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Giving Compass' Take:
• Adrian Franco and George Ashton III discuss the conclusions of a roundtable on Opportunity Zones and how investors should proceed.
• What issues do community members in Opportunity Zones and investors face while working together? How can philanthropists help bridge the gap?
• Read about six ways philanthropy can help build success in opportunity zones.
Opportunity Zones are a new part of the federal tax code that seeks to incentivize long-term investment in low-income urban and rural areas across the country. The policy, which was introduced as part of the 2017 Tax Cuts and Jobs Act, aims to support the growth of inclusive, local economies that benefit the people who live and work in them, while also providing tax benefits to investors.
On June 24, the Federal Reserve Bank of New York and LISC facilitated a roundtable discussion to solicit input from national community and economic development leaders on how to ensure that residents in designated zones will benefit from resulting investments.
Here are takeaways from the discussion:
1) Participants expressed a need for two-way education, among both communities and investors. Communities in designated zones need to be able to define what they want out of the investments and identify what levers they have to achieve them.
2) Trusted intermediaries may be key in connecting communities with investors. Roundtable participants said philanthropy could play a role, with philanthropic gifts helping to shape the market and lead investors to get involved.
3) Data reporting could safeguard against unintended consequences. Information gaps around Opportunity Zones could lead to unintended consequences, such as the displacement of existing residents, or dampen the potential impact of investments.
4) It takes time to make investments in Opportunity Zones. Opportunity Zone funding might gravitate toward areas where development would have happened anyway, and one challenge would be how to direct funding to places where it would not have gone otherwise.
5) The conversation is bigger than just Opportunity Zones. Many participants said Opportunity Zones should be part of a broader approach to catalyzing opportunity in distressed communities.
Read the full article about Opportunity Zones and a reality check by Adrian Franco and George Ashton III at LISC.