The left is celebrating Patagonia’s Ceo Yvon Chouinard’s grand virtue signal to fight “Climate Change”, but they’ve all been duped. What they don’t know is his 3 billion dollar donation of his company to a 501c4 simply an means to avoid paying his “fair share” – to put inti in their terms – in taxes.
While the Patagonia donation to a charity looks like an altruistic way of fighting climate change, it is actually a means for Yvon Chouinard to evade taxes, and exert political influence past his death
Bloomberg writes, Yvon Chouinard described his decision to give away Patagonia as his last-ditch effort to protect the planet.
The deal also offers the billionaire other benefits, letting him and his family keep control of Patagonia and avoiding large tax bills.
In donating most of the company, valued at $3 billion, Chouinard has found a way to exert political influence through nonprofits long after he is gone.
Most billionaires make living donations with tax and estate planning in mind, but Chouinard appears to have structured his Patagonia gift with more than one objective. Unlike its cousin, the 501(c)(3), Holdfast is a 501(c)(4), a nonprofit that can make unlimited political donations. Because of this, donations to 501(c)(4) organizations aren’t tax deductible. As a result of transferring shares to the trust, the Patagonia founder will also owe $17.5 million in gift taxes.
Despite the moves, Chouinard won’t owe the federal capital gains taxes he would have owed if he’d sold the company, an option he’d considered. In the case of a $3 billion sale, the bill could exceed $700 million. Chouinard also avoids the US estate and gift tax, which is a 40% tax on large fortunes transferred to heirs.
Even more tax savings could have been achieved by giving to a foundation or other 501(c)(3) nonprofit – namely, reducing other income with a charitable deduction – but US law prohibits such organizations from owning private businesses. Through the use of 501(c)(4)s and trusts, Chouinard and his family can continue to control the company; his family members will continue to serve on its board of directors, as well as collect salaries from the company.