MORRISVILLE -- The Redwoods Group, which insures YMCAs and Jewish Community Centers, is proudly commemorating its second consecutive year of financial losses.
In fact, the $390,000 loss in 2009 is nearly six times bigger than the company's loss the year in 2008. According to the annual report the Morrisville company issued Friday, Redwoods made a deliberate choice to lose money rather than compromise its humanitarian values for profit.
"We certainly could have made close to half-a-million dollars," said Redwoods CEO Kevin Trapani. "We could have said goodbye to some employees. We could have incurred less cost in serving our customers."
Redwoods is part of a business subculture that promotes socially responsible capitalism. The company requires workers to do 40 hours of community service a year, on company time. Its corporate bylaws prohibit the CEO from getting paid more than 10 times as much as the lowest-paid employee.
The recession has certainly eaten into the bottom line, Trapani said. About 50 customers defected from Redwoods last year, choosing cheaper insurers. Revenues fell about 9 percent last year, but Redwoods cut operating costs by 7 percent, largely by offering safety courses on DVD rather than in person.
"You gotta understand: We serve only nonprofit customers," Trapani said. "They were financially stressed more than they would be in a typical year."
Even as it was projecting a loss for 2009, Redwoods stepped up charitable giving to about $700,000. The company defrayed college tuition for 16 children of employees in 2009, up from nine the previous year. And Redwoods let one employee take a two-year sabbatical to get an MBA at UNC-Chapel Hill, with the company covering full tuition and fees.
Redwoods is down to 87 employees this year from 94 a year ago. The smaller payroll includes the student on sabbatical, a pair of departed interns and several employees who left and have not been replaced.
So the lingering question is: How long can Redwoods maintain its commitment to ethical principles in the face of an anemic economy?
Trapani may not have to face that quandary because the company's internal projections show that this year Redwoods will break even or make a small profit.
Still, we persist: What would it take for Redwoods to buckle?
Trapani said he finds layoffs morally reprehensible. With cash reserves of $2.8 million, he said Redwoods has cushion to protect its staff from unemployment.
"I'll spend every penny of that before I lay anyone off," he said. "So we'd have to lose $2.8 million - that's the easy answer."
