Stonyfield Founder Finally Profits So He Can Give It Away

Gary Hirshberg is finally getting to do what he always wanted to do: give money away. The money we're talking about isn't all his, mind you. Millions of dollars in donations come from Stonyfield Farm, the yogurt company Hirshberg runs.

After years of struggling to make payroll and stay afloat, Stonyfield is profitable. So much so that France's Groupe Danone, the food conglomerate owner of Evian, among other brands, has bought 85 percent of the Londonderry, N.H., company in a staged, multimillion-dollar deal.

Stonyfield is a leading organic yogurt brand in America, with sales of about $400 million annually. Hirshberg decided not to keep all the money in the corporate coffers.

Through its "Profits for the Planet" program, the company donates 10 percent of its profits to various causes, including organic farming research, land conservation efforts and children's education.

"We always said that when we got to profitability we would give back a percentage to efforts that improve the health of the planet," says Hirshberg, the company's 56-year-old co-founder.

R. Paul Herman, an investment advisor and portfolio manager at HIP (Human Impact + Profit) Investor Inc. in San Francisco, says Stonyfield's approach shouldn't be thought of as a giveaway. Rather, it's a balancing act.

"Stonyfield is a very sustainability-minded company seeking to balance people, planet and profit," Herman says. "Allocating profits to charities is one way to inspire employees, as well as gain market share with customers. For example, 43 percent of women prefer to buy brands that make a donation with every purchase."

While having the money to donate to charity is new to Hirshberg, charitable causes are not. He began his career in the nonprofit sector, working at The New Alchemy Institute, an organic farming educational organization in Hatchville, Mass., and served on various boards of New England organizations that helped the poor. Fed up with government inertia on social services and a lack of funding in the nonprofit world, Hirshberg teamed up with Samuel Kaymen, one of the country's early authorities on organic and bio-dynamic agriculture, in 1983 and founded Stonyfield on the premise that businesses can do good. Stonyfield prides itself on its organic, "healthy" ingredients.

In the early years, Hirshberg says, the company scraped by and didn't have money to do much more good than stay afloat. Advertising was too expensive, so Stonyfield took up "cause marketing," celebrating environmental and healthy eating activism in messages printed on yogurt carton lids. Those efforts built a loyal following and attracted socially responsible shareholders, too. Donating profits, therefore, hasn't been a rub on investors, Hirshberg says. Besides, he says, it's good for business.

"Is [Profits for the Planet] self-serving? Yes," Hirshberg says. "It can't not be. The program is based on sales. The more profits, the more we can give away." And this further deepens and expands Stonyfield's customer base.

In 2010, Profits for the Planet donated more than $2.5 million to efforts committed to "healthy food, healthy people, and a healthy planet." Recipients include: the American Farmland Trust, to support its manure methane reduction project; BabyCenter, to educate moms and moms-to-be about environmental health; and Detroit Public Television, to support its special on the "anticancer" diet.

Stonyfield also supports the Climate Counts initiative. The service -- Hirshberg's brainchild -- allows people to learn the "climate score" of companies, products and brands, and then send emails to the companies to express their pleasure or displeasure with the scores. For example, Hewlett-Packard receives a score of 85 (on a scale of 0-100), whereas Apple receives a 61. The higher the score, the greater the company's commitment to fighting global warming. The score is calculated by taking into account a company's commitment to reducing emissions and making products that require less energy, as well as its recycling efforts, among other things.

Hirshberg says he believes that every purchase is a vote with your dollars, and Climate Counts, launched in 2007, was born out of that belief. He serves as chairman of the board and is involved with the organization's efforts to help consumers make informed decisions about where they shop. Climate Counts leans on GreenOrder, a sustainability strategy firm in New York City, for its scoring system, and it has its own team of analysts and executives who operate the site.

For Hirshberg, the program validates his initial instinct when founding Stonyfield -- that it's up to businesses and consumers to take responsibility and allocate their own resources to help protect the environment as government support for such causes falters.

"As part of my personal odyssey, I needed to become self-reliant and not count on government to support the things I most believe in," he says. "That goes for businesses, too."

His wealth and the company's profits now allow him to join the ranks of companies that have built substantial charitable giving programs. PepsiCo, for example, supports water conservation programs throughout the world, while TOMS Shoes donates one pair of shoes to someone in need for every pair that consumers purchase.

For Hirshberg, leveraging Stonyfield's balance sheet has allowed him to donate beyond anything he could do personally and at the same time still serve the corporate mission. It's satisfying and rewarding, he says.

With Group Danone's European muscle, Stonyfield is extending its reach beyond U.S. borders. That means its yogurt and philanthropic mission will go global. Danone bought a small stake in Stonyfield a decade ago and increased its investment over the past several years so Danone now owns majority shares.

At Stonyfield, Hirshberg says, "We think like we're between a business and nonprofit."

SecondAct contributor Thomas M. Kostigen is a best-selling author whose books include The Green Blue Book: The Simple Water-Savings Guide to Everything in Your Life and The Big Handout (September 2011). He lives in Los Angeles.