After Montreal’s Cinéma du Parc launched its first community bond campaign a few days ago, here’s a closer a look at this form of social financing that is sure to catch on in Canada.

The Cinéma du Parc recently launched a campaign to issue community bonds, and used the opportunity to hold an information session about this type of funding. Because, even though community bonds have been in use for several years in Ontario by groups like the Center for Social Innovation (CSI), Solar Share or the West End Food cooperative, this type of funding is still relatively uncommon in Canada. “Community bonds are still not very well-known; people don’t really know what they’re about,” said Vanessa Sorin, project manager with Territoires Innovants en Économie Sociale et Solidaire (TIESS), an organization that has been studying these new financing tools since 2014.

Issuing community bonds allows nonprofit organizations (NPOs) to tap into new sources of private capital from their community, helping them pursue their development and strengthen their local presence. The bond is a debt instrument with features similar to any other bond, including a face value, maturity date and a return based on a certain interest rate. They are accessible to everyone, but can only be issued by NPOs. They are offered directly to the community, with no intermediary, allowing individuals to invest their savings directly in causes they’re passionate about. “It’s essentially an interest-bearing loan with a modest return that allows community supporters to invest in projects they believe in. And one of the keys to success is being able to count on a community with very strong ties,” added Sorin.

As part of a pilot project that began in April 2016, TIESS is supporting and documenting the community bond offering of four organizations: the Grand Costumier (top photo), the Empress Theatre, the Ateliers 7 à nous and the Cinéma du Parc.  Through this experience, various tools will be developed, including a how-to guide for issuing bonds, a toolkit, case studies and training activities.

“NPOs and social economy enterprises are faced with the challenge of diversifying their sources of funding; we want to help them find a balance. Community bonds should be seen as one piece of the financial puzzle, along with, for example, a bank loan or a crowdfunding campaign.”