Yvon Chouinard, the founder of Patagonia, on Wednesday revealed that he and his family had given away the company and that all future profits from the apparel maker would go toward fighting the climate crisis.
It’s a groundbreaking act of philanthropy. In voluntarily forfeiting all their shares in Patagonia, which is valued at more than $3 billion, the Chouinards are renouncing their status as one of the wealthiest families in America.
And by routing all of Patagonia’s profits, some $100 million a year, to a new nonprofit organization called the Holdfast Collective, they have immediately established an entity that will become one of the nation’s biggest funders of climate causes.
The Chouinards are not the first billionaires to pledge their fortunes to the climate fight.
In recent years, Jeff Bezos, the Amazon founder, pledged $10 billion to what he called the Bezos Earth Fund, and has begun detailing how that money will be spent. Laurene Powell Jobs, the widow of the Apple co-founder Steve Jobs, has pledged $3.5 billion to a group that will support climate action. And this year, John Doerr, the billionaire venture capitalist, donated $1.1 billion to Stanford University to establish a new school for the study of sustainability and climate change. Mike Bloomberg, Mark Zuckerberg and Bill Gates have all donated huge sums to climate, as well.
“It speaks to the sense of existential threat that people feel about the climate issue,” David Callahan, founder of the website Inside Philanthropy, said of the Patagonia gift and the flurry of climate giving.
But as billionaires pledge their fortunes to the climate fight, it’s worth asking whether they’re funding the right things.
After Doerr made his gift to Stanford, critics said the donation was effectively a 20th-century solution to a 21st-century problem. Endowing university chairs and naming a building are nice gestures, but it’s not clear how those efforts will help rapidly reduce greenhouse gas emissions, which are dangerously warming the planet. And students at Stanford expressed discomfort after the school’s new dean said he was open to collaborating with fossil fuel companies, which have for decades been working to thwart climate action.
And while Bezos and Powell Jobs have only just begun distributing their funds, their efforts are dogged by questions around transparency and the degree to which the donations allowed them saved money on taxes.
The Chouinard family did get around the issue of paying estate taxes on the transfer of the company, as my colleagues at DealBook noted today. But as Peter Vanham at Fortune pointed out, there are also important differences between the Chouinard gift and other similar donations.
But when it comes to where the money for Patagonia’s climate action will come from, and how it is likely to be spent, the Chouinard gift stands apart. Rather than endow a school or give away a lump of cash, the Patagonia founder has relinquished the company and pledged its future profits toward things like protecting undeveloped land and supporting regenerative agriculture. And because the Holdfast Collective is a 501(c)(4) group under tax rules, a special designation for organizations that focus primarily on social welfare, it can spend money on political efforts. That means Patagonia’s profits could soon be put to use shaping policy on climate issues.
“This responds to a lot of criticism people have been making of climate giving, which is that it needs a bit more political bite, and you need to invest in political solutions to make progress,” Callahan said. “That is going to give it unusual power in the climate space.”
Leah Stokes, a climate policy expert at the University of California, Santa Barbara, said that more funding for climate action was necessary, and that the Patagonia gift was welcome news. “This is an all-hands-on-deck situation, and we need funding so that we can create the political and policy change that’s necessary,” she said.
And given Patagonia’s record of funding grass roots activists, Stokes said the new money coming from the Holdfast Collective “will make sure that there’s a diversity of groups that are getting support, including ones with varying political positions that use different strategies.”
Patagonia has yet to reveal details of its strategy, so how the money is actually spent remains to be seen. But the prospect of more than $100 million a year in donations, and the Chouinards’ relinquishment of their family fortune, is one of the biggest moves yet in the emerging field of climate philanthropy.
“Every country has to work together and every single person has to make it their number one priority,” Chouinard told me when I interviewed him last month. “That’s what we have to do to save the planet. Each one of us has to dig down deep and say, ‘OK, what can I do?’”
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