Certificates of participation are a type of financing where investors receive a share of revenue instead of buying a bond that is simply backed by those revenues. Unlike municipal bonds, these COPs may have uneven payments over time and may not be fully secured investments.
For example, suppose that a municipality would like to build a new library, but wouldn’t like to take on debt to do so. Certificates of participation may be issued whereby investors receive lease payments from the municipality over time rather than interest payments.