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How can a long-time business owner preserve a business’ core principles and long-standing values when transitioning away from ownership? Vetting buyers and contractual obligations can only go so far. When a business owner sells a business, there is ultimately no guaranty that the buyer will adopt the departing owner’s method of operation and legacy.
Enter Eddie Smith and the Grady-White Boat Company. When recently faced with this dilemma, Mr. Smith opted to forgo a sale of his company for more than $400 million. Rather, he chose to gift control and ownership to a perpetual purpose trust and a paired 501(c)(4) non-profit organization. His primary concern was not maximizing his profit, but instead determining how to “transition to the future and take care of our team while retaining the soul of this business."1
Mr. Smith purchased Grady-White in 1968 at the age of 26, with a loan from his father and desire to prove to himself that he could do something on his own. Over the next fifty plus years, he took the company from the brink of bankruptcy to an award-winning, industry-leading, premium boat builder. During that time, he maintained sole control, never bringing on other investors or publicly selling stock. While owner, he championed profit-sharing for employees and other generous employee benefits, a commitment to high-quality products, exceptional customer service and satisfaction, and support for his community of Greenville, NC. A guiding principle of his is “if you’re successful, you really should share that success with your people, who helped you be successful."2
When evaluating offers to sell Grady-White, Mr. Smith determined that he “had no confidence that a new owner would keep [the company] culture going."3 Preserving what he had created and what it meant to employees, customers and the community was paramount and, for him, took precedence over other considerations. Accordingly, Mr. Smith looked for another path, ultimately taking inspiration from Yvon Chouinard, the founder of Patagonia, who gave his stock to a purpose trust in 2022 and set up a nonprofit organization to distribute company profits to charitable causes.
Mr. Smith gifted Grady-White’s voting shares to the Grady-White Boats Perpetual Purpose Trust. As the name suggests, the trust will hold those shares in perpetuity, preserving Grady-White’s independence, preventing its sale, and ensuring it continues to operate in accord with the values and principles Mr. Smith holds dear. Notably, a purpose trust is not, in and of itself, charitable, and can be used to hold many types of assets for many kinds of purposes. Some of the more common uses for purpose trusts include: ownership and control of family business interests; ownership and maintenance of a family vacation home or compound; holding intellectual property or publishing rights; and the maintenance of a family burial plot. What makes a purpose trust different from a regular trust is that it does not have defined beneficiaries; rather, its reason for being is to effect the purpose for which it was created in accord with its terms.
To accomplish his charitable intentions, Mr. Smith (like Mr. Chouinard before him) is transferring his non-voting shares to a 501(c)(4) nonprofit that will receive and then donate Grady-White profits to education, healthcare, conservation and the community. Those donations will likely amount to tens of millions of dollars annually.
The purpose trust and 501(c)(4) entity will both be administered independently from Mr. Smith, and his executive team will remain in place to run the day-to-day operations of the company. It is an elegant solution to preserve and grow a legacy, and promote good work.
As of the date of this article, publicly available information does not reveal the Grady-White Boats Perpetual Purpose Trust situs or governing law. New Hampshire, however, provides a tailored trust situs for just this type of structure. It is one of a limited number of states that allows perpetual, non-charitable purpose trusts. See RSA 564-B:4-409. As long as the trust meets prescribed statutory requirements, it can be an ideal vehicle to fulfill a settlor’s goals for an unlimited duration. Moreover, while a purpose trust need not have a charitable objective, where it directs business profits to a non-profit organization, as Grady-White’s does, the combination can accomplish both perpetual stewardship and legacy preservation, and a substantial and enduring charitable impact.
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1 https://www.proptalk.com/grady-white-boats-transitions-perpetual-purpose-trust
2 Id.
3 https://www.nytimes.com/2026/07/25/business/grady-white-boats-charity.html?smid=nytcore-ios-share
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