Leading US organic wholesaler Organically Grown Company (OGC) has become the first company in America to be owned by a perpetual purpose trust, allowing it to focus on maximising purpose, not profits – and never having to be worried about being sold to a bigger food company.
As one of the founders of the organic marketplace in 1978, OGC is no stranger to trailblazing. For 40 years, it has been an industry leader, promoting health through organic agriculture and corporate responsibility through sustainable business practices. Now, among the largest independent organic produce distributors in the US, moving more than 100 million pounds of fresh fruit and vegetables across the Pacific Northwest region last year, OGC is addressing one of the most common business challenges of our times, how does a values-based business scale and transition its founders without “selling out”. It believes the solution is to bring a new ownership model to the marketplace.
“…OGC is addressing one of the most common business challenges of our times, how does a values-based business scale and transition its founders without ‘selling out'”
Previously employee- and grower-owned, OGC is making a bold move to buy back all the shares from its stockholders and transfer them to the Sustainable Food and Agriculture Perpetual Purpose Trust. The Trust, created by the company, will eventually hold 100 percent of the ownership rights and will ensure that the company delivers positive economic, social and environmental impact and maintains its independence into perpetuity, never to be sold. The Trust is overseen by a committee whose members are organic industry veteran leaders including Joe Rogoff, a former Whole Foods Market President, and Organic Valley CEO George Siemon.
Maximising purpose, not profits
Through this new structure, the pressure to maximize short-term quarterly profits and exit-value for shareholders is removed. Instead, OGC will maximize “purpose” by creating long-term returns to mission-aligned evergreen investors and sharing the balance of profits with their stakeholders, including farmers, coworkers, customers and community.
“This groundbreaking ownership model embeds OGC’s commitment to organic and sustainable agriculture, and corporate, social and environmental stewardship into our governance and financing structure. Placing the company into a Purpose Trust ensures that we stay focused on our mission as North Star, share real-time rewards with our stakeholders and have aligned financing to increase our impact,” said Elizabeth Nardi, CEO of Organically Grown Company.
Swerving the mission
In purpose-run companies, profits are a means to an end but not an end itself, and are primarily reinvested to serve the mission. Control rights and responsibility lie with the staff who are tasked with producing long-term value rather than immediate financial returns.
“The Purpose Trust provides a new model for the social enterprise sector, which is hungry for alternative ownership structures,” said Kate Danaher, senior director, Integrated Capital at RSF Social Finance, which provided financing to enable the conversion (a $10 million land and $1 million of working capital according to a report by Forbes) She added that OGC was an excellent fit with RSF’s work to transform the food system and provide the kind of capital social enterprises need to achieve their mission. “The Purpose Trust provides an option for entrepreneurs and investors that has not existed before, and I expect an increasing number of social enterprises to seriously consider this path.”