Charity bonds form an important part of crowdfunding offers at Triodos Bank. They are popular with investors because of the direct impact they deliver, how they empower charities to gain more autonomy over their finances and help them to secure longer term financial resilience.
Recently, we held a webinar with Simon Conway, joint director of strategy at Thera Trust and Craig Berens, chief executive officer of Nottinghamshire YMCA who explained how investment helps their charities to increase their impact.
Thera Trust has successfully raised capital through Triodos crowdfunding three times in the past five years, helping to secure unrestricted finance to help them to provide homes for adults with a learning disability across the UK.
Nottinghamshire YMCA is currently crowdfunding on the platform to provide the capital for a community & activity village in the heart of one of its region’s most deprived areas.
The webinar was really well attended and sparked a number of interesting questions from attendees, which was hosted by senior investor relations manager at Triodos Bank, Whitni Thomas.
Below is a short selection of some of the questions and answers from the panellists and host. The responses have been edited for clarity.
Questions asked of Simon at Thera Trust
Q. How has the Covid pandemic affected the charity and its beneficiaries?
A. In the main, our beneficiaries have had the same experiences and have been impacted in the same way that we all have. A very small number of our beneficiaries have lost their lives to the virus, which has been incredibly sad. As we support our beneficiaries in their own homes, our biggest challenge has been to ensure we are keeping everyone safe and, like many other care providers, a big challenge initially was sourcing PPE and always ensuring we had enough staff to support our beneficiaries. I’m pleased to say we have also been able to access financial support from not only national, but local government during this crisis.
Q. Can you clarify how you raise sufficient income to repay bonds/interest?
A. The majority of our income comes from contracts with local authorities around the UK to support individuals with a learning disability. We also receive rent from housing associations for the properties that we purchase and adapt using bond funds. Our contract income supporting tenants in these properties provides for our staff costs and covers our overheads and our bond financing costs are funded through the rent that we receive.
Q. How straightforward has it been to raise charity bond offers on the Triodos platform?
A. Remarkably easy. Triodos have always made it straightforward and relatively pain free, but we’ve completed the process three times now and each time it’s been easier than the last. The Triodos team have such a good understanding of our organisation now and we’re used to the questions and process of due diligence that we need to go through.
Q. How long to will you support an individual for?
A. Our support remains in place for as long as the individual wants us to support them and they and their family are happy with the support that we are providing.
Questions asked of Craig Berens at Nottinghamshire YMCA
Q. Can you say more about how the design of this project has been truly driven by local people. How are you certain that this is what they want most of all?
A. We have had lots of consultation on our plans across the community and with all our partners for many years and to be honest we’re still continuing to do so. We’ve had constant feedback and it’s evolved and adapted. As a dynamic organisation that is constantly trying to respond to the needs of our communities, it’s something we’re always doing.
Q. I sense that it is incredibly hard to bring affluent & deprived people together in true bonds of friendship. What examples can you share that show how the very social wide gap between deprived & affluent people has been bridged?
A. The community & activity village was designed to be very inclusive and it’s right that it is. You could be working out in the gym on a treadmill next to someone else from a different part of the community with a different background and ‘class’ to you, but you’re both still working out, in the same place, at the same time and using the same facilities. We want to break down barriers with the help of our partners. From what we have seen previously, this starts with children who don’t have the same awareness to know where it each other is from and what our background is. We want to change the tide and this building is a vehicle for that delivery.
Q. To what extent has sustainability featured in the design and build of your new building?
A. Wherever possible within the design and within the realms of our budget we have tried to minimise our environmental impact. Being ‘responsible’ is one of our core values at YMCA and we feel that covers being environmentally responsible too. We recognise that as with many other charities or organisations building new projects, we could go even further, but we believe (and our architects have confirmed) that we have got the best design for the capital.
Questions asked of Whitni Thomas at Triodos
Q. How does the Triodos due diligence process work?
A. It’s a very thorough and comprehensive process. It starts with meeting the organisation’s senior team and the collaborative discussion process can take anywhere from four months to two years as we have to be sure they are in the right position to be able to structure an investment product and for us to feel comfortable to put it on the platform. During this time, we help them to build or review a financial model, sense check their assumptions about the business and discuss sensitivities that help to frame a picture of the risks involved. Overall, the charity or organisation has to have a sustainable operating model, an excellent management team and evidence of meeting social or environmental needs effectively.
Q. How do you decide on the interest rate for the investment offer?
A. We look for what is fair for the charity/organisation involved and what they can afford depending on their operating model and what is a fair financial return for our investors based on our assessment of the risks of the investment. It’s a balance and is something we consider and discuss in detail before we settle on the interest rate for an investment offer.