or for out-of-Toronto clients.

Another early challenge was the realization that selling coffee would likely be problematic with the Canada Revenue Agency (CRA) perceiving this as an ‘unrelated business’. We determined that charities are not permitted to conduct just any business, and, that many charities may indeed be off-side on these rules. We researched and discussed CRA’s ‘related business’ matter and concluded that we could operate a pilot phase within the charity but that any real business would have to be separately incorporated.

Lessons Learned

In the long-term, we cannot grow this business profitably within a registered charity. When considering that our social enterprise would eventually separate from St. Leonard’s Society, some people from our advisory board expressed interest in investing after the pilot phase. In exchange for partial ownership shared with St. Leonard’s Society, individuals were willing to put in their own money to assist KLINK Coffee during the transition period in becoming an independent corporation. However, over time and through negotiations, we found that even despite their social concern, private investors did not fully share our thinking regarding KLINK’s future. We would advise other social enterprises to be cautious about including private investors as we had to walk away from this idea, not being able to find a way to make it work.

People running a social enterprise need to be proactive and prepared for the stress that comes with the business. It requires a different mindset than working in the nonprofit environment which relies on funding. The social enterprise business depends on a great product and customer service. There is a constant pressure to sell repeatedly to existing customers, and also to find new customers. We also need to constantly wear the customer service hat. For example, we try to understand their needs and help them save money on our products.

Support

We have been lucky because our Board of Directors and Executive Director are willing to champion the social enterprise. Showing their support and dedication, our team members at St. Leonard’s Society worked really hard and wore different hats to help the project succeed. The first manager of KLINK Coffee played a critical role in bringing everyone together by creating a strong advisory board and making connections in the coffee world.

Social enterprises need seed funding to get over the humps of start up without overly stressing the parent organization. We were fortunate to receive funding from an agency (Human Resources and Skills Development Department) to hire a company to help with branding.

Organization Structure

At the moment, KLINK Coffee is still a program of St. Leonard’s of Toronto, but we plan to have the social enterprise separately incorporated sometime soon. KLINK Coffee will be a private nonprofit corporation, with the charity remaining as sole owner and all the proceeds going into training individuals.

Partnerships

There are three key business partnerships. Our association with Reunion Island, Canada’s “greenest” coffee roaster has been essential for the business as we sell their coffee. KLINK Coffee is available as a coffee service to offices through our association with Imperial Coffee Service. We also can accept online orders which are distributed by Culture Coffee Bean, Canada’s largest online coffee retailer.

KLINK works closely with Employment Ontario Service Providers like Dixon Hall, The Centre for Education and Training (TCET), JVS Toronto, and St. Stephen’s House to assist in the subsidies offered to our employment partners. The shared mission of these Employment Ontario Service Providers and KLINK Coffee make communities in the Toronto region stronger by eliminating barriers to employment.

A private company, GenesisXD, was contracted to do the branding for KLINK Coffee. Their work and in-kind contribution played a significant role by creating a great brand of which we are proud.

Impacts & Outcomes

The sad fact is that about two thirds of ex-prisoners in Canada reoffend. It doesn’t have to be that way. In Norway recidivism (re-offence) rates are about 20% and in the UK they are about 25%. It’s clear that Canada has a lot of room for improvement. The estimated cost of housing a male inmate federally in Canada is about $110,786 per year. For a female inmate it’s about $211,093 per year. Maximum security for a male prisoner runs about $150,808. That is not including the costs of trials, the parole system and the like, economic and personal harm a re-offense might cause, and the incalculable loss of all that the individual would have contributed to society.

KLINK assists individuals in removing barriers to entering the workforce. Employment readiness training is offered by an employment specialist and covers topics such as work attitudes, employer expectations, long term employment behaviour patterns, job search skills, interview skills, budgeting, and credit scores. In addition, clients are trained in topics such as disclosing a criminal record, institutional gaps in a client’s resume, and the rights of a job seeker.

Following the employment readiness training, the client has the option of entering into a work placement ranging from 4 weeks to 4 months in the coffee industry. Skills and knowledge in the coffee industry, in addition to work experience and a reference, help set individuals on the right foot when entering the job market and leaving the criminal justice system. The importance of employment in reducing rates of re-offense and in creating a positive sense of self is profound. Many of the clients have retained full-time employment after completion.

Through the growth of our business we have been able to employ up to two clients in sales, as well as two customer service representatives at our KLINK Coffee Stop location, in addition to the employment readiness program that has graduated 31 clients.

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Vision for the Future

KLINK Coffee will soon become a separate entity, but still totally owned and controlled by St. Leonard’s Society of Toronto. We plan to continue with the wholesale business as it brings the most profit into our enterprise.

We now operate one coffee stop at a storefront, but want to grow the retail site to offer more training opportunities for our people, particularly the ones who need more oversight as they have been out of the workforce and society for a long time. Our role is to help them get ready for the next steps through the first job experience. We hope the profits from wholesale will help pay for the cost of the storefront training opportunities.