Because of the lack of ratings and regulation for community investments, it is difficult to assess the level of risk of different types of investments and Community Investment Institutions (CIIs) . Clearly, insured investments (such as certificates of deposits) in regulated CIIs (community development banks and credit unions) are the least risky investments. However, other types of investments in other types of community development institutions have proven safe and attractive for many investors.

Investor losses in community investing have been minimal, at most. Of the 442 CDFIs surveyed through the CDFI Data Project, none of them have reported that they have ever lost any investor principal.* Many of the CIIs themselves have lost money, either through operations or loan losses. However, in general, they have been able to manage the risk they take in such a way that they have been able to fulfill their obligations to investors. Hundreds if not thousands of investors, including institutions and individuals, have placed their investments in hundreds of CIIs without suffering any late interest or principal repayments. However, unless investing in a federally insured community development bank or credit union, loss of principal remains a possibility.**

For more information about the risk of community investments and how to evaluate that risk, please see Section 6 of our Due Diligence Primer .

* Data as reported by 442 of the 1,000 existing CDFIs for the FY 2002. Taken from CDFI Data Project study “CDFIs: Providing Capital, Building Communities, Creating Impact.”

** Intro to Section 6 of the Due Diligence Primer for Community Investing.