March 7, 2023

67. Did Patagonia's founder really give his company away?

Links from today's discussion:

“Billionaire No More: Patagonia Founder Gives Away the Company” New York Times Sept 14, 2022 

Yvon Chouinard’s statement on Patagonia’s site 

Yvon Chouinard’s Google Talk

Adam Conover’s analysis of Yvon Chouinard’s recent announcement and other billionaire philanthropist hype 

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Hey! Welcome to Spend Donate Invest! I’m your host, I go by GG, that’s short for Genet Gimja. And here we talk about our money and how we can align our personal values with what we’re doing with our money. So this isn’t your typical personal finance podcast, I’m not going to share hot tips on making more money. But I do hope to help with questions like “help, my 401K has a bunch of climate destroyers in it” or “help, I feel weird shopping at this store, because they donate to politicians who are working against my rights.” So these are big questions, on this podcast, I hope to share realistic, practical suggestions to get you started on answering those questions in a way that makes sense for you. Episodes tend to be short and I will always include links so you can continue your exploration after the episode. The topics for each episode come from your emails! So you can reach me at spend donate invest at gmail dot com. What have YOU been thinking about?

Today we’re going to be following up on something that came up a few episodes ago, this is the announcement that Patagonia’s founder, Yvon Chouinard made that he’s giving the company away. Those were the headlines, and in interviews he said that his family transferred ownership of the company to a trust and nonprofit organization.

Patagonia is a well loved company that was founded by an outdoorsy guy who makes and sells outdoor gear and clothing to outdoorsy people…and to indoorsy people like myself. We have talked about Patagonia before, they are a certified B Corp, which means that they have committed to more than just making money, but to also run their company according to certain values. If you want to learn more about B Corps and what all they entail, check out episode 10. I’ll put a link in the show notes. B Corps are very interesting and an improvement over your standard corporation that is only required to make money.

For years, Patagonia has given away 1% of annual sales, and if you listen to old interviews with Yvon Chouinard he has said “for me, it’s an earth tax. Taxing ourselves for being polluters, for using up non-renewable resources.”

More recently, when describing his giving the company away, he said “we needed to find a way to put more money into fighting the crisis” so maybe you’re thinking, awesome! So then sell Patagonia and use that gigantic amount of money to fight climate change. But he says he wants to still keep “the company’s values in tact.”

He believed that selling the company and giving away the money would have given up too much control, so bada bing bada boom, in the classic tradition of billionaires believing they know best, he and his kids will continue to control the company, and of course, they will control the nonprofit as well.

The headlines are already not quite matching up with reality.

I watched Yvon at one of those Google Talks that you can watch online and he spent a few minutes reading from his book, here’s what he read:

“I’ve been a businessman for almost 50 years. It’s as difficult for me to say those words as it is for someone to admit being an alcoholic or a lawyer. I’ve never respected the profession. It’s business that has to take the majority of the blame for being the enemy of nature. For destroying native cultures. For taking from the poor and giving to the rich. And for poisoning the earth with the effluent from its factories. Yet business can produce food, cure disease, control population, employ people and genuinely enrich our lives. And it can do these good things and make a profit without losing its soul.”

“No young kid growing up ever dreams of someday becoming a businessman. He wants to be a fireman, a sponsored athlete or a forest ranger. The Lee Iacoccas, Donald Trumps,and Jack Welches of the business world are heroes to no one except other businessmen with similar values. I wanted to be a fur trapper when I grew up.”

Later during this same talk he asks the audience “how many of you think that the government is going to solve our problems? And then he laughs and says “you know, government is the problem.” And it’s like are you sure bro? A series of policy failures are what led to the grotesque income inequality that has led to your pile of money that you are now gripping with that death grip. You’d think a bilionaire would be more complimentary of the systems that helped him gather that much power.

Things get weirder, in his talk, he gives the example of the civil rights movement as an example of how our government will never be courageous. He says that we have moved towards what he calls a civil democracy, not because of the White House, but because Rosa Parks, who he describes as a tired housewife, was too tired to get off the bus. Rosa Parks was not a tired housewife. She had two jobs. She was a clothingmaker and a trained activist in the fields of worker’s rights and racial equality. In the context of her work as an activist, she worked at the NAACP. She was not the first person to refuse to move to the back of the bus. But the NAACP was strategic in selecting her as the court case they would throw their weight behind to try to get the racist laws changed. So, no, she wasn’t a tired housewife, but his point is that our government is the problem.

Now, spoiler alert, what’s interesting is that, fast forward, one of the things that his new nonprofit and trust is going to do is to support certain political candidates that share his political agenda. In other words, he wants to, in his view, strengthen the government. You know what else strengthens our government? Billionaires paying their damn taxes.

Yvonn saved over $1 billion in taxes by setting up this strange trust slash non profit. He could have given his $3B stake in the company to his kids, but doing it this way saves the 1.2B in taxes. From his perspective, it’s a win-win, his family still gets to control the money, and has to pay even less in taxes than they normally do because essentially what he did was to “give away” the company to a trust and then put his family in charge of the trust. So he and his family are still in charge of Patagonia, just like they were before. But now, because of the type of nonprofit they set up a 501(c)(4), they are legally allowed to do a lot of political campaigning without paying any taxes, no capital gains taxes, no income tax, and no gift tax.

It boggles the mind. Our government is too weak to collect taxes from billionaires, which allowed him to hoard even more money and then with that money he is able to further weaken the government which is already weakened because it is not collecting taxes from billionaires. This is not OK y’all! This is not OK!

I might agree with Yvonn and his family’s opinions on what to do for the earth, but I don’t want to have to hope that I agree with a family of billionaires. I want to hear from the nerds at the EPA. I want them to coordinate with the other global climate scientists and I want them to tell us what the hell to do. I’m an engineer so I can say that we’re nerds.

We have too many billionaires and they have too much power. And I know I’m not the only one who is disturbed by the billionaire worship that we are plagued by. I know it’s not new, I know that back in the day, we all were trained to worship our kings and queens and chiefs and lol shout out to my British listeners, I guess you still are somewhat worshipping your royal family? Are y’all OK??? But you know what, sometimes I wonder if there’s that big of a difference. In the US, we worship our billionaires, and you all are worshipping your royal family. Sidenote, if you want an analysis of where the royal refugees Harry and Meghan donate their money, let me know, sometimes it is nice to do a light episode.

What were we talking about again? Oh yes, Yvon Chouinard’s giving Patagonia away. Sigh. In short, he didn’t. He gave the company that his family controls to a nonprofit that his family controls. Do billionaires listen to podcasts? (Tap the mic) Any billionaires listening today? Hey, hey friend, come closer. Look, I know you surpassed the odds and you made a billion dollars. And I know I know, a billion dollars isn’t even really that much. I know your friends have more money than you. And I know they’re doing some really crazy stuff to avoid paying their taxes, you’re just doing the standard billionaire tax practices, but please, please, we don’t need you to rack your brains to figure out how to give back to society, just pay your taxes. Don’t take the billionaire tax loopholes. Even if they are perfectly legal. Even if all the other billionaires are doing it too. Just pay your taxes. That act alone will go towards the environment, our schools, our health care system, life saving research, regulating industry, regulating the financial markets. Just think of all the good your money could do.

Ok that’s it for this week. A little peek into what it might mean when a billionaire says he’s giving his company away, or what it meant when this particular billionaire didn’t really give his company away. If there’s another topic you’d like to hear on the show, please do write in. If anyone has seen my Patagonia sweater, let me know, I haven’t worn it since I attempted to enjoy the outdoors and went to Yosemite two years ago. If you’re looking for other episodes of this show, check out the website at spend donate invest dot com. Or you can email me anytime at spend donate invest at gmail dot com. You might even want to join the monthlyish newsletter where we continue the conversation. Just send me an email or sign up on the website. That’s it for now, let’s talk again soon.