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Patagonia founder donates company to fight climate change

Patagonia founder donates company to fight climate change

Yvon Chouinard, founder of Patagonia, deviated from the traditional Wall Street strategy of moving on from a company by reaping the rewards first and making millions of dollars.

The billionaire chose not to sell the company to the public or give it to his heirs and two adult children, Claire and Fletcher. Instead, Chouinard and his family members, including his wife Malinda, decided to transfer the Patagonian estate (worth $3 billion) to a specially designed trust and non-profit organization.

The trust and nonprofit organization was created to preserve the company’s independence and ensure that its $100 million in profits would be used for Chouinard to continue his multi-decade passion – preserving untapped land and fighting climate change.

The company also announced the decision on September 14 after the news was first reported by The New York Times, saying, “Hey guys, we just gave our company planet Earth. Well, it’s more subtle than that, but we’re closed today to celebrate this new plan. To save our only home. We’ll be back online tomorrow” via Twitter.

The Reluctant Billionaire

Chouinard, 83, has always been a reluctant billionaire and eschews the lifestyle his fortune could bring, even abhorring technology by choosing not to buy a computer or mobile phone. He founded the company in 1973 and has spent several decades donating 1% of its sales to popular environmental groups.

“Hopefully this will affect a new form of capitalism that doesn’t end up with a few rich and a group of poor,” Chouinard told The New York Times in an exclusive interview. “We will donate the maximum amount of money to the people who are actively working to save this planet.”

Patagonia will continue to be a private company that is estimated to sell over $1 billion worth of popular hats, jackets, and ski apparel annually. California-based Ventura has an enthusiastic fan base among Silicon Valley tech executives, Wall Street traders and employees at investment firms who have added their corporate logos to their jackets, and even inspirational Instagram accounts like Midtown Uniform.

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But Patagonia also disliked the excesses of Wall Street and Silicon Valley, and in 2021 famously opted to stop allowing all companies to put their logos on bulletproof vests. The company said it wanted to focus on the future of the environment because the slogans would shorten the life of clothes as the male-dominated workforce shifts jobs and fewer clothes end up in landfills.

The Chouinards received no tax benefits from their notable decision and ceased control of Patagonia in August. The family members transferred all of the company’s voting shares, representing 2% of the total shares, to the Patagonia Purpose Trust, which was created for this purpose.

The family, along with their advisors, will oversee and manage the trust to ensure that the clothing company continues to donate its profits and remains a socially responsible entity that does not focus solely on maximizing profits.

The Chouinards pay $17.5 million in taxes because their donation was made into a fund.

The remaining 98% of the company that owns its common stock was donated to Holdfast Collective, a non-profit organization the family created. The company’s profits will be transferred to the Holdfast Collective so it can fight climate change.

Holdfast Collective is organized as a 501(c)(4) organization, giving it the ability to make unlimited political contributions, but giving up any tax advantage. Patagonia has made an initial donation of $50 million and plans to give another $100 million to Holdfast Collective in 2022.

Dan Mosley, partner at BDT & Co. , a commercial bank that helped Patagonia set up the new structure, told the New York Times that the decision by the Chouinards cost the family money.

โ€œThere was a significant cost to them to do this, but it was a cost they were willing to incur to make sure this company stayed true to their principles,โ€ he said. And they didn’t get a charitable discount for it. There are no tax advantages here at all.โ€

BDT & Co. It is a bank that works with wealthy businessmen and individuals such as billionaire Warren Buffett, CEO of Berkshire Hathaway.

While many billionaires such as Bill Gates, founder and former CEO of Microsoft (MSFT) and Buffett, who signed the Giving Pledge to commit to donating a portion of their enormous fortune, the Chouinards would be at the helm of the most charitable families in the United States

David Callahan, founder of Inside Philanthropy, told the New York Times that the majority of billionaires donate “a tiny portion of their net worth each year.”

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