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

Patagonia’s move follows other American companies that have undergone a similar transformation in ownership structure. For instance, the family-owned, Pennsylvania-based construction firm High Industries, which had revenues of $570 million in 2021, announced earlier this year that their eponymouswould assume control and ownership. A few years ago, such arrangements would have been impossible; a 1969 tax-reform law limited foundation ownership in corporations to 20%.

Firstly, despite claims that firms will flounder without human owners and “market discipline,” foundation-owned firms have similar financial performance compared with their investor-owned counterparts. Danish corporate governancethe benefits of this ownership structure: Foundation-owned firms have more stable growth, are less volatile during crises, invest more in R&D, and have a longer lifespan compared with conventionally owned firms.The second insight concerns philanthropy.

There's a tax deduction there somewhere

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