David Henninger helped start Bayaud Industries in the late 1960s as a way to assist the mentally disabled in finding work.
Its business lines have included janitorial and telephone-reception services, as well as document scanning and management.
But several years ago, Bayaud lost one of its key businesses – recycling cartridges used in microfilm – as technology changed and information became increasingly digital.
To replace it, Henninger three years ago invested nearly $300,000 to start a document-shredding business serving corporate and government clients.
The nonprofit used grants and donations to purchase two giant trucks, assembly-line style shredding equipment and retrofit its Denver headquarters to handle the service. Bayaud also needed security cameras due to the sensitivity of the work.
“You have life cycles in the business world,” said Henninger, 61, the nonprofit’s co-founder and executive director for more than three decades. “Document shredding is our new opportunity.”
Bayaud’s move underscores a broader trend: nonprofits starting businesses.
“Gone are the days of nonprofits depending entirely on charitable contributions,” said Charley Shimanski, president and chief executive of the Colorado Nonprofit Association.
Gifts haven’t kept pace
The number of nonprofit organizations in Colorado has grown from 13,316 in 1999 to 17,291 in 2004, a 30 percent increase, according to the association. During that same time, charitable contributions increased by 21 percent, the association reported.
“Contributions have not kept pace with the growth in the nonprofit sector,” said Richard Steckel, a nonprofit consultant who has written a book on nonprofit-business ventures, also known as earned income in the nonprofit word.
Examples may include selling jewelry, opening lunch cafes or bottling salad dressing.
Despite the lure, nonprofits must be careful when trying to launch a money-making venture, said David Miller of The Denver Foundation.
“There are huge risks – just as there are risks in starting a new business,” said Miller, the foundation’s president and chief executive. “It’s not for everyone.”
Like traditional enterprises, nonprofit businesses must pay taxes on income.
Bayaud is named for its location on Bayaud Avenue in Denver. It provides employment and job-placement services for those with chronic mental and physical disabilities and illness, assisting more than 7,000 people since its inception, Henninger said.
Bayaud has an annual budget of nearly $8 million. About $500,000, or 7 percent, comes from charitable gifts or grants.
Bayaud’s shredding business this year will generate as much as $50,000 in profit on about $350,000 in revenue, said George Arguello, who heads up the division.
Arguello said about 85 percent of the shredding division’s revenue comes from corporate clients, including Pinnacol Assurance and The Children’s Hospital. The balance comes from government contracts, he said.
Henninger said the nonprofit has about 175 people on its payroll, including about 20 who work on document shredding.
He said document-shredding workers earn, on average, about $8 an hour. Bayaud jobs can pay up to $12 an hour or more.
“I like working on the (shredding) line,” Virginia Hermasillo, 46, said during a break Wednesday. “It’s really neat work, and you get to learn something.”
Hermasillo, who has worked for Bayaud for seven years, said she is considering using her experience on the shredding line to land a higher-paying job elsewhere.
“It feels really good to work,” Hermasillo said.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
On TV today: Watch a report on Bayaud Industries at 6:40 a.m. KUSA-Channel 9
David Henninger
Age: 61
What he does: Executive director of Bayaud Industries, a Denver-based nonprofit that employs, and provides job placement for, the mentally disabled
Education: M.A. in rehabilitation administration, University of San Francisco; B.S. in history and political science from Sterling College in Kansas
Family: Four adult children
What he’s read: “Team of Rivals,” Doris Kearns Goodwin, about Abraham Lincoln’s Cabinet
Hobbies: Backpacking, volunteering, softball
