Can a business be owned by its purpose? A growing number of Oregon companies say yes.

Gavin McComas poured a cup of Pu’er tea and handed it to a cashier at Sundance Natural Foods on a recent sunny afternoon in Eugene.

“Maintaining a positive, nourishing vibe at the store,” the unassuming longtime leader of the organic grocery store said, “is central to taking care of our staff and our customers.”

Since 1971, Sundance has been a neighborhood staple nestled in South Eugene. Hundreds — if not thousands — of people have worked there over the decades, including this reporter from 2006 to 2015. For more than 30 years, McComas was the owner, until October 2023 when Sundance became owned by its purpose. That’s right, it’s purpose.

That’s when McComas joined a small but growing number of U.S. business owners choosing to sell or gift their company to a trust, instead of selling to a person or another company, so they can protect its values even when the owners are gone. The model is called a “perpetual purpose trust” and offers independent business owners a new way to preserve their companies.

Perpetual purpose trusts have become more visible since 2022, when outdoor clothing company Patagonia made the transition. But the structure premiered in the U.S. in 2018, when an Oregon-based produce distribution company became owned by a trust that’s set up to require the company to run according to its purpose.

Protecting a company’s purpose — like a sense of belonging

Cashier Eva Sway has worked at Sundance on and off for more than 7 years — and she’s pregnant with her first kid.

“I love it here,” Sway said. “It’s such a dear place to me. It’s like a home and a sense of belonging.”

It’s that sense of home that Sundance wants to protect. Regular customers often comment on the friendly staff and high-quality products, especially the bounty of locally grown fruits and vegetables. Employees enjoy health care benefits, profit-sharing checks, and discounts on food and supplements. McComas has built employee gatherings, like river rafting trips and potlucks, into the culture of the store.

And recently — especially over the last decade — he’s been thinking about how to preserve that culture.

Four years ago, McComas watched as one of Sundance’s main produce suppliers, Organically Grown Company, became a perpetual purpose trust.

Natalie Reitman-White worked at OGC at the time and took on the task of figuring out how to help some of the founders exit the company.

“The problem was, we had aging owners,” Reitman-White said. “We had the original farmers and employees who had started the company, who were the owners, and we were trying to figure out what our ownership succession plan was.”

Reitman-White studied different ownership models, including in some European countries.

She proposed something pretty novel in the U.S.: selling OGC to a trust set up to maintain its purpose. For the produce distributor, that purpose is sustainably distributing organic produce and treating employees, farmers and customers well.

Reitman-White said it works similarly to any other business sale. The owner can either gift the company or sell it to the trust.

“The difference is that, once you’ve paid for it and put it into a purpose trust, then you never need to transfer ownership again,” Reitman-White said. “Because, unlike a person, a trust will never die and never needs any income.”

Instead of going to an owner, the company’s profits are reinvested into the business, shared with employees or donated, or a combination of those things.

The business itself has the same structure — for example, it could still be an LLC or a C corporation — but instead of being owned by individuals or shareholders, it’s now owned by the trust.

Re-writing Oregon law to support businesses with a purpose

When OGC was making the transition, Reitman-White found one hang-up: Oregon laws weren’t favorable to a purpose trust structure for a business. At the time, OGC set up its trust in Delaware, but she wanted Oregon businesses to be able to make the switch.

She got in touch with University of Oregon Law Professor Emerita Susan Gary, who had experience both drafting legislation and working with trusts.

“It’s very different from what I was used to in working with private trusts or even with charitable trusts,” Gary said. “But when I figured it out, it was brilliant.”

Brilliant, she said, because it takes away the economic incentive to operate the business for the highest profit or to sell the business to the highest bidder. Basically, it’s a way to sell the business without selling out, Gary said.

Gary helped draft a bill that passed the Oregon legislature in 2019, making the state ideal for purpose trust businesses.

Both Gary and Reitman-White say when Patagonia became a purpose trust, that helped make the structure more popular.

Reitman-White has started her own consulting firm helping businesses transition to the model. She’s worked with a wide range of businesses of different sizes, including Local Ocean seafood restaurant in Newport and Vernier Science Education in Beaverton.

Back at Sundance, McComas said at first he was intimidated by Organically Grown Companies’ purpose trust structure. He thought it would work for medium-sized companies like OGC or global ones like Patagonia — not for a small store like Sundance.

But a workshop at a conference for independent food retailers showed him it could be a fairly simple structure. Last year, McComas gave the fewer-than-90-employee business to a trust.

“I chose to donate the business,” he said. “I don’t have any remuneration from that sale, and I hope to continue to work here.”

McComas said he still owns a couple of the buildings housing Sundance and collects a small amount of rent. Between that and Social Security, he says he’s taken care of.

And now Sundance has five people tasked with maintaining its purpose: three on the trust stewardship committee, plus a trustee and the trust enforcer. The things the store has always done for workers — discounts for employees, profit-sharing checks, and creating a sense of belonging — are now codified in the business structure.

McComas says when he explains to customers what the trust is, they’re reassured Sundance will remain as the community-oriented organic grocery store they love — even when he is gone.

“A couple, the other day, were saying they moved to this neighborhood to be close to Sundance 25 years ago,” McComas said. “And they were greatly relieved that they will be able to rely on Sundance for the foreseeable and unforeseeable future.”