THE IMPACT LEAK – Community Bonds & Social Enterprise - where no one loses
Updated: Jan 31
- What impacts the good we do?
There is an increasing interest in the use of Community Bonds to help nonprofit social enterprises achieve their financial goals. They can be used to finance program development or for capital build projects where the 'first-in' dollars are hard to find. For people in the nonprofit sector, they are a form of investment that clearly shows what the investor is interested in - you.
Photo by KIMDAEJEUNG via Pixabay
The history of community bonds shows they are not a recent invention. Perhaps it is the donor fatigue that charities and nonprofits are experiencing or just the fact that there is less 'free money' around to be donated; whatever the case, community bonds offer an alternative that moderate income donors favour and this has captured the attention of social enterprises.
Construction of community bonds are as individual as the organizations themselves but creating a bond requires careful financial analysis and a social enterprise must understand itself and its business in order to achieve its goals. Registering as a nonprofit is the first step. If you are a charity with a social enterprise, the process is easier. A for profit social enterprise cannot create a community bond.
For someone to gain an understanding of the process, a popular community bond success story, CSI Centre for Social Innovation, has been providing teachings and models for more than a decade. They achieved star status in the nonprofit sector when they bought their first building in 2010 using community bonds. They now have 6 locations.
Smaller social enterprises and charities also have long histories and rich stories of achieving their business goals through community bonds. As recent as 2019, the Toronto Outdoor Picture Show , dedicated to bringing high quality, diverse, and engaging outdoor film programming to local communities offered their community bond raising $50,000. They completely sold out through their efforts and this is the most common situation. Knowing that you have a community of supporters who want to show you what you mean to them propels communities forward and when investors are asked, they act.
The West End Food Coop operated a retail store in Parkdale until 2018 when it closed due to gentrification and an inability to find affordable space. Prior to that time and thanks to their successful community bond offering, they operated their cooperative in one of Toronto’s most disadvantaged neighbourhoods. They sold out their first bond issue in 2009 and then created a second bond which also sold out. Their local investors created the opportunity to start new programs, expand their farmer's market and open the community store.
Photo by Nathan Dumlao via Unsplash
Considering the resources available and the success stories to date, nonprofit social enterprises should give themselves and their communities the chance to expand and succeed. A community bond brings together ‘community’ and ‘dollars’ to make the world we want to see - a fine example of the world of social finance and social enterprise.