Giving your money away like Patagonia is easy if you know how


“We had to find a way to put more money into fighting the crisis while keeping the company’s values ​​intact.

“Here’s how it works: 100 percent of the company’s voting stock vests in the Patagonia Purpose Trust, established to protect the company’s assets; and 100 percent of the non-voting shares had gone to the Holdfast Collective, a non-profit organization dedicated to fighting the environmental crisis and protecting nature.

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“Funding comes from Patagonia: every year the money we make after reinvesting in the business is paid out as a dividend to help fight the crisis.”

It’s a big step, but one step is necessary, according to Chouinard. So could a like-minded Australian pull off the same?

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take a similar path

Absolutely, says Caitriona Fay, managing partner of community and social investment at blue-chip wealth manager Perpetual.

“We have the structures in place and ultimately you can … transfer equity ownership to various types of businesses, including not-for-profit corporations. If anyone had the inclination to give a similar gift, they absolutely could,” she says.

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But there are a number of things founders need to think about if they want to follow a similar path, she adds.

Business owners with liquidity in their business may consider using a stock donation from a corporate beneficiary rather than making cash donations to a philanthropic structure or private relief fund.

Caitriona Fay says it’s entirely possible for Australians to do the same. Elke Meizel

Private Relief Funds are a type of non-profit trust that provide an investment structure for individuals, families or associations to facilitate sustainable giving.

“We often see that when there is liquidity in a company, this opportunity is missed. So we tend to see successful business people making cash distributions to foundations rather than thinking about stocks with their corporate structure and how that might play out to have more impact.”

But entrepreneurs and founders will face some challenges if their company doesn’t have a lot of liquidity, she adds.

When an entrepreneur holds a significant amount of paper wealth, it can be difficult to convert it into philanthropic donations, largely due to the requirement that private relief funds distribute at least 5 percent of the market value of the fund’s net assets.

“So we have some structural things that we need to address if we’re going to attract people early in their entrepreneurial journey, where it’s harder for them to pull cash out of the business to make those payouts.”

Those who want to make repeated and significant contributions can also consider the pledging model, where a percentage of the profit or income is pledged to a specific purpose.

“Billionaires’ Sport”

She says bringing in financial advisors can help founders and entrepreneurs navigate these complexities.

“Advisors may see their role as protecting your wealth and not necessarily see their role as getting rid of your wealth. So part of this is making sure you’re really clear about what your ambitions are for the company.

“Really good counselors should be able to take those individuals or families on a really great journey, to structure in the right way and bring the next generation of family members along on that journey.”

A study released by the Center for Social Impact in August found that the Financial Review Rich List’s wealth for 2022 is up 15.7 percent since 2021. At the same time, donations under the Financial Review Philanthropy 50 list for 2022 fell 2.3 percent.

Globally, Australia also gives relatively less. As a percentage of GDP, Australia donates 0.81 percent to charity, compared to the US (2.1 percent), New Zealand (1.84 percent), Canada (1 percent) and the UK (0.96 percent).

Analysis of ATO’s 2018-19 data also found that 5 percent of top earners gave more than 1 percent, while more than half of top earners reported no tax-deductible donations or gifts.

“We have to build trust [that] Philanthropy is not just a sport for billionaires,” says Fay. “So it’s accessible to a whole range of Australians who might have the capacity.”



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