Impact Investing Legal Working Group 599 Lexington Avenue | New York, NY | 10022 jkhjkjkh Legal Issues in Impact Investing: U.S. and Abroad Official Program Thursday, May 19 & Friday, May 20, 2016 Contents Program Agenda 1 Thursday – May 19, 2016 1 Friday – May 20, 2016 3 Panelists and Organizers 11 Bibliography 43 Thursday – May 19, 2016 43 Friday – May 20, 2016 44 Reed Smith and the Impact Investing Legal Working Group are proud to work with the following sponsors: Follow along and join the conversation using the hashtag #ImpInvLaw Program Agenda Building on the momentum of its inaugural 2015 conference, the Impact Investing Legal Working Group is again convening leading lawyers and other professionals working in impact investing for a series of exciting panels, discussions and presentations geared towards knowledge-sharing and building a community of practice. The Impact Investing Legal Working Group is a group of lawyers who work in the field of impact investing and represent a diverse array of organizations, including impact investors, social enterprises, law firms, nonprofit organizations, foundations, and academic institutions. Thursday – May 19, 2016 1:00 - 1:30 pm Registration 1:30 - 2:45 pm Panels Round 1: a) Policy and Regulation of Impact Investing: Emerging World of Materiality and Disclosure: Metrics & Impact Integration Location: Conference Rooms A-B For the past few years, impact measurement has been primarily a discussion for those on the entrepreneurship and investment side: How do we understand and measure impact? Do we use “impact” as a proxy (or substitute) for some portion of financial return? Now, however, especially as “impact” is becoming integrated into business models (benefit corporations) and into regulatory structures (“Impact SBICs,” for example), there is an increasing regulatory dimension to “impact.” Is what to measure (and how to measure it) entirely a choice of each entity, or is it (or in the future will it be) something that is proscribed in terms of materiality, topics, required disclosure, timing, etc.? Now is the time for practitioners (in addition to the pioneers on this panel) to participate in this discussion, across the sector, more broadly. Moderator: Michael Chodos, Senior Fellow, Beeck Center for Social Impact & Innovation, Georgetown University Panelists: • Melvin F. Williams, Jr., General Counsel at the U.S. Small Business Administration • Mark Newberg, Director, Impact Strategies at Womble Carlyle Sandridge & Rice, LLP • Keren Raz, Attorney Socially Responsible Investing, Paul, Weiss, Rifkind, Wharton & Garrison, LLP • Frederick Alexander, Head of Legal Policy at B Lab b) Legal Issues for Social Enterprises: Public Benefit Reporting Standards and Compliance Location: Conference Rooms C-D This panel will examine the reporting requirement for benefit corporations, which has been a key component of this new legal form designed to create transparency. The panel will address such topics as compliance rates, content and substance, and what more can be done to enhance transparency (and hence, accountability) for benefit corporations. We will also compare the reporting standards of U.S. benefit corporations with those of the Società Legal Issues in Impact Investing: U.S. and Abroad Reed Smith LLP 01 Benefit, Italy’s form of the benefit corporation and the first of its kind in the EU. Moderator: Jonathan Ng, Global Legal Director at Ashoka Panelists: • Dana Brakman Reiser, Professor of Law at Brooklyn Law School • Lizzie Babson, Associate at Drinker Biddle & Reath LLP • Roberto Randazzo, Partner at R&P Legal Studio Associato; and Member of the Board of the European Social Enterprise Law Association 2:45 - 3:00 pm Break 3:00 - 4:15 pm Panels Round 2: a) Policy and Regulation of Impact Investing: Recent Regulatory Developments: ERISA, PRI & MRI Revised Guidance Location: Conference Rooms A-B This panel examines the recent regulatory developments related to various impact investment channels, including the Department of Labor’s revised ERISA guidelines and recent updated IRS guidance regarding program- and mission- related investments. Moderator: Perry Teicher, Impact Finance Fellow at Orrick, Herrington and Sutcliffe LLP Panelists: • Alexandra (Sandra) Poe, Partner at Reed Smith LLP • Ruth Madrigal, former Attorney-Advisor, Office of Tax Policy, U.S. Department of Treasury • Adam Kanzer, Managing Director, Director of Corporate Engagement & Public Policy Domini Social Investments b) Legal Issues for Social Enterprises: Tandem Structures for Social Enterprise: A Two-Way Street Location: Conference Rooms C-D This panel will present the following key legal issues for social enterprises using tandem structures: (i) IRS scrutiny of tandem structures given private benefit concerns, (ii) transactions between tandems and best practices for maintaining separateness, (iii) adjustment of outward-facing marketing to attract both donors and investors, and (iv) the feasibility of operating in a tandem structure as a start-up. Moderator: Alicia Plerhoples, Associate Professor of Law at Georgetown University Law Center Panelists: • Allen Bromberger, Partner at Perlman & Perlman, LLP • Khurram Gore, former General Counsel and Chief Strategy Officer at Personal Blackbox • Alissa Pelatan, Founder and Partner-Manager at AMP Avocat; and Development Director and Member of the Board of the European Social Enterprise Law Association • Kyle Westaway, Founding Partner of Westaway; and a Lecturer on Law at Harvard Law School 02 Reed Smith LLP Legal Issues in Impact Investing: U.S. and Abroad 4:15 - 4:30 pm Break 4:30 - 5:00 pm Keynote speech Marc J. Lane, President of The Law Offices of Marc J. Lane and author of The Mission Driven Venture: Business Solutions to the World’s Most Vexing Social Problems Location: Conference Rooms A-D Marc J. Lane will discuss the opportunities for attorneys to drive positive social change not only as counsellors, but also as advocates of socially innovative public policies. 5:00 - 7:00 pm Cocktail Reception for Conference Attendees Location: Conference Rooms 2 Friday – May 20, 2016 8:00 - 8:30 am Registration 8:30 - 9:30 am Morning Plenary: A conversation about the state of the impact investing sector between Professor Deborah Burand, Assistant Professor of Clinical Law and Director of the International Transactions Clinic, NYU School of Law, and Amit Bouri, Chief Executive Officer of the Global Impact Investing Network. Location: Conference Rooms A-D 9:30 - 9:45 am Break 9:45 - 11:15 am Panels Round 1: a) Aggregating Capital for Impact Investment: Case Study: Analyzing a Potential Deal from the Investor Perspective Location: Conference Rooms A-B As impact investing volume and deal size has grown, investors have increasingly explored ways to aggregate their capital – through private funds, holding companies, crowdfunding and other tools/vehicles – to achieve scale and to enhance impact. The panels in the “aggregating capital” theme will explore issues relating to aggregating capital for impact from three different perspectives – the investor perspective, the sponsor/manager perspective, and the investee perspective. Each panel will utilize a hypothetical case study as a launching point to explore questions such as why investors, sponsors and investees might prefer using aggregated vehicles for investments rather than direct investments; what forms of capital aggregation exist and what their relative pros and cons are; and how measuring and reporting on social/ environmental impact may be affected – positively or negatively – by aggregating capital. Legal Issues in Impact Investing: U.S. and Abroad Reed Smith LLP 03 Case Study: Analyzing a Potential Deal from the Investor Perspective: You have just been given a mandate by your employer to advise it on the investment of $50 million into impact investments. Your employer is open to investing in any geography and any sector, and would like your advice on how to choose the ideal investment structure for (a) sourcing investable projects, (b) achieving an attractive rate of financial return, and (c) maximizing social return. Some options your employer is considering are (i) making direct investments into social enterprises, (ii) investing indirectly in social enterprises through an impact investing private equity fund managed by a for-profit sponsor, (iii) investing indirectly in social enterprises through a debt fund managed by a nonprofit sponsor, and (iv) investing in public equities using an ESG screen. Describe your thought process and what you would advise your employer in order to maximize social returns and achieve an attractive financial return. How is your position on these issues formed by the characteristics of your particular employer? What other options would you consider and why? Moderator: Javier Fierro, Associate at Sidley Austin LLP Panelists: • Ingrid Miller, Executive Director and Assistant General Counsel at JPMorgan Chase • Lynn Roland, General Counsel at Acumen • Gordon Myers, Chief Counsel, Technology and Private Equity at International Finance Corporation • Abdul-Rahman Lediju, Global Social Finance Group, Deutsche Bank Trust Company Americas • Steven Godeke, Independent Impact Investment Advisor and Adjunct Professor of Finance at NYU Leonard N. Stern School of Business b) Social Finance Innovations: From Intentions to Outcomes: Embedding Social Metrics into Deal Documentation and Structures Location: Conference Rooms C-D This panel will focus on the ways in which social metrics are most commonly embedded