Welcome to Cause & Capital.

My goal: Inform your giving strategies.

Every month in Cause & Capital, I break down a brand’s corporate giving campaign or one of the world’s leading philanthropists, uncovering what worked, why it worked, and how you can apply those insights to your own cause investments, whether you’re giving as a brand or an individual.

Let’s get into it.

Most outdoor gear companies treat philanthropy as something they layer on after the business is profitable. Davis Smith did it backwards.

He incorporated Cotopaxi as a Public Benefit Corporation and committed 1% of all revenue to poverty alleviation before the company had sold a single backpack.

That was 2014. Since then, the Cotopaxi Foundation has helped reach more than 4.4 million people living in extreme poverty across Latin America and the U.S., while the company surpassed $100 million in annual revenue in 2024.

Today, we’re breaking down exactly how Smith structured it and what you can emulate from his approach.

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Davis Smith is the founder of Cotopaxi, an outdoor gear and apparel company headquartered in Salt Lake City. He moved to the Dominican Republic at age four and spent most of his childhood across Latin America, living in Puerto Rico and then Ecuador, where his family settled in Quito. He grew up camping and climbing in the Andes with his father, and the company is named after the nearly 20,000-foot volcano outside Quito where he spent weekends as a kid.

His credibility on poverty comes from his childhood. In a piece for Utah Business, he wrote that even as a boy, he recognized the people around him were just as smart and hardworking as he was, but had none of the same opportunities. Those early years shaped his conviction that business could be a vehicle for closing that gap.

Smith launched Cotopaxi in April 2014 with $3 million in seed funding after being rejected by over 100 investors. His pitch was unusual for the time: a certified B Corporation and Public Benefit Corporation that would bake philanthropy into its revenue model from the very first dollar.

Even his own attorney advised against incorporating as a benefit corporation. He did it anyway, and Cotopaxi became one of the first companies in the U.S. to incorporate as a benefit corporation and then raise venture capital.

In 2021, Bain Capital Double Impact invested $45 million in the company, validating that the model could scale. In 2023, Smith stepped down as CEO to serve a three-year religious mission in Brazil, though he remains Chairman of the Board. Lindsay Shumlas, who joined in 2024 as CFO and COO, was promoted to CEO in December 2024.

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Cotopaxi dedicates at least 1% of annual revenue to the Cotopaxi Foundation, a 501(c)(3) nonprofit that distributes grants to organizations fighting extreme poverty.

Revenue is harder to defer, restructure, or explain away in a down year. When you tie giving to the top line, it happens before anyone takes a cut. And sales-based commitments signal a fundamentally different level of seriousness to partners and customers.

Smith’s implicit promise is similar: build giving into the revenue model before the business succeeds, and philanthropy scales automatically with growth. Cotopaxi reportedly donated nearly 3% of revenue in some years, exceeding their 1% floor.

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Cotopaxi focuses on alleviating extreme poverty, with a primary emphasis on Latin America. The Cotopaxi Foundation targets three categories identified by MIT’s Abdul Latif Jameel Poverty Action Lab (J-PAL) as having the highest potential for poverty reduction: health care, education, and livelihoods.

The Cotopaxi Foundation operates as a Utah-based 501(c)(3) that distributes grants through multi-year commitments to carefully vetted nonprofit partners. They do not accept unsolicited grant applications.

Key grantees include the International Rescue Committee (with specific support for refugee communities in Salt Lake City, Seattle, and Denver, as well as in Colombia), Mercy Corps (supporting Colombian and Venezuelan refugees through cash assistance, medicine, and small business grants), Fundación Escuela Nueva (providing quality education in Colombia and other countries), the Mona Foundation (education access for girls in Brazil and Panama), J-PAL South America (capacity building for gender agency in Central America), ALIADOS (supporting indigenous smallholder farmers in the Ecuadorian Amazon), and New Story (building safer housing for low-income families in Latin America).

1% of revenue committed from founding, built into the corporate charter as a Public Benefit Corporation

Multi-year grants to nonprofit partners with proven track records

B Corporation certification holds the company to rigorous social and environmental standards

1% for the Planet membership, further formalizing the revenue commitment

The Del Día product line, which uses deadstock fabric and gives factory sewers creative control over each one-of-a-kind colorway, reducing waste while empowering workers

Guaranteed For Good repair program extending product life and reducing consumption

Sustainable materials strategy: as of 2024, 100% of Cotopaxi’s products contain recycled, repurposed, or responsibly certified materials

More than $3.3 million has been given to the Cotopaxi Foundation through 2023, with more than $1 million contributed in the most recent year

4.4 million people reached through Foundation grantees to date

The company surpassed $100 million in annual revenue in 2024

20 retail stores (18 in the U.S. and 2 in Japan) plus wholesale partnerships with REI, Nordstrom, and Backcountry

Operations in the U.S., Europe, and Japan

Goal to support over 5 million people in poverty by 2028

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1. Legal structure created an irreversible commitment

Smith incorporated as a Public Benefit Corporation before raising a dollar of venture capital. That legal structure means the company’s mission to fight poverty is written into its corporate charter. Directors have a fiduciary obligation to balance shareholder returns with the stated public benefit.

This is a harder commitment to walk back than a CSR pledge or a press release. When Bain Capital invested $45 million, it did so knowing the charitable obligation was baked into the corporate DNA.

2. The founder’s story is the company’s story

Smith grew up watching children in extreme poverty across the Dominican Republic, Puerto Rico, and Ecuador. He named the company after the volcano outside his childhood home. The Foundation focuses on Latin America, where he spent his formative years. This is not a cause selected by a committee or a marketing department.

Every dollar the Cotopaxi Foundation sends to a partner in Ecuador or Colombia connects back to a specific kid in Quito who saw inequality and decided to do something about it. That kind of origin story sustains attention in ways that corporate philanthropy strategies rarely do.

3. Product design reinforces the mission

The Del Día collection uses leftover deadstock fabric that would otherwise go to landfill, and gives factory sewers in the Philippines creative control over each bag’s unique color combination. Every Del Día product is literally one of a kind. The product itself becomes a conversation about sustainability and intentional manufacturing, turning customers into advocates.

4. Revenue-based giving scales automatically

When Cotopaxi grew from roughly $100 million in revenue, the Foundation’s funding grew with it. The company contributed more than $1 million through the Foundation in the most recent year alone. The model does not require a new board vote or fundraising campaign each year. Growth in the business equals growth in the giving.

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1% of revenue is meaningful at Cotopaxi’s current scale, but the model generates more modest funding for smaller companies.

A startup with $5 million in revenue would generate $50,000 in annual giving, which, while valuable, limits the scope of partnerships and programs it can support.

The model’s original credibility was deeply tied to Davis Smith’s personal story and leadership. With Smith now serving as Chairman from Brazil and a new CEO in place, the mission will need to sustain itself beyond any single leader.

Cotopaxi reduced its workforce in January 2024 and experienced a leadership transition. Like many outdoor brands, Cotopaxi faces broader industry headwinds that could pressure the revenue base used to calculate the 1% commitment.

Impact metrics focus on reach (4.4 million people) rather than on specific poverty-reduction outcomes. The Foundation partners with evidence-based organizations like J-PAL, but published data on measurable changes in income, health, or educational attainment for beneficiaries is limited.

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1. Build the legal architecture first

Smith incorporated as a Public Benefit Corporation before raising venture capital. That decision means the charitable mission is legally protected. If you are building a company or structuring a family’s giving, consider the legal vehicles that make the commitment permanent rather than discretionary.

2. Tie giving to revenue, not profit

This is the same lesson we drew from Selena Gomez’s model, and Cotopaxi reinforces it from a completely different industry. Revenue-based commitments are harder to defer and signal seriousness to partners, investors, and customers.

3. Let the founder’s story drive the cause

Smith’s childhood in Latin America made the focus on poverty alleviation authentic and defensible. The most compelling philanthropic models come from people with direct experience of the problem they fund. If you or your brand has a genuine connection to a cause, lead with that.

4. Make the product carry the mission

Cotopaxi’s Del Día line turns every purchase into a sustainability conversation. When the product itself embodies the mission, the marketing writes itself and customers become part of the story. Consider how your giving strategy can be embedded in the core offering rather than sitting alongside it.

5. Plan for leadership transitions

The strongest philanthropic models survive their founders. Smith built a legal structure (PBC), a certified status (B Corp), and a formal foundation (501(c)(3)) that together create institutional guardrails around the mission. If your giving depends entirely on one person’s enthusiasm, it is fragile.

See you in two weeks for the monthly wrap!
​Christine​

PS — If this issue landed for you from the fundraising side — thinking about how your organization partners with corporate donors or makes the case for cause investment — I also publish a short weekly brief called Chief Fundraiser Weekly. It's focused on the decisions that come with owning the revenue number. If that's part of your world, you can find it here: Chief Fundraiser Weekly.

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