What Happens When a Company (Like Patagonia) Transfers Ownership to a Nonprofit?

Patagonia will now be run by a nonprofit foundation. The shift generated a lot of headlines, but outside of the U.S. this form of ownership is not new. “Shareholder foundations” have quietly prospered for decades in continental Europe, particularly in Denmark where a quarter of the largest 100 firms are foundation-owned, including the three largest firms in the country: Carlsberg, Maersk, and Novo Nordisk. The authors’ analysis of these firms suggests they can succeed as businesses, and that the arrangement helps simplify some of the tradeoffs that for-profit companies typically face when considering social responsibility.

On September 14, Yvon Chouinard, the owner of Patagonia, publicly donated all his voting stock to the Patagonia Purpose Trust, and all his nonvoting stock to the Holdfast Collective, a nonprofit organization “dedicated to fighting the environmental crisis and defending nature.” The move was intended to shield the company from…

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This article was written by Arthur Gautier and originally published on hbr.org