This paper examines the Redwoods Group, a specialized insurance provider focused on serving non-profit organizations such as YMCAs and community groups, through two analytical frameworks: the triple bottom line and the 4 Cs stakeholder analysis. The triple bottom line assessment evaluates the company's financial performance, environmental footprint, and social contributions, drawing on B Corporation certification data. The 4 Cs analysis explores the company's customers, competitors, internal interests, and community involvement. Together, these frameworks reveal a company that achieves modest financial returns, falls short on environmental performance, but demonstrates meaningful commitment to employee welfare and community betterment through risk management and safety education.
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The Redwoods Group is a specialized insurance provider whose stated core purpose is to serve others, with a particular focus on keeping kids safe. The company acknowledges that solutions to many problems are "often inconvenient for those used to doing things a particular way" and that Redwoods "engages in uncomfortable conversations with people who are not ready to face these issues: public officials, educators, philanthropists, social service and business leaders" (Redwoods Group 2013 Report). The company's main business is insurance and risk consulting, through which it insures YMCAs, camps, and community groups.
In these roles, Redwoods is not strictly focused on profit-taking. Rather, it provides insurance at a level that finances its operations while the absence of a high-profit motive allows it to undercut conventional insurance companies when competing for non-profit insurance business. The company wrote $48 million in premiums in 2013, earning $12.1 million in revenue and from that a net profit of $138,000 (Redwoods Group 2013 Annual Report).
The triple bottom line concept evaluates an organization's performance across three categories: profit, planet, and people. On profit, the figures noted above show that Redwoods turns a modest return from its enterprise — $138,000 in net profit last year. This represents a net margin of 1.13%. The previous year's net margin was slightly higher at 2.67%, and the company also earned slightly more revenue and wrote more premiums that year, making 2013 a down year. The industry average net margin in insurance is 10.39% (MSN Moneycentral, 2014). The company's track record of profitability, however minimal, earns it a net positive on this dimension.
The B Corporation is a certification body that evaluates companies on criteria broadly aligned with triple bottom line principles. It gave the Redwoods Group a score of 7 on the environment, versus a median score of 9 (B Corporation, 2014). Redwoods has a strong altruistic streak, but one focused on the human dimension rather than the environment. Its operational footprint is probably low, and environmental impact is taken into some consideration, but the company's attention is largely directed elsewhere. The best it can say for itself environmentally is that over 50% of its facilities are located near public transit — which largely means it is based in an urban area. On "planet," Redwoods is a net negative. While its core activity is not environmentally destructive, it still makes a negative contribution when employees drive to work — the company is based in North Carolina, so most will — and it makes no attempt to minimize this through telecommuting or other measures. Without any affirmative effort toward environmental stewardship, Redwoods receives a net negative grade on this dimension. Its business is small enough that even its modest footprint exceeds what is strictly necessary, since a larger competitor could handle the same volume of business with a lower marginal increase in environmental impact. This is unfortunate, as Redwoods performs well in other areas but appears to have limited environmental consciousness with respect to minimizing its impact on the world.
On the people dimension, the B Corporation (2014) ranks Redwoods high on workers — scoring 36 versus a mean of 22 — but low on community, scoring 17 versus a median of 32. On balance, Redwoods scores well for people overall. Employees are reimbursed for continuing education and are paid a living wage. Over 80% of health premiums are covered, and the company offers six or more weeks of maternity leave. The B Corporation also credits the company for having over 50% female employees and for the fact that over 75% of employees take time off for community service.
Redwoods provides a wide range of safety resources, including contributions to child sexual abuse prevention, employee safety, aquatics safety, and other areas related to its risk consulting work. It therefore makes a genuine contribution to community betterment by applying its risk management expertise. The insurance services it provides could be supplied by others, but Redwoods delivers them at a lower price, freeing up client cash flow for other uses. Furthermore, its efforts to reduce risk in the community appear to exceed what comparable companies would do. It is quite reasonable to argue that Redwoods makes a net positive contribution to the communities it serves.
Overall, the minimal net profit is not sufficient on its own to offset the environmental net negative, but the strong people performance is. On the strength of its commitment to community betterment, the triple bottom line for the Redwoods Group is positive.
The four Cs framework consists of customers, competitors, company, and community (Nager, 2014). While Redwoods is theoretically capable of providing insurance and risk consulting to a wide range of clients, in practice it mainly markets to non-profit entities. Community organizations are the primary target market for its insurance services, and the company has built a niche around understanding these customers' needs and meeting them at a lower cost than conventional insurers can.
One representative customer is the YMCA of Grand Rapids, featured as a case study in the 2013 Redwoods Group Annual Report. As with most clients, the basic need is liability insurance. Such organizations have limited funding — in the case of the Grand Rapids YMCA, raised through memberships and donations. In one instance, Redwoods became a donor by contributing funds to supply a "veggie van" to improve access to fresh produce in underprivileged neighborhoods. Beyond providing insurance, Redwoods worked with the Grand Rapids YMCA on an initiative to help fight childhood obesity. This type of relationship is characteristic of how Redwoods approaches its best clients. YMCAs are a major target group for Redwoods, along with similar organizations that run community centers and services. These are typically small, diffuse organizations, none of which constitutes a large share of Redwoods' total customer base.
Competitors for these insurance services include other insurance companies, many of which offer similar products aimed at the same target market but with a stronger profit motive (Redwoods Group.com, 2014). There are also indirect competitors: non-profit agencies can choose to carry less insurance or no insurance at all as a way to free up operating capital. That said, some level of insurance coverage tends to be effectively mandatory to protect a non-profit from financial ruin in the event of a serious incident.
One significant competitor is USLI, the United States Liability Insurance Group. USLI is larger than Redwoods and operates as part of Berkshire Hathaway, which also owns Geico and reported $183 billion in sales (MSN Moneycentral, 2014). The non-profit segment of USLI is a small fraction of that total, but the financial backing of such a large parent company makes it a formidable competitor. USLI offers a bundled non-profit insurance program that leverages its capabilities as an underwriter across multiple specialties, though it does not provide employee coverage directly, instead referring clients to another Berkshire Hathaway subsidiary. USLI is therefore a capable competitor, but one with a stronger profit motive and, according to this analysis, a weaker ethical orientation than the Redwoods Group.
"Owner equity, employee benefits, and stock program"
"Risk management outreach and child drowning prevention"
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