For Oregon’s mission-driven businesses, one of the biggest wins during the 2019 Legislative Session was Governor Kate Brown signing into law a bill making Oregon the first state in the nation to adopt a new alternative ownership option called the Stewardship Trust.
House Bill 2598 was sponsored by Representative Julie Fahey (D-Eugene), a longtime business consultant who recognized that private sector leaders are hungry for innovative tools to ensure that the legacy of their businesses survive and continue to operate according to their mission through growth and succession. The new law, which goes into effect in January 2020, is part of a growing movement driven by social enterprise and impact investors that seeks to find a new relationship to ownership that enables a business to be purpose-led, community-minded and independent into perpetuity.
Oregon-based organic produce distributor Organically Grown Company (OGC) spearheaded the initiative supported by Purpose Network U.S. as part of their commitment to educating purpose-focused businesses about stewardship ownership models and legal entities, nationally and internationally. In 2018, OGC became the first U.S. business to utilize trust law to structure its operational and funding model to support purpose-based entrepreneurship, ownership and succession of retiring founders.
The new law will modify the Oregon Uniform Trust code to add the Stewardship Trust model, which works as follows:
- The trust can hold a company’s stock ownership indefinitely so long as the company stays viable.
- Founders can transfer their shares into Stewardship Trust to ensure the ongoing operation of the business with both defined financial and non-financial purposes.
- The profit is directed to be primarily reinvested in the company’s mission and can also be distributed to stakeholder groups at the direction of a Trust Stewardship Committee.
- Depending on the business, distributions can be made to employees, customers, the community or investors holding non-voting preferred stock.
“OGC was founded on the vision to not simply to make money, but to do good,” says CEO Elizabeth Nardi. “This kind of entrepreneurial legacy and spirit is shared by companies across the state and makes Oregon stronger and we believe that businesses shouldn’t have to forego their mission and values to grow. The Stewardship Trust is a business structure that focuses on financial and non-financial values, allowing a company to be successful commercially while being responsible to employees, local communities, and true to its mission.”
OGC looks forward to the opportunity to domicile their Trust in the state of Oregon in the new year.
Source: Organically Grown Company