Court Temporarily Dissolves 54 South African Organizations Amidst Mastercard Foundation Controversy
54 Collective Under Provisional Liquidation Amidst Financial Misconduct Allegations
South African venture firm 54 Collective (formerly Africa Founders Ventures) is currently under provisional liquidation following serious allegations of financial misconduct involving a $106.5 million grant from the Mastercard Foundation.
The Mastercard Foundation, a leading global organization that works with visionary partners to unlock human potential, has taken legal action and initiated a forensic audit against 54 Collective. The allegations include the mismanagement of over $42 million disbursed between 2023 and 2024, and inappropriate spending of restricted grant funds, notably $689,000 on an unauthorized rebranding exercise.
The South African High Court provisionally liquidated 54 Collective, ordering the freezing of accounts at Nedbank, Standard Bank, and Investec, holding about $6.1 million in reserve pending the outcome of an international arbitration in Toronto. Mastercard will pursue full recovery of the misused and unused funds.
The controversy surrounding 54 Collective began when the firm's leadership, under CEO Bongani Sithole, attempted a business rescue filing aimed at withholding funds from Mastercard and covering employee severance and fees instead. However, this was ruled illegal by the court, which described the move as an act of bad faith.
Before its collapse, 54 Collective had played a major role in supporting African startups, having backed over 40 startups and created approximately 17,500 jobs across the continent. The termination of Mastercard’s support and the ensuing litigation and liquidation have disrupted this ecosystem, risking job losses and threatening ongoing projects connected to the Mastercard Foundation’s funding focus areas such as gender equity and portfolio stability.
Investigations by auditor PwC and Deloitte have revealed poor financial controls and lack of expertise within 54 Collective, as well as a $4.59 million transfer from 54 Collective to Founders Factory Africa, a for-profit entity reportedly run by the same individuals behind Africa Founders Ventures.
The case has sparked debate across Africa's philanthropic and venture circles over accountability and governance in nonprofit funding. An independent liquidator has been appointed, and a final decision on the permanent liquidation of 54 Collective is expected on August 11, 2025.
| Aspect | Details | |-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------| | Alleged Misconduct | Misuse of $42M+ from Mastercard Foundation grants; unauthorized $689K rebrand expenses | | Legal Outcome | South African court froze assets, rejected business rescue attempt, ordered provisional liquidation of 54 Collective/AFV | | Financial Recovery | Assets (~$6.1M) frozen pending arbitration; Mastercard demanding repayment of misused and unused funds | | Impact | Shutdown of venture studio operations, job losses, disruption of support to African startups and entrepreneurs | | Leadership Response | CEO Bongani Sithole denied wrongdoing but court ruled against firm, exposing attempts to circumvent legal claims | | Audit Findings | Poor financial controls and lack of expertise within 54 Collective; $4.59M transfer to Founders Factory Africa | | Debate Sparked | Accountability and governance in nonprofit funding; role of auditors and forensic audits in preventing misconduct | | Liquidator Appointed | Independent liquidator appointed to oversee the liquidation process | | Future Decision | Final decision on the permanent liquidation of 54 Collective expected on August 11, 2025 |
The South African venture firm, 54 Collective, is currently under provisional liquidation due to allegations of financial misconduct that involve the mismanagement of funds received from the Mastercard Foundation for business purposes.
The Mastercard Foundation, a global organization dedicated to unlocking human potential, has initiated a forensic audit and taken legal action against 54 Collective, citing issues such as the misuse of over $42 million and inappropriate spending on business expenses.
