Frequently Asked Questions

• Community, social impact investment is a type of investment that aims to generate positive social or environmental outcomes, as well as financial returns for investors.

• The Community element is served by providing capital or income, resources, and support to underserved or marginalized communities, such as low-income groups, women, veterans, minorities, etc.

• The Social element addresses social challenges or needs, such as education, health, housing, or employment, through innovative business models and solutions.

• Impact investment focuses on creating measurable and scalable impact on specific issues or sectors, such as climate change, poverty, or human rights, through various asset classes or vehicles for change.

A Bushido micro -bond is at its most basic a fixed interest “loan note” that states that Bushido Social Impact CIC will pay back the holder of the Bond the face value of the money “lent” to the Company on a redemption date in the future and will pay a fixed Coupon (interest) on the funds lent over the designated term (Duration).

Where Bushido micro-Bonds are different to other corporate bonds is in what Bushido do with the funds raised that generate beneficial social outcomes and leverage.

‘Buying an outcome’ not donating.

Bushido has been created to deploy funds into a diverse portfolio of projects and investments, that are targeted to deliver sustainable measurable impact, and that deliver on the objectives of Bushido’s Community Impact Statement by helping to deliver Corporate Social Responsibility goals and a financial return to Bushido investors.

Bushido, as a CIC, is constituted in a way that requires most of its profits to be reinvested into the furtherance of our community interest purpose. This allows us to create a sustainable funding model, that through reinvestment amplifies the impacts we can achieve from a given sum invested. This gearing effect not only enhances the impact outcomes but provides our bond holders with a commercial rate of return, security of their capital, and the knowledge that they have been responsible for measurable Community and Social Impact.

Outcome Driven

Fundamentally each underlying transaction that the Company undertakes will be a results-based investment. Each Investment typically has three main parties involved. a private or company investor, an outcome payer, and an implementing partner/service provider. In practice, there can be more than one of each type of partner, and stakeholders may have more than one role.

The private or company investor—This will be Bushido either on its own, or in collaboration with other investors—The funds raised into Bushido allow us to provide funding and resources to carry out projects that promise certain community, social an impact outcomes.

The service provider, this can be any form of business or organization which frequently will be a nonprofit organization (e.g., A charity or a CIC). The service provider is ultimately responsible for the project and its outcomes. If the outcomes are achieved, the investor (i.e., Bushido) is paid back the capital introduced plus interest by the outcome payer.

The Outcome Payer, the outcome payer (ultimate customer) can be any anyone, or organization, but in the community space they are typically a philanthropic funder or organization. Quite often in the social space the outcome payer will be local or central government, or even a transnational grant funding body.

Where the government are the outcome payer, it means the under lying Bushido bonds are essentially government backed, provided the target outcomes are achieved.

There are many incentives for the government to enter such public-private partnership. Public funds are directed towards projects that aim to show definite results. The attraction for the government is the risk of the investment is not borne by the government alone, but is instead spread across all the stakeholders, allowing the government to stretch limited resources further. The contingency of achieving certain social outcomes also creates greater accountability among all the Stakeholders.

As in any normal business if results are not achieved Investors can lose
some or indeed all the capital they have invested. The consequences of the service
provider not meeting targets can vary according to the terms negotiated at the design stage of a project.
Typically, the outcome payer pays back the risk investor, (Bushido) but likely without a return.

There are Five key players involved in the Bushido Community, Social and Impact Investment Projects.

  1. Individual 0r business investors: Those who have purchased Bushido Bonds.

  2. The organisations or nonprofit that carries out the project and aims to achieve a set of outcomes (targets).

  3. Bushido & other risk investors: who provide capital to the service providers to carry out the project and achieve the targets.

  4. Outcome funder: Typically, a philanthropic organization, Government, commercial business, or Individual that pays back the original principal plus a return to Bushido, and or other investors, if the targets are met.

  5. An Evaluator: Someone that evaluates and validates the work of the service provider.

The idea of Community Social Impact bonds is not new.

The very first Social Impact Bond was launched in 2010 by Social Finance UK. Social Finance raised approximately £10 million from 17 trusts and foundations to reduce reoffending among short-sentenced offenders leaving Peterborough prison. The Investor in this case was a group of trusts and foundations, and the outcome payer was the Ministry of Justice. The project surpassed its predetermined outcomes.

Since 2010, about 108 impact bonds have been contracted globally.

• We introduce micro so small sums collectively add up.
• We leverage investor funds often double.

Although not a new concept the Bushido bond raise via a CIC is a new and significant development, as it is essentially creating “a pooled fund”. Up until now most impact bonds have been done at a level that excluded “ordinary” individuals from participating. By investing into the “crowd bonds” of Bushido, funds are aggregated to allow Bushido to act as the Investor in Community and Social Impact projects. This means even people with very small amounts to invest can access impact projects that will have profound Community, social and impact returns. Small investors can then become true Impact Investors rather than passive donors, and benefit from feeling good about doing good as well as see a competitive rate of return on their investment.

By aggregating funds Bushido has greater flexibility in how and where it deploys funds but requires less effort, to manage a diverse pool of funders, than an investment fund would do. This keeps costs low and enhances returns. Bushido is then able to be hands on and can ensure that it“monitors” and collects data in respect to measuring impact. Essentially being the Investor in a project it can continuously evaluated and monitor projects at different stages. This in turn means that there is greater accountability and transparency about projects and ability to buy outcomes. In addition, as an “Independent Private” Company Bushido can potentially widen the potential market for outcome payers who need or wish to ‘Buy Outcomes’, to a wider investment and commercial audience. In very simple terms Bushido bonds allow for a shift in the focus for projects from inputs (e.g., the number of textbooks for students) to outcomes (e.g., an increase in students’ learning outcomes).

Bushido has been created to generate a sustainable source of up-front funding into community and social impact projects, that will remove the need for Service Providers (charities, social enterprises) continually having to seek new donations. All too often, projects are funded by a few donors, each with different conditions and demands, making implementation and reporting more challenging for all concerned. Larger Charities often are unable to deploy all the funds they already have, yet they still receive donations, compounding issues faced by smaller charities and nonprofits who are competing for a shrinking donor base. Bushido can target its support where it is needed most and has the biggest impact.

Bushido mixes its passion to do good, with pragmatism to ‘buy outcomes’ and achieve a financial return. This allows Bushido to shift from dealing with acute problem solving (firefighting) and crisis funding, to planning interventions and implementing innovation. It allows us to buy Outcomes through offering preventions rather than cures and move us from simply coordinating among peers to being full-on-collaborators that provides for the inclusion of All the Stakeholders within our communities.

It gives everyone the potential to be an impact investor not just those that have the larger funds to do so.