Why giving away your company is the ultimate legacy power move

2 hours ago7 min read

Over the next two decades, a staggering $84 trillion is projected to change hands in the United States, a monumental shift some have dubbed the Great Wealth Transfer or the Silver Tsunami. This isn't just cash and stocks; it includes an estimated 2.9 million private businesses owned by individuals over 55. The conventional playbook for these retiring founders typically involves one of two exits: a lucrative sale to private equity or a strategic conglomerate, or the more personal route of passing the torch to the next generation.But a growing, albeit still radical, contingent is rewriting the rulebook entirely by choosing to give their company away to philanthropic causes. Think of it not as an exit strategy, but as the ultimate legacy power move, transforming a for-profit entity into a perpetual engine for good.This isn't a new concept—the legendary Paul Newman set the gold standard when he bequeathed his entire Newman's Own food company to his foundation in 2008, ensuring that every bottle of salad dressing sold would continue to fund charities. Yet, it was Yvon Chouinard's earth-shattering 2022 announcement that all of Patagonia's future profits would be dedicated to fighting climate change that truly catapulted this model into the mainstream, earning a full-page feature in the New York Times and even spawning a dedicated book.The movement is gaining quiet momentum. So-called '100% for Purpose' companies are no longer just outliers like Newman's Own and Patagonia.They include ticketing platform Humanitix, the search engine Ecosia, the browser Mozilla, and consumer brands like The Good Store and Thankyou. Even former New York mayor Michael Bloomberg has revealed plans to donate a controlling stake of his financial data and media empire to a trust that will permanently fund Bloomberg Philanthropies.From my vantage point as the President and CEO of a 100% for Purpose organization, I'm witnessing a palpable surge in inquiries from business owners intrigued by this path. So, why would a philanthropically-minded founder choose this route over the seemingly straightforward path of selling and then donating the cash? The financial mechanics are compelling.Imagine your business generates $10 million in annual profits and you sell it for a handsome $50 million. You could then establish a foundation and, following the standard 5% minimum distribution rule, give away about $2.5 million per year in perpetuity. Alternatively, you could spend down the entire endowment, distributing $10 million annually for five years before the well runs dry.Now, contrast that with donating the company itself to a foundation or a purpose trust. The business continues operating, its employees keep their jobs, and it keeps generating that $10 million in annual profits, which can then be gifted to causes you care about, year after year, indefinitely.You've effectively created a philanthropic annuity. The math is undeniable: Paul Newman's initial $40,000 investment with co-founder A.E. Hotchner in 1982 could have been a one-time charitable donation.Instead, by building and then giving away the company, Newman's Own has generated over $600 million for charity—a staggering 15,000x return on philanthropic capital. Beyond the numbers, this move gifts your business, its employees, and its customers a profound sense of ongoing purpose; every product made, sold, or purchased directly fuels positive change.For those ready to explore this journey, a spectrum of models exists, from simple to sophisticated. You can start immediately by giving your profits away through your current corporate structure, perhaps using a Donor-Advised Fund for ease, much like Newman did initially.A more turnkey approach is to donate the entire business to an existing non-profit whose mission aligns with your values, instantly providing them with a profit-powered funding stream. For founders wanting more hands-on control, establishing your own foundation and donating the company to it is an option, now legally streamlined by the 2018 Philanthropic Enterprise Act.The most advanced model involves a Perpetual Purpose Trust, a relatively new but powerful structure in the U. S.that allows you to separate voting rights from economic rights. This is the path Patagonia chose, granting voting control to a trust dedicated to preserving its values, while the profits flow to a non-profit fighting the climate crisis.As Giving Tuesday approaches, it's a perfect moment for current owners and aspiring founders to consider this profound shift. Giving your business away remains a radical act, but it offers something a traditional sale never can: a living, breathing legacy that outlasts you, your leadership, and even your lifetime, ensuring your life's work continues to make a difference forever.

#philanthropy

#business legacy

#wealth transfer

#corporate giving

#100% for Purpose

#featured

#Patagonia

#Newman's Own

#social enterprise

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