At a glance
- The trust pledges 95% of future profits — potentially tens of millions of dollars annually — to charitable causes focused on conservation, health care and education.
- According to The New York Times, cited by WealthManagement.com, Smith in 1968 took a risk on a small boat maker in Greenville, N.C., that was headed under water, and turned it into a high-end recreational fishing boat company.
- Purpose-trust adoption among U.S. companies has grown from seven in 2018 to 81, WealthManagement.com reports.
WealthManagement.com reports that Eddie Smith Jr., the 83-year-old owner of Grady-White Boats, gifted the company to a perpetual purpose trust earlier this month, passing up offers exceeding $400 million. The trust pledges 95% of future profits — potentially tens of millions of dollars annually — to charitable causes focused on conservation, health care and education.
According to The New York Times, cited by WealthManagement.com, Smith in 1968 took a risk on a small boat maker in Greenville, N.C., that was headed under water, and turned it into a high-end recreational fishing boat company. The move echoes Patagonia founder Yvon Chouinard's September 2022 structure, where voting stock representing 2% of the company's value went to the Patagonia Purpose Trust and non-voting stock representing 98% went to the Holdfast Collective, a 501(c)(4) social welfare organization.
Purpose-trust adoption among U.S. companies has grown from seven in 2018 to 81, WealthManagement.com reports. Grady-White is the first marine-industry company to use the structure and reportedly the largest such transaction since Patagonia.
The transaction widens the succession toolkit for private-company owners beyond a sale or family transfer. A purpose trust separates control from profit rights, preserving an owner's vision while directing operating cash flows to philanthropy.
Roger A. Grad, a partner, tells WealthManagement.com that whole-enterprise gifts are 'exceptionally rare.' He says wealthy clients typically fund a portion of wealth to a private foundation, donor-advised fund, or charity. A 95% profit pledge, he indicates, sets a new bar.
The Smith transaction suggests purpose trusts have moved from a niche idea to a credible exit path for family-owned businesses. Seven to 81 adopters since 2018 is still a small club, but the scale — over $400 million in forgone sale proceeds and tens of millions in annual charitable flow — is enough to put the structure on every family-office succession checklist.
The structure is not a sale. It carries governance weight: separating voting stock from profit rights requires a trust designed to hold a long-term operating business, and the charitable stream depends on future company performance. Patagonia is proof of concept, not a guarantee.
Purpose-trust adoption is likely to keep climbing as more owners weigh succession options, though WealthManagement.com notes the structure remains rare. Expect family offices and their advisors to field more questions about steward-ownership structures as adoption grows.
Reported by the Family Office desk from WealthManagement.com. Published . Corrections