Scope launches £20 million bond programme
31 October 2011
- Scope pilots £20 million bond programme
- Innovative application of established financial product by UK charity
- Bond programme could open capital markets for wider charitable sector
Scope is to pilot a £20 million bond programme to generate complementary funding for its charitable activities alongside the traditional donations and philanthropic loans it currently receives.
The charity plans to use the finance raised through the Scope Bond Programme to expand its income generation activities such as fundraising programmes and its network of charity shops, both of which generate long-term sustainable sources of income for its work with disabled people.
Scope is partnering with Investing for Good, a specialist social finance intermediary to launch the programme, which will see it become one of the first UK charities to enter the capital markets.
The Scope Bond Programme will operate in the same way as similar corporate bond products. Scope will have the flexibility to issue sterling bond tranches at varying nominal amounts, maturity dates and coupon rates under the overarching programme.
However, as the finance raised will be used for charitable activities, rather than for commercial purposes, investment in the Scope Bond Programme will generate social benefits in addition to the expected financial returns to investors [1] .
Scope and Investing for Good anticipate that the bond programme will be an attractive proposition for the growing market of trusts, foundations, high net worth individuals and wealth managers who are looking for social investment [2] opportunities for their capital. Scope has already received a pledge in principle towards its first issue under Investing for Good’s Charity Bond Programme [3] from the Big Society Finance Fund [4].
The Scope Bond Programme will be listed on the Euro MTF market in Luxembourg [5], a recognised stock exchange which has a strong presence in capital markets and a proven record for supporting social investment. The programme will be subject to the same regulation and protection offered to corporate bond investors and a prospectus will be available on request from the programme arranger, Investing for Good.
Alongside Investing for Good, the Scope Bond Programme has been developed through close collaboration with several other City partners including BNY Mellon, acting as fiscal agent and registrar, Capita acting as nominee holder, and with legal expertise provided by Linklaters and Weil, Gotshal and Manges, who have all offered pro bono support to the charity.
Scope is piloting the Charity Bond Programme set up and issuance process, paving the way forward for other large charities who may be interested in similar programmes to address their funding needs. Investing for Good is already speaking to several other charities from a range of sectors including inner city regeneration, drug rehabilitation, children and young people, and emergency services.
Richard Hawkes, Chief Executive of disability charity Scope, said:
“The major cash investment that we hope to generate through the Scope Bond Programme has the potential to transform the support we can provide to disabled people. It gives us the opportunity to talk to a new and emerging network of prospective supporters and offer them an additional way of investing in Scope alongside traditional donations and philanthropic loans. This is a landmark development for Scope and could revolutionise the way we and other large charities raise finance for our work in the future.”
Geoff Burnand, Co-founder and Chief Executive of Investing for Good, continued: “Until now, investors who want their money to do social or environmental good have found themselves in a difficult position. For the most part, they have had to choose between investments that are essentially philanthropy - offering little or no financial return - and those that are high return, but also high risk. The Charity Bond programme has been designed to strike a balance and also to satisfy both the ethical and financial aspects of social investment.''
ENDS
Notes to the Editor:
For more information about supporting Scope’s work or for general information about the Scope Bond Programme, please contact Tom Hall, Head of Philanthropy on 020 7619 7280 or email Tom.Hall@scope.org.uk
For media and pr enquiries please contact the Scope press office on 020 7619 7200.
1. It is expected that charitable investors will receive a lower rate of financial return through the Scope Bond Programme than from commercial investments, due to the social return delivered through this type of investment.
2. Existing social investment opportunities include social impact bonds and philanthropic lending. Social impact bonds offer financial returns to investors on achievement of social outcomes which generate measurable financial savings. Examples to date include the Peterborough Social Impact Bond, which is aiming to reduce reoffending rates or current government pilots in Westminster, Hammersmith and Fulham, Birmingham and Leicestershire aimed at helping families affected by crime and poverty.
3. The Investing for Good Charity Bond Programme offers large charities and social enterprises an established financial product to attract mainstream capital from the social investment market. The programme is replicable, cost efficient and gives the issuer flexibility and control over varying bond tranches. An independent rating system will report social and financial returns to investors. The Charity Bond Programme addresses a significant shortage in quality investment propositions available to social investors in the UK.
4. The Big Society Finance Fund is an initiative set up by NESTA to pilot 20 diverse methods of raising capital as part of a shared ambition to grow the UK’s social investment market. Investing for Good’s Charity Bond Programme is one of the pilot initiatives supported by Panaphur, a partner of NESTA.
5. The Scope Bond Programme will make use of the UK’s ‘Quoted Eurobond Exemption’ so that no UK tax will need to be withheld on interest payments on the bond. One of the requirements of the exemption is that the programme must be listed on a stock exchange recognised by HM Revenue and Customs, which includes the Euro MTF.
About Scope
Scope is a registered UK charity. 2010/11 charity financials include:
- Fees-based revenue for provision of disability services: £58m
- Voluntary fundraised income £14m
- Grants income £5m
- Retail income from 250 charity shops £23m
- Fixed asset net book value £23m
- Net incoming resources £4 million
About Investing for Good
Investing for Good is a specialist social finance intermediary. Its wholly owned subsidiary The Social Investment Market CIC Ltd is FSA regulated to conduct investment business.
More information about Investing for Good
Disclaimer: This press release does not constitute an offer to sell or the solicitation of an offer to buy the bonds.
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