Retail Charity Bonds: March 2015 Happy Hour with Phil Caroe, Director Social Finance at Allia

24 Jun Retail Charity Bonds: March 2015 Happy Hour with Phil Caroe, Director Social Finance at Allia

Finance Matters’ March happy hour welcomed Phil Caroe, Director Social Finance at Allia, for an interesting discussion retail charity bonds, and on Allia’s journey in developing the platform. We started the evening at the welcoming Borough Barista, where Phil began the discussion by providing some insight into his background and his first experiences in the charity space.

As a way of background, Allia is a charity offering finance solutions, work space and business support designed to help UK social ventures grow. Launched in 1999, Allia’s finance solutions arm has developed a number of innovative social investment products including the Charitable Bond and Capital Plus Bond. Its latest initiative is the launch of Retail Charity Bonds, a bond issuing platform to raise unsecured loan finance for charities through retail eligible bonds listed on London Stock Exchange. The platform standardises and facilitates the issuing process, making it affordable for charities to raise sums of less than £50m through the retail bond market.

Phil has been leading Allia’s social finance operations since 2009, when he joined the organisation based in Cambridge. The concept behind Allia, he first explained, was to build an infrastructure in the market which would allow for charity funding, and thus standardise the bond issues. The Retail Charity Bonds were first catered to the social housing sector, yet one of the first challenges they encountered were naturally risk-averse charities that were skeptical to borrowing funds. Building on this, Phil explained another challenge they faced were highly regulated bond markets, charities were not publicly-listed and the fundraising amount was not substantial to generate enough interest.

As a result, the journey to developing the platform took 3 years, and the solution was to create a templated process for any charity looking to raise funds, as a way to reduce transaction costs. They decided to pool the charities into a larger organisation, which in turn raised the funding amount to an adequate level, as well as met several other requirements. Phil underlined that demand far surpasses supply in the space as there is increasing interest in the social investing space, building on an example of of an £80m bond closing at a record £150m. He explained that the market was defined by 3 appealing characteristics to investors: regulated, liquid and ethical.

He mentioned that investors consider 3 factors to be of strong importance in social investing: accessibility, always open for investment and the ability to commit a smaller amount; factors that are all met through the retail charity bonds. The Retail Charity Bonds are characterised as suitable ethical investment opportunities, and in turn are benchmarked against traditional methods.

To conclude, he explained that investors are currently changing their perceptions of charities, and there is an increasing demand from social ventures of well-established charities with strong revenues. He ended the discussion by revealing Allia’s upcoming platform in coordination with an external foundation, which would allow for any retail investor to engage in social investment, with an initial investment from as little as £50.

Allia website: