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Raising Community Bonds amid Pandemic Restrictions

By | Education

To say this past year has been tough would be a massive understatement. We’ve all been stretched to our limits balancing childcare, social isolation and economic challenges, just to name a few. 

But we are a resilient bunch. Across Canada, communities and social purpose organizations have been rallying together to provide critical social services. Non-profits and charities, in particular, have worked tirelessly to fill the void by providing food, mental health support, housing, and so much more. 

covid volunteers

At Tapestry, we are always on the hunt for good news, and now that we’re a full year into the pandemic, we feel we are all well overdue for some.

So what’s been the silver lining of the pandemic?

The pandemic, as difficult as it has been, has undeniably prompted a dramatic shift towards collectivism. Movements to support local and community initiatives have triggered the attention of the masses. We’ve all seen the hashtags to #supportlocal, had an old friend ring up out of the blue, or offered to collect groceries for a neighbour. These are all signs that despite social distancing, social cohesion appears stronger than it has in recent years. 

The same has been true in the world of finance. Now, more than ever, we are seeing that investors aren’t just interested in a financial return. They also want a tangible social outcome, and a positive impact that’s visible in their own community.  

Even amid lockdowns and widespread restrictions, the past year was a great success in community financing. In 2020 alone, Tapestry supported raising $18.3 million in community investment for Canadian non-profits, co-ops, and charities. This investment is creating spaces for marginalized youth, producing clean energy, and supporting the growth of social purpose organizations.

Now that’s not to say that COVID hasn’t created new hurdles for Tapestry and our clients. It has. But like everyone, we are learning to adapt, and in the process becoming more productive and efficient. 

We thought we would take this opportunity, on the anniversary of the pandemic, to share some of the lessons we’ve learned from a year of lockdowns and restrictions.

A chance to redefine community

As a result of the pandemic, we’ve all been forced online like never before. Our clients, in particular, have had to double-down on their digital tactics. Where in-person events used to be the modus operandi for meeting potential investors and selling community bonds, Zoom calls are the new norm. 

We are lucky to be working in a sector that is nimble and flexible. Our clients were quick to adapt, and made the move online seamlessly. And in doing so, they found some unexpected benefits. 

Going digital, has meant much greater reach. Events no longer have geographic restrictions and can be accessed by potential investors all across Canada. This has hugely increased the pool of impact investors for our clients. 

Online events are also more accessible. There is no longer the need to arrange transportation or child-care. Anyone can join in so long as they have an internet connection and a few minutes to listen. The other plus? Putting together an online event is much more time efficient, and there is the added benefit that content can be recorded and repurposed.

SKETCH Working Arts just completed their bond sales campaign, raising $1.4 million – all during the pandemic. “Interestingly, 80% of their investors were new to the organization,” shares Satyameet (Sattu) Singh, one of Tapestry’s Campaign Managers. “Pushing digital strategies can really help non-profits expand their presence to new supporters.”

This has made us, and our clients, think more deeply about who our communities truly are. Are they a group of individuals living in the same region? Or is it a much broader community of beliefs? With digital connectivity tools abound, the opportunity exists to bring online and offline communities together as never before.

Take advantage of the amazing tools at hand

We have had to pivot in the way we work with our clients, and the ways in which our clients interact with their potential bond investors. One major change has been an even greater shift to making use of online tools. And there are so many great ones! 

With team members working from home, team management platforms have become ever more important. We are big fans of Trello, which allows our clients’ teams to follow along on their campaign progress, interact, and respond to other teammates all on one interface. “It’s highly interactive and keeps everyone on that same page. It also reduces the need for a lot of back and forth on email – saving all of us time,” says Sattu

With investor leads coming in from a multitude of digital streams, the importance of tracking incoming traffic is also critical. We train our clients to use a great customer relationship management (CRM) tool called Pipedrive. “We help our clients to integrate Pipedrive with as many entry points as possible, so that no potential investor lead is lost,” says Sattu. “Once a lead is in Pipedrive, we work with our clients to make sure that they are providing the necessary content and touch points to move that lead along to becoming an investor in their project.”

Our clients are also all set up to sell community bonds directly to investors online. We provide our clients with a clean and streamlined campaign website, which gives investors access to a simple investment platform to make their purchase quick and easy. 

“All of these tools mean that campaigns can be optimized quickly, and can reduce resource requirements significantly,” says Sattu. “Nowadays we can have a campaign up and running in about 2 months, and we are working really hard to reduce costs and make community financing available to a wider array of organizations.”

We can’t meet in person but we can still make meaningful connections

It’s true that we live in an age where we can easily connect online, but that doesn’t necessarily mean that the connections we make over the internet are the same as in-person meetings. “We need to be very aware of this,” say Sattu “being online, we need to take extra care to read the room, gauge interest and build trust.” 

“This may mean adding in additional touch points for potential investors, to ensure that they feel informed” shares Sattu. “We encourage our clients not to just rely on email but to pick up the phone.”

“We also suggest that our clients ask their potential investors what form of communication they prefer,” says Sattu, “we want potential investors to feel comfortable.”

Let’s rebuild this post-pandemic economy to be more sustainable

We know that Covid-19 is changing society in complex ways. We also know that there will be winners and losers in this pandemic, and that those who are most adversely impacted are also those with the fewest resources to cope. 

As we focus on the post-pandemic recovery, we should all be thinking hard about the economy we want to see on the other side. Is it the old norm that concentrates wealth in the hands of a few? Or are we interested in creating a more inclusive and sustainable system?

If you are interested in the greater conversation on this ‘Next Economy’, check out our friends at the Centre for Social Innovation (CSI), who are doing amazing work on intentionally building a more equitable system. CSI Next Economy

We know that innovative forms of financing will be integral to building the next economy. We envision financing that 1) involves and rewards communities, 2) funds meaningful and quantifiable impact, and 3) creates financial sustainability and power for non-profits and charities that provide such critical services to society. 

“We promote this idea at both the government level but also on a grassroots level,” says Sattu thoughtfully, “we encourage non-profits where appropriate and possible, to consider seeking investment from their own community, to feed wealth back into that community, and to change the cycle of grant dependence.”

If you are a non-profit, charity or co-operative interested in financing a project with the support of your community, reach out to us at info@tapestrycapital.ca.

Abbey Dawn SolarShare Project

What comes after the Raise? Investor Stewardship and why it’s Important

By | Education

Community bonds can help you scale-up your non-profit, charity or co-op, and take ownership of important assets that you need to achieve your mission. They can also help you to strengthen and deepen meaningful ties to your community.

When a community member invests in your project, they are becoming part of your dream and vision. They are also putting trust in you to carry out your project efficiently and run your operations in a manner that will ensure that investors are repaid.  

You might think that a community bond campaign ends when all the funds are raised. But at Tapestry, we have seen that our most successful clients are those that steward their investors from their first interaction with the organization all the way through to when their bonds mature, and beyond.

So, what does Investor Stewardship mean?

Effective investor stewardship means managing your investors and caring for their needs. You can look after your investors by staying in regular contact with them, giving them news and information about your organization and the project they are supporting, and providing reassurance that your bond campaign and project are running according to plan. In our opinion, the key elements of investor stewardship are:

Investor onboarding: First impressions are everything. This may be an investor’s first transaction with the organization and if you want to instill trust, this is the most important starting point. Information about the investment and organization should be presented clearly and provided on time, someone should always be available to field questions via email or phone, and there should be immediate follow-up once the investment is received.

E-newsletter: A monthly e-newsletter is one the most effective ways to keep in touch with your investors. In your newsletter you can share details about your investment campaign, project updates and highlights, and even industry news.

Social media: Social media provides a more informal channel to give your investors updates about what is happening within your community. Social media also allows investors and influencers to engage with your news and content, and share within their own network.

Seek input: Community bond investors often want to go beyond putting their money in an organization. Occasionally seeking their guidance or input via surveys or at events can help strengthen your relationship by making them feel that they are a meaningful part of your mission.

Professional Investment Management: Ensuring that investors are paid interest or dividends on time and in a professional manner is critical. You will also want to ensure that they receive the necessary tax forms at the appropriate time of the year, and that you can give statements and updates on their investment whenever they request them.

CSI Founder Bricks

 The Centre for Social Innovation (CSI) created Founders Bricks for their investors.

There are also many creative ways that you can acknowledge and thank your investors. Some organizations may choose to give investors naming rights of spaces which they are building, as is often done in a capital fundraising campaign, while others might choose to send a small gift.

SKETCH Working Arts recently completed a $1.4 million community bond raise, to purchase their admin and studio space. Over the holiday season, in order to thank investors, SKETCH distributed coffee and brownies to everyone that made an investment.

Small gestures like this don’t have to be costly. In the case of SKETCH, they had the coffee donated and the brownies were baked by volunteers in their community kitchen. This was a low cost but memorable acknowledgement of the role that their investors are playing in bringing their vision to life.

Why is investor stewardship so important?

Your investors will be powerful spokespeople for your project, your investment opportunity, and your mission. If they have a positive investment experience, are able to trust in you, and have access to investment and project details, they will share this opportunity with others in their network.

“Word of mouth is actually the single most important source of new investment,” shares Jennifer Bryan, our Senior Campaign Manager at Tapestry. “In addition to generating new investment, stewarding investors throughout the life of their bond can mean that when their bond matures, they choose to reinvest in any new investment opportunities the organization has.”

Abbey Dawn SolarShare Project

Investors touring SolarShare’s Abbey Dawn installation (pre-covid). This is their 37th project.

SolarShare is a community power co-operative that sells bonds to finance community-owned solar projects. “They have over a 70% reinvestment rate, meaning that when bonds mature, 70% of investors will choose to put their money back in,” says Jennifer. “This pool of dedicated investors meant that SolarShare could scale extremely rapidly.”

To give you an idea of just how quickly they scaled, from 2011 to 2015 they raised $10 million total in investment. Last year, in 2020 alone, they raised $16 million in 9 months. SolarShare started with just one solar project and now has 49 solar projects across Ontario.

The Centre for Social Innovation (CSI) also has a fantastic growth story,” says Jen. Their first bond campaign in 2010 raised $2 million to help them purchase their first building in downtown Toronto. Four years later, in 2014, they were able to turn around and re-approach investors to raise another $4.3 million to purchase a second building.

“What is truly incredible,” shares Jen, “is that in 2020, amidst a global pandemic, CSI was able to raise another $1.9 million in community bonds in just 41 days.” The speed at which their bonds sold out is a testament to the trust that investors have in CSI.

CSI Growth

How can Tapestry help?

Building a community bond campaign means forging lasting relationships with your investors. Building these relationships takes time. “We often find that organizations don’t have the bandwidth to dedicate resources and time to stewarding investors, and this is why we are here to help,” says Jen.

“We see ourselves as a temporary part of your team, providing the additional resources to make sure that your investors receive the attention they need. We can provide advice, tools and templates to help you on your way. We don’t have to reinvent the wheel here,” says Jennifer, “we have done this so many times now that our process and methods are well formulated.”

Are you interested in using community bonds for your project? Get in touch.

Cathy Mann

How to raise donations and investments at the same time

By | Education, Uncategorized

Charities are one of three types of organizations in Canada that can make use of community bonds to raise investment from their supporters. What makes charities unique from the other two groups – co-ops and non-profits – is that they also have the ability to seek donations and offer tax-receipts to donors.

As community bonds and philanthropy are so different, yet both important types of financing, we are often asked if the two can work hand-in-hand for charities.

We sat down with Cathy Mann, founder of the Fundraising Lab, to tell you that yes, it can be done and there may be benefits to combining these two types of funding that you haven’t realized yet.

Cathy has over 20 years of experience teaching fundraising in college and university, and over 25 years of experience working as a front-line fundraiser and consultant. Cathy developed the Fundraising Lab to share fundraising skills and her best advice to help more charities achieve their mission.

Cathy Mann Fundraising Lab
Community bonds are an exciting tool for Charities

Community bonds are a social finance tool, 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. The major difference is that in addition to offering a modest financial return, they also offer a social or environmental return.

What are community bonds

Most charities will be familiar with traditional fundraising and building relationships with donors. They will also be familiar with donor fatigue and the struggles that can come with trying to align capital fundraising with project timelines. What community bonds do is create a new vehicle for accessing funds that might not otherwise have been possible to tap in to. 

“Impact investing is such a hot topic right now,” shares Cathy, “there are a lot of institutional funders out there that don’t have a place to put the money they have earmarked for impact investment. Community bonds create a new avenue for these investors to make a return while also ensuring that money is doing good in the community.”

And it’s not just institutional investors who are searching for community bond investments. In fact, in a community bond campaign the majority of investors are your average retail investor interested in making an impact, or someone who is already a supporter of the issuing organization. 

“I think community bonds are a really interesting form of financing” says Cathy, “but that doesn’t mean they are for everyone.”

“I don’t want to be a Debby Downer,” she laughs, “but there is a checklist of conditions for charities interested in this tool.” Most importantly, the charity must have a revenue model that will allow them to repay investors over time. The second important condition is that the charity be raising the financing for the purchase or renovation of an asset, most likely real estate.

Community bond checklist
Financing to match project timelines 

One element of community bonds that is often appealing is that they allow charities to access a lump sum of financing upfront. “With a typical capital campaign, donations come in as pledges, and those pledges are paid out over the course of 3-5 years,” explains Cathy. “This is something that many charities engaging in a capital campaign for the first time don’t realize.” Adding bonds into the financing mix can potentially help with project rollout, as these funds are available upfront.

Are charities ready for social finance?

“Some charities are better positioned to take on debt than others, and feel more comfortable,” shares Cathy. “My clients haven’t had a lot of experience in this area solely because most don’t own property, and without property, there is nothing to secure a loan. So many charities just don’t have a lot of experience with taking on financing.”

But that may be changing now with the emergence of community bonds. Charities are becoming more and more inventive with social enterprise models, there is growing government support in this area, and with rising rents across Canada, the business case for owning vs. renting is often there.

“I hope this model of financing becomes more prevalent,” says Cathy. “I think seeing somebody else do it first is going to make a big difference.”

What if Donors only want to be Investors moving forward?

Most recently, Cathy has been working with a charity called SKETCH Working Arts on their capital campaign Project Home. This $1.52 million fundraising campaign happens to be running alongside a $1.4 million community bond campaign that we at Tapestry are supporting with.

In total, SKETCH will be raising $4 million to purchase their studio and admin space, where they support homeless and marginalized youth through mentoring and development in the arts.

SKETCH is a great example of a charity that has been successful in running these two types of campaigns in tandem, and managing both investors and donors at the same time.

“I think there is a legitimate fear that some donors may choose only to invest,” says Cathy, “and this may be the case for some, but what we have learned from SKETCH is that many donors just want to remain donors, or want to donate AND to invest.” 

SKETCH donors and investors

At Tapestry, we’ve also seen that community bonds can re-engage lapsed donors. “Some may have stopped giving years back but are now interested in supporting the organization in a different way,” shares Jennifer Bryan, our Senior Campaign Manager.

The key according to Cathy, is that you need to make sure you have a good plan for both your fundraising campaign and community bond campaign before you begin on either element. “What is really critical is to speak to your donor base when you are in the planning phase to see what their reactions are and which way they will lean,” she says. 

“In our experience, community bonds have actually extended the reach of our community,” says Dale Roy, Marketing and Resource Development Associate at SKETCH. “Community bonds allowed us to tap into a new group of people we never realized were out there. We hope that our investors will continue to support our work even once this project is complete.”

The Giving Bond

“The SKETCH creation of the Giving Bond has been amazing,” says Cathy. SKETCH is the first organization in Canada to utilize this form of a community bond. How it works: an investor purchases the bond, they receive their full principal back at the end of the term and the interest is donated to SKETCH. The investor then receives a tax receipt for the donation.

Charity giving bond

In a sense, the Giving Bond allows investors to make a donation, and gives the charity an interest free loan. “Lots of organizations just get tripped up by the notion of making the interest payments. So for many organizations, it might be easier for them to consider if it can be viewed as an interest free loan,” says Cathy.

The keys to success

One of the main reasons that SKETCH has succeeded, in Cathy’s opinion, is that they had a donor base that would support this kind of initiative. “They have great relationships with their supporters and a sizable group of people that they could reach out to from the get go.”

They also had experience with major gift fundraising, which was a great starting point for them. This meant that they already had a lot of the necessary infrastructure in place. They were able to take these existing tools and knowledge and pivot to effectively communicate with investors, whom require different messaging from donors. 

“The other thing is that people love Rudy,” Cathy says with a big smile. Rudy Ruttimann is the Executive Director of SKETCH and the lead on Project Home. “She is a force to be reckoned with.”

“She was just so determined that this was going to succeed, that people got caught up with that enthusiasm, and believed in it because she believed in it so strongly.” Of course, Rudy also has an amazing team supporting her, to whom Cathy gives her kudos. It was SKETCH’s volunteer financial consultant, Michael Sacke, who initially put forward the idea of alternative financing, and he was a champion for the idea of community bonds from the start.

Some advice to charities interested in Community Bonds

“Prepare for some nail biting,” she says with a grin. “It’s not for the faint of heart. There will certainly be moments of doubt, and ups and downs, but in the end it can really pay off. This is something really cutting edge and exciting, and people want to be part of that.”

Are you interested in using community bonds to raise investment for your charity? Get in touch at info@tapestrycapital.ca.

Can Community Bonds be held in Tax-Advantaged Accounts? 

By | Education, Policy and Advocacy

Community bonds are a social finance tool that allow non-profits, charities and co-operatives to raise investment from their community of supporters. Like a regular bond, they are an interest bearing loan that is repaid at maturity. Similarly, they have a fixed term and a set interest rate.

The key difference is that they produce both a financial and social return for investors.

Community bonds are most often used to raise capital financing for the purchase or renovation of a fixed asset, such as real estate or major equipment. At Tapestry, we’ve worked on community bond raises for everything from solar energy projects, to co-working spaces, to schools, and we are learning about new and exciting projects every week. 

As community bonds become more commonplace, their demand has increased significantly. In 2020, Tapestry supported issuers in raising $18.3 million in investment. 

One of the questions which we are frequently asked is, “Can community bonds be held in tax-advantaged accounts?” 

To answer that question, we spoke to Erica Glueck, our Senior Manager of Investments at Tapestry. 

 

What are tax-advantaged accounts?

Tax Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) are two types of tax-advantaged accounts that were created by the Canadian Government as a means to support Canadians in saving for their retirement. 

“You can think of TFSAs and RRSPs as a basket”, says Erica. “You can pick what to put in that basket from an array of financial products – guaranteed investment certificates (GICs), cash, stocks and bonds.”

 

So if bonds are allowed in tax-advantages accounts, are community bonds as well?

Headshot

Erica Glueck, Senior Manager of Investments at Tapestry Community Capital

“The short answer is, ‘it depends’”, says Erica. “The organization that is issuing the bonds will have to meet certain conditions in order to make this a possibility for their investors.” 

First, the organization must be raising bonds that are secured against a traditional mortgage loan or a capital asset. “So if the organization is purchasing a building, or renovating a building they already own, this is a first great step,” she explains. 

The second step is finding willing financial institutions to be custodians for these bonds in a registered plan. 

Community bonds are what we call exempt market securities – or in plain English – they cannot be bought and sold on the public market.

The exemptions that allow for non-profits, charities and co-ops to raise investment in this way also make clear that they cannot have ‘dealers’ who are being paid to sell bonds on behalf of the issuing organization.

“This can sometimes be a challenge,” says Erica, “because there is no incentive for a brokerage or financial institution to support investors in getting their bonds held in a tax-advantaged account.”

But fear not, there are several great financial institutions who are already custodians for community bonds. Questrade, Caldwell Securities and Concentra are a few that we are aware of. 

In order to get these financial institutions on board, the issuing organization will need an Opinion Letter from a tax lawyer or an accountant. 

Erica explains, “The Canada Revenue Agency (CRA) decides what can be deemed a qualified investment for these accounts. Bond debt that is secured against a mortgaged property is one way they can meet the necessary criteria. The safest way though, is to have a chartered accountant or lawyer interpret the Income Tax Act as it pertains to your project and investment opportunity.”

It’s important to know that ultimately the decision is at the discretion of financial institutions, and that this is something that Tapestry and the Issuer can’t control.

 

What are the benefits of having community bonds eligible for tax-advantaged accounts?

Lots of Canadians max out their contributions to their RRSPs and TFSA’s not only to save for retirement, but to reduce the taxes that they need to pay on those funds. This means that a lot of wealth within Canada is in these accounts.

An individual might not have a lot of cash available, but may have a significant amount saved in one of these accounts. 

Retirement savings“Because there are restrictions on withdrawals from these types of accounts,” says Erica, “most of the money remains locked in place there – making it difficult, for say Bob Smith, to withdraw $2,000 to invest in a community bond.”

“If Bob can suddenly hold that bond in his TFSA or RRSP,” she explains, “there is no need to withdraw that capital.” Enabling community bonds to be held in these accounts unlocks more potential investment. 

“It’s a good way to leverage someone’s savings plan, rather than making them go through the extra effort of drumming up additional savings to invest in an organization they believe in.”

How important is it that community bonds are TFSA and RRSP eligible?

“It’s definitely worthwhile to explore,” says Erica, “but I don’t think it’s a make-or-break situation if the Issuer’s bonds are not a qualified investment.”

Of Tapestry’s clients, only around 10 percent of investments are held in these accounts. “Especially if clients have a lower minimum entry point – say $500 or $1,000 – the need for this vehicle is definitely less.”

Community bonds are great because they can be priced to be so widely accessible, democratizing the impact investment arena,” she says emphatically.

“We are seeing a growing number of younger investors with community bonds, and many investors are at a point in their lives where they aren’t taking advantage of these tax-advantaged accounts yet, but are in a financial situation where they can invest $1,000 in an organization they believe in.”

 

What types of organizations should consider making their bonds RRSP and TFSA eligible?

“We always recommend to clients that they consider this option if they feel their community would have significant funds saved in tax-advantaged accounts”, says Erica. “The best way to assess this is through simply speaking to your potential investors before you launch your bond campaign.”

 

“It can be a bit of a process to establish, but if investors are really keen on having this option, it can pay off in the long run,” Erica advises. 

It is important to note that there are some additional costs with going this route, so issuers should be prepared for this. For example, it’s necessary to obtain a new opinion letter for every year that the bond is held.

 

Any last thoughts on the subject?

“I’d just say that financial markets need to start paying attention to these investors.”

“More and more, we are seeing that people are not just interested in making a financial return, but want to know that their money is doing something good. Just because financial institutions aren’t as familiar with these investment products, it doesn’t mean they are necessarily bad or risky investments to be making.”

“The more people want to buy and hold these investments in registered accounts, the more the industry will need to pay attention to investor needs and streamline the process to make it possible.”

Woman working on a laptop

The Best Tool to Manage your Community Investors

By | Education

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

Why Atticus?

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

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

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

And now, why use Atticus?

Forget Your Spreadsheets and Calculators

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

Trust in Data

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

Atticus Tracks Our Progress and Workflows

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

Reports

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

Communication

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

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

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.

How the Argonaut Rowing Club raised $1 million in 4 months

By | Client Stories, Education, Success Story
Jason van Ravenswaay, President of the Argonaut Rowing Club

In March 2019, following a six month pre-campaign planning process, the Argonaut Rowing club launched Argonaut Rowing Club NEXT (ARC Next), a rebrand of their five-year revitalization project, designed to support current and future rowers for the next 50 years. Over the next 5 years, the club aims to attract over 80 new members, reach 15 local schools and support 80 young athletes.

In support of the campaign, the club is raising $1.2 million dollars through a community bond raise, to fund the essential upgrades that would offer a fully accessible facility, increased member capacity and youth programs. To date, there has been just over $1 million pledged to the campaign in under four months, with a deadline of September 15, to raise the final amount. We spoke with Jason van Ravenswaay, President of the Argonaut Rowing Club to get his perspective on the campaign so far.

What is the vision of ARC Next and what makes this project iconic?

Argonaut Rowing Club boat racks

In part, what makes the project iconic is that the rowing club has been around for a long time. We’ve had our, ups and downs over that time. At one point the rowing club even burned down. We’ve always come back stronger. The opportunity that we have is really bringing the club to the next level, reaching more youth, and becoming completely accessible for our para-athletes.

That’s the primary vision. Right now, we’re investing a lot in our youth. About 3 years ago, our junior program was 3 – 5 people. And, we’ve actively been growing that program, investing in coaching, in safety, in new rowing shelves so that these athletes can compete and have the opportunity to be successful.

With this ARC next campaign, we’re able to open up more space so that we can grow this program even further. Right now, we’re at 60 junior athletes, which is a lot. This program doesn’t really make money for the club. It actually costs us money, but we’re very passionate helping people get introduced into the sport of rowing and creating that passion.

Why is this so important?

For me it’s important because rowing has been an outlet. It’s been a way to be healthy, to enjoy the city, and the beautiful lake that we have the privilege of living on. And, I think what’s great is that rowing is addictive.

I want people to have the opportunity to feel what that’s like and to fall in love with the sport.

For yourself, what has been the biggest challenge in this bond raise so far?

Probably the biggest challenge is—we have a phenomenal leadership team behind this bond raise and on the board of directors, but the reality is that these leaders for the club are all volunteers. Everyone has jobs and careers outside of the rowing club. So, the challenge is really getting people energized.

We’re working late nights to get a lot of this stuff done, and you know, a lot of planning goes into this campaign. With the financial modelling, and the business plan and really thinking through what the next five to seven years look like. We’ve been thinking about and planning for this investment. We knew that we needed to do something, in particular looking at the flooding that’s been happening in our changing room.

Argonaut Rowing Club practice with woman's team

We’ve been making small investments in our program, that have moved us forward, but planning such a big one-time investment that gets us everything that we need to push all of our programs forward and to reach more in the community is a heavy lift. We’re really lucky that we have the leadership team that we do because they’re putting in tonnes of hours getting this done.

That’s been the hardest part of this campaign.

What has been the biggest surprise throughout this whole campaign?

The biggest surprise has been that a lot of people have the same passion for our club and for the impact that we have. They have come through and invested in ARC next.

I think probably the investors that kind of give me goosebumps are really the parents. People that aren’t rowing, but their kids have been through our programs and just how they reflect on their children’s experience and how it has changed their lives. How it’s gotten into their schools and how it’s created a network of friends that are strong, motivated individuals.

The parents want the club to be able to scale and have this impact on their children. Some of the parents that are sitting on our committee, their kids are actually off to university now, and they’re participating in the bond raise—whether that’s investing or actually being on the team—because of the impact that we’ve had on their kids in previous years.

It sounds like you’ve been able to cultivate a really amazing community around the club!

We’ve been really lucky and we have a lot of really great volunteers that are really driving the community and culture. We’re super grateful that everyone has been so engaged.

Argonaut Rowing Club woman rowing

You have surpassed the $1 million pledges milestone, what do you feel has been the biggest factor in your success to date?

We have a pretty strong vision and we have been working on a number of micro initiatives that have all kind of lined up right in front of this ARC Next campaign. As an example, a year and a half ago we assembled a grant committee, and they began figuring out what do we need to support our programs and what kind of grants are out there. Writing grant proposals is very time consuming and we had all that work done upfront and we successfully were awarded a grant at the beginning of this fiscal year which helped pushed this campaign forward.

So, for you it was all the prep-work that was done beforehand?

The prep work and the vision of all the different micro-components, like the banquet facility, which is critical to supporting this investment. With the banquet facility, really understanding the feedback from our client to know what types of investments are really going to elevate the space and allow us to demand higher fees and get more revenue out of that space. And, even before that making sure that we had the right management in place for the banquet space and we had some issues with water coming into the building so investing and building a wall at the front of the building to divert water away and into the lake. There’s just so many different components that have all come together this summer, but the club, it’s different. It’s a different space, it’s a different feel, it’s a different energy, and people are really excited and they want to be down there.

Argonaut Rowing Club woman and coachWoman being coached on rowing

How has Tapestry helped to bring this campaign to life?

Tapestry has been a tremendous support; we really didn’t know where to start only that we didn’t want traditional financing. Finding community bonds and Tapestry made our vision possible; especially for a volunteer organization like ours it would have taken years of work to get where we are today without Tapestry.

And, if you were going to give advice to someone who was considering embarking on a community bond campaign, what would you tell them?

Focus on impact. What is the impact that you’re going to have on your community. On the people or the environment, and really paint a picture of what that feels like. It’s important that people get the feels for what you’re doing. Sometimes it’s hard to communicate the motivation behind something but emotion is powerful.

The Argonaut Rowing Club staff, board members and committees are coming together to celebrate the momentous achievement of reaching the $1 million milestone on July 17th at the clubhouse to encourage the last round of investments from members, parents and stakeholders.

To stay engaged and up-to-date on all things ARC Next and to learn more about the project, visit www.arcnext.ca. See you on the water!

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!

Two people reading a contract

Differentiating Community Bonds and Social Impact Bonds

By | Education, News

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

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

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

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

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

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

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

Where do these tools sit on the Investment Continuum?

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

How do the investor groups differ?

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

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