What risks are involved in community investments?
As with any investment, there are risks involved in community investments. Investing in community development banks and credit unions is considered low-risk and are insured up to at least $100,000 per depositor. Community development loan fund or venture capital investments have different risks that investors need to be aware of, but these institutions have plans and practices built into their operations that mitigate risk. Investors should carefully evaluate the risks as they would for any other investment and request appropriate materials such as a prospectus from the CIIs. For an overview of the risks associated with community investments and a primer on due diligence, see Evaluating Risk.
