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Stephanie Pinnington

Meet our new Impact Investment Manager

By | News

We are pleased to welcome Theodora Mladenova as our new Impact Investment Manager at Tapestry Community Capital.

Theodora brings to our team a diverse background in banking, having worked for the past 10 years across Client and Brokerage Services at Invesco and BMO Nesbitt Burns, as well as Capital Markets, Derivatives Services and Treasury at RBC and Scotiabank.

“I’ve always had an interest in Finance, but I also have a strong desire to contribute to building a more fair economic system,” says Theodora. Born in Bulgaria, and having lived in many countries when she was young, she was always interested in politics and the ways in which political and economic systems impact individual’s livelihoods.  

She moved to Canada as a teengager and pursued her degree in Economics and Political Science at the University of Toronto, where she also led a research team at the Munk School, monitoring G20 compliance. 

“I’ve been looking to transition into a sector that aligns with my values for some time now,” shares Theodora. “Impact investing provides an avenue for me to make that change in an effective way, while using the skills and knowledge I already have.” She hopes that her credentials, including her CFA and FRM designations, as well as her banking experience will add value to the growing Tapestry team. 

“Community investment is a sound and sustainable way to finance capital projects. Not only do community bonds unlock private capital that would otherwise be out of reach to non-profits, but they also encourage deep community involvement,” says Theodora. “This aspect of community building is a remarkable by-product.” 

At Tapestry, Theodora will lead our process and infrastructure to manage 4000+ community investors and $80 million in impact investments. Together with Tapestry’s Investment Management team, she will focus on building and implementing systems that make community bonds an efficient and user friendly experience for issuers and investors alike. 

In her spare time, Theodora enjoys getting outside. She is an avid camper, hiker, climber and cyclist. She loves to travel, meet new people, and learn about new cultures and customs. Lately, she has been trying to revive her piano skills.

She also loves to spend time with her adorable rescue pup, Mitko.

We hope that you will get the chance to meet and work with Theodora in the near future. Interested in arranging a chat? You can reach her at Theodora@tapestrycapital.ca

Timing your Community Bond Campaign: what to expect

By | Education

Typically, a community bond campaign takes about one year from start to finish. While every project is different, and may vary slightly depending on the total sum being raised and unique project milestones, we find that the vast majority of organizations are able to achieve their funding goal within this timeframe.

In this article, we will walk you through our community bond process so that you can understand how your funding timelines can fit with your project needs.

Getting Started

Each community bond campaign begins with an introductory workshop as the first step. This 3-hour session will be a chance to bring your entire organization together (Volunteers, Staff, Board Members, Advisors, etc.) to learn more about community bonds and how they could potentially be used to fund your project. After the workshop, you’ll receive a readiness assessment from Tapestry with a recommendation on whether community bonds will be a good fit for your project and organization.

If your assessment suggests that community bonds are a promising financing route, you will move into the Planning & Feasibility phase.

Planning & Feasibility

Clients come to us at all different stages. It is our job to get you to the point of being investment ready. In order to do this, we will model your finances to get a picture of how much debt your organization can comfortably carry.

Next, we will map your community stakeholders to understand their needs and appetite for investment. Together, these two critical steps will take approximately 2 months.

If it is clear after Planning & Feasibility that 1) your organization is in a financial position to carry debt and repay investors, and 2) there is a sizable community to support your project, you will move into the Structuring phase.

Structuring

During the 3 months in Structuring, we will be helping you to set your bond terms. This will be done through a combination of financial modelling and community consultations to test the bond terms.

We will also be preparing all the necessary documents to bring your investment offering to the public. These will include a:

  • 5-10 year business plan
  • Offering statement
  • Term sheet
  • Trust agreement

Your Tapestry Campaign Manager will work with you to create your marketing and communications strategy, and set you up on our sales platform so that investors can easily invest online. We will train you to use these tools, and to communicate effectively with potential investors.

By the end of the structuring phase, you will have:

  • Your investor package ready to go
  • A campaign website that links to your organization’s homepage
  • A marketing and communications plan that will include a detailed budget and timeline for key messages through social media, e-newsletters, investor information sessions and press
  • A sales process set-up on our customer relationship management (CRM) system and on Tapestry’s investor management platform, Atticus

Raise

At this point, you will be ready to go live and bring your campaign to the public! Once your campaign is launched, it will take 6 months to raise your target investment. Though this timeframe can vary slightly, we find that a period of 6 months gives your organization enough time to tell your story and demonstrate your impact, and gives investors ample time to do their research and make an investment decision.

We generally don’t recommend extending beyond the 6-month timeframe as there needs to be a sense of urgency in order to engage investors.

Your Tapestry Campaign Manager will meet with you regularly throughout your raise and make sure your campaign is on track. As bonds are being purchased, our Investment Management Team will work in the background to onboard investors and process their transactions.

 

Management

Once you have reached your target investment, Tapestry will continue to support you with professional investor management services for the duration of your bonds.

Our Investment Management Team will look after interest disbursements, issue tax forms and provide customer service to investors as needed. At year end, we will also support you with financial reporting on your bonds.

An accelerated timeline is sometimes possible

We are often approached by organizations that are on a tight timeline and interested in pursuing an accelerated plan. In some cases, this may be possible but will depend on the readiness of your organization.

In certain cases, organizations may have already taken the time to build detailed financial models on their own. In such a situation, we would work together to assess whether it is possible to by-pass the Planning & Feasibility phase.

If your project will require tighter timelines, it will be important to share this with the Tapestry team early on so that we can adjust your schedule accordingly.

Don’t raise before you can spend

Another important question is when to raise your funds. We always advise organizations not to begin raising funds until they have a defined use for the capital, and there is a planned transaction date within sight.

Of course, if you are searching to purchase a property, finding the right property may take time and you will need the funds in hand to do so. However, once your raise is complete, we recommend deploying the funds as soon as possible as you will be beginning to accrue interest.

Under certain circumstances, it may make sense to stage your raise to match project milestones. For example, if you are constructing a building rather than buying one, you may wish to issue multiple offering statements in order to secure the funds only when you need them.

 

Tapestry will always work with your team to understand the important milestones of your project, and do our best to match the timing of your funding.

Where to start?

Are you interested in raising community bonds for a project? The first step is our Introductory Community Bond Workshop. Learn more about it here, and get in touch with a member of our team at info@tapestrycapital.ca.

What is the right financing mix for our project?

By | Education

One of the most common questions we receive from groups interested in raising community investment is “What is the right amount to be raising in bonds and how will this financing fit with our other sources of funding?”

The long and short of it is, there is no correct financing mix. Every organization that we work with is unique, and therefore, there is no magic one size fits all answer to this question.

However, in this blog we will attempt to give you some high-level ideas and thresholds for project financing. Once we begin to work with your organization and better understand your project and financial situation, we will be able to provide your team with some guidance on how much your organization can raise in community bonds.

We always recommend that this work is done in close cooperation with your finance/accounting team and Board Members, as they will have important insight on the risk tolerance of your organization and its capacity to carry debt.

Types of financing available to nonprofits, charities and co-operatives

When we speak of an organization’s project financing, we will often refer to their capital stack. In simple terms, the capital stack represents the underlying financial structure of an asset or real estate deal. Often, the capital stack is presented as a graphic that shows the different types of capital in a deal stacked above each other, like a cake with many layers.

Types of financing that may appear in a capital stack:

In the case of co-operatives, it’s also possible to issue preferred equity in the form of preferred shares. This cannot be done for charities or non-profits because they cannot be owned.

Finding the right mix for your organization will mean balancing your appetite for risk and your cash flow situation. Ultimately, the goal of your organization should be to align your sources of financing with your project timelines and key cash output milestones, and balance this with finding the lowest cost of capital through a combination of the tools above.

Percentage of total financing

There is no correct percentage of bonds within an organization’s capital stack. It could be as little 5% for a large project or as much as 100%. In the past, most of our clients have raised 10-40% of their total financing in community bonds.

For certain organizations, it may make sense for the bond total to be a larger piece of the puzzle. This is common when an organization needs to access a large sum of capital quickly, and don’t have the time to fundraise, or when traditional lenders are only willing to finance a smaller piece of the project.

“Bonds are such a great tool for community organizations to use when considering a capital raise,” says Mary Warner, Co-Executive Director at Tapestry. “Community bonds allow the organization to set the terms of the financing in a way that works best for them and allows them to reach out to their community in a new way, offering a chance for their supporters to invest in the future of their project, and to directly benefit from a financial return on that investment”.

Total dollar figure

“There are a lot of factors that go into determining how much an organization wants to raise but we have seen many partners accomplish their goals in raising between half a million and five million in their first raise,” says Mary.

Setting an initial goal within this range can help set your organization up for success. This is simply because the concept of bonds will be new to your community, there will be no existing marketing and messaging around your project, and you won’t have had the opportunity to test your community’s appetite for investment yet.

Due to certain fixed costs (ex. Legal, marketing etc) raising less than $500,000 in bonds isn’t generally a cost effective way to raise capital. Typically, the more you raise, the less it will cost per dollar of financing.

Once an organization has successfully completed an initial raise, they will have the opportunity to tap into their existing investor base and issue reinvestment campaigns. They can also build on the message of a successful bond raise and consider raising bonds for different projects in the future.

“We’ve seen this type of sequential bond raise with several partners, including SolarShare and ZooShare,” says Mary. “Building on the success of their initial raises, and foundation of proven ability to raise and manage community investments, has allowed these organizations to expand their projects and further their missions.”

We often see reinvestment campaigns that are much larger than first time raises. This is because, with time, issuers become more comfortable with their investor base, gain a better understanding of their community’s appetite for investment, and have built a solid marketing narrative around the organization, project and offering.

For example, our largest single raise to date has been $16 million, and this was a reinvestment campaign for an organization that has done repeated raises.

If a first-time raise over $5 million dollars is being contemplated, there are many things the organization will have to consider to ensure the raise is successful, including having sufficient staff and marketing support to maintain momentum.

Some organizations may have an easier time with a larger first campaign if they have:

  • Experience running a substantial capital fundraising campaign
  • A large and engaged pool of donors, members or supporters
  • A large project that will gain significant community and/or media attention early on

Deciding which types of financing should be used for different expenditures

Ideally the duration of the liability should match the duration of the asset, to the extent possible. In simple terms, this is why a mortgage would have a 25 year maturity, while a car loan would have a 3-5 year maturity.

In the context of your project, you should be thinking of the underlying asset of your project, and its associated projected cash flow.

Generally, community bonds will work well for funding long-term assets. A line of credit would be better suited to funding a short-term project or addressing a short-term funding need.

Relationship to other funding sources

Typically, if there is a mortgage in place for a project, community bonds will be subordinate to the mortgage. In other words, in the case of a default, the financial institution holding the mortgage will have the first right claim on the asset, followed by the community bond holders.

These details will be negotiated as part of your mortgage deal, and you should inform your financial institution of your intent to raise community bonds. In our experience, traditional financial institutions welcome community bonds as part of the financing mix as they view them as standing in the place of equity, and as an additional capital buffer.

“When considering community bonds as part of your capital stack, if it will be in tandem with a mortgage, it is important to engage the mortgage lender with the idea early on,” says Mary. “We have seen many organizations use both community bonds and a traditional mortgage so it is a possibility but it is important to be clear with the lender or potential lender about your intentions so that you can have firm expectations about how much will be raised and what the timelines for financing are.”

Where do we start?

Figuring out your project financing can be complex, and at Tapestry we understand this very well. We are always happy to speak to your finance/accounting team about how community bonds could fit into your own unique mix.

If your team is interested in pursuing community bonds as a source of financing, we encourage you to reach out to our team and register for our Intro to Community Bonds Workshop.

 

 

Community Bonds supercharge the electric vehicle transition

By | Client Stories, News

Earth Day Canada is building the infrastructure of the future, and using community bonds as a way to engage all Canadians in the electric vehicle transition.

Seven in 10 Canadians who plan to buy a new vehicle within the next five years are likely to buy an electric vehicle (EV). “The change is coming,” says Pierre Lussier, President of Earth Day Canada, “The Canadian Government has pledged to ban the sale of gas cars by 2035, and major car manufacturers like Volkswagen and Honda have made similar commitments to phase out sales of combustion engines.”

While the electric car industry is evolving rapidly, charge points aren’t always easy to find. This unmet need is why Earth Day Canada is building a network of 100 fast-charging stations that will stretch across New Brunswick and Quebec.

For the past 25 years, Earth Day Canada has been supporting Canadians to lower their impact on the environment. In recent years, the organization has had a strong focus on mobility. They developed a ride-sharing application used across Quebec, and partnered in creating the first zero-emissions refrigerated lightweight truck in Canada.

“We are actively working to develop new ways for mobility because we acknowledge that at the centre of the climate change issue is the way our society moves. We want to be part of getting EVs to the masses and democratizing the needed infrastructure,” says Pierre.

The EcoCharge network will extend to areas where there is currently a lack of fast charging equipment; not only in the metropolitan areas of Montreal, Quebec City, Trois-Rivières and Sherbrooke, but also in less populated areas, including Victoriaville, Gaspé, Rouyn-Noranda, Chelsea, Saint-Félicien. The locations of the EcoCharge stations, which will be installed by the end of 2021, can be viewed here.

To bring this project to life, Earth Day Canada has brought together a network of dedicated partners, including IGA (Sobeys), the Quebec Association of Electric Vehicles (AVEQ), Natural Resources Canada, Investment Quebec, Fondaction, as well as our team at Tapestry Community Capital. Jointly, these partners will support in financing the $14.75 million project.

The Community Bond campaign

Together, Earth Day Canada and Tapestry, have developed a $2 million investment campaign that will mobilize private capital through the use of community bonds. “They are the perfect tool for our vision,” explains Pierre, “because this isn’t just about financing, it’s also about building a community around these service centres.”

The investment campaign will be open to all Canadians interested in investing with impact. In addition to the environmental return of the project, community bonds will offer investors 4% interest per year for a period of 7 years or 3.5% per year for a period of 5 years. Investors will also receive free recharging time at EcoCharge stations.

“We are so excited about this campaign,” says Ryan Collins-Swartz, Co-Executive Director of Tapestry. “Not only will this be the largest community bond campaign in Quebec to date, but it will also be the first of its nature across Canada,” he shares. “There is something very powerful about allowing the average citizen to participate, not just emotionally but also financially, in a cause that they believe in. We hope this investment opportunity will give those interested in making a difference the agency to be a part of the positive change.”

A convenient charging experience

Earth Day has partnered with IGA to install the chargers across 50 IGA sites so that customers can charge their vehicles while they shop for groceries. With a speed of 62.5 kW, the charging stations will be the fastest network of charging stations in Canada and will be able to fully charge a vehicle in just 20 minutes. Built for the future, these stations will always be installed in pairs and can be combined to provide 125 kW of electricity to meet the needs of the next generation of electric vehicles.

“Access to charging stations on private property multiplies charging options for citizens, complements public initiatives and reduces pressure on public property” says Montréal City Councillor, Sophie Mauzerolle. The EcoCharge network is a much needed complement to the existing 225 public fast-charging stations already in operation across Quebec.

Building a more sustainable Canada

With more charging infrastructure available, the decision to buy an EV should become an easier one for those looking to make a car purchase. Even at current rates of EV penetrations, within 10 years of operation, EcoCharge will have saved 33,000 tons in GHG emissions.

“We all have a role to play in fighting climate change,” says Pierre, “and we don’t have any more time to wait for solutions.”

“We know that EVs are the way of the future and a part of the answer,” says Pierre, “so, together we are going to build the infrastructure that this country needs to expedite the transition.”

What’s Next?

To learn more about how you can participate and invest, visit the EcoCharge website and register for their upcoming Investor Information Session.

Community Bonds that turned Waste into Power

By | Client Stories, Success Story

The project that charmed Ontario

“Everyone is just so excited to talk about poop,” laughs Daniel Bida, Founder of the ZooShare Biogas Co-operative. I’ve just connected with him over Zoom to hear about the recent completion of their biogas project at the Toronto Zoo. “The joke never seems to get old and that’s an advantage we’ve always had,” he says, “it’s part of what drew people to our story and mission.”

With a background in finance and a passion for the environment, Daniel has always been fascinated by the potential to turn waste into something useful. Ten years ago, that curiosity turned into a bold vision to build Canada’s first zoo-based biogas plant.

The plan was simple – take zoo waste (yes, poop!) and commercial food waste collected from the Greater Toronto Area, use an anaerobic digester to produce biogas, and burn that gas to produce clean power. His plan also revolved around financing the project through community investors, like you or I, who could invest as little as $500.

“We’ve been really lucky that the media loved to tell our story. I think that’s partly because the conversation on food waste and its impact on greenhouse gas emissions has really picked up in recent years, and partly because of the ‘cuteness’ of our project,” says Daniel, “these two elements really helped us to raise the financing that we needed.”

To date, the organization has raised over $7 million from over 700 investors, to invest in the project and to refinance earlier investments that are now maturing. The co-op also joined forces with Oshawa Power and Utilities Corporation, who made an investment in the project in exchange for 49% of the equity, and the Federal government, which granted $2.7 million from the Low Carbon Economy Fund.

What started as a mere idea, now stands fully constructed across from the Toronto Zoo processing zoo poop and commercial food waste, producing biogas, and running a combined heat and power generator to produce clean power for Ontario’s electricity grid.

Now that the project is operational, it will divert 15,000 tons of food waste from landfills each year, reduce CO2 emissions by up to 20,000 tons, generate 500kW of renewable energy each year, and produce a nutrient rich fertilizer as a by-product.

The Investors made all the difference

“I don’t think I realized at the time how proud people were to become investors in ZooShare,” says Daniel, “that’s something I only came to understand with time.”

While Daniel’s plan for the biogas digester may have appeared simple on paper, the execution was far from it. He was working in what is still an emerging industry and using a technology that was not widely understood in Ontario at that time.

ZooShare faced several hurdles along the way, including finding long-term suppliers of waste and dealing with organic waste that was not free of plastics, just to name a couple.

In 2017, ZooShare held what Daniel describes as their most difficult Annual General Meeting. They had come up against so many hurdles that they were faced with a major decision. “Essentially, we were at the point where we either just had to pull the plug and return investor’s money, or as a Board and co-op, make the decision to deploy the capital we had even though all the financing to complete the project was not yet in place ,” shares Daniel.

The co-op was quickly approaching the cut off date of their feed-in-tariff contract – a key element of their business model to ensure that their renewable power would be purchased by the Ontario power grid. They needed to begin generating power to maintain the contract, and to do that they needed to finance the combined heat and power generator.

They put the decision to the investors. “I was fully expecting for people to ask for their money back,” shares Daniel, “I really thought there was a limit to the patience the members would have after the previous delays we had faced.”

“But I was wrong, this wasn’t a traditional boardroom,” says Daniel, “the investors just said ‘you just keep fighting, you get back in there!’ It was really powerful to have that type of support.”

With their community bond investors behind them, they met the deadline to generate electricity. There were still hurdles ahead to be met, but it was clear at this point that the investors were in it for the long haul.

ZooShare investors gather for the groundbreaking.

Impact First, Returns Second

“The patient investors we have are the reason we were able to do what we did,” says Daniel. “These are people that were motivated to make an impact. They weren’t people who wanted to make a return and the impact was ‘a nice to have’. They wanted to make an impact and the return was ‘a nice to have.’”

With a background in finance, it was very interesting for Daniel to see the ways in which different people perceive risk. “When we got started we priced our offering based on the pricing of securities with a similar risk profile,” he says.

“I’m not sure that the people who ultimately invested in ZooShare would have been swayed by a 0.5% or 1% difference in interest.” says Daniel. “That’s not to say that they didn’t care about the return, they did, but they cared about the impact first.”

Daniel believes that if you are doing something environmentally or socially positive and you offer at least an average return, then it really comes down to telling a compelling story.

Some advice to those looking to raise financing

The ZooShare Biogas Co-operative was one of the first non-profits in Canada to issue community bonds. As pioneers in the space, they have a wealth of knowledge and experience to share with fellow organizations looking to build a project and finance it through community investment.

Reflecting on his experience, Daniel shared three pieces of wisdom for those looking to follow in the co-op’s footsteps.

1. Assume things are going to go slower and cost more than you think.

Pad your assumptions so that you don’t have to go back to the drawing board and find more funding. Be frugal and diligent with the money you have in pocket. Having some wiggle room will give you the flexibility to make good decisions.

2. Even if things don’t go as planned, it’s important to keep investors informed.

My approach was always to be hopeful and optimistic, but also as forthcoming and transparent as possible. I think investors appreciate and respect that.

3. Don’t issue bonds to build something until you are ready to build.

When we got started, I really felt that we needed to have the money in hand to prove that we were serious to the other stakeholders we were negotiating with. The problem was that once it was in the bank, we were paying interest on it and as the delays piled up, so did the interest costs. You don’t want to be paying for capital that you aren’t using.

What’s next for Zooshare?

From the very start, one of the main drivers behind this project was to leverage it as an educational asset. It is one of the reasons that Daniel selected the Toronto Zoo as the site for the digester. “Our hope with this project is not just to process waste and generate power, but also to introduce people to biogas,” says Daniel. The co-op is actively working with the Zoo, Parks Canada and a renewable energy education charity called Relay Education to make this a reality.

Expansion could be a likely next step for ZooShare. In bioenergy, Daniel explains, economies of scale are very much at play. The co-op could conceivably build another digester tank, take more waste and generate more gas. “There is strong demand for renewable natural gas (or RNG), to be sold as gas, rather than used to generate electricity. We are actively exploring this market,” says Daniel.

Daniel stands next to the completed biogas digester. Photo Credit: Dan Pearce.

A time to celebrate the accomplishments of Zooshare

While Covid-19 may have thrown a wrench in their plans, ZooShare still intends to find a way to celebrate the launch of the facility. They will be releasing a video about the project next month, and hope to host an open house in the fall so that the public can tour the facility.

Stay tuned to the ZooShare’s newsletter and social media to stay up to date on what they have planned!

 

Kingsway College School (KCS) Senior School

Using Community Bonds to change the landscape of education

By | Client Stories

“We’re ready to shake up the independent school scene,” says Hallie McClelland, Director of Advancement at Kingsway College School (KCS) in Toronto.

I’ve just connected with her over Zoom to discuss how their project is progressing, and when I see Hallie’s energy, it’s clear how excited and proud she is of what KCS has planned. 

“We come from humble beginnings,” she shares, “we were founded by a group of dedicated community members 32 years ago, and when the school opened we had just 50 students.” Over the years the school has organically grown and evolved, due in large part to the overwhelming demand for independent education in Toronto’s West End. The school now has almost 400 students, with two classes per grade from JK to grade 8, and over 70 staff. 

“We are finally ready to deliver on a promise that we’ve had for a long time now,” says Hallie with a big smile, “we are ready to build the senior school that our community needs and our students deserve.”

Delivering on their promise of a senior school

The new KCS senior school will be 40,000 square feet, spread over two floors of a new condo development at 2183 Lake Shore Boulevard West. The school will give high school students access to open spaces for performing and community-building, science labs for chemistry, biology and physics, and a fitness room to support healthy activity. The school is set to open its doors in September 2022. 

To bring their vision to life, KCS is raising $4 million in community bonds and $1 million in charitable donations. Anyone across Canada can invest as little as $2,500 in KCS and make a 3% return over 5 years. 

KCS Community Bond Investments

“We love the fact that we are going to be paying out interest to individuals and organizations that believe in our mission. We are seeing community bonds as a really meaningful way to connect with people and engage them in this special project. We also love that we are leading the way for our students and showcasing what innovation looks like.”

“The really amazing thing,” Hallie adds, “is that anyone who invests in the school will become a lifelong Senior School Founder.” This means that investors will be recognized in perpetuity for their role in creating this school. 

Kingsway College School (KCS) Senior School

Fulfilling a community need

“I think a big part of the excitement around this project is that we are filling a real gap in the market,” Hallie notes. KCS is currently the only independent elementary school in Toronto’s West End, and when complete, will also be the only independent Senior School in the area.

In order to meet latent demand while construction is underway, KCS will be offering their first cohort of the senior school at a temporary location. “This means that when we open our doors, we will be starting with one grade 10 class and three grade 9 classes,” says Hallie, “we already know that placements in the senior school are going to be in very high demand.”

“This is because KCS isn’t your average independent school,” she says, smiling again. Yes, they meet Ontario’s curriculum standards. But KCS also goes above and beyond because they recognize that the world is changing very quickly for young people, and education needs to adapt to respond to these changing needs. 

Kingsway College School (KCS) Senior School

The senior school program is a culmination of years of work and design. A task force of over 40 people reviewed more than 80 independent schools internationally, and brought together the best pieces of all of them. “We are very confident in what we have to offer Senior School students,” says Hallie. 

“Even though we’re growing, our ethos, mission and values will always remain the same. What is most important to us is graduating students that not only excel academically, but that are good global citizens who have the tools to do well for themselves and for others.”

An education system that gives today’s youth the tools they need to succeed

Investing in KCS means investing in the education of the future – an education that will prepare students for the real world and give them all the tools they need to become the best people they can be. “There is no more important investment than education,” says Hallie. “Education has the power to radically change our society for the better; to create more well-rounded, courageous, accountable and empathetic leaders.”

The fact that the school is meeting a real community need, has a solid foundation and strong business model, and that the bonds are backed by a real asset makes this a very attractive investment. The campaign has already built a huge amount of excitement so far, with $2.7 million pledged in bond purchases to date.

“I’m an investor,” says Hallie proudly, “actually, I purchased two bonds! I believe in this investment, I believe in this school, and most importantly I believe we will change the landscape of education and build a Senior School in Toronto that our students deserve and our community needs.”

Become a KCS Founder

KCS urges investors that are interested to learn more through their website, sign up for an investment information session, and not to delay getting involved. “We know the bonds will sell out quickly, and we’d like to have as many people involved as possible,” Hallie concludes with excitement.

Windshare community owned wind project

Celebrating our Renewable Energy Roots 

By | News, Success Story

At Tapestry, we are so excited about community bonds and the future of social finance that we often forget to take a moment to step back, reflect, and share our history. Today, on Global Wind Day, we thought it an apt occasion to celebrate our roots in renewable energy, and the amazing organizations working alongside us to build a more sustainable future. 

Tapestry is not a standalone organization; we are actually building on years of experience of our parent organization, the Toronto Renewable Energy Co-operative (TREC). TREC was founded almost 25 years ago with the mission to address climate change through collective carbon reduction. Being founded with co-operative values, TREC sought to find community-led solutions, and took inspiration from the renewable energy co-operative model that was thriving in Germany.

If you have ever driven in downtown Toronto along the lakeshore, you will have seen North America’s first urban wind turbine. Ever wonder how it was built? That was TREC’s inaugural incubated project: WindShare, a community-run renewable energy co-operative. This iconic wind turbine is jointly owned by 600 environmentally-minded community investors, a few of whom are pictured below, and Toronto Hydro. 

Windshare community owned wind project

Having seen the possibilities of community power, TREC was eager to replicate the WindShare model with other renewable energy technologies, and allow widespread involvement through community investment. TREC has helped to incubate, and continues to support, some of Canada’s most successful community-led renewable energy initiatives, including SolarShare, WindShare and ZooShare. Combined, these organizations have a portfolio of 54 community-owned renewable energy projects across the province of Ontario.

By allowing people to invest as little as $1000 to help bring these projects to life, these organizations have made participation in the renewable energy industry much more accessible to Canadians. “Often people want to find a way to make a difference, but they don’t have the means to do so. Not everyone can install solar panels on their roof, or even has a roof for an installation. Buying a wind, biogas or solar bond allows people to play a meaningful role in the clean energy transition.” says Mary Warner, Co-Executive Director of TREC. “What’s really exciting is that when these investors become involved, they suddenly want to learn more about renewables, carbon reduction, and even energy efficiency.”

Zooshare Community Bonds

This idea of raising community investment to enable community ownership has transpired into the work we do at Tapestry today. Building on what we learned in community-owned renewable energy, we now support organizations to tap into their community of supporters, raise impact investments, and use these funds to purchase or develop community assets – such as community hubs, sports & recreation spaces, affordable housing, and so much more.

As TREC incubated and saw the success of renewable energy projects, they also noticed a gap in public awareness around the possibilities of these technologies.  They began to focus on children as the solution – to plant the seed of a sustainable future early on and inspire kids to see not only the environmental benefits of renewable energy but also the economic opportunities, like green collar jobs.

This advocacy work led to the formation of what is now Canada’s leading renewable energy education charity, Relay Education. In a normal year, Relay works with upwards of 10,000 kids to help them gain hands-on experience with renewable energy, learn about the connection between energy and the environment, and explore career opportunities in the field.

In addition to their elementary and secondary school programing, Relay is working in partnership with Indigenous communities to support sustainable, long-term energy solutions that are democratic, clean and inclusive. Read more about this work in the recent article in T. about Relay Education’s Indigenous Youth program.

As Tapestry continues to build a thriving community investment market, TREC will remain focused on advocating and finding solutions for a more sustainable future. The TREC team is actively working to define where that mission will take them next.

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A day in the life of our Investment Management Team

By | News

Meet Erica Glueck, our Senior Manager of Investments.

Erica joined the Tapestry team in 2018 to help us manage our client’s growing base of community bond investors. In the 3 years since she joined, Erica has seen that number of investors under management nearly double to 4000, and now manages around $80 million in impact investment.
Erica Glueck, Senior Manager of Investments at Tapestry Community Capital

As we continue to grow and take on new clients, Erica’s role has also evolved to include a stronger focus on supporting new issuers in structuring their impact investment offerings, and preparing all the necessary infrastructure to enable investments. Alongside our new leadership team, she is also supporting organizational strategy.

This is why Erica is looking to grow her team with the addition of a new Impact Investment Associate. The Impact Investment Associate will oversee our portfolio of clients and their respective investors, ensuring that the entire investment process is a streamlined and pleasant one.

Are you interested in learning more or know a friend who might? We’ve asked Erica what a day in the life of our Investment Management Team looks like.

What does the investment management team at Tapestry do?

In a nutshell, we oversee all transactions – and by that I mean all the money going in and out through bond purchases, interest accruals, disbursements, and maturity events – and all the reporting and due diligence that goes along with those transactions.

A huge part of what we do is also client facing work. We work very closely with our portfolio of issuers, really helping them to manage their investors well. We want investors to feel confident in their community bond investments, feel that they are managed professionally, and ultimately, be champions for the organizations they have chosen to invest in. We know that when investors are treated well, they choose to re-invest, and this just means more money for greater impact!

What does a typical day look like for you?

It really depends! Some weeks I spend more time on our overall process and operations, working to improve efficiency, and others I really get into nuts and bolts and need to focus on detailed transactions…like for example, when we are moving $6 million dollars in interest and principal in a few short weeks!

But generally, I’d say that I like to have a lot of structure to my days. I spend about 30 percent of my time overseeing investment operations. About 40 percent of my time is spent on new and existing clients, helping them to move forward in structuring their investment deals, looking out for project risks, looking at financial statements and writing offering statements. The remainder of my time is usually focused on overall Tapestry strategy, building new systems (like our investment management platform), working with our Futures Committee and thinking about what’s next for our organization.

What motivates you to do this work?

When I first applied for the role I started in, I was really drawn to the organization because of the renewable energy work we had done. I actually came from a policy background, and I was really interested in the interaction between policy and sustainability, and how we could create a more energy efficient economy.

What’s really cool is that I get to do that, but I also get to see the direct impacts of how community financing puts any socially or environmentally oriented organization on a stronger financial trajectory. The growth we have witnessed in our clients has been remarkable – for example, seeing an operating budget grow from $400,000 to $9 million over the course of a few years.

I also love being able to see the physical projects that transpire as a result of these impact investments we are managing. It’s incredible to see an old historic building transformed into a new hub and meeting place for the community, or seeing an established organization finally take ownership of the space they have been in for so long.

I find it really powerful to see that transition from subsistence to a really sustainable and growth-oriented mindset. So many non-profits get stuck spending time on getting that next big grant that they actually don’t have the time and energy to think big and plan big. Community bonds really give them that power to be in control, set their own terms and move forward.

On a more personal level, I am a total word and data nerd, so investment management is really fun for me. I’m also a problem solver, and love the diversity of challenges we face working with such a broad group of clients, that are all financing very different projects.

How would you describe tapestry as an employer?

Tapestry has really grown and matured over the last few years, but even since the beginning, the ethos has been community ownership and community power. That word community is just really ingrained in the organization, and collaboration is really intrinsic and embedded in everything we do.

We rarely make big decisions unilaterally, and take the time to come to agreement together. There is also very little, if any, ego in the organization. We are all equally invested in our growth and passionate about what we do.

Sometimes working collaboratively like this is harder, because it means we have to talk things out and contemplate them a little bit deeper, but ultimately we end up with a better service, product and organization.

What is the team looking for in the Impact Investment Associate?

We would really love to see a bright systems thinker – someone who can appreciate how things work internally, externally, and together. I want to see someone who isn’t afraid to challenge processes, just because that’s the way it’s been done in the past, and someone who is keen to find weak spots in efficiency.

I hope that the new Impact Investment Associate will have the willingness and humility to really learn those problem areas before jumping to make changes. I think the better we can learn the problem, the more sustainable the solution will be long-term.

On a more personal level, I hope they will have a collaborative work ethic that will mesh well with our team. I want them to feel comfortable to ask questions, talk it out, and take ownership of their work.

Lastly, it’s really important to me that they are committed to our overall mission. Community bonds are an investment vehicle that should be accessible to everyone – not just accredited investors – but to everyday investors that just want to invest in a good cause.

We want someone who will be passionate about making the investor and issuer experience as pleasant as possible, and someone who will design processes in a way that makes what we do sustainable and scalable. Ultimately, we want to help as many organizations as possible to create these amazing impact investment opportunities for their communities of supporters, and this will only be possible by becoming more efficient and better at what we do.

Are you interested in supporting social change with innovative financing?

We are hiring for an Impact Investment Associate. Applications are due by June 14th, 2021. Click HERE to see the full job description.

 

Crafting your bond terms: How to find the right rate of return

By | Education

Finding the right rate of return for your community bonds will be critical to both your campaign success, and ultimately, your project success. Of course, it will be to your benefit to keep your cost of capital as low as possible. But at the same time, you will need to position an attractive investment to engage your community and ensure that you raise the capital you need. 
Headshot of Mary Warner

Finding this balance is our specialty. Through a combination of financial modelling and community consultations, we help the organizations that we support to design bond terms that work for their balance sheet and their community. 

Today we sat down with Mary Warner, the Co-Executive Director of Tapestry, to give you more insight into the process of crafting community bond terms. Below, she answers a few questions that recently came up during one of our Community Bond Workshops that we offer to non-profits, charities and co-operatives.

What is the typical rate of return offered on a community bond? 

“Bond rates that we’ve seen typically range at the low end from 3%, to about 7% at the high end.

We’ve seen bond interest decrease slightly with the pandemic and current economic situation, but issuers do want to provide their investors with a decent rate of return for the risk they are taking on. So, we haven’t seen rates drop as significantly as commercial interest rates. Current rates for community bonds are averaging at about 3.5-5%.

Typically, the longer the bond term, the higher the interest rate. Another important note, is that when we are referring to interest here, we are speaking of simple interest – where the interest is paid out and does not become part of the principal. Compounding interest (where interest does become part of the principal) is possible in community bonds, but more complex and expensive to issuers. So, for the most part, we see simple interest with community bonds.”

How can we figure out how much we can afford to pay out?

“This is when our financial modelling comes in. The first step is putting together a business model with projections of the next 5-10 years, incorporating your new project.

Then we piece in different options for community bond rates and terms, based on your needs and early assessments of your community. It’s sort of a trial and error process of testing the community bond interest expense and principal repayment. Ultimately, we want to land on a few options that income and cash flow statements can bear.”

Can greater impact mean lower returns?

“That’s a really good question. We have seen in the past that investors may be willing to take a lower return if they feel a strong connection to the project and are passionate about the impact. 

It’s really about finding a balance between the social and environmental return, and the financial return. If the impact is significant and important to the issuer’s community of supporters, you may find that investors are willing to take a slightly lower rate of return. 

If you are a charity, you might also be interested in looking at the ‘giving bond’ model. This is  where investors invest an amount of principal, but instead of receiving interest back as a payment to them every year, the interest is donated back to the charity. The investor does take on the income tax implications of having investment income but they get the benefit of a charitable receipt for the amount of money they donate.

So essentially, it’s equivalent to baking in an annual donation to the charity, and on the flip side, offering the charity an interest free loan. At the end, investors get their full principal investment back.”

We are afraid that we might need a few years to get up and running and generate a profit. Will that be a problem for us in issuing bonds?

“Not necessarily. When we are doing financial models, we want to see that there is the potential to pay back bonds at the end of their term. If your project will take a few years to generate the income necessary, we might want to look at a longer period bond. On the short end, there are 3 year bonds, on the longer side you could be looking at 7-15 years. 

There are also different ways of paying out interest. You might choose to withhold interest payout until year four for example, or to simply pay out all the interest upon maturity. Those are just some of the options we have to manage your cash flow. 

It’s completely normal that in the first year or two you might not generate consistent income until you are steadily up and running. What we want to see in the financial model is that in the longer term, these bonds can be repaid.” 

We would like to have a 10 year bond, but we are worried that investors won’t want to keep their money tied up that long. Any suggestions?

What we’ve seen in the past with other issuers, is that it’s good to offer investors a mix of bond options. So, if we are offering a longer term bond, we might also want to offer a shorter term option. Some investors are able and willing to invest in a 10 year + bond and others will look for a shorter investment.

Having at least two series of bonds with different terms and rates can help with marketing efforts and give options to investors with different motivations. The added benefit of having multiple options is that it can allow you to stagger your principal repayments.

When it comes to a shorter term bond, there is also the option to refinance bonds at maturity. Often, our issuers who issue shorter bonds will choose to issue a new offering statement once their bonds have matured and ask investors to reinvest their funds. We see issuers having very high reinvestment rates. For example, our client SolarShare has found that when bonds reach maturity, about 60-70% of investors choose to reinvest their funds.”

Is there a possibility to repay the principal before the end of the bond term?

“Yes, typically in the offering statement there is a clause that will allow organizations to pay out the principal early. But there is a lot to consider in making this decision. It can sometimes be to the benefit of organization, allowing them to save on interest costs. But it’s also important to consider the relationship you have with your investors. 

It may sour the relationship if investors expected this investment for a period of time and they no longer receive interest payments because you decided to repay the principal early. So yes, there is the possibility but the consideration should not so much be ‘can we?’ but ‘should we?’.

In the case of investor need, the offering statement or the Board can set out the terms of how an “early redemption” takes place.  In some cases it may not be possible, in others you might consider allowing an early redemption if the investor provides a letter stating financial hardship and requesting a redemption prior to maturity.”

We work in a low income neighbourhood and it is important to us that we include our community in this campaign. How can we do that?

“Economic inclusion is a really important topic, and for most of our issuers it’s very important that bonds are accessible to a wide range of their community. We have seen bond minimums set as low as $500 to make this possible.  

We have also had discussions with issuers where they want to maximize community participation by limiting larger size investments.  While the logistics of managing 5 $100,000 bonds may be simpler than managing 500 $1,000 bonds, many issuers we work with have consistently chosen to make community bonds as accessible as they can, setting low minimums for investment and carefully considering larger investments. Community bonds are always about more than financial returns, both for the issuer and the investor.“

How do community consultations help in finding the right rate of return?

“Community consultations give you the opportunity to go to your stakeholders and see what they think of your bond terms and find out what is most attractive. This can help us decide on the options to include in your offering statement. Sometimes you will find that one bond series might resonate better than others. 

You are never going to be able to speak to everyone, but we can help you select a representative group of your community and gain crucial feedback early on to see what is going to be attractive once you start selling.  This also allows you to bring stakeholders together early and start to build enthusiasm and excitement about the project you are working towards.”

Have another question for us to answer? Get in touch at info@tapestrycapital.ca

How do I know if Community Bonds will work for my project?

By | Education

At Tapestry, this is one of the most common questions we are asked. Organizations are often first introduced to the concept of community bonds by seeing them in action, coming to learn about them as an investor, or because they have been searching for alternative forms of financing. When they approach us, they are curious to learn how bonds can work for their unique set of circumstances. 

While every organization and project is unique, there are five main criteria that typically apply across the board. We always begin by walking organizations through a simple checklist to see if their team and board should invest the time to explore this opportunity in greater detail. In this article, we will walk you through the checklist below, step by step.

The organization is a non-profit, charity or co-operative

Community Bonds are a social finance tool that allow organizations to raise capital from their community of supporters. Just like a regular bond you might purchase – say a Canada Savings Bond – these bonds are repayable, and have a fixed term and a set interest rate. 

There are two main features that differentiate community bonds and traditional bonds. The first is that in addition to a financial return, community bonds generate an environmental and/or social return. The second, is that community bonds can only be issued by non-profits, charities and co-operatives (both for-profit and non-profit).

In Canada, the sale of bonds is regulated at the provincial level by the provincial securities commissions, and at the federal level by the Canada Revenue Agency. These agencies have strict requirements for private companies that want to sell securities to the public, and the process is complex and expensive. 

Charities and non-profits, however, are exempt from these requirements under National Instrument 45-106 s. 2.38, and are able to issue community bonds so long as they can guarantee:

  • They are a non-profit organized exclusively for education, benevolent, fraternal, charitable, religious and recreational purposes
  • No commission or other remuneration will paid in connection with the sale of the security

Co-operatives go through a slightly modified process under the Co-operative Corporation Act, and their regulations vary among provinces. The process, however, remains straightforward and much less onerous than that of a private company.

In order to safeguard the interests of community bond investors, our documentation and process for issuing community bonds always meets the requirements set for co-operatives, regardless of whether we are working with a charity or non-profit. 

The organization is seeking to raise financing for the purchase or renovation of an asset

Technically speaking, there is no legal document stating that community bonds must be used towards the purchase of an asset. However, in our experience of managing over $70 million in community bonds, we have found that having these securities backed by an asset increases investor confidence, and hence the success of the campaign. This is particularly true for organizations that are issuing bonds for the first time and have not built a reputation and rapport with their investor base. 

Asset backed projects are also typically easier to build an inspirational story around. We’ve come to understand that investors like having a brick and mortar outcome – a tangible and physical project that resulted from their investment. While operational expenses are critical, they are rarely inspirational, and do not excite investors in the same way.

In some circumstances, if an organization has run several asset backed campaigns, and proved their ability to meet repayment schedules, they have gone on to raise capital for operational expenses.

CSI Community Bond Campaign History

The organization has a revenue model that allows them to repay their investors over time

While community bonds offer a social and/or environmental outcome, they are also a financial product, and issuers must have the capacity to repay the principal investment and pay out interest on schedule. 

For some organizations, income is generated through the operation of a social enterprise, for example by selling tickets, renting spaces or operating a shop. Others, and particularly those who are purchasing an asset to be used for office and administrative purposes, are able to redirect capital previously earmarked for rent payments. 

In almost all cases, community bonds will be only one piece of a larger financing puzzle. They are often used in tandem with donations, grants, interest free loans and traditional bank financing.

One appealing aspect of community bonds is that the issuer has the ability to set their bond terms in a way that will match their cash flow situation. For example, some organizations may prefer to have a longer term in order to pay off the principal investment or may decide to delay interest payments for a year or two while they get their project off the ground. 

We always work with our clients to find terms that work for their investors and their balance sheet.

The organization has a champion

What is a community champion? They are the natural leader of the project, pushing at every stage to make it come to fruition.

Tonya Surman

Tonya Surman, Founder and CEO of the Centre for Social Innovation (CSI)

In some cases there will be two champions, an internal lead who drives the project management, and a public face of the campaign, who will engage the media and publicly represent the organization.

In either case, a champion is critical to campaign success. Investors want to see a responsible and charismatic face behind their investments. They want to see someone who is passionate about the potential of the project and determined to see it come to life. This excitement is what inspires people to take the next step in learning about the project and investing their money.

The project is meaningful to your community of supporters

Of course, this probably goes without saying. If you want your community to invest, they will need to feel one of two things, or both. 

1) They are doing something positive and productive with their money. They are making a meaningful contribution to society while also making a fair financial return. 

2) They will personally benefit from seeing the project come to life. For example, they will benefit from improved access to services and spaces that meet their needs.  

In order to target the first group, the project needs to have a strong social impact and/or a positive impact on the environment. In order to target the second group, there must be a sizable group of people that stand to see their community (be it geographical or values based) benefit from the project’s development. 

This last criteria is the one that organizations tend to struggle to answer. That’s why we always help organizations interested in this model to dig deeper on this topic and begin to assess who their community truly is and understand what their appetite for investment might be. 

Once an organization has been through this checklist and feels comfortable that they fit within these criteria, the next step in assessing a community bond campaign is to participate in a community bond workshop hosted by Tapestry. 

During the 3-hour, online workshop, you will have the chance to bring together your team and board to learn more about community bonds, see how community bonds have worked for other organizations, understand how investors make decisions, and understand what a campaign budget and resource plan might look like. Upon completion of the workshop, Tapestry provides a readiness assessment to help your team and board make a decision about whether or not community bonds are an appropriate financing tool for your project. 

If you think your organization might have a project that fits these criteria, get in touch with us at info@tapestry.captial.ca

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