Patagonia's founding family is giving away their company -- and the $3 billion it's worth -- to trusts dedicated to protecting the environment and fighting global warming.
Yvon Chouinard, the founder of the environmentally-friendly outdoor apparel company, never wanted to be a billionaire. He's expressed the sentiment several times throughout the years, most recently, telling the New York Times that when he made the Forbes’ billionaire list, it really “pissed” him off.
This rejection of status and wealth has been a through-line of Chouinard's philosophy through the years. Over 20 years ago he told the LA 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.”
Now, as he and his family transfers their ownership of the company, collectively valued at $3 billion, to a specifically designed trust and nonprofit organization, Chouinard’s net-worth will definitely enter a period of no-growth.
The move comes as billionaires and corporations face more and more scrutiny in the public eye, especially as the pandemic has underlined massive wealth inequalities. In many cases, the growing aversion towards billionaires comes as rhetoric about making the world a better place is often overshadowed by their contributions to the very problems they claim to want to solve. Yvon Chouinard wants to change that.
“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, told The New York Times. “We are going to give away the maximum amount of money to people who are actively working on saving this planet.”
To him, this move ensures that Patagonia sticks to its values long after he’s gone. Patagonia will continue to operate as a for-profit company based in Ventura, California. Chouinard, his wife, and two adult children, however, will no longer have any stake in the company. Instead, every year, about $100 million in sales from apparel for climbing, snow, kitesurfing, hiking, fly fishing, mountain biking, and running will go to a specifically designed trust and nonprofit organization.
The newly established entity is known as the Patagonia Purpose Trust. The trust is made up of all of the company’s voting stock, which is roughly 2% in shares. It will be overseen by members of the family and their closest advisors, to ensure the company continues to uphold its mission of being a socially responsible business and donates all of its profits.
The other 98% and the Chouinards’ common shares will be funneled into a newly formed nonprofit organization: the Holdfast Collective. As a recipient of all of the company’s profits, the Holdfast Collective, a 501(c)(4), allows the company to make unlimited contributions to its cause, while not receiving a single tax benefit. The company has already donated $50 million to the Collective.
"It's been a half-century since we began our experiment in responsible business," Chouinard told NPR. “If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. As the business leader, I never wanted to be, I am doing my part."
In a letter pinned on the homepage of Patagonia’s site, Chouinard relives how the business became. A climber himself, he and his friends began experimenting with climbing gear. As they ventured into apparel, Patagonia was born in 1973. As they witnessed the extent of global warming and ecological destruction, they wanted to use the company to not only fight climate change but sway other businesses and their consumers to do the same.
Patagonia's products don’t cause harm to the environment and are all sustainably made. Since 1985, the company has donated 1% of annual sales to causes working for the preservation and restoration of our planet. They’ve awarded over $140 million in cash and in-kind donations to domestic and international grassroots environmental groups making a difference in their local communities.
The company’s activism doesn’t stop there. Since its inception, they’ve had a unique brand of corporate social activism.
Before opening for business, Chouinard gave desk space to a young activist, fighting to protect the Ventura River from commercial development, he wrote in 2013. Patagonia became the first commercial customer in California to commit to purchasing 100% renewable energy in 1998.
It began donating 10% of its profits to conservation groups in 1985. In 1990, the company donated money to Planned Parenthood and for every complaining call they received, they gave the organization another $5. They donated 100% of Black Friday sales to grassroots organizations in 2016, and sued President Trump after his proclamation slashing national monuments in Utah sacred to many Native American tribes in 2017.
Since 2018, they have supported climate-focused senate candidates, and over the years they have donated to a slew of environmental groups and social justice organizations like Black Lives Matter and the New Georgia Project to fight restrictive voting laws.
Their action network regularly runs campaigns for climate justice, environmental justice, and nature protection causes. Currently, a donation and action campaign for an Indigenous community in Newtok, Alaska lives on their site.
The people of Newtok need to escape the rising sea levels and coastal erosion threatening their way of life. Patagonia Film is a series of videos highlighting environmental and justice issues and changemakers and activists across environmental spheres.
The latest in the series gives voice to the people of Newtok, showing them losing their only drinking source. The documentary, published in April, archives the issue over the last 33 years. They face the dangers of floodwater and pollution, all while navigating coronavirus. It follows the 400 Yup’ik residents as they try to relocate their community, racing to higher ground, while battling government inertia. The Yup’ik are some of America’s first climate refugees.
The story of Newtok is one of many, Patagonia has told.
Chouinard wrote in his letter that while the company has been doing its best to fight the environmental crisis, it’s not enough. There were no good options available to 1) improve the company's philanthropy, 2) keep their team of people employed, and 3) ensure that profits and vitality never exceed responsibility. Thus, they decided to create their solution.
Instead of “going public” Chouinard articulates in the letter, Patagonia is “going purpose.”
“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., who helped Patagonia design the structure. The costs he speaks of are many, one of which is the $17.5 million in taxes the Chouinard must pay on the gift.
But to Yvon Chouinard, his wife Matilda, and their two children, Fletcher and Claire, who are both in their 40s, it is all worth it. The family has established itself as one of the most charitable families in the country, giving away the bulk of their assets throughout their lifetime.
“In my 30-plus years of estate planning, what the Chouinard family has done is really remarkable,” Mosley told The New York Times. “It’s irrevocably committed. They can’t take it back out again, and they don’t want to ever take it back out again.”
In terms of how the Holdfast Collective will distribute the projects, Chouinard notes that much of the focus will be on nature-based climate solutions such as preserving wildlands. The Collective could also lobby and donate to political campaigns, and will build on Patagonia’s legacy of funding grassroots activists.
"Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source,” Chouinard told NPR. “We're making Earth our only shareholder. I am dead serious about saving this planet."