By David Gelles
© The New York Times Co.
A half-century after founding outdoor apparel maker Patagonia, Yvon Chouinard, the eccentric rock climber who became a reluctant billionaire with his unconventional spin on capitalism, has given the company away.
Rather than selling the company or taking it public, Chouinard, his wife and two adult children have transferred their ownership of Patagonia, valued at about $3 billion, to a specially designed trust and a nonprofit organization. They were created to preserve the company’s independence and ensure that all of its profits — some $100 million a year — are used to combat climate change and protect undeveloped land around the globe.
The unusual move comes at a moment of growing scrutiny for billionaires and corporations, whose rhetoric about making the world a better place is often overshadowed by their contributions to the very problems they claim to want to solve.
At the same time, Chouinard’s relinquishment of the family fortune is in keeping with his longstanding disregard for business norms and his lifelong love for the environment.
“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, said in an exclusive interview. “We are going to give away the maximum amount of money to people who are actively working on saving this planet.”
Patagonia will continue to operate as a private, forprofit corporation based in Ventura, Calif., selling more than $1 billion of jackets, hats and ski pants each year. But the Chouinards, who controlled Patagonia until last month, no longer own the company.
In August, the family irrevocably transferred all the company’s voting stock, equivalent to 2% of the overall shares, into a newly established entity known as the Patagonia Purpose Trust.
The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits.
Because the Chouinards donated their shares to a trust, the family will pay about $17.5 million in taxes on the gift.
The Chouinards then donated the other 98% of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation.
“There was a meaningful cost to them doing it, but it was cost they were willing to bear to ensure that this company stays true to their principles,” said Dan Mosley, a partner at BDT & Co., a merchant bank that works with ultrawealthy individuals including Warren Buffett, and who helped Patagonia design the new structure. “And they didn’t get a charitable deduction for it. There is no tax benefit here whatsoever.”
That differs from the choice made by Barre Seid, a Republican donor who recently gave 100% of his electronics manufacturing company to a nonprofit organization shortly before the company was sold, reaping an enormous personal tax windfall and making a $1.6 billion gift to fund conservative fights over abortion rights, climate change and more.
By giving away the bulk of their assets during their lifetime, the Chouinards — Yvon, wife Malinda and children Fletcher and Claire, who are both in their 40s — have established themselves as among the most charitable families in the country.
Patagonia has donated $50 million to the Holdfast Collective and expects to contribute an additional $100 million this year, making the new organization a major player in climate philanthropy.
For Chouinard, it provided a satisfactory resolution to the matter of succession planning.
“I didn’t know what to do with the company because I didn’t ever want a company,” he said from his home in Jackson, Wyo. “I didn’t want to be a businessman. Now I could die tomorrow, and the company is going to continue doing the right thing for the next 50 years. And I don’t have to be around.”
In some ways, the forfeiture of Patagonia is not terribly surprising coming from Chouinard.
As a pioneering rock climber in California’s Yosemite Valley in the 1960s, Chouinard lived out of his car and ate damaged cans of cat food that he bought for 5 cents apiece.
Even today, he wears raggedy old clothes, drives a beat-up Subaru and splits his time between modest homes in Ventura and Jackson. Chouinard does not own a computer or a cellphone.
Patagonia, which Chouinard founded in 1973, became a company that reflected his own idealistic priorities, as well as those of his wife. The company has been an early adopter of progressive ideas — from organic cotton to on-site child care.
The company has given away 1% of its sales for decades, mostly to environmental activists. And in recent years, the company has become more politically active, going so far as to sue the Trump administration to protect Bears Ears National Monument.