Steward Ownership is the future of corporate governance and ownership
What is Steward Ownership?
Steward ownership is a form of corporate governance and ownership that prioritises a company’s long-term mission and values over short-term profit maximization.
In this model, companies are owned or governed by stewards (often charitable foundations) who are committed to upholding the company’s core mission, ensuring ethical and aligned decision making, and distributing funds for good.
Profits are reinvested, used to cover capital costs, shared amongst stakeholders (ie. employees) or donated for charitable purposes.
Why does it matter? Steward Ownership creates value on a number of different fronts:
Long-term sustainability
It encourages long-term thinking over short-term profits, supporting more resilient organisations and economic systems.
Mission preservation
It helps preserve a company’s original mission and values over time, even if leadership changes.
Stakeholder consideration
Steward ownership promotes consideration of all stakeholders – e.g. employees, customers, communities, and the environment – not just shareholders.
Wealth distribution
Profits are reinvested, donated or shared among stakeholders rather than concentrated among a few shareholders.
Innovation and long-term thinking
Without pressure to deliver purely financial results, companies can invest in long-term innovation and development.
Independence
It allows companies to maintain their identity and kaupapa, resisting pressure from external forces.
Values Match
An unambiguous signal to partners and customers with values alignment.
Ethical decision-making
Balancing purpose and profit can lead to more ethical/values aligned business practices and decision-making.
Trust and reputation
Companies committed to their mission and stakeholders often build stronger reputations and customer trust.
Companies can establish, transform or exit to Steward ownership and Generous Ventures will support companies with any of these options.
However, we believe the more significant opportunity in Aotearoa is through exits and transitions. 50% of small businesses in NZ will be looking to transition ownership within the next ten years. Most will not have a clear exit strategy, understand their options, or have access to an exit pathway that limits exposure, disruption, and failed attempts at sale.
Steward ownership presents an alternative to inheritance or sale that has greater certainty, protects kaupapa, contributes to community and provides fair economic value to owners. It is a robust way to enable business-funded philanthropy, potentially in perpetuity.
Steward ownership offers founders and shareholders liquidity & legacy – a financial and a social return on their investment, and it offer broader benefits as well, including:
- Increasing available philanthropic funds
- Keeping ownership, capital and employment local
- Supporting leadership to take a long-term or intergenerational approach to thinking and planning
- Addressing a gap in exit options, providing a pathway that supports legacy and liquidity in succession/business transition.
- Aligning with te Ao Māori and a broader societal move towards degrowth and collective versus competitive models
And it has the potential to positively impact on employees, economy and society, as demonstrated in other markets, most specifically Denmark.
Denmark has the highest number of steward owned companies in the world. Research suggest this benefits the economy, employees, companies and community though:
- More stable profitability with a stronger capital basis, higher equity ratio and higher reserves
- Similar or higher levels of productivity
- Increased survival probability: 60% versus 10%
- More resilience to financial crises and fluctuations
- Significantly higher levels of invest in research and development
- Higher average salaries with more stable, long term employment
- 4x higher ownership stability, and
- 40% lower management fluctuation
We believe now is the right time to build the steward ownership movement in Aotearoa and Generous Ventures intends to lead the way. The ‘silver tsunami’ of retiring business owners is upon us, we are in a period of significant economic, environmental and social instability, there is growing inequality, and increasing dissatisfaction with extractive corporate ownership models. We are well positioned to take on Steward ownership, with a tax environment that treats this model of exit favourably, and a culture of innovation in ownership.