- Key insight: Traditional thinking that Community Reinvestment Act investments involve high risk and low returns is giving way to an approach focused on low-risk, high-impact projects.
- Supporting data: Banks deploy more than $100 billion annually in CRA investments.
- Expert quote: "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." — Hugh Allen, head of commercial real estate at TD Bank
A Maine-based fund manager is seeking to raise as much as $45 million from banks to support long-term affordable housing in distressed neighborhoods in South Dallas.
The fund, which will invest in transit-oriented projects in the Texas city's Cedars and Lake Cliff neighborhoods, is expected to generate Community Reinvestment Act credit for the investor banks. It's the fifth such endeavor by the fund manager, CEI-Boulos Capital Management.
And CEI-Boulos is not alone. The firm is part of a developing trend, in which third-party professionals offer help to banks in allocating their CRA investment capital. The firms are focusing on low-risk, high-impact projects, as they seek to overcome longstanding perceptions that impact investing is accompanied by high risk and low return.
William Cunningham, CEO of Creative Investment Research in Washington D.C., and a longtime authority on impact investing, said banks are giving more weight to investments' social returns, which has made them more open to alternative investment strategies.
"The market is moving in our direction," Cunningham told American Banker.
In November, a group headlined by the financial literary activist John Hope Bryant disclosed that it had
Banks traditionally made these investment decisions in-house, but tapping into third-party expertise can make sense, CEI-Boulos CEO and managing director Sam Spencer told American Banker.
Spencer noted that many impactful affordable housing and community development projects involve complex public-private partnerships that require "a lot of time and effort" to underwrite.
The Community Reinvestment Act was passed in 1977 to ensure banks meet the credit needs of the communities they serve, especially low-income neighborhoods. It includes a test that measures investments made to promote housing, community development and revitalization.
That requirement has spawned a major market. Greg Thomas, president and chief investment officer of Community Development Fund Advisors in Miami, said CRA investments are worth "north of $100 billion every year."
Thomas' firm is among the companies that see an opportunity. Since joining Community Development Fund Advisors in 2022, he has deployed more than $300 million, and he said growth is accelerating.
"We've got a very strong pipeline," Thomas told American Banker. "There's overwhelming demand for the fund."
Community Development Fund Advisors' overarching strategy is to invest in debt securities and other debt instruments, most of which support the development of CRA-qualified affordable housing. The fund is able to tailor its investments to support projects located inside the footprints of investing banks.
Thomas worked for two decades as an institutional investor prior to joining the fund — which his father, CRA expert Ken Thomas, founded in 2011. Now he is injecting Wall Street investment strategies and expectations into CRA investing.
"There's a perception that CRA investments historically have offered lower yields, higher risk [and] limited liquidity," Thomas said. "That was the opportunity I found interesting in the market, to try to bridge that gap."
To that end, Thomas has designed Community Development Fund Advisors to offer banks place-based investment opportunities with 20% risk-weighting and daily liquidity options. The strategy appears to be working. According to a May 1 filing prospectus, the firm's investments have generated positive pre-tax returns since he joined, including 5.92% in 2025.
Spencer said CEI-Boulos also aims to provide its bank clients with market-rate, risk-adjusted returns.
Since its start in 2019, CEI-Boulos has launched 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, said he's been "very pleased" by the fund's performance.
"We expect to have to have all the funding out the door by the end of this year," Allen told American Banker. Last month, TD and CEI-Boulos announced a $2.7 million investment in a project providing 45 affordable housing units in Philadelphia's Strawberry Mansion neighborhood.
Allen said the bank is a large investor in low-income-housing tax credits. The fund offers "a way for us to diversify how we deploy investment dollars to support affordable housing in communities we serve."
"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," Allen said.
Two other CEI-Boulos funds, including the South Dallas initiative, involve multiple banks. Both fund types have their own advantages, Spencer said. His company is in discussions with a number of banks about both new single investor and multi-investor-funds, he added.
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.
