Patagonia's profits fund conservation and politics

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

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

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

The flow of philanthropic money is the result of an unconventional corporate restructuring in 2022, when Patagonia founder Yvon Chouinard and his family relinquished ownership of the company and declared that all future profits would be used to protect the environment and combat climate change.

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

Patagonia paid an initial $50 million dividend to Holdfast in 2022. Last year it made another payment to Holdfast. That figure is not available in tax returns or internal documents, and the company would not make it public. Each year, Patagonia will transfer any profits it does not reinvest into the business to Holdfast.

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

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

Holdfast Collective has founded and manages five non-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, provided their primary purpose is social welfare. The nonprofits, 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 through which organizations can apply for grants. There is also only one full-time employee: Greg Curtis.

Mr. Curtis, previously deputy general counsel of Patagonia, is responsible for recommending recipients, which are then 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 major 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 there was a slew of political contributions last cycle, including $100,000 each Senate Majority PAC And House Majority PACthat work to elect Democrats to Congress, as well as smaller donations 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 set this up is that all the money we get every year has to be spent,” Mr. Curtis said in an interview. “So we are in a more or less constant spending mode.”

Dark money

Political donations represent only a fraction of the Holdfast Collective's total expenditure. So far, the donations are barely a drop in the tsunami of outside spending expected around the 2024 elections, which already exceeded $300 million earlier this month, according to a analysis by OpenSecrets, a nonpartisan group that tracks campaign finance.

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

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

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

Her group flagged public filings from Holdfast-funded nonprofits, which listed a range of causes, including fighting 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 planned to file a complaint with the Federal Election Commission for falsely reporting donations as come from the Holdfast Collectiverather than the nonprofit groups it manages.

The oversight of major donors hits close to home for Americans for Public Trust. It is affiliated with a large money network of nonprofits 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 stock of his Chicago appliance maker in a deal that shook the political world and drew comparisons to the Chouinards' transfer of Patagonia to Holdfast.

Mr Curtis said Holdfast had no intention of being biased.

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

But so far, the group's political contributions have focused heavily on issues that could help Democrats. Shortly after its founding, Holdfast made a slew of contributions to groups working to win votes in Georgia ahead of the 2022 midterm elections.

It has since made donations to organizations supporting 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.”

Yet there is no guarantee that Holdfast's funds will be spent supporting candidates who align with Holdfast's position on climate change. Last year, a Senate Majority PAC nonprofit spent more than $1.5 million on ads praising Sen. Joe Manchin of West Virginia, a Democrat who has repeatedly scuttled climate legislation. A advertisement praised him for working with former President Donald J. Trump to protect miners.

More recently, Holdfast has supported a campaign to preserve a California state law banning oil and gas activities in residential areas.

Chris Lehman, organizer of the Campaign for a Safe and Healthy California, which is working on this, said his group received $500,000 from Holdfast this month, allowing it to compete with entrenched companies on the other side of the fray.

“There is such a lack of pro-climate financing that full-blown political fights want to happen,” he said. “With Patagonia you now have a major player who cares deeply and is putting his name and reputation on the line.”

Smart philanthropy

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

As Patagonia grew into a multibillion-dollar company, he grappled with his own role in promoting consumerism and tried to create a responsible company focused on using organic and recycled materials and treating his employees and suppliers well.

For decades, Patagonia has given away 1 percent of its sales to environmental causes — a total of about $230 million — and Mr. Chouinard has 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 one mystery that bothered him most: the fate of Patagonia.

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

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

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 hectares of wilderness around the world, and that it has pledged to protect a further three million hectares, much of it in Australia and Indonesia.

Shortly after the ownership change, Mr. Curtis heard about an attempt to purchase a tract of land in Alaska that would make it difficult to build Pebble Mine, a proposed gold and copper mine. Within a few weeks, he agreed to provide the final $3.1 million for the Conservation Fund to make the purchase, leaving the project in dire straits.

“We were nearing the end of the deadline and it was a grant the size 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 engage us and enable us to take action.”

The Holdfast Collective's frugal structure reflects a growing trend in philanthropy — epitomized by MacKenzie Scott, the former wife of Amazon founder Jeff Bezos — of giving away large sums of money with little to no overhead.

“It's further proof that it doesn't take an army to successfully give away a lot of money,” said Ms. Palmer of The Chronicle of Philanthropy. “Being educated and getting more money out the door is important when you have pressing issues like the environment.”