In making planet Earth Patagonia’s “only shareholder,” founder Yvon Chouinard has exchanged considerable personal fortune for substantial political power—an outcome that is good for environment, but could be detrimental for democracy, say experts of philanthropy and tax law.
There’s cause to celebrate but also, potentially, to worry about the “unorthodox arrangement” through which Chouinard and his family transferred their stake in the US$3-billion outdoor apparel company to two entities: the Patagonia Purpose Trust and the Holdfast Collective, says Inside Philanthropy senior editor Philip Rojc.
Chouinard’s intention to give lots of money—US$100 million annually, should Patagonia continue to thrive—to those “actively working on saving this planet” as he put it, is important, since the climate crisis is “pretty much the paramount global problem of our times,” says Rojc. And Patagonia’s environmental street cred is already strong, with the company supporting grassroots groups “rather than dumping money into big, corporate-friendly NGOs.”
And it’s another positive that a 501(c)(4) social welfare organization, the Holdfast Collective, will be able to fund lobbying efforts, since “where climate is concerned, policy and politics is a key battleground.”
But therein lies part of the rub. “The new organization’s 501(c)(4) designation holds fewer restrictions on political activity and advocacy spending,” Rojc writes. “An influx of hundreds of millions into the environmental arena will make serious waves, but we’ve been left to speculate for now exactly what kind of philanthropic and lobbying activity this money will boost.”
Any massive cash injection by a private citizen into the political realm is very bad news—whatever cause it serves, said Matthew Nisbet, a communication and public policy professor at Northeastern University.
The Holdfast Collective appears to be yet another stage in an “escalating zero-sum political arms race,” Nisbet told Grist, likening the Collective to the National Rifle Association.
“Now that they’ve invented this [model] and introduced it to the marketplace for politically motivated billionaires, regardless of their background, everyone’s going to do it.”
Rojc too is concerned about the precedent-setting nature of Chouinard’s move. “Although Chouinard gave away his fortune in an irrevocable way, he didn’t necessarily give up his power,” he says. “One could argue that by priming his fortune for use in policy fights—noble as Holdfast’s positions in those fights may be—Chouinard has reinforced and cemented his influence to the tune of $100 million a year.”
While there are steps a donor can take to give away that much money in a way that also gives away power, he adds, “we’ll see if the family takes them.”
Rejecting charges that Patagonia’s new arrangement lacks transparency and “will fuel untraceable funds,” company spokesperson Corley Kenna told Grist that “Yvon Chouinard, the Chouinard family, and the Holdfast Collective is not an extension of a political party.”
“What we’re talking about here is a family that is committed to addressing the existential crises facing our planet.”