Community bonds offer great opportunity to build community wealth

Community bonds are growing in popularity, and the research efforts of a team of community partners and academics including Heather Hachigian, associate professor in business at Royal Roads University aims to help keep that momentum going.
But first things first. What is a community bond?
"Community bonds are a way to boost local investment and engagement,” Hachigian says. “They are essentially debt instruments that allow community organizations—like nonprofits, charities, and cooperatives—to raise money directly from their supporters to finance projects that generate revenue. They offer an alternative to, and augment financing from, traditional financial institutions.”
One common use of community bonds is to buy or renovate buildings for affordable housing. The money made from renting out these homes is then used to pay back the investors, along with interest.
Hachigian is currently engaged in Social Sciences and Humanities Research Council Insight Development Grant funded research as co-investigator along with Audrey Jamal, assistant dean, strategic partnerships and societal impact at the Gordon S. Lang School of Business and Economics at the University of Guelph. Their project aims to look at the current state of the community bond market across Canada, focusing on how to build an ecosystem alongside a robust market.
Jamal and Hachigian are collaborating with Tessa Hebb, a distinguished research fellow at Carleton University's Centre for Community Innovation, who brings expertise in social finance, community innovation and community-engaged research. The team also benefits from the expertise of Julia Grady, executive director of 10C Shared Space who brings deep experience with, and knowledge of, community bonds and the community finance ecosystem. Two graduate students round out the project team, helping with survey design, analysis, interviewing subjects and project management.
"Our goal is to understand the barriers and challenges that prevent wider use of community bonds and to identify opportunities to scale their use nationwide and successful long-term implementation," Hachigian says.
To do this, the team first plans to conduct a comprehensive survey this spring involving various stakeholders.
"We'll be engaging nonprofits, charities, and co-ops that are either issuing or thinking about issuing community bonds. On the investor side, we'll look at both individual and institutional investors, including community foundations. We're interested in learning why more community foundations aren't investing in community bonds, even though it aligns with their missions,” says Hachigian.
Barriers to community bond use range from lack of awareness among organizations and investors as well as challenges as to how community bonds work alongside other types of funding and financial systems. Hachigian and Jamal hope that this research will result in unlocking more options for communities to finance their impactful work, including with community bonds.
"By providing more tools, resources, and knowledge, we aim to help organizations overcome barriers and challenges,” Hachigian says. At the same time, she emphasizes that “it is important that we are also thinking about mitigating risks, particularly for individual investors.”
The possibilities are quite impactful.
"There's a lot of interest right now in using community bonds to finance affordable housing and community-owned housing. For instance, in Kamloops, British Columbia, the Propolis Community Bond was launched last year,” Hachigian says. “They raised over $1,000,000 to help finance an affordable housing unit. This unit will lease out space on the ground floor to a daycare and other socially aligned businesses, using the revenue from rents to repay the investors."
In a time when the resilience of local economies is on the minds of residents, community bonds have the potential to offer people a sense of agency.
"Many people are feeling a loss of control over what's happening in their communities and local economies. Community bonds give people the potential to invest in projects that directly benefit them and their families, fostering a sense of connection. This aligns with the current political discourse around buying Canadian and investing locally."