Paul Newman and Yvon Chouinard’s footsteps: More ways for CEOs to give it away in ‘Great Boomer Fire Sale’

While some business leaders are focusing on how to make their fortunes in AI or cryptocurrencies, others are choosing to stay away from anything but what matters most: a charitable annuity to enhance their legacy. As the President and CEO of one of the most famous brands that donates 100% of their profits, I’m hearing more and more from CEOs and business owners who want to follow in the footsteps of Paul Newman or Yvon Chouinard. These leaders have spent decades building profitable ventures, and are now moving ownership of their companies not to the highest bidder, but to foundations, nonprofits, trusts with specific goals, or to their employees.

An estimated 2.9 million private businesses in the United States are owned by people over the age of 55. Over the next 20 years, the Great Wealth Transfer and “Big Boom Sale” present a unique opportunity to reimagine business exits as an act of generosity.

Why are you giving up your job? Generosity Out allows you to maximize your giving through a drive that will continue to generate profits every year, creating a charitable pension, while preserving the company, its employees, and the culture you’ve built over decades. Furthermore, traditional exit options may not be a good fit for your values ​​if you have spent decades investing in your employees and community. Selling to private equity or another company could mean layoffs and the destruction of culture. Not all owners have family heirs who want or can take over. Going public is only available to the largest companies and your life’s work is subject to the pressures of quarterly earnings and the short-term thinking that comes with it. Purpose and legacy can be more important than a big check at the end of your life, especially if you’ve already earned good money throughout your life.

While Baby Boomers are looking to the legacy they want to leave behind, Millennials and Generation Z are looking to the legacy they want to build, with some successful companies being founded where 100% of their profits are donated from the beginning. Entrepreneurs like John and Hank Green of The Good Store, and Adam McCurdy and Joshua Ross of Humanitix, challenge critics of the “business for good” model by showing that you can grow a successful business while simultaneously giving up all the profits.

The good news for those who want to give up their jobs? There are now more governance models available than ever before.

Choose the right structure for your exit

With the passage of the Charities Act in 2018, foundations can now own 100% for-profit companies in the United States. Newman’s own foundation is an example of this. As a result, one hundred percent of profits and royalties from sales of Newman’s own products go to the foundation in service of its mission: to nourish and transform the lives of children facing adversity.

Patagonia uses a permanent purpose trust, a type of host-owned property that is more common in Europe. Since 2022, the fund has owned 100% of the company’s voting shares to ensure its environmental mission and values ​​are maintained indefinitely, while profits are funneled into the 501c(4), Holdfast Collective, to donate to climate causes. These models create what economists call “lock-in effects” that allow owners to keep the mission front and center, even after they are gone.

More than 6,500 U.S. companies are now wholly or partially owned by their workers, using employee stock ownership plans (ESOPs), including Bob’s Red Mill and King Arthur Baking Company. These models support business continuity and create thousands of employee owners who are invested in the company’s long-term success. While in many cases, these exits are financed through loans, there is nothing preventing the owner from giving the business to his workers.

You can also look at hybrid models. For example, Organic Grown Company uses a permanent purpose fund to ensure that profits are split between equity investors, employees, farmers, and nonprofits.

While a business owner may decide to create his or her own organization, why reinvent the wheel? There are plenty of established foundations and nonprofits that could be worthy recipients if you want to divest your company. In 2011, Amar Bose gave a majority stake in Bose Audio Systems to his alma mater, MIT in the form of non-voting stock.

What’s next?

This holiday season is right around the corner, and whether you own a business or not, it’s a good time to reflect on what matters most: What are your values? How much money is enough for you and your family? What does heritage mean to you?

For executives and owners considering a generous exit, the first step is to assemble the right team: lawyers with experience in institutional ownership, investment funds, or financial advisors who understand the tax implications of these unique paths, or independent directors or trustees who share your vision. Organizations such as 100% for Purpose, Purpose Trust Ownership Network, and Purpose Foundation can provide resources and case studies.

Start drawing up your plan, and be patient because the transition may take years, not months. Yvon Chouinard spent two years structuring Patagonia’s transformation. While Paul Newman decided from the beginning to donate all of the food company’s profits when he started in 1982, the first few years were just writing checks at the end of the year. Initially established in 1998, the Foundation became the Newman Private Foundation before Paul’s death, at which time the food business was gifted to the Foundation. The complexity is not just legal, it is emotional, relational, and cultural, but ideally, transformation can happen while you are still an active participant, you can manage the transformation, and you can see the fruits of your hard work pay off forever.

In this day and age of robots and artificial intelligence, we would do well to remember Paul Newman’s wise words: “Businesses are not inhuman financial machines. They must accept their existence within society. They have a moral responsibility to participate. They cannot sit there without acknowledging that there are things going on around them.”

Building a profitable company is difficult, but the true meaning is to let them go to serve good. In doing so, we allow our business to continue in ways that go beyond the importance of the balance sheet.

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