Shifting Perceptions: Banks Embrace Low-risk, High-impact Community Reinvestment Act Investments
Contrary to traditional views, Community Reinvestment Act (CRA) investments are no longer seen as high-risk, low-return ventures. Instead, an increasing number of banks are recognizing the potential for such investments to yield high-impact, low-risk results, particularly in the realm of affordable housing projects. With banks deploying over $100 billion annually in CRA investments, the shift in perspective is significant. “I think you’re going to see more of this — alternative investment opportunities for banks to support housing in a tactical way in high-need communities,” says Hugh Allen, head of commercial real estate at TD Bank, signaling the change in investment strategy.
One newcomer to this space is Maine-based fund manager CEI-Boulos Capital Management. The firm aims to raise up to $45 million from banks to finance long-term affordable housing initiatives in distressed neighborhoods in South Dallas. The investments will be channeled towards transit-oriented projects in Cedars and Lake Cliff neighborhoods.
CRA Investments: A Growing Trend
CEI-Boulos is part of a rising trend where third-party professionals offer assistance to banks in allocating their CRA investment capital. They focus on low-risk, high-impact projects, challenging the long-standing belief that impact investing comes with high risk and low return.
Expert William Cunningham, CEO of Creative Investment Research in Washington, D.C., and an authority on impact investing, notes that banks are becoming more receptive to alternative investment strategies thanks to a growing emphasis on social returns. “The market is moving in our direction,” says Cunningham.
Investing with a Social Purpose
Previously, banks made investment decisions internally, but the complexity of impactful affordable housing and community development projects has made third-party expertise a valuable resource. These projects often involve intricate public-private partnerships that require substantial time and effort to underwrite. CEI-Boulos CEO and managing director Sam Spencer emphasizes this point, underlining the value that third-party expertise can bring.
Founded in 1977, the CRA ensures that banks cater to the credit needs of the communities they operate in, particularly low-income neighborhoods. According to Greg Thomas, president and chief investment officer of Community Development Fund Advisors in Miami, CRA investments are worth “north of $100 billion every year.”
Transforming CRA Investing
Community Development Fund Advisors is another firm leveraging this opportunity. Since joining the company in 2022, Thomas has deployed over $300 million, with growth showing no signs of slowing down. The firm invests in debt securities and other debt instruments, most of which support the development of CRA-qualified affordable housing. Thomas, who spent two decades as an institutional investor, is now injecting Wall Street investment strategies into CRA investing.
“There’s a perception that CRA investments historically have offered lower yields, higher risk [and] limited liquidity,” says Thomas. “That was the opportunity I found interesting in the market, to try to bridge that gap.”
A Track Record of Success
Since its launch in 2019, CEI-Boulos has started several single-investor-bank-backed CRA-focused funds. In January 2025, TD bankrolled a $25 million fund with CEI-Boulos to support affordable housing and other CRA-qualified community development projects in the Philadelphia area. Hugh Allen, TD’s head of commercial real estate, has been “very pleased” by the fund’s performance.
Two other CEI-Boulos funds, including the South Dallas initiative, involve multiple banks. Both fund types have their own advantages, Spencer says. His company is in discussions with a number of banks about both new single investor and multi-investor-funds.
For the South Dallas fund, CEI-Boulos and its partner, Dallas-based Savoy Equity Partners, are actively seeking investors. “They’re going to be banks, local statewide and national, that happen to have branches and deposits in Dallas,” Spencer said.
This shift in thinking is more than just a trend; it’s a testament to the growing recognition of the potential for CRA investments to yield high-impact, low-risk results. As more banks embrace this approach, it could signal a new era for affordable housing initiatives and community development projects.
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