On 25 November 2011, the Senate Economics References Committee
released its report (Report) on its recent inquiry
into the mechanisms and options for the development of financial
products and services for not-for-profit organisations. The issues
considered in the report have the potential to trigger alternative
financing arrangements for charities and not-for-profit
organisations and create a framework for social investment through
mechanisms such as social impact bonds.
The Report recommends the establishment of a Social Finance
Taskforce to set a strategic direction to coordinate opportunities
for social economy organisations and investors to develop a capital
market in Australia.
The Report identifies five principal areas critical to the
development of a robust social finance and investment structure in
Development of intermediaries and building the capacity of
not-for-profit organisations to seek and access finance
Educating investors of options and expectations, particularly
in ventures which may deliver a 'sub-commercial' rate of
Promoting new social investment products such as social impact
bonds specific to the needs of different not-for-profits
Strengthening innovation in social enterprises, including
access to seed capital
Developing a measurement framework to evaluate investment
performance and minimise compliance costs.
Broader NFP Reforms
While the broader reforms taking place for the not-for-profit
sector tend to change the regulatory environment enabling charities
and not-for-profits to carry out their mission, the Report sets out
a roadmap for the potential options for sustaining the work of
charities and not-for-profits.
Charities and not-for-profits should review the Report to
consider the potential for financing sources beyond traditional
grants and donations appropriate for their mission which can:
encourage collaboration with the public and private
garner public confidence through collaboration and the ability
to measure and report on outcomes
provide a means of financially sustaining their activities to
further their objectives.
Banks and financial institutions should review the Report to
determine its impact and the potential for investment in the
charitable and not-for-profit sector.
Gadens Lawyers is able to advise banks,
financial institutions, not-for-profits, intermediaries and social
investors considering social finance arrangements including the
structure of social bonds and the effect of the Report.
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).