For Organically Grown Company (OGC), the move to a Perpetual Purpose Trust (PPT) in 2018 was not only a legal and governance shift but also a financial one. To realize the new ownership structure, OGC needed to buy out its former shareholders – farmers, employees, and ESOP participants – without compromising the company’s mission or stability. Central to the redesign was the development of a waterfall model, which balanced investor returns with reinvestment needs by structuring profits to first cover operations and debt, then provide capped dividends to investors, and finally support employees, farmers, and community allies in line with OGC’s mission. The transition was made possible through the backing of three pioneering investors – RSF Social Finance, Purpose Evergreen Capital, and Candide Group. Today, OGC stands as one of the largest independent organic produce distributors in the United States, recognized as a trailblazer in steward-ownership and a proof point that aligned capital can sustain mission-driven business at scale.
It was really a co-creative process … everybody was thinking what is the right balance, and not what is my greatest interest.
For Organically Grown Company (OGC), setting up the Sustainable Food & Agriculture Perpetual Purpose Trust (SFA PPT) in 2018 represented not just a shift in governance, but a redesign of its financial foundations. The transition presented a central challenge: how to offer investors fair, risk-adjusted returns while ensuring that purpose, not profit, remained the company’s guiding principle? And, how to honor broad stakeholder representation without jeopardizing OGC’s independence?
“Independence is important to us because we want those who are active in OGC’s initiatives and business efforts to be able to control our destiny,” explained David Lively, pioneer emeritus and founding farmer of OGC. “Selling out could compromise our ability to do that. We founded this business to carry out a mission that is multi-generational; we need our ownership structure to support our mission now and in perpetuity.”
In order to buy out previous shareholders and recapitalize its business, OGC leveraged a combination of debt and equity and collaborated with its investors to design a deal structure that would balance both profits and governance responsibilities between the company and its stakeholder groups.
Making the waterfall work in practice required substantial capital and a carefully staged process. First, RSF Social Finance provided debt to buy back ESOP shares, consolidating 51% of the company under the Sustainable Food & Agriculture Perpetual Purpose Trust (SFA PPT). Next, Purpose Evergreen Capital (PEC) and Candide Group supplied patient, non-voting preferred equity to buy out remaining farmer-owners. These investors accepted capped returns and long-term horizons, reflecting alignment with OGC’s mission.
“Our challenge as preferred equity investors was to design an equity investment in a context where an ‘exit’ is off the table, and where purpose is explicitly being placed ahead of investor returns,” said Aner-Ben Ami of Candide Group.
At the heart of OGC’s financing structure is the waterfall model:
The model also includes a tiered system for surplus allocation: 60% of additional profits beyond base allocations are distributed among stakeholder groups until investors reach a predefined dividend threshold, after which 80% of further profits flow to stakeholders. By explicitly defining the order, conditions, and caps for distributions, OGC has created a transparent and purpose-aligned system.
Governance under the SFA PPT is deeply intertwined with financing. The Trust Protector Committee (TPC) – elected by employees, farmers, investors, customers, and community allies – appoints the OGC Board and ensures adherence to its mission (for details on governance, see the OGC case in the SO in Practice chapter). The Trust, as the legal owner of all common stock, safeguards the company’s independence and long-term purpose. Investors hold non-voting preferred shares but participate as a key stakeholder group, influencing governance through the TPC without controlling the company.
The transition to the Perpetual Purpose Trust (PPT) was complex. OGC faced legal, financial, and operational challenges, including structuring debt without personal guarantees and designing investor agreements that balanced risk, return, and mission alignment.
OGC has maintained independence, lowered administrative costs compared to an ESOP, and enabled values-aligned investment. Employees, farmers, and community members share in its success while investors support long-term growth without control. Embedding steward-ownership in governance and finance protects the mission and ensures fair participation, making OGC one of the largest independent organic produce distributors in the U.S.