Instead of selling, business owner donates company to trust for charity

Last month, Eddie Smith, the 83-year-old owner of Grady-White Boats in Greenville, North Carolina, made headlines when he pledged nearly all of his company's future profits to charity. Instead of selling Grady-White, Smith opted to donate it to a perpetual purpose trust that would distribute profits to various causes, including conservation, healthcare, and education. Liz Landers interviewed Smith to learn more about his decision and encourage other business leaders to follow suit.

Smith explained that despite receiving offers for his company worth over $400 million, he decided to place it in a trust for employees and donate the profits. He had witnessed many friends in the industry sell their companies and later regret it, as promised cultures often changed after the sale. With his son having passed away from ALS, Smith realized the urgency of finding someone to keep the company intact.

He came across a New York Times article about Patagonia's owner, who had put his company in a similar trust, and decided to do the same.

Smith revealed that the trust structure would give all voting shares to the trust and transfer the majority of common shares to a new 501(c)(4) nonprofit. The trust would guide Grady-White indefinitely, while over 90% of profits would go to the nonprofit for charitable purposes. He and his family foundation would focus on education, healthcare, and conservation in Eastern North Carolina.

The community's reaction to Smith's decision was overwhelmingly positive. His employees, who were initially apprehensive, were thrilled to learn that the company would remain their beloved entity, with profits shared among them. Smith hopes his decision will inspire other business owners and high-net-worth individuals to consider philanthropy and explore options like purpose trusts.