You’ve got questions—we’re here to help

Community bonds are a social finance tool used by nonprofits, charities and co-ops to finance capital projects with impact.

Similar to a traditional bond, a community bond is an interest bearing loan from an investor with a set rate of return and a fixed term. The key difference: a community bond provides the investor with both a financial and social return.

Community bonds allow you to set terms that work for your project timeline and financial situation. You can define the price, interest rate, and repayment schedule.

Community bonds have a broad appeal and attract a diverse range of investors. Every group of investors is unique, because every community is unique.

Retail investors: Community bonds offer an accessible investment opportunity for individual retail investors, who make up the majority of most issuers’ investors. These investors typically commit amounts starting at $1,000, making it feasible for a broad spectrum of people to participate.

Small to medium businesses: Businesses, particularly those with a strong local presence, are often enthusiastic community bond investors. They recognize the value of investing in projects that align with their community interests and may contribute substantial sums.

Foundations, large enterprises, and institutional investors: Foundations and larger enterprises also play a vital role in the community bond landscape. They frequently invest significant amounts, sometimes totaling several hundred thousand dollars or more. Many even have portions of their investment portfolios earmarked for impact investments and are actively looking for meaningful opportunities.

Community bonds are best suited for financing assets like real estate or major equipment acquisitions. Projects without tangible asset backing carry a higher level of risk.

Projects also need to have a viable revenue model that can repay investors with your chosen interest rates.

And of course, the community bond model only works if the community is behind what you’re doing, and therefore wants to invest—so your project’s positive impact is ultimately the most important factor.

With Tapestry’s support, organizations build a financial model for their community bond raise as they plan their issuance.

As you can imagine, a major part of the financial model is how they’ll generate the revenue they need to repay investors according to the bond terms they set. Most organizations raising community bonds have a social enterprise component of their work—i.e. they collect revenue for some kind of product or service they provide. Take affordable housing: organizations will work out what rental rates are affordable to their community but also allow them to repay investors. Oftentimes, they’re repaying community investors at lower rates than they’d need to pay the bank, meaning community bonds can give them more wiggle room to make rent affordable.

Other types of organizations do similar calculations. Arts venues might calculate how much they should charge for tickets allowing them to service community debt. Community recreation centres might decide revenue from venue rentals will repay investors. Ultimately, your revenue model will be as unique as your organization and Tapestry’s job is to help you decide if community bond debt fits.

As of spring 2026, interest rates for community bonds typically range between 2% and 5%. We’ve found that increasing interest rates from the Bank of Canada correlate with an increase in the rates community bond investors look for.

There’s also a trade-off between the financial return on investment and the social impact of the project, a concept referred to as the ‘social return on investment.’

In practice, this means that projects with a significant positive impact on the community may offer lower financial returns to investors, depending on what issuers discover about investors’ appetite during early consultations. These projects are often seen as contributing to the greater good and are attractive to individuals and organizations looking to make a meaningful difference.

Projects associated with higher risks, particularly those lacking physical asset backing, may necessitate offering higher interest rates to motivate investors. The goal is to provide a competitive return while acknowledging the increased risk associated with such ventures.

Yes! Community bonds offer the flexibility to fund either individual projects or a portfolio of projects, depending on your organization’s goals and fundraising strategy.

Single project financing: Some organizations opt for community bonds to fund a specific, stand-alone project. This focused approach allows for a clear connection between the bond offering and the intended impact of that particular project. This can make the fundraising appeal more straightforward and compelling.

Portfolio funding: Organizations may choose to aggregate multiple projects under a portfolio or fund structure, often with common themes or objectives. Investors’ contributions are then allocated across the various projects in the portfolio. Portfolio funding can be particularly attractive for organizations with diverse project needs or those looking to maximize the spread of their fundraising campaign.

In our experience working with issuers, community bonds tend to attract a distinct category of supporters who often supplement, rather than replace, your existing donor base.

That means community bonds typically bring in net new financial supporters. These individuals and entities often invest higher amounts than the average donation.

If you’re interested in running a community bond campaign at the same time as a donation campaign, Tapestry can help you strategically craft your messaging to reach these two distinct audiences effectively.

Additionally, many organizations find community bonds to be an effective way to re-engage lapsed donors—offering them a different way to support when donations aren’t feasible for them anymore.

Since a community bond is a loan, not a donation, your investors cannot receive a tax receipt, even if you are a registered charity.

However, some charitable organizations we’ve worked with have chosen to offer their investors the option to donate their interest and/or their principal upon maturity—in this case, the investor would become a donor and would therefore receive a tax receipt.

Tapestry is advocating for federal tax incentives for community bondholders, but this is not included in policy yet. Learn more about our advocacy here.