Long-time followers of the organic food industry have seen many of their favorite companies bought out by corporations that do not share their values. General Mills bought Annie’s a decade ago. Dairy brand Horizon Organic is now owned by the global investment firm Platinum Equity. Kellanova (formerly Kellogg’s), Colgate-Palmolive, Clorox, Coca-Cola, and PepsiCo are also among the corporations that now own some of the organic food industry’s much-loved brands.
Organically Grown Company (OGC), the nation’s largest wholesale distributor of organic fresh produce, did not want to fall victim to the acquisition trend.
On one end of the distribution chain, OGC works with organic farmers, large and small. On the other end, OGC delivers the farmers’ fresh produce to grocers, processors, restaurants, and home delivery services. The Eugene, OR-based company also offers sourcing, logistics, planning, and merchandising in the organic agriculture space.
OGC is known for its principled relationships with organic farmers, employees, customers, investors, and nonprofit allies—relationships it did not want compromised under the ownership of a corporation that does not share OGC’s vision of organic agriculture’s power to improve the health of communities and the planet. To ensure its independence, OGC radically changed its corporate structure to Purpose Trust ownership in 2018, becoming the first Purpose Trust in the U.S.
A Purpose Trust incorporates the purpose of the company into the legal documents that guide the trust’s operations, restricting ownership to the trust itself. The trust is overseen by a committee charged to manage or “steward” the trust in alignment with its purpose and principles. Profit is critical to the trust’s success, but unlike the typical corporation, profit isn’t the only thing that matters. Purpose matters as well.
The initial conversion from corporation to Purpose Trust requires investor capital. For OGC, some Natural Investments clients stepped in as investors. Although OGC is not currently offering additional investment opportunities, investments by Natural Investments clients played an important role in OGC’s creation of its Purpose Trust. Those investments illustrate the win-win possibilities of sound investing. Investors got to participate in OGC’s mission and impact, as well as earn a reasonable return on their investment, while OGC gained access to the capital it needed to convert the company to a Perpetual Purpose Trust, ensuring its mission and contributions can move forward.
Under the OGC Purpose Trust structure, other stakeholders can benefit from OGC’s performance through an employee profit share plan, fair prices for farmers, green distribution systems and in-house business practices, a grant program open to stakeholders that awards financial and produce donations, and industry advocacy and innovation to help the industry at-large. To operate strictly for profit-maximization would sideline many of these stakeholders who now benefit under the Purpose Trust.
OGC’s Purpose Trust was a model for Natural Investments’ 2023 conversion to a Purpose Trust, making Natural Investments the first financial services company to operate under Purpose Trust ownership.
This publication is distributed to clients and friends of Natural Investments, LLC (NI). NI is an investment adviser registered with the SEC. It is for educational purposes only and is not intended to contain recommendations or solicit sales of any specific investment. Authors, representatives, or related persons of NI may own securities mentioned in here.
