Kat Tancock is co-founder and co-editor of nature-focused Rewilding Magazine and of Workshop, a small business magazine for makers and creators in Canada.
For years, I’ve kept the bulk of my savings in a portfolio of diversified, low-cost exchange-traded funds. While for the most part I’ve been happy with that decision, one aspect has long bothered me: The very nature of index investing means you don’t get to choose where your money is (and isn’t) going. Unfortunately, that means I’m invested in companies whose actions are at odds, to put it mildly, with my values, such as big energy companies with questionable environmental records.
I’ve been exploring market funds that are more selective in their holdings as one strategy to make my portfolio greener and more socially responsible. But during that process, I realized that I was longing for an investment vehicle that would do more than just alleviate my guilt. I wanted to be putting at least some of my money toward something that was making a positive difference, and whose results I could see up close. And that’s when I found out about community bonds.
Community bonds are a tool that allows non-profits, charities and co-ops to borrow money to fund their work, and investors to profit from supporting organizations and projects they believe in. This isn’t simple charity – issuers must have a revenue model so they will be able to pay interest to bondholders. Each bond issuer creates its own terms, including duration, interest rates and minimum investments. For instance, Montreal-based environmental organization Earth Day Canada is currently raising funds to install a network of electric-vehicle charging stations in Quebec and New Brunswick. With a minimum investment of $1,000, lenders can choose a five-year commitment at 3.5-per-cent interest or a seven-year term at 4 per cent, with earnings paid out annually.
One pioneer in this area has been Toronto’s Centre for Social Innovation (CSI), a social enterprise that has been offering co-working, event, meeting and office space as well as community and collaboration to those who are “doing good” since 2004. By 2009, CSI had a large membership and a waiting list and was looking to buy its own space. With only $50,000 in savings, the nearly $7-million needed to purchase and renovate the building they had their eye on seemed far out of reach, chief executive Tonya Surman says.
Thanks in part to a loan guarantee from the City of Toronto, Ms. Surman and her team were able to secure a mortgage – but they still needed to come up with $2-million elsewhere. That’s when Ms. Surman had a brainwave in how to turn what she calls their “community capital” into financial capital. CSI created bonds secured against the value of the building and raised the funds. “It was mayhem,” Ms. Surman says. “But it was the first example of an at-scale community bond, where ultimately it allowed us to now own two buildings.”
CSI’s experience has been a model for many groups. One of these is 10C in Guelph, Ont., a social innovation hub similar to CSI that’s been in operation since 2008. Thanks in part to community bonds, 10C was able to purchase and renovate a historic building in downtown Guelph that has become its home base. The bonds were essential in accelerating 10C’s ability to serve its community, executive director Julia Grady says. “If we were running a donation campaign, it would take us 10 years” to reach the financing that was needed, Ms. Grady says. “Community bonds gave us a way to build the project and be doing the work versus planning for a day in the far future.”
A standard investment portfolio is a mix of stocks and bonds, and community bonds “definitely sit on the bond side of that equation,” says Tim Nash, a financial planner and founder of Toronto-based Good Investing. While community bonds can be competitive with other types of bonds – especially during times like the past few years, which have seen relatively poor bond performance – there are a few trade-offs.
First, Mr. Nash points out, unlike some fixed-income investments, community bonds are not liquid, so investors should be confident in leaving that money where it is for the duration of the term. Second, he says, “they do tend to have different risk profiles than standard investments,” so it’s important to understand what assets, if any, are backing them. (Both Ms. Grady and Ms. Surman have held numerous information sessions with potential investors over the years, and highlight that this direct relationship is one of the benefits of community bonds.) And third is that while community bonds are technically eligible for registered investment accounts, the logistics mean that holding them in a registered retirement savings plan or tax-free savings account is cumbersome at best and often comes with additional fees, so many investors choose to simply hold them outside those accounts and pay tax on the returns.
Mr. Nash suggests that community bonds and other impact investments might make up between 5 per cent and 10 per cent of an investor’s portfolio. He suggests that what he calls the “warm fuzzies” – the positive feelings that come along with this type of investing – should be taken into account when making investing decisions. “Evaluate the risk, but also evaluate the return as the financial return plus the warm fuzzies,” he says. “That’s different for everyone. And it’s different for every bond.”
For me, it comes down to why I’m investing in the first place. It’s to save money so I can buy things in the future, yes. But my cash flow 30 years from now isn’t going to be the only factor that affects my well-being. The strength of my community and the state of the environment I’m surrounded by will have a huge impact, too. If I can contribute to making those better and make a decent return on my investment, all the better. And judging by the success of so many community bond programs, I’m not the only one who thinks this way. “We’ve become so disconnected from where our money is invested,” Ms. Surman says. “And I think people ultimately want to see how their money is working for society.”
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
