Retail investors are the majority of individual investors. Also known as non-accredited investors, they are individuals who have less than one million dollars in net assets. Because they are less tolerant to financial losses, the government places limits on investors who manage or accept capital from non-accredited individuals. However, a retail investor can, independently of any advisor or financial planner, place capital directly with a local community development bank, credit union or loan fund, affordable housing developer or through a microfinance institution.
Many advisors and planners may be able to assist retail investors with choosing community investment options; however, not many will be able to manage the money directly through their firm. The Expanding the Market for Community Investment in the United States report provides information on ways to attract new accredited and institutional investments, as well as to develop products that are accessible enough to retail investors.
The section on Advisors to Retail Investors in the Options and Innovations in Community Investing report also has more information on this subject.
Some private US banks and credit unions have a commitment to financing small businesses, microenterprises, non-profits, commercial real estate and affordable housing in low-and-middle income communities. These institutions offer checking and saving accounts, as well as certificates of deposit (CD) at comparable returns to conventional banks. A number of these banks and credit unions have received certification from the US Treasury as community development financial institutions (CDFIs).
To find a community development bank or credit union, please visit
Fixed income generally refers to an investment that has a set rate of return on a set schedule. Bonds are the most common type of fixed-income security, though there are others such as loans, notes and fixed income funds.
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.
Bond funds (with Community Reinvestment Act focus) or mutual funds with a strong community investment component
A community development bond fund can be structured as a mutual fund, by bundling government-backed affordable housing, business financing and municipal bonds. The Community Reinvestment Act of 1977 not only prohibits discrimination by denying or increasing the cost of banking to residents of racially or economically-defined neighborhoods, it also requires all banks to invest a portion of their assets in low- and moderate-income neighborhoods. Community development bond funds have grown in popularity with investors who like the combination of impact, return and security these bonds offer and are frequently referred to as “CRA bonds” or “social bonds.” There are also other mutual funds that are not strictly in fixed income, but include community development investments into their portfolio mix.
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.