Social Finance and Impact Investing

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.

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Social Finance and Impact Investing Updates

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