CS Professional · CSR and Social Governance · Social Governance
Hariyali Foundation, a registered NPO, wants to raise money for a rural sanitation project from donors through the Social Stock Exchange. Donors will give money without expecting any financial return, and the Foundation will list nothing that carries a return. Which instrument is it using?
The Foundation is using a Zero Coupon Zero Principal instrument. It is issued by registered non-profit organisations on the Social Stock Exchange, carries no interest and no principal repayment, and so suits donors who expect no financial return.
- AZero Coupon Zero Principal (ZCZP) instrumentCorrect
- BOptionally convertible debenture
- CPreference share carrying cumulative dividend
- DCommercial paper
Explanation
A ZCZP instrument is issued by NPOs registered on the SSE; it pays no interest and returns no principal, so donors receive no financial return. The other instruments carry a return or repayment obligation, which does not fit donation-style raising.
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