Clothing empire given away
Patagonia’s eccentric founder transfers his company to trust and environmental nonprofit
A half-century after founding outdoor apparel maker Patagonia, Yvon Chouinard, the eccentric rock climber who became a reluctant billionaire with his unconventional spin on capitalism, has given the company away.
Rather than selling the company or taking it public, Chouinard, his wife, Malinda, and two adult children, Fletcher and Claire, who are both in their 40s, have transferred their ownership of Patagonia, valued at about $3 billion, to a specially designed trust and a nonprofit organization. They were created to preserve the company’s independence and ensure that all of its profits — some $100 million a year — are used to combat climate change and protect undeveloped land around the globe.
The unusual move comes at a moment of growing scrutiny for billionaires and corporations, whose rhetoric about making the world a better place is often overshadowed by their contributions to the very problems they claim to want to solve.
At the same time, Chouinard’s relinquishment of the family fortune is in keeping with his long-standing disregard for business norms and his lifelong love for the environment.
“Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,” Chouinard, 83, said. “We are going to give away the maximum amount of money to people who are actively working on saving this planet.”
Patagonia will continue to operate as a private, for-profit corporation based in Ventura, California. But the Chouinards no longer own the company.
In August, the family irrevocably transferred all the company’s voting stock, equivalent to 2% of the overall shares, into a newly established entity known as the Patagonia Purpose Trust.
The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits. Because the Chouinards donated their shares to a trust, the family will pay about $17.5 million in taxes on the gift.
The Chouinards then donated the other 98% of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation.
“There was a meaningful cost to them doing it, but it was a cost they were willing to bear to ensure that this company stays true to their principles,” said Dan Mosley, a partner at BDT & Co., a merchant bank that works with ultrawealthy individuals including Warren Buffett, and who helped Patagonia design the new structure.
Barre Seid, a Republican donor, is the only other example in recent memory
of a wealthy business owner who gave away his company for philanthropic and political causes. But Seid took a different approach in giving 100% of his electronics company to a nonprofit organization, reaping an enormous personal tax windfall as he made a $1.6 billion gift to fund conservative causes, including efforts to stop action on climate change.