Photo: Jamie Street | Unsplash
What happens to a purpose-based business when the owner/founder wants to retire? Perpetual Purpose Trusts offer independent business owners a new way to preserve their companies. This structure takes away the economic incentive to operate the business for the highest profit or to sell the business to the highest bidder. An owner can gift or sell the business to the trust and then the purpose rules the organization’s decisions. The business itself has the same structure – for example, it could be an LLC or a C corporation – but instead of being owned by individuals or shareholders, it’s now owned by the trust. The model became more popular after outdoor clothing company Patagonia made the transition in 2022.
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