RSF-Purpose Initiative Responds to Demand for Mission-First Business Models
Wednesday, October 23, 2019
RSF Social Finance and Purpose collaborate to make alternative structures accessible for businesses that want to grow without sacrificing purpose; publish their first report
SAN FRANCISCO, October 22, 2019 — A grassroots global movement is emerging behind mission-first business models rooted in stakeholder governance—rather than shareholder control—and RSF Social Finance and the Purpose Foundation are collaborating to help that movement grow. Today they released a report that serves as a handbook for companies exploring alternative business structures and financing.
RSF and Purpose recognized that a generation of social entrepreneurs is approaching retirement age and grappling with how to exit in a way that protects their company’s social and environmental mission while enabling continued growth. That challenge, plus the knowledge that succeeding waves of social entrepreneurs face the same dilemmas, prompted the two organizations to launch an initiative to make mission-first models accessible to U.S.-based businesses.
“The world urgently needs to move from an extractive to a regenerative economy. That requires fundamentally rethinking how businesses are owned, controlled and incentivized,” said Jasper van Brakel, CEO of RSF Social Finance. “Through our work with Purpose, RSF seeks to accelerate a shift to alternative business structures designed to build value for all stakeholders.”
Report details current options, with pros and cons
“State of Alternative Ownership in the U.S.: Emerging Trends in Steward Ownership and Alternative Financing” dives into what’s driving the demand for alternatives to traditional business structures, the pros and cons of existing models, financing options and solutions to common concerns about mission-first models. The report is based on a year of field research and consulting with companies considering mission-first conversions.
“We learned that social entrepreneurs, business leaders and investors are hungry for new models that enable them to balance profits and purpose,” said Camille Canon, U.S. partner for the Purpose Foundation. “Steward ownership, for example, is emerging as a powerful tool in the U.S. for businesses looking to preserve their mission, maintain their independence and show what an economy that works for everyone looks like.”
Organically Grown Company pioneers alternative ownership
Portland, Oregon–based Organically Grown Company (OGC) illustrates the steward ownership concept. Last year OGC, one of the largest independent organic produce distributors in the country, restructured as a perpetual purpose trust in order to scale the business and transition its founders without “selling out”—and without ever being sold. Previously employee- and grower-owned, OGC bought back all the shares from its stockholders and transferred them to the Sustainable Food and Agriculture Perpetual Purpose Trust, which ultimately will hold 100 percent of the ownership rights.
The new structure removes the pressure to maximize short-term quarterly profits and exit value for shareholders. Instead, OGC is creating long-term returns to mission-aligned evergreen investors and sharing the balance of profits with stakeholders, including farmers, co-workers, customers and community.
RSF and Purpose both supported the conversion, and its success prompted the RSF-Purpose initiative, which so far has resulted in 10 to 12 companies taking steps to convert their ownership structure.
Leaders from RSF and Purpose will discuss the report findings and the movement at the SOCAP conference Oct. 23 in a 2:45–3:45 p.m. panel session, “The State of Alternative Ownership and Finance in the U.S.”