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Education

How does a community bond campaign work?

By | Education

Community Bonds are a proven social finance instrument that allow people of average means to transform from occasional donors into citizen investors, giving them the opportunity to align their money with their values. Once we have worked with your organization to determine that a Community Bond is a good fit, your organization will be ready to launch a Community Bond campaign!

The Tapestry Process will guide your organization from workshop to successful campaign in 12 months. This ensures that the campaign will be managed effectively, and every step needed to have the campaign be a success is put in place:

The Tapestry Process

  1. Structure
  2. Raise
  3. Manage

A clear process takes the guess work out of developing a community bond, and helps you  focus your energy on actually bringing the project to life, knowing that the required funding will be secured.

Community Bond - Planning and Feasibility
Planning and Feasibility (Typically 3 months)

Before we begin a Community Bond campaign with our clients, we have a range of services that allow us to prepare our clients for a successful campaign, and ensure that the intended project is a good fit for a community bond. Among these services, the Planning and Feasibility phase is one of the most crucial. This pre-campaign process allows us to test if a project will be successful. Some of the factors we look for include:

  1. Is this a project the community would be excited about?
  2. Is the project well defined?
  3. How much of the funds can be raise through the Community Bond?
  4. How will revenue be generated to repay the bonds?
  5. What bond price and interest rate will be attractive to the community of investor

Upfront work helps to avoid unpleasant surprises well into the campaign, and guides the structuring of the community bond.

Tapestry’s role

Even before the Feasibility Assessment, Tapestry offers a Community Bond Accelerator workshop where we conduct an initial assessment of the project idea. If we determine that the idea is viable, we’ll invite you to participate in the Planning and Feasibility phase. This includes:

  • Investor Research
  • Financial Feasibility
  • Resource Planning

One of the major deliverables that is produced from this phase, is a financial model that can be presented to investors, and clearly outlines the bond repayment plan. We bring our years of experience to help you determine if a Community Bond fits your project and forecasts the resource demands on your organization.

Community Bond - StructureStructuring the Bond (Typically 3 months)

Structuring the bond refers to all of the communications and resources that have to be brought together or created to issue a bond. On the most basic level, this refers to the bond prospectus or offering statement. This document provides potential investors with all the information they need to know about the organization and the bond before making an investment decision.

Once this work is complete, a strategy and tools focussed on effectively educating the community on the project, and selling the bond have to be developed. This can include a marketing and communications strategy, campaign website, and a variety of marketing collateral.

Finally, resources should be considered to communicate with investors for the life of the bond following the completion of the campaign. A bond campaign does not end once the raise is over–investors are interested in the project, and receive interest payments over the life of the bond. In addition, the capital investment is typically repaid at the end of the bond term. As such, some mechanism for tracking, communicating with, and paying investors on a regular basis needs to be put in place.

Tapestry’s role

Our structure module can more accurately be described as the structure and infrastructure module. It is during this time that we leverage all of the information that we gathered from your organization through the planning and feasibility module, to build the perfect bond campaign for your community!

This includes the development of a business plan, creation of an offering statement and investment package, required legal work, development of a campaign website and marketing strategy, and configuration of our investor management platform Atticus.  We help design campaigns that have all of the elements to attract community investors, corporate investors, institutional investors.

Community Bond - Raise

Raising the Investment (6 months)

Once your Community Bond is structured, it is time to raise the required capital to finance your community project! It’s at this time that your organization will engage in activities to both educate your community about the project and sell community bonds.

The most successful community bond campaigns have had a combination of both citizen investors, and institutional investors (often in the form of foundations).

It will take a strategy of ongoing and timely engagement to keep the momentum of your Community Bond campaign going, and to ensure that the full raise can be achieved.

Tapestry’s role:

Tapestry provides both the resources and expertise to supplement the experience already present on your organization’s team. We work alongside your organization to manage the community bond campaign and bond investors by: ensuring that key events are held; managing the distribution of important communication materials to investors; and closely monitoring milestones for the life of the campaign. With our assistance, your organization will be able to turn your passive supporters into active investors.

Community Bond - Manage

Community Bond Management (Ongoing)

The time allotted for a campaign raise is fixed, and once it has concluded, your focus will shift to managing investors for the life of the bond.  Investor management includes: investor onboarding, monthly/annual reporting, interest distributions, tax documention, and redemptions at maturity.

This step should not be overlooked. Aside from the legal requirements, it is important because happy investors are more inclined to reinvest in future projects!

Tapestry’s role

We help support communication with the Community Bond investors for the life of the bond. We’re able to do this effectively through the use of our proprietary investor management platform, Atticus. With our processes and through Atticus, we have been able to raise and manage $61 million dollars from 4400 investors.

What’s Next?

Community Bonds can be effectively leveraged for a variety of projects. While the process can seem daunting, the support of a partner like Tapestry makes it simple to manage.

Do you think you have a project that would be a good fit? Click the link below to contact us and start your project or attend our next Community Bond 101 webinar.

Get in Touch

Future of Good: What’s a Community Bond, Anyway?

By | Education

On August 14, we published a blog post in collaboration with the Future of Good, giving a primer on Community Bonds!

In the post, we explored why not for profit organizations need to diversify their funding sources, and the advantages/disadvantages of some of the financing tools available to not for profit organizations.

Here are the key takeaways from the article that we wrote:

Grants are essential but inconsistent

As one of the tools most readily available to not for profit organizations, we discuss grants quite a bit. While essential and hugely valuable, there are drawbacks to relying on grants. One of the main disadvantages is the relative lack of flexibility and stability.

In all cases, it’s the granting body that defines how a grant can be used, and typically, a not for profit organization will have to find a project that fits the granting parameters. Furthermore, it’s the granting body that decides when and under what circumstances the grant is available.

While organizations should pursue grants, caution should be taken in relying solely on grants for funding. In particular, for major capital development projects, relying on grants will likely be insufficient.

Using a range of tools provides a more secure funding base

In considering how to establish a secure funding base, organizations should seek to diversify their funding sources. This could include any range of funding vehicles including: fundraising, crowdfunding, social entrepreneurship, community bonds and grants.

A range of purpose specific funding tools like grants or community bonds, and flexible funding tools that can be used for anything, like donations or social entrepreneurship, will provide your organization with the ability to escape the endless granting cycle and plan for growth!

We’re strong believers in leveraging the entire investment continuum when reviewing how to effectively plan for long-term financing. Much like you wouldn’t hammer a nail with a screwdriver, you should consider the tool being used when considering what you’re trying to fund.

Community Bonds are an effective tool to finance your next capital development project

Whether you’re seeking a tool that can help to reengage existing supporters, or looking for a new tool that can jumpstart your capital development ambitions, Community Bonds are an effective resource for organizations of all sizes. They provide your community to feel a sense of ownership over the project being funded.

The full article is available on the Future of Good website. If you’re interested in reading click here:
What’s a community bond, anyway?

If you’re interested in learning more about community bonds, or signing up for our Community Bonds 101 webinar, to see if this innovative financing solution is right for your organization, click the link below:

How Inspirit Foundation does impact investing

By | Education

A Conversation with Jory Cohen: Inspirit Foundation

At Tapestry, we’re on a mission to help the not for profit sector more effectively pursue sustainable financing for their iconic community projects. To accomplish that goal we’re endeavouring to speak to as many stakeholders as possible!

This includes both people who have created iconic projects, and those who fund those projects. One of the key partners that help to bring these projects to life in the not for profit world is foundations.

We spoke with Jory Cohen, Director of Social Finance and Investment at Inspirit Foundation, to get his perspective on what makes for a worthwhile investment. Jory leads Inspirit Foundation’s finance and investment strategies. He is a leader in the Impact Investment field, and with the support of the Inspirit Foundation board, is leading Inspirit to a 100% impact investment portfolio. Before Inspirit, Jory was the Managing Director of Youth Social Innovation Capital Fund (YSI), an impact investing fund.

The full audio of our interview with Jory can be found at the end of this post.

About Inspirit Foundation

Inspirit is a public foundation based in Toronto. They work to build more pluralist societies–one where multiple groups can coexist. Inspirit works towards this mission through granting, impact investing, and working to make systemic change through young change leaders. The foundation’s granting activities are focussed on the main priorities of reconciliation and addressing islamophobia through a media and arts lens.

Our main interest in speaking with Jory was exploring the criteria that Inspirit Foundation uses to evaluate organizations from an impact investment perspective. The conversation was wide-ranging, but he provided three key takeaways that organization should consider when positioning themselves for investability.

 

Key Lessons Learned

“There is a higher likelihood of financial profitability alongside higher levels of impact (or), at least the intent of impact…”

There is sometimes an aversion in the non-profit world towards thinking of organizations like a business. Whether knowingly or unknowingly, this can result in short-term decision making that prioritizes direct program delivery over the long-term health of an organization. What Jory has found through impact investing, is that impact and profitability do not have to be mutually exclusive, and in fact, can go hand and hand.

As Jory explains, an investor can decrease their volatility by investing in organizations that have a focus on impact. The chances of a crisis arising, and a subsequent dramatic drop in the company’s value, is lessened when social good is at the centre of their business practice. This is part of the reason why Inspirit has moved towards 100% impact investing. It’s just good business.

To learn more about Inspirits impact investment practices, click here.

 

“We don’t like investing under $250,000.00 because investing is a lot of work. Every investment takes a few months from start to finish.”

Inspirit Foundation does not have a large team of people assessing investments. For that reason, Jory has to be selective about the types of investments that the foundation chooses to take on, and any opportunity under $250,000.00 will likely be too low for consideration.

In positioning an organization for investability, it’s important for organizations to be conscious of not asking for too little. While an organization may think that a smaller ask makes them more attractive because the amount is more accessible, it can actually have the opposite effect.

 

“Quite honestly, most (organizations) come to us. Canada is a small market for impact investing still and I think we’ve got the word out that we’re active impact investors, active in the sense that we like making investments.”

Inspirit doesn’t need to seek organizations out.

While the ecosystem is small, Canada still provides a healthy pipeline for investors seeking impact investment opportunities. What that means for not for profits developing investible projects is that they need to be proactive in seeking organizations out. This means more than just putting up a website.

Get your pitch ready, have your financials in order, and set up some meetings!

 

Full Interview Audio

If you’re interested in learning more about Inspirit Foundation, what they look for when investing in Community Bonds specifically, and how they approach impact investing more generally, check out the full audio of our conversation below.

If you’re interested in reading about Jory’s journey towards 100% impact investing, you can view his blog, Impact Invest with Me, by clicking here.

And, if you want to receive more stories like this directly to your inbox, signup for our newsletter The Threadby clicking here.

Where do Community Bonds sit on the Investment Continuum?

By | Education

What are Community Bonds?

Community Bonds are an innovative social financing tool issued by a non-profit, charity or co-operative organization to finance projects that have a community impact. Figure 1. demonstrates the social investment continuum of financial instruments used by various organizations. The left side of the continuum is dominated by grants and philanthropic mechanisms, while the other end consists of instruments typically used by for profit corporations when pursuing growth opportunities. These instruments on the right side of the continuum are typically supported by the securities market trade.

Figure 1: Investment Continuum

The Investment Continuum Defined:

  • Donations: capital given by anyone for charitable purposes and to benefit a cause.
  • Grants: funds given by a specific granting body, particularly the government, corporations, foundations, educational institutions, businesses, or an individual. To receive a grant, an application is required.
  • Forgivable Loans: a form of loan in which its entirety, or a portion, can be forgiven or deferred for a period of time by the lender when certain conditions are met.
  • Social Enterprise Investments: investment funds that can be accessed by social enterprises.
  • Community Loan Funds: a fund that provides loans to the community usually for the purpose of financing a community project.
  • Social Impact Bonds: a tool based on the pay-for-performance principle where the government agrees to repay investors for the improved social outcomes of the project/program.
  • Community Bonds: an interest-bearing loan with a face value, fixed term and set interest rate. Community bonds always generate a social or environmental return, in addition to a fair financial return.
  • Debt: money that is owed or due to another institution or individual.
  • Corporate Bonds: a debt security tool issued by a corporation and sold to investors in order to raise capital for a variety of reasons. In return, investors receive repayment in terms of financial capital.
  • Equity: equity financing is the process of raising capital through the sale of shares. By selling shares, the company sells ownership in their company in return for cash.
  • Venture Capital: capital that usually takes monetary form but can also be technical or managerial expertise. Investors provide to startup companies and small businesses that are believed to have long-term growth  This type of financing usually comes from accredited, high net-worth investors, investment banks and other financial institutions.

Community Bond Benefits

Community bonds sit close to the centre of the continuum. They are more closely aligned with tools typically used by for-profit organizations, but still very much rooted in community engagement and support. In recent years, Community Bonds have emerged as an innovative financial tool used by non-profits, co-ops and charities to attract capital beyond traditional philanthropic sources. This tool enables organizations to receive funding from citizen investors to finance a project in their community. At Tapestry, we ensure that the issuers we work with are giving their investors a world-class experience by providing all of the necessary information on the bond before they make an investment decision, at the time they purchase a bond, and throughout the entire term of their Community Bond. Since a Community Bond is an interest-bearing loan, at the end of the term, investors get paid back their capital investment, a fair financial return on that invested capital, and a tangible social return in the form of the community benefit.

As one tool among many on the social finance continuum, it is important for organizations to closely evaluate the purpose of the financing when determining what combination of tools would be best suited for their goals and the vision of their organization.

Are community bonds the right fit?

Some of the questions that organizations can ask when making this determination are:

  1. What type of organization do you represent?
  2. What is the nature of the project in need of funding (operational, capital development, research, etc.)?
  3. How much funding is required for the project?
  4. Do you already have funding from other sources?
  5. Does your organization have a revenue generating business model?
  6. How quickly is the financing required?

These questions are not definitive or exhaustive, but in answering them organizations can have a better sense of what finance tool is most appropriate for their purposes.

If you think community bonds may be among the tools that make sense for your project, fill out the below qualifier survey and get in touch. We want to hear from you!

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