Patagonia founder shuns company from environmental trusts

FILE - Yvonne Chouinard, founder and president of Ventura-based Patagonia Inc., is photographed September 28, 2005 at the original Chouinard tool blacksmith shop located in Ventura, Calif., where he once made lattice pits for climbers.  In a letter posted to the privately held company's website on Wednesday, September 14, 2022, Chouinard said the 50-year-old company would transfer 100% of its voting stock to the Patagonia Purpose Trust and 100% of its stock to the nonvoting Holdfast Collective. was given.  (Al Seeb/Los Angeles Times via AP, File)
FILE - Yvonne Chouinard, founder and president of Ventura-based Patagonia Inc., is photographed September 28, 2005 at the original Chouinard tool blacksmith shop located in Ventura, Calif., where he once made lattice pits for climbers.  In a letter posted to the privately held company's website on Wednesday, September 14, 2022, Chouinard said the 50-year-old company would transfer 100% of its voting stock to the Patagonia Purpose Trust and 100% of its stock to the nonvoting Holdfast Collective. was given.  (Al Seeb/Los Angeles Times via AP, File)
FILE - Yvonne Chouinard, founder and president of Ventura-based Patagonia Inc., is photographed September 28, 2005 at the original Chouinard tool blacksmith shop located in Ventura, Calif., where he once made lattice pits for climbers.  In a letter posted to the privately held company's website on Wednesday, September 14, 2022, Chouinard said the 50-year-old company would transfer 100% of its voting stock to the Patagonia Purpose Trust and 100% of its stock to the nonvoting Holdfast Collective. was given.  (Al Seeb/Los Angeles Times via AP, File)

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FILE – Yvonne Chouinard, founder and president of Ventura-based Patagonia Inc., is photographed September 28, 2005 at the original Chouinard tool blacksmith shop located in Ventura, Calif., where he once made lattice pits for climbers. In a letter posted to the privately held company’s website on Wednesday, September 14, 2022, Chouinard said the 50-year-old company would transfer 100% of its voting stock to the Patagonia Purpose Trust and 100% of its stock to the nonvoting Holdfast Collective. was given. (Al Seeb/Los Angeles Times via AP, File)

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FILE – Yvonne Chouinard, founder and president of Ventura-based Patagonia Inc., is photographed September 28, 2005 at the original Chouinard tool blacksmith shop located in Ventura, Calif., where he once made lattice pits for climbers. In a letter posted to the privately held company’s website on Wednesday, September 14, 2022, Chouinard said the 50-year-old company would transfer 100% of its voting stock to the Patagonia Purpose Trust and 100% of its stock to the nonvoting Holdfast Collective. was given. (Al Seeb/Los Angeles Times via AP, File)

Outdoor gear company Patagonia says “Earth is now our sole shareholder” after transferring ownership of the company from founder Yvonne Chouinard and his family to two nonprofits founded to fight climate change.

in a letter Posted on the 50-year-old company’s website Wednesday night, Chouinard said Patagonia will transfer 100% of its voting stock to the Patagonia Purpose Trust, which has long been known for its environmental activism to uphold the values ​​of the company. is designed to. All of its non-voting stock will go to Holdfast Collective, a non-profit dedicated to “fighting the environmental crisis and protecting nature.”

“While we are doing our best to address the environmental crisis, this is not enough,” Chouinard wrote. “We need 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 in the company, approximately $100 million will be distributed annually to Holdfast Collective as dividends, depending on the health of the business.

Grace Chiang Nicolet, vice president of programming and external relations for The Center for Effective Philanthropy, said this unusual move by the Chouinard family could become a blueprint for company founders who want to donate their businesses to causes that matter to them. .

“Business owners are often faced with frightening decisions over the future of their company when it’s time to sell,” said Nicolette, who co-hosts the “Giving Done Right” podcast. “The very wealthy are also faced with the fact that their net worth is growing faster than they can imagine giving it. The plan makes the social impact of the company its guiding principle and I think we Going to see more donors following this approach.”

Other options for the Ventura, Calif., company to dedicate itself to protecting the planet — sell the company and donate the proceeds, Chouinard said; Or taking the company public—were not viable for Patagonia’s end goals.

“Instead of extracting value from nature and turning it into wealth for investors, we will use the money Patagonia creates to protect the source of all wealth,” Chouinard wrote.

Chuck Collins, director of the Institute for Policy Studies on Inequality and the Common Good, said Chouinard’s works reflect a personal connection to the environmental crisis and a willingness to back up his beliefs with his wealth.

“It shows that someone who has enough money is responding with the scale needed to address the problem,” he said. “He’s working with the tools he’s got. And it’s been a great response.”

Patagonia CEO Ryan Gellert said in a statement that Chouinards challenged him and others in the company to develop a new ownership structure.

“They wanted us to both protect the purpose of the business and release more money immediately and forever to fight the environmental crisis,” Gellert wrote. “We believe this new structure works on both and we hope it will inspire a new way of doing business that puts people and the planet first.”

Brian Mitdorf, a professor of accounting at Ohio State University who focuses on nonprofit organizations and their financial statements, said the new Patagonia structure is similar to the one Paul Newman created for his salad dressing company, Newman’s Own. Profits from the business go to the Newman’s Own Foundation, which donates to nonprofits supporting children facing adversity.

The difference is that Holdfast Collective is organized as a 501(c)4 corporation, according to the New York Times, which first reported the ownership change. This allows it to lobby politicians, which public-profit charities such as the Newman’s Own Foundation are not allowed to do.

“I don’t think there’s enough attention being paid here that the tax benefits of choosing a charity over a social welfare organization to be a charity are not clear in this particular case,” Mittendorf said. He said the gift tax that Chouinards will pay is on his initial investment in Patagonia, not its current price, which is estimated at $3 billion.

“I see it as a desire to maintain control over the company, while ensuring that the resources the company generates are used for a specific goal,” he said.

Patagonia manufactures outdoor clothing, gear and accessories for everything from skiing to climbing and camping. The company said it would continue its previous charitable donations, including donating 1% of its sales each year to grassroots workers and remaining B Corp, a designation for companies that meet social and environmental standards as well. Prioritize profits.

Chouinard said he never wanted to be a businessman and started Patagonia as a craftsman, making climbing gear for himself and his friends.

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