From Default to Design

Most purpose-led companies still inherit a governance structure built not for purpose but for shareholder primacy: boards representing owners, decisions concentrated at the top, financial return as the primary measure of success.

This template is almost universal and still frames the default assumptions of company law, accountancy, investment and board culture.

Across all our conversations, the same diagnosis recurs: mission statements, values and certifications are not enough on their own. If capital still expects priority control, or the board answers only to short-term performance measures, the organisation tends to revert to the old familiar norms when there’s a struggle. Governance is tested less in ordinary operation than at specific moments: when money is scarce, when founders step back, when investors arrive, when growth accelerates, when conflict surfaces, or when the mission becomes inconvenient. That’s when we default back to linear thinking and hierarchical decision-making.

A growing ecosystem is making these ideas more visible and practical. Networks such as B Lab, the Transformational Governance Collective and sociocracy practitioners are helping organisations experiment with different ways of distributing power, making decisions and holding purpose over time. The field remains fragmented, and these approaches are still far from mainstream business practice. But a shared language, body of practice and community of practitioners is beginning to emerge.

Three shifts are showing up across the interviews for this guide:

• from governance as oversight to governance as stewardship
• from stakeholders being consulted to stakeholders holding real power
• from governing the organisation alone to governing its place in a wider system

If you ask what's blocking deeper governance practice, six themes emerge:

1. The dominant shareholder-primacy model pulls organisations back when they’re tested. 'When the decision becomes too tense, then you are going to revert back to the old form,' as Zahra Davidson of Huddlecraft puts it.
2. The professional ecosystem still defaults to familiar models. Advisers, lawyers and accountants tend to favour the models they were trained on and know best, and route founders towards them by default. Being literate in the fuller menu (B Corp, steward ownership, golden shares, fiscal hosting, multi-stakeholder governance) is still the exception.
3. Innovation often comes from the margins. Many founders experimenting with new ownership and governance models come from backgrounds that have been poorly served by conventional business structures. For some women and founders from underrepresented backgrounds, redesigning the organisation is less of a values choice and more of a practical response to creating healthier work environments.
4. Energy and resources are often absorbed by working one-to-one with small funds and organisations. The deeper challenge is designing governance models and supporting infrastructure that work across networks and at ecosystem scale.
5. Behavioural readiness lags structural design. New governance structures only work when people have the mindset and skillset to use them. There is a key role for supporting the development of these skills.
6. Capital can simply override governance. However well a decision-making structure is designed, investor terms, return expectations and control rights set the outer limits of what that structure is free to decide. The two have to be designed together.

In practice, effective governance depends on pairing structure with the capacities to use it well: hosting, facilitation, conflict practice, futures literacy (e.g. Three Horizons practice), board courage, and the ability to act in uncertainty. Across our interviews, five interconnected lenses emerged for thinking about governance in practice:

Many of the most mature examples of these capacities (participation, hosting, futures practice and field-building) are found in the civic and community sectors, not in business yet. Dark Matter Labs’ work on many-to-many contracting, for example, shows how governance can sit across networks of people and organisations. This matters for business because many of today’s challenges cannot be governed by one organisation acting alone. How do we govern a business's relationship with place, supply chains, nature, future generations and the wider systems it depends on? Businesses have much to learn from civic practice about coordinating around shared missions and shared resources.

Field infrastructure is governance infrastructure. Ecosystem maps, convenings, toolkits, peer learning, adviser capability and shared learning loops all influence whether new governance practices spread or remain isolated within a handful of leading organisations.

The standard shareholder model remains predominant in the UK, deeply embedded in law, finance and professional practice, and rarely questioned.

But alternatives are both older and more established than that predominance suggests. Co-operatives, mutuals and community-owned enterprises have operated at real scale for generations. There are over 35,000 active Community Interest Companies. Building societies hold around 29% of UK mortgage lending, while community-owned pubs grew by 51% in five years once policy backed them.

Employee ownership has become another increasingly credible pathway. The sector was negligible before the 2012 Nuttall Review and the 2014 tax reliefs that followed it. A decade on, the UK has 2,337 employee-owned businesses turning over £24.9bn combined. Its growth demonstrates how quickly an ownership model can move towards the mainstream when policy, professional advice and practical infrastructure begin to support it.

Steward ownership opens up a different possibility. By separating responsibility for the purpose and long-term direction of a business from the right to participate financially, it invites us to question ownership itself, and to recognise that ownership can be designed.

Steward ownership is not a single model but a set of principles that can be expressed through different legal forms and structures. It is attracting growing interest internationally, supported by organisations such as Purpose Foundation and a developing ecosystem of businesses, investors and practitioners. In the UK the field is still young. YOAK is working with Purpose and others to help develop it, through raising awareness, sharing practical knowledge and growing the infrastructure for more founders and businesses to explore these choices.

Its potential significance goes beyond the number of businesses that call themselves steward-owned. By teasing apart the bundle of rights we normally call “ownership”, it invites more fundamental questions: Who should hold power in an enterprise? What should capital receive in return for taking risk? Who should benefit from the value created? And what should protect the purpose of an organisation over time?

Ownership has moved from background assumption to live public concern. The shift that matters most in the medium term is the Great Ownership Transfer. A generation of Boomer and Gen X owners is approaching retirement without succession plans: in the US, an estimated 4.5 million small and medium businesses face this, with around 70% of succession attempts failing; the UK pattern is closely analogous. This is a continuity and employment problem, and it’s also a once-in-a-generation intervention opportunity.

The ownership models exist, but they’re mostly invisible.

Professionals and the wider ecosystem largely reinforce the familiar pathways. Choosing the mainstream model is, as one lawyer put it, ‘pressing the easy button’.

There are more than 690 start-up accelerators and incubators in the UK, yet almost all follow the Silicon Valley logic of capital, scale and exit.

Founders rarely encounter ownership as a design question until crisis or exit, when they're exhausted and the path of least resistance is a conventional sale.

Most investment capital is built around equity upside and exit: these are returns that steward-owned and employee-owned businesses are often deliberately designed not to maximise. New legal mechanisms might help, but without investors, advisers, founders and funders who know how to use them, they struggle to gain traction. As Daisy Ford-Downes, who led impact investment at Firstport, puts it, reflecting on the CIC limited-by-shares structure introduced in 2005, "The instrument was there. The ecosystem wasn't."

Even where suitable legal mechanisms exist, such as golden shares and employee ownership trusts, they are often complex and expensive to establish without specialist advice. The UK has no dedicated legal framework designed specifically for purpose-led ownership. That makes cost and complexity the real barrier to using less conventional models.

Each alternative also comes with its own design trade-offs. Employee ownership works well where employees are the primary stewardship community, but can be less suitable when stewardship extends to customers, communities or place. Golden shares and mission locks can protect purpose, but only while the people, governance and capital surrounding them remain aligned.

There is no universally 'right' ownership model. The challenge is to intentionally design one that fits the organisation's purpose, stewardship community and long-term ambitions.

For more on ownership options, check out our Ownership 101 Coming soon.

Not everyone needs to become an expert in ownership. But the people advising founders at the moments when ownership decisions are made need to know that there are choices.

The 2012 Nuttall Review recommended combining EOT tax relief with active education for high-street lawyers and accountants. This produced a real step-change in employee ownership transitions. And the same opportunity applies today to accelerators and incubators.

Europe offers a growing body of experience to build on: the Purpose Foundation has spent more than a decade building steward ownership infrastructure on the continent and beyond, and Purpose Ventures & Purpose Evergreen Capital have been leading the way in funding steward-owned companies. Now there are more early-stage investors emerging, such as Karma Capital, who for the last five years have been investing primarily in steward-owned companies too. Similar efforts are beginning in the UK now. While Europe offers useful infrastructure and proof points, the UK will need its own pathways. The opportunity is to translate what has worked elsewhere into a UK context: legal templates, capital routes, adviser training, founder education and visible case studies that make ownership design easier to understand and use.

Ownership isn't a single choice made once. It's tested and re-made at key moments in a business's life. Knowing where those thresholds are matters more than choosing a 'final' structure on day one.

See Ownership 101 Coming soon for the fuller pathway and founder diagnostic questions at each threshold.

And one from history for inspiration: In 1977 Ove Arup moved ownership of Arup from individual partners into a trust held for the benefit of employees. Arup describes this structure today as giving the firm "the freedom to put our clients first, set our own direction, and develop Arup in ways that allow us to contribute positively to the biggest challenges facing the world." Arup is now one of the world’s largest independent built-environment consultancies, globally turning over more than £2bn, with 17,000 employee owners worldwide, 5,900 of whom work here in the UK.

The capital ecosystem for purpose-led business is dominated by a template that was never designed for it: the venture capital pathway.

VC is built for a particular job: high-growth, high-risk, exit-driven. It becomes harmful only when treated as the default route for businesses whose purpose requires a different rhythm. The VC power-law model needs some investments to return 10x whilst others fail; purpose-led businesses with capped returns break that maths. 'Typical investors bank on averaging returns at the portfolio level,' as Ebru Kaya puts it. 'Because of that they might say: this investment opportunity doesn't make sense for me… The return is too low.' 'Investing in these businesses, you need to move away from the concept of averaging portfolio returns - each business needs to do well.'

This is not a new critique. Faith traditions have questioned extraction and interest for centuries. Islamic finance prohibits riba (interest) on the basis that money should share risk instead of guaranteeing a return regardless of it. Christian moral theology has its own long history of usury critique and equivalent prohibitions exist within Judaism. Melanie Rieback, active in the Economy of Francesco movement, frames this as recovering old wisdom. Sheeza Shah's work as co-founder of Raf'a draws directly on Islamic finance principles, redesigning venture capital from first principles.

Social, impact and philanthropic capital is no longer marginal in the UK: impact investing assets reached roughly £76.8bn by the end of 2023, growing over 10% a year. But much of it still inherits conventional assumptions: fixed fund lifespans, benchmark-pegged returns, exit-oriented ownership models.

There's a gap which Daisy Ford-Downes, who led impact investment (including making changes to enable steward ownership) at Firstport, calls the "missing middle". It lies between venture capital, which demands exit-driven growth, and charitable or social enterprise models, which tend to constrain commercial activity or access to capital.

Fair question at this point: aren't these all small examples, small businesses, small funds? Ooooby, Library of Things and Be the Earth aren't signals the system has actually changed yet, and vehicles like atreyu (currently around €1m invested, targeting €20m over three to four years) are still tiny next to a conventional VC fund. But the infrastructure and appetite behind them are scaling faster than the vehicles themselves: from a ~£400m foundation endowment in transition, to three sold-out cohorts of the Regenerative Investing Academy. The individual businesses and funds in this field are still small, but the interest in them and the design principles they’re using is what’s scaling now.

We see three shifts are emerging:

• from capital as extraction to capital as service
• from individual deals to system-level coordination
• from impact as reporting to impact as design

Founders are asking earlier what kind of capital will protect their mission; funders are appointing dedicated leadership to move beyond ESG; and the conversation itself has shifted. 'We're no longer laughed out of the room,' says Erinch Sahan, appointed in 2025 as JRF's Associate Director of Investment. 'Fifteen years ago, I'd have been treated like a lunatic for these things.'

Ask the people working in this space what's missing, and the answer is consistent: policy and infrastructure that aligns to the businesses and economy we’re building.

The first blocker is EIS / SEIS rules. These government schemes give investors 30–50% tax relief for backing young UK companies, but only ordinary shares qualify, not shares with protected returns or a pre-agreed exit. That rules out most non-extractive finance, from revenue-share to planned buybacks. The tax-free gain on a sale rewards investors for backing companies that can provide exits within a few years.

The second is portfolio logic. Venture capital’s 2% management fee and 20% carry structurally reward rapid growth and large exits. Steward-owned and mission-locked businesses deliberately cap financial returns; that doesn’t make them poor investments, but it does make them a poor fit for funds designed around uncapped upside.

Emma Shaw encountered the same maths while raising capital for Library of Things.

As she puts it:

Even mainstream impact investors recognise the gap. Bethnal Green Ventures' Melanie Hayes describes the "unspoken secret" of impact VC: what happens to the solid, profitable, impactful companies that become successful businesses but never become unicorns? When a venture fund reaches the end of its life, there is often no immediate way of creating liquidity for shareholders.

The third blocker is access. Capital doesn't flow evenly. The Rose Review found only 1% of UK start-up investment reached all-women founding teams. Parliamentary evidence found only ten Black female entrepreneurs received venture capital funding over a decade. Purpose-led businesses and underrepresented founders often find themselves navigating multiple structural barriers simultaneously.

The fourth blocker is cost and complexity. Revenue-based finance, redeemable equity, recoverable grants and blended finance all exist, but each requires specialist legal, financial and relational expertise. This applies to founders and funders alike. Unlike conventional equity, many of these approaches lack widely used templates and established market practice. Even experienced advisers may need to do more bespoke work, while other advisers may need time to understand unfamiliar structures. Founders can end up paying for that lack of standardisation. And running a niche fund below around £10 million rarely pays for itself. As Louise Marston of Resolution Ventures reflects, “it’s incredibly hard to make the numbers add up.”

The fifth blocker is ecosystem literacy. If the first adviser, accelerator or business support programme they encounter only understands venture capital, that’s the path founders are encouraged to follow.

Every founder and funder we spoke with for this guide pointed to the same conclusion: the next phase is all about making aligned capital easier to access.

That means shared templates, funder and founder education, funder toolkits, adviser training, peer learning and case studies, are all needed to build the field.

Europe offers a working model: Karma Capital (Germany), itself steward-owned, invests primarily in companies that are or are becoming steward-owned, with a systemic investing approach; 2050 (France) is an evergreen fund with a 99-year horizon and no shareholders. UK infrastructure is forming more slowly: two examples are JRF’s Transforming Wealth Lab, that brings together a group of organisations re-imagining how investments works; and Considered Capital’s Alt Funding School, which is pivoting from founder education to training practitioners. Global organisations such as the Innovative Finance Initiative are creating open-source tools that reduce the cost of building alternative capital structures, including here in the UK.

This sits inside a much bigger shift: the Great Wealth Transfer, as trillions in assets pass to a generation less committed to conventional finance. Philanthropy is responding by treating decolonising wealth less as a correction and more as an ongoing practice. The Wealth Hackers Initiative (which grew out of a JRF-hosted gathering) now convenes practitioners from across the world who want to move money differently. Katapult Future Fest in Amsterdam brings founders, funders and family offices into the same room. And Regenerosity's recent webinar series on philanthropy for systemic change has drawn over 600 attendees.

The biggest funder opportunity here isn't another deal. It's the market itself.

Closing reflection: Attention is moving beyond the individual enterprise, to the role of finance in the transformation of the economy. Kate Harmatz, Esme Verity, Daisy Ford-Downes, Ebru Kaya and Emma Shaw all point to the same shift: capital is increasingly being asked to serve place, community, bioregions, supply chains and the wider systems a business depends on, not just the business itself.