A greater mission

A goal of many document destruction companies is to operate leanly, adding employees only when absolutely necessary, to minimize overhead and to maintain profitability. However, one document destruction operation has a philosophy that runs counter to this prevailing model.
 

An overriding mission

Vienna, Virginia-based SourceAmerica’s secure document destruction division seeks to provide employment opportunities for as many people with disabilities as possible while also providing its corporate, government and institutional clients with secure and reliable service, says the organization’s Shawn Murphy, senior business development manager, secure document destruction.

SourceAmerica (formerly NISH, or National Industries for the Severely Handicapped) is celebrating its 40th anniversary in 2014. The national nonprofit is the link between the federal government and the commercial sector, providing a workforce of people with disabilities through a network of more than 1,000 community-based nonprofit agencies.

“What SourceAmerica does is find business opportunities or contract opportunities within the federal government and broker between the federal government and the nonprofit agencies that will actually do the work,” Murphy says.

The nonprofit agencies that SourceAmerica subcontracts with create employment for people with significant disabilities, which can range, for example, from cognitive disabilities to physical disabilities as well as Down’s syndrome and cerebral palsy, he says.

“What we like about document destruction is that, even though it is a small percentage of our overall business, it provides job opportunities for people with the most severe disabilities,” Murphy says.

“A big focus for us is providing employment for wounded warriors,” he adds.

These employees prepare documents for destruction by removing metals and binders, for example. They also separate paper by grade, Murphy says.

SourceAmerica began its secure document destruction operations nine years ago, Murphy says, after a contracting officer within an agency of the Treasury Department told one of SourceAmerica’s executive directors that he had a problem related to information destruction. When the division opened in 2005, it served nine of the government agency’s offices. SourceAmerica contracted with six nonprofit agencies to perform the work.

Not without cost

While SourceAmerica’s mission is clearly defined, that doesn’t mean it’s always understood or embraced by the wider information destruction industry, Murphy says, which has led to criticism from some operators. He says some for-profit companies wrongly believe that SourceAmerica’s clients receive tax deductions because they use the service, assuming its fees are akin to charitable donations. “This couldn’t be further from the truth,” Murphy says.

However, SourceAmerica does not let its detractors distract from its mission. Murphy says he sees “plenty of business” available for nonprofits and for-profits alike and reminds critics that SourceAmerica is trying to do the same thing they are—provide a valuable service while making a profit—with the additional goal of “providing employment for people who desperately need employment.”

SourceAmerica’s mission is not without expense. It costs the nonprofit more to do business because of its goal to improve the employment rate among Americans with disabilities. “We have higher overhead because we are looking to employ more people,” Murphy says.

He adds that 75 percent of the labor performed by SourceAmerica subcontractors must be carried out by people with disabilities per its federal contracts.

Additionally, the U.S. Department of Labor has established wage ratings for specific jobs that contractors performing under federal contracts must pay their employees. These wage determinations apply to SourceAmerica as well. Two examples Murphy offers are the position of paper sorter, which mandates a wage of $9.95 per hour in most states, and medium-duty truck driver, which mandates a wage of $17.37 per hour, plus additional health and welfare benefits.

Murphy says all companies with federal contracts are required to meet this minimum wage requirement; however, he adds that for-profit companies are rarely audited to ensure they are doing so. SourceAmerica, on the other hand, does undergo regular audits, he says.
 

A history of growth

Murphy joined SourceAmerica as senior program manager shortly after the document destruction division was established. Previously, he worked for Shred-it, helping to establish the company’s Fresno, California, operations. Prior to that, he spent 20 years working in the commercial laundry industry.

When Murphy joined SourceAmerica, its document destruction division served 120 client locations and subcontracted with 19 nonprofit agencies to execute the contracts, he says. Today, SourceAmerica serves 1,000 federal customer locations, including 550 Treasury Department locations nationwide, and more than 20,000 commercial client locations through 62 nonprofit subcontractors in 45 states that employ 1,000 individuals with disabilities, he says. The nonprofit agencies SourceAmerica subcontracts with include Goodwill, Easter Seals and United Cerebral Palsy affiliates.

Murphy says he tells the nonprofits that subcontract with SourceAmerica’s document destruction division that they should not rely solely on federal accounts provided through SourceAmerica but also should actively pursue commercial accounts in their areas.

The nonprofits appear to be heeding this advice, as SourceAmerica’s federal work accounts for only 11 percent of the network’s total revenue.

He adds, “I track how many jobs we provide through federal and commercial accounts. In 2013, we provided 600 jobs through federal accounts and 1,200 on the commercial side.”

The secure document destruction division makes up only a fraction of a percent of SourceAmerica’s overall revenue. (Its other divisions include grounds maintenance, custodial and laundry, to name a few.) That doesn’t mean the document destruction division’s numbers are unimpressive. In 2013, Murphy says, the network shredded 106 million pounds of paper and generated $30 million in revenue.

“We have seen growth every year since we started, both at the federal level and growth the network has done on its own with commercial accounts,” he says.
 

The business model

Murphy says SourceAmerica’s secure destruction business uses a model that is similar to the franchise model used in the for-profit sector.

The nonprofit agencies that subcontract with SourceAmerica operate off-site destruction facilities that are certified by the National Association for Information Destruction (NAID), Phoenix. Of the 62 nonprofits the organization works with, 55 have almost identical systems from Allegheny Shredders, Delmont, Pennsylvania, he says.

SourceAmerica favors the off-site model because it provides the most employment opportunities, Murphy says.

“If we take $225,000 and invest it in a plant-based operation, we can employ 10 to 20 people,” he says. With an on-site business model, that same investment would yield one or two jobs.

That is not to say that some of the agencies that SourceAmerica works with have completely shunned the on-site model. “A number of our agencies are quite large and do run multiple trucks,” Murphy says.

Because SourceAmerica’s shredding business is primarily plant-based, Murphy says, “We knew we were going to have to do some things differently to be perceived to be as good as mobile shredders” in the eyes of some customers.

These differentiators include shredding to five-sixteenths of an inch as opposed to the industry standard of five-eighths of an inch, using GPS tracking on all vehicles and opting not to open containers while servicing a client. “We exchange containers or take bags out of consoles and put them into a locking container,” Murphy says. “We don’t open any containers to the environment; we only open them in controlled environments under video surveillance.”

He continues, “We are proud of what we have done to make our business model as secure as we possibly can.”

SourceAmerica also asks its subcontractors to adhere to Internal Revenue Service requirements, which are “more stringent than” NAID requirements, Murphy says.

The Treasury Department agency performs spot checks on its contractors to assure they are performing to the agency’s standards. In addition, SourceAmerica performs an annual scheduled audit of each of its subcontracting agencies as well, Murphy says.

The off-site business model that SourceAmerica maintains offsets the higher costs associated with its personnel, helping to maintain the profitability of its secure document destruction operation. “If we don’t make money, there will be no jobs for the people we support,” he says.

As Murphy likes to remind people, “We are a document destruction company first, and our mission is to employ people with disabilities.”

The author is editor of SDB and can be contacted at dtoto@gie.net.

Photos by Cade Martin