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Transformations Capital: The Rising Frontier

Creating seamless and easy ways to shift large capital flows toward deep systemic transformation is critical to address the multiple crises we face. A recent investigation[1] not only drew the outlines of such a financing system, but it found several existing and emerging examples. Particularly exciting is the wide variety of examples, which suggests such systems can be adapted to diverse contexts and issues.

The foundation of the report, developed with a group of three dozen people working on the financing transformation challenge, was distinguishing between “progressive capital” and “transformations capital”. The distinction, summarized in Table 1, proposes a type of capital with distinctive purpose, power logic, and values. These qualities are definitional of transformation itself as a distinct type of change, in contrast to incremental and reform types of change.[2]


Two types of capital

Table 1: Two Types of Capital

The definition of transformations capital was first noted by Dominic Hofstetter at Climate-KIC, which describes itself as “Europe’s largest public-private innovation partnership focused on climate innovation to mitigate and adapt to climate change”. It’s core distinction from progressive capital is transformational intent. Whereas most private capital, such as traditional impact investing, focuses on incremental change with social-environmental benefits and modified financial returns, transformations capital assumes that the very power structures and goals of traditional capital are sources of the crises facing civilization.

Although the concept of transformations capital may today seem revolutionary, it can be placed in the evolving capital traditions since the 1970s of negatively-screened social investment, positively-screened social investment, impact investing, green bonds, social purpose funds and program-related investing.

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The architecture of transformations capital provision shifts focus from creation of funds to creation of an ecosystem for financing transformation or EFT. This shifts the traditional unilateral power of those having financial assets, to power shared with those who are doing the transformational work. This shift is simply demonstrated in Figure 1 that represents the traditional dominant mental model of funding, to Figure 2 where there is a range of roles necessary that require collective interaction and power-sharing.

Traditional Finance Mental Model

Figure 1: Traditional Finance Mental Model


Ecosystem for Financing Transformation (EFT)

Figure 2: Ecosystem for Financing Transformation (EFT)

This range of roles was identified from operating and emerging examples that the investigation uncovered. (Table 2) The great variety of the examples can make them look like apples and oranges. However, they all share a transformational intent and a recognition that provision of financing for transformation requires an ecosystem of effort with distinctive qualities:

  • Aggregation and blending of various types of financial sources, including such things as government agencies, science funders, foundations, high net worth individuals, and crowdfunding
  • Investment in systems change, which involves a shift from individual project proposals and usually requires work to aggregate several proposals into a larger group of activities by a bigger range of stakeholders
  • Provision of three different types of funding
    • Fi1: Funding to support operations of the whole system
    • Fi2: Funding to support aggregation of deals into a systems change proposition, and
    • Fi3: Funding in the actual proposition – the actual financial flow that Figure 1 focuses on


Table 2: Operating and Potentially Emergent EFTs

Table 2: Operating and Potentially Emergent EFTs. Green shading indicates currently operating ETFs.


The EFTs identified required significant development effort – they did not just arise on their own. The investigation referred to the leads in this effort as “EFT Stewards”. Their role is described in Figure 3, where the green circle labelled EFT contains all of the activities of Figure 2. The Steward spurs action and brings coherence to the work of a range of work by those outside the EFT, and to the EFT development itself.

Role of Steward in Model

Figure 3: The Role of the EFT Steward

Next Steps

This 6-month investigation was cursory and much more work is required to powerfully spur development of EFTs. The work produced a proposal for a 1-year set of activities that aim to develop a community of those developing EFTs to accelerate their work with a longer-term effort. The activities include:

  1. Forming four communities of practice around four key development challenges
    1. Aggregating capital
    2. Aggregating proposals
    3. Baking in equity
    4. Metrics
  2.  Case studies to deepen understanding of the current state of the art of development pathways
  3. Two meetings of a couple of dozen people each, tentatively planned for Geneva and India, to share lessons, create community and identify pathways forward for the longer-term

The EFT investigation was the product Catalyst2030, Bounce Beyond and Cattail Strategy.

The project leads are currently seeking funding. Please direct inquiries to: Steve Waddell: swaddell@bouncebeyond.global

[1] This article was based on the report:
Waddell, S. (2021). An Investigation into Financing Transformation. Catalyst2030, Bounce Beyond, Cattail Strategy.
[2] This distinction is adapted from: Waddell, Steve. 2007. “Realising global change: developing the tools; building the infrastructure.” The Journal of Corporate Citizenship (26):69-85. and Waddell, Steve. 2011. Global Action Networks: Creating our future together. Bocconi University on Management. Hampshire, UK: Palgrave-Macmillan. The distinction has been referenced in a variety of other reports, such as the Scaling Impact series by Rockefeller Philanthropy Advisors, and Germany’s development agency GIZ’s 2020 report “Transforming our work: Getting ready for transformational projects.”

For over 35 years Steve Waddell has supported transformations and institutional innovation in various capacities. This is local to global, with organizations, networks and systems. He is founder and Co-Lead of Bounce Beyond, which supports accelerating our economic paradigm shift. Steve has a Ph.D. in sociology and an MBA, and ... Read more
Suzanne Bowles is Chief Strategist of Cattail Strategy, a firm that advances systems change philanthropy, and a founding member of Catalyst 2030. Suzanne brings together people and communities who seek transformation through connection and has spent decades supporting strategic and resource development for grassroots systems change organizations.

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