54 Collective faces liquidation over misused Mastercard Foundation grant

The 54 Collective liquidation has been provisionally ordered by a South African High Court, following allegations of serious financial misconduct and a “blatant disregard for the law” from the Mastercard Foundation. Court documents seen by Condia reveal that the misconduct relates to a $106.5 million charitable grant.

The Foundation had disbursed over $42 million to the firm, originally registered as Africa Founders Ventures NPC (AFV), across 2023 and 2024. 

The provisional liquidation order implies that an independent party will now take over the company’s affairs while the court decides if it should be permanently shut down. The court also froze more than a dozen accounts held at Nedbank, Standard Bank, and Investec, citing concerns over improper fund transfers.

The ruling signifies a stark end for the ambitious venture, which was established in December 2022 with a mandate to fund small and medium-sized enterprises across Africa on a “non-profit basis and with an altruistic or philanthropic intent.” 

In August 2023, Condia reported that the org’s for-profit entity, Founders Factory Africa, raised $144 million from LPs, naming Mastercard Foundation as one.

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The Foundation grew concerned that its charitable funds were benefiting for-profit entities, including Founders Factory Africa (FFA) and a venture capital brand named “Utopia,” which were run by the same key individuals as AFV. The dispute accelerated in August 2024 when Mastercard Foundation discovered that AFV had undertaken an unapproved rebrand, costing almost $700,000, to 54 Collective.

In a letter by Mastercard Foundation Executive Director, Impact, Research, and Learning, Daniel Hailu, he expressed concern about “the potential for-profit activity being associated with the brand linked to the charitable programs and the goodwill associated with these programs being transferred to non-charitable activities.” The foundation also began an internal probe on AFV’s activities.

A damning financial investigation

After AFV provided incomplete documentation, the foundation appointed Deloitte in December 2024 to inspect the firm’s books. The investigation uncovered significant financial irregularities.

A preliminary review of bank statements revealed the transfer of approximately $4.59 million from AFV to a for-profit company, FFA. The foundation stated it would never have approved such a transfer due to its charitable status. After the Deloitte investigation began, AFV posted nearly 2,000 “adjusting journal entries” to its books between March 5 and March 20, 2025. These adjustments altered the grant income account balances, which no longer matched the foundation’s disbursement records. 

AFV failed to produce audited financial statements for its fiscal years 2023 and 2024. Its own auditor, PwC, attributed delays to an “inadequate adoption” of reporting standards and a “lack of financial competency within its financial function.” 

Failed business rescue attempt

The foundation formally terminated the grant agreement on January 30, 2025, demanding the return of all remaining funds and repayment of $689,931.46 for the unauthorised rebranding campaign to 54 Collective. While AFV initially agreed to repay the rebranding costs, it later claimed doing so would constitute reckless trading.  On March 26, 2025, AFV’s board passed a resolution to enter business rescue proceedings, a move the court found was an improper attempt to conduct an “informal wind-down” rather than rescue the company. 

AFV asked for $1,200,000 for employees’ costs (around $490,000 per month); $500,000 for property-related costs including the closure of offices; $1 million for “program payables and wind down assumptions” and approximately $400,000 to $500,000 for business rescue costs including the Business Rescue Practitioner (BRP)’s fees and professional fees.

The court slammed AFV’s attempt to enter business rescue as legally invalid and strategically evasive. Acting Judge Johann Gautschi criticised the Business Rescue Practitioner, Barry Urban, for his failure to notify the foundation and for attempting to use remaining funds to settle operational expenses and his fees, with a projected recovery to the foundation of just $1 million.

In a rare punitive ruling, the court ordered Urban to personally cover the foundation’s legal costs, including fees for two senior advocates. A final decision on AFV’s permanent liquidation is expected at a hearing set for August 11.