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.
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.