Good Business

EXECUTIVE SUMMARY
Organization. Goodwill Industries of Southwest Florida Industry. Nonprofits Key. Applying business strategies to boost charitable endeavors.

Most businesses wouldn't expect a nonprofit organization to muscle in on their turf, but that's because they haven't met Goodwill Industries of Southwest Florida yet.

Executives with the nonprofit, many of them with impressive private-sector experience, have thrust the charity into businesses such as vending machines, janitorial services and document shredding. They've done it using creative financing and by applying corporate rigor to their operation.

As a result, Fort Myers-based Goodwill Industries of Southwest Florida hit $34 million in revenues last year and could post $40 million this year, an 18% increase, says Chief Financial Officer John Doramus. Revenues are up more than threefold from $9.5 million in 2003.

Doramus spent more than two decades as a financial executive in the hospital business and another 14 years in international finance. The man who hired him, President and CEO Tom Feurig, ran a hospital system with a $300 million budget. Chief Operating Officer Rick Evanchyk was vice president of finance for all 1,500 Kmart stores west of the Mississippi totaling $15 billion in sales. “This is an eclectic group,” Feurig acknowledges.

It's not money that attracted them to the jobs. “Some people call it a step down,” says Feurig. “I call it a step back.”

Feurig says the trick to hiring seasoned executives without the promise of a big salary is to identify them when they sour on the corporate world and seek greater meaning to their lives. “You catch people at different times in their lives,” he says. “You'll be a difference-maker,” Feurig promises.

Diversification strategy
Feurig, who joined Goodwill 10 years ago, says he needed to hire experienced professionals to boost Goodwill's charitable mission: to assist disabled and low-income people with job training, housing and other services in a five-county area that includes Charlotte, Collier, Glades, Hendry and Lee counties.

Last year, Goodwill helped 37,000 people in Southwest Florida, more than double the 16,000 people just three years ago. It employs nearly 900 people and operates 29 retail stores, making it one of the top employers in the region.

Goodwill is well known for its retail stores, but Feurig has sought to diversify the charity's sources of revenues. “You can't strictly rely on retail,” he says.

For example, Goodwill bought a vending-machine company last year for $1.8 million that Doramus says will employ as many as 20 people within two years. The company has a fleet of trucks, 360 vending machines and 300 accounts, making it the second-largest vending-machine operator in the region.

Goodwill also has more than 300 accounts in its shredding business, including clients such as the Internal Revenue Service. Meanwhile, its janitorial business is growing, too, as it seeks to grow beyond caring for its own stores.

When he talks with prospective customers, Feurig says he emphasizes the fact that Goodwill employs disabled people to win new business. “Most businesses have a heart,” Feurig says.

Other nonprofits are clients, too. Goodwill has established an extensive back-office operation to support its businesses in areas such as information technology, facilities management, accounting and human resources. It is now offering those services to smaller nonprofits that can't afford to have those services in house. “We're big on collaborating,” Feurig says.

Goodwill executives say they examine every business as if it could stand on its own. A crab-trap manufacturing business Feurig once considered didn't pass the test. “We don't do anything here without a pro forma,” says Evanchyk.

Financing growth
To finance Goodwill's growth, Doramus turned to a complicated program administered by the U.S. Treasury called new-market tax credits.

The program is designed to spur investments in operating businesses and real estate projects in low-income neighborhoods. It allows investors to claim a substantial tax credit on their federal income tax in return for making investments in special community development entities.

For example, the new market tax credit program helped Goodwill acquire a 126,000-square-foot building equal to the size of two football fields in a low-income neighborhood of Fort Myers for $2 million. It spent another $3 million to improve the facility before moving its headquarters there earlier this year. “What really made all this work was the new-market tax credits,” Doramus says.

Besides administrative offices, the headquarters includes a charter school, the shredding business, a job-search center, the donation sorting operation, and a burgeoning e-commerce sales operation.

Goodwill has also resorted to conventional financing to fund its growth. For example, it turned to bank financing to buy a $650,000 shredder that can swallow furniture and other large items and spit it out in separate recyclable materials.

Feurig says Goodwill will focus the next year on growing its existing businesses at its new headquarters, but he says to do that the organization needs to boost its fundraising abilities. It has about $1 million in assets in a foundation it has established, and it plans to raise more with donations. “We'll ask for program dollars,” he says.

GOODWILL AMBASSADORS
Where do nonprofits send their executives and employees for training?

Goodwill Manasota hopes to be the destination of choice when it opens a 29,000-square-foot international training center this summer at its new $13 million, 68,000-square-foot headquarters under construction in Bradenton.

“This training center is just an extension of what we've done,” says Bob Rosinsky, president and CEO of Goodwill Manasota. Like its cousin to the south, Goodwill Manasota has built a successful operation with annual revenues in excess of $50 million and 750 employees in Florida (the organization runs another Goodwill in Mississippi, bringing total employment close to 1,000).

Formed in 2001, Goodwill Manasota's mission development program teaches other Goodwill organizations how to refine and expand their enterprises by improving their business operations. “Our results have been among the best in the movement,” Rosinsky says. “We coach everyone from the CEO to the donor-greeter.”

Over the years, Goodwill Manasota's team has trained other nonprofits, though that business only represents 1% to 2% of total revenues. “It's the result of the synthesis of lots of Goodwill CEOs and our team here collecting that information, creating the training program and managing a system that defines best practices,” says Rosinsky.

Until now, most of the training has taken place at other Goodwill locations. Now, others will visit Sarasota. “We've created the ability to train large groups of people,” Rosinsky says.