Patagonia’s millionaire founder is donating the company to a trust that will use the profits to combat the climate issue.
Instead of selling the company or going public, Yvon Chouinard, 83, announced on Wednesday that he will transfer his family’s ownership to a trust and a non-profit organization.
Chouinard is worth $1.2 billion and is famed for alpine climbs in Yosemite National Park.
“Each year, the money we earn after reinvesting in the company will be distributed as a dividend to assist battle the crisis,” he wrote in an open letter posted on the company’s website.
Instead of extracting value from nature and turning it into profit for investors, Patagonia will use the wealth it generates to safeguard the source of all prosperity.
In an interview with the New York Times, the founder of Patagonia adopted a more direct approach, stating: ‘Hopefully this will influence a new type of capitalism that does not result in a few rich people and a large number of impoverished people.
We are going to provide as much money as possible to those who are actively trying to save the earth.
The company founded by Chouinard has its headquarters in Ventura, California, and sells over $1 billion worth of outdoor apparel and equipment globally.
Patagonia will now be owned by Patagonia Purpose Trust, while non-voting stock will be transferred to Holdfast Collective and all revenues will be contributed to environmental causes.
Instead of selling the firm or going public, Patagonia founder Yvon Chouinard, 83, announced on Wednesday that he will transfer his family’s ownership to a trust and a non-profit organization.
Chouinard (shown), a pioneering rock climber, founded the firm in California during the 1970s.
Patagonia will continue to function as a private, for-profit organization despite the fact that the Chouinard family, which owned the business until last month, will no longer own it.
Approximately 2% of the firm’s voting stock is being transferred to the Patagonia Purpose Trust, a newly founded organization that will ensure the company fulfills its pledge to donate its profits.
The trust will be administered by family members, including his spouse and two adult children.
While wealthy individuals frequently make charitable contributions, the New York Times reported that the structure of the Patagonia founder’s move meant he and his family would receive no financial advantage and would actually incur a tax liability.
Approximately 98 percent of Patagonia’s non-voting shares were donated to the Holdfast Collective, a non-profit organization dedicated to combating the environmental crisis and safeguarding nature.
As the Holdfast Collective is a tax-exempt social welfare organization, the family received no tax deduction for its contribution.
A spokeswoman for the merchant bank BDT & Co., who assisted Patagonia in structuring the transfer of shares, told the New York Times: ‘There was a significant expense associated with their actions, but it was a cost they were ready to take to guarantee that the firm stays loyal to its beliefs.
They did not receive a charity deduction. There is absolutely no tax benefit here.
The firm is worth approximately $3 billion and has a strong connection to ecology.
Patagonia and Chouinard have a history of environmental advocacy in business.
In 2002, the alpinist created the “1% for the earth” campaign, and Patagonia became the first company to donate one percent of yearly sales to environmental causes.
And in 2018, the then-CEO of Patagonia, Rose Marcario, donated $10 million the firm saved from tax cuts to non-profit environmental organizations, in addition to the 1% of sales the company donates annually.
The 2017 rewrite of the United States tax system by the Republican Party, which reduced corporate tax rates from 35% to 21%, was a boon for corporations.
In a statement at the time, Marcario described the tax decrease as foolish and added, ‘Taxes safeguard the most vulnerable members of our society, our public lands, and other life-sustaining resources.
Despite this, the Trump administration enacted a corporate tax cut, jeopardizing essential services at the expense of the earth.
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