01:00 AM EST on Saturday, March 25, 2006

BY PAUL GRIMALDI
Journal Staff Writer

The cascade of money showered on start-up companies during the Internet boom created a cadre of executives who cashed out of the business world.

High-priced initial public offerings and multimillion-dollar buyouts gave company founders and key managers the opportunity to sail off into the sunset or hit the links at their favorite golf courses for weeks and months at a time while they let their money do the working for them.

But what happens if you've spent your business career trying to build a better world? Do you walk away from that commitment when you cash out of your company?

It's an issue faced by people such as Ben Cohen and Jerry Greenfield, of Ben & Jerry's ice cream; Gary Hirschberg, of organic yogurt maker Stonyfield Farm, and now Tom and Kate Chappell, the founders of Tom's of Maine, who announced they are selling their personal-care products company.

Ben Cohen used $5 million from the sale of Ben & Jerry's to start a philanthropic venture-capital foundation, the Barred Rock Fund.

Hirschberg, whose family is estimated to have made $35 million when Groupe Danone bought Stonyfield, considers himself a Trojan horse inside the Paris-based food company. He remains president and chief executive officer of Stonyfield, where he keeps an eye on the company's bottom line and its commitment to social activism.

He's also started O'Naturals, a healthy-menu fast-food restaurant company that he hopes will rival McDonald's one day.

The Chappells founded natural-products maker Tom's of Maine in 1970 and managed to grow the Kennebunk-based company into the nation's leading maker of natural toothpaste and top natural oral-care brand with products including mouthwash and dental floss.

On Tuesday, New York-based Colgate-Palmolive Co. announced that it's spending $100 million to gain an 84-percent stake in the privately held company, in a deal that will play out over several years.

Under the Chappells' stewardship, Tom's of Maine developed a reputation for philanthropy, donating 10 percent of its pretax profits to nonprofit organizations that benefit the environment, the needy, the arts and education. It also allows employees to spend 5 percent of their paid time on volunteer work.

The company created the Dental Health for All program, to increase access to dental care around the United States, and the National Rivers Awareness Program, which supports river cleanup days.

Colgate has agreed to maintain Tom's of Maine's financial commitment to social causes, a key part of the deal.

Workers at Tom's of Maine will share the windfall, with $1.2 million being split among 120 employees.

"From the philanthropic angle, it's a win-win," said Eugene D. Miller, assistant director of the Center on Philanthropy and Civil Society in New York. "Ben & Jerry's, The Body Shop and Tom's of Maine have cut deals in which their philanthropic and social activity efforts are protected."

The Chappells addressed the matter in a letter posted on the Tom's of Maine Web site.

"It's been a quest that we entered with trepidation and excitement because we wanted to find a company that would honor our values, and we were unwavering in our commitment to stay intact in Maine as Tom's of Maine. We are happy to report to you that we did find a partner who has a deep understanding and respect for what we've done and wants to build on that with us."

The Chappells will stay active in the company, with Tom Chappell remaining as chief executive officer for three years and Kate Chappell staying on as vice president for two years.

Eventually, the deal will allow the Chappells to devote more time and money to the social causes that have been part of their lives and business for decades, the Chappells said in a conference call Thursday.

Tom Chappell has long been committed to The Saltwater Institute, a values-centered leadership training program he helped start. He also serves on the boards of Harvard's divinity and dental schools.

"I don't think our problem is finding ways to get involved," said Tom Chappell. "I think Kate and I are socially minded people. We've been involved with things for a long time."

A professional artist and poet, Kate Chappell has lent her efforts to arts programs for years.

"Those are things that I will just continue," she said. "That won't be a deviation from my endeavors."

The couple will create a family foundation, financing it with $10 million, they said, to support various projects.

"We are in the process of researching and getting our family foundation established," Tom Chappell said. "But it will not be funded in the next two years."

How they structure that foundation will depend on how much time they want to devote to those social-service efforts, said Ron Ancrum, president of Associated Grant Makers in Boston.

"You have a couple who are already community minded," Ancrum said. "They're already steps and miles ahead of your typical businessperson."

They could create what's called an operating foundation, Ancrum said, which would be better suited to financing the Chappells' own initiatives, such as the Saltwater Institute.

A different entity, a family foundation, typically accepts requests from groups that offer services or programs focused on certain endeavors such as education or the environment.

A family foundation also allows the founders to involve their children in the charitable work. The Chappells have five children and seven grandchildren.

"The values that Tom and his wife have are very easy to transfer to their children," Ancrum said. "When you get out to the third generation, then you have to make some decisions."

Grandchildren and great-grandchildren don't always share a passion for the same social causes, he said. At that point, family foundations may switch emphasis or transfer their funds to another charitable organization.

The Chappells have some time to sort out who might benefit from their larger finances, they said.

"We're really not selling right away, so it would be premature for people to ask right away," Kate said.

But Ancrum counseled that they shouldn't ignore the issue for long.

"Given their stature, there are probably already people putting the squeeze on them," Ancrum said. "They're not going to be able to hide this."

pgrimald@projo.com / (401)-277-7356