⏱️ 2 min read  

They sound similar, but they’re not! 

Community bond: you finance an asset

A non-profit, charity, or co-operative needs capital to purchase an asset, like real estate or major equipment. Instead of going to a bank, they come to their community. Investors (mostly everyday people, but also businesses and other organizations) lend them money, earn interest, and get repaid from the organization’s own revenue – rent, fees, sales, whatever revenue they generate using the asset. 

Similar to a traditional bond, it’s an interest-bearing loan with a set rate of return and a fixed term. The key difference: because the issuing organization is a non-profit, charity, or co-op, the investment generates a financial and a social return. 

The idea is that organizations can offer investment opportunities and returns to their communities, not just to big commercial lenders. They can also set the interest rate and maturities that work best for their project, instead of accepting the bank’s terms. 

Example: In 2024, the Ottawa Community Land Trust raised $3M from 132 investors – neighbours, small businesses, foundations – to buy and preserve affordable rental housing in Ottawa. 

So… what’s the difference?

 

Community bond Social impact bond
Who can invest Anyone (typically minimum $1,000) Typically businesses, foundations, trusts, institutional investors
Who repays you The issuing organization (non-profit, charity, co-operative) The government
Repayment is based on… The organization’s revenue Outcomes achieved
Best for Capital projects with real assets Large-scale social programs

 

Community bonds are for organizations with a revenue model and a community willing to invest directly. Social impact bonds are for governments with a specific social outcome in mind and funders willing to bet on it. 

They’re different tools for solving different problems, both effective.

Interested in learning more about community bonds? Get in touch!