WEEK 3: Financial institutions and crowdfunding

Text 1: Shareholders vs. Stakeholders: A New Idolatry

The era of shareholder value maximization, popularized by figures like Jack Welch, is being questioned. Richard Lambert, head of the Confederation of British Industry (CBI), suggests a shift towards "customer-driven capitalism," prioritizing customer satisfaction over shareholder value. Critics argue that the financial crisis exposed flaws in linking executive pay to share prices and relying on private equity. While some advocate for a collaborative approach involving various stakeholders, including employees, others believe shareholder value is not inherently flawed but should focus on long-term gains rather than short-term stock price increases. Calls for empowering shareholders and improving corporate governance are gaining traction.

Text 2: Six Corporate Fundraising Tips for NGOs

Establishing successful partnerships between NGOs and corporations can be challenging. Lessons from working with a think tank suggest key strategies:

1. Speak in the company's interest:

   • Align with the company's objectives and strategy during discussions.

2. Know your targets:

   • Understand corporate affairs budgets across sectors and seek advice from other NGOs.

3. Persistence is key:

   • Corporate circumstances change, so revisit opportunities and contacts over time.

4. Make your board work:

   • Assign clear fundraising tasks to board members to maximize their contributions.

5. Be creative:

   • Offer intangible benefits to companies in return for donations.

6. Build networks within the company:

   • Cultivate relationships with various individuals to strengthen your case and secure funding even if contacts change.

By implementing these strategies, NGOs can enhance their chances of forming successful and sustainable partnerships with corporations.

Text 3: The Problems & promises of crowdfunding

Crowdfunding, heralded as a democratic force in startup funding, faces scrutiny from entrepreneurial finance experts. Despite the potential for innovation and experimentation, the professors from Harvard Business School suggest that crowdfunding may have limited power to disrupt the investment landscape. The delayed implementation of equity crowdfunding rules by the Securities and Exchange Commission (SEC) has led to companies primarily utilizing platforms like Kickstarter. The looming question is whether democratizing entry through crowdfunding will boost experimentation or lead to the funding of unsuitable companies. Skepticism persists about crowdfunding's long-term success, with concerns about unsophisticated investors and its impact on traditional venture capital financing. While crowdfunding may add a layer to the funding landscape, it remains to be seen if it will live up to its initial hype.

.

.