Morgan Stanley
  • Sales and Trading
  • Aug 13, 2021

A Social Bond to Support Deaf and Hard-of-Hearing Students

Gallaudet University issued its first-ever social bond to raise capital for its signing and deaf community, amid a growing market for social impact debt.

Undergraduate and graduate students who attend Gallaudet University learn that being deaf or hard of hearing is something to fully embrace—a process of understanding oneself and building connections within and beyond the school’s community.

To expand on its mission of educating deaf, hard-of-hearing and deafblind students, Gallaudet, based in Washington, D.C., turned to the public bond market. Proceeds from the private university’s first-ever social bond will fund projects that help create an educational environment further optimized for a signing population.

Deaf and hard of hearing people sometimes face unique challenges in attaining economic, social, educational and workplace equity. Due largely to societal biases, unemployment and underemployment impacts the deaf community at significantly greater levels than they do the hearing population and those without disabilities. Furthermore, deaf entrepreneurs often face societal barriers and lack equitable support, hindering growth opportunities, according to the university. Gallaudet aims to help mitigate these inequities.

In 2020 and 2021, as the nation and the world found themselves in the throes of a pandemic, issuers and investors alike showed increased interest in addressing environmental and social issues through sustainable bonds. Green bonds, social bonds, and sustainability bonds raised more than $600 billion from investors, nearly double the $326 billion issued in 2019. Demand grew for social bonds, and sustainability bonds in particular, as the public and private sector prioritized projects to address problems exacerbated by the pandemic. Gallaudet’s fundraising fortuitously coincided with the investment community’s growing appetite for financing social impact. 

Promoting Self-Reliance in Underserved Community

“Gallaudet considers itself a hub within the signing ecosystem, and one of its aims is to promote diverse visual and tactile signed languages from cultures around the world, supporting students and others in the deaf community to realize their full potential,” says Lisa Clarke, who was Gallaudet’s Interim Chief Financial Officer until August 2021. According to Clarke, the university plans to use proceeds from the social bond for capital and infrastructure improvements and debt refinancing.

What really resonates with investors is a targeted approach to financing social equity.
Zachary Solomon Head of Tax-Exempt Project Finance and Sustainable Infrastructure, Public Finance Group, Morgan Stanley

By supporting Gallaudet’s overall mission, the bond also helps support job resources, says Robert Feigenson, an Executive Director in Public Finance. “Gallaudet is uniquely positioned to prepare its students that are deaf or hard of hearing to find employment opportunities and improved access to traditional career tracks,” he says.

‘Targeted Approach’ to Social Equity

Gallaudet’s debt is the latest in a series of sustainable-bond issuances underwritten by Morgan Stanley for diverse entities, such as foundations, housing finance agencies, community development financial institutions and corporations. Public and private organizations alike are heeding growing investor appetite for the bonds, an increasingly popular method to finance social-equity-related projects.

In 2020, the municipal social-bond market surged nearly sevenfold, to $6.7 billion from $864 million in 2019. In the first quarter of 2021, transaction volume has continued to expand rapidly, with $3.2 billion issued. The number of transactions during this period has already matched the 2020 total.1

Gallaudet’s bond was significantly oversubscribed, says Zachary Solomon, Head of Tax-Exempt Project Finance and Sustainable Infrastructure in Morgan Stanley’s Public Finance Group. That success shows that investors are interested in helping specific communities, he adds. “What really resonates with investors is a targeted approach to financing social equity,” he says. “In this case, there’s a very targeted population that’s under-resourced, and the social bond was an incredible way for investors to help this community.”