Impact Esq Vol. 1

Welcome to Volume 1 of Impact Esq – a monthly email featuring the most insightful articles on social enterprise and impact investing law. This email is designed specifically for legal practitioners in the social impact sector as a vehicle for us to share what we’re learning and feature our important work.

We are a different breed of lawyers. We see the world as it could be. We resolve to lay the foundations for the next generation of change makers. We know that a brighter future is built by the adventurers, people like you and me, who are on the ground charting new territory, motivated by passion and committed to execution.

We believe in the power of the marketplace to generate positive social and environmental change. We believe that the best solutions to complex challenges create long-term prosperity, not only financial but also social and environmental.

We are in this together.

Social Enterprise

  • Laureate IPO. On February 1, history was made when Douglas Becker rang the opening bell of the Nasdaq. With the ringing of the bell his company, Laureate Education, Inc., became the first public benefit corporation to be publicly traded. Only time will tell if Laureate is able to buck the trend of publicly traded for-profit colleges that have failed to deliver value to their shareholders. Maybe converting to a benefit corporation will empower its management to navigate the public markets while keeping their purpose central. Hopefully the pursuit of purpose will drive long-term profit for investors. Learn more in my article in Fast Company.

  • Deductible Donations by Benefit Corporations. For federal income tax purposes, a benefit corporation is treated the same as other taxable corporations, including the tax treatment of payments to charitable organizations. A significant tax issue is whether payments by a taxable corporation to charitable organizations are deductible as charitable contributions under Section 170 (with the 10% limitation), or as business expenses under Section 162 (which is not limited). Recently the IRS stated that a benefit corporation may deduct payments to charities as business expenses (and thus not subject to the 10% limitation on corporate charitable contributions). Learn more at Morgan Lewis (8 minutes).

  • Purpose in Practice. The ABA Journal recently released an article profiling some creative ways that lawyers are integrating purpose into their practice. Featuring a wide range of models, the piece mentioned big firms like DLA Piper and MoFo’s vast charitable contributions and community service to firms like Neo Law Group and Wilkinson Mazzeo who have built innovative business models to serve exclusively social sector clients. It was great to see a lot of friends getting a little bit of the credit they deserve. Learn who’s doing what in the ABA Journal (9 minutes).

Impact Investing

  • D.light Raises $10.5M. D.light, a for-profit social enterprise that makes solar-powered products for “off-grid” communities, has raised another $10.5 million in funding, taking its total financing to more than $40 million over the past quarter. This latest $10.5 million tranche comes in the form of $5 million from new investor Norfund and $5.5 million in grant funding from Beyond the Grid and Shell Foundation. Back in September, the company announced a $22.5 million raise; $15 million of that round coming from a number of VC firms, including Omidyar Network. Learn more at Venture Beat (2 minutes).

  • DC issues the 1st Environmental Impact Bond.The DC Water Environmental Impact Bond is similar to a SIB in that it is a contract between parties that says a portion of the repayment to investors will be based on the outcomes of an intervention – in this case the efficacy of green infrastructure in reducing storm water runoff. But this Environmental Impact Bond differs from a SIB in a few ways. 1) It is an actual bond issued by DC Water. As a tax-free bond, it functions as a debt security issued to finance capital expenditures and backed by DC Water with regular payments of interest and full repayment of principal at the end of the term. 2) It is financing environmental outcomes instead of social outcomes. 3) Unlike some SIBs that are financing an intervention through projected cost savings, this was structured to incentivize innovation. Learn more at CASE (6 minutes).

  • Impact Assessment Platform for Private Equity. For impact investing to grow, a critical mass of mainstream funders needs to embrace it. Helping to make that happen is the goal of ClearlySo ATLAS, a recently announced platform with which private equity investors can assess the impact of their portfolio companies. The underlying framework is geared to the UN’s Sustainable Development Goals. How does it work? Investors log in and then can click on any of their companies. That will lead to a display called a “thematic compass”, with a score for six overall themes, which encompass all the sustainability goals. Learn more and see the ATLAS dashboard at Forbes (3 minutes).

People

About Impact Esq

The best articles on innovation, impact, and growth distilled into one email every Saturday morning by Kyle Westaway – author of Profit & Purpose and Managing Partner of Westaway.

Thanks for being a member of the Impact Esq community. I truly enjoy curating this email every month and love hearing your thoughtful insights. Feel free to shoot me an email with any feedback or suggestions. If you like what you’re reading, I’d be honored if you share it with other social impact attorneys. Have a restful and thoughtful weekend.