Introducing charitable bonds Fundraising with social investment
The funding landscape <ul><li>Public sector cuts </li></ul><ul><li>Financial pressure on donors </li></ul><ul><li>Squeeze ...
<ul><li>Issued by Allia, a charity with over 10 years experience. </li></ul><ul><li>Investors get: </li></ul><ul><li>a saf...
What we all do with money
What we all do with money Need now
What we all do with money Need now Need later
What we all do with money Need now Need later Surplus Grants/donations Charitable bonds
Saving with the bank BANK Tax Dividends Bonuses Costs
Saving with Allia Tax Dividends Bonuses Costs Charity
How it works
How it works
Who invests in bonds? <ul><li>Mid to high value donors </li></ul><ul><ul><li>‘ give more than you can give away’ </li></ul...
Who fundraises with our bonds?
What do others say? <ul><li>“ The charitable bond is essentially a simple idea but it is a powerful tool for enabling capi...
What do others say? <ul><li>“ As someone who has invested in a charitable bond before – and received all my money back, I ...
What do others say? <ul><li>“ We see the charitable bond as a mechanism whereby a proportion of our cash reserves can be p...
What do others say? <ul><li>“ At long last: financial engineering to be proud of.” </li></ul><ul><li>Andrew Hill </li></ul...
For more visit www.allia.org.uk [email_address] 0845 456 2431 @charitablebonds
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Tim Jones, Allia

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Introducing charitable bonds - Fundraising with social investment. Presented at NCVO Sustainable Funding Conference 2011: Adapt, Gain, Grow.

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  • We all know the funding landscape is tough. But the need for funding is as great as ever. If we want to achieve greater social impact – or even just maintain current levels – we need to ask how do we find new sources of income
  • What is a charitable bond? In summary: [click] The bonds are issued by Allia, a national charity which has raised £16 million of investment in its charitable bonds since 1999. [click] The bonds enable investors to make a safe, fixed-return social investment. [click] This will release an up-front, tax-free gift for [charity name] To illustrate the proposition, let’s look at what we all do with our money.
  • Here is one of your regular supporters with all his income. (He could be an individual or represent a corporate supporter) He divides his money into three pots.
  • Some he needs to spend now – whether that’s mortgages and food or salaries and paperclips.
  • Some he sets aside to keep safe until he needs it at some time in the future. This is money he’s not going to give away. He might make a legacy to give away when he dies, but he can’t give it now in case he needs it.
  • Whatever surplus is left is his disposable income [click] This is where his donations come from But with a charitable bond from Allia, he can also use the pot he needs in the future to support [charity name] now. [click] So how do the bonds work? To explain, let’s compare what happens when you put your savings in the bank.
  • When you put your money in the bank it goes into this black box – you have no idea what they do with it, but they invest it to make profit. [click] They have to pay tax on that profit [click], then they have to pay dividends to shareholders [click], bonuses to staff [click] and all the costs of running a commercial bank [click]. That leaves a bit they can pay to you in interest. [click] The point is, as a wholesale investor the bank always gets a higher rate on its investments than it pays to you as a retail investor.
  • Instead, you could put your money in a five year charitable bond from Allia. Allia does exactly the same as the bank. It invests your money to make the same profit. [click] But because Allia is a charity it doesn’t have to pay tax, dividends or bonuses. [click] It only has deduct a little to cover its low running costs [click], so it can give you a return on your investment if you want it [click] and give the rest of the profit to us. [click] Now, while the bank won’t tell you how they invest your money or how much profit they’ll make, Allia is entirely transparent about what it will do with your money so you can see just how safe and efficient the bonds are.
  • And here’s the clever bit – because Allia knows exactly how much profit it will make on your money, it can give that profit away up front. So Allia will divide your money into three parts [click]. The main chunk it loans at a fixed rate to a non-profit social housing provider. They pay exactly the same rate they would pay when borrowing from the bank. Allia works with Places for People Homes [click] whose credit rating is Aa3 – same as Barclays Bank for example (and better than some other high street banks) Allia takes a little to cover its costs, which are 2% of the first million invested in each bond for each cause and 1% thereafter. The rest is given as a gift straight to your chosen cause, and [charity name] [click] is one of the charities supported by Allia which you can choose. When you invest, you can choose the rate of return you want. You can choose just to get your money back in full or you can choose to get a 5 or 10% return on top. The higher the rate you choose, the more money will be loaned to the housing provider and the less will be given to us. You can see exactly what these proportions are in this current round by using the investment calculator on the Allia website.
  • At the end of the five year term, the social housing provider repays the loan with interest. This enables Allia to give you back your investment at the rate of return you chose.
  • To find out more and to make an investment, go to www.allia.org.uk where you can find the full terms of the offer and fill out an application form to invest. You can also contact Allia directly at the email address or phone number shown here.
  • Tim Jones, Allia

    1. 1. Introducing charitable bonds Fundraising with social investment
    2. 2. The funding landscape <ul><li>Public sector cuts </li></ul><ul><li>Financial pressure on donors </li></ul><ul><li>Squeeze on CSR budgets </li></ul><ul><li>Low returns on charitable investments </li></ul><ul><li>How do we find new sources of income? </li></ul>
    3. 3. <ul><li>Issued by Allia, a charity with over 10 years experience. </li></ul><ul><li>Investors get: </li></ul><ul><li>a safe, fixed-return social investment </li></ul><ul><li>Their chosen cause gets: </li></ul><ul><li>an up-front, tax-free gift </li></ul>What’s a charitable bond?
    4. 4. What we all do with money
    5. 5. What we all do with money Need now
    6. 6. What we all do with money Need now Need later
    7. 7. What we all do with money Need now Need later Surplus Grants/donations Charitable bonds
    8. 8. Saving with the bank BANK Tax Dividends Bonuses Costs
    9. 9. Saving with Allia Tax Dividends Bonuses Costs Charity
    10. 10. How it works
    11. 11. How it works
    12. 12. Who invests in bonds? <ul><li>Mid to high value donors </li></ul><ul><ul><li>‘ give more than you can give away’ </li></ul></ul><ul><li>Corporate supporters </li></ul><ul><ul><li>social outcomes from cash on deposit </li></ul></ul><ul><li>Trusts, foundations and local authorities </li></ul>
    13. 13. Who fundraises with our bonds?
    14. 14. What do others say? <ul><li>“ The charitable bond is essentially a simple idea but it is a powerful tool for enabling capital to be harnessed for social benefit.” </li></ul><ul><li>Stuart Popham </li></ul><ul><li>Senior Partner, Clifford Chance </li></ul>
    15. 15. What do others say? <ul><li>“ As someone who has invested in a charitable bond before – and received all my money back, I can personally vouch for this excellent, tried and tested mechanism. ” </li></ul><ul><li>Brian Winterflood </li></ul><ul><li>Life President, Winterflood Securities </li></ul><ul><li>Personal investor </li></ul>
    16. 16. What do others say? <ul><li>“ We see the charitable bond as a mechanism whereby a proportion of our cash reserves can be put to good use to strengthen the local economy at modest cost and minimal risk.” </li></ul><ul><li>Gerald Avison </li></ul><ul><li>Chairman, TTP Group plc </li></ul><ul><li>Invested £2.5 million </li></ul>
    17. 17. What do others say? <ul><li>“ At long last: financial engineering to be proud of.” </li></ul><ul><li>Andrew Hill </li></ul><ul><li>Associate Editor, FT </li></ul>
    18. 18. For more visit www.allia.org.uk [email_address] 0845 456 2431 @charitablebonds
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