Transformative Financing Structures

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A more Transformative economy requires more equitable term sheets and ownership structures. We research these models – most currently Employee Ownership and other Alternative Ownership Enterprise models – and develop solutions for investors to make them more commonplace.

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: 

  • Enterprise structures, such as employee ownership, multi-stakeholder cooperatives, steward ownership, fair trade enterprises, platform cooperatives, and more.
  • Financing structures in the direct deal context, such as revenue-based financing, recoverable grants, self-diluting equity, and many trends and innovative ways that investors can support impact enterprises and broadly limit the tendency of capital to benefit investors over all other stakeholders. 
  • Fund models and fund capitalization structures such as guarantee models, fee structures for fund managers, and other stuff…In the place-based context, we believe that enterprise and real estate funds should be fundamentally designed and controlled by the communities they serve.
  • Other financial innovations that can be used to support a more Transformative Economy. 

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 have several resources on Alternative Ownership Enterprise, Alternative Financing Structures, and other innovative financial tools on our Learn Page.

Check out our resources