Opportunity Zones: Moving Toward a Shared Impact Framework

The tax bill passed in 2017 includes a provision creating various benefits for investors that move capital gains into designated low-income census tracts, known as Opportunity Zones, through special investment vehicles known as Opportunity Funds.

This tax benefit has captured the attention of a wide range of stakeholders — from investors attracted by a new tax incentive to community development practitioners drawn by the promise of increased investment in low-income areas.

Many elements of this new investment tool are uncertain, including if and how Opportunity Funds will manage and report on the social and environmental impact of their investments. Yet even amid this uncertainty, investors are looking to take advantage of the benefit.

What is certain is that Opportunity Funds are another tool in the community development tool kit — primarily for state and local players — and they underscore the importance of place-based investment. The tax benefit will drive capital to the nation’s most distressed areas, but the activities that capital supports must be rooted in a local context.

Ensuring that these investments result in meaningful and inclusive economic development will require a coordinated effort by a diverse consortium of leaders. With that in mind, on July 19, the U.S. Impact Investing Alliance, the Beeck Center, and the New York Fed convened a roundtable of community development investors, researchers, and practitioners to discuss the future of Opportunity Zones.

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