Big Society Capital launches £10m fund to help charities issue their own bonds

Charity bonds could open up the social investment market and the fund is intended to help more charities to seek investment, according to Nick O'Donohoe, chief executive of BSC

Big Society Capital
Big Society Capital

Big Society Capital has created a £10m fund designed to give more charities the confidence to issue their own bonds.

The Charity Bond Support Fund will operate as a market development tool by buying up to a third of an issued set of bonds where there is a need to make up for any shortfall in interested investors, meaning that a bond issue can still go ahead.

The company that issues the bond on behalf of a charity will be charged a small administration fee if the fund buys up its bond. This would encourage bond issuers to find buyers on the open market if possible, a spokesman for BSC said.

Any bonds issued by registered charities, community interest companies, exempt charities or their wholly-owned subsidiaries will be eligible for support from the fund.

Nick O’Donohoe, chief executive of BSC, said: "In recent months we have seen a transformation in the charity bond market, with increased interest from both charities and investors, as well as important infrastructure developments.

"Charity bonds have the potential to open up the social investment market, and we hope that this fund will provide the support needed to enable more charities to seek investment in this way."

Earlier this month, Golden Lane Housing, the housing arm of the learning disability charity Mencap, announced that it had raised £11m in less than two weeks after issuing the first bond through Retail Charity Bonds, a new special-purpose vehicle set up by the social investment charity Allia.

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