Giving Compass' Take:

• Here are three ways that developers and investors can work with communities to ensure that they will benefit from opportunity zone investments.

• How can local donors help elevate community voice during these transitions?

• Learn about how community foundations can get involved with opportunity zones. 

For two years, investors and neighborhood leaders in cities around the country have responded to economic Opportunity Zones (OZs) with hope and hesitation. The policy, part of the 2017 Tax Cuts and Jobs Act, provides tax incentives for long-term investments in low-income census tracts. These incentives are meant to help disinvested neighborhoods, hungry for economic growth, attract new financial opportunities. Heeding this call, nearly 90 OZ funds have dedicated more than $2 billion for investments in OZs.

The interest has highlighted the policy’s pitfalls. While investors set the terms of local investments in business, real estate, and infrastructure projects, they are not required to respond to community needs. Place-based investments, like those incentivized by the OZ policy, are increasingly vulnerable to local resistance, especially when investors do not attempt to understand the local context of their investments.

Throughout our own work researching and supporting grassroots organizations, we have identified three ways in which developers and investors should approach new projects in neighborhoods to ensure the community's welfare and the investment's success.

  1. Learn From Foundations That Have Identified Community-Minded OZ Funds 
  2. Seek Out Strong Government Involvement
  3.  Identify Grassroot Movements to Understand What a Neighborhood Needs

Because only a fraction of OZ investors are based in the places they are putting money into, they may often be unaware of their projects' impact on local communities. And despite its intent to support communities, the OZ program lacks controls to prevent the displacement of locals in historically disinvested neighborhoods.

Read the full article about opportunity zone investments by Kate Gasparro & David Weinberger at Stanford Social Innovation Review.