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

Amna Nawaz:

Late last month, Eddie Smith, the 83-year-old owner of Grady-White Boats in Greenville, North Carolina, made waves when he announced he was pledging nearly all his company's future profits to charity. Instead of selling Grady-White, Smith chose to gift it to a perpetual purpose trust that will distribute profits to causes, including conservation, health care, and education.

Liz Landers recently spoke with Smith about that decision and why he hopes other business leaders will follow suit.

Liz Landers:

Eddie Smith, thank you for joining us.

Eddie Smith, Owner, Grady-White Boats:

It's my pleasure.

Liz Landers:

Why did you decide to turn down the offers -- and one of them was more than $400 million -- and instead put your company in a trust for employees and give away the profits?

Eddie Smith:

That's a great question. And some of the offers were actually well north of $400 million.

But I have seen so many of my friends in this industry sell their companies and then be very, very sorry about what happened to their companies after the sale. Even though they have been promised that the culture would remain the same, everything would stay the same, it never, ever does.

And I saw that time and time again. And I had hoped and thought my son would take the company into the next one more generation anyway, but, unfortunately, he passed away from ALS, so then I was faced with trying to figure out, OK,who's going to take the company forward in the future?

And the only option seemed to be to sell the company and hope that you could find a buyer that would keep the company pretty much like it is. I happened to be reading New York Times article a couple years ago about Mr. Chouinard at Patagonia and the fact that he had been in a similar situation and had put his company in a perpetual purpose trust.

So I started doing some research on that and decided that that was a much better way for me to go. So I feel really, really good about it. I think some friends think I'm probably crazy for giving away most of my net worth, but it's the right thing to do, and Grady-White's future is secure.

Liz Landers:

With the structure of this trust, what do you stand to gain financially from this?

Eddie Smith:

Nothing whatsoever. All the voting chairs go into the trust. The majority of the common shares goes into a new 501(c)(4) nonprofit. And so the trust with all the voting shares will own and guide Grady-White in perpetuity.

And then the profits, more than 90 percent of the profits forevermore will go into the nonprofit, go to charity and hopefully do some really good things and touch lots of lives.

Liz Landers:

How did your employees react when you shared the news?

Eddie Smith:

Well, I'm sure when they walked up on the stage and looked out at those 350 very apprehensive people in front of me, they were pretty positive I was getting ready to tell them that I'd sold the company.

But when I explained to them that the company would never be sold, that it would always be the company that they know and love and have built, and that we would always share profits with them and furnish all the other things that we do for them, it was screaming, hollering, some tears. It was exciting.

Liz Landers:

You mentioned some of the charitable projects. What are the charitable projects that you hope the profits go towards? How do you hope that the community is impacted?

Eddie Smith:

I have a family foundation that I started years ago, and so it'll basically track along the same things that we have been doing for years. We really care about this 29 Eastern rural underserved counties in Eastern North Carolina, and lots of opportunity here to do a lot of good.

And so we concentrate primarily on education. We do an awful lot in the area of health care and then conservation. I'm very concerned about clean rivers, clean ocean, fishery resources for future generations.

Liz Landers:

We live in a moment where there is a pretty large wealth disparity in the United States, and not many other millionaires and billionaires are making the kind of decision that you made with your business.

What is your message to other business owners and other high-net-worth individuals?

Eddie Smith:

Well, frankly, that's -- I mean, the main reason that I did what I did was to preserve Grady-White forevermore for our employees, our dealers, our customers, and the community. But a secondary motive on my part was to make people aware.

I mean, I wasn't aware of a purpose trust until I happened to read the Patagonia article. And I know most of my peers, CEOs across the country that I talked to have never heard of it. So my hope was that it would educate and maybe inspire other business owners to at least consider that path if it fit them, but if it didn't fit them, that I wanted to at least nudge their consciousness about philanthropy.

There's so much need, and how much can you need? I mean, I'm comfortable. I'm -- but I just felt very strongly that maybe, maybe it would get many other people thinking about their philanthropic journey. And, indeed, I have had calls from all over the country from businessmen asking for more details about the purpose trust and to talk about philanthropy.

So, hopefully, hopefully, that's done some good. And certainly talking to you and sharing with your viewers hopefully will do more of the same.

Liz Landers:

I went to college with your granddaughter Sudie (ph), and I had the pleasure of meeting your son Chris a few times before he passed. How do you think that he and your late wife would react to what you have done with the business?

Eddie Smith:

Liz, I am absolutely positive that they're smiling really big time. I know they would -- they both loved all of our people at the plant and loved the journey we have been on for 58 years with Grady-White, and there's no doubt in my mind they're smiling big time.

Liz Landers:

Eddie Smith of Grady-White Boats, thank you so much for joining us.

Eddie Smith:

Thank you.