Harvard's recently announced commitment to fund affordable housing with $20 million in loans and a $1 million grant could eventually create up to $400 million for the Boston area--an unprecedented contribution, according to local housing non-profits.

The $20 million loan will be administered by three intermediary non-profits. In their hands, the money will "revolve"--be loaned out, paid back and loaned out again--multiplying its effects up to 10 times.

In addition, Harvard's example will encourage other private institutions and the government to contribute to affordable housing, according to Mathew A. Thall, senior program director of Boston's Local Initiatives Support Corporation (LISC), a nonprofit organization which will dispense $10 million of the loan.

"We rarely get money available to us for such a long time at such a low rate," Thall said. "It just opens up tremendous opportunities."

The potential of this funding makes Harvard's initiative--announced Wednesday by University President Neil L. Rudenstine--a uniquely powerful one-time allocation, Thall said.

"As far as we know, there is no [other] private, nonprofit institution that has made this kind of commitment," he said.

Boston and Cambridge officials attending the announcement at the Kennedy School of Government praised Harvard--once seen as a brazen, self-serving neighbor--for taking an active role in community development.

"This announcement puts another building block in the foundation of a strong relationship between Harvard University and the city of Boston," said Boston Mayor Thomas M. Menino at the press conference.