Investors’ knowledge bank

A community bond is an interest bearing loan from an investor, which has a set interest rate and a fixed maturity date. An investor buys a bond, agreeing to be repaid with interest according to the terms agreed upon at purchase.

Community bonds are issued (offered) by charities, nonprofits, and cooperatives to finance capital projects—usually the purchase of real estate or other major assets they use to grow their operations and impact.

Anyone can purchase a community bond, including everyday investors, local businesses, and other community organizations.

At Tapestry, we talk about the growing, Canada-wide movement of community investors often. But what does the label actually mean?

We use the term community investor to describe anyone who invests in a project that directly improves its surrounding community. From affordable housing to community centres to local arts venues and more, community investors are building thriving communities and moving their money into alignment with their ethics.

An organization that creates and offers securities—like community bonds—for sale to investors to raise capital.

A community bond issuer is any charity, nonprofit, or cooperative that offers community bonds for purchase to investors.

A project that builds, acquires, or improves physical assets like land, buildings, or major equipment. In the context of community bonds, we use the term capital project to describe the project being financed by community bonds.

For example, a charity might be raising money to purchase a building to host its programming—this is a capital project. If you purchase a community bond from that organization, you are investing in that capital project. The organization uses revenue generated from the project (in this example, through program participation fees) to repay investors with interest, according to the bond’s terms.