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Capitola Book Cafe's Plan to Save Itself

Everything you need to know about the Capitola Book Cafe's plan to avoid closure.

Capitola Book Cafe's Plan to Save Itself

As we reported Tuesday, the financial situation is dire. And although the business is respected and heavily integrated into the community, it is nonetheless on the brink of permanent closure.

But the cafe's quartet of owners has : the launch of a 501(c)(3) nonprofit which would generate revenue through private donation and grants. The nonprofit, Books Belong, would expand on the Book Cafe's current author talk, book club, writing group and education program. 

The Book Cafe has outlined its entire plan in the Q&A below. Got a question about how the business plans to survive? You can probably find the answer here.

Q: How will this new business model work?

A: Capitola Book Café (CBC) is creating a separate 501(c)(3) organization that will be dedicated to education and outreach programs currently being offered by CBC. The seed funding for the nonprofit arm of CBC called Books Belong will come from a portion of the fundraising campaign’s revenue, and will be sustained by future profits from the CBC.

As a registered 501(c)(3), Books Belong will be eligible to apply for and receive grants and tax-deductible donations from individuals, foundations and corporations. Programs offered via Books Belong will include: Author talks and book signings, book clubs and reading groups, workshops for writers, literature/literacy education and outreach for teens, adult education, special off-site events with authors and release parties.

Books Belong will also expand upon its growing role as a support to local teachers, educators and education administrators, providing content and staffing for literacy outreach that is no longer supported by outside programs.

With events and outreach being created and managed by Books Belong, the retail arm of this business model, the for-profit CBC, will focus on selling books, both in-store and online through the newly-revised CBC website. With resources no longer being allocated to events and outreach, the newly-streamlined retail operation will be better able to shape in-store inventory, offering a more robust reflection of our community’s shopping needs.

Q: Why does CBC need to raise this specific amount of money?

A: The goal of $285K represents an investment of past, current, and future financial obligations.

Specifically:
Past: Professional reviews of CBC’s financials show that if the backlogged financial obligations resulting from the slowing economy and online competition were removed from the equation, the bookstore would actually be running at a slight profit. Profit and loss data for CBC’s book sales are running slightly higher than average, when compared to national data for independent booksellers.

Current: Transitioning to the new model will require an investment of seed funding for acquiring non-profit status as well as the financial resources for the necessary physical alterations to store’s retail space. Additional funding will allow CBC to adjust on-site book inventory to levels that better reflect the community’s shopping needs.

Future: A reserve will be necessary to transition the business to its new model and allow each entity to continue operating from a stable foundation.

Q: Why should individuals step up to invest in the new business model, if the supposedly “for-profit” arm of this business is not making it on their own?

A: CBC is doing better than many independents and does have strong potential for sustainability under the new model. Transition to the new model will require a cash infusion, and if residents wish to continue to have an independent bookseller in their community, this fundraising campaign is that opportunity.

Q: Why doesn’t CBC just apply for a loan from a bank or other lending institution?

A: Taking on additional debt at this time does not provide for long-term sustainability. Infusion of cash from a loan will only prolong the inevitable cash crunch, with repayment relying on increased sales. 

Q: Can CBC approach a few individuals for large gifts or investments?

A: CBC is not looking for deep-pocket investors but is reaching out to the many customers, supporters and community members that have the passion and commitment for independent booksellers and their unique place in the community, especially with the added opportunity to interact directly with the education professionals in its efforts to support literacy in its local schools. CBC is proud to be a community bookstore and is inviting the members of that community to have a say in whether or not an independent bookseller should remain in their neighborhood.

Q: What is CBC doing to reduce costs and increase revenue?

A: CBC is currently in discussions with its landlord to reduce the square footage of the store. The new layout will be smaller by approximately 1,400 square feet, reducing overhead costs. The cafe portion of the business is draining resources from the potentially profitable bookselling side of the business.

Q: What happens if CBC doesn’t reach its goal?

A: If the amount raised is not enough to implement the transition to the new business model, it is inevitable that CBC will close its doors.

Q: If I choose to support CBC, what do I get in return?

A: The most direct benefit of the success of this campaign is the continuing existence of your local independent bookstore, revamped, revitalized and offering a more robust in-store inventory than recent conditions have allowed. The second, less direct but no less important benefit will be the enhancement of CBC’s community-based offerings.

Q: Are any events planned for the campaign?

A: There are two scheduled fundraising events. The first is a campaign launch party that will take place on May 20, from 3-6 p.m. The second is a local writers’ event that will include multiple local writers and take place during the final week of the campaign.

Q: What will happen to my donation to the campaign if CBC does not reach its goal?

A: Donations will be held in a dedicated account through the end of the campaign period. If the goal is not met, the donations will be returned less the value of any thank you gifts received.

Q: Will my donation to this campaign be tax-deductible?

A: Because CBC has not yet received 501(c)(3) status for its non-profit arm, any gifts in this initial campaign will not be tax-deductible. In the future, once Books Belong has secured 501(c)(3)status, cash gifts given to that organization will be tax-deductible.

Are you willing to donate to help save the Capitola Book Cafe? What do you think of the nonprofit approach? Tell us in the comments!

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