NEW YORK, June 25, 2019 /PRNewswire/ -- Across America, from city halls and community meetings to board rooms and chambers of commerce, local leaders are working hard and fast to understand what it means to live in and invest in an Opportunity Zone. This year, governors designated more than 8,700 low-income communities as Opportunity Zones, responding to a provision in the 2017 tax law aimed at incentivizing private investment in small businesses, affordable housing and other drivers of economic opportunity.
On the one hand, Opportunity Zones – which drew bipartisan support when the law passed a year and a half ago – could become one of the largest economic development initiatives in U.S. history. Thirty-one million Americans live in Opportunity Zones, over half of whom are people of color. And while the poverty rate is nearly one-in-three and unemployment is over triple the national average, Opportunity Zones are also home to millions of businesses, schools, churches, nonprofits and other community assets that could form the backbone of thriving communities.
On the other hand, this transformative tax break could leave residents and communities vulnerable to displacement. These residents understandably fear losing their voice in defining their economic futures. Meanwhile, there is no guarantee capital will flow to the most distressed neighborhoods, or to the projects that are best for those who work and live there. Indeed, many such Opportunity Zones are at risk of losing out and falling further behind, while Zones in already-gentrifying parts of urban areas like New York City or Washington, D.C., continue to draw the lion's share of development capital.
As members of the Presidents' Council on Impact Investing, a philanthropic leadership group facilitated by the U.S. Impact Investing Alliance, we have deep and long-standing experience investing in places like Opportunity Zones. We know that there is tremendous potential if we invest in the human and social capital that already exists inside these communities. And we also know that success will require clear opportunities for community engagement to ensure local context and priorities are front-and-center in every Opportunity Zone. Indeed, success hinges on the extent to which Opportunity Zones enable current residents to engage and equitably participate in defining how new investments ultimately reshape and strengthen the physical, social and economic fabric of their communities.
Fostering that engagement will take intentional, collective action from everyone involved in this nascent market. Specifically, we call on policymakers, investors, fund managers and philanthropists to work together to ensure communities have a voice in how this policy is implemented.
- Policymakers at the federal, state and local levels must leverage appropriate incentives and regulation to protect the voices and advance the priorities of Opportunity Zone residents in this new market. Effective policies, in tandem with civil society and impact investors, should ensure that mayors, county commissioners, local nonprofits and other community stakeholders on the frontlines of this work can access the tools and resources they need to connect with investors and effectively advocate for community interests and outcomes.
- The Opportunity Zone Reporting Framework, released by the U.S. Impact Investing Alliance, the Beeck Center at Georgetown University and the Federal Reserve Bank of New York, provides a model for how fund managers can consistently, transparently and authentically engage with communities. Investors and fund managers in Opportunity Zones must embrace a set of principles that promote authentic community engagement to determine investment priorities, learn and respond to residents' needs and shape a shared vision for equitable development. Opportunity Fund managers should also be proactive and transparent in measuring and reporting the impact stemming from their investments.
- Finally, we as impact investors and as grantmakers must stand committed to using our collective voice to champion residents and hold market actors accountable for the outcomes of their investments.
Even these actions taken together do not ensure success. Opportunity Zones represent less than a quarter of census tracts experiencing distress in the United States. As the rest of the country has enjoyed a decade of robust economic growth following the financial crisis, these distressed communities have slipped further and further behind. Bridging that growing divide and fulfilling the promise of Opportunity Zones for the people living and working inside them today must be the subject of our shared focus and drive.
As members of the Presidents' Council on Impact Investing, we stand committed to supporting this effort. Opportunity Zones have shone a spotlight on specific communities, but if the transformative potential of this policy is realized, the entire nation will benefit from a new wave of inclusive and equitable growth.
About the U.S. Impact Investing Alliance
The U.S. Impact Investing Alliance is a field building organization committed to raising awareness of impact investing in the United States, fostering deployment of impact capital and working with stakeholders, including government, to help build the impact investing ecosystem. The Alliance's members represent more than 1,000 individual and institutional investors committed to achieving measurable social, economic and environmental impact alongside financial performance. For more information, please visit www.impinvalliance.org.
About the Presidents' Council on Impact Investing
The Presidents' Council on Impact Investing comprises the heads of 20 leading U.S. foundations with a shared commitment to practicing and promoting impact investing. Together, they hold more than $80 billion in combined assets. The Presidents' Council is co-chaired by Julia Stasch, President of the John D. and Catherine T. MacArthur Foundation, and Darren Walker, President of the Ford Foundation. The U.S. Impact Investing Alliance convenes the Presidents' Council regularly to pursue shared learning, deepen commitments to impact investing and foster opportunities to pool investment and grant capital to catalyze the field. For more information, please visit www.impinvalliance.org/partners.
SOURCE U.S. Impact Investing Alliance