Kirkland & Ellis International LLP is working pro bono with the Private Equity Foundation (PEF) in its latest government-supported initiative to reduce the number of young people not in education, employment or training (NEET) in the United Kingdom.
PEF has today announced that it has launched one of the first social investment funds, designed pro bono by Kirkland & Ellis, with a £450,000 investment from Big Society Capital — a newly established investment firm capitalized with unclaimed assets left dormant in bank accounts for more than 15 years and contributions from the U.K.'s largest high street banks — and a matching investment by PEF itself. The fund will finance ThinkForward, a project in Shoreditch, East London, where 75 percent of children live in poverty.
Kirkland has supported PEF financially since its founding and volunteered to work on the social investment vehicle during the planning stages. In this social investment fund, money from social investors is used to finance a charitable project or other social enterprise run by a private organization. Once the organization can show evidence of achieved outcomes over the term of investment, it triggers bonus payments from the U.K Department for Work and Pensions Innovation Fund — "success premiums" — that enable investors to recover their initial capital and a financial return, in addition to the social return generated by the project. As a charitable foundation, PEF will re-invest any investment returns back into other charitable initiatives it supports.
"It's novel because the government hasn't funded these projects on a payments-by-results basis before," Kirkland private funds partner Stephanie Biggs said. "Previously, the government has just written a check and not been sure whether it got value. This way, the government only pays for projects that deliver tangible results."
Leveraging Kirkland's leading fund formation practice, Firm attorneys helped PEF design the fund structure, worked through regulatory issues, put in place shareholder arrangements, drafted the necessary corporate documents, negotiated the contracts with the U.K. government, and helped PEF negotiate and document its contract with Tomorrow's People, the charity that will deliver ThinkForward on the ground. Kirkland attorneys and staff have contributed nearly 600 pro bono hours to assisting PEF with this project.
ThinkForward has been developed by PEF in conjunction with Tomorrow's People, an innovative national employment charity. The program identifies teenagers at the age of 14 who are struggling and at risk of dropping out of school and assigns them "progression coaches" to provide a personal action plan, workplace mentors and business networks through to the age of 19. This enables them to gather the skills, characteristics and contacts they need to transition to the working world. It is estimated that ThinkForward could save the U.K. government millions of pounds in the long term and substantially reduce the NEET population in the targeted area.
"This project was very similar to what we do in our paid work. It was equally as challenging, and in some respects, more so, as we were dealing with some parties — the U.K. government and charities — that are not familiar with these fund structures at all," Kirkland corporate partner David Arnold said. "This is a project that could well be a blueprint for the social investment model going forwards."
ThinkForward is the second-ever charitable initiative in the U.K. to tap this social investment market. Iain Duncan Smith, the U.K. Secretary of State for Work and Pensions, believes the current market of £200 million could grow to £10 billion.
"This pro bono work is genuinely new," Biggs said. "Some of these documents literally started with a blank sheet of paper. We said, 'Nobody's done this before. What should this look like?' So the project really exercised our creative thinking skills."
Kirkland & Ellis is a 1,500-attorney law firm representing global clients in complex private funds, corporate, tax, restructuring, litigation and dispute resolution/arbitration, and intellectual property and technology matters. The Firm has offices in London, Chicago, Hong Kong, Los Angeles, Munich, New York, Palo Alto, San Francisco, Shanghai and Washington, D.C. Kirkland is committed to providing legal services without charge to those who cannot afford counsel, with the goals of improving lives, bettering communities and deepening our professional experience.
Since its creation in 2006, Private Equity Foundation has secured the backing of more than 70 private equity firms and their advisers, including banks, law firms, accountancy firms, consultants and search firms and has organized more than 32,000 hours of voluntary help. For more information about PEF and ThinkForward, visit www.privateequityfoundation.org.