Patagonia founder Yvon Chouinard is giving his company away — to planet Earth, he announced Wednesday.
“I never wanted to be a businessman,” Chouinard wrote in an open letter announcing the transfer of his roughly $3-billion controlling stake in the company to a trust and a nonprofit.
It’s a sentiment he’s expressed time and time again, telling the Los Angeles Times in 1994: “I can sit down one on one with the president of any company, any time, anywhere, and convince them that growth is evil.”
Chouinard and his family transferred their voting stock to the newly established Patagonia Purpose Trust, which will ensure that Patagonia maintains its commitment to corporate responsibility and donating its profits. The rest of the company, about 98% of its shares, was donated to the Holdfast Collective, a nonprofit organization that will receive all of the company’s profits, roughly $100 million a year, and use them to fight climate change.
乔伊纳德和他的家人将他们有投票权的股票转让给了新成立的巴塔哥尼亚目的信托/Patagonia Purpose Trust，该信托将确保巴塔哥尼亚保持其对企业责任和捐赠利润的承诺。公司的其余部分，约98%的股份被捐赠给Holdfast Collective。这是一个非营利组织，将获得公司所有利润(大约每年1亿美元)，并将其用于应对气候变化。
The deal is structured in ways that also bring the billionaire other perks, by letting him and his family keep control of Patagonia while shielding them from tax bills that could have totaled hundreds of millions of dollars.
While many billionaires make living donations with tax and estate planning as the primary considerations, Chouinard seems to have structured his Patagonia transfer with at least a few purposes in mind. Holdfast is a 501(c)(4), a nonprofit that can make unlimited political donations — unlike its cousin, the 501(c)(3). For that reason, any giving to a 501(c)(4) isn’t eligible for income-tax deductions. In addition, the Patagonia founder will owe $17.5 million in gift taxes for the shares he transferred to the trust.
Still, the moves mean Chouinard won’t have to pay the federal capital gains taxes he would have owed had he sold the company, an option he said was under consideration. On a $3 billion sale, that bill could be more than $700 million. It also helps Chouinard avoid the US estate and gift tax, which is a 40% levy on large fortunes when they’re transferred to heirs.
“There was never an ask from the Chouinard family that we avoid taxes” when structuring the transaction, said Corley Kenna, a Patagonia spokeswoman. The company has a long history of paying its taxes and “supporting tax increases that could benefit the planet,” she added, noting that Patagonia’s CEO backed a higher corporate rate in support of President Biden’s Build Back Better plan.
Chouinard said in his statement that the trust was “created to protect the company’s values” of preserving nature through business practices. It already gives away 1% of sales each year to environmental nonprofits.
Still, Ray Madoff, a professor at Boston College Law School, said there’s a broader question of whether the ultra-wealthy should be able to circumvent taxes.
“We are letting people opt out of supporting all the expenses of government to do whatever they want with their money,” Madoff said. “This is highly problematic from the point of view of democracy, and it can mean a higher tax burden for the rest of Americans.”
Donating to a foundation or other 501(c)(3) nonprofit could have brought even more tax savings — namely, with a charitable deduction offsetting other income — but US rules make it difficult for those organizations to own private businesses, said Ellen Harrison, a tax attorney at McDermott Will & Emery in Washington. Using a 501(c)(4) and trust lets Chouinard and his family continue to effectively control the company (family members will remain on its board under the new ownership structure).
华盛顿McDermott Will & Emery律师事务所的税务律师艾伦·哈里森说，捐赠给基金会或其他501(c)(3)非营利组织本可以带来更多的节税，即用慈善扣除抵消其他收入。但美国的规定使这些组织难以拥有私人企业。使用501(c)(4)和信托的方式让乔伊纳德和他的家族继续有效地控制公司（在新的所有权结构下，家族成员将继续留在董事会中）。
“I suspect the driver was trying to preserve the company,” Harrison said of the transaction. Founders often “almost view these companies as part of their family.”
The Ventura-based outdoor apparel company was founded on Yvon Chouinard’s love of the great outdoors. He grew up in Burbank and took to climbing the Tehachapi Mountains in his teens, surfed along Highway 1, and eventually became a skilled rock climber who lived out of his car in the Yosemite Valley.
In 1957, he started by creating his own line of reusable climbing spikes that were hammered into the rock. When he discovered his hardware was severely damaging the rock, he phased out of that business and introduced an alternative in 1972 — and it quickly became a hit with climbers. In an early catalog, he espoused the importance of enjoying the wilderness while preserving it, leaving no trace behind.
“We have always considered Patagonia an experiment in doing business in unconventional ways,” Chouinard wrote in his book “Let My People Go Surfing.” “None of us were certain it was going to be successful, but we did know that we were not interested in ‘doing business as usual.’”
Over the decades, Patagonia has displayed a unique brand of corporate activism backed by its commitment to sustainability. In 2018, the company changed its mission statement to something plain and direct: “Patagonia is in business to save our home planet.” In more recent years, its environmental activism has extended directly into the political sphere as well.
It’s unclear to what extent Chouinard’s Holdfast nonprofit will get involved in politics, since the issue of climate change is broad and could entail lobbying for legislation or apolitical charitable work, Harrison said.
“Battling climate change can mean a lot of things,” she said.
With a historically polarized government leading to repeated stalemates on legislation, it’s likely that more billionaires will see 501(c)(4)s as the most expedient way to ensure their policy aims and charitable intentions outlive them.
“If someone wanted to leave their votes behind after they die, we don’t let people do that,” Madoff said. “But through these organizations” they’re doing something similar, she said. “And their money is so much more powerful than a single vote."
John Elkington, a pioneering authority on corporate responsibility and sustainable development who is credited with coining the terms “green growth” and “triple bottom line.”, said the announcement was “totally in character, yet still blew my socks off.”
Chouinard’s move puts Patagonia “light-years” ahead of other corporations aspiring to balance business interests and social responsibility, Elkington said.
“For me, Yvon has always represented true north,” Elkington said. “And hundreds of CEOs and other business leaders will now be forced to reconsider their own takes on the climate challenge.”
Here’s a timeline of some of Patagonia’s biggest moves in social activism:
“I don’t really have the guts to be on the front lines,” Chouinard wrote in 2013, but he has supported activists since the conception of the company. A year before its official founding, he gave desk space to a young activist who fought to protect the Ventura River from a commercial development near the river’s mouth.
Began donating 10% of its profit to conservation groups, which it later changed to 1% of all revenue.
Together with REI, North Face and Kelty, founded the Conservation Alliance, which collects membership dues from companies to distribute to grass-roots environmental organizations. As of 2022, it had more than 270 member companies, and it plans to distribute more than $2.2 million this year.
与REI、North Face和Kelty一起成立了保护联盟/Conservation Alliance。该联盟向公司收取会员费，分发给基层环保组织。截至2022年，它有270多家会员公司，并计划在今年分配超过220万美元。
Donated money to Planned Parenthood, drawing complaints and threats of boycotts from Christian fundamentalists. The company responded by telling callers it would donate an additional $5 to Planned Parenthood for every call received.
向计划生育组织Planned Parenthood捐款，引起基督教原教旨主义者的抱怨和抵制威胁。该公司的回应是告诉来电者，每接到一个电话，就会额外向Planned Parenthood捐赠5美元。
Chouinard told the company’s managers they had 18 months to switch from conventional to organic cotton or stop selling sportswear altogether. Two years later, Patagonia began exclusively using 100% organic cotton — grown without synthetic pesticides, herbicides or GMO seeds.
Became first commercial customer in California to commit to purchasing 100% renewable wind energy.
Ran an ad in the New York Times urging readers, “Don’t Buy This Jacket” to bring attention to the company’s Common Threads Initiative, which allows consumers to buy or trade in used Patagonia clothing.
Began making Fair Trade Certified clothing. The company said it offers more certified clothing styles than any other brand, and the additional money paid for Fair Trade Certified clothing goes directly to the workers at the factory.
Donated 100% of global Black Friday sales to grass-roots organizations.
Sued President Trump after his proclamation slashing national monuments in Utah sacred to many Native American tribes.
Endorsed Senate candidates for the first time, including Sen. Jon Tester in Montana and then-Rep. Jacky Rosen, who both won their races. The company also helped launch the “Time to Vote” initiative, which resulted in more than 1,000 companies committing to giving their employees enough time to vote on election day. Former Chief Executive Rose Marcario also announced the company would donate $10 million to climate change groups — the amount of taxes Patagonia didn’t have to pay because of corporate tax breaks during the Trump administration, she said.
Released limited-edition shorts with the tag, “VOTE THE ASSHOLES OUT.” They quickly sold out. The same year, Patagonia pulled all ads from Facebook and Instagram and continues to boycott them for failing to “take sufficient steps to stop the spread of hateful lies and dangerous propaganda on its platform.”
发布了限量版短裤，标签是“投票把混蛋赶出去/Vote the assholes out”。它们很快就卖光了。同年，巴塔哥尼亚公司从Facebook和Instagram上撤下所有广告，并继续抵制它们。因为Facebook和Instagram没有“采取足够的措施来阻止仇恨性谎言和危险的宣传在其平台上的传播”。
Donated $1 million to Black Voters Matter and the New Georgia Project to fight restrictive voting laws in Georgia.
向“黑人选民很重要/Black Voters Matter”和“新乔治亚州项目”捐赠了100万美元，以对抗乔治亚州的限制性投票法。
Announced it would provide bail for employees who have taken a nonviolent civil disobedience class if they were arrested while peacefully protesting for abortion rights after the Supreme Court’s decision to overturn Roe vs. Wade.