Disability charity's £20m scheme will start with a £2m tranche this year and is expected to be followed by other charities
The disability charity Scope has launched a £20m bond programme, the first by a major operational charity.
The bond will be targeted at investors who need to make a return on their money but are also keen to achieve a social good. The money will be used to finance the growth of Scope’s fundraising programme and network of charity shops.
It will be launched in several tranches, including one this year which is likely to be about £2m.
Scope said the first investment in the bond had been agreed "in principle" with the Big Society Finance Fund, a fund set up by National Endowment for Science, Technology and the Arts to trial products that might grow the social investment market.
The bond has been developed in partnership with the social finance intermediary Investing for Good.
Scope has not decided the time period the bond will cover or the interest rate it will pay.
Geoff Burnand, co-founder and chief executive of Investing for Good, said that the rate paid on the bond would be lower than that for a traditional first-time issuer.
"This is aimed at the mixed motive investment space," he said. "It’s excellent timing because the Charity Commission launched guidance last week, explaining that it was acceptable for charities to invest in this area.
"There are very few products in that mixed motive space. If you are the trustee of a permanently endowed charity, and you want to bring your investments in line with your mission, this is the perfect way to go about it."
Burnand said the bonds had major advantages over other types of social investment because they followed a simple, well-understood model, and would be listed on the Euro MTF market in Luxembourg, a recognised stock exchange, which means that they can be traded freely.
He said he expected other major charities to launch bonds through the same programme in the near future.
"A charity for the blind, a drug rehabilitation charity and several others in different sectors are all interested in this," he said. "Some will look to issue more than Scope. This will be a big market relatively quickly."
Other charities have previously issued bonds, including Clare College, Cambridge, and the Wellcome Trust, which used the money to fund investments in higher-yielding assets. However, this is the first major issue by an operational charity.
Scope has previously trialled a venture philanthropy model, where major givers have provided a combination of grant and loan funding to develop new flats for individuals with complex disabilities.