MEMBERS MAKING A DIFFERENCE: Organically Grown Company

Maintaining independence in perpetuity 

Imagine a company where the largest stockholder never wants to sell its stock or take a profit. And where leadership is directed to focus 100 percent on its founding purpose: to deliver a positive impact on people and planet through its products and services. Organically Grown Company (OGC) recently became that company and the first U.S. business to utilize trust law to structure its operational and funding model to support purpose-based entrepreneurship, ownership and succession.

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 nation and 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” – by bringing a new ownership model to the marketplace.

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.

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.

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 crucial financing to enable the conversion. She added that OGC is 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.” 

To develop the concept for and implement the Purpose Trust, OGC partnered with attorney Ronald D. McFall, a leading expert in cooperative law, and a team from his firm, Stoel Rives LLP. With one of the largest food and agribusiness law practices in the United States, and with comprehensive experience across every tier of the industry, the Stoel Rives team was uniquely prepared to assist OGC with this landmark change.

“Organically Grown Company is on the leading edge of a movement to shift the paradigm in business to ‘steward ownership’ where companies are self-owned by their community of stakeholders for the long-term, rather than a commodity to be bought and sold,” says Natalie Reitman-White, VP of Organizational Vitality and Trade Advocacy at OGC. “We are excited to forge partnerships to spread these models.” //