How it works

Community Finance is a platform which invites impact investors to purchase community bonds.

Bonds are issued for specific projects and are created through the establishment of a stand-alone, ring-fenced investment vehicle to ensure investors are afforded protection from other projects managed by Community Finance.

The purchase of bonds is only open to investors who meet the ‘Wholesale Investor’ definition under the Financial Markets Conduct Act 2013 at this stage. The proceeds of each bond issue are transferred through the platform to qualifying borrowers called “Project Providers”.

A Project Provider, such as a Community Housing Provider, will be an organisation which can provide sufficient security to support the loan, meet a commercially standard credit assessment, be appropriately managed and demonstrate strong governance. Loans are set to match the term of the bonds so that, at the expiry of the bond, the loan can either be refinanced or investments rolled over for a fresh term.

The key features and benefits of the Community Finance platform are as follows:

Impact Reporting:

Investors are provided with regular impact reporting which allows them to see how their investment is making a social and/or environmental impact in New Zealand.

Outsourcing of Relationship management:

Community Finance stands between bondholders and project providers (borrowers). This gives bondholders the option of anonymity and allows Community Finance to manage all responsibilities in respect of the investments, administration and lending. Investors and borrowers enjoy the ease of contracting with one party which handles all loan management and relationship matters.

Internationally recognised:

The investment structure is a common securitised investment structure that is used in commercial dealings internationally. Whilst the structure has been adapted to suit an impact investment context (rather than a narrow, profit-making context), investors can rest in the knowledge that this is an internationally recognised investment structure.

Provision of a ring-fenced impact investment structure:

Community Finance provides a specialised ring-fenced investment vehicle for each project. This removes the risk of contagion, i.e. a default in one project will not prejudice the operation or returns of another. This gives investors comfort that their risk is clearly defined by the risk profile of the relevant project they invested in.


Investors will earn a fixed coupon rate for each project bond. The rate may differ between projects depending on the risk profile and tenure of the project. Project Providers will be provided with the following social and financial benefits of working with Community Finance: (1) below-market borrowing costs, enabling them to expand and continue their beneficial activities, (2) access to finance that may not have otherwise been made available, (3) the benefit of Community Finance networks for delivering better, more affordable and environmentally friendly housing, and (4) the engagement with a socially-minded lender who commits to a high level of personal, professional and flexible service. Community Finance will recover its costs through the interest rate differential between what is charged to Project Providers and what is paid to investors, plus any fees paid by the Project Provider. Community Finance reduces its margin to provide the best possible return to investors and the lowest possible cost of funds to borrowers.