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October 2023

What is a community land trust? Learn about the movement preserving affordable housing and community spaces

By Affordable Housing, Education

Canada’s housing crisis is reaching a boiling point. We hear about the causes all the time: gentrification, renovictions, real estate bubbles, and more. 

But what about the solutions? One solution with a long history in North America is gaining steam — community land trusts. There are now more than 40 of them across Canada working to keep neighbourhoods diverse, affordable, and vibrant. 

Ready to learn more about this growing movement? Here’s a primer. 

First things first: what is a community land trust? 

In the broadest sense, community land trusts are non-profit organizations that own land and make decisions for what happens on that land at the direction of their members, typically residents of the area. Together, members decide what their community needs and use the land they own to address those needs. 

For example, if the neighbourhood needs more affordable housing, they could lease some of their land to a co-op or non-profit housing provider. If they’d like to encourage arts and culture, they could develop studio spaces or performing venues. And much more! 

How do members make decisions?

Community land trusts run like democracies. Members of a land trust elect a board who makes the decisions. A common governance structure is the tripartite model, where one third of the board needs to be made up of residents inside the land trust’s properties, a third made up of members from the surrounding community, and a third made up of government officials, housing experts and other stakeholders.

Getting this balance of power right is key, because it ensures the community land trust doesn’t only act in the interests of any one stakeholder group. This isn’t a glorified NIMBY group, in other words.

Is there a community land trust near me?

There just might be! There are more than 40 community land trusts across Canada. Find a directory here.

Check out this video for the story of the Kensington Market Community Land Trust, the group working to preserve affordability in one of Toronto’s rapidly gentrifying neighbourhoods. Plus, more on the community land trust movement across North America. 

How do community land trusts get the money to buy land?

Community land trusts don’t always start with a lot of money, but they do have lots of community support — and that’s why many of these groups choose to raise capital by mobilizing their communities. To do this, many issue community bonds, a type of investment opportunity that allows residents and supporters to invest directly in a community land trust’s projects.

Back up, what are community bonds? 

We’re so glad you asked! Community bonds are a social finance tool that can be used by charities, non-profits and co-operatives to finance socially and environmentally impactful projects. Similar in many ways to a traditional bond, they are an interest-bearing loan from an investor, which has a set rate of return and a fixed term. In other words, they function like an I.O.U: community land trusts, in this case, ‘sell’ a bond to an investor, then pay that money back after an agreed-upon amount of time (usually a few years) and with predetermined interest. 

Why community bonds over other financing options for community land trusts?

Community land trusts benefit from a diversity of financing options, but many are exploring community bonds because with this model, they can get the financing they need on their own terms. They don’t have to wait for a government grant or the bank’s approval for a loan — they can launch a community bond campaign when they want to, how they want to. This offers flexibility, which is especially important to land trusts since they often have to spring into action when a piece of property is for sale. Some community land trusts choose to run community bond campaigns to buy specific properties, while others like the Ottawa Community Land Trust are choosing to raise money for a fund they can pull from when properties come onto the market.

Another big reason? Community bonds align with these groups’ ethos of true community economic development (not gentrification). Returns don’t go to big banks or major investors; they go to everyday people living in the neighbourhood, frequenting public spaces, and supporting local businesses. In this way, community land trusts are able to funnel money back into their local economies, fuelling thriving communities from every angle. Learn about all the benefits of community bonds here.

Are you running a community land trust (or thinking of starting one up) and looking for financing? Get in touch with our team — we’d love hear about your project and explore whether community bonds are a good fit. 

Iffy about investing your foundation’s assets in REITs during a housing crisis? Switch to community bonds

By Affordable Housing, Education

A recent report by SHARE, a non-profit shareholder advocacy organization, revealed some unsettling information about residential real estate investment trusts, known as REITs. 

These trusts, which own and often operate profit-driven residential real estate (i.e. apartment buildings), could be contributing to the country’s housing crisis. But investors don’t have enough information to know one way or another, the report found.

The data they were able to gather from Canada’s six largest REITs, though, suggests these trusts’ investment strategies could be pricing people out of housing. New tenants in turned over units paid an average of 13 per cent higher rent in properties managed by the four REITs that provided this data. Tenants moving into newly renovated units paid a whopping 29 per cent more on average than previous tenants (in properties managed by two REITs who shared this data). 

The report also found investors are getting little to no information from REITs about eviction rates, property maintenance, and other factors around securing people’s human right to decent housing.

Are foundations and REITs values-aligned?

In a recent Future of Good story, Gabe Oatley reported that while “Canadian foundations and charities aren’t required to disclose their investments…interviews with experts suggest residential REIT holdings are common.”

Meanwhile, Canada’s philanthropic foundations are under increasing scrutiny to ensure their investments align with their missions and beliefs. The troubling practices revealed by the SHARE report have sparked debates over the role of REITs in exacerbating housing affordability challenges and contributing to the erosion of tenants’ rights — and therefore, foundations’ complicity.

All of this raises a fundamental question: If foundations divest from REITs, where should they channel their investments?

Community bond campaigns: a community-led, ethical way to invest in housing

Community bond campaigns present a compelling solution for foundations seeking ethical and impactful investment options. (New to the world of community bonds? Learn about the model here.

By creating a dedicated portfolio for community investment through community bonds, foundations could actively address affordable housing challenges while fostering community development at the same time. Community bonds are issued by affordable housing providers (you can read about six of them operating across the country here), bought by retail or institutional investors, and repaid with interest rates and timelines set by issuers. This gives community groups who want to address the housing crisis a flexible way to raise the capital they need, while offering returns directly to their community members. And at Tapestry, we work with these groups to make sure there’s a solid plan to generate revenue and repay investors before launching.

Here are four big reasons they’re a values-aligned investment for foundations: 

Community bonds are transparent 

Community bond issuers consistently report on progress to investors throughout their projects, allowing investors to clearly see where their money is going, and make sure they’re invested in truly ethical, affordable housing. This transparency fosters trust between foundations, issuers, and communities, ensuring that funds are making a dent in the housing crisis.

They’re direct 

Investing in community bonds directly supports community-driven and community-focused initiatives that prioritize long-term and sustainable affordability in communities. Through community bonds, foundations can invest directly in grassroots groups with firsthand knowledge of their communities’ housing struggles and effective solutions. 

They facilitate community engagement 

One of the biggest advantages of community bonds is the opportunity for foundations to engage directly with communities at the forefront of the housing crisis. This engagement isn’t just financial — it’s about creating connections, understanding needs, and fostering genuine impact. Foundations can play a pivotal role not only as investors but as catalysts for positive change within communities.

You can help catalyze a community investment movement

At Tapestry, we envision a future where retail investors can put their money into bettering their communities, and the returns from those investments then contribute to the community’s overall economic development. If you believe in this future, too, an investment from your foundation could help build excitement and confidence in community bonds. It’s an invaluable contribution to the individual community bond campaign you invest in, and to the movement toward ethical investment in Canada.

In a landscape where foundations are increasingly called on to uphold ethical responsibilities, the choice of investment vehicles carries immense weight. Transitioning from REITs to community bond investments offers foundations an opportunity to stand as beacons of truly ethical investment — and make a real impact on the housing crisis affecting the daily lives of so many across Canada.