Setting a travel business on a new path – Philly.com
No matter how solid the balance sheet, a single act of omission – the lack of succession planning – can imperil a business.
Harold E. “Hal” Taussig wasn’t leaving anything to chance.
About 12 years before Taussig, the cofounder of Untours, a travel-planning business in Media, drew his last breath on Jan. 11 at age 91, he had started devising the structure of its second act, and that of the foundation that distributes Untours’ profits to help eradicate poverty by aiding small businesses.
A social-minded entrepreneur known for extreme generosity mixed with an insistence that his giving be a hand up, not a handout, Taussig’s succession plan is consistent with that philosophy.
With a progressive, yet rare, twist: He made the nonprofit Untours Foundation owner of the for-profit travel business he and his wife, Norma, started in 1975. She died in July.
“It’s a huge, huge responsibility,” said Elizabeth Killough, who has managed the foundation since 2004. “It’s exciting and scary a little bit.”
That the father of three and former Colorado cattle rancher approached succession planning with inventiveness is classic Taussig, who was known as a trailblazer.
In 2007, his
travel company became the first certified B Corp, or benefit corporation, in the world. There are now nearly 1,600 businesses in four countries meeting that standard, in which success is measured not only by profit but by treatment of employees and the environment, otherwise known as the triple bottom line.
“I think it’s a testament to the power of the idea of using business as a force for good. No one understood that more than Hal,” said Jay Coen Gilbert, cofounder of Wayne-based B Lab, the nonprofit that governs B Corp certification globally. In a blog post after Taussig’s death, Coen Gilbert called him “my inspiration for the B Corp movement.”
When Taussig started planning for the foundation to assume ownership of the travel company, nonprofits running for-profit businesses were not common, and still aren’t, said William H. Clark Jr., a partner at the Philadelphia law firm Drinker Biddle & Reath L.L.P. who advised the foundation on the takeover.
“In a way, I wish more people would do it because it would provide a better foundation for lots of charitable activity,” said Clark, who drafted the model legislation authorizing the organization of benefit corporations. It has been enacted in 29 states, the District of Columbia, Puerto Rico, and Italy, he said.
Last month, philanthropist H.F. “Gerry” Lenfest waded into rarely traveled waters by donating the parent company of The Inquirer, the Philadelphia Daily News, and Philly.com to the Philadelphia Foundation in a complex transaction designed to ensure the survival of quality journalism in the region for generations.
Under the arrangement, Philadelphia Media Network remains a self-governing, for-profit company, with business decisions made by the PMN board and senior managers. But the new structure provides outsiders a means to help fund the company’s journalism, enabling foundations, corporations and other benefactors to make tax-exempt donations to a new Institute for Journalism in New Media, an entity operating under the Philadelphia Foundation’s special-asset fund.
Donors can give money to the institute to be used for specific reporting projects and other journalism undertakings. For instance, Lenfest said he envisions the institute researching and discovering content-delivery models that could potentially one day replace printed newspapers.
As part of the change, PMN became a B Corp like Untours.
Not nearly to the degree facing newspapers, Untours, which offers mostly apartment-based independent vacation packages in Europe, is feeling competitive pressures. As such, “the challenge for the foundation is to figure out the best way to let the business grow and prosper so it will continue to provide a good source of funding,” Clark said.
To help, the foundation appointed a five-member board of directors for the travel business in November, consisting of Killough, two members from the foundation board, and two retirees from the business world. One is a former chief financial officer for a commercial electrical-contracting firm; the other, a corporate and project-finance attorney.
One of the business board members is a Taussig nephew, Brian Taussig-Lux, general manager of the travel company of 11 employees (plus seasonal overseas staff) since 1996. Its 2015 revenues were a little short of $4 million, down from about $5 million in 2012.
“There’s been this big disrupter called Airbnb that has made life difficult for a lot of us in the industry,” Taussig-Lux said. “But it’s allowed us to really focus on the niche we really do well, which is the folks who not necessarily are looking for the cheapest way to stay in Paris or Rome, but folks who like . . . the combination of freedom to do what they want and having someone there to support them.”
To provide travelers more options, Untours recently added river cruises and “soft adventure” trips such as Machu Picchu in Peru and the Galápagos Islands. London and Ireland were recently added to its land excursions, bringing that portfolio to a total of 12 countries. Scotland will join the mix next year, said Taussig-Lux, who became president of Untours over the summer.
In all, more than $2 million in direct funds have been funneled from the travel business to the Untours Foundation. In 2011, the foundation board voted to suspend those diversions to help support the care of Hal Taussig and his wife, who was debilitated by a stroke in 1999. Both remained in their Media home until their deaths.
Though he doesn’t relish having to prepare detailed board reports, and hopes there won’t be too many board meetings, Taussig-Lux said he welcomes the expertise the new ownership structure enables him to tap.
“At some point, we’ll begin giving profits to the foundation like we used to,” he said. But first, with his uncle and aunt no longer requiring care, Untours will work on building the business’ financial reserves, he said.
At the foundation, which has issued 300 low-interest loans totaling $8 million since its creation and which holds an equity stake in five of the recipients, Killough said she has yet another tall order from her late boss to fulfill.
“He told me the foundation needs to look different at least every 10 years or the foundation isn’t doing its job,” she said.
“I feel my board is doing a great job overseeing the business and making all that fall into place. Now, I really need to live up to his command.”
Killough said she hopes what Taussig has left at Untours – ownership of a for-profit business in the hands of a nonprofit – is “the wave of the future.”
“We have to use the best of each structure to eke the most change out of both of them to change the world,” she said.
Setting a travel business on a new path – Philly.com