In late December 2020, amidst a tumultuous US presidential transition and raging COVID-19 pandemic, the US House and Senate passed the Consolidated Appropriations Act, an annual constitutional obligation that funds the government (and prevents a shutdown). In addition to $900 billion in COVID-19 stimulus funding, it included a five-year, $25 billion extension of the New Markets Tax Credit (NMTC) program for America’s at-risk communities, the largest extension in the history of the program.

Invented as part of a broader set of “third way” reforms under the Clinton administration, NMTCs are aimed at improving conditions in low-income communities via market-friendly policies. Managed by the Treasury, NMTCs enable private investors to purchase tax credits for their development work in low-income communities, with the net sale proceeds funding projects that deliver better jobs, buildings, schools, and health outcomes. And from the perspective of most analysts, the now 20-year-old program is a resounding success, receiving rare bipartisan support in Congress for generating investment across all 50 states, the District of Columbia, and Puerto Rico. More than $60 billion in tax credits have been utilized in America since the inception of the program, creating more than 1 million jobs and generating $8 of private capital for every $1 of NMTC investment.

An example of the NMTC’s large potential for impact is the Coquille Indian Tribe, which continues to utilize the program to help correct more than 150 years of historical wrongs. In 2005 they turned to regional nonprofit Craft3, a certified Community Development Financial Institution under the NMTC program, for a tax credit allocation in support of the construction of The Mill Casino, a hotel and RV park on the site of a former sawmill. Support from Craft3 and other private investors helped the tribal enterprise flourish and generate family-wage jobs that continue to this day.

The Mill Casino’s financial success allowed the tribe to think more broadly and flexibly about the next steps toward fiscal and cultural self-determination. The tribal leadership once again turned to Craft3 and other investors in 2015 for NMTCs to acquire the 3,200-acre Sek-wet-se Forest, with the goal of creating jobs by sustainably managing the forestland. Considered part of their ancestral homeland, this forestland contributes to the tribe’s long-term vision for economic self-sufficiency and cultural revitalization. Altogether, the tribe now owns more than 10,000 acres of sustainably managed forestland, a step that likely wasn’t possible without the federal NMTC program. Three decades after restoration, the Coquille Indian Tribe has become Coos County’s second-largest employer and an important contributor to the southern Oregon Coast’s social, political, and cultural vitality.

Read the full article about the New Markets Tax Credit by Seth Walker at Stanford Social Innovation Review.