Corporate investors

Charitable Bonds work by providing a combination of grant funding and capital loans.

At the request of one or more charities, Citylife may create an offer of bonds on their behalf. When the offer period closes, around 80 per cent of the total raised is loaned at a commercial rate of interest to a registered provider of social housing. The housing provider is regulated by the Tenant Services Authority, and will use the loan as part of its business to develop and maintain affordable housing. The remaining 20 per cent or so after costs is immediately given as a tax exempt grant to the charity (or charities).

After five years, the housing provider repays the loan with interest – taking the fund to its original 100 per cent level – and bondholders are repaid in full. So on an investment of £100,000 for example, around £20,000 will immediately go to charity while the rest will help to create affordable places to live.

1. Exact figure depends on commercial interest rates at time of issuing the loan.
2. Costs of issuing and marketing the East London Bond are kept as low as possible thanks to pro-bono support from a number of partners. Citylife will recover costs plus a 1 per cent issuing fee up to a limit of 5 per cent of the subscription proceeds.
3. The activities outlined in any marketing materials for the East London Bond illustrate the current funding priorities of Bromley by Bow Centre and Community Links, but grants will be spent where most needed for the benefit of the local communities.

Invest in the future of East London

The yield from the East London Bond will change the lives of people living in some of the most deprived areas of England, right on the edge of the Olympics site. It will fund two local, pioneering charities that are making a significant impact on their communities.

Corporate social responsibility

Supporting the East London Bond is an effective, high-impact way of demonstrating CSR. It not only generates a high return on investment for social causes, it also creates a more dramatic message about your CSR commitment.

For example, if you invest £1 million in the East London Bond at zero interest you may consider there to be an annual opportunity cost to your company. Whether you invest £1 million in the Bond or give the value of this opportunity cost each year as a direct donation, charged to profit and loss, the cost to the company is the same. However, by investing in the Bond you can announce your seven-figure support for charity while retaining the money as an asset on your balance sheet.

For the charities, there is greater benefit in receiving a lump sum now than the same amount (or less) over five years. And from one single transaction you will gain those CSR dividends reported every year for five years.

Immediate benefits to charity

An investment in the East London Bond will release immediate funding for the Bromley by Bow Centre and Community Links. This up-front grant will be of greater value and more effective in enabling them to achieve their mission than an equivalent amount in smaller donations spread over five years.

Value

Citylife will loan around 80% of the proceeds of the Bond to Places for People Homes. The exact proportion to be loaned will be calculated according to the rate of interest agreed, such that the total amount to be repaid after five years equals the amount required to repay bondholders in full.

By pooling the capital from multiple investors, Citylife is able to on-lend the investment in the Bond at a commercial margin above standard rates. Furthermore, since Citylife is a charity the interest gained on the loan is tax free.

This means that the proportion Citylife needs to loan to Places for People Homes is lower, and therefore the proportion that is given to the Bromley by Bow Centre and Community Links is higher.

Bonds retained as assets

The bonds you purchase are retained as assets. This means that buying a bond may not have any material impact on your Profit and Loss accounts (your accounting of bonds purchased will depend on your specific circumstances and you may wish to seek further professional advice). In the event of changed circumstances the bonds could also be used as collateral against borrowing or transferred to a third party.

Initial investment returned in five years’ time

Investors will be given the opportunity to receive their principal investment at par five years from the date of issue of the East London Bond. At this point you may choose to donate all or part of your investment to the Bromley by Bow Centre and/or Community Links, or to roll all or part into a subsequent Bond if available.

Employee engagement

Both the Bromley by Bow Centre and Community Links have employee volunteering and event programmes that help to strengthen community partnerships, promote teamwork and enhance employee satisfaction. Opportunities range from helping to transform local housing estates and community centres to running skills workshops or mentoring young entrepreneurs.

Bonds are available to purchase at a range of denominations: £1,000,000, £100,000, £10,000, £1,000, and £100. This allows investors to buy a combination of bonds for the amount they wish to invest, and after five years to reinvest some or all of the bonds in a new Bond if available, or to donate some or all of the bonds to charity. The minimum investment is £500.

Before applying to invest you should make sure you have read and understood the offer document and relevant background documents for the East London Bond.

If you wish to invest on the basis of these documents, you need to complete an application form and return this to us together with payment for the relevant amount. The bonds are officially purchased on the issue date and you will be sent bond certificates in the relevant denominations.