The succession challenge

By the mid-2010s, OGC faced a critical juncture. Retirement plans of many long-time farmer-owners confronted the company with the growing challenge of funding share repurchases within its ownership structure, while still ensuring sufficient capital for reinvestment and long-term mission alignment. Without a fundamental change, the existing structure could increasingly pull attention toward short-term financial requirements, rather than supporting long-term purpose. OGC recognized that these were not challenges that could be solved through incremental adjustments and began exploring more fundamental ownership approaches capable of safeguarding its mission over the long term while enabling the company to operate, grow, and succeed in service of that purpose.

“We were trying to be stewards of the business. But a stock ownership plan ties you to a fair market valuation and it’s comparing you to similar companies in your industry who may not run them for mission maximization as we do. If we got to a certain level, our hands would be forced by law. We wanted to keep OGC to its mission for the long haul and not be bought and end up in the wrong hands because employees or anyone else wanted to sell,” explained Nathalie Reitman-White, VP of Organizational Vitality and Trade Advocacy at Organically Grown Company (OGC).

 

Setting up the Perpetual Purpose Trust to embed steward-ownership

That search ultimately led OGC to steward-ownership as a guiding logic – and to the Perpetual Purpose Trust as the legal vehicle through which those principles could be deliberately and durably implemented.

In 2018, OGC took a groundbreaking step and transitioned into a Perpetual Purpose Trust (PPT) structure, becoming one of the first U.S. companies to adopt this model. 

Putting design into practice required access to aligned, mission-supporting capital. This capital allowed OGC to buy back all shares from the company’s previous owners and employee stock plan and transfer them to the Sustainable Food and Agriculture Perpetual Purpose Trust (SFA PPT), structured as an Oregon Benefit Company and holding the majority of voting rights. Laying these groundworks enabled OGC to embed governance and ownership mechanisms that protect the company’s mission, ensure long-term and purpose-driven decision-making, and prevent sale or takeover.

True to OGC’s longstanding commitment to shared stewardship and stakeholder engagement, the transition process itself was highly participatory, reflecting the company’s values and respect for the voices of employees, growers, and mission-aligned partners. While the process was not without its challenges, it also demonstrated the depth of commitment amongst the stakeholders, but also within OGC’s leadership to actively resolve barriers and navigate structural and legal complexity rather than compromise the mission.

“The deal almost didn’t happen because we couldn’t find a trustee. Ultimately, our vice president of finance stepped in to be the trustee for six months in order for it to happen. So it was really a hero's journey.’” – Brenna Davis 

Employees and growers voted to approve the sale of their shares to the trust, while some former board members helped design the transition and acted as early advisors and supporters. Shareholders were also offered the opportunity to convert common stock into preferred stock and participate in governance roles. 

Today, OGC’s SFA PPT forms the legal backbone of the company’s steward-ownership model, serving as a permanent legal guardian for the company, protecting its independence and mission over the long term. To operationalize these protections in day-to-day decision-making, governance is shared across three bodies, each with clearly defined roles and responsibilities, creating a system of checks and balances:

• Corporate Trustee

The Corporate Trustee is responsible for the administration of the trust and the formalities of owning the common stock. The Corporate Trustee casts votes as a shareholder, and it oversees tax reporting and distributions for the trust. The original trustee is appointed in the trust agreement, with the Trust Protector Committee able to remove or replace them in the future.

• Trust Protector Committee

While governance authority is shared across multiple bodies, the Trust Protector Committee represents the core of OGC’s multi-stakeholder approach, serving as the primary steward of the company’s mission and values. It consists of employees, growers, customers, investors, and community representatives, including leaders such as Joe Rogoff and George Siemon. The committee approves distributions and elects the operational Board of Directors, but cannot unilaterally change the trust’s purpose. 

• Trust Enforcer

Acting as the ultimate safeguard, the Trust Enforcer ensures that the Trust, the Corporate Trustee, and the Trust Protector Committee all operate according to the Trust Agreement. They can review financing, address stakeholder grievances, and take legal action if the Trust’s purposes are compromised.

Together, this governance structure supports shared stewardship and long-term resilience, while also enabling the integration of aligned capital. Investors participate through non-voting preferred shares, with returns designed to be mission-aligned rather than conferring control over the company.

Financing the transition to steward-ownership

Translating steward-ownership principles into practice required a concrete financial solution, as it fundamentally changes how value flows through a company. For OGC, moving away from previous ownership structures that treated shares as extractable financial assets meant (instead) designing capital arrangements in which profit would serve the company’s purpose over the long term. To do so, OGC needed to buy out its former shareholders – farmers, employees, and ESOP participants – whose existing claims created ongoing financial obligations and potential pressures. Resolving these ownership claims was essential to preserving OGC’s mission, financial stability, and long-term independence within the new structure, where control and capital were intentionally decoupled. 

The setup of the Perpetual Purpose Trust (PPT) provided a legal and governance foundation for this step, creating a flexible framework in which OGC could intentionally redesign ownership and capital. Steward-ownership principles were embedded through deliberate choices: separating control from financial claims, capping extractive returns, and (OGC-specific) including multi-stakeholder oversight. This combination of legal structure, aligned investors, and collaborative design allowed OGC to protect its mission while reshaping how capital could enter, circulate, and exit the business, ensuring that financing reinforced long-term purpose rather than undermined it. The transition process sparked a very special moment of innovation, as OGC and its stakeholders forged a new model for long-term purpose-orientation and shared ownership. 

“It was really a co-creative process … everybody was thinking ‘what is the right balance’, and not ‘what is my greatest interest’.” – Matt Mrozcek, Vice President of Finance at OGC

 

From principles to an aligned capital structure 

Making the steward-ownership transition possible required aligned investors and a carefully structured financial framework, as well as mechanisms that translated principles into practice. To buy out previous shareholders and to recapitalize, OGC worked closely with RSF Social Finance, Purpose Evergreen Capital, and Candide Group. The three provided a mix of debt and patient, non-voting preferred equity; all reflecting a shared commitment to financing structures that support steward-ownership – whether by enabling companies already steward-owned or by facilitating transitions toward such models. Beyond providing capital, their participation helped demonstrate how financing itself can be structured to reinforce long-term mission alignment, setting practical examples for aligned capital to function both within OGC and in the broader field of alternative ownership. Having investors willing to accept capped returns and long-term horizons was essential, as it provided the capital needed to execute the transition while preserving mission alignment and independence.

Translating OGC’s steward-ownership principles into practice required more than securing aligned capital – it demanded a clear, enforceable framework for allocating funds, whilst also meeting OGC’s multi-stakeholder approach. The company needed a mechanism to embed purpose into financial flows, ensuring operational needs were met first, followed by capped investor returns, and then distributions to employees, farmers, and community initiatives, all in alignment with OGC’s mission. To meet this need, the waterfall model was developed, creating a structured, step-by-step system for how capital moves through the business in service of both sustainability and stewardship. Here, a careful deal design ensured that governance, capital, and stakeholder distributions worked in tandem to reinforce long-term mission alignment, balancing investor returns, reinvestment, and stakeholder engagement. 

 

OGC’s waterfall model: embedding purpose into financial flows

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 SFA PPT. Next, Purpose Evergreen Capital (PEC) and Candide Group supplied patient, non-voting preferred equity to buy out the remaining farmer-owners. All three 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.

Today, the waterfall model stands at the heart of OGC’s financing structure:

• First, all operational costs and debt obligations are covered.

• Next, preferred investors receive cumulative, capped dividends.

• After these obligations, remaining profits are allocated to employees, farmers, and community initiatives.

The model 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 created a transparent and purpose-aligned system.

“So this ensures that financial flows reinforce the company’s purpose, supporting employees, farmers, investors, and community initiatives in alignment with OGC’s long-term mission. It really is a full circle design. It is a system, a feedback system, and it’s exciting to be a part of.” - Brenna Davis, CEO of OGC

 

Sustaining purpose and shared success

In the case of OGC, steward-ownership was not the starting point, but the outcome of a decades-long journey through different ownership forms. Over time, OGC had repeatedly encountered the same core challenge: how to finance succession and continued reinvestment while remaining independent and true to its mission.

Adopting the PPT structure and intentionally designing it to legally embed the steward-ownership principles allowed OGC to address this challenge directly. By separating control from capital, embedding a multi-stakeholder governance, and protecting the company from sale or takeover, OGC created an ownership structure designed to meet their needs.

To make this transition viable, OGC was able to raise aligned capital and structure its financing accordingly to buy out existing shareholders while avoiding renewed pressure for growth or exit. Through the waterfall model, employees, farmers, and community members share in the company’s success, while investors support long-term development without holding control rights.