Patagonia spends millions on conservation and politics

Patagonia spends millions on conservation and politics

A little over $3 million to block a mining project in Alaska. Another $3 million to conserve land in Chile and Argentina. And $1 million to help elect Democrats nationwide, including $200,000 for a super PAC this month.

Patagonia, the outdoor clothing brand, channels its profits to a wide range of groups working on everything from dam removal to voter registration.

In total, a network of nonprofits tied 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 influx of philanthropic money is the product of an unconventional corporate restructuring that occurred in 2022, when Patagonia founder Yvon Chouinard and his family relinquished ownership of the company and declared that all its Future profits would be used to protect the environment and fight climate change.

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

Patagonia paid a first $50 million dividend to Holdfast in 2022. It made another payment to Holdfast last year. This figure is not available in tax filings or internal documents, and the company will not disclose it. Each year, Patagonia will transfer to Holdfast any profits it does not reinvest in the company.

“This is a new model for how wealthy individuals 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 start of changes that we’re going to see more of.”

For a group that distributes so much money, the Holdfast Collective has managed thus far to remain largely under the radar, unknown to several philanthropy experts and Democratic fundraisers interviewed about it.

Holdfast Collective has established and operates 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), which 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 still does not 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, Patagonia’s former deputy general counsel, is responsible for recommending recipients who are then approved by each trust’s distribution committees. The Chouinard family personally approves many of the gifts.

Holdfast made contributions to over 70 groups in its first year of operation. Large donations have been made to conservation projects, including efforts to protect Albania’s Vjosa River and Alaska’s Bristol Bay, as well as grants to environmental organizations such as Earthjustice.

And there have been a slew of political contributions this past cycle, including $100,000 each to Majority PAC in the Senate And Majority PAC in the Housewhich aims to elect Democrats to Congress, as well as smaller gifts to groups such as 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 get every year is supposed to be spent,” Mr. Curtis said in an interview. “We are therefore in a phase of more or less constant reduction in expenses.”

Political donations represent only a fraction of the Holdfast Collective’s overall spending. To date, his donations represent just a drop in the ocean of the expected tsunami of foreign spending around the 2024 elections, which already exceeded $300 million earlier this month, according to one report. analysis by OpenSecrets, a nonpartisan group that tracks campaign finance.

But Holdfast’s first donations raise the prospect of a new pool of money for advocacy groups and political action committees that support Democratic candidates and causes.

Representatives of 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 had applied for the money or if they had received feedback from Holdfast Collective on how to spend it.

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

Her group pointed to public records from Holdfast-funded nonprofits that list a range of causes, including combating misinformation and advocating for reproductive health care and prison reform.

“Personally, I don’t see the connection between spending money on abortion and climate change,” she said, adding that her group plans to file a complaint with the Federal Election Commission for reporting incorrectly that the donations had been made. come from Holdfast Collectiverather than the nonprofit groups it administers.

The scrutiny of major donors hits close to home for Americans’ public trust. It is affiliated with a large network of nonprofit groups formed by conservative activist Leonard A. Leo. The network received a $1.6 billion infusion from Barre Seid, a reclusive businessman who donated all the shares of his Chicago device manufacturing company in a deal that shook the political world and drew comparisons with the transfer of the Chouinards from Patagonia to Holdfast.

Mr Curtis said Holdfast did not intend to be partisan.

“We’re not looking to be an extension of the Democratic Party,” he said. “The sole purpose of political and political engagement is to promote stronger environmental policy. »

But so far, the group’s political donations have focused on causes that could help Democrats. Shortly after its founding, Holdfast made a slew of contributions to groups working to get out the vote in Georgia ahead of the 2022 midterm elections.

She has since donated to organizations supporting local politicians who campaign on environmental issues.

“We would really be interested in supporting any climate leader – Republican, Democrat or independent,” Mr. Curtis said. “A lot of these people happen to be Democrats.”

Yet there is no guarantee that Holdfast funds will be spent to support candidates aligned with their positions on climate change. A nonprofit affiliate of the Senate majority PAC last year spent more than $1.5 million on ads praising Sen. Joe Manchin of West Virginia, a Democrat who has repeatedly defeated climate legislation. A the ad praised him for working with former President Donald J. Trump to protect coal miners.

Most recently, Holdfast supported 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, allowing it to compete with deep-pocketed companies in the other side of the struggle.

“There is such a lack of climate funding that there is an incentive to engage in direct political fights,” he said. “With Patagonia, you now have a major player that you care deeply about and is putting its name and reputation on the line.”

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

As Patagonia grew into a billion-dollar company, it fought to play its own role in promoting consumerism and attempted 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 — totaling about $230 million — and Mr. Chouinard used his own money to help create national parks in South America.

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

After an extensive process, Patagonia’s management team arrived at a structure that allowed the company to continue operating as a for-profit entity while donating its profits to nonprofit groups.

Because the Chouinards did not sell the business and retain the profits or pass the business on to their children, they did not have to pay significant taxes. And because they donated the shares to 501(c)(4) organizations, they didn’t receive a substantial tax deduction. Instead, the family paid approximately $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 worldwide and it is committed to protecting an additional three million acres, much of it in Australia and Indonesia.

Shortly after the change in ownership, Mr. Curtis heard of an attempt to purchase a strip of land in Alaska that would make it difficult to build Pebble Mine, a proposed gold and copper mine. Within weeks, he agreed to provide the remaining $3.1 million that allowed the Conservation Fund to make the purchase, putting a strain on the project.

“We were nearing the end of the deadline and this was a grant in 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 commit and allow us to act. »

The Holdfast Collective’s simple structure reflects a growing trend in philanthropy — epitomized by MacKenzie Scott, the former wife of Amazon founder Jeff Bezos — of doling out huge sums of money with little or no overhead.

“It’s further proof that you don’t need an army to distribute tons of money successfully,” said Ms. Palmer of the Chronicle of Philanthropy. “It’s important to take a lean approach and get more money when you’re dealing with pressing issues like the environment. »

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David B.Otero

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