This Company Pioneered a New Business Structure to Preserve Its Mission

Summary

A purpose trust means that Organically Grown Company will have a single owner devoted only to investing its profits back into the business.

The new owner of Organically Grown Company, an Oregon-based organic produce distributor, isn’t a person but a trust, created to help the company maintain its social and environmental mission as it grows. The company is the first in the U.S. to use something called purpose trust law to restructure itself.

“Most ownership structures are still about an owner that expects to pull out profit regularly from the company as well as someday sell their stock for more than they bought it for,” says Natalie Reitman-White, VP of “organizational vitality” and trade advocacy at Organically Grown Company. “This stops that cycle because we’ll have a single owner–a trust that will hold the company ownership stock into perpetuity–that never wants to extract a profit and never wants to sell the company.” Profits, instead, will be continually reinvested in the company’s mission and stakeholders.

The company has experimented with several forms over its 40-year history. When it was founded in the late 1970s, it was a nonprofit, set up to help farmers with organic growing methods. When the founders realized that the best way to promote organic produce would be to help farmers sell it, they became a business. They later became a coop, owned by farmers, and then–to be able to include employees in ownership–became an S-corporation. As they grew, because an S-corp can only have a limited number of owners, they added an employee stock ownership plan.