Yvon Chouinard, the founder and CEO of outdoor apparel company Patagonia, has recently announced that he will be giving away his $3 billion company with the intention that all future profits will help fight climate change and protect undeveloped land. This act is not simply a donation; Chouinard and his family will be ceding all ownership of the corporation, giving a newly-formed nonprofit named the Holdfast Collective all control of its common shares and profits, with the rest (2 percent) going to the Patagonia Purpose Trust. While unusual, this decision does not come as a surprise to those who know the company’s history of energy-efficient production and anti-consumerist marketing (you may have heard of their famous “Don’t Buy This Jacket” Black Friday advertisement).
Chouinard has stated that he hopes this move to give the company away will “influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,” with the intention of “[giving] away the maximum amount of money to people who are actively working on saving this planet.” While Chouinard’s optimism is certainly refreshing, it may be a bit naive.
Wealth inequality has continued to increase in spite of rising billionaire philanthropy, and many view capitalism as the cause of our climate catastrophe rather than the solution. Although it would be unfair to say that Chouinard’s generosity will have no positive impact on our planet, such donations do nothing to challenge the very systems which got us here in the first place.
Patagonia’s business practices have been undeniably ethical in comparison to most companies of a similar scale. In 2019, Baptist World Aid Australia published an ethical fashion report which investigated the environmental management and workers’ protection systems of various corporations within the fashion industry, giving each brand a score on a scale of A+ to F. Some of the lowest-scoring brands featured were also some of the most popular, including Abercrombie and Fitch and Forever 21, both of which received a D-. However, Patagonia was given an A overall, with an A+ in environmental management. And it’s not difficult to see why: Patagonia leads a number of pro-sustainability programs such as Worn Wear, an online store that sells second-hand Patagonia products, Action Works, a website dedicated to environmental activism, and 1% For the Planet, a network of corporations who have pledged to give 1 percent of their annual revenue directly to grassroots environmental groups. While Patagonia may be doing exceptional work in an industry otherwise dominated by fast fashion and hyper-consumerism, it is important to remember that they are just that: an exception. Chouinard’s personal dedication to protecting the planet is admirable, but not the norm. The capitalist system is set up in a way that prioritizes immediate profit over everything else. In fact, even Chouinard himself agrees.
“Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility,” stated Chouinard, explaining why the company opted not to go public. As he explains, companies simply don’t have the proper incentives to care about the environment, and their moral compasses don’t seem to have a significant impact on their business models.
In fact, while Chouinard may hope that his current generosity will inspire more capitalists to protect the environment, it was Chouinard’s very rejection of typical capitalist practices—his refusal to go public or sell his company—that made him the environmentalist and philanthropist he is today. The man who once said he had no respect for the stock market wishes to inspire a new form of capitalism, as if environmental destruction is a side effect of capitalism and not its very nature.
Now I hear you asking: what about the philanthropy industry? There’s no shortage of stories about the generosity of the world’s wealthiest families and individuals. However, billionaire charity isn’t all it’s cracked up to be. Instead of giving their money directly to nonprofit, on-the-ground organizations, many billionaires give their money to their own private foundations or donor-advised funds (the largest being Fidelity Charitable). In fact, over a quarter of charitable donations go to such organizations. On the surface, it seems wonderful that the nation’s ultra-wealthy are willing to set up their own charitable foundations in order to streamline the donation process. The problem? Private foundations are only required to give away 5 percent of their assets per year, and donor-advised funds aren’t required to give away anything at all. This means that billionaires can give money to these foundations and tell everyone that they’ve been very generous, all while taking a massive tax cut as their money collects dust in a fund which they control.
At their worst, private foundations can be deliberately used for nefarious purposes. The most famous example in recent memory is the now-dissolved Donald J. Trump Foundation, whose funds were used to, among other things, settle lawsuits against the former President as well as aid him on his 2016 campaign. Though obviously an outlier, these practices represent the worst of a system designed to benefit the wealthy without much impact on the amount of actual charitable giving.
Even if philanthropists choose to skip the billionaire-run intermediaries, donations can have an unexpected and sinister effect. As the nation’s wealthiest individuals continue to give more and more money to education, healthcare, and other systems for which governments should be responsible, their political influence may balloon to alarming proportions. Relying on wealthy donors to fund schools and hospitals can make politicians even more susceptible to caving to billionaires’ personal whims. The Global Policy Forum, an independent policy watchdog, has cautioned international governments about the dangers of philanthropic foundations for this exact reason, warning they should “analyze the intended and unintended risks and side-effects of their activities.”
We’ve certainly seen this play out in the United States: one example can be found in Philadelphia’s public school system, which has faced significant budget cuts over the last few years. Wealthy donors have stepped in to fund charter schools for local children. However, they do so with “strings attached,” as stated by author David Callahan: “They want the schools to change in certain ways… is that any way to run a city education system[,] that you give power to billionaires in exchange for money that the taxpayers won’t put forward themselves?”
It is bad enough that billion-dollar donations do nothing to confront the systems that perpetuate inequality and environmental destruction, but they may also be inadvertently (or intentionally) allowing the wealthy to side-step the traditional channels of democracy. This is not to say that billionaire philanthropy does not have a positive influence, but it is worth considering what other influences it may have as well.
Of course, there are billionaires who have made it their mission to distribute their wealth. MacKenzie Scott, the ex-wife of billionaire Jeff Bezos, became the richest woman in the world following her divorce from the Amazon founder. Since then, she has dedicated herself to giving away as much of her wealth as possible: As of April 2022, she has donated an unprecedented $12.5 billion to more than 1,250 organizations. What sets Scott apart from the rest (besides how quickly she has managed to give her money away) is the fact that the organizations which receive her donations—from small grassroots organizations to large nonprofits—can do whatever they wish with the money they receive, while Scott will have no say in what her donations are used for. While incredibly generous, Scott’s donations don’t seem to be inspiring widespread change to where and how the money of other American billionaires has been given. Though Chouinard’s desire to “influence a new form of capitalism” is admirable, giving away billions may not have the impact the Patagonia CEO is counting on if Scott’s unfollowed lead is any indication.
The fundamental issue with billionaire philanthropy is that it does nothing to challenge the economic, political, and social institutions that have created the problems these billionaires are trying to solve. Throwing money at the nonprofit sector won’t change corporations’ fundamental goal to fill the pockets of their shareholders. Giving away one apparel company won’t change the fact that there are thousands more who are eager to perpetuate a culture of hyper-consumerism at the expense of our planet.
Chouinard’s decision to turn over his company is undeniably selfless, but we cannot let it lull us into a complicit slumber. We can congratulate Chouinard for his kindness without pretending that it will solve the climate crisis. Progress should be celebrated, but the steps forward must not be ignored. It is important now, more than ever, that we remain vigilant.