Place-Based Impact Investing in Opportunity Zones
In December 2017, Congress passed the Tax Cuts and Jobs Act which included the Opportunity Zone tax incentive meant to spur economic development and revitalization in communities lacking access to capital. This new tool encourages long-term equity investments in these under-served communities. Under the Act, investors receive tax incentives to capitalize Qualified Opportunity Zone Funds that invest in developments and businesses operating in designated Opportunity Zone census tracts.
Without the right leadership, Opportunity Zone communities risk missing their potential
Equitable and inclusive impact investing in the Opportunity Zones is hampered by several factors. First, thus far, there is limited focus on community revitalization and wealth-building in Opportunity Zone investing. The communities themselves are often not up to speed on the possibilities and generating the right engagement. Second, impact-oriented shovel-ready projects are scarce, and even if they existed, few investment ecosystems exist to enable efficient capital flow.
Place-focused philanthropy is uniquely positioned to bring out the goodness in Opportunity Zone investing
The Act does not require that investing generate any social returns. Philanthropy is likely one of the few institutions able to push for those outcomes. Community foundations, in particular, can have powerful influence given that they have knowledge of the community needs and players, connections to power and capital sources, and a devotion to positive community impact in underserved populations.
LOCUS helps Foundations unlock impact investing in Opportunity Zones
With guidance from LOCUS, place-focused philanthropy can lead the charge in Opportunity Zones in three key ways:
Get community stakeholders up-to-speed and action-oriented
- Become a champion for the program and potential community impact
- Develop and provide targeted briefs and information materials
- Conduct educational webinars and seminars
- Advise on actions required to realize the benefits
Deploy the Foundation's assets
- Invest alongside in mission-aligned projects with direct grants, equity, debt, and guarantees
- Provide grants to individuals and group championing the program and establishing markets and funds
- Partner with key leaders and groups to provide space, host forums, and support events
Establish Opportunity Zone markets
- Provide a real and virtual place for stakeholders to engage
- Build and nurture community project pipeline
- Facilitate the creation of Opportunity Zone funds
- Institute and monitor impact goals