Private investors

A bond is a financial mechanism for investing money in an organisation, like a bank or a company, for a fixed period of time. It’s a contract in which the investor effectively agrees to lend a certain amount of money, and the organisation promises to pay it back (‘redeem’ it) on certain terms at a later date (‘maturity’). Citylife offers bonds at fixed denominations with zero interest, so if you buy a £1,000 bond from Citylife, you are buying a promise that Citylife will pay you £1,000 in five years’ time.

In this document we use ‘bonds’ (with a lower case ‘b’) to refer to the bonds of different denominations that are bought by investors. Each offer of bonds is referred to in this document as a ‘Bond’ (with a capital ‘B’).

Citylife’s 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. Individuals and organisations may subscribe to invest in the bonds during a set offer period.

When the offer period closes, around 80 per cent (1) 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 £1,000 for example, around £200 will immediately go to charity while the rest will work to create affordable places to live. In effect, what you give is the interest you might have received over five years had you put the money in a bank or invested it elsewhere.

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.

Investing in a Charitable Bond is an additional way to support charity. By putting your savings to work for the benefit of others, you can give more than you can afford to donate, or still support charity even if you don’t feel in a position to give money away.

Alternatively you may prefer investing in a Bond to giving outright. However, you should remember that around 20 per cent of your investment goes to charity, and ensure that buying a bond does not reduce the total amount you give to charity.

A Charitable Bond is the ideal opportunity for people who are more interested in making a social profit from their savings than a personal gain.

By investing in the East London Bond, you are effectively releasing five years’ worth of compound interest on your savings as a grant to the Bromley by Bow Centre and Community Links on day one. This up-front grant will be more effective in enabling the charities to achieve their mission than an equivalent amount in smaller donations spread over five years.

Since Citylife is also a charity, it is able to make this immediate grant and lend the remainder without having to pay tax on the interest gained on the loan. What’s more, by pooling the money of multiple investors, Citylife is able to on-lend the investment in the Bond at a commercial margin above standard rates. This makes the Bond an effective and excellent value way to support charity.

Finally, the East London Bond is an entirely ethical investment. As well as releasing grant funding for the Bromley by Bow Centre and Community Links, the underlying loan to Places for People Homes will help to create affordable homes and provide services and support to those who live in them.

You can invest in the Bond as an individual or jointly with one other person.

Bonds can be purchased in 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.

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 just need to complete an application form and return this to us with a cheque for the relevant amount. The bonds are officially purchased on the issue date and you will be sent bond certificates in the relevant denominations.

The minimum amount you can invest in the East London Bond is £500, and you can invest any amount greater than this in multiples of £100.

No, because the interest that is accumulated on your investment is already exempt from tax.

To ensure that you get back what you put in, around 80 per cent of your investment will be loaned at a commercial rate to Places for People Homes (PfPH), a not-for-dividend registered provider of social housing, regulated by the Tenant Services Authority. PfPH is the main asset owning company of Places for People Group, whose vision is to create neighbourhoods of choice – which means much more than just building homes. It also provides job and training opportunities, access to affordable childcare, support for businesses, financial products such as mortgages and loans, and specialist care and support services that enable people to live independently in their own home.

For more details about Places for People, including annual reviews and financial statements, see www.placesforpeople.co.uk.

You will receive regular updates about how the funding released from your bond is being spent by the Bromley by Bow Centre and Community Links, and the difference it is making to local communities. You will also have opportunities to visit each charity and see the work in action, or get involved by volunteering in a range of activities from helping to transform local housing estates to working with children and young people.

Once the offer period for the East London Bond has closed you will not be able to buy any more of these bonds. You will be able to invest in any subsequent Charitable Bonds issued by Citylife, although these Bonds may or may not support the Bromley by Bow Centre or Community Links.

The East London Bond is a fixed-term investment and not suitable for those who may require access to their money before maturity. However, you can transfer your bond if someone is willing to buy it from you.

Yes, Citylife’s bonds can be transferred from the original investor to another person. However, you should note that Citylife cannot give any assistance in finding a purchaser for your bonds and a purchaser may only be willing to buy your bonds at a discount.

Regardless of whether the bond is held in your name solely or in joint names, your interest in the bond will be disposed of in accordance with your will (or in accordance with intestacy rules if you have not made a will). The bond will still be repaid in accordance with the terms and conditions of the bonds – but payment will be made to the then holder. Please note that Citylife cannot advise you on the inheritance implications or any tax implications – you must seek your own independent professional advice from an adviser that understands your circumstances.

We will contact you before your bonds mature for instructions. You can choose to:

• receive all your initial investment back
• donate part or all of the value of your bonds to Bromley by Bow Centre and/or Community Links
• reinvest part or all of your bonds up to £20,000 in membership shares of Citylife
• you may be able to roll your investment over into a subsequent Charitable Bond.

If no instructions have been received, your investment will by default be repaid to you.

No tax should be payable by primary investors on redemption of the bonds as the repayment amount equals the investment amount and therefore no capital gain arises. Potential investors should seek advice from their professional tax advisors if in any doubt about the tax implications of an investment in the Bond. Nothing in this document or any other document issued by Citylife should be construed as tax advice.

See the risks section for details.

We’re happy to talk to you directly if you have any further questions about how Charitable Bonds work, although we cannot give you any financial advice. If you are in any doubt about whether an investment in the East London Bond is suitable for you or in respect of the tax or inheritance consequences of the Bond then you must consult an independent financial advisor.