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It is routine for any commercial finance to call on legal expertise to ensure precision and clarity, protect against risk and secure the deal. There are many lawyers to call upon for this.

Social finance and impact investment require the same technical capabilities, but also two further specialisms: public benefit legal knowledge and experience in balancing the dual motivations of social outcome and financial return. Few lawyers have this combination of skills, for the understandable reason that commercial and public benefit legal disciplines are usually distinct. The Social Finance and Impact team at Stone King, however, integrates these two disciplines.

Over the past four decades profit maximisation, competitive engagement and private shareholder value have become entrenched as the drivers of business, financial transactions, our economy as a whole and even, in a particularly ideological version, outsourced public service delivery. Meanwhile, a counter-culture originating in charity law has promoted alternative (or rather, complementary), drivers of social purpose, collaboration and public value. This has given rise to a social economy that is based on social enterprise, co-operation, community and ethical and responsible business.

Social business needs secure, flexible and affordable financing as much as any other business, but familiar corporate finance models are not necessarily directly transferable for this purpose. For example, members of the Stone King team have experience of early Social Impact Bond documentation being drafted virtually without the defining social outcome measures; and of a pioneering, regulated public share offer for a community renewable energy project, which caused the Financial Conduct Authority difficulty in giving due weight to the social element in the motivation of prospective investors.

With socially-minded projects looking to commercialise and an increasing number of commercial businesses looking to develop their ‘social’ agenda, ‘Social Finance’ has become a recognised term that links the two very different business models.

A gathering of social businesses might find common frustration in social finance offers not being tailored to purpose as might be expected and the cost of capital. Likewise, a gathering of social finance institutions might agree that finding investable social opportunities can be challenging.

On the positive side, all the dynamics are moving in the right direction, as impact investing and ethical investment become increasingly mainstream and as social enterprises and responsible businesses mature into becoming commercially competitive, with the direct appeal of their purpose-driven missions.

This fast moving environment needs lawyers who have grown up with social enterprise, or who have actively chosen to turn their commercial skills to the public benefit and responsible business domains. The team at Stone King has both these types of lawyer and a wealth of experience working with both social finance institutions and social businesses.