The Home That Community Bonds Built

The Centre for Social Innovation (CSI) is a co-working space founded in 2004. I joined in 2009 as an aspiring social entrepreneur out to transform the world of finance, and in doing so, found my home in Toronto.

‘The Home That Community Bonds Built’. That’s what I like to call the big red building at 720 Bathurst Street in Toronto. People are always asking me to define social enterprise or quantify the impact on a community bond. Instead, I simply invite them to come visit CSI Annex and join me for a beverage in The Coffee Pub. A quick tour of the building, and they get it. When I tell them it was financed through a community bond, their jaw hits the floor as they start to understand the potential for community finance to change the world.

CSI is looking to buy another building in Toronto, and is expected to issue another round of community bonds soon. Anyone interested in investing can contact Leah Pollock leah[at]


The business model is simple - purchase or lease space in the city’s coolest neighbourhoods and sublease it to for-profits, non-profits, and co-ops that are pushing the boundaries of social innovation. Over the past decade, CSI has cultivated an incredible community that supports individuals and organizations committed to social and environmental change. Size-wise, CSI currently hosts more than 750 organizations across three locations in Toronto and one in New York City. With a waiting list, they still have plenty of room to grow.

CSI issued their first community bond in 2010 to pay for the downpayment and retrofit of a beautiful 36,000 sq. ft. red-brick building in the trendy Annex neighbourhood at Bathurst & Bloor. It was a bold initiative from a maturing non-profit that was wisely using debt to expand. The original $2 million offering was over-subscribed, and I loudly suggested that the interest rate they were paying was too high - the market is hungry for this type of impact investment. They settled on an accessible 5-year bond with a minimum investment of $10K, and paid out a healthy 4% annual interest rate. They hit their debt ceiling, and the Annex location is now at full capacity.


The Opportunity

CSI’s original community bond offered a 4% annual financial return. It was the first community bond to hit the market in Toronto, and represented a good test for the market. SolarShare has gained lots of ground with their 5% community solar bond and ZooShare is pushing it higher offering 7% for their pre-construction bond for a biogas plant at the Toronto Zoo. Any new bond from CSI should offer a higher return than the original. That said, the overall demand for impact investments has been growing rapidly as people are becoming more educated and thoughtful with their portfolios. This demand will help keep rates low for CSI as they look to expand.

For investors looking to build a sustainable economy, the social return is fantastic. CSI is dedicated to helping budding social enterprises by providing an entire ecosystem of services. I’ve experienced the impact first-hand, and can vouch that it genuinely helps world-changing people and organizations find their stride. Starting with affordable work space, CSI adds an eclectic entrepreneurial community, meeting & event space, and even financing partnerships for new start-ups. 

I’ll add a final benefit that applies to all impact bonds. They protect against something called ‘systemic risk’. I like to call it ‘globalization risk’, and it’s the risk we experienced worldwide in the wake of the 2008 financial crisis. Since international markets are now so interconnected, what happens in one part of the world can trigger a reaction all around the globe. It was a huge issue after the crash, but short memories prevail and you hardly hear about it now. Well, there’s only one way to protect yourself from globalization risks - invest locally. Since impact investments aren’t traded on the mainstream exchanges, they won’t be affected if the whole bond market fails. It’s diversification on a very important level!


The Risks 

The biggest concern for any bond is default risk (the risk that the organization goes bankrupt and is unable to pay off debt). Default risk is especially difficult to measure for community bonds, since they aren’t rated by a bond rating agency like Moody’s or S&P. I don’t personally trust these agencies after they got things so massively wrong before the 2008 crash, but they at least provide some assurance that free cash flow is sufficient to pay the debt. CSI’s growth since 2010 is a testament to the success of their business model, and it’s always reassuring to have a substantial real-estate asset backing the bond.

The biggest risks for community bonds are liquidity risk and duration risk. Since it isn’t traded on a public exchange, investors can’t sell if they need their money quickly. This lack of liquidity could be a problem for investors with a short time-horizon. If you’re hoping to buy real-estate in the next few years, these bonds aren’t for you. Duration risk is the risk that interest rates will go up in the near term. 4% seems like a great financial return with such low rates at the moment, but if the Bank of Canada raises the overnight rate then 4% won’t be as attractive. Prospective investors should go into it with the assumption that that they are locked-in for the full 5-years.



As early pioneers of the community bond in Canada, it’s exciting to watch CSI blossom to the point where they are ready to issue another bond. It’s a testament to the power of social finance in helping non-profits grow and prosper. This investment isn’t suitable for all everyone, but is a great example of a social finance offering that beautifully blends an attractive financial return with a demonstrated social impact.


Do you like this post?
Don't let your money do things you wouldn't