A State of The Field of Purpose Trust Ownership
Reporting out from the first Purpose Trust Ownership Convening
TLDR: Last week at the Aspen Institute, we co-hosted the first Purpose Trust Ownership Convening, pulling together the investors and lawyers and consultants that are helping convert companies to purpose trust ownership.
Background: Last year, my colleague Jenny Everett and I started interviewing experts in purpose trust ownership.
We joined up with Project Equity and Purpose Owned and, with the support of Aspen EOP and the Rutgers Institute, started planning for a one-day gathering of those experts. (Thanks to all our sponsors, listed there!)
For many of these experts, it was the first time meeting or even hearing about the other people around the country working on similar structures.
The purposes of the day, facilitated by my inimitable Liminal Advisors colleague Molly Alexander, were to learn about each other’s work, interrogate the uses and dangers of purpose trust ownership, and explore ways to build the field together.
The State of the Field
The team asked me to share a “state of the field” at the start of the day. Some of what I shared:
Where Things Stand: As best I can tell, the first employee ownership trust (EOT) in the United States was actually in the UK: With the help of Fieldfisher’s Graeme Nuttall, WATG converted to an EOT in 2014, ten years ago.
According to our database, for the couple of years Chris Michael facilitated many of the conversions to EOTs in the US. In 2018, Organically Grown Company became the first perpetual purpose trust (PPT).
Today, ten years later, we’ve come across 45 purpose trusts in the US (more on definitions in a moment), with 4,000-12,000 employees, based on LinkedIn searches. The majority of them are on the West Coast, and the largest number of them are in food and agriculture, followed by manufacturing and software.
Oregon now has a statute recognizing stewardship trusts, and Illinois is on its way to creating one recognizing virtuous trusts. According to Susan Gary, 12-14 states have started down the path of adjusting their statues and trust codes to allow for purpose trust-based ownership of companies.
Five Tensions: I also shared what I see as five tensions within the purpose trust ownership field that need to be resolved or managed:
Getting clarity on language. There’s not agreement on what to call these things, yet. As best I can tell, we’re talking about directed, long-term--maybe perpetual--non-charitable purpose trusts without an ascertainable beneficiary, that own corporate and/or real estate assets, and whose purposes include the benefit of employees, communities, the planet, or other stakeholders; and in which the governance of the trust likely includes some governance by those stakeholders by way of a stewardship committee.
I’ve heard these called employee ownership trusts, perpetual purpose trusts, stewardship trusts, virtuous trusts, business purpose trusts, employee-centered benefit trusts, etc. Personally, I’m warming to stewardship trusts, but that’s just me (and Oregon).
Uncertainty about this is reflected in uncertainty about what to call the wider fields they belong to: alternative ownership, shared ownership, steward ownership, distributed ownership, broad-based ownership, etc.
Balancing the technical and the mimetic. Related to this tension is one between getting technical clarity on what these trusts are and how they operate, along with what Zoe Schlag called the mimetic way of talking about them.
In other words, what are the simple articulations of these models that business owners and their lawyers and advisors, who don’t initially care about the technical details of them, will hear about and get interested in?
It seems to me that one answer is in the (maybe technically incorrect) phrase employee ownership trust, which seems to get owners thinking about employee ownership, also thinking about purpose trust ownership.
Balancing competition and collaboration. Both these things can be good, and they need to be balanced in two ways.
Among purpose trust ownership advocates, there can’t be too much collaboration. It is an industry after all, and then we’d be a cartel! Plus, competition is generative, and to grow an industry in a capitalist system, people need to make money.
But there are ways that competitors can collaborate. This happens all the time, across industries. Hence our Purpose Trust Ownership Convening!
The same tension exists in purpose trust ownership’s relationship to ESOPs and worker cooperatives, the more well-known versions of employee ownership.
The tension: how might we work ecumenically to contribute to the growth of employee ownership more broadly, while also carving out a niche for purpose trust ownership?
Balancing speed, scale, and quality. The US and the world face big challenges. If purpose trust ownership is to help address them, we have to move quickly, and we have to get to scale fast. But when we’re setting up something this long-term, we also can’t afford to move fast and break things.
The field has to figure out how to scale quickly, with quality tools and documents and best practices.
Determining how to organize ourselves. Nobel Prize-winning political scientist Elinor Ostrom discovered in her work that when groups of people have time and space to build trust with each other through repeated interaction, they can overcome a lot of otherwise intractable problems.
More recently, sociologists have argued that in movement-building, it doesn’t make sense to seek too much alignment before starting to act together.
Put simply: talking → aligning → acting isn’t as effective as acting → talking → aligning.
What’s Next: My hope is that after ten years of action, this week’s talking generates just enough alignment for ad hoc working groups to sprout up to take advantage of some of the opportunities we surfaced.
There is so much coming. Up next, as best I can tell, are:
Project Equity’s Employee Ownership Equity Summit on May 6th
The next EOT Peer Gathering, hosted by NCEO, on May 8th
Watch this space!