lauren
By Lauren Bray, edhat staff
The founder of the Ventura-based apparel company, Patagonia, has donated the billion dollar enterprise to fight climate change.
Yvon Chouinard, his spouse and two adult children, signed away their ownership and are dedicating all company profits to projects and organizations that will protect wild land and biodiversity.
Patagonia is estimated to be worth $3 billion, according to The New York Times.
In a letter posted Wednesday on the Patagonia website titled “Earth is now our only shareholder,” Chouinard passionately wrote about reimagining capitalism.
“As we began to witness the extent of global warming and ecological destruction, and our own contribution to it, Patagonia committed to using our company to change the way business was done. If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way,” he wrote.
Chouinard reflected on starting with materials that caused less harm to the environment, then giving away 1% of sales each year, becoming a certified B Corp and a California benefit corporation, and writing values into their corporate charter.
Patagonia Campus in Ventura (Photo: Kyle Sparks)
Now, nearly 50 years since finding popular apparel company, the Chouinard family has transferred all ownership to two new entities: Patagonia Purpose Trust and the Holdfast Collective. Every dollar that is not reinvested back into Patagonia will be distributed as dividends to protect the planet, according to a company press statement.
The Patagonia Purpose Trust now owns all the voting stock of the company (two percent of the total stock) and exists to create a more permanent legal structure to enshrine Patagonia’s purpose and values. It will help ensure that there is never deviation from the intent of the founder and to facilitate what the company continues to do best: demonstrate as a for-profit business that capitalism can work for the planet, according to the company’s statement.
The Holdfast Collective owns all the nonvoting stock (98 percent of the total stock), and it will use every dollar received from Patagonia to protect nature and biodiversity, support thriving communities and fight the environmental crisis. Each year, profits that are not reinvested back into the business will be distributed by Patagonia as a dividend to the Holdfast Collective to help fight the climate crisis.
The company projects that it will pay out an annual dividend of roughly $100 million, depending on the health of the business.
“Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits. But it’s also resilient. We can save our planet if we commit to it,” wrote Chouinard.
Too bad Jeff Bozo doesn’t have the same mentality.
What a legend.
This has made my day x1000, I’ve been telling everyone I see about it. What an absolutely beautiful gift to earth and to all of us. It is so rare to see companies making decisions like this. I hope this inspires similar acts. Truly amazing, I am blown away.
He just made a for profit company a protected trust non profit charity. His CPAs and lawyers probably utilized a South Dakota trust, which is especially good for dynastic handoffs and privacy.
So yes, it’s a giant tax dodge that also allows him and his dependents to remain employees and controllers of the trusts and company. But huge props to Mr Chouinard and his team for leveraging some very clever PR.
Explain, if it’s such a great “tax dodge,” why aren’t any other companies doing it? Sus
No good deed goes unpunished, or criticized by anyone keeping water clean for you to drink. It may be good tax-wise, but this man and his company donated millions upon millions of their profits to help others and resources we all need and enjoy. The fact is, he and his descendants could continue making billions into their own pockets for generations but they decided not to for the greater good. Unlike every other American billionaire, sans Mackenzie Scott, who keep getting richer and richer.
Hundreds of private companies do this annually, not many are of this size. Even little guys like me are encouraged to consider it by our CPAs. It’s best when your kids want to retain control but don’t want to do the day to day management. This is not a tax strategy used by public companies (such as Amazon). reminder that non profit can pay 100% of it’s contribution in the form of overhead (ie, salaries to the trust’s employees).
But look, the guy created a multi billion dollar company and he can do what he wants, and donate monies to whatever he wants. But he isn’t dumb and he has a lot of great legal and tax advisors. Good on him for leveraging these strategies.
simpleton, the Edhat resident trust lawyer……
bahahahahha
“It may be good tax-wise”
It’s not; simpleton is a blatant liar.
Do they really believe they can make the air colder by donating the profits of their company to the new organization they created?
Sac, science is not about declaring things settled or proven. Science is also not at all about consensus, or suppressing dissent. However, I would agree doomsday predictions and the belief that we can make the air colder and cause the seas to fall by making sacrifices of various sorts would fall within the purview of the “proven science” of con artistry.
babble babble babble what?
CHIP – Do you really believe there is nothing we can do about slowing down climate change?
Sac, for millennia humans have held the belief that they can influence the weather by making various forms of sacrifices. The weather has always been a bit unpredictable in both the short term and the long term. Until recently, it was widely understood that weather is a phenomenon that humans have little influence on, and that making sacrifices will not result in desired weather outcomes. Although it seems our society is losing that knowledge, I still hold the understanding that I cannot make the air colder by sacrificing my standard of living.
CHIP – yeah, you seem confused here. This isn’t about changing the weather, it’s about addressing the proven effects of pollution on our climate, again not weather, and as the article states (not surprised you didn’t even read it): to “protect wild land and biodiversity.”
I’ll add an example. Below is a link to a Mercury news article from a few years back explaining the results of a study of tree ring data that established a record of drought in california going back over 1000 years. Be sure to scroll through to the last picture which is a graph of the drier and wetter periods identified in the tree ring data. The drought in 1850 was so severe that it caused the demise of the Spanish ranchos, subdivision of lands, and tremendous societal changes. That drought was nothing by historical standards. History indicates a severe drought could occur in the future and it almost certainly will. That does not mean that humans are causing it to happen, or that humans can make it rain more by making sacrifices.
https://www.mercurynews.com/2014/01/25/california-drought-past-dry-periods-have-lasted-more-than-200-years-scientists-say/
“History indicates a severe drought could occur in the future and it almost certainly will. That does not mean that humans are causing it to happen,” – Just because it has changed in the past without our interference in the past isn’t proof positive that humans haven’t affected our climate over the past 100 years. Simple logic there.
Sac, humans certainly believed they could interfere with the climate more than 100 years ago, just as many humans continue to hold that belief today. Claiming that undesirable changes to climate and harmful weather events are caused by humans and can be avoided by making various forms of sacrifices is one of the oldest cons in existence. We know there have always been and will be droughts, hurricanes, heatwaves, and even ice ages. I guess it’s only natural to try to capitalize on these phenomenon. However, it’s dangerous to make sweeping policy decisions based on false beliefs. Many European countries dismantled the infrastructure to produce their own energy based on a belief that they could make the air colder. Now, with great irony, they will be suffering with cold air this winter along with extreme cost increases, economic turmoil, and a weakened strategic position to confront Russian aggression.
Tax avoidance Strategy. Period. All family offices and large wealth advisors have been setting up these irrevocable trusts for decades. It is legal and nothing but loophole filled complexity. Ironic at best as a company that resells goods designed to keep you warm is selling itself as being responsible for cooling the planet. So it can keep you warm.
yeah, not if you read the article….. thanks for trying haskels
This reminds me of Brewster’s Millions. LOL
Its a free country. You can waste money in any way you choose. If people will honor you for it, all the better.
Wah wah wah. No good deed goes unpunished. EdHat comments are becoming unreadable….
Yacht if you think this is bad, don’t go on any other websites. The comment section is much much worse and you might get too offended.
It’s not about pearl-clutching, it’s about wasting my time. C-ya.
“I hate all these comments, everyone is so negative!” Says someone posting a negative comment.