{"id":1223,"date":"2022-11-28T15:48:12","date_gmt":"2022-11-28T15:48:12","guid":{"rendered":"https:\/\/tapestrycapital.ca\/?p=1223"},"modified":"2022-11-29T15:22:50","modified_gmt":"2022-11-29T15:22:50","slug":"charitybonds","status":"publish","type":"post","link":"https:\/\/tapestrycapital.ca\/fr\/charitybonds\/","title":{"rendered":"Les obligations caritatives d\u00e9collent au Royaume-Uni"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Charity bonds, the UK equivalent of community bonds, have taken off rapidly in recent years. From 2012-2020, the charity bond market grew by a remarkable <\/span><strong><a href=\"https:\/\/bigsocietycapital.com\/impact-report-2020\/ecosystem\/financial-product-types\/charity-bonds\/#:~:text=Growth%20of%20charity%20bond%20market%202012%2D20\">62x<\/a><\/strong><span style=\"font-weight: 400;\">! The size of the market is now estimated to be around \u00a3337 million &#8211; an astronomical leap from the mere \u00a35.4 million in 2012. More than 30 organizations have seized the opportunity to issue charity bonds and raise capital from their communities of supporters.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"> In this article, we explore the immense growth of charity bonds in the UK and what this could mean for community bonds in Canada.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s start off by understanding the similarities and differences between charity bonds in the UK and community bonds in Canada.\u00a0<\/span><\/p>\n<h6><span style=\"font-weight: 400;\">Similarities<\/span><\/h6>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Interest-bearing loans, with a fixed interest rate and a fixed term<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Used to finance socially and\/or environmentally impactful projects<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Organization issuing the bond must have a source of revenue that will enable them to repay investors<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">More flexible than bank financing because terms are set by issuers and funds are raised from supporters\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Engage a variety of investors (individuals, foundations, trusts, etc.)\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Can be held in tax-advantaged accounts\u00a0<\/span><\/li>\n<\/ul>\n<h6><span style=\"font-weight: 400;\">Differences<\/span><\/h6>\n<p><span style=\"font-weight: 400;\">The table below highlights key differences between charity bonds and community bonds:\u00a0<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Charity Bonds<\/b><\/td>\n<td><b>Obligations communautaires\u00a0<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Issued by charities and social enterprises\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Issued by non-profits, charities, and co-operatives\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Usually unsecured loans (no asset to back investment)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Usually secured loans (asset to back investment)<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Tradable on the London Stock Exchange\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Not tradable\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Typically unrestricted funds\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Typically restricted funds\u00a0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h3>A market to trade charity bonds<\/h3>\n<p><span style=\"font-weight: 400;\">In 2014, the first charity bond was publicly listed on the London Stock Exchange, and many have since followed suit. Being able to list on a public market has provided charities and social enterprises with access to a bigger market, allowing them to reach their investment target more efficiently. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Organizations do not issue their charity bonds directly on the stock exchange. Rather, they go through a \u201cspecial purpose vehicle\u201d called the Retail Charity Bonds Plc. (RCB). RCB is governed by an independent board of directors who reviews applications from charities and social enterprises. Upon approval, RCB issues the charity bonds on the London Stock Exchange, and then investors can buy and trade the bonds in the secondary market just like any other bond or stock. Fun fact: most organizations can raise their required financing within 1-2 weeks after they launch an offer!\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Community bonds are not yet tradable in Canada, however, as the market continues to grow rapidly, we are hopeful of such initiatives. Based on the UK experience, it\u2019s clearly a win-win for investors and social purpose organizations.<\/span><\/p>\n<h3>Building confidence has been critical<\/h3>\n<p>In 2014, Big Society Capital launched the Charity Bond Support Fund, in collaboration with Rathbones. The purpose of the fund was to co-invest in campaigns alongside retail and institutional investors when campaigns were not fully subscribed. This had a dual purpose &#8211; to give confidence to issuers that they would reach their targeted investment goal, but also to give confidence to investors. The initial fund was \u00a330 million, but has since grown to \u00a3163 million with a diverse array of investors engaged.<\/p>\n<h3>The emergence of sales platforms has helped the community investment market to grow<\/h3>\n<p><span style=\"font-weight: 400;\">Many community investment platforms have been developed in the UK to <strong>a)<\/strong> encourage organizations to use social finance tools and <strong>b)<\/strong> encourage individuals to invest in social finance tools. For example, <a href=\"https:\/\/www.ethex.org.uk\/\">Ethex<\/a> is a non-profit community investment platform that connects social purpose organizations with investors. In 2020, Ethex and Energise Africa raised a total of \u00a3100 million of people-powered finance to benefit over 200 community-oriented projects.\u00a0<\/span><\/p>\n<p>Such sales platforms have brought charity bonds into the mainstream by making the investment process simple yet professional. It is now easier than ever to invest with impact in the UK.<\/p>\n<p><span style=\"font-weight: 400;\">By learning from partners, both near and far, we at Tapestry continue to foster community bonds as a mainstream form of financing and an avenue to invest in society.<\/span><\/p>\n<h3>\u00c0 propos de cette s\u00e9rie de blogs<\/h3>\n<p>Hi, my name is Jasleen Bahia, and I was once an Intern at Tapestry Community Capital. I am now completing my degree in business with a focus on social finance, and I&#8217;m currently doing a semester abroad in Europe. While here, I am Tapestry&#8217;s Ambassador to the UK.\u00a0This blog series documents my adventure abroad learning about the social finance ecosystem in the UK and connecting it to our growing community investment marketplace in Canada. I am eager to find out what we can learn, replicate and share!<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1224 size-large\" src=\"http:\/\/tapestrycapital.ca\/wp-content\/uploads\/2022\/11\/IMG_2140-1024x768.jpg\" alt=\"\" width=\"1024\" height=\"768\" srcset=\"https:\/\/tapestrycapital.ca\/wp-content\/uploads\/2022\/11\/IMG_2140-1024x768.jpg 1024w, https:\/\/tapestrycapital.ca\/wp-content\/uploads\/2022\/11\/IMG_2140-300x225.jpg 300w, https:\/\/tapestrycapital.ca\/wp-content\/uploads\/2022\/11\/IMG_2140-768x576.jpg 768w, https:\/\/tapestrycapital.ca\/wp-content\/uploads\/2022\/11\/IMG_2140-1536x1152.jpg 1536w, https:\/\/tapestrycapital.ca\/wp-content\/uploads\/2022\/11\/IMG_2140-2048x1536.jpg 2048w, https:\/\/tapestrycapital.ca\/wp-content\/uploads\/2022\/11\/IMG_2140-16x12.jpg 16w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/p>","protected":false},"excerpt":{"rendered":"<p>Charity bonds, the UK equivalent of community bonds, have taken off rapidly in recent years. From 2012-2020, the charity bond market grew by a remarkable 62x! The size of the&#8230;<\/p>","protected":false},"author":12,"featured_media":1224,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"mc4wp_mailchimp_campaign":[],"footnotes":""},"categories":[60],"tags":[],"class_list":["post-1223","post","type-post","status-publish","format-standard","has-post-thumbnail","category-learning-from-abroad"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Charity Bonds take off in the United Kingdom - Tapestry Capital<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tapestrycapital.ca\/fr\/charitybonds\/\" \/>\n<meta property=\"og:locale\" content=\"fr_CA\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Charity Bonds take off in the United Kingdom - Tapestry Capital\" \/>\n<meta property=\"og:description\" content=\"Charity bonds, the UK equivalent of community bonds, have taken off rapidly in recent years. 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