CRA Mutual Funds

CRA mutual funds pertain to funds available for investment in accordance with the 1977 Community Reinvestment Act. The Act has required the four agencies that supervise banks (the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision) to push the FDIC-insured banks and other financial-institutions to help with the credit needs of their communities. With the CRA mutual funds, these financial institutions can invest in rightful projects and undertakings, without fearing being short on funds.

CRA mutual funds invest in community projects that may end up earning the bank and the fund company some profit through dividends and interests. Projects are mostly for moderate to low income communities. Income projections are kept grounded and basic. The good thing with CRA mutual funds though is that these provide funding options for these less lucrative undertakings – projects that otherwise would not be touched by the financial institution alone. With CRA mutual funds, the risks associated with these investments are spread across many investors.

Of course, the gains from CRA mutual funds are lesser and take longer than other investment or mutual fund opportunities. However, the main goal really is community building, or the uplifting of the neighborhood through much-needed capital infusion. The gains here are slow and may take years. However, the development of the community has a lasting effect on the locale and its people. In the end, the benefit multiplies beyond just the beneficiary projects. In time, it will uplift the economic status of the whole community.