ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / ECONOMY & WORK

Patagonia founder donates his $3 billion company to fight climate change— and he still faced backlash

The company which was founded in the 70s, has been known for its focus on activism.
PUBLISHED OCT 11, 2024
Photo credits: Getty Images |  (Photo by Jean-Marc Giboux/Liaison Agency) and  (Photo by Michael M. Santiago)
Photo credits: Getty Images | (Photo by Jean-Marc Giboux/Liaison Agency) and (Photo by Michael M. Santiago)

The impact of industrial pollution has brought the planet to a point when climate change is wreaking havoc in different parts of the world. While corporations have made promises to cut down emissions and others are buying carbon credits, Yvon Chouinard, the founder of clothing Patagonia gave away his firm's entire profits to fight climate change in 2022. But while his philanthropy was praised, some reports claimed that the plan actually helped the billionaire avoid $700 million in taxes.

Patagonia store owner Yvon Chouinard poses in his shop November 21, 1993 | Getty Images | Photo by Jean-Marc Giboux/Liaison Agency
Patagonia store owner Yvon Chouinard poses in his shop November 21, 1993 | Getty Images | Photo by Jean-Marc Giboux/Liaison Agency

Giving Away His Life's Work

Chouinard, who turned his passion for rock climbing into one of the world’s most successful sportswear brands, took to X (formerly Twitter) to announce that he had donated his $3 billion company to a specially designed trust and nonprofit organization.

Chouinard, his wife, and two children worked with teams of company lawyers to create a structure that allowed Patagonia to continue to operate as a for-profit company whose proceeds would benefit environmental efforts, The Guardian reported.



 

The company which was founded in the 70s, has been known for its focus on activism. Since 1985, it has donated 1% of its total sales to environmental groups through the One Percent for the Planet organization, founded by Chouinard. 

However, soon after his groundbreaking announcement, Net Zero Watch tweeted, that the billionaire's "last ditch effort" to protect the planet was saving him $700 million in taxes as well.



 

A Potential Tax Evasion Plan

According to a Bloomberg analysis, the structure of Chouinard’s deal allowed him to avoid the tax he would have paid if the company was sold. Furthermore, Chouinard told The New York Times that the family's voting stock which was 2% of all shares was being transferred to a new trust run by family members and advisers.

The rest of the privately owned company's stock, which is held by the family would go to a new nonprofit called Holdfast Collective. This reportedly means that his heirs will also avoid estate and gift taxes, while the family keeps control of the company.



 

As per The Times report, the family would have to pay $17.5 million in gift taxes, under normal circumstances. However, due to the structured deal, they would not have to pay any capital gains tax on the value that the stock has gained since the family first acquired it. Bloomberg estimated that this capital gains tax on the donation could have been about $700 million.



 

Justin Miller, national director of wealth planning at Evercore Wealth Management told Business Insider that there was a massive amount of stocks headed for the 501(c)(4) nonprofit, which was tax-exempt as well. He estimated that if 98% of the $3 billion donated had been subject to a federal gift tax, the amount owed by the Patagonia family would be about $1.176 billion including the 40% levy.



 

Thus, experts and people across the globe criticized Chouinard for coming up with a structure that allowed him to offload the company and "opt-out" of paying taxes. However, in a statement to Insider, a company spokesperson said that the billionaire founder had no intention of avoiding taxes. 

"Patagonia pays its taxes," the statement read. "We have at times advocated for increased corporate tax rates to support climate initiatives," it added. The representative also claimed that the company would be willing to pay a higher corporate tax as well to advocate for "stronger climate policies".

MORE ON MARKET REALIST
The artwork from the guest's grandfather, Henry Siddons Mowbray was too important for him to let go.
3 hours ago
The pawn shop owner took a chance on the item being authentic and it worked out well.
5 hours ago
The only name that the host was familiar with throughout the round was Cinderella.
6 hours ago
Kevin O'Leary teamed up with another shark to make the offer after the two fought for a deal.
1 day ago
The contestant had his priorities sorted even though his answer didn't find many takers.
1 day ago
The guest said that he had purchased it for $750, about 15 years ago, which was way too much money.
1 day ago
Thankfully, none of the cast members will be changed and fans are excited about the changes.
2 days ago
The guest even had the signature authenticated, but it did not fetch him what he wanted.
2 days ago
The host then brutally trolled one of the contestants for a mistake he refused to see.
2 days ago
The sharks were baffled that the entrepreneurs did not even have a plan to become profitable.
3 days ago
The contestant's answer made the host single him out in the most hilarious manner.
3 days ago
The host even gave justification for the contestant's shocking answer.
3 days ago
The host's hilarious expression after hearing the absurd answer will surely go down in the game show's history.
4 days ago
The guest hoped to getv $1,500 for it but was only offered a couple hundred bucks.
4 days ago
The old man wanted the car to be painted black as well, which would have cost a lot of money.
4 days ago
It seemed like she was going to win the car and some more after almost nailing the game.
5 days ago
While the founder of Hampton Adams got a $500,000 offer, he chose not to go for it.
5 days ago
Fans of the show quickly picked up on the new detail which must have meant to be a secret.
5 days ago
The entrepreneurs were not able to present the numbers that might have instilled some confidence.
5 days ago
The entrepreneur's mission to "save mankind" and his life's story impressed all of the sharks.
6 days ago