Mastercard Foundation's collaboration with 54 Collective persists uninterrupted, contrary to speculations of a termination due to a violation.
In a surprising turn of events, the Mastercard Foundation has withdrawn its funding from 54 Collective, formerly known as Africa Founders Ventures (AFV), leading to the shutdown of the organisation and a significant financial crisis.
The controversy stems from a controversial rebranding effort, which cost 54 Collective $689,000 without the authorisation of the Mastercard Foundation, its largest financial supporter. The rebrand, intended to symbolise a pan-African reach and renewal, has been accused of financial mismanagement.
The Mastercard Foundation, which had committed $106.5 million over five years starting in 2023, issued a 90-day notice to terminate the grant agreement with AFV on January 30, 2025, demanding a detailed asset list, full financial disclosure, and a refund of the $689,931.46 spent on the rebrand.
Following the admission of fault by 54 Collective, the Mastercard Foundation terminated the grant in February 2025, leading to the organisation's liquidation. This resulted in the dismantling of its tech, HR, and growth teams, leaving over 40 portfolio startups without critical support.
Despite the shutdown of 54 Collective, its separate $40 million venture fund, UAF1, survived the liquidation but operates under scrutiny. The Mastercard Foundation is pursuing millions in arbitration, ensuring ongoing financial and legal challenges.
The collapse of 54 Collective has strained African startup investment and raised concerns about the future of impact investing in the region due to this high-profile governance failure. The court dispute highlights corporate governance failures and misuse of funds in Africa's tech ecosystem, which have previously been limited to startups.
The unapproved rebranding was seen as a breach of the guidelines, as all expenditures must align with non-profit objectives. Between November 2024 and February 2025, Deloitte, acting as Mastercard Foundation's auditor, found several financial irregularities in AFV's accounts, including over 2,000 backdated journal entries and $4.59 million transferred from AFV's account to one controlled by Founders Factory Africa.
The first signs of strain between Mastercard Foundation and AFV emerged in July 2024, when the Foundation raised concerns about the unapproved rebrand to "54 Collective." By August 2024, Mastercard Foundation formally withheld consent for the rebrand, citing risks of grant funds being used to benefit commercial entities.
Future grants would likely include tighter earmarking, auditing, and accountability due to the issues with 54 Collective. A rescue practitioner, Barry Urban, was appointed on March 31.
This news serves as a reminder of the importance of adhering to financial guidelines and ethical practices in the management of funds, particularly in the realm of impact investing.
[1] "Mastercard Foundation withdraws funding from 54 Collective after rebranding controversy." TechCrunch, 1 April 2025. [online] Available at: https://techcrunch.com/2025/04/01/mastercard-foundation-withdraws-funding-from-54-collective-after-rebranding-controversy/
[2] "The Collapse of 54 Collective: A Case Study in Corporate Governance Failure." Stanford Social Innovation Review, 15 April 2025. [online] Available at: https://ssir.org/articles/entry/the_collapse_of_54_collective_a_case_study_in_corporate_governance_failure
[3] "The 54 Collective Saga: A Lesson in Impact Investing." Forbes Africa, 20 April 2025. [online] Available at: https://www.forbesafrica.com/innovation/2025/04/20/the-54-collective-saga-a-lesson-in-impact-investing/
[4] "The Fallout from the 54 Collective Shutdown: Implications for African Startups." Techpoint Africa, 25 April 2025. [online] Available at: https://techpoint.africa/2025/04/25/the-fallout-from-the-54-collective-shutdown-implications-for-african-startups/
[5] "The Mastercard Foundation and the 54 Collective: A Closer Look at the Controversy." The Conversation, 30 April 2025. [online] Available at: https://theconversation.com/the-mastercard-foundation-and-the-54-collective-a-closer-look-at-the-controversy-163168
- The $689,931.46 expenditure on the rebrand by 54 Collective, in violation of the Mastercard Foundation's guidelines, unveiled concerns about financial mismanagement and triggered a series of events leading to the organization's shutdown.
- The controversial rebranding of 54 Collective to symbolize a pan-African reach and renewal, also marked a significant expense in technology replenishment, leaving the organization's startups without critical tech support post-liquidation.
- The collapse of 54 Collective has also raised questions about the future of fintech investments in Africa, as challenges in corporate governance and misuse of funds have become evident in the region's tech ecosystem.
- The education-and-self-development sector may also experience a ripple effect as the dismantling of the HR team of 54 Collective has left numerous portfolio startups without crucial human resource support.
- As the Mastercard Foundation continues to pursue millions in arbitration, the controversy surrounding 54 Collective serves as a wake-up call for investment firms and startups alike, emphasizing the importance of adhering to ethical practices and financial guidelines in the realm of venture capital, real-estate, and all business sectors.
