You’ve stumbled across an experiment: an effort to see what a newsletter might look like that covers all the ways owners commit their businesses to a purpose, from nonbinding public statements all the way to irrevocable purpose lock-in.

Each week we’ll share news on all the things we’ve spotted. For more, subscribe here:

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One Big Thing

• Luxury travel company Black Tomato converted to an employee ownership trust, with founders retaining 25% ownership and decision-making control

Upcoming Events

• Aug 25: Institute for Family Governance’s lunch presentation with Newman’s Own Foundation in Miami

• Aug 26: NCEO’s 2026 NCEO Forum starts in Phoenix; day one features an intensive workshop on employee ownership trusts

News this week

• Pennsylvania software company LockData converted to an employee ownership trust for its 13 employees, as reported by Roodgally Senatus for ImpactAlpha (paywalled)

• Founder Miren Oca shares how converting to an employee ownership trust resolved her exit strategy concerns with the women of Entrepreneurs’ Organization

• From Project Equity, Courtney Kemp publishes an in-depth white paper explaining Employee Ownership Trusts (ht David Gray)

• Steward Market releases their monthly brief, outlining how legal and financial infrastructure is evolving to support steward ownership

• OpenAI co-founder Greg Brockman reflected on their shift away from nonprofit governance as traditional capital demands usurped soft mission locks

• LA Weekly spotlights Susana Cabrera’s story on Everytable’s social equity program trains frontline restaurant workers to become business owners

• ICYMI: In May, Swiss cloud provider Infomaniak transferred majority voting rights to a public-interest foundation with employee-shareholders voting unanimously to protect against future buyouts

You’ve stumbled across an experiment: an effort to see what a newsletter might look like that covers all the ways owners commit their businesses to a purpose, from nonbinding public statements all the way to irrevocable purpose lock-in.

Each week we’ll share news on all the things we’ve spotted. For more, subscribe here:

Subscribe now

One Big Thing

• Matt Pardieck of The 21 Hats Morning Report examines Grady-White’s transition to purpose trust ownership and asks: Have You Considered Giving Away Your Business?

Upcoming Events

• Aug 25: Institute for Family Governance’s lunch presentation with Newman’s Own Foundation in Miami

• Aug 26: NCEO’s 2026 NCEO Forum starts in Phoenix; day one features an intensive workshop on employee ownership trusts

Job Openings

• Trust Neighborhoods is hiring a Director of Finance

News this week

• ICA Group cofounder Steven Dawson published Help Wanted, a new co-authored book. Case studies include purpose trust-owned Optimax and Zingerman’s; ESOP-owned Messer Construction and SRC; and Cooperative Home Care Associates

• Hannah Sandmeyer of Steward Market and Elizabeth Limbach of 1% for the Planet will get into the nitty gritty of what needs preserved during ownership transitions in their September webinar

• 🎙️ Lift Economy’s Beyond the B talks with Tony Chocolonely’s CEO, Douglas Lamont about their steward-influenced governance structure and gets another shout-out during their conversation with Chris Marquis about systems change and transforming industries:

You’ve stumbled across an experiment: an effort to see what a newsletter might look like that covers all the ways owners commit their businesses to a purpose, from nonbinding public statements all the way to irrevocable purpose lock-in.

Each week we’ll share news on all the things we’ve spotted. For more, subscribe here:

Subscribe now

One Big Thing

• Matt Pardieck of examines Grady-White’s transition to purpose trust ownership and asks: Have You Considered Giving Away Your Business?

Upcoming Events

• Aug 25: Institute for Family Governance’s lunch presentation with Newman’s Own Foundation in Miami

• Aug 26: NCEO’s 2026 NCEO Forum starts in Phoenix; day one features an intensive workshop on employee ownership trusts

News this week

• Southern Shade Tree (NC) raised equity from Mosaic Capital Partners, acquired Atlantic Coast Landscaping (NC), and established an employee ownership trust

• John Abrams reflects on Yvon Chouinard’s biography and his reasons for giving his company to a purpose trust

• Ari Weinzweig reflects on how perpetual purpose trusts force long-term thinking at Zingerman’s

• A new Harvard report reveals that 79% of Gen Z seek jobs that positively influence others’ lives, yet many are concerned about their low pay (ht Daphne Berry)

• Nina de Korte analyzes a new report from EY, a consultancy, on extractivism

• The Impact Track analyzes the governance conflict at Indian conglomerate Tata Sons, highlighting the tensions between mission-driven trust ownership and market oversight (ht Daniela G.)

• The steward-owned collective CO_ recently structured a loan for açaí harvesters in Colombia around harvest cycles rather than quarterly cycles

• 🎙️ Journey to Regeneration talks with We are Stewards cofounder Esther Welles about steward ownership:

In a recent book, Native American author Steven Charleston chronicles the lives of four prophets who foresaw, and helped their communities survive, the apocalypse of European colonization. From their history, Charleston draws four lessons for dealing with times of radical, potentially apocalyptic change. I’ve been thinking about those this week, amid wars and rumors of wars, and especially how much this community of people embodies what Charleston hopes for.

First, Charleston says, radical change demands a radical response--turning the culture upside down. As Jason Wiener put it last night, the proximate cause for our gathering is a legal form. But the deeper cause is that all of you are doing just that--turning over culture.

Second, the crumbling of the world we know demands that we build prototypes, or lighthouses, of an alternative potential future. That is who you are. Patagonia may be a national lighthouse, sure--but it’s you, in your towns and in your industries--that are prototypes of alternate futures.

Third, it is imperative that we take into consideration the stakeholders that have historically had no voice or power in our economies. Smoholla, one of Charleston’s four prophets, asked during a negotiation with the Europeans “I wonder if this land has anything to say?” Surely you hear this and think of Organically Grown, or Local Ocean, or the other companies here that are taking their environment--our environment--seriously.

Fourth, building a future together means just that--building a future together. As you heard from Issie yesterday, this is built directly into PTON’s DNA, and it’s what I see in most corners of the wider world of alternative ownership. It is a collaborative vision that Natalie Reitman-White had a decade ago, that has finally taken root. And it is, as we talked about in our ecosystem panel yesterday, deeply pluralistic--I guarantee you there are companies here whose purposes you would disagree with. But I think we know that we are building an alternative future, together, and that has to happen, together.

I took a lot of comfort in the historical depth of Charleston’s We Survived the End of the World. As Ari reminded us yesterday, learning history keeps you from getting caught with your pants down. I’m paraphrasing — Ari may have said it with more dignity than that. Actually, knowing Ari, probably less.

I’d like to take one more historical detour, if you’ll allow it. Joseph Blasi told me last week about the New York company B. Altman and Company. Unless you’re of a certain age, you probably haven’t heard of it. But for over 100 years, the Manhattan-based retailer was a purpose-driven, charity-spawning, gender-bending high-end retailer in New York. When Benjamin Altman died in 1913, he left his stock in the stores to the Altman Foundation, creating what was essentially a purpose-driven ownership structure: the department store funded charitable and educational work in New York City, and everyone who shopped at Altman’s was also contributing to local charity efforts.

This arrangement worked for over seven decades. But then came the Tax Reform Act of 1969’s excess business holdings provisions, which restricted private foundations from owning active businesses. The Altman Foundation had to divest ownership, the company traded hands a few times, and then finally shut down in 1989.

This story stuck with me in part because it is representative of the fact that if we widen our aperture just a little bit, we can see history littered with examples of founders that were trying to do things differently, but ultimately failed.

For the Louisville Courier-Journal, a family feud with no succession structure handed one of the ten best newspapers in America to Gannett for $300 million, and was immediately enshittified. HealthTrust, A 104-hospital ESOP dissolved its employee ownership structure within four years, then sold to Columbia/HCA, which later pled guilty to 14 felonies and paid over $2 billion in fraud penalties. Three private equity firms bought Toys R Us, a profitable company holding 20% of the American toy market, loaded it with $5.3 billion in debt, collected $470 million in fees, and >30,000 people lost their jobs. At Cadbury, over the objections of the board, the employees, and the British government, shareholders ended 186 years of Quaker values in a Kraft Foods boardroom, and ruined Cadbury Creme Eggs for a generation.

These founders had all “built something worth protecting,” but did not have access to the architecture they needed to support their good intentions.

It’s that architecture that we are building today. And already, in just a few short years, look what we see: For every Louisville Courier-Journal, there is a Berrett-Koelher Publishing that shows how else publishing can be done. For every Healthtrust, there is a LiveOak Living. For every Polaroid, and Optimax. For every Toys R Us, an Entertainer — a British toy company whose founder just chose employee ownership over private equity last September. For every Cadbury, a Tony’s Cholonely. Each of these companies has built something worth protecting, and it is the people in this room that have helped them figure out how to protect it.

I first came to know about purpose trusts in 2021, thanks to a nudge from Zoe, a longtime friend of mine. Many of you had already been doing the work by then. But it was clear that many more hands were needed for this model to reach a scale proportional to the size of the problems we seek to solve. It was Jenny Everett who helped me understand this as an ecosystem problem, and it is what we set out to help solve.

In the academic literature — bear with me, this is the last time I’ll try to sound like a professor today — there are two camps on entrepreneurship. One camp says entrepreneurs discover opportunities. The other says they create them out of thin air, by putting out a quarter-baked idea and seeing who shows up to build it with you, and now you have a half-baked idea. PTON is firmly in that second camp. Natalie had had a quarter-formed idea. You showed up. And now look at this room. Ten years ago we could have held this gathering in a single booth at El Cockfight--a small one! But here we are, a room full of 150 people and 100 more we couldn’t pack in. We have gotten here in collaboration with you, and the vision of PTON is self-consciously a recombination of the skills, networks, knowledge, resources, and needs that you have shared with us.

The task moving forward, I believe, is the same: to find new friends, share with them our half-baked idea of what the future could be, and let their skills, networks, knowledge, resources, and needs reshape what we are building. As Charleston’s fourth Native American prophet demonstrated, the future can only be built together--co-created. We can’t do that without you, but with you, we are confident that we can co-create that better, alternative future.

I’d like to close with gratitude. Simone Weil said “attention is the rarest and purest form of generosity.” I am grateful, we are grateful, for your generous attention these last few days. I’d also like to thank Issie and PTON, Taylor and TXCEO, and our funders and speakers. And a special thanks to the volunteers and staff at The Line who made this happen. So let’s get some lunch, and then let’s get to work.

She posted a little about it on LinkedIn, then gave The Stakehold the details:

• Graeme Nuttall provided a keynote history of EOTs and their international growth.

  • He emphasized the model’s flexibility, lower costs compared to ESOPs, and strength in protecting legacy and mission. He also shared how EOT adoption has accelerated in the UK to 10 conversions per week, with over 1,800 companies transitioning since 2014.

• Zoe Schlag from Common Trust presented on their transaction approach, which is oriented toward pipeline generation and scaling EOT adoption in the U.S.

• Courtney Kemp from Project Equity and PTON presented on building a post-transaction culture of employee ownership, sharing practices and lessons for strengthening ownership culture after a transition.

• Discussion covered both the opportunities and challenges in scaling EOTs in the U.S. and abroad, including:

  • Tax and regulatory obstacles in some jurisdictions

  • Difficulty in locating experienced service providers

  • Emerging interest in using EOTs for innovative structures such as holding companies

• The workshop highlighted international convergence, with Canada, Slovenia, Denmark, and Australia all adopting versions of the EOT model.

• Messaging and terminology remain an area of active debate. While employee ownership trust has gained traction, many legal practitioners prefer the more precise purpose trust and others prefer the employee trust. Clear, consistent messaging will be critical to field growth.

• Field-building needs include:

  • Policy advocacy

  • Cultivation of practitioner networks

  • Alignment with cooperative and employee ownership movements

  • A shared focus on clarity and credibility

Overall, the workshop reinforced EOTs as a practical and flexible succession solution.

Courtney is also helping organize TXCEO & PTON’s first Purpose Trust Ownership Conference in Austin next February. Y’all come and see us!

This is where steward ownership comes in. Steward ownership is a “corporate ownership structure that presents an alternative to shareholder value primacy.” This means that steward owned companies are legally obligated to prioritize their purpose over the maximizing of potential returns.

How This Is Done

Steward owned companies prioritize two principles: self-determination and purpose orientation. Self-determination refers to the power structure of companies, where the employees (or stewards) who directly assist in operating the company function as the decision-makers. Purpose orientation refers to prioritizing the purpose through reinvesting profits or directing them toward the “purpose.” In steward ownership models, these principles are legally bound to protect them from being infringed upon.

Steward ownership can be implemented through several different models:

• Double Foundation Model

  • Legally separates money and power. The managers act as the stewards for the company while another charitable organization holds economic rights and shares of the company

• Single Foundation Model

  • All voting and economic rights are held by a “self-governing non-profit foundation.”

• Veto Share Model (or Golden Share Model)

  • Guiding principles are included in the company’s “articles of association.” Stewards hold 99% of control rights but no economic rights, while the 1% is given to an independent non-profit. This places a check on the company to ensure all principles in the articles are being followed

• Perpetual Purpose Trust

  • Set up for the benefit of a purpose rather than a person. Steward owners are in control but cannot extract value from the company.

• Employee Ownership Trust

  • Shares of a company are held by a trust that ensures the employees control or benefit from the company.

Examples of Steward Owned Companies

• Patagonia

  • A trust controls the company’s values, and the non-profit uses the profits from the company to fulfill the values in the trust

  • For Patagonia, this means they are legally obligated, through their trust, to fulfill their mission to “save the planet”

• Bosch

  • 92% of the company is owned by the Robert Bosch Foundation, which continually reinvests profits into charity

  • 93% of the shares with voting rights are held by 10 steward owners that cannot be sold

• Novo Nordisk

  • Their mission is to defeat diabetes by preventing obesity and type 2 diabetes, and providing affordable healthcare

  • Private investors have around 23% of votes and 72% of capital of their “B Shares” while the Novo Nordisk Foundation holds 78% of votes and 24% of capital

• Wildplastic

  • Their mission is to solve the plastic crisis

  • They gather “wild” plastic waste to produce recycled trash and parcel bags

  • 1% of Wildplastic’s voting shares is held by Purpose Foundation to protect the ownership and financial structure, while the rest of the shares are divided between investors (with no voting rights) and stewards (with all the voting rights)

Overall, steward ownership is a promising approach to keep companies accountable for the promises they make to the public. Additionally, it often gives the individuals that carry out the mission ownership to continue fulfilling it in the long term. By shifting power away from profit-maximizing shareholders and toward stewards who prioritize purpose, companies can ensure that their commitments—whether to sustainability, social responsibility, or ethical business practices—are not just marketing tools but legally embedded principles.

Background: Over the weekend, I listened to an Oxford-style debate between Harvard’s A. Lucian Bebchuk and Oxford’s Colin Mayer.

• The question at hand: Should business be governed and run for shareholder or stakeholder interests? 

The conversation came in the wake of a 2019 announcement by The Business Roundtable, a lobbying group made up of large CEOs of large companies. In that announcement, they redefined the purpose of a corporation.

• Why it Matters: For decades, The Roundtable adhered to economist Milton Friedman’s position that the sole legitimate purpose of a corporation is to maximize shareholder value. TBR’s announcement, a real departure from economic orthodoxy, came as a shock.

• But Bebchuk and other critics argued that this was mostly PR.

The Rise of Steward Ownership: At the same time the Roundtable was reconsidering the purpose of a company, a movement was growing in Europe in support steward ownership. In a post, the nonprofit Purpose Foundation argued:

We need to ask ourselves: who holds power and what is motivating their decisions? To create new solutions that harness the potential of capitalism (entrepreneurship, innovation, competition, a decentralized economy) and move beyond its failures (greed, consolidation, inequality), we must challenge one of the fundamental paradigms of capitalism: the understanding and definition of corporate ownership.

Toward the end of the Oxford debate, Bebchuk argued something similar: we can’t blindly trust business leaders to make decisions on behalf of stakeholders. If stakeholder benefit is what we are after, we need a different kind of corporate governance.

Where do things stand? Today marks five years since the Rountable’s announcement, which the commemorated last week in a blog post. And their Purpose of a Corporation document is still linked from the About Us section of their homepage.

• But the most exciting developments of the last five years have not come from the CEOs of major companies or regulation, but from the small group of companies that have taken up Bebchuk’s call to rethink corporate governance in pursuit of purpose.

Watch the debate here:

The symbol means that the company has been evaluated by the B Lab, a third-party certification company that ensures that companies are living out their commitments to “an inclusive, equitable, and regenerative economy.” I remember seeing the logo for the first time in 2010 at GrayMatters Capital, which I think was the first B Lab-certified investment fund.

In the last few months, I’ve thought a lot about B Lab. It has seemed to me that employee ownership and B Lab movement grew in parallel, and that they had much more in common than has been taken advantage of, yet.

You can imagine I was excited, then, that B Lab sent a representative to our Purpose Trust Ownership Convening last month. And I listened intently this morning to this week’s episode of the ESOP Podcast featured Brian Taussig-Lux, former CEO of UnTours, the very first B Corporation:

To Brian’s knowledge, there were only two employee-owned B Corporations: King Arthur Baking Company (an ESOP) and Namaste Solar (a worker cooperative). Natural Investments became another when it converted to perpetual purpose trust ownership in 2023. A recent article from B Lab and an older one from NCEO point to even more.

Later this morning, I learned about the newest: Evenlode Investment, an employee-owned investment manager in the England, announced this week that it had a B Corporation. I also learned that last year, B Lab Europe hosted its own event focused on employee ownership.

If B Lab is about helping companies live out their values, and shared ownership is about making sure that the value created by a company is locked in and shared widely, might they be able to build off each other more strategically? RSF Finance’s Jasper van Brakel tackled this question in a February article worth reading in full. He starts swinging:

“If ESG is a foot in the door to an economy built around sustainability, inclusion and equity, then governance is the power that’s going to kick that door wide open and make way for real progress on corporate environmental and social performance.

… “We need to change who makes decisions more broadly, along with the interests they’re accountable to and the incentive structures they work within. If we want stakeholder capitalism, we need stakeholder governance.”

I took at look at the B Lab’s most recent draft standards to see how they are thinking about governance. Here are B Lab’s criteria for Purpose & Stakeholder Governance:

• The company has a defined public purpose contributing to a material positive impact on society and the environment.

• The company considers impacts on stakeholders in decision making.

• The company has adequate grievance procedures to receive, respond, and seek resolution to stakeholder grievances.

• The company manages marketing and communications activities responsibly.

• The company’s highest governing body has an explicit oversight role in monitoring the company's social and environmental impact and stakeholder considerations.

• The company is transparent about its social and environmental performance and its progress against the B Corp requirements.

It struck me that this section might be where the shared ownership rubber could meet the B Corporation road. Here are a few options based on principles from steward ownership and workplace democracy—offered humbly, as I know how hard it is to put together frameworks like this:

• The company's legal structure and governing documents explicitly incorporate its stated public purpose and commitment to stakeholder consideration.

  • This could be through a benefit corporation (which B Lab helped develop), purpose trust ownership, or other forms of steward ownership

• The company's highest governing body (e.g., board of directors) includes representation from stakeholder groups directly affected by the company's operations, such as employees, local communities, or relevant special interest groups.

  • This could be through purpose trust ownership or codetermination (stakeholders having board seats, like in Germany)

• The company implements democratic decision-making processes that give stakeholders, especially employees, a formal role in shaping policies, practices, and strategic directions that affect them.

  • This could include open book management or other expressions of workplace democracy

• The company's executive compensation and incentive structures are aligned with the achievement of its stated public purpose and stakeholder considerations.

  • This probably mean equity-sharing and/or profit-sharing

What would you change or add, dear reader? If you’d like to learn more, some other links I’ve found at the B Lab ↔ employee ownership intersection:

• The Employee-Owned B Corp: An Enterprise Design for the 21st Century (from 2018)

• Benefit corporations and employee ownership: A legal and ownership structure for the future (from 2022)

• Two purpose trust experts, Natalie Reitman-White from Purpose Owned and Greg Curtis from Patagonia, sat on a SOCAP panel with B Lab’s Sarah Schwimmer last October

TLDR: Last week at the Aspen Institute, we co-hosted the first Purpose Trust Ownership Convening, pulling together the investors and lawyers and consultants that are helping convert companies to purpose trust ownership.

Background: Last year, my colleague Jenny Everett and I started interviewing experts in purpose trust ownership.

• We joined up with Project Equity and Purpose Owned and, with the support of Aspen EOP and the Rutgers Institute, started planning for a one-day gathering of those experts. (Thanks to all our sponsors, listed there!)

• For many of these experts, it was the first time meeting or even hearing about the other people around the country working on similar structures.

• The purposes of the day, facilitated by my inimitable Liminal Advisors colleague Molly Alexander, were to learn about each other’s work, interrogate the uses and dangers of purpose trust ownership, and explore ways to build the field together.

The State of the Field

The team asked me to share a “state of the field” at the start of the day. Some of what I shared:

Where Things Stand: As best I can tell, the first employee ownership trust (EOT) in the United States was actually in the UK: With the help of Fieldfisher’s Graeme Nuttall, WATG converted to an EOT in 2014, ten years ago.

• According to our database, for the couple of years Chris Michael facilitated many of the conversions to EOTs in the US. In 2018, Organically Grown Company became the first perpetual purpose trust (PPT).

• Today, ten years later, we’ve come across 45 purpose trusts in the US (more on definitions in a moment), with 4,000-12,000 employees, based on LinkedIn searches. The majority of them are on the West Coast, and the largest number of them are in food and agriculture, followed by manufacturing and software.

• Oregon now has a statute recognizing stewardship trusts, and Illinois is on its way to creating one recognizing virtuous trusts. According to Susan Gary, 12-14 states have started down the path of adjusting their statues and trust codes to allow for purpose trust-based ownership of companies.

Five Tensions: I also shared what I see as five tensions within the purpose trust ownership field that need to be resolved or managed:

• Getting clarity on language. There’s not agreement on what to call these things, yet. As best I can tell, we’re talking about directed, long-term--maybe perpetual--non-charitable purpose trusts without an ascertainable beneficiary, that own corporate and/or real estate assets, and whose purposes include the benefit of employees, communities, the planet, or other stakeholders; and in which the governance of the trust likely includes some governance by those stakeholders by way of a stewardship committee.

  • I’ve heard these called employee ownership trusts, perpetual purpose trusts, stewardship trusts, virtuous trusts, business purpose trusts, employee-centered benefit trusts, etc. Personally, I’m warming to stewardship trusts, but that’s just me (and Oregon).

  • Uncertainty about this is reflected in uncertainty about what to call the wider fields they belong to: alternative ownership, shared ownership, steward ownership, distributed ownership, broad-based ownership, etc.

• Balancing the technical and the mimetic. Related to this tension is one between getting technical clarity on what these trusts are and how they operate, along with what Zoe Schlag called the mimetic way of talking about them.

  • In other words, what are the simple articulations of these models that business owners and their lawyers and advisors, who don’t initially care about the technical details of them, will hear about and get interested in?

  • It seems to me that one answer is in the (maybe technically incorrect) phrase employee ownership trust, which seems to get owners thinking about employee ownership, also thinking about purpose trust ownership.

• Balancing competition and collaboration. Both these things can be good, and they need to be balanced in two ways.

  • Among purpose trust ownership advocates, there can’t be too much collaboration. It is an industry after all, and then we’d be a cartel! Plus, competition is generative, and to grow an industry in a capitalist system, people need to make money.

    • But there are ways that competitors can collaborate. This happens all the time, across industries. Hence our Purpose Trust Ownership Convening!

  • The same tension exists in purpose trust ownership’s relationship to ESOPs and worker cooperatives, the more well-known versions of employee ownership.

    • The tension: how might we work ecumenically to contribute to the growth of employee ownership more broadly, while also carving out a niche for purpose trust ownership?

• Balancing speed, scale, and quality. The US and the world face big challenges. If purpose trust ownership is to help address them, we have to move quickly, and we have to get to scale fast. But when we’re setting up something this long-term, we also can’t afford to move fast and break things.

  • The field has to figure out how to scale quickly, with quality tools and documents and best practices.

• Determining how to organize ourselves. Nobel Prize-winning political scientist Elinor Ostrom discovered in her work that when groups of people have time and space to build trust with each other through repeated interaction, they can overcome a lot of otherwise intractable problems.

  • More recently, sociologists have argued that in movement-building, it doesn’t make sense to seek too much alignment before starting to act together.

  • Put simply: talking → aligning → acting isn’t as effective as acting → talking → aligning.

What’s Next: My hope is that after ten years of action, this week’s talking generates just enough alignment for ad hoc working groups to sprout up to take advantage of some of the opportunities we surfaced.

• There is so much coming. Up next, as best I can tell, are:

  • Project Equity’s Employee Ownership Equity Summit on May 6th

  • The next EOT Peer Gathering, hosted by NCEO, on May 8th

Watch this space!

When Yvon Chouinard, founder of Patagonia, transitioned the company to a purpose trust in 2022, it made headlines around the world and brought attention to an emerging form of corporate ownership. Patagonia, long hailed as a model for how to operate a company to the benefit of society and the planet, now exemplifies how to align a company’s ownership with its purpose.

Patagonia’s conversion is part of a broader movement to rethink the fundamentals of corporate ownership. A few years prior, Organically Grown Company, a large wholesale produce distributor out of Oregon, had done the same thing. In 2023, Clegg Auto, a retail service chain in Utah, did too. These very different companies faced the same problem: How could founders retire while perpetuating the intent of what they’ve built? How could they ensure the people who are creating the value, including workers and communities in which they operate, also share in the benefits? How could they grow without “selling out,” and enshrine their values for the long-term?”

Read the rest of our paper on the Harvard Advanced Leadership Initiative’s website.

The book dives into Patagonia’s unique ownership structure as it plays a central theme in the book. Despite remaining a for-profit entity, Patagonia’s profits are dedicated toward environmental causes instead of private shareholders or heirs. Their purpose trust differs from other trusts as it focuses on a specific non-charitable objective. The book is centered on guiding companies through the challenges of economic transformation. It advocates for strategies such as minimizing environmental impact, creating durable products, and establishing trust in interactions with both employees and customers. If you’re interested in reading more about The Patagonia Purpose Trust and The Holdfast Collective, check out the book here.

In Brief: Last April, reports began to swirl that billionaire Michael Bloomberg was looking to one day transition his stake in the media and financial conglomerate he founded to a Perpetual Purpose Trust. 

The Details: While no specific timeline or confirmation from Bloomberg has been provided, reports indicate that Bloomberg is interested in a model similar to that used by Patagonia CEO Yvon Chouiard. A steward ownership model would likely direct a portion – or even all – of the firm’s revenue to Bloomberg Philanthropies. In addition, the move would grant employees greater say, with voting rights vested firmly with those who are closest to the operation and management of the company. 

The Impact: Bloomberg’s announcement has major implications for the Employee Ownership and Employee Ownership Trust movements. The announcement resulted in increased visibility of a structure that is relatively unknown in the United States. Media coverage of the rumored move increased the profile of the structure both in the business and political communities. The eventual transition could prove even more impactful, as Bloomberg would serve as another example of a major corporation shifting to a new form of ownership. Finally, the rumors may encourage politicians to create the necessary legal and regulatory structures for such a significant transition. 

The Questions: Currently, Patagonia offers the only example of a major corporation transitioning to a Perpetual Purpose Trust. For Bloomberg, this means many regulatory and structural questions still exist. These queries include -  how and to where profits will be distributed, who would the company’s trust committee consist of, and what the purpose of the trust will be. 

Go Deeper: Check out the original article here.

Photo by AronPW on Unsplash

In brief: For the last few weeks my colleague Jenny and I have been collecting stories about the purpose trusts in our database of perpetual purpose trusts, employee ownership trusts, and stewardship trusts in the US. Below is everything we’ve found so far.

Why it matters: In our conversations with purpose trust owners, advocates, and practitioners, Jenny and I have heard over and over again how important case studies of successful trust will be. This is one step in that direction.

A request: Do you know of other articles about these companies and organizations that should be listed here? Please drop them in the comments or send them our way!

Every Purpose Trust, Everywhere (in the US), All at Once

Articles about Employee-Focused Trusts

Montecito Estate Management

• Reshaping the Post-Pandemic Workplace: Employee Owned Businesses, Part 4 with Jennifer Lowe

Resource Development Associates

• Why we invested in RDA Consulting - Mission Driven Finance

Optimax Systems

• Optimax Systems | EOT Advisors 

• New Employee Ownership Trusts Demonstrate Viability in U.S. 

• EOT Case Study - Optimax Systems 

• Business Leadership in the Age of Aquarius | by Culturati Team 

• Job Quality and Employee Ownership: An Interview with Rick Plympton (CEO, Optimax) 

Arbor Assays

• Employee Ownership Trust for permanent worker ownership without repurchase liability

• The Arbor Assays Story 

CodeWeavers

• Discover a Better Way to Exit - Common Trust

• CodeWeavers Transitions to Employee Ownership Trust

• CodeWeavers Now Controlled By An Employee Ownership Trust - Phoronix 

Bioworks

• BioWorks | EOT Advisors

Caboose

• Caboose hobbies in Denver is on it's death bed | The Atlas Rescue Forum

ShopBot Tools

• CNC Press Release | ShopBot Tools | Employee Ownership

• ShopBot Tools: Becoming an Employee Ownership Trust (EOT)

• Open books and employee ownership - with Ted Hall on Apple Podcasts

• Stories | Ownership Transition Initiative 

• ShopBot Tools transitions to employee-ownership trust | Woodworking Network   

• The Time for Employee Ownership Is Now | NCEO  

Bicycle Technologies International

• BTI restructures as employee ownership trust

• Employee Ownership Trust Videos - EOT Law

• New Employee Ownership Trusts Demonstrate Viability in U.S.

• EOT Case Study - Bicycle Technologies International  

Clegg Auto

• A Utah auto shop demonstrates a pathway to worker ownership via a perpetual purpose trust - ImpactAlpha 

Firebrand Artisan Breads

• The Next Economy MBA (p56) 

• Firebrand Artisan Breads Case Study

• Firebrand Artisan Breads - How a local bakery is building inclusive wealth and transforming a community. 

• An Interview with Matt Kreutz of Firebrand Artisan Breads — Alternative Ownership Advisors

• Perpetual Trusts for Sharing vs. Shielding Wealth — Alternative Ownership Advisors 

Grand Central Bakery 

• Regenerative Business and Steward Ownership: A New Example for Passing On Your Business -Sarah Joannides (p14)  

• Grand Central Bakery to Become a “Perpetual Purpose Trust” to Preserve Its Values 

• Grand Central Bakery delays plans for independent trust ownership amid unstable economy

The Trust for Workers

• Shifting power, Meeting the Moment 

Wimberly Allison Tong and Goo (WATG) 

• Wimberly Allison Tong and Goo launches …

• An Introduction to Employee Ownership Trusts

• Employee ownership case studies Architects, designers …

• The Employee Ownership Trust (EOT): An ESOP Alternative

• UK: WATG: Employee-Owned Through A Perpetual Trust 

Metis Construction

• Employee Ownership Trusts – The New Kid on the Block

• Metis Construction – Seattle, WA

• An Introduction to Employee Ownership Trusts

• The Employee Ownership Trust (EOT): An ESOP Alternative

Equity Atlas

• Employee Ownership Trusts – The New Kid on the Block

• Reshaping the Post-Pandemic Workplace: Employee Owned Businesses, Part 5 with EOT Employee Panel 

• Perpetual Trusts for Sharing vs. Shielding Wealth — Alternative Ownership Advisors 

• Mapping the State of Social Enterprise and the Law 

Sandias Executive Search

• Press Release

• Sandias Executive Search announces leadership transition ...

Craftsman Technology Group

• Employee Ownership: Client Announcement

Paras and Associates

• Paras and Associates - EOT Advisors

• As CEO Retires, Paras and Associates Adopts Employee …

• What makes Berkeley a hotbed of worker co-ops? 

Articles about Purpose-Focused Trusts

Natural Investments

• The First Perpetual Purpose Trust in Financial Services

Hummingbird Wholesale

• Why we invested in Hummingbird Wholesale <- Mission Driven Finance 

• Our Next Chapter: Hummingbirds Become Owners

• Embedding Climate Action Into The Culture At Hummingbird Wholesale

Zingerman's

• Sharing the Next Big Step in Zingerman's History—A Perpetual Purpose Trust 

• Bonus Episode: Not Sold on ESOPs? There’s a New Alternative - 21 Hats 

• Ari's Top 5—A Perpetual Purpose Trust 

BioHabitats

• Purpose Over Profit: Locking in our mission forever

Berrett-Koehler

• Berrett-Koehler's Series B investment deck 

• Exiting to Employees Through Employee Ownership Trusts (p28) 

Patagonia

• PATAGONIA’S NEXT CHAPTER: EARTH IS NOW OUR ONLY SHAREHOLDER 

• Patagonia: "Earth Is Now Our Only Shareholder" 

• Patagonia, Purpose Trusts, and Stewardship Trusts— Business with a Purpose 

• A sustainability case study of Patagonia – more than just fuzzy fleeces and backpacks 

• Patagonia Case Study [3 of 4] – Strategy (Rebroadcast) — LIFT Economy 

Hobby Lobby

• Restoring Trust Through Trusts: Hobby Lobby CEO Is A Steward, Not An Owner

Organically Grown

• Heads up, investors: It’s not all about you

• Perpetual Trusts for Sharing vs. Shielding Wealth — Alternative Ownership Advisors 

• The Oregon Stewardship Trust: A New Type of Purpose …

• Perpetual Trusts for Sharing vs. Shielding Wealth

• Steward-ownership

• Exiting to Employees Through Employee Ownership Trusts

• Regenerative Business and Steward Ownership: A New Example for Passing On Your Business -Sarah Joannides (p11)

• The Employee Ownership Trust (EOT): An ESOP Alternative

• EXIT TO COMMUNITY: STRATEGIES FOR MULTI- …

• Mapping the State of Social Enterprise and the Law

• Natalie Reitman-White: Restructuring Organically Grown Co. to a Perpetual Purpose Trust — LIFT Economy

• Legal Issues in Social Entrepreneurship and Impact Investing   

California Harvesters

• Financing Conversions Through A Private ...

Local Ocean Seafoods 

• Regenerative Business and Steward Ownership: A New Example for Passing On Your Business -Sarah Joannides (p19)  

• Employee Ownership Transition Announcement

• How This Local Restaurant Is Taking The Patagonia …

• Organically Grown Co. launches investment banking arm …

Articles about Place-Focused Trusts

East Boston Neighborhood Trust

• Acquisition and Expansion of Affordable Housing in East Boston Announced 

Fresno Mixed-Income Neighborhood Trust

• Fresno's lawmakers push off bulk of Dyer's housing plan, demand refinement 

Kendall-Whittier Neighborhood Trust 

• Why Mixed-Income Neighborhood Trusts can help build wealth and opportunity - Where To Next

• David Kemper. Slaying Gentrification

Lykins Neighborhood Trust

• Why Mixed-Income Neighborhood Trusts can help build wealth and opportunity - Where To Next 

• Fourth Quarter Newsletter 

Kensington Corridor Trust 

• The Neighborhood Trust | Inclusive Economic Development Lab

• Community Wealth-Building Models

• Kensington Corridor Trust - Pixel Parlor

• Community Ownership: Emerging Models and Roles for Philanthropy A report for The Kresge Foundation   

Last month Travis Hayes from ACTEC interviewed Professor Emerita Susan Gary from the University of Oregon to discuss Patagonia’s Purpose Trust structure and purpose trusts generally. In September 2022, Patagonia’s founder, Yvon Chouinard, transferred his company’s voting stock to a Purpose Trust. Chouinard chose this business route primarily to ensure a continued emphasis on employee welfare and sustainable practices. Chouinard’s transfer was a gift, which Professor Gary finds unusual, as most owners typically make their transfers through sales in order to receive fair compensation for their involvement in the business.

Into the Legal Weeds on Purpose Trusts

Purpose Trusts, as the name implies, operate for a purpose, and thus, have no identifiable beneficiaries. Due to the lack of beneficiaries, each purpose trust has a trustee and a trust enforcer to enforce the trust itself. Additionally, it usually has a trust committee, which is usually composed of representatives from stakeholder groups, that helps direct the trustee. Given that available public information suggests Chouinard and his family’s continued advisory role, Professor Gary suspects they have a role in Patagonia’s trust committee.

Moreover, each purpose trusts has a trust agreement to provide a manual for how committee members are chosen. This will be different based on each business and business structure. If a founder’s family members continue to hold a directing role in the business, they could be committee members. However, uncertainty has grown surrounding the retained interest provision, section 2036, and whether a trust committee member involvement could be considered a retained interest. Professor Gary cautions that if a transfer is a gift, extra care should be taken regarding the extent to which family members continue to hold power.

Transitions usually occur through sales financed from three different sources. First, a sale could be financed through a company’s retained earnings. However, retained earnings are usually not sufficient. Secondly, sales could be financed through a loan paid back from future earnings. The type of loan they receive will depend on the business. For example, a business that emphasizes environmental or social impacts could go the social finance fund route. Lastly, a source of funding could be non-voting preferred stock, where a company issues non-voting stock to raise funds. Non-voting shareholders would receive a fixed dividend, as long as revenues are sufficient, but would have no voting rights.

So, what happens with the revenue and profits? A family that hopes to maintain an income stream for generations may choose to keep a small amount of non-voting stock. But what if the company has no beneficiaries? Patagonia’s profits, specifically, go to the 501(c)(4) social welfare organization for environmental purposes. Other companies choose to use their profits to focus on business growth and development. For further directions, the trust agreement may include a guideline for how profits are to be shared among employees. The trust committee could then direct distributions of any remaining profits toward additional profit sharing. Thus, while revenues are firstly used to pay costs, the remaining profits can be distributed to the benefit of stakeholders.

Why does Patagonia stand out? Patagonia serves a mission and a cause, where its emphasis is on sustainability initiatives and employee welfare. Other companies with missions, such as preserving good quality food for employees or delivering a good quality product that serves a community, may look at Patagonia’s legacy and model and may find that a purpose trust is a more adequate ownership structure for them. Patagonia can help create a ripple, and that’s why it is critical to the development and spreading of purpose trusts.

For more legal writing on purpose trusts, check out these resources from the American Bar Association:

• Real property, trust, and estate law: Non-Charitable Purpose Trusts: Past, Present, and Future

• The Purpose Trust Has A New Purpose

• Patagonia, Purpose Trusts, and Stewardship Trusts—Business with a Purpose

In Brief: In a move similar to Patagonia’s, an Oregon seafood restaurant has sold its operation to a perpetual purpose trust.

How It Works: Different from Patagonia founder Yvon Chouinard’s effective ‘donation’ of his company to a purpose trust, Local Ocean was purchased at a fair market price by a group of institutions dedicated to supporting a sustainable seafood industry. The institutions now operate as a separate legal entity, holding Local Ocean in a trust designed to serve the group’s mission. 

Why A Trust: Before making the move to employee ownership the leadership of Local Ocean considered multiple avenues, including ESOPs and a worker co-operative. However, in many cases ESOPs function as a retirement fund for long tenured employees, and co-operatives are difficult to operate when the employees - and therefore the owners - are constantly changing. Due to the high rate of turnover at Local Ocean and within the restaurant industry more widely, ownership ultimately decided on a purpose trust. 

Why It Matters: Steward ownership is currently one of the least common shared ownership structures. Aside from Patagonia - which enjoys few peers in size or scale - few employee-owned firms operate within the structure of a purpose trust. However, pioneers such as Local Ocean offer an example of how steward ownership works, and what a successful transition to a purpose trust looks like. In addition, Local Ocean shows how purpose trusts offer an alternative for businesses who are hesitant to switch to an employee- owned structure due to high rates of staff turnover. 

Go Deeper: Check out the original article on Local Ocean here.

Image Credit: Photo by Mike Bergmann on Unsplash

The founder of Patagonia recently did the unthinkable: he chose to commit profits towards helping the planet. But in an article for Bloomberg (which may also be restructured into a purpose trust), Devon Pendleton and Ben Steverman point out that while the planet may benefit from the deal, Chouinard will, too: in structuring Patagonia this way, he avoided 700 million dollars in taxes. Is the deal about tax avoidance or doing something good? And if it is both, is that ok, if it incentivizes others to do the same?

To me, these questions reflect a larger issue, which is a system that allows a few people to accumulate massive amounts of wealth. There are ways to level the playing field, including employee ownership and democratizing the workplace. As business owners plan to retire in record numbers in the next decade, now is the time to incentivize them to restructure their business into something more equitable.

In a recent interview, Chouinard used a slogan now associated with Alexandria Ocasio-Cortez: “every billionaire is a policy failure.” If a few more tax breaks are the policy solution to that failure, perhaps I can get on board.

Last year Patagonia’s owner converted the company into a purpose trust. As explained by the authors at ImpactAlpha:

“The Patagonia Purpose Trust will own all of the company’s voting stock (2% of the total stock). The Holdfast Collective, a new nonprofit organization, will own the other 98% of non-voting stock. Profits not reinvested into the business will transfer as dividends to the collective to finance nature-based solutions and biodiversity protection. Ventura, Calif.-based Patagonia will remain a B Corp. and continue to donate 1% of sales to grassroots activists.”

Learn more here:

• First, a primer on purpose trusts from June 2022 by the Purpose Foundation, now called Common Trust, a partner of EO+WD. Exiting to Employees Through Ownership Trusts.

• Second, a Medium post on Patagonia, purpose trusts, and steward ownership from Purpose Foundation in response to the sale: “The Patagonia Structure in the Context of Steward-Ownership.”

• Third, EO+WD maintains a public available database of ownership trusts in the United States. You can access and contribute to that data on our Harvard Dataverse instance.

• And if you’d like to go straight the source, here is Patagonia’s press release, “Earth is Now Our Only Shareholder.”