The term accredited investors refers to wealthy individuals, family offices and organizations such as foundations/endowments and other institutional investors. For individuals to qualify as “accredited”, they must have more than a million dollars in net assets along with several other stipulations required by the Securities and Exchange Commission. Because accredited investors have substantial assets and are more able to tolerate losses on investments than the retail market, these investors have greater flexibility in their financial choices.
Typically, deposits in banks and credit unions with a commitment to community development (many of which are certified by the US Treasury as community development financial institutions, or CDFIs) are considered a vehicle for retail investors. However, the IntraFi® Network Deposits (formerly Certificate of Deposit Account Registry Service (CDARS)) can be used by institutional investors to create one large cash deposit that is placed in multiple banks in amounts that qualify for federal deposit insurance. A similar product for credit union deposits is offered by Inclusiv. It offers a cash-based way to finance small businesses, microenterprises, non-profits, commercial real estate and affordable housing in low-and-middle income communities.
To find a community development bank or credit union, visit
Impact notes are debt-finance instruments that use the proceeds from their issuances in projects, funds or intermediaries for underserved communities across the United States and around the world. Examples of target sectors include affordable housing, microfinance lending, improving access to healthcare, and job training. Impact notes often have low barriers to entry, such as low minimum investments and availability through brokerage accounts, making them accessible for investors of all types–both large institutions and retail investors–and attractive compared to many fixed income investments. Impact notes are offered by Calvert Impact Capital, Capital Impact Partners and the Local Initiatives Support Corporation (LISC), among others.
CDFI loan funds
A number of CDFI and other community development loan funds accept direct investment. The investment is generally executed as a promissory note providing term debt to the organization. Typically the notes are offered under a non-profit exemption from registration at the state level. Because such notes are not registered and are therefore considered unregulated, they are not currently distributed through conventional investment industry channels. However, several CDFI loan funds, along with affordable housing organizations, are working to increase their visibility and are now offering registered (as exempt non-profits) products in some states.
To find a CDFI loan fund, please visit the Opportunity Finance Network CDFI Locator. To find rated CDFI's, Aeris Insight offers a CDFI Selector.
Bond strategies with a strong community investing component
Another fairly common community investment vehicle is a community development bond strategy, structured either as a mutual fund or a separately managed account. These strategies bundle government-backed affordable housing, business financing and municipal bonds. The securities were first developed to facilitate investments in low-income census tracts--investments that banks are required to make under the Community Reinvestment Act (CRA). They have grown in popularity with non-bank investors who like the combination of impact, return and security these bonds offer. These bond funds are often referred to as “CRA bonds” or “social bonds".
There are also other mutual funds, particularly those that specialize in fixed income, that include community development investments into their portfolio mix.
Microfinance and investments in small business finance entities
Microfinance organizations make small loans to help very small businesses, especially in the poorest parts of the world. These international or internationally focused organizations provide loans, debt guarantees and technical assistance to businesses, affordable housing providers, smallholder farmers and agricultural cooperatives. A growing number of microfinance organizations exist in the United States. Organized as both for-profit and non-profit entities, there are also a number of intermediaries that pool investor funds and re-lend them to microfinance organizations. For more information, visit FinDev Gateway (formerly Microfinance Gateway).
In addition, there are growing opportunities to invest internationally in small (rather than micro) enterprises such as agricultural institutions and cooperatives.
Private Equity, Real Estate and Other Alternative Investments
Investing in a private company (one whose stock is not publicly traded) can put money to work locally and may assist poor and underserved people or offer sustainability impacts. Additionally, investors may become limited partners in a real estate development project or a fund that involves multiple real estate initiatives. Such projects could address affordable housing, green building, transit-oriented development, charter school finance or conservation real estate. Accredited investors and institutions can participate in virtually any legal fund structure that meets their impact goals, and many innovative funds have responded. Finally, desired impact goals can often be achieved, and customized, through separately managed accounts.
To find a private equity opportunity, visit
Institutional investors can purchase equities screened for sound community investment practice through the State Street Global Advisors US Community Investment Index (USCII). The F.B. Heron Foundation developed the index in 2005 and is responsible for selecting securities in the index. The index includes more than 300 large- and mid-cap companies in diverse sectors screened for workforce development, wealth creation, environmental management, and community involvement and consultation, among other issues, in economically underserved populations.