October 3, 2022
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Patagonia founder donates entire company to environmental nonprofits

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Yvon Chouinard, the founder of the Ventura-based outdoor apparel company Patagonia, has given his company away to two nonprofits that will use Patagonia’s profits to fight climate change.

The Chouinard family’s transfer of all of its ownership shares was announced by Patagonia on Sept. 14 and was effective immediately. Patagonia is one of the largest privately held companies in the tri-county region, with annual revenue that has been widely reported at around $1 billion in recent years.

The Patagonia Purpose trust now owns all voting shares of the company, which amounts to 2% of the total shares. The trust “exists to create a more permanent legal structure to enshrine Patagonia’s purpose and values,” the company stated in its news release.

The other 98% of the company is now owned by the Holdfast Collective. Patagonia will pay an annual dividend to the nonprofit, which the company estimates will be around $100 million per year, and the Holdfast Collective will use the money “to protect nature and biodiversity, support thriving communities and fight the environmental crisis,” Patagonia stated.

Management of the company will not change. Ryan Gellert will remain CEO and a board member, and Chouinard and his wife and children will also continue to sit on the board. The Chouinard family will “guide” the Patagonia Purpose Trust, electing and overseeing Patagonia’s board of directors, the company’s statement said.

Patagonia will also remain a for-profit company. As a registered B Corp. since 2018, it already donates 1% of its annual sales to charitable causes — in Patagonia’s case, environmental activism — and it will continue to do that under the new ownership structure, in addition to the $100 million annual dividends.

“While we’re doing our best to address the environmental crisis, it’s not enough,” Chouinard wrote in a letter posted to Patagonia’s website. “We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.”

Chouinard founded Patagonia nearly 50 years ago. He is now 83, has stepped back from management and splits his time between homes in Ventura and Wyoming.

Chouinard wrote that he started “as a craftsman,” making mountain climbing equipment himself and his friends, and “never wanted to be a businessman.”

He had been searching for an exit strategy and a succession plan, and rejected selling the company or taking it public and donating the proceeds. There wouldn’t be any guarantee that a new private owner would run Patagonia in a way that was consistent with Chouinard’s values, and a public offering would have been “a disaster,” he wrote.

“Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility,” Chouinard wrote. “Truth be told, there were no good options available. So, we created our own.”

According to a New York Times article published the day of the company’s announcement, Patagonia could be worth around $3 billion, making the Chouinards “among the most charitable families in the country.”

There is no tax benefit to the arrangement, the Times reported. Because the Chouinards donated their shares to a trust, the family will pay about $17.5 million in taxes on the gift. And because the Holdfast Collective is a 501(c)(4), allowed to make unlimited political contributions, the donation is not a deductible charitable contribution.

Patagonia’s Ventura headquarters (file photo)