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Scottish Government commits another £40 million in Allia’s Scottish Charitable Bonds

The Scottish Government has announced it is investing a further £40 million in Allia’s Scottish Charitable Bonds in 2019/20 to help deliver its ambitious social housing targets.

Allia’s charitable bond model is an innovative funding mechanism which provides development finance for new affordable housing. It also generates instant capital funds, in the form of charitable donations, which the government is using for new social housing.

To date, the government has invested £115 million in the charitable bonds programme which has provided finance for over 1,000 affordable homes across Scotland.

Donation money created by the programme so far will provide funding for over 250 homes for social rent. The additional investment for 2019/20 is expected to generate £10 million of charitable donations.

The largest bond issued to date

Dunedin Canmore, part of the Wheatley Group, have entered into the largest loan to date: £16 million, generating charitable donations of £5.1 million.

Housing Minister Kevin Stewart made the announcement on a visit to The Wisp in Edinburgh, where Dunedin Canmore is close to completing 20 flats for social rent and plans to use charitable bond loan finance to build a further 34 homes. He said:

“The government’s innovative use of charitable bonds is making a real contribution in the delivery of new social rent homes, as part of our target to deliver 50,000 affordable homes by 2020.

“The programme was created in response to demand from housing associations for better access to appropriate finance.  It provides unsecured loans for up to 15 years with no payments of interest or capital before maturity.

The interest on these loans has enabled us to create a grant fund to further support the development of homes for those on the lowest incomes.”

Wheatley Group Chief Executive Martin Armstrong said:

“We are delighted to have received £16m of investment through the Allia charitable bond scheme. This helps us progress our plans for hundreds of new affordable homes in and around Edinburgh as part of our wider new-build programme in support of the Scottish Government’s More Homes Scotland agenda.”

Dunedin Canmore’s 20 homes at the Wisp have been built by Springfield Properties. They are part of a wider masterplan for the area which will provide a mix of affordable housing and homes for private sale via Springfield.

Daniel Carrico, Head of Origination at Allia Impact Finance said:

“We’re delighted to secure another £40 million into our charitable bond programme, building further on the success seen since it started over 4 years ago. We look forward to working with more housing associations and supporting them with this unique source of unsecured finance.”

Left to right: Tom Leggeat (Group Partnerships Director, Springfield), Kevin Stewart MSP (Minister for Local Government and Housing), Daniel Carrico (Head of Origination, Allia Impact Finance), Mary Mulligan (Chair, Dunedin Canmore), Hazel Young (Managing Director, Dunedin Canmore)


Charitable Bonds are an ethical investment product where the margin usually paid as interest to the bond holder, tax, or profit to shareholders, is released as grant funding for a charity of the investors choice, on day one of the investment.

Allia undertook its first charitable bond with the Scottish Government in 2014, and in 2017 successfully tendered to manage the bonds until 2021. This included a commitment for the Scottish Government to make £25m available for 2017/18, £40m for 2018/19 and an intention to continue to invest till 2021. The contract allows for investment by other government areas, public sector organisations and other private finance.

The proportion of grant to loan is dictated by the interest rate on the loan finance, and these interest rates will be set on a case-by-case basis, according to Allia’s credit assessments and prevailing market conditions.

The difference between the loan amount and the bond value is the charitable donation, which will be used by the Scottish Government for the provision of additional social housing.

Part of the funding provided to the Scottish Government from the UK government comes in the form of ‘financial transactions’ (FTs).  This is not capital grant – it is for loans and equity, and must be repaid to HM Treasury.

Wheatley Group is the UK’s biggest developer of homes for social rent (Inside Housing 2017 and 2018). It has completed over 2300 new homes since April 2015 and has plans in place which will take the total number built between 2015 and 2025 to 7500.