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Social Mission at the Heart of New For-ProfitNovember, 2002
BY CHERIAN GEORGE FOR VISITORS TO YOSEMITE NATIONAL PARK, less than four hours east of San Francisco, Evergreen Lodge is a welcoming destination with cozy wooden cabins wrapped in serenity and the scent of pine. For Nicole Goldsmith, the journey was longer and the arrival, sweeter. The 20-year-old native of Las Vegas first had to mend a chaotic high school career and recover from the devastating death of a loved one. Now, she works at the lodge to earn money to further her studies and build a new life. Goldsmith and three other young adults in similar transitional stages in their lives were picked to join the 15-strong staff of Evergreen Lodge this summer as part of a unique model of socially responsible entrepreneurship. It is a dream come true for two ’94 MBAs, Lee Zimmerman and Brian Anderluh. With an outdoor industry specialist they recently acquired Evergreen Lodge as what they hope will be the first in a portfolio of properties in Northern California’s great outdoors. What makes the venture stand out, however, is its social mission—helping young adults, like Goldsmith, get their lives and livelihoods in order after difficult starts. Taking stock of their own careers two years ago, Zimmerman and Anderluh decided to look for a way to marry an entrepreneurial business with a social conscience. They knew from their experience in venture-backed enterprises that the typical startup was not the ideal vehicle for such goals. “With the pressure for financial growth, it’s difficult to champion socially responsible entrepreneurship,” Zimmerman says. In late 2000, they began talking to Juma Ventures, a nonprofit organization in San Francisco that works with disadvantaged youth and young adults, where Zimmerman had spent a year after Stanford as a consultant. After operating small-scale enterprises for seven years, Juma, cofounded by Sharon Wurtzel, MBA ’91, was seeking partnerships with outside entrepreneurs who could develop and run larger businesses. Zimmerman and Anderluh’s company, First Light Destinations, germinated from these discussions. The entity has been set up as a for-profit company, but unlike most businesses, in which philanthropy and community service are an afterthought, First Light has built its youth program into its foundation through its partnership with Juma. “We’re inextricably linked in a long-term relationship,” Zimmerman says, adding that the nonprofit has two seats on First Light’s seven-member board. “We think there is great power in a partnership with an established nonprofit that brings its expertise to bear.” As a business proposition, First Light sounds promising enough. It will target destinations where demand for lodging exceeds capacity, acquire mom-and-pop operations that are charming but underdeveloped, expand and improve the facilities, and develop recreational programs for guests, such as guided hikes and fly-fishing trips. Its prototype, Evergreen Lodge, was purchased for $1.25 million from the husband-and-wife team that ran it for 27 years. It sits on 15 acres but has only 18 cabins, which earned the previous owners a modest, seasonal income. First Light will quadruple the number of cabins as part of a county-approved expansion plan and will keep the lodge running year-round. The new recreational programs will contribute additional revenues of 15 to 20 percent. Profits are projected to exceed $1 million by 2006. One innovative feature of First Light’s structure is the choice that it gives to financial backers. An individual can invest directly in an equity stake in a First Light property or make a tax-deductible donation to Juma, which it will use to increase its own stake in the venture. Either way, Zimmerman says, backers will receive the gratification of significant social returns in addition to financial returns or tax benefits. Of course, the social mission does increase First Light’s expenses: It must provide for mentoring and training the Juma youth it hires. “Our investors understand that from the get-go,” Anderluh says. The “direct social costs”—amounting to more than $100,000 annually from next year on—are stated in the financial projections and revealed to prospective investors. “Investors seeking only dollar returns may be put off by these numbers, but we are confident we can attract enough interest from investors who want to be at the cutting edge of developing businesses with an ingrained social mission,” Anderluh adds. Having secured enough capital to buy Evergreen Lodge last year, First Light is currently raising several million dollars for its expansion plans. Initial backers include individual investors as well as the Roberts Foundation, whose Roberts Enterprise Development Fund, directed by Melinda Tuan, MBA ’97, works closely with Juma. Within five years, First Light aims to create jobs for more than 40 Juma youth annually. The typical program participant is 18 to 24 years old and may have experienced various challenges in his or her past, including poverty, drug abuse, family instability, and homelessness. Such individuals often are past a crisis but lack the income, family support, or network to achieve their full potential without an extra boost. Applicants are screened by Juma to ensure that they are ready for the experience. They are paid market rates, which currently start at $7.25 per hour. With below-market-rate board and lodging provided on the premises and recreational opportunities available in the surrounding wilderness, the seven-month stints provide an opportunity for youth to build their savings while expanding their horizons. For every dollar they put aside for school, they qualify for $3 in matching funds from Juma through its Individual Development Account program. The Evergreen Lodge will employ 10 to 15 Juma program participants next year, up from the present four. Composing about one-third of the total staff, the young people can learn from more experienced colleagues. They also spend five hours a week with a full-time counselor who serves as Juma’s attaché at the lodge. Alice Briggs, who plays that role, works with the participants on educational and career plans and skills such as personal relationships and budgeting. Briggs considers this her most satisfying experience in her three years with Juma. “It’s a profound way for me to make a difference in their lives, as well as mine,” she says. Nicole Goldsmith is one of the young people who have found their way to First Light. She says she had a wayward teen life and a stormy home environment, which contributed to her skipping classes. Then she was shattered by the loss of her grandfather to stomach cancer when she was 16. He was Goldsmith’s main champion in life, and his death, alone in a nursing home, left her feeling lost and betrayed by her family. Gradually, Goldsmith put her life back in order, completing high school along with a vocational training course in office management. This past summer, she could be found cheerfully handling reservations and checking in visitors at the reception desk at the Evergreen Lodge. She also waitressed in the restaurant and helped with housekeeping. After just a few weeks, she was already referring to her Evergreen Lodge coworkers as family and says she wants to come back next year. She wants eventually to run her own garage and plans to take an auto mechanics course, which her fast-accumulating savings will help pay for. “I’m way excited about that,” she says. Goldsmith is determined to make these months a turning point, and she is not the only one with something to prove. For the founders of First Light, the coming months and years will test their theory that with progressive investors and the right social service partners, entrepreneurs can build profitable businesses that do good from day one. Zimmerman says, “We intend to prove that this model works and hope to inspire others to try it.” For more information about Evergreen Lodge, go to www.evergreenlodge.com or email info@evergreenlodge.com. |
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Social Mission at the Heart of New For-Profit
