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In a typical corporation, 100% of profits goes to shareholders. At Keap, we are experimenting with ways of doing business that can accelerate a shift to a new, regenerative economy, so what does that mean for the way we distribute economic surplus?
The simplest way to describe our current legal setup for how we decide this allocation—as it is for most independent businesses—is a dictatorship. In practice, I like to think of it as a benign dictatorship in that every dollar so far has been reinvested back into Keap. But it's still a dictatorship, which might not be benign in the long run if we don't address structural pieces.
The truth is that to date we have not had significant profits to allocate, so there is a theoretical element to these discussions. But we don't want to wait until we get to that bridge to think about how we'll cross it.
Back in 2021, we wrote a post about How Alternative Business Ownership Models Could Reshape the World in which we shared that we were working towards our own Steward-Ownership transition. (If the blog post is too much reading for you, this video is a great primer on Steward Ownership.)
In short, Steward-Owned companies legally enshrine two principles: self-governance and the guaranteed use of profits to serve the company's social mission.
The Steward Ownership movement (though it also goes by other names) towards more equitable, sustainable forms of ownership is picking up speed. The high profile announcements of Patagonia or Zingerman's last year helped to give voice to these important ideas.
For the past few years we have been working with the Purpose Foundation (now Common Trust) to create such a structure. Are we there yet? The short answer is: not yet.
Why Haven't We Made The Transition Yet?
There are steep legal costs for this work, and while costs have come down dramatically over the last few years, they remain high for our current level of resources. In the meantime, we've focused on other nitty gritty, wonky legal changes that ensure we are well placed to make this transition once we're ready.
For now, we're focused on building Keap for the long term as an institution and community. That includes reaching a point of financial stability where the discussion of who gets the surplus has real stakes. In the meantime, kudos to the companies large and small who have already made the transition to a more equitable ownership structure.
Do you have any questions about Steward-Ownership?
I'm also curious: Do you seek out or avoid certain kinds of financial ownership? Tell me tell me please.
Wishing you a wonderful rest of the week,
—Harry from Keap, Benign Dictator