Community bonds
An innovative solution adapted to non-profits and co-ops under conditions.
Understanding bonds
Community bonds in Quebec are debt securities that non-profit organizations (NPOs) issue to their support community.
How does it work?
- An NPO has a project to fund. The organization wants to ask its users, customers, members or partners for support by lending an amount of money for a given period.
- The organization evaluates and validates its legal, financial and human capacity to issue bonds. With support from an organization in the ecosystem, it carries out the self-diagnostic test.
- It specifies, determines and adopts the conditions of issuance: the objective, the nominal value of each certificate, the term, the interest rate, the maximum number of bonds per subscriber, the terms of renewal, transfer or redemption before maturity, and the risks associated with these securities.
- Community members learn about all of these conditions through the Investor’s Kit. They adhere to the project and subscribe to one or more obligations. These solidarity investors can be natural or legal persons: Community bonds are accessible to all types of investors.
- The organisation undertakes to keep its creditors informed throughout the term. When the securities mature, the organization repays the capital to the bondholders. He pays them the interest either annually or at maturity.
Two birds with one stone
The community bonds will have contributed to the non-profit’s influence while allowing it to carry out its project. For their part, community members will have put a portion of their savings to good use for a cause that is close to their hearts.
The ampli’s Fund: one more boost
Intended for social economy enterprises that plan to launch a community bond issuance campaign, the Fonds l’ampli is a financial incentive that enhances L’ampli’s community capital crowdfunding program.
For every dollar invested by your community, the Ampli Fund will invest an additional dollar up to a maximum of $100,000! Get to know more
Local social economy enterprises tell their stories
L’Artishow, a performing arts school in Gatineau, reached out to its community in 2018 and issued bonds to produce a new theatrical production. See how!
But…!
Community bonds
also have their limits
- They are not a substitute for other sources of financing but are part of a broader financing strategy that allows for risk sharing.
- They are a debt to be repaid and therefore require a solid business model.
- Issuing bonds takes time, as does the duty of information and transparency.
- For the investor, as they are often not guaranteed, they can in some cases constitute relatively risky savings.
- Because they are contracted without intermediaries and issuers cannot provide investment advice, they require a certain autonomy on the part of investors who must be vigilant and understand the risks associated with these securities.