Community Bonds

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By Jonathan Wade:

"a community bond (or sometimes called a community investment bond) is where a private citizen can purchase the bond directly from a social enterprise, and they may receive a both a financial and a social return on that investment over time. Financial returns are modest, typically ranging from 2-6%. Maureen Stapleton of Investing for Good offers a clear definition: “Community bonds allow people to support a charitable cause while knowing that the money will be returned to them at the end of the investment period.”



"The Canadian leader in this tool is the Centre for Social Innovation (CSI) in Toronto, as they have issued community bonds for sale to investors in order to finance their shared space business. As a result of their expertise, they have created a website to answer many of the questions regarding the use and design of this particular financial instrument in Canada." [1]


Tyler Hamilton:

"There is plenty of good news happening around community bonds in my home province. SolarShare, for example, announced on Dec. 6 that it had been approved by the Financial Services Commission of Ontario to sell bonds (which offer a 5 per cent annual return) beyond a cap of $1,000. It is now selling up to $25,000, and can go even higher if requests are approved on an individual basis by their board of directors. This has opened up the possibility off pursuing projects more aggressively. The co-op is now going through a process to make its bonds RRSP-eligible. “Once an independent evaluation of SolarShare mortgages that secure your bonds is complete and we have received a legal opinion based on that evaluation, a self-directed RRSP account can be opened through Concentra Credit Union via the Canadian Workers Co-op Federation (CWCF),” the co-op reported in a recent newsletter. “You are also welcome to take that legal opinion to your own wealth management representative and request an account through other channels” – i.e. you can take it to your own bank and make a case for carrying the bonds in your existing self-directed RRSP.

These bonds are a safe investment, so if you’re tired of getting pummeled by the market and want a safe 5 per cent return, you might want to learn more at

SolarShare also announced this week that it has partnered with green energy retailer Bullfrog Power, which is helping to finance future co-op solar projects. As an investor, Bullfrog will also market SolarShare’s “solar bonds” to its existing network of green-minded electricity customers. It’s a great partnership." (

the West End Food Co-op

By Sara Bartolomeo:

"In my previous post, I provided a history of the West End Food Co-op and the various finance models that they considered implementing in order to raise capital for their newest venture, the Food Hub. This post will focus on their success with the chosen method. community bonds, as shared by the West End’s and Co-Founder Director John Richmond.

John and his fellow directors contemplated financing the building for the Food Hub entirely through community bonds, however they felt that raising more than $200,000 would be counter-productive due to increased regulatory provisions. Under Ontario’s Co-operative Corporation’s Act, co-operatives who issue greater than

$200,000 in community bonds must submit a formal offering with the Financial Services Commission of Ontario. This can be a lengthy process that requires the guidance of legal professionals, for which West End lacked the resources to solicit. Thus, after three years of unsuccessfully trying to secure capital, plans to purchase a building for the Food Hub were abandoned. Instead, West End opted to lease space from Parkdale’s Community Health Centre, which has proven to be an ideal location given that the visitors of the centre are a key segment of the community that the Food Hub aims to serve and educate.

In keeping with the co-op tradition, West End required that anyone who wanted to purchase a community bond for the Food Hub must first become a member of the co-op, at a cost of ten dollars. West End also maintained its lean, grass-roots management style, opting to operate without a marketing budget. The campaigns instead relied on significant volunteer time, as well as neighbourhood canvassing and word-of-mouth. The co-op’s lean model also entailed that there was no legal staff involved, though they engaged in a few pro-bono consultations withlawyers specializing in co-ops. West End’s bond agreement was modelled upon similar agreements used by other organizations, where language was kept as simple as possible to ensure inexperienced investors were fully aware of the risks. During the first campaign, five and ten year bonds were priced at $100 each. The interest rate was set at 4% per year beginning after the first two years, and paid at maturity. During the second campaign, the price increased to $500 in an attempt to reduce the administrative time spent selling and administering the bonds, while the interest rate fell to 2.5% to reflect market conditions.

In hindsight, John acknowledges that the increased bond price may have limited the ability for lower-income members of the community to participate, which ultimately increased the time taken to reach their target. Nonetheless, West End met its funding target and Parkdale residents have been adamantly supportive of the Food Hub. Creating an enterprise funded by and for the community has fostered a sense of pride amongst residents, especially in response to the neighbourhood’s ongoing gentrification. As such, the majority of bondholders indicated that financial return was not their primary motive for purchasing bonds, but more so to support the Food Hub’s mission and to claim ownership to a piece of their community. That being said, as bonds begin to mature, John and his team are hoping that the majority of bondholders will choose to donate them or re-invest in lieu of repayment. If not, the team is currently devising a financial strategy to ensure that all bondholders will be repaid.

While West End faced its fair share of hurdles throughout the financing process, taking the Food Hub from an idea to a thriving community hub has certainly made it worthwhile. As such, John and his team are considering the creation of a capital fund to support future co-operative start-ups in the community. At this stage, it’s too early to evaluate the Food Hub’s impact on the Parkdale community or West End’s ability to meet its debt obligations as they come due. Yet regardless of the outcome, the Food Hub will provide a much-needed case study of the community bond model, ultimately helping us navigate the evolving world of social finance." (

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