A more Transformative economy requires capital that is structured equitably. We design and promote deal structures, financing tools, and enterprise models that feature community engagement and governance, are non-extractive, and fairly balance of risk and return.
Capital is deeply intertwined with the major challenges of our time – wealth and power inequality, corporatization and consolidation, racial injustice and colonialism, the climate crisis – and in fact has been a driving force in creating those challenges. These big issues can’t be solved by investment alone, and they certainly can’t be solved just by investing in companies that have impactful products and services. They require a fundamental rethinking of value, ownership, and governance over the capital that affects all communities. In practice, this looks like shifting power to workers, entrepreneurs, and communities within the terms and codified relationships of investment and business structure. These terms and relationships form the models that are the building blocks of the economy.
Part of the problem is in the current models that economic actors have access to. The predominant models are based on the traditional notion of shareholder primacy, where investors get to make most major decisions and accumulate more capital as the fundamental aim. We see shareholder primacy in the relationship between funds and entrepreneurs, the relationship between management (which represents the interest of shareholders and often are shareholders themselves) and workers, and the absence of non-investor decision makers at all places in the chain of capital.
New approaches are emerging from entrepreneurs, business networks, progressive investors, researchers, and grassroots movements building social and solidarity economies. These approaches run the gamut of finance:
We help investors adopt these models, terms, and approaches, or Transformative Financing Structures. These structures, if made widely popular, won't solve our major issues alone, but will set an economic backdrop where those most marginalized are able to dictate major aspects of economic activity.
We launched a major research and advocacy project that identifies firms that significantly shift economic value and decision-making power toward the non-investor stakeholders they impact, such as workers, producers, consumers, community members, or even a non-financial purpose. We're supporting investors in moving capital into the ecosystem of funds and deals that support these models through education, field building, and developing financial innovation.
One of our core advisory services is to help investors understand the different tools at their disposal, and help them develop investment strategies and technical models. A recent example is our work to help the Media Development Investment Fund evaluate and improve the structure of their guarantee offering. We are currently working on our Financing Alternative Enterprise project, and plan to offer advisory work in 2023. Stay tuned!
We have several resources on Alternative Ownership Enterprise, Alternative Financing Structures, and other innovative financial tools on our Learn Page.
Check out our resources
