This page is for U.S.-based co-operatives, social good investors, and accredited individuals considering an investment in the Stirchley Co-operative Development (SCD) Community Bond.
This guide is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The SCD bonds have not been registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption. Prospective U.S. investors should consult their own legal, tax, and financial advisers before investing.
At a Glance
| SCD Community Bond | Typical U.S. Community Investment Note | |
|---|---|---|
| Interest rate | Up to 3.5% per annum | 0.4% – 2.5% |
| Minimum investment | £20,000 (~$25,400) | $20 – $1,000 (varies by issuer) |
| Currency | GBP (British pounds sterling) | USD |
| SEC registered | No — exemption being determined | Yes (registered with SEC) |
| Secondary market | None (non-transferable) | Limited (some notes trade on InspereX) |
| Security | Varies by amount (see below) | Generally unsecured; backed by issuer’s portfolio |
| U.S. tax reporting | Complex (FATCA, FBAR, foreign tax credit) | Standard 1099-INT |
| Impact focus | Social housing & worker co-ops in Birmingham, UK | U.S. community development (housing, small business, health) |
The SCD bond offers a higher interest rate than most U.S. community investment notes, but carries additional complexity, currency risk, and legal risk that U.S. notes do not. The minimum investment is also substantially higher.
Why Invest from the U.S.?
Principle 6 — Co-operation Among Co-operatives
The International Co-operative Alliance’s Principle 6 calls on co-ops to work together locally, nationally, and internationally. Investing in SCD is an act of inter-cooperative solidarity — channelling capital from the U.S. co-operative movement to a project that embodies the same principles in the UK. It puts Principle 6 into practice across borders.
A compelling story of community resilience
SCD was founded in 2016 by local people in housing and worker co-operatives. After years of planning, construction began in 2023. The contractor went into liquidation in 2024. Construction restarted, but in March 2026 the housing association partner reversed its commitment to hand ownership to SCD. The community fought back — and is now raising £1–2 million through this bond offer to buy back the building and keep it in co-operative hands.
This is the kind of high-stakes, community-versus-institution narrative that motivates solidarity investment. Read the full press timeline on our In the Press page.
Impact aligned with the UN Sustainable Development Goals
| SDG | Target | SCD Contribution | Indicator |
|---|---|---|---|
| SDG 7 — Affordable & Clean Energy | 7.2 — Increase share of renewable energy | Renewable electricity generation, heat pumps, no gas connection | kWh renewable energy generated annually |
| SDG 8 — Decent Work & Economic Growth | 8.3 — Promote productive employment | Purpose-built premises for 3 worker co-ops, shielding from gentrification | Number of worker co-op jobs sustained |
| SDG 10 — Reduced Inequalities | 10.2 — Empower and promote social inclusion | 10% of all social rent housing in Birmingham (2020–2025) | Number of social rent homes delivered (39) |
| SDG 11 — Sustainable Cities & Communities | 11.1 — Access to adequate, affordable housing | 39 permanently affordable, car-free homes | Number of households housed |
| SDG 13 — Climate Action | 13.1 — Strengthen resilience | Zero-carbon-ready building fabric; protection from energy price shocks | Estimated annual CO₂ savings vs. standard build |
Eligibility & Legal
Can a U.S. person or U.S. co-operative invest?
SCD is actively seeking legal counsel to determine the appropriate exemption under U.S. securities law for U.S. investors. The bonds have not been registered with the U.S. Securities and Exchange Commission (SEC). Until the applicable exemption is confirmed, no offer is being made to U.S. persons.
The most likely pathways are:
- Regulation D, Rule 506(b) or 506(c) — a private placement exemption allowing offers to accredited investors without SEC registration. Under Rule 506(c), general solicitation is permitted but all purchasers must be accredited investors and the issuer must take reasonable steps to verify that status.
- Regulation S — exempts offers and sales made outside the United States only. Because this page targets U.S. investors, Regulation S would not apply.
Do not invest until SCD confirms which exemption applies and provides the necessary legal documentation.
Which Regulation D rule applies?
Rule 506(b) — flexible, but no public advertising
| Feature | Detail |
|---|---|
| Accredited investors | Unlimited number can invest |
| Non-accredited investors | Up to 35 per 90-day period, but must be “sophisticated” — having sufficient knowledge and experience in financial and business matters |
| General solicitation | Not allowed — SCD could not publicly advertise the bond to U.S. investors on its website |
| Disclosure for non-accredited | If even one non-accredited investor participates, SCD must provide disclosure documents similar to a registered offering |
| Form D filing | Required within 15 days of first sale |
Problem for SCD: Rule 506(b) prohibits general solicitation. The existing web page — which publicly advertises the bond — likely constitutes general solicitation. This means SCD may already be unable to use 506(b) for any U.S. investors who learned about the offer from the website.
Rule 506(c) — allows public advertising, but accredited only
| Feature | Detail |
|---|---|
| Accredited investors | Unlimited — and general solicitation is permitted |
| Non-accredited investors | Zero — not allowed at all |
| Verification | SCD must take reasonable steps to verify each investor’s accredited status (cannot simply rely on self-certification) |
| Form D filing | Required, same as 506(b) |
This is the most practical route for SCD — it permits the public web page to serve as the solicitation, but restricts actual investment to accredited investors only.
So who can invest?
| Individual type | Rule 506(b) | Rule 506(c) | Practical reality for SCD |
|---|---|---|---|
| Accredited individual ($1M+ net worth or $200K+ income) | ✅ Yes | ✅ Yes | ✅ Can invest under either rule |
| Non-accredited but “sophisticated” | ✅ Up to 35 | ❌ No | ⚠️ Only possible under 506(b), but the existing public web page likely disqualifies 506(b) due to general solicitation |
| Non-accredited, non-sophisticated | ❌ No | ❌ No | ❌ Cannot invest under any Reg D pathway |
Most U.S. individuals cannot invest. Only those meeting the accredited investor thresholds are likely to be eligible, and even then only once SCD formally adopts a Regulation D exemption and files Form D with the SEC.
What is an accredited investor?
Under SEC Rule 501(a) of Regulation D, an individual qualifies as an accredited investor by meeting one of these financial thresholds:
- Net worth over $1,000,000 (individually or jointly with spouse/partner), excluding primary residence
- Annual income over $200,000 (individually) or $300,000 (jointly with spouse/partner) in each of the two most recent years, with a reasonable expectation of the same in the current year
Certain entities also qualify (banks, investment companies, employee benefit plans, family offices, etc.). Professional certifications and designations may also qualify individuals under the 2020 SEC amendments.
Can a U.S. co-operative (not an individual) invest?
Potentially yes — certain entities qualify as accredited investors under Regulation D, including organisations with total assets exceeding $5 million. A U.S. worker co-operative or credit union meeting that threshold could invest. Legal confirmation from SCD’s counsel is required before any entity investment proceeds.
State “blue sky” laws
Even with a Regulation D exemption, SCD may need to file notices in each U.S. state where an investor resides. State securities laws (“blue sky” laws) apply in addition to federal law. SCD’s legal counsel will determine which state filings are required.
Tax & Reporting
Will UK withholding tax be deducted from my interest payments?
Under UK domestic law, companies making payments of UK-source interest must generally withhold tax at 20% (proposed to rise to 22% from April 2027). However, under the U.S.–UK double taxation treaty, interest paid to U.S. residents may qualify for a reduced withholding rate of 0%. To benefit from the treaty rate, the investor must provide the appropriate treaty declaration form to SCD before interest is paid. Consult a tax adviser to confirm eligibility and procedure.
Do I need to report this investment to the IRS?
Very likely, yes. U.S. taxpayers holding financial assets outside the United States may have reporting obligations under two separate regimes:
- Form 8938 (Statement of Specified Foreign Financial Assets) — required if the total value of specified foreign financial assets exceeds the applicable threshold ($50,000 for single filers residing in the U.S., higher thresholds apply for joint filers and overseas filers). Failure to file carries a penalty of $10,000, rising to $50,000 for continued failure, plus a 40% understatement penalty on tax attributable to undisclosed assets.
- FinCEN Form 114 (FBAR — Report of Foreign Bank and Financial Accounts) — required if the aggregate value of foreign financial accounts exceeds $10,000 at any point during the calendar year. Filed electronically via the BSA E-Filing System, due by 15 April (with automatic extension to 15 October).
These are separate filing requirements — an investor may need to file both forms. Consult a U.S. tax professional.
Is the interest income taxable in the U.S.?
Yes. U.S. persons are taxed on worldwide income, including interest received from foreign sources. Interest earned on SCD bonds must be reported on the investor’s U.S. federal tax return. If UK withholding tax is applied, the investor may be able to claim a foreign tax credit on Form 1116 to avoid double taxation, subject to the U.S.–UK treaty provisions. State taxes may also apply. Consult a qualified tax adviser.
Currency & Payment
What is the currency risk?
SCD bonds are denominated in British pounds sterling (GBP). All interest payments and principal repayment will be made in GBP. A U.S. investor bears full currency (foreign exchange) risk — if GBP depreciates against USD between the date of investment and the date of repayment, the USD value of both interest and principal will be reduced. Conversely, GBP appreciation would increase the USD return. There is no currency hedging provided with the bond.
How will interest and principal be paid?
Payments will be made in GBP by bank transfer. Details of the payment mechanism (including any intermediary bank requirements for international transfers) are set out in the bond offer document. U.S. investors should confirm with their bank that they can receive GBP wire transfers and understand any fees their bank may charge for receiving foreign currency payments.
Risks
Is the bond secured?
It depends on the investment amount:
- Under £150,000 (~$190,000): No security offered — the bond is unsecured
- £150,000 – £500,000 (~$190,000 – $635,000): Tertiary charge — ranks behind both the first and second charge holders
- Over £500,000 (~$635,000): Secondary charge — ranks behind the first charge holder only
In the event of default, unsecured and tertiary charge bondholders are the last to be repaid and may lose some or all of their investment.
Can I sell or transfer the bond?
No. SCD bonds are non-transferable. There is no secondary market. The bond cannot be sold, assigned, or transferred to another party. The investment is illiquid — capital is locked in for the full term of the bond.
What happens if SCD defaults?
If SCD is unable to make interest payments or repay principal, bondholders’ recourse depends on the level of security:
- Secured bondholders (secondary or tertiary charge) have a legal claim on the underlying assets, but only after higher-priority charge holders have been satisfied
- Unsecured bondholders rely solely on SCD’s ability to pay and have no claim on specific assets
There is no deposit insurance or government guarantee on this investment. Investors could lose some or all of their principal.
Key risks summarised
- Currency risk — GBP/USD fluctuations can erode or enhance returns
- Liquidity risk — bonds are non-transferable with no secondary market
- Credit risk — SCD may default; unsecured bonds have no asset backing
- Construction risk — the project has experienced contractor liquidation and repeated delays
- Interest rate risk — the fixed 3.5% rate may not keep pace with inflation
- Tax and regulatory risk — U.S. tax and reporting obligations are complex; errors can carry significant penalties
- Legal risk — the applicable SEC exemption has not yet been confirmed; investment may not be possible for all U.S. persons
Co-operative Principles
The International Co-operative Alliance defines seven principles that guide co-operatives worldwide. SCD lives all seven — and this bond is Principle 6 in action.
| Principle | How SCD Lives It |
|---|---|
| 1. Voluntary & Open Membership | 200+ households applied; 20 selected; open to all who share the values |
| 2. Democratic Member Control | One member, one vote — residents and worker co-ops govern SCD |
| 3. Member Economic Participation | Members contribute capital through bonds; surplus reinvested in the community |
| 4. Autonomy & Independence | SCD is a non-profit Registered Provider, controlled by its members |
| 5. Education, Training & Information | Cookery school, cycle training, arts space — community education embedded in the building |
| 6. Co-operation Among Co-operatives | This bond is Principle 6 in action — international co-ops funding co-op development across borders |
| 7. Concern for Community | Community hub, café, hall — public access to co-operative life in Stirchley |
Comparable Projects
Community bonds for affordable housing are a proven model. These projects demonstrate what is possible when co-operatives and communities raise capital together.
Leeds Community Homes — Leeds, UK
Raised £360,000 through a community share offer to purchase 16 permanently affordable homes. Supported by the Community Shares Booster Fund and Co-operatives UK. Demonstrated that community-led housing finance works at scale in the UK.
Indwell Community Homes — Hamilton, Ontario, Canada
Offers five community bond series with minimums from $1,000 to $50,000, interest rates of 3.5%–5%, held in RRSPs and TFSAs. Demonstrates community bonds at scale for affordable housing — a direct Canadian parallel to what SCD is building in Birmingham.
East Bay Permanent Real Estate Cooperative — Oakland, California, USA
Uses community bonds to finance affordable housing for low-income residents. A U.S. example of the same model — community-owned, permanently affordable, democratically governed.
How to Invest
- Download the Bond Offer Document (PDF)
- Review the Investment Step-by-Step Guide
- Consult your own legal, tax, and financial advisers — especially regarding SEC compliance and U.S. tax reporting
- Contact SCD to confirm eligibility and discuss the investment process for U.S. persons
- Complete the application and arrange payment (in GBP)
Questions?
Contact SCD directly via the email address on the bond offer page. For U.S.-specific legal or tax questions, consult your own qualified advisers — SCD cannot provide U.S. legal or tax advice.
Stirchley Co-operative Development Limited (Registration number 4496) is registered under the Co-operative and Community Benefit Societies Act 2014. SCD is a Registered Provider of Social Housing regulated by the Regulator of Social Housing in England.