Patagonia's profits are funding conservation and politics

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Just over $3 million to block a proposed mine in Alaska. Another 3 million dollars to conserve lands in Chile and Argentina. And $1 million to help elect Democrats across the country, including $200,000 to a super PAC this month.

Patagonia, the outdoor clothing brand, is funneling its profits to a number of groups working on everything from dam removal to voter registration.

In total, a network of nonprofits linked to the company has distributed more than $71 million since September 2022, according to publicly available tax filings and internal documents reviewed by The Times.

The flood of philanthropic money is the product of an unconventional corporate restructuring in 2022, when Patagonia founder Yvon Chouinard and his family relinquished property of the company and declared that all its future profits would go to protecting the environment and combating climate change.

Patagonia and the Chouinards created a series of trusts, limited liability corporations and charitable groups designed to protect the clothing company's independence while distributing all of its profits through an entity known as Holdfast Collective.

Patagonia paid an initial dividend of $50 million to Holdfast in 2022. It made another payment to Holdfast last year. That figure is not available in tax returns or internal documents, and the company would not disclose it. Each year going forward, Patagonia will transfer all profits not reinvested into the company to Holdfast.

“This is a new model for how wealthy people can approach their philanthropy,” said Stacy Palmer, executive director of The Chronicle of Philanthropy. “It's a combination of charity and politics, and it's the beginning of changes that we'll see more of.”

For a group that is doling out so much money, Holdfast Collective has so far managed to remain largely under the radar, unknown to several philanthropy experts and Democratic fundraisers who were asked about it.

Holdfast Collective created and manages five not-for-profit groups: Holdfast Trust, Chalten Trust, Sojourner Trust, Wilder Trust and Tail Wind Trust. They are registered under a section of the tax code, 501(c)(4), that allows them to make unlimited political donations, as long as their primary purpose is social welfare. The nonprofit groups, which pay management fees to Holdfast Collective, own 98 percent of Patagonia's non-voting shares. The shares are valued at $1.7 billion but will not be sold.

The group does not yet have a website and there is no formal process by which organizations can apply for grants. There is also only one full-time employee: Greg Curtis.

Mr. Curtis, former deputy general counsel of Patagonia, is responsible for recommending recipients who are subsequently approved by each trust's distribution committees. The Chouinard family personally approves many of the gifts.

Holdfast made contributions to more than 70 groups during its first year of operation. There were large donations to conservation projects, including efforts to protect the Vjosa River in Albania and Bristol Bay in Alaska, and grants to environmental organizations such as Earthjustice.

And last cycle there were a slew of political contributions, including $100,000 each to Senate Majority PAC and House Majority PACwho work to elect Democrats to Congress, as well as smaller donations to groups like the Black Voters Matter Fund, the Center for American Progress Action Fund and the Georgia Investor Action Fund.

“One of the principles we had when we created this is that all the money we receive each year should be spent,” Curtis said in an interview. “So we're in a more or less constant cost-cutting mode.”

Political donations make up only a fraction of the Holdfast Collective's total spending. To date, their donations are just a drop in the tsunami of foreign spending expected around the 2024 elections, which already surpassed $300 million earlier this month, according to a report. analysis by OpenSecrets, a nonpartisan group that tracks campaign finance.

But Holdfast's first donations hint at the prospect of a new reserve of cash for advocacy groups and political action committees that support Democratic candidates and causes.

Representatives from the Senate Majority PAC and the House Majority PAC declined to comment, while most other political groups that received grants did not respond to questions about whether they applied for the cash or received information. on how to spend it from Holdfast Collective.

Some conservatives are raising questions about Holdfast Collective. Caitlin Sutherland, executive director of the conservative watchdog group Americans for Public Trust, called Holdfast “a political organization waiting for $1.7 billion.”

Her group highlighted public presentations from Holdfast-funded nonprofits, which listed a variety of causes, including fighting misinformation and advocating for reproductive health care and prison reform.

“I personally don't see the connection between spending money on abortions and climate change,” he said, adding that his group planned to file a complaint with the Federal Election Commission for incorrectly reporting that donations had come from the Holdfast Collectiverather than the nonprofit groups it manages.

The scrutiny of major donors hits close to home at Americans for Public Trust. Is affiliated with a network of nonprofit groups with lots of money shaped by conservative activist Leonard A. Leo. The network received a Infusion of 1.6 billion dollars of Barre Seid, a reclusive businessman who donated all shares of his Chicago gadget manufacturing company in a transaction that shook the political world and drew comparisons to the Chouinards' transfer of Patagonia to Holdfast.

Curtis said Holdfast did not intend to be partisan.

“We're not trying to be an extension of the Democratic Party,” he said. “The sole purpose of participating in politics and policy is to promote stronger environmental policy.”

But until now, the group's political donations have been narrowly focused on causes that could help Democrats. Shortly after its founding, Holdfast made a series of contributions to groups working to get out the vote in Georgia ahead of the 2022 midterm elections.

Since then, he has donated to organizations that support local politicians campaigning on environmental issues.

“We would be really interested in supporting any climate leader: Republican, Democrat or independent,” Curtis said. “It just so happens that a lot of those people are Democrats.”

However, there is no guarantee that Holdfast funds will be spent supporting candidates who are aligned with its stances on climate change. A nonprofit affiliate of the Senate Majority PAC last year. spent more than 1.5 million dollars in ads praising Sen. Joe Manchin of West Virginia, a Democrat who has climate legislation repeatedly sunk. One advertisement praised him for working with former President Donald J. Trump to protect coal miners.

More recently, Holdfast has backed a campaign to preserve a California state law banning oil and gas operations in residential neighborhoods.

Chris Lehman, an organizer with the Campaign for a Safe and Healthy California, which is working on the effort, said his group received $500,000 from Holdfast this month, which will allow it to compete against deep-pocketed corporations on the other side of the fight. .

“There is such a lack of financing in favor of the climate that they want to enter into direct political struggles,” he stated. “With Patagonia, you now have a major player who cares deeply and is putting his name and reputation on the line.”

Chouinard, who founded Patagonia in 1973, struggled with his role as a businessman throughout his career. An avid climber, surfer and skier, he became deeply concerned about the degradation and depletion of natural resources.

As Patagonia became a billion-dollar business, it struggled with its own role in promoting consumerism and sought to create a responsible company that aimed to use organic and recycled materials and treat its employees and suppliers well.

For decades, Patagonia has donated 1 percent of its sales to environmental causes (for a total of about $230 million) and Chouinard has used his own money to help create national parks in South America.

But a few years ago, Chouinard decided it was time to solve the enigma that worried him most: the fate of Patagonia.

After an extensive process, Patagonia's leadership team found a structure that would allow the company to continue operating as a for-profit entity while donating its profits to nonprofit groups.

Because the Chouinards did not sell the company or retain the profits or leave it to their children, they did not face a significant tax bill. And because they donated the shares to 501(c)(4) organizations, they didn't receive a substantial tax deduction. Instead, the family paid about $17.5 million in taxes to facilitate the transaction in 2022.

Holdfast's first full year of giving reflects Mr. Chouinard's commitment to conservation work and Political activism.

Holdfast said its grants have protected 162,710 acres of wilderness around the world and it has committed to protecting another three million acres, much of it in Australia and Indonesia.

Shortly after the ownership change, Mr. Curtis learned of an attempt to purchase a strip of land in Alaska that would make construction of the Pebble Mine, a proposed gold and copper mine, difficult. Within weeks, he agreed to provide the final $3.1 million that allowed the Conservation Fund to make the purchase, derailing the project.

“We were nearing the end of the deadline and it was a grant of the amount we needed to get across the finish line,” said Mark Elsbree, senior vice president for the Conservation Fund's western region. “They were able to compromise and allow us to perform.”

The basic structure of Holdfast Collective reflects a growing trend in philanthropy: played by MacKenzie Scottex-wife of Amazon founder Jeff Bezos to donate large sums of money with little to no overhead.

“It's further proof that it doesn't take an army to successfully donate a ton of money,” said Ms. Palmer of The Chronicle of Philanthropy. “It is important to adopt efficient measures and obtain more money when there are urgent problems such as the environment.”



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