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While most fixed income instruments are targeted towards institutional investors, an increasing proportion of responsible instruments are being designed for retail investors. Here, we look at how the Retail Charity Bond platform brings fixed income products to a retail audience looking to support charitable organisations and the impact of this funding.

Retail Charity Bonds: A tool for the socially-conscious retail investor

David Katimbo-Mugwanya David Katimbo-Mugwanya Senior Fund Manager
Edentree Insight reports

The Rise of Social and Sustainable Bonds

David Katimbo-Mugwanya

Senior Fund Manager
30 Dec 2020

Chapter 6

Retail Charity Bonds: A tool for the socially-conscious retail investor

EdenTree is proud to be a patron of the Retail Charity Bond platform since its launch in 2014. The platform enables UK-based charitable organisations to raise unsecured debt that trades on the London Stock Exchange. The issuance of debt focuses on projects supporting social housing, elderly care homes, mental health, dementia care and pre-dates the arrival of social bonds, although these instruments could just as easily be categorised as such. To-date, GBP287 million in debt has been issued across nine securities, including GBP84.5 million of retained bonds.

While most of the bonds we have discussed so far are largely targeted towards institutional investors, retail charity bonds trade in denominations beginning from GBP500, which explains the ‘retail’ classification. Moreover, the economic case for purchasing a credit rating is perhaps not as strong as for commercial Investment Grade issuers and so it is important to note that the bulk of Retail Charity Bonds are unrated.

The issuance of debt focuses on projects supporting social housing, elderly care homes, mental health, and dementia care

In the wake of the 2008 financial crisis, deleveraging saw commercial banks cut back on their lending to Small to Medium-sized Enterprises (SMEs), therefore the Retail Charity Bond platform has been essential for charities seeking to raise unsecured funding.

Admission onto this platform follows a rigorous approval process that entails strict selection criteria based on profitability, as well as in-depth credit assessments. In fact, the various bonds’ borrowing covenants stipulate that unencumbered assets must equate to at least 130% of the organisations’ total debt.

Here are a few examples of charities that have issued bonds on this platform, with brief summaries of their backgrounds and activities, including the social impact achieved in recent years.

Golden Lane Housing

Golden Lane Housing works alongside Mencap, one of the UK’s largest mental health charities to provide specialist accommodation. The very first charity to raise funds on the platform, Golden Lane’s two outstanding Retail Charity Bonds (maturing in 2021 and 2027) have allowed it to procure, lease and adapt properties to enable approximately 2,200 individuals1 with learning disabilities to live more independently across England, Wales and Northern Ireland. Over the last two decades, Golden Lane has purchased 454* properties and leased an additional 486* dwellings.

The charity estimates that of the 1.5 million people with a learning disability in the UK, over 70% wish to live independently. The tenants’ rents are paid directly to Golden Lane as the landlord by the local authorities, ensuring this is stable and government-backed rental income.

Golden Lane also lends support to various mental health campaigns such as Mencap’s Treat Me Well campaign and has continued to fund research conducted by the National Development Team for Inclusion, a not-for-profit organisation seeking to enable individuals at risk of societal exclusion, due to age or disability, live the life that they choose.

(* as at 31 March 2019)

Hightown Housing Association

Hightown Housing Association was established over 50 years ago with a stated aim of providing as many homes as possible at sub-market rates and now offers a broad range of housing and support to people that are vulnerable and / or disabled. Hightown owns and manages 6,818 homes2, primarily operating in the areas of Hertfordshire and Buckinghamshire, with some affordable housing in Bedfordshire, as well as care and support projects in Berkshire. In 2019/20 alone, Hightown built 477 homes, making it Inside Housing’s fastest growing housing association in the UK.

A founding member of the Homes for Cathy group of over 100 organisations that seek to end homelessness, Hightown has continued to be a leading voice in the industry and has demonstrated commendable commitment to tackling this societal challenge. In 2018, Hightown allocated 36% of its new and vacant homes3 to homeless households, rising to 42% in 2019. From its more recent annual report, the association also extended support to 221 rough sleepers via its outreach services. It provides ongoing homelessness support via hostels in Hertfordshire in mother and baby and domestic violence projects.

The organisation is also acutely aware of its environmental footprint and strives to enhance efficiency in its new and existing homes. Hightown has an ongoing investment programme to install air source heat pumps, solar panels and incorporates water-saving features into new homes with the dual goals of boosting energy and water efficiency, as well as reducing fuel poverty. A total 2,800 of its properties now possess an environmental performance certificate (EPC) score of B or better. Its consistent record of operating surpluses and financial resilience saw it assigned a credit rating of A3 stable by Moody’s in January 2020. Hightown’s two outstanding bonds mature in 2025 and 2027.

Charities Aid Foundation (CAF)

The Charities Aid Foundation (CAF) offers banking services to charities and individuals, enabling the latter to give to charitable causes efficiently. CAF has existed for over 90 years and has a network of offices across six continents4.

CAF conducts thought-leading research into charitable giving trends by FTSE 100 companies, as well as individuals in the UK and runs the country’s largest payroll giving scheme

CAF has also claimed tens of millions of pounds in Gift Aid for its donors over the years, significantly reducing the administrative burden borne by charities. Using the proceeds of its retail charity bond, which matures in 2026, CAF has been able to further its support of charities across the UK. It also conducts thought-leading research into charitable giving trends by FTSE 100 companies, as well as individuals in the UK and runs the country’s largest payroll giving scheme.

Under CAF Venturesome, its social investment arm, CAF provides affordable finance for enterprises to enhance their social impact through its Development Fund, Community Land Trust Fund and SE-Assist for start-up social enterprises. CAF Venturesome has supported over 650 social enterprises and not-for-profit organisations with funds totalling GBP55 million since 20025. When repaid, the capital is recycled into loans made to other social enterprises. Projects have included providing healthy school meals for schoolchildren, as well as tackling homelessness by offering training and education.

Greensleeves Care

Greensleeves Care was born out of the Women’s Royal Voluntary Service (WRVS), from which it acquired a number of elderly care homes in 1997. Greensleeves provides high quality and round-the-clock nursing care, specialist dementia care and residential support for the elderly in 25 care homes across England. Since issuing its retail charity bond in 2017, Greensleeves has increased the number of residents6 it supports from 789 to 1,388 and now employs over 1,500 staff (at above the national living wage) whose skills it continues to enhance through learning and development programmes.

By investing in and promoting its staff, Greensleeves is also able to record a lower than average employee turnover rate of 18.5% versus the typical care sector average of over 30%, a feat that also affords its residents better quality of care from staff they are ultimately more familiar with.

In addition, Greensleeves plays an integral role in its local communities, organising events whose positive impact goes well beyond the borders of their care homes. For instance, 2019’s BBC Music day at Trinity Methodist Church in Lowestoft, which featured a special performance by Britain’s Got Talent winner Colin Thackery, engaged the whole community. Lowestoft locals also attended various 2018 events at the Broadlands care home including: Party in the Garden, murder mystery evenings, jazz afternoons, quiz nights and firework evenings. Last year, the residents of Greensleeves’ Tickford Abbey in Newport Pagnell knitted clothes that were sent to Africa for mothers to clothe their new-born babies.

COVID-19 statement: Greensleeves has adapted quickly to a fast-evolving situation, implementing robust procedures to limit incidents and closing its homes to all but essential visitors. The organisation’s liquidity levels remain strong.



1. Golden Lane Housing social impact report 2020

2. Hightown Housing social impact report 2019/2020

3. Hightown Housing Association Ltd social impact report 2018/19

4. CAF facts – data as at August 2018

5. CAF Venturesome data as at Feb 2020

6. Greensleeves Care social impact report 2019-2020