Patagonia’s billionaire founder, Yvon Chouinard, has given his company away to the Earth.
Instead of selling Patagonia and donating the profit to charity, or taking the company public, Chouinard has given the $3-billion outdoor fashion brand to a trust and a nonprofit organization, called the Holdfast Collective.
The goal, says Chouinard, is to put any profit not reinvested into the company towards fighting climate change. He claims that will amount to about $100 million per year, depending on how well the company performs.
Here’s how Patagonia’s stock will be divided up:
While Patagonia will continue to operate as a for-profit company, its excess profits, whatever is left after reinvesting in the business, will go to a newly formed organization called the Holdfast Collective. The Chouinards donated 98% of Patagonia to this collective.
Here’s how it will operate:
🚫 Is a not-for-profit organization.
📢 It will advocate for causes.
💰 It will make grants and investments “to fight the environmental crisis, protect nature and biodiversity, and support thriving communities.”
All of the collective’s shares will all be nonvoting, which means it will have no input on how Patagonia is run.
Last month, the Chouinard family transferred all of the company’s voting stock into the newly established Patagonia Purpose Trust. Family members and their advisors will oversee the trust, which will ensure the company continues its focus on social responsibility. Unlike the Holdfast Collective, the trust will have decision-making power over the company.
Here’s what the Trust will be in charge of:
💼 It will approve key company decisions, like who sits on the board.
✅ It is meant to protect the company’s values and mission.
Chouinard doesn’t get an income tax refund for the move. Instead, he will pay about $17.5 million in taxes on the gift of shares to the trust. The family will no longer receive any profits from the company.