Patagonia founder gives company away to environmental trusts
Outdoor gear company Patagonia says “the earth is now our only shareholder” after transferring the company’s ownership from founder Yvon Chouinard and his family to two nonprofits established to fight climate change.
In a letter posted on the 50-year-old company’s website Wednesday night, Chouinard said Patagonia would transfer 100% of its voting stock to the Patagonia Purpose Trust, created to uphold the values of the company long known for its environmental activism. All of its nonvoting stock will go to the Holdfast Collective, a nonprofit “dedicated to fighting the environmental crisis and defending nature.”
“While we’re doing our best to address the environmental crisis, it’s not enough,” Chouinard wrote. “We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.”
Patagonia estimates that after reinvesting some profits back into the company, about $100 million annually will be distributed to the Holdfast Collective as a dividend, depending on the health of the business.
Grace Chiang Nicolette, The Center for Effective Philanthropy’s vice president of programming and external relations, said this unusual move by the Chouinard family may become a blueprint for company founders looking to donate their businesses to causes important to them.
“Business owners are often faced with fraught decisions on the future of their company when it’s time to sell,” said Nicolette, who also co-hosts the “Giving Done Right” podcast. “The very wealthy are also faced with the fact that their net worths are growing faster than they can conceive of giving it away. This plan makes the company’s social impact its guiding principle and I think we’re going to see more donors pursuing this approach.”
Chouinard said other options for the Ventura, California, company to dedicate itself to protecting the planet — selling the company and donating the proceeds; or taking the company public — were not viable for Patagonia’s ultimate goals.
“Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth,” Chouinard wrote.
Chuck Collins, the Institute for Policy Studies director of the Program on Inequality and the Common Good, said Chouinard’s actions reflect a personal connection to the environmental crisis and a desire to back up his beliefs with his wealth.
“It shows that somebody who has substantial wealth is responding with the kind of scale needed to address the problem,” he said. “He’s working with the tools that he’s got. And it’s a pretty good response.”