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Stephanie Pinnington

Differentiating Community Bonds and Social Impact Bonds

By | News

Over the last decade, governments and social purpose organizations have been responding to the growing need for social and environmental services by developing and using innovative finance tools to both grow the base of community assets, and expand programming. Two tools that have received a lot of attention, and are gaining traction, are Community Bonds and Social Impact Bonds.

At Tapestry, we’re often asked what the difference is between these two tools, so in this article we will attempt to set the record straight.

Community Bonds, by definition, are a debt financing tool issued a by non-profit, charity or co-operative organization. In simple terms, Community Bonds give these organizations the opportunity to take loans of varying sizes directly from their community of supporters. Both sides win – their supporters are paid interest for investing in a project that is meaningful to them, and the issuing organization gains access to the capital they need to grow.

In order to repay their investors, organizations issuing Community Bonds must have a revenue model. For example, an artist co-operative might issue community bonds to purchase a building. They will have revenue streams from operating a storefront, leasing studio space to their members, and renting out their event venue. This artist co-operative would be a good fit for a community bond raise because they have a way to repay their investors and have a strong base of supporters through their co-op membership and patrons.

Social Impact Bonds are similar in some ways because they are issued by community focused non-profits and charities. They too, create impact investment opportunities for individuals who believe in the mission of the issuing organization. The main difference is that the issuing organization has established an agreement with the government, where the government will pay for performance by the non-profit or charity. The payment from the government is tied to clear social or environmental outcomes to which the issuing organization has committed. These are the funds that are used to repay investors. So rather than investing in the business model of a social enterprise (as is the case for Community Bonds), investors in SIBs are investing in the organization’s ability to realize detailed social or environmental outcomes.

For example, a community service organization that houses and provides employment training to homeless youth could establish a pay-for-performance contract with the government where they commit to housing and employing 80 youth. This organization could then issue debt in the form of an SIB to their community of supporters. Their investors will be repaid at the end of the program, assuming the organization has achieved the outcome to which they committed with the government.

According to the Ministry of Economic Development, Job Creation and Trade, “SIBs are not bonds, per se, since repayment and return on investment are contingent upon the achievement of desired social outcomes; if the objectives are not achieved, investors receive neither a return nor repayment of principal. SIBs derive their name from the fact that their investors are typically those who are interested in not just the financial return on their investment, but also in its social impact”.

Where do these tools sit on the Investment Continuum?

What are the main characteristics of Community Bonds vs. SIBs?

How do the investor groups differ?

As SIBs aim to solve big social challenges on behalf of the government, these programs often require larger capital injections than a project that may successfully issue Community Bonds. Thus, the investors targeted for SIBs are often high net worth, accredited investor. On the other hand, Community Bonds enable people of average means to transform from occasional donors or volunteers into citizen investors.

Tapestry Celebrates Announcement of Social Finance Fund

By | News

Today is a day to celebrate! In the Fall Economic Statement released this morning, the Federal Government announced the creation of a $755 million Social Finance Fund. This is a strong signal towards the growing movement of impact investment in Canada and a bold step towards advancing social innovation.

“We are very optimistic about the announcement today,” says Tapestry’s Social Impact Manager, Ryan Collins-Swartz, “it’s a signal from the top that the social economy is moving towards becoming the common economy.”

In June 2017, the Government created a Social Innovation and Social Finance Strategy Co-Creation Steering Group that sought feedback from hundreds of non-profit and charitable stakeholders to create a nationwide social innovation and social finance strategy. The Steering Group published its final report in August 2018: Inclusive innovation: New Ideas and New Partnerships for Stronger Communities.

One of the report’s central recommendations was to create a Social Finance Fund to accelerate the social finance market in Canada and help close the financing gap faced by organizations that are contributing to social and environmental change in their communities.

The Fund, which will make $755 million available over the next ten years, will support charities, non-profits and other social purpose organizations to access new financing and connect them with private investors that want to make impact investments. The Government has also proposed to invest $50 million over two years to create an Investment Readiness Steam, for these organizations to improve their ability to successfully attract investment.

Tapestry has also recognized the need to develop the investment readiness of non-profits, charities and co-ops. With the launch of our Bond Camp we will be supporting Ontario-based organizations to successfully raise community investment in 2019. We have seen the movement of private capital into meaningful, place-based investments and feel confident that this fund will feed the growing local and social investment ecosystem.

“This is a symbolic gesture from the Government, recognizing the reality that the non-profit sector is a very important part of our economy,” says Collins-Swartz. “This fund will make much needed resources available to ensure that social innovators are able to scale, and make Canada a better place to live, work and play.”

The Government has reported that this Social Finance Fund could generate up to $2 billion in economic activity, and help create and maintain as many as 100,000 jobs over the next decade.

In honour of this great news, we are giving the gift of one free investment readiness workshop. Do you know of a project that could benefit from community investment? Email us at info@tapestrycapital.ca

Social innovation reaches new heights in Ottawa

By | Uncategorized

On October 17th, Tapestry was joined by more than 80 non-profits, charities, co-operatives and social enterprises in Ottawa, all eager to learn how social finance can help them scale-up their impact. The question among all of them – where do we start? What are the tools that we can put to work in our favour?

Social enterprise is still a very new, and arguable poorly understood, sector of the economy. Even less explored is the realm of social finance.

So what is social finance?

Social finance is an approach to mobilizing private capital that delivers a social dividend and an economic return to achieve social and environmental goals. Mobilizing private capital for social good creates opportunities for investors to finance projects that benefit society and for community organizations to access new sources of funds.

The term can include community investing, microfinance, investing in socially-responsible and sustainable businesses (such as B-Corps), social impact bonds, and social enterprise lending. A social investment is not a grant or donation; it’s repayable, with interest.

Tapestry works specifically in the space of community investment. We make use of a social finance vehicle called a Community Bond. Simply put, a Community Bond, is an interest bearing loan from a community member. It could be for as little as $1000 or more than $1 million, but the bonds must always be repaid, providing a fair interest return and a proven social or environmental benefit.

To shed light on other tools across the social financing continuum, Tapestry brought in partners including:

Vancity Community Investment Bank

Vancity works exclusives with organizations and entrepreneurs that are working to solve environmental, social and economic challenges. Committed 100% to impact, Vancity offers project, portfolio, and business lending; impact capital transaction advisory services; and investment banking for community and environmental enterprises.

Ottawa Community Foundation

The Ottawa Community Foundation (OCF) is a non-profit organization created by and for the people of Ottawa to connect people who care with causes that matter. OCF recently launched a new Impact Investing Strategy that will allow the Foundation to go beyond their traditional grant-making role by helping charitable and non-profit organizations access loans, guarantees and mortgages. Under the terms of the Strategy, OCF will allocate up to 10% of their endowment to impact investing.

The Ottawa Community Foundation is also one of the lead investors in the Community Forward Fund, a fund which lends exclusively to charities, non-profits and social enterprises.

PARO Centre for Women’s Enterprise

As a not-for-profit social enterprise, PARO collaborates to empower women, strengthen small business and promote community economic development across Ontario. PARO has become well know for their Peer Circles – small groups of like-minded women who meet regularly to share their experiences, offer advice to each other and expand their individual and shared contact networks.

One of the key elements of a Peer Circle is that members also provide access to micro-credit of between $500.00 and $5,000.00. Members of the Peer Circle are involved in the review and approval of a member’s PARO loan application before it is approved. Today PARO is one of the strongest peer lenders of small business loans in North America, supporting a diverse range of women who may have no or poor credit history, and no sources of equity.

Centre for Social Enterprise Development (CSED)

CSED is a non-profit organization based in Ottawa that offers a wide range of services to social enterprises, including access to technical expertise, coaching, financing, learning communities, training, and cross-sector partnerships. They have worked with hundreds of clients developing their social enterprise plans and provided them with the tools, strategies, and support to perpetuate positive social change and grow profitably.

CSED’s UNCAPPED program enables the start-up, growth and scaling of social enterprises through organizational readiness and capacity building support, including access to funding. The program is open to charities, not-for-profit organizations, co-operatives, and for-profit businesses with a clearly demonstrated social purpose. Under the program, participants will receive curated readiness and capacity building support that may include one-on-one coaching, facilitated cohort-based training, access to community mentors/experts, and funding in the form of grants, loans or grant/loan combinations.

Ottawa Community Loan Foundation

The Ottawa Community Loan Fund (OCLF) is a non-profit organization providing microloans for business and professional development purposes. Since its inception in 2000, it has constantly pursued its overarching goal; to ensure their loan recipients eventually have access to traditional financing, increase their assets and/or achieve the professional development.

More recently, OCLF has expanded their scope of activity to include new micro-financing products, business technical expertise, financial literacy training, professional development, affordable housing and social enterprise development.

Impact Hub Ottawa

Impact Hub is a community and co-working space that Inspires, enables and connects people that are working to solve the world’s challenges. Impact Hub is part of a global network of 15,000 purpose driven individuals and organizations in 102 impact hubs worldwide.

In the context of our social finance discussion, the Impact Hub Ottawa shared their experience as a non-profit raising $400,000 in community bonds. To learn more about their story, click here.

Explore Presentations from this Event

David Cork, Tapestry Community Capital

Alfred Lee, Vancity Community Investment Bank

Brian Coburn, Ottawa Community Foundation

Jane Duchscher, Ottawa Community Loan Foundation 

Michael Murr, Centre for Social Enterprise Development (CSED)

Kiran Pal-Pross, PARO Centre for Women’s Enterprise

The Best Tool to Manage your Community Investors

By | News

In the age of Google, there are many manual-entry methods available for calculating interest payments. Whether it’s spreadsheets or giant accounting books, you know as well as we do that they aren’t sustainable, cost a lot of human-power (and with that, potential for human error!), and aren’t scalable. That’s why at Tapestry, our Investment Management Services are backed by a powerful little engine we adoringly call Atticus.

Why Atticus?

We could tell you that our software was inspired by the literary character Atticus Finch from To Kill a Mockingbird. He certainly represents all that we believe in – justice, morality, fairness. But to tell you that would be a fib..

…because Atticus is really named after a dog. And not just any dog, but the pride and joy of Tapestry’s former Community Investment Manager, Greg Goubko.

Our software, which Greg customized, refined and improved over the years became something of a child to him. Like his dog, Atticus became his loyal, intelligent and reliable companion. And so, it seems fitting that he leave a mark of his legacy with this special name.

And now, why use Atticus?

Forget Your Spreadsheets and Calculators

Atticus is a powerful database and accounting system at its core. It was custom-designed and built to aid in raising and managing community bonds. Atticus’ brain has the ability to calculate complex or simple bond configurations. We don’t waste time scrolling through sheets of data in Excel. And you shouldn’t either.

Trust in Data

Your data is safe with Atticus. Our system is secure and reliable. Our data is encrypted and stored right here in Canada. Our data is backed up nightly, weekly, and monthly all throughout the year. We comply with internal policies when accessing data and we never, ever transmit information unless necessitated by law.

Atticus Tracks Our Progress and Workflows

Raising a bond is exciting; it’s where the magical moments for your community happen. Managing a bond is where the practical deliverables need to be met. Atticus helps us keep on top of the thousands of bonds we currently manage. The system was designed to align with our workflows and ensure we don’t ever miss a step in the care of investments.

Reports

We’re able to create customized reports to do some hard analysis work. Whether it is a big-picture overview of an organization and its investors, or its getting to the granular details of daily transactions and calculations – if you ask Atticus about a number, it can answer it pretty quickly.

Communication

Atticus built with the ability to integrate seamlessly with third-party email services. It allows us to work in things like transactional emails to investors with the click of a button. Investors are alerted automatically when they purchase a community bond.

Tapestry Launches Bond Camp

By | News

Across Ontario, communities are coming together to reclaim ownership of community assets

These community assets are becoming spaces for change. We are witnessing amazing transformations – from old furniture stores into social purpose co-workings spaces, historic abbeys into affordable housing hubs, and empty hockey rink roofs into places for clean solar power generation.

Non-profits and charities have bold ideas to address systemic issues. Bringing these iconic project to life requires innovative business models, creative partnerships and financing.

Community bonds have proven to be part of the solution,  but the getting to the point of issuing the bond is a journey. We’re here to help you on the road to raise.

Over the past year, we have been travelling across Ontario meeting with groups who have important projects to implement. We have seen and heard that additional resources and coaching is needed, not only to raise a community bond, but also to help move the project forward. Everyone needs a little bit of help. For some groups it is about business planning and financial modelling, for others they need help with securing a property or architectural renderings.

That’s why we are launching Bond Camp

Bond Camp is a 5-month program to give you the funding and coaching support needed to help bring your vision to life with community bonds.

Successful applicants will receive up to $10,000 in grant funding and coaching to increase your project’s investment readiness and prepare you on the road to raising a community bond.

To find out if you are eligible and submit an application, click here.

Innovative Financing Solutions for Affordable Housing

By | News

More than 40 affordable housing stakeholders gathered at the Workers Arts & Heritage Centre in Hamilton today to explore new and innovative financing models for affordable housing. The key message from the panelists was a firm belief that that community investment has a central role to play in creating more affordable housing. Lack of funding is a long-standing problem that has escalated to become a front-page item in every community and an issue which will clearly require a collaborative solution. As with many mid-sized cities across Ontario, lack of affordable housing is a critical area of concern in Hamilton., who hosted the event.

The event attracted a diverse cross-section of stakeholders including non-profit and co-operative housing providers, poverty and housing activists, churches, affordable housing consultants, city councillors, city planners, architects and developers. The panelists, including Tapestry Community Capital, New Market Funds, Tim Welch Consulting, the Mount Community Centre and Options for Homes, presented a range of alternatives to traditional bank financing, which at times can be challenging for non-profit groups and low-income households to secure.

Tapestry believes that a social finance tool called a community bond could play an integral role in mobilizing private capital for affordable housing. “The signal is strong and clear that Canadians want to invest locally and with purpose”, says Tapestry’s Executive Director, David Cork, “what is needed are more investable projects”.

Non-profit and co-operative organizations are unique in that they can take advantage of exemptions of the Ontario Securities Commission that allow them to issue securities to their community of supporters.  “Quite simply, a community bond is a loan from a community member. How it differs from a traditional bond is that it always encompasses a social or environmental return in additional to a financial return” says Cork.

One of the panelists who shared a real-life success story was Andi van Koeverden, the Director of The Mount Community Centre in Peterborough. In 2011, a small group of dedicated citizens that were part of the Peterborough Poverty Reduction Action Network embarked on momentous task of transforming a historic 132,000 sq ft building in the heart of Peterborough to respond to growing needs for affordable housing in the area.

With no upfront capital to close on the purchase of the building, the group turned to their community for private capital. Their ask was simple – “just imagine”. The response was overwhelming, with 60 community members stepping in to collectively invest $2 million to bring the project to life. This community financing was complimented with a $1 million contribution from the City of Peterborough and a low interest $1.7 million loan from the County of Peterborough. To date, 43 affordable rental units have been completed, with another 38 under construction.

The Mount Community Centre is a story of determination, courage and commitment, and demonstrates the power of community finance. Tapestry hopes more groups will lead the way, creating opportunities for supporters to invest in projects that will directly benefit their communities.

“There are many sectors in which community bonds can be applied”, says Cork, “but the case for affordable housing is particularly strong. Lack of funding is a long-standing problem that has escalated to become a front-page item in every community and an issue which will clearly require a collaborative solution.”

Tapestry Community Capital Celebrates Official Launch

By | News

On May 2nd, joined by an excited crowd of social innovators, Tapestry officially launched it’s new suite of services to help non-profits and co-ops across Canada raise capital through community investment.

Tapestry Community Capital is the latest social venture of the TREC Co-operative, a non-profit organization founded in 1998 to advance the community power sector of Ontario. For years, the TREC Co-operative has assisted renewable energy co-ops across Ontario to raise community dollars for community owned sustainable energy projects. With the support of TREC, renewable energy co-ops such as SolarShare, WindShare and ZooShare, have raised close to $40 million in community investment.

With Tapestry, we are expanding on TREC’s experience in renewable energy and opening up our knowledge of social finance tools to non-profits and co-ops across all sectors, including affordable & inclusive housing, arts & culture, health care, local & sustainable food, co-working and community service agencies.

Driven by a steadfast belief in the power of community, Tapestry envisions a world where community investment is the new normal. We see a whole new wave of organizations and social enterprises committed to not only leveraging their community to realize social good, but to keeping returns within the community, creating and redistributing wealth via local investment opportunities.

Community bonds can and will play a vital role in helping social enterprises to scale their operations, take ownership of assets, and meaningfully engage their network of supporters in that growth. We look forward to helping non-profits and co-ops across Canada build upon their greatest asset: their community.

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