Reflections on investing in Community Bonds and opportunities to improve the market

Quick disclaimer: I work for a mission-driven commercial lender that is privileged to work with many issuers of community bonds, some of which I’ve invested with personally. I manage these conflicts carefully and am not involved in lending relationships around these. This is also not financial advice, and if thinking about community finance opportunities you should receive advice relevant to your own situation.

My first real experience with community finance was in 2010 with the growth of the Community Economic Development Investment Funds (CEDIFs) program in Nova Scotia. Through the Farmers Market Investment Cooperative, I was able to invest directly in the redevelopment of the Halifax Seaport Farmers Market. It was an instructive example of a community coming together to build the economic infrastructure it wanted. It was also, sadly, a bust. While the market itself still continues as a beautiful space, some failures in governance and differing incentives between the tenants of the space (to naturally keep costs down) and the private investors (to see their investment returned with some profit) let ultimately to a wind-up and handover of the space to the port authority as a permanent owner. It appears the market is now being relocated to another part of the port, and the space the coop helped finance the improvement of turned into a “living lab” for the transportation sector by the port authority. Well, do hope they enjoy the green roof!

Since relocating to Toronto almost seven years ago, it’s been exciting to play witness to and support a growing community finance sector in Ontario. Through the leadership of organizations like the Centre for Social Innovation, community bonds have become much better understood by the coop and nonprofit sectors. The Feed-In-Tariff (FIT) programs in Ontario, while no longer offering new support, spurred the creation of a community-based renewable power coop sector that creates fertile ground for more work in driving the low-carbon transition. Now organizations like Tapestry Community Capital are helping professionalize the delivery of these tools and campaigns, so I certainly expect more to come.

I’ve invested in a total of 15 community bond or community share offerings, including the farmers market. For the purposes of this I’m excluding both broader based green bonds (for example CoPower and RE Royalties) as well as preferred share issuances by Credit Unions. While both can also be impactful investments, they aren’t focused to a given community project or projects, so I don’t think of them as the same. Here’s what that sub-portfolio looks like for me:

Overall, this constitutes about 11% of my investment portfolio, from which I exclude our home. I’m generally comfortable with this level, and would consider going up to 15-20% in the right circumstances despite the lack of liquidity because my partner and I are young and we’ve got good coverage of our fixed costs from our income. We’re pretty concentrated in an early investment in Zooshare, and while there’s been a couple of moments that have made me nervous with that, I’m excited about a virtual ribbon cutting on the project this Spring. When that investment matures later this year, I’m intending to try to reinvest towards other impact investments to hopefully diversify more. I’m satisfied with the yield we’re getting from these investments, and while there are concerns about inflation looming in general, there’s still a strong premium over lower risk fixed income options.

What do I like (sometimes love?) about Community Bonds and Investments?

  • They are a meaningful way for signature projects in the community to access additional capital, often at a greater risk tolerance than institutional investors or lenders would provide.
  • They help us realize the economy isn’t something that happens from the outside to us, but something we actually all actively create through our decisions on where to buy, invest, and work.
  • They aren’t strongly correlated with the broader investment market, and so can be value-adding as a stable fixed income tool.
  • They can allow for targeted investment in the themes we’re most passionate about.

What don’t I like as much?

  • There’s low liquidity or market for these investments. While there’s sometimes a bit of a waitlist an issuer can try to sell your investment into, that’s too much work for most.
  • There’s a lot of refinancing risk, as full redemption at maturity is often dependent on someone else coming in to refinance a projects or additional reissuance of more community bonds that others subscribe to
  • There’s a bit of a “first mover” risk in these investments, as a well subscribed campaign gives greater likelihood that these projects can be achieved than a more minimally subscribed campaign. Generally this risk is partially managed by having a trustee not release investor funds until after a minimum amount is reached, but there’s value in having greater confidence of a project’s success. I’ve observed that this leads to a bit of a momentum effect in these campaigns.
  • The flip side of targeted investment is that unless you’re willing to roll up your sleeves on a portfolio of community investments, you’re likely to not be particularly diversified.

One idea to improve the Community Bond Market: a “market making” fund

I wonder if there could be a benefit in a Canadian (or provincial if required) community bond fund that would invest exclusively in community bond and share offerings. This could do a few things that could strengthen this market for investors and offerings alike:

  • For investors: A turn-key mechanism to invest in a more diversified pool of community finance offerings.
  • For issuers – campaign momentum and confidence: The fund could commit to anchoring new community bond campaigns with an investment, that would be replaced by direct investors if the campaign is successful. For example the fund could commit to investing up to 20% of an offering (up to some maximum of the Fund’s own portfolio such as 5-10%), which is replaced as other community investors buy-in. This would give campaigns early momentum, fill in some gaps in capital access as a backstop, and give other investors a vote of confidence if the offering had undergone an anchor investors due diligence.
  • For issuers – a liquidity mechanism: For any approved offering above, the fund could commit to being willing to buy-out individual investors interests in the same offering, subject to the Fund’s own liquidity requirements and concentration limits. This could de-risk the ability for an individual to invest by providing a safety mechanism for unexpected emergencies.
  • For issuers – reducing refinancing risk: As a dedicated fund for the sector, such a fund could also ensure that unique market moments don’t heighten refinancing risk by providing the same backstop as for initial offerings.

As food for thought, there are some issues with the idea I recognize right away:

  • Investor interest: I wonder if I’m unusual in how I think about impact. I’m fairly embedded in this work, and care about these approaches as more economically democratic, so I feel comfortable with the idea of investing in a fund, that is investing in these offerings, vs. needing to see/feel the individual projects being supported. I wonder if there are enough investors who would similarly value the diversification and more turn-key solution to investing in these approaches?
  • Capital cost: For such a fund to work, it would have to operate on a very streamlined basis (and likely as a nonprofit) to keep costs down and operate viably. Ultimately the fund would need to invest in community bond offerings at a higher rate than what it could offer investors, and so the benefits to investors in diversification and simplicity would need to be greater than the financial delta they could achieve investing in offerings directly.
  • Capital deployment: While the community bond market continues to grow, the build up of a portfolio based on infrequent offerings (they’re pretty cyclical with the RRSP season generally!) would create a meaningful cash drag unless there were opportunities to act on right away. This could really damage the economic viability of the fund.

I’m curious what others experiences have been with community bonds and share offerings. Would this kind of fund have ever made a difference for you or the investors you’ve collaborated with? Are there other, better ways to improve this area so community investment can thrive?

About our guest author: Lars Boggild is a creative thinker working at the intersection of finance and social change. He currently supports new business relationships across lending and investments for Vancity Community Investment Bank, Canada’s first bank dedicated to social and environmental impact. Prior to VCIB, he worked at Rally Assets leading impact investing advisory projects that built practical strategies for asset owners to deploy more of their investments towards social and environmental good. Lars also sits on the Canadian Community Economic Development Network’s National Policy Council, the Investment Committee of the Evangelical Lutheran Foundation of Eastern Canada and is the Board Chair of Not Far from the Tree, Toronto’s urban fruit picking project.

The Community Bond in Action

In 2018, when SKETCH Executive Director Rudy Ruttimann saw that commercial rent was projected to rise 4.5% annually in Toronto, she knew it was time to act. If the rent increases continued SKETCH could no longer afford to stay in Toronto by 2023. That wasn’t an option: relocating would mean disrupting programs, uprooting from SKETCH’s central, accessible Artscape Youngplace creative hub location, and shifting far into the GTA. Pausing programs for the move would damage the solid, trusting relationships they’d formed with young people in the community over the past six years.

If you don’t know SKETCH, you should: it’s a community-arts nonprofit engaging diverse young people, ages 16-29, from across Canada, who live on the margins and navigate poverty. The organization operates out of a 7,500 sq. ft. multi-discipline art studio and a 1,500 sq. ft. administrative space at the Artscape Youngplace on Shaw Street. Their free programs are hosted in studios dedicated to visual arts, music and recording, culinary arts, ceramics, textiles, movement and theatre, digital arts, and industrial arts. There are few spaces available with the resources and support SKETCH provides in the downtown area: over 19,000 young people have come to SKETCH since it opened!

This November will be SKETCH’s 25th anniversary. With this milestone on the horizon and rent increases looming, Rudy began to look for other options. And when she came across the Community Bond, she knew it would be a perfect fit.

ABOUT THE COMMUNITY BOND

What is a Community Bond? You’re asking the right org! CSI invented the Community Bond in 2010 as a means to turn a nonprofit’s social capital into financial capital. We used the first Community Bond to raise $2M to purchase our first building, CSI Annex, in 2010. We used the bond a second time in 2014 to raise $4.3M from 227 community investors to buy CSI Spadina. In 2020, we used the Community Bond to invite our community of members and supporters to invest in programs that put people and planet first. Other organizations have used the Community Bond model for their own fundraising: our friends at Innovation Works in London, Ontario reached their $1,000,000 goal in October and have recently launched their 2021 campaign.

The Community Bond is an innovation in social finance that allows a nonprofit or charity to leverage its community of supporters to pursue its mission, build its resiliency, and create more vibrant communities. As, Rudy put it: “How can individuals support or invest in a community initiative and be a part of the impact for social change?” The answer is the Community Bond!

Quote from Marie Moliner: "I hope others are as happy to invest as I am. Your Series A Bond made it seamless to be an investor and a donor."

PROJECT HOME

SKETCH began their exploration of the Community Bond in earnest in fall 2018. It began with engaging the expertise of CSI Member Tapestry Community Capital to conduct a Feasibility Study to determine if SKETCH had the tools and resources for a campaign.

They liked what they saw, and in 2020 they launched their capital campaign, PROJECT HOME, with a goal of raising $4.1M to purchase their spaces from Artscape Youngplace on Shaw Street.

SKETCH, in many ways, is still a grassroots operation and we don’t have the kind of donor base where someone will sign a huge cheque and purchase the studios for us. Instead of borrowing the full amount from a bank, we asked the question: ‘what is the least expensive form of capital generation?’ The answer was to issue community bonds to the public.

“Bonds also allow us to reach a new audience beyond our present donor base. We have found that people are connecting with us for the first time through this campaign. Making a solid financial return on an investment may be more top-of-mind to them than making an impact.”

SKETCH’s four bonds have investment levels starting at $500, $5,000, $10,000 and $25,000 successively. This allows people with a wide array of available savings and investment knowhow to participate. They also had the opportunity to create a Canadian first. Their “Bond A: The Giving Bond” allows investors to donate their interest back to SKETCH in exchange for a tax receipt. 

Historically, Rudy says, during their annual fundraising campaigns, the organization would attract donations from their donor base and a small number of new donors who came across their social media posts. 

“With the community bond campaign, we’ve been able to reach an eclectic array of people we’d otherwise possibly never connect with. We’ve attracted investors from Montreal to Yellowknife to Halifax, and we have years now to get to know them better. We also have several familiar faces investing in SKETCH: staff, board members, our families, and even a former SKETCH youth artist have invested in Project Home bonds.”

So, how’s it going? Organizations and the public have invested over $854,500 in SKETCH’s bonds so far. That’s 61% of their $1.4 million investment goal. As well, they’ve reached 60% of their capital campaign fundraising goal over the holidays. Congrats!

LEARN AND INVEST

If you want to learn more about SKETCH’s campaign, visit their campaign page where you can  review bond terms and download investment packages. 

SKETCH is also hosting a free online Info Session on Friday, February 5th for folks who’d like to do a bit of a deep dive into their bonds, the investment process, and the impact they’ll have on the lives of marginalized youth.

We’re so excited about SKETCH’s campaign, and can’t wait to celebrate their success. If you’re thinking of using Community Bonds for your organization, and you’re a nonprofit, charity or co-op, a good place to start is with CSI’s guidebook. If you want more of a concierge approach, you should connect with our friends and long term partners at Tapestry Community Capital.

Toronto will more than double its supply of winter park washrooms

Pipes on a white brick wall

The City of Toronto and CSI are working together to facilitate a set of meetings between homelessness experts and social entrepreneurs. Our Homelessness and Hygiene lab was created with the goal of of building a socially responsible, community based solution to the issue of hygiene in homeless encampments. The months since the COVID-19 have seen an increase in the number of homeless encampments across the city, encampments that do not have access to washroom facilities, laundry, or clean water.

In the warmer months, the City of Toronto maintains 187 park washrooms. But because most of them were not designed or constructed for winter use, they can lack insulated plumbing and sufficient electrical for heating of the building to prevent pipes from freezing and bursting. So all but 64 of them are usually closed by Thanksgiving weekend.

This year, however, City staff have determined that an additional 28 park washrooms can be kept open with minor retrofits to support winter use. The expanded locations include washrooms at golf courses, fieldhouses and stadiums that are not normally kept open through winter months. Additionally, portable toilets will be deployed to 51 high-use locations where winter activities will occur. Snow clearing will be provided at all winter washroom locations in parks. Washrooms will be also be available at 47 outdoor rinks once the season begins in late-November, weather dependent.

The increase of 79 new locations brings the total number of washrooms available from 64 to 143. Winter accessible public washrooms are also available in community recreation centres, libraries and City-owned buildings throughout Toronto. The City is working to post a comprehensive list and map of locations on the City’s website.

The City had also opened a number of facilities with showers and washrooms for all individuals in need of these services, including those experiencing homelessness and other vulnerable individuals. Portable toilets with hand-washing stations are also available in key locations. Detailed information about these facilities, including hours of operation and amenities, can be found on the City’s website.

Do you have an idea to make our city work better for everyone? Find out out CSI can help!

Join the League of Social Entrepreneurs

League of Social Entrepreneurs Blog header image

Help wanted!

Entrepreneurs! We need you! Toronto needs you! The world needs you! Are you ready for an entirely new kind of challenge? Itching to bring your talents to a new set of problems? Are you looking for a way to give back to the city that has given you so much? Ready to #buildbackbetter?

The Centre For Social Innovation is embarking on a new experiment, the League of Social Entrepreneurs.

We are recruiting experienced and emerging entrepreneurs interested in using their skills and creativity to find solutions to some of our city’s most pressing social issues. And we need you – in the middle of a pandemic that is devastating those most vulnerable in our city – to help us build solutions, right now!

Essentially CSI is looking to remix a ‘change lab’ with a ‘social accelerator’ to create intentional economic solutions that put people and planet first.

We have 4 areas that we are looking for entrepreneurs in: 

  • Homelessness & access to hygiene in Toronto 
  • Affordable housing solutions
  • Impact measurement and social technology
  • Affordable delivery systems to support retail businesses pivoting online

Here is the idea…. 

You, the entrepreneur, join experts from government, NGO’s and people with lived experience to co-learn about the issue, the challenges, barriers, what other jurisdictions have done and the opportunities that exist to solve this problem. We will facilitate a change lab with the goal of identifying solutions that we will turn into prototypes that you are leading, to solve this challenge.

This isn’t easy work. It isn’t for the faint of heart. This might just be the challenge of a lifetime as you bring your problem solving skills, creativity, tenacity, and drive to evolve new solutions that will help Toronto Build Back Better.

So, if you are keen to be kept in the loop on these kinds of opportunities, please answer a few questions in our survey so that we can invite you to the right conversations. 

At the very least, I promise that you will meet some other amazing entrepreneurs who give a damn about our future. 

CSI Raises $1.9M in Record 41 Days to Build the Next Economy 

Wow! 

We launched the 2020 Community Bond on May 15th, and truly expected to be at it all summer: a summer full of Q+As, emails, webinars, and the personal, one-on-one conversations that make Community Bonds a community experience. After all, it took four months to raise to the original $1.4M we needed for Annex! It took over 200 days to raise the money we needed in 2014 to buy CSI Spadina. 

But here we are. With profound gratitude (and more than a little surprise) it is our great honour to share that, in just 41 days, we’ve raised more than $1.9M using Community Bonds to help build the Next Economy. These investors are our members, staff, neighbours, and community foundations; people like you and I who know this old economy is broken, and who know we deserve better.

The record success of this campaign, during this unprecedented time of hardship and activism, speaks to the moment: great challenges demand that we rise to meet them. As a society, we’re emerging from a time of quiet reflection, during which many of us have, for the first time in our adult lives, been given a moment to catch our breath and think about our work and our values. The potential we have today to reshape ourselves hasn’t existed since the post-war era.

What is a Community Bond?

For those unfamiliar, the Community Bond is an innovation in social finance that allows a nonprofit or charity to leverage its community of supporters to raise money, pursue its mission, build its resiliency, and create more vibrant communities.

CSI invented the Community Bond in 2010 as a means to turn a non-profit’s social capital into financial capital. 10 years later, the Community Bond is a household name in impact investing, having been replicated around Toronto, and the world.

We used the first Community Bond to raise $2M to purchase our first commercial office building at 720 Bathurst, CSI Annex, in 2010. We used the Bond a second time in 2014 to raise $4.3M from 227 community investors to buy another location: CSI Spadina.

Unquestionably, our tremendous growth over the past 10 years is linked to the success of the Community Bond.

10 Years Later the Community Bond is Still Evolving 

The 2020 Community Bond is focused on impact, which is itself an incremental innovation: Traditionally, Community Bonds have been used to finance infrastructure. They have been used for the past decade, by CSI and other organizations, to finance student loans, solar energy projects, food co-ops, biogas plants, and other large capital projects. But never before to finance investments in scaling programs. 

While we were structuring the campaign, this raised a few questions (and eyebrows). But the important thing to remember is that CSI invented the Community Bond, so in the Bonds case, ‘traditional’ really just means what we did for the first time, last time.

Programming for Impact 

Aligned through six Sustainable Development Goals: Quality Education, Gender Equality, Decent Work, Reduced Inequality, Sustainable Communities and Climate Action, the 2020 Community Bond builds on, and scales, CSI’s existing work in these areas, with the overarching goal to contribute significantly to building the Next Economy: one that puts people and planet first. 

Our community of impact investors are some of the most committed people in Canada. They saw the opportunity, CSI’s track record of doing the work and proving that big ideas are possible, and they wanted to be part of the solution. So they bought-in.

A Tool to Help Build the Next Economy

If you’re following our work you know that CSI is focused on building the Next Economy. We first wrote about it in the 2018/19 issue of our magazine, The Collider. Back then we were asking ourselves, what is the Next Economy? We knew that it had different names in many different sectors, and that its overarching goal is to unite these sectors in response to the world’s biggest challenges.

Over time we’ve come to this definition: the Next Economy is regenerative, inclusive, equitable, and prosperous for all.

But what does that really mean? How can we begin to make the policy, culture, and market changes necessary to achieve it? And how has the COVID-19 pandemic affected this movement?
These questions are top of mind at CSI.

The Community Bond is a concrete solution in the push to build the Next Economy. We have seen the power of the Bond to leverage community support and build financial capital with social purpose. It’s proof we can find market-based solutions while being socially and environmentally conscious. Using the funds raised this year for our impact programming we’ll take the movement further and build back better by catalyzing more ideas, tools, solutions that put people and planet first.

____________________

Kyle Shantz is CSI’s Director of Growth, and has managed CSI’s Community Bond portfolio through three renewal periods and two capital raises. 

 

A community investment in accessibility

Rowing team carrying a boat.

In 2010, 58 people collectively invested $2M in the Centre for Social Innovation, enabling us to purchase a 720 Bathurst — aka CSI Annex. The concept of Community Bonds was born. Four years later, 227 people invested $4M to allow us to purchase 192 Spadina — aka CSI Spadina.

Since then, we’ve inspired others to turn to their communities when they are in search of crucial capital. This summer, the Toronto Outdoor Picture Show launched their own Community Bond initiative to invest in the purchase of own Audio-Visual Equipment.

The Argonaut Rowing Club is the most recent organization to seek out community investment. A devastating flood in 2017 left the club dire need of repair. ARC Next — an ambitious $2 million club revitalization project — aims to support the next generation of rowers by offering a fully accessible space with a renovated event venue, new elevator, extended docks, new change rooms, and an increased capacity for both membership and youth programs.

In just over five months, the campaign has successfully passed $1.1 million investment mark from 79 investors. Interested in investing? Learn more about the project and check out the different bond offerings. With only 10 days to go, there is just under $100,000 left in bonds available for purchase before the September 15th deadline.

Want to know more about what a Community Bond is, and the impact they can have on your organization and your portfolio? Check out The Future Of Good’s informative primer: What’s a Community Bond, Anyway?

About the Argonaut Rowing Club
Founded in 1872, the Argonaut Rowing Club is one of Canada’s oldest and largest clubs with a history of supporting Olympic and Paralympic champions. Members at ARC include rowers of all ages, skill levels and abilities.

About Tapestry Community Capital
Tapestry Community Capital supports non-profits and co-ops across Canada to raise and manage community bonds. To date, Tapestry has facilitated $61 million in community bonds investment from 3,900 community investors.

Announcing winners of the helping small and medium businesses go low carbon competition

Climate Smart and Pitstop Connect declared winners of the Centre for Social Innovation and the Massachusetts Institute of Technology’s Climate CoLab competition

(Toronto) Small to Medium Sized Enterprises (SMEs) make up 98.2% of businesses in Canada, and emit as much climate change-causing greenhouse gas (GHG) emissions per year as Canada’s combined transportation sector, including every car, truck, train, plane, and ship.

Earlier this summer, the Centre for Social Innovation launched a contest on the Massachusetts Institute of Technology’s Climate CoLab platform to solicit a broad range of possible solutions to help SMEs in Ontario reduce their direct and indirect GHG emissions while helping them thrive.

During the application period, thirty proposals were submitted. Those proposals were voted on by the public, as well as assessed by a team of six judges. Today, we’re excited to announce the Judges’ and Popular Choice winners.

The winner of the Judges’ Choice is Climate Smart’s project: Data drives smart decisions: Interactive BEEPs for Municipalities and Businesses. Climate Smart has built a reputation as one of Canada’s leading organizations helping SMEs reduce greenhouse gas emissions from a range of sources. Their report 200 million tons of opportunity documents the ways in which those reductions have been achieved. In their contest proposal, Climate Smart proposed Business Energy and Emissions Profiles (or a BEEP) as an innovative carbon mapping tool that unlocks SME business data to help cities and on-the-ground partners identify and prioritize opportunities to work strategically with their local businesses to reduce greenhouse gas emissions and develop data-driven storytelling on climate action. To learn more about BEEPs and to see an interactive map of North American cities that have launched a BEEP, go to beep.eco.

The winner of the Popular Choice Award is Pitstop Connect’s Reduce Vehicle Emissions with Predictive Maintenance. Pitstop has developed a software platform that aggregates data and uses machine learning to predict vehicle issues before they happen. This means mitigating vehicle breakdowns, informing hazardous recalls and future vehicle designs, and making drivers aware of their emissions and environmental impact. To learn more about the app and how it can help drivers solve problems before they happen, go to pitstopconnect.com

“We know that greenhouse gas emissions are causing global warming that will have devastating consequences for our economy, security, and the health of our citizens. Every tonne of CO2 we emit causes at least $85 in damages, while on the other hand we know that meaningful climate action would add around $26 trillion to the global economy by 2030,” said CSI’s Director of Programs Barnabe Geis. “The proposals in this competition demonstrated a broad range of approaches and tools that SMEs and their supporters can use to thrive and build the more resilient, flourishing low-carbon economy of the future.”

The judges’ runners-up in the contest were Eco Business Network, Grow Green and ioAirflow. The judges are listed on the contest page.

The winners will receive membership and workspace at the Centre for Social Innovation’s Climate Ventures, an incubator for climate entrepreneurs, innovators, and leaders.

For more information contact:

Barnabe Geis
Director of Programs, Centre for Social Innovation
barnabe@socialinnovation.ca

(header photo by rawpixel on Unsplash)

CSI CEO Tonya Surman addresses Senate Special Committee

On September 18, the Senate Special Committee on the Charitable Sector met to examine the impact of federal and provincial laws and policies governing charities, nonprofit organizations, foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada. Our Co-Founder and CEO Tonya Surman was invited to speak to the committee. You can watch that speech here, or read a draft of her words below these two videos.

Other speakers included The McConnell Foundation’s President and Chief Executive Officer Stephen Huddart, and Susan Manwaring, Partner and Leader of Social Impact at Miller Thomson LLP. Following their speeches, there was a half-hour Q&A with the committee:


Tonya’s speech to the committee

Thank you for inviting me to speak with you today. I am here as a serial social entrepreneur, a community organizer and a Canadian.

The promise of social innovation is that we can solve the most pressing issues facing our society, while generating revenue. The revenue supports our sustainability, saves government money, and creates meaningful work.

Like you, we want Canadians to have and build community assets that will serve for generations. But the playing field in Canada favours the private sector, with few supports – and many barriers – for the charitable and nonprofit sector.

While other countries are accelerating their social economies, Canada’s social entrepreneurs are wading through quicksand. This needs to change.

—————-

Fourteen years ago, the Centre for Social Innovation became the first coworking space in Canada, and maybe the world. We now serve over 1,000 social mission organizations and 3,000 individuals every day.

Our members create solutions to some of hardest social, environmental and economic challenges Canadians face. They generate over $250M a year, employ thousands of people, and serve millions more.

We are a Canadian success story. And yet at every stage in our growth we’ve faced barriers where private companies would have found opportunities.

When we needed capital for our first expansion we were excluded from government enterprise growth programs because we are a non-profit.

To buy our first building, we talked to venture capitalists. They saw our fast growth and offered to buy us, but they wouldn’t give us a loan because we’re a non-profit.

Infrastructure Ontario considered us ineligible because we didn’t receive ‘enough’ government funding.

We could get a mortgage, but there was no source of capital for our equity portion.

Ineligible on both the for profit and nonprofit sides, we invented the Community Bond. We bought the building through community-based investing.

We’ve developed digital tools to scale our work, and once again no one will give us the capital we need to invest. SRED and IRAP consider nonprofits to be ineligible for their innovation grants. We have a proven track-record of innovation and job creation – why not support us? Nonprofits aren’t eligible.

So we created a for profit to house our digital innovation work. In fact, we’ve had to create and now manage three organizations: a non-profit, a for-profit and a charity – to get the most basic work done.

These barriers have slowed us down and wasted energy. Despite all of this, we’ve grown a $572 surplus in our first quarter to $10M revenue last year with $30M in real estate, 6 locations, 70 staff and 180 volunteers. What could we have done with fewer barriers and more support?

—————–

Our members face the same challenges, and a fresh generation of Canadian do-gooders feel forced into for-profits. But for-profits can’t solve the problems that matter most – a private profit motive won’t solve poverty. Assets that should be in the public and common good are left vulnerable to being bought and stripped.

This moment

Building on the recommendations of the Social Innovation and Social Finance Co-Creation group, we need the Government of Canada to:

First, create a level playing field for social mission organizations. We should have equal access to the government supports that for-profits use. Our regulatory regime should unlock and enable – not create fear and trepidation.

Second, the CRA needs to adopt the ‘destination of funds’ test – don’t try to determine how we can and cannot make money. Focus on whether the money is going to serve our mission. Australia’s done it, so can Canada.

Third, support social enterprise in the way that you would support any sector that you want to see grow. Countless millions go into sophisticated for-profit innovation strategies, imagine what could be done for our country and our communities with a bit of help for public benefit.

Finally, please stop treating us as if we breaking the laws. The 2 million people who work in this sector across the country are smart, handle multiple bottom lines, and have sacrificed so much to serve our communities and country. Treat us with the respect we’ve earned.

Thank you again for inviting me, I’m looking forward to your questions.

Community Bonds buy Social Innovation a new home

On Halloween 2014, CSI marked a new milestone: we bought a 64,000 sq. ft. building at 192 Spadina Avenue! It’s the second building we own and our fourth Toronto location. It’s conveniently located across the street from CSI Spadina near Queen and Spadina, and, well, it’s a beauty. Exposed brick, wood floors and beams, oodles of natural light, this building was just screaming for CSI.

Buying a building meant several things for CSI: more space, protection for ourselves and for our members from the rising cost of rent, bigger offices to accommodate larger organizations, and, when the mortgage is eventually paid off, a surplus to reinvest in social innovation. It also meant we’d need to come up with some serious cash on top of our mortgage with Alterna Savings and Citizens Bank. So, we turned to our community with the Community Bond to raise $4.3M to buy the building.

“The investment in a Community Bond solidifies my personal connection to CSI…CSI has become essential to my professional growth, but also in connecting with people to work on a level I hadn’t imagined was out there. It’s created possibilities.” Paul Dore, CSI Member

The Community Bond is an interest-bearing loan that allows a nonprofit to leverage its community of supporters to pursue its mission, build its resiliency, and create more vibrant communities. We launched the campaign in mid October of 2014 to help us transform our new location into a home for social innovation, offering a real estate investment with social impact.

News of our Community Bond spread, and we were featured in InsideToronto, Metro and the Toronto Star. Tonya Surman, Co-founder and CEO of CSI, has started a tradition of doing cartwheels in every new building we buy (that’s two cartwheels so far!). In the end, we raised $4.3M from 227 investors who believe in our mission to support and facilitate social innovation.

Since taking possession of 192 Spadina Ave, we have attracted new tenants, refined our long-term strategy for the financing and development of the building, and made necessary repairs and upgrades. Gradually, we will convert parts of the building to the CSI model, with shared facilities, meeting rooms, event spaces, offices and coworking for changemakers.

Community Bonds allow citizens to invest in the projects they believe will make a difference, all while earning a financial return. Thank you to our incredible investors who believe in what we do, and to all those who helped spread the word about our campaign!