05/30/2010 05:12 am ET Updated May 25, 2011

Elmwood Cafe In Berkeley: All About Giving Back

At a time when the difficult economy is forcing many businesses to go under, Michael Pearce is planning to do the unimaginable: give away half his profits. Pearce's Elmwood Café, which opened in Berkeley this month, is built around the idea of giving back, and getting the average coffee drinker to think broadly about their impact on the world. Customers will be able to choose which of three community benefit projects or charities they want their latte money to go toward as they pay at the counter, and the project with the most votes will be the first to receive funding.

In the restaurant business it can be difficult to break even, let alone turn a profit that, divided in half, will accumulate into a sizable donation. Pearce says the success of the model will be in the hands of the customers, and the more they come in and buy their lunch or coffee at Elmwood as opposed to a Starbucks, the more Elmwood will be able to help others.

So far, customers have responded: Elmwood has seen packed tables since it opened, a stark contrast to the café that had occupied the space previously, which closed down during the recession. The next big trick will be turning a profit -- once that happens, half of the money will go to projects such as funding a garden for a woman in South Africa who has taken in 28 orphans, and support for the Go Green Initiative which teaches environmental responsibility in schools.

Pearce says his concept implements a locally-conscious business model, which, much like the locally-grown food movement also popular to Berkeley, focuses on finding labor, supplies and ingredients from within the community. And in keeping with Berkeley's famous food movement, his team includes manager Kara Hammond, who spent eight years at Alice Waters' Café Fanny.

Elmwood Cafe in Berkeley

After a 20-year career supplying vintage musical instruments to prominent bands, Pearce developed the idea for the café after hearing President Bill Clinton speak about his Global Initiative that emphasizes turning ideas into action. His dream grew legs after he found the store space: a closed-down soda fountain that had been a Berkeley landmark for 82 years. He restored the café's 1920s details and kept the same name the space has had for decades, and with it he hopes to retain some of the Berkeley fervor that the space had been known to house.

Two days before the café was set to open, Pearce took a break from last-minute calls with electricians and bakers to answer a few questions about his business model and what impact he hopes to have.

HuffPost: The idea of giving away profits in these times seems counter-intuitive: how do you expect this business model to work?

Michael Pearce: We are in tough times right now. It's really hard on small businesses and employees who are getting laid off and there's a lot of tension. I think that since we are all in this together the way forward is working together. I am starting a business that was a casualty of the hard times and saying to the community, "help us be successful and we'll give back half of it to the community and to the world." Businesses spend a lot of money on trying to stay open, trying to advertise themselves. But if they took that money they spend on putting a hot-air balloon over the place and instead did some good with it, people will respond to that.

Restaurants have tight margins, we put a lot of money into them and hope to get at least some of the money back. But working with the community and giving back to the community might be the difference between making it and not making it.

HP: What's behind your idea for giving profits to charities, and how do you choose your charitable projects?

MP: The idea started when Bill Clinton talked about the Global Initiative -- about how can we put charity into people's everyday lives, get them out of the immediate daily problems and get them thinking of other people. I thought here's a way out: when people come in and order their coffee, we can explain that we're a café that gives out money to charity, and open up a discussion about how they can have impact.

People have come forward to us with great ideas. We're looking for people with their boots on the ground who are doing the work and not getting a lot of help or recognition from others. Then we ask them what they need. I'm trying to get away from just sending a check to a charity, I'm really trying to get to a point where we work with concrete, tangible projects so that we can see we have really done some good.

HP: What impact do you hope to have?

MP: Landlords are being tough on businesses, businesses are being tough on employees, everybody is saying we have to cut back, and I'm saying, no, we have to give more. It's quite a bold move in the middle of the biggest recession in our lifetimes to not only open a business that had fallen prey to the recession but then to try a completely different model. The payoff is that if it's successful, it's a way forward. The biggest impact we can make is, if it is a viable way forward, then other businesses can look at that and say maybe we should be incorporating some of these ideas into our business model. I'd say the next step is that some of the bigger chains would do the same.

There are people who wouldn't want to do that, and there are people who will say, why don't you give it all away? As they say, there are many paths to enlightenment. But maybe if we weren't so money-hungry, we will be more successful.

You can help out with Pearce's project by visiting once the site is up next month, and for now can be found on their Facebook page. The site will sell t-shirts and Elmwood's specialty roasted coffee, and profits from those sales will also go toward the charitable projects. The site will include details on the progress of the projects it is funding and ways for visitors to suggest ideas for organizations in need of help.