Every company needs money it has not earned yet: to start, to grow, and to get through a bad year. In most companies that money buys shares, and with the shares come control and an open-ended claim on everything the company will ever make. FairShare has three sources of capital, and none of them buys either. They are profit kept back, Futures sold to investors, and pay deferred by founders and early staff. A FairShare company can also borrow, and this chapter says what that asks of it.
The reserve
The reserve is the share of each year’s net income that the company keeps. In the example company it is 30 percent, which was $9 million in 2027. It pays for growth, and it is the cushion that keeps salaries paid in a year with no profit.
The council sets the percentage before the year begins and may fix it for several years at a time. It has to fix a year’s percentage before it sells a single Future for that year, and after the first sale it may lower the figure but not raise it. Someone who buys a 2029 Future in 2026 is buying a slice of 2029’s pool, and the council that sold it cannot then decide to make the pool smaller. A young company can set the percentage very high, a case Chapter 14 takes up.
The custodian
Once the accounts close, the money owed on Futures stops being the company’s to spend. In 2027 the pool was $21 million. Half was paid out on January 1, 2028. The other $10.5 million moved to an outside custodian, was held in low-risk instruments such as short-dated government debt and insured deposits, and was released at $875,000 a month. Everyone holding Futures can see the custodian’s statements.
The arrangement keeps instalments that have already been earned from being used as operating cash if the company runs into trouble during the year.
Futures sold to investors
An investor buys Futures for a named later year, at a price below what the company expects them to pay. The gap between the price and the payout is the investor’s return.
In January 2025 the example company forecast that a 2027 Future would pay about $350. It sold 2,500 of them at $250 each and raised $625,000. What the investor got back depended entirely on 2027:
| 2027 net income | Value of one Future | Investor receives | Result on $625,000 |
|---|---|---|---|
| $30 million | $400 | $1,000,000 | 60% gain |
| $20 million | $267 | $666,667 | 7% gain |
| Zero or a loss | $0 | $0 | Total loss |
The investor carries the same risk as the workforce, in the same year, and is paid on the same dates. An investor who wants a longer exposure buys Futures for several years, each priced on its own forecast.
Two features make this different from buying shares.
- The investor buys a count, not a percentage. If the company hires, the workforce earns more Futures that year and each one pays less. Growth in headcount dilutes the investor in the same way it dilutes everyone else.
- Nothing else comes with it. There are no shares, votes, board seats, preferences or guaranteed returns. Whether an investor may sell its Futures on to someone else is a matter for the purchase agreement; the Future itself does not change.
This will not suit every investor. A venture fund that depends on a few companies being sold for many times their cost has nothing to buy here. Futures suit investors who want cash returns from companies that make a profit. Such investors exist: when Organically Grown Company moved into a perpetual purpose trust, it raised $11 million from investors who received stock without votes.1 A company that needs many years of losses funded before its first profit will find Futures hard to sell, and that is a real limit of the model.
What a sale of Futures costs the workforce
Every Future sold makes every other Future of that year pay less. Without the investor’s 2,500, a 2027 Future would have paid $420. With them it paid $400. The workforce gave up $1 million of 2027’s pool in exchange for $625,000 received three years earlier.
The test of whether that was worth it is simple. The investor’s Futures added 5 percent to the year’s count, so the sale paid off for the workforce if the $625,000 made 2027’s net income more than 5 percent higher than it would otherwise have been. Here that means about $1.43 million.
The council limits the exposure by capping the share of any year’s Futures that can be bought with money. In the example the investor holds 4.8 percent of 2027’s Futures. A cap of 10 percent would leave room for one more sale of the same size.
The cap itself has a ceiling, and the charter holds it. Purchased Futures can never be more than half of a year’s total. However much money a company needs, the people who do a year’s work receive at least half of that year’s pool. An established company can keep its cap far below the ceiling. A young one will need a much higher cap, as the founder’s case later in this chapter shows.
Borrowing
A FairShare company can borrow like any other. A loan buys no vote and no share of the profit, only its interest, and interest is a cost before the pool like any other cost.
The difficulty is the guarantee. Lenders to small companies usually want a person standing behind the loan. In the Federal Reserve’s 2025 survey of small businesses with employees, 59 percent of those with debt had secured it with a personal guarantee.2 A company owned by a trust has no owner to give one.
Someone will have to, and FairShare treats what they give as capital, because the person has put their own house behind the company.
- It is published. Everyone can see who has guaranteed what, and until when.
- It is paid for at one published rate. The council sets a yearly fee on the amount guaranteed, the same for anyone who gives a guarantee. The fee is a cost, like the interest on the loan.
- It ends as soon as the company can borrow without it. The council reviews each guarantee every year, and replaces it with the company’s own assets or reserve when a lender will accept them.
A guarantee buys nothing else. It carries no vote, no band and no Futures. In a young company the person giving it will usually be the founder, and the fee is all they receive for it.
Founders and the years before profit
A new company usually cannot pay full band salaries. FairShare treats the difference as capital the person has put in.
The company keeps a log, open to everyone who works there, of the gap between each person’s band salary and what they were paid. Shortfall is logged only for periods when the company has told everyone that it cannot pay full bands.
Logged pay becomes Futures in one of two ways, and neither lets the people who hold the log name their own price.
- At an outside buyer’s price. When the company first sells Futures to an investor who has no other tie to it, each person’s logged shortfall converts at the price that investor paid.
- At the charter’s rate. If no outsider has bought, logged pay is repaid from the pool at one and a half times the amount logged. In the sum, that is a Future priced at two thirds of what it turns out to pay.
Either way, the Futures are purchased Futures. They count toward the cap, and they are spread over as many years as it takes to stay inside it, with each person’s share of every year in proportion to their log.
Suppose a founder belonged in the top band at $150,000 but drew $60,000 in each of the company’s first two years. The log shows $180,000. The first outside investor then paid $100 per Future and bought 1,000 for each of three years, so the founder’s $180,000 converted into 1,800 Futures at the same price. By those years the company had 20 people earning 4,000 Futures a year. The council had set the cap at 30 percent, and the founder’s Futures went in 600 at a time.
| Each of the three years | Futures |
|---|---|
| Earned by 20 people | 4,000 |
| Bought by the investor | 1,000 |
| Converted from the founder’s log | 600 |
| All Futures | 5,600 |
| Share that was purchased | 29 percent |
If those Futures paid $150 each, the founder received $270,000 over the three years, which is also what the charter’s rate would have paid. The cost was carried by the twenty. Without the purchased Futures each one would have paid $210, so a full year’s payout was $30,000 where it would have been $42,000. That is what the company’s first years cost the people who came after, stated as plainly as the investor’s $20 was in Chapter 9.
The same rule covers an engineer who joined in the first year at half their band salary, and cash a founder puts in is treated as an investment at the investor price.
Founders get no shares and no pool of their own. What they get is a band salary once the company can pay it, a Future for every day worked, and their early risk converted at the price an outsider paid for the same risk. A founder who wants the windfall from selling a company should not adopt FairShare.
A lean period
The log is not only for new companies. An established company can reach a point where the reserve is spent and there is not enough coming in to pay every band in full. The usual answer is to let people go. FairShare gives the council something to weigh first.
The council declares a lean period and tells everyone. While it lasts, the money available for pay is divided in a fixed order.
- Everyone is paid up to the floor first, in proportion to their schedule.
- What remains is divided in proportion to the rest of each band figure, the part above the floor.
- Everything unpaid is logged, and converts like any other logged pay.
In the example company, half of the $25 million payroll sits above the floor. Suppose that in some bad stretch the company could find only $20 million for a year’s pay. The floor for 250 people takes $12.5 million. The remaining $7.5 million covers three fifths of what each band pays above the floor.
| Band | Band figure | Paid | Logged |
|---|---|---|---|
| Junior | $50,000 | $50,000 | $0 |
| Standard | $100,000 | $80,000 | $20,000 |
| Principal | $150,000 | $110,000 | $40,000 |
The order is deliberate. A year without profit takes the same Futures payout from everyone, and so falls hardest on the lowest-paid, as Chapter 15 shows. A lean period runs the other way. It takes nothing from the floor until it has taken everything above it.
If there is not enough to pay even the floor, each person receives the same fraction of it and the rest is logged.
A lean period buys time, and that is all it buys. Logged pay is a claim on pools that have not been earned, and a company that leans on the log year after year is no longer paying its ladder. A council that declares a lean period should say how long it expects it to last, and what it will do if it lasts longer.
Notes
- RSF Social Finance. Organically Grown Company’s Groundbreaking Move to New Ownership Structure. https://rsfsocialfinance.org/news/organically-grown-companys-groundbreaking-move-to-new-ownership-structure/. See also Berkeley Haas Case Series. (2024). Perpetual Purpose Trust and Organically Grown Company: Rethinking Corporate Ownership for the Future. https://cases.haas.berkeley.edu/2024/07/purpose
- Federal Reserve Banks. (2026). 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey. https://www.fedsmallbusiness.org/2026-report-on-employer-firms