Our award-winning social finance practice has facilitated the investment of over £40 million into causes as diverse as affordable housing and inner-city regeneration, disability opportunities and employment support for former offenders.
We are increasingly using our legal expertise in areas such as structured finance and tax to develop innovative streams of finance for deserving not-for-profit organisations. In the current economic environment charitable organisations are facing funding cuts, and at the same time increased demand for their services. External investment capital can help meet these twin challenges. Linklaters has developed a cross-jurisdictional, multidisciplinary social finance practice which is market-leading in developing innovative streams of finance for not-for-profit organisations and social enterprises. Our work in this area extends from small not-for-profit organisations like ADIE in France and Fair Finance in the UK to large organisations such as Big Society Capital to help social impact organisations raise finance.
Social finance pro bono work has provided our lawyers with deep sector knowledge that can be applied to other work in this area. As a testament to the growing strength and reputation of our social finance practice, we have been invited to lend our expertise to working groups supporting the G8 Social Impact Investment Taskforce, including the UK National Advisory Board and the Mission Alignment Working Group. The Mission Alignment Working Group is examining how investors and others can trust that businesses that are driven by a social mission will continue to stay true to that mission into the future, beyond a change of ownership.
Social Impact Bonds
Unlocking the investment potential of individual (retail) investors is seen by many as the key to attracting large scale investment into social finance. Some of our recent work with social impact bonds is highlighted below:
We worked jointly with Weil, Gotshal & Manges on the ground-breaking £20 million bond issue for Scope was awarded CSR Initiative of the Year at the British Legal Awards 2012. We helped disability charity Scope pilot the first bond programme in the charity sector. The Scope Bond Programme is listed on Luxembourg’s MTF exchange and operates in a manner similar to a traditional corporate bond programme. The proceeds of the issue are being used by Scope to invest in its income generation activities, including expanding its network of charity shops. Ultimately the work will result in better support for disabled children and their families through better services, information and campaigns. Volunteers across our structured finance, tax, financial regulation and investment management practices in London and Luxembourg volunteered their time acting for the arranger of the bond issue.
In another landmark deal, we advised Charity Bank on a £14.5 million investment by way of subscription for ordinary shares by Big Society Capital. Charity Bank provides affordable loans to charities and social enterprises, helping them to access the finance they need to grow and increase their social impact and this transaction represented a significant step towards their goal to increase lending from £55 million to £250 million by 2018.
We acted together with Allia and CanAccord Genuity to create the Retail Charity Bond platform enabling charities to raise millions in medium term unsecured loans from retail investors which are tradeable on the LSE. The platform was specifically designed by Allia, a community benefit society, to attract retail investors through a combination of fixed income near market returns, social good and - crucially - investment liquidity. Through the platform Mencap were able to raise £11million to support its housing arm, Golden Lane Housing which is being spent on building 30 suitable supported homes for more than 100 people with learning disabilities. Investment grade charities already issue bonds as a way of raising funds, but these are typically reserved for large institutional investors with tens of thousands of pounds to spend. Our role involved devising the structure of the platform and creatimg solutions to complex tax and regulatory challenges
We acted for Allia to issue social impact bonds of £10 million on behalf of a number of NGOs, and to develop the first multi-charity online bond platform – Giving Bond – raising £13.6 million to date.
Other Social Finance Transactions
Assisting B Lab globally in creating a legal framework to support the use of business to achieve positive social change by evaluating existing corporate laws, recommending language to be included in constitutional documentation of entities under existing laws to best achieve B Lab’s goals within the existing legal framework as well as identifying recommended changes to applicable laws to improve the legal framework. The work has included the creation of a new type of corporate entity: the “benefit corporation”. Registered benefit corporations can give the pursuit of social and environmental impact the same attention as profit.
“The thing that’s been most valuable to us has been the reach they have in other markets,” Andrew Kassoy, co-Founder B Lab. This project achieved recognition as being ‘Standout’ in the social responsibility category of the FT North America Innovative Lawyers 2014;
Supporting the Alliance for Financial Inclusion with creating a global database on financial inclusion policies and legislation, including financial inclusion data, digital financial services, financial integrity, consumer protection and market conduct and national financial inclusion strategies.