One of the first questions investors ask of a company is, “What’s your Exit Strategy?”

In other words, when are you going to go public or sell your company to a larger company so I can cash out with 10 times my original investment?

With a conventional profit-driven company, this might not be a big deal for consumers, workers, or suppliers. For companies primarily with a social mission, however, it means the end of the mission. But you can’t get that investment money without having a plan to sell out – call it the Exit Strategy Trap.

We’ve seen it over and over among companies that were once our peers in driving change in food and consumer products. (Dr. Phil Howard has put together an excellent graphic of the consolidation of the organics industry. Join us on Oct. 24 for a webinar on this topic with Dr. Howard.) Despite the rosy statements when big piles of cash are being exchanged, once the mission-driven company becomes a cog in the machine, it ceases to be an agent of change.

How did Equal Exchange avoid this Exit Strategy trap? It’s not because we don’t get offers. We get them all the time. It’s not because we’re more noble or purer of heart. A lot of folks at our company would welcome a windfall payout in exchange for our ownership stock.

The answer is in three parts.

First, our democratic worker co-operative model means that a decision like this would have to be approved by 2/3 of the worker-owner members of the co-op, and we each get an equal vote. Unlike faceless corporate investors, we’d be voting to end the social part of our company for ourselves and our co-workers. We’d have to look them in the face, and look at our reflection in the mirror.

Second, we’ve figured out how to raise the investment capital from sources that mirror our social mission, from over 600 investors, dozens of mission-driven lenders, and over $2 million from our own workers. You can find a deeper description here: http://equalexchange.coop/blog/cooperative-capital.

Third, recognizing the Exit Strategy Trap early on, the workers in the company adopted what you might call the “No Exit Strategy.” Essentially, this established a rule that in the event of a sale of the company, we couldn’t keep any of the money. All loans and investments would be returned at face value, but all the net proceeds of the sale must be donated to another Alternative Trading Organization. All we’d get is a new corporate boss.

By taking the money off the table, we took away the temptation to ever sell out. What stays on the table is a shared obligation to run the company for the benefit of all stakeholders: farmers, workers, consumers, and the environment. Why would we ever want to have an exit for that?