Social finance, or impact investing, is an increasingly important complement to governmental and philanthropic aid in addressing social and environmental issues facing communities around the world. In social finance transactions, both traditional and innovative financing tools use private and/or philanthropic capital to solve social problems while at the same time delivering financial return. Even in the face of shrinking public budgets, social finance innovations can enable policymakers to use resources more efficiently and improve services for disadvantaged populations while providing socially minded investors with attractive investment opportunities.
Social Impact Bonds. Chapman is one of the few law firms in the country that has worked on and completed social impact bond financings, also known as pay for success financings. A social impact bond is a financial tool that enables governments to pay for programs that deliver results. Under a pay for success arrangement, a governmental entity sets a specific, measurable outcome that it wants to see achieved in a population and promises to pay for such services if and only if the social services agency providing the services accomplishes the desired outcome. The social services are initially funded by investments from the private sector. Then, if success is achieved, the government repays the investors. Our attorneys have served as lender’s counsel, government counsel, service provider’s counsel, and intermediary’s counsel in numerous pay for success transactions across the country.
Green Bonds. Green bonds were created to fund projects that have positive environmental or climate benefits. The global green bond market is growing rapidly with many issues oversubscribed. Chapman served as underwriter’s counsel in one of the first such transactions with bond proceeds used to implement renewable energy and green modernization schemes for school buildings, and continues to represent clients in green bond transactions across the country.
Renewable Energy. Chapman provides a spectrum of legal services to participants in the renewable energy sector. Our interdisciplinary team has extensive experience in energy, finance, real estate, construction, energy regulation, environmental, tax, corporate, and other relevant areas. Our experience in renewable energy project assets includes wind, solar, hydropower, biomass/landfills, ethanol production facilities, and geothermal and spans a wide range of deal structures, including tax-advantaged bonds and leases, Property Assessed Clean Energy (PACE) programs and other securitizations, investment tax credits, community solar projects, bank loans, private placements, equipment leases, lease/leasebacks, sale leasebacks, prepays, partnership flips, inverted leases, REITs, master limited partners, yieldcos, and investment pools.
Investment Companies. The Investment Company Group has been serving investment company and exempt investment company clients for over 50 years. Chapman has been at the forefront in the development of several innovative investment products, including the launch of the first wind industry exchange-traded fund. We have also counseled clients on the formation of both registered and exempt funds whose purpose is to invest in social programs.
ESG Policies. Chapman has assisted clients in the development of responsible investing policies that incorporate environmental, social, and governance factors in determining the risks associated with a particular investment.
Public-Private Partnerships. A funding gap continues to increase between critical infrastructure and public development requirements in the United States and available traditional financing sources. The public sector has turned to the private sector to perform a larger role in public projects. The contractual relationships in a public-private partnership (or “P3”) bring together the strengths of both the public and private sectors to provide high-quality services in the most cost-effective manner. P3 transaction structures allow public entities to tap private sector resources (technical, project design and development, management, and financial) in new ways to achieve desired public entity objectives. Our knowledge of relevant industries and our experience in mergers and acquisitions and securities offerings, together with our thorough understanding of development, financing, and privatization strategies, have enabled us to effectively counsel a full range of public and private sector participants, in P3 transactions ranging from transportation to higher education.
Not-for-Profit Finance. Chapman’s Public Finance attorneys regularly serve as bond counsel, bank counsel, borrower’s counsel, or underwriter’s counsel in connection with the issuance of tax-exempt and taxable bonds for the benefit of various 501(c)(3) not-for-profit corporations located throughout the country. We have completed financings for colleges and universities, hospitals and health care systems, senior living facilities, housing finance corporations, YMCAs, social service agencies, museums, zoos, research institutions, cultural facilities, and other charitable organizations.
Private Equity Funds. Chapman’s Private Funds Group participates in private equity transactions involving investments in private equity funds that target a variety of asset classes along the risk/return spectrum, ranging from buyouts, to venture capital, to infrastructure, to natural resources. We have organized private investment funds for institutional sponsors and operators and represent institutional investors in their purchases of interests in private investment funds.
Commercial Lending. Commercial lending is a core practice area of Chapman’s Banking and Financial Services Department. We represent a wide array of traditional and nontraditional lending sources in structuring and negotiating transactions involving virtually every type of commercial lending product. We have represented lenders in providing loans to housing development and neighborhood improvement corporations, community organizations, and other not-for-profit institutions.
Tax. Our tax attorneys work closely with transactional deal teams on tax-exempt and taxable financings. We also represent governmental, charitable, and exempt entities with respect to their formation, qualification, administration, and financing. Our experience includes issuing opinions as to 501(c)(3) status, structuring joint ventures and private equity investments with for-profit organizations, and the formation and qualification of domestic and international exempt organizations.
- Chapman served as counsel to a social impact fund that provides project loans to acquire, preserve, and improve affordable housing in the Detroit metropolitan area. Chapman assisted in the formation of the fund, which involved raising capital through multiple credit facilities with local, regional, and national financial institutions.
- Chapman acted as bond counsel to a utility in connection with the green bond financing of a carbon-neutral base-load generation facility.
- Chapman served as special counsel to an Illinois county in the state’s first transaction under a PACE financing program, which allows property owners to obtain upfront financing from private capital providers for energy efficiency and renewable energy projects in new and existing buildings. Funding is secured by a special assessment lien on the property and is repaid as a line item on the owners’ property tax bill.
- Chapman served as special counsel to the lender in a social impact bond transaction to reduce homelessness in Salt Lake County, Utah by funding a program to provide housing, behavioral-health treatment, and employment counseling for 315 chronically homeless individuals.
- Chapman served as counsel to a nonprofit organization dedicated to mobilizing capital to drive social progress in the formation and operation of its first private impact investing fund, which provides catalytic capital to support education and training programs for low-income and underserved populations, including wraparound support services to help students graduate and pursue in-demand career pathways.
Social Finance and Impact Investing Updates
- Chapman InsightsApril 22, 2021
At today’s Earth Day Climate Summit, President Joe Biden announced to world leaders that the United States is committed to cutting its greenhouse gas emissions by 50% to 52% from 2005 levels by 2030.
- Chapman InsightsApril 20, 2021
Last week the Loan Syndications and Trading Association, the Loan Market Association, and the Asia Pacific Loan Market Association jointly published their first ever Social Loan Principles.
- Chapman InsightsMarch 25, 2021
The Securities and Exchange Commission this month announced that the Divisions of Corporation Finance, Examinations, and Enforcement are all undertaking climate or ESG-related initiatives.
- Client AlertDepartment of Labor Announces Non-Enforcement Policy and Intent to Review Environmental, Social and Governance Investment RuleMarch 16, 2021
The Department of Labor announced that it will not enforce its previously issued final rule regarding plan fiduciaries’ use of environmental, social and governance factors in selecting investments for tax‑qualified retirement plans.
- Chapman InsightsMarch 2, 2021
Environmental, Social and Governance investing in the United States has reportedly reached an estimated $250 billion in assets under management and is expected to see continued growth in 2021 and beyond.
- Client AlertNovember 9, 2020
On October 30, the Department of Labor issued a final rule which amends its 1979 investment duties regulation under the Employee Retirement Income Security Act of 1974, as amended, to update and clarify its position with respect to ERISA plan fiduciaries’ use of environmental, social and governance factors in selecting investments.
- ArticleApril 2019
Pension shortfalls. Crumbling infrastructure. Wage pressures. These are only a few of the budgetary pressures facing state and local governments. It’s no surprise that, with so many demands on limited tax dollars, funds needed to address social problems are being diverted.
- White PaperApril 2017
This white paper addresses pay for success legislation that has been adopted at the state level, pointing out the various functions of the pay for success financing structure and how individual states have treated these components within their legislation.
- Jim Audette
- Kelley Bender
- Kimberly Bischoff
- Ryan Bjerke
- Nancy Burke
- Robert Capizzi
- Paul Carman
- Amy Cobb Curran
- Walter Draney
- Aaron Efta
- Aaron Eisenberg
- Michael Friedman
- William Hermann
- John Hitt, Jr.
- Van Holkeboer
- Joon P. Hong
- Juliet Huang
- David Kates
- William Libit
- Lorelle Lindo
- Ronni Martin
- Mark O'Meara
- Kristin Parker
- Hillary Phelps
- David Sykes
- Carol Thompson
- Morrison Warren
- Lawrence White
- Gregory Xethalis