At Cahdco, we’re always on the lookout for new ways to get affordable housing projects off the ground. That’s why we were excited to attend a presentation by Tapestry Community Capital on the potential that community bonds can provide to finance affordable housing.

Community bonds are social finance tools that allow charities, non-profits, and co-operatives to leverage the support of their communities to finance their socially and environmentally impactful projects. Like traditional bonds, they are an interest-bearing loan that must be repaid to investors, with a set rate of return and a fixed term. In the past, mission-driven organizations have used community bonds as a way to acquire property, scale their social enterprises, or spearhead renewable energy projects.

Essentially, community bonds allow non-profit organizations to tap into and transform their social capital (community support) into financial capital (equity). Tapestry is an organization that helps facilitate the creation of community bonds for non-profit organizations from their social capital and also connects non-profit organizations with impact investors.

Tapestry is optimistic about the potential of community bonds to become a uniquely flexible and efficient financing tool for affordable housing development. While the use of community bonds is still relatively new to most people and organizations, they have been successfully utilized by housing organizations such as Brique par Brique (Montreal, QC) or The Mount (Peterborough, ON).

Ryan Collins-Swartz and Suzanne Faiza of Tapestry walked us through some of the key strengths of community bonds in the context of affordable housing development. Here are our main takeaways:

  • Flexible: community bonds allow housing developers to set the terms of their loans, unlike many traditional financing options.
  • Engaging: community bonds engage local actors and instill a sense of community ownership in projects, allowing developers to avoid the community resistance (AKA NIMBYism) that hinders many affordable housing developments.
  • Efficient: community bonds, which can be raised within 4-6 months, enable organizations to quickly raise capital as they wait for more funds to be accessible via government programs or traditional fundraising.

How affordable housing developers can use community bonds (photo courtesy of Tapestry Community Capital).

The Canadian Housing and Mortgage Corporation (CMHC) agrees that community bonds have a crucial and transformative potential for affordable housing. Last year, Tapestry’s ‘Affordable Housing with the Power of Community’ project was one of 14 funding recipients (alongside Cahdco’s Toolbox+ program!) for Round 2 of the CMHC Housing Supply Challenge, a program dedicated to ideating creative solutions to Canada’s housing crisis. Currently, Tapestry is putting the community bond model to the test through twelve demonstration projects that will finance the acquisition or development of over 2000 affordable housing units.

We are excited to follow Tapestry’s work and explore the possibility of using community bonds in the future!

Want to learn more about financing opportunities for affordable housing projects, including community bonds? Check out Cahdco’s Toolbox+ program.

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