Tools & Resources

10 Tips for Foundations Interested in Getting Involved in OZs

CREATED 08/15/18; LAST UPDATED 02/27/19
The Opportunity Zone program, a new federal tax incentive intended to attract investments to low-income communities, is quickly rolling out across the U.S., as funds and states develop strategies to facilitate investments. (Click here to read more about what OZs are and how the program works.)
 
Early movers are often responsible for shaping the ultimate direction of new government programs of significant scale. As the OZ program unfolds, foundations with an eye to impact are moving quickly to get involved in ways that appropriately fit their capacity and priorities. Below, we’ve compiled evolving advice from the field on how some foundations are getting up to speed, creating strategies, and monitoring progress in this fast-moving program. View a complete list of resources and related articles at the bottom of this page.
 

Learning the OZ Fundamentals

1) Read key resources from mission-driven sources
Many organizations have built introductory materials to clarify what the OZ program is and how it works, including: MIE’s OZ FundamentalsEconomic Innovation Groups FAQs and Introduction, and Enterprise Community Partners resources
 
2) Develop place-based knowledge
The OZ program is a place-based approach to impact investing and will unfold in very different ways at the state and local level. To understand how OZs may affect regions you care about, consider leveraging local knowledge, such as the Directory of Economic Development Agencies and Opportunity Finance Network’s CDFI Locator.
 
3) Learn from colleagues
Consider reaching out to your local or national partners — including MIE — for advice, connections, and tailored resources. MIE members may contact Melanie Audette to receive suggestions for relevant connections.
 

Crafting an Initial Strategy

4) Understand the OZs in your areas of focus
Explore the census tracts identified as OZs to consider where they overlap with the communities your foundation serves and cares about. A maximum of 25% of low income census tracts were selected in each state; also of importance to foundations are the communities that were left out of the program. Resources include Enterprise Community Partners Census tool and reports , Economic Innovation Group’s OZ data map, and Urban Institute’s investment score analysis of census tracts.
 
5) Develop internal and external dialogue 
The OZ program can affect a foundation’s stakeholders in a variety of ways — on both the grantmaking and investing side of an organization. Consider the following activities to engage foundation staff in cross-learning and engage external stakeholders.
  • Share this resource page internally to bring staff up to speed
  • Invite speakers for brown bag lunches at your foundation or view live / recorded webinars and schedule meetings across program/investment teams
  • Attend convenings and conferences: Leaders from state and local government, CDFIs, economic development agencies, fund managers, academia, tax experts, real estate developers, and other foundations are rapidly developing expertise in the OZ program. Many are looking for partners to help establish initiatives or collective responses for their region.
6) Consider how OZs intersect with your mission
How might your mission can be furthered (or jeopardized) by engaging (or not) in OZ related activities? Which of your programmatic areas may relate to OZs? Examples of articles diving into these kinds of topics include the impact of OZs on tribal lands, on rural communities, or on Income inequality.
 
7) Consider strategies across programs and investments 
Although strategies are not ‘one-size-fits all,’ below are a few examples we see emerging in philanthropy:
  • Co-investing and/or providing catalytic capital. Although foundations are not eligible for the program’s tax benefits, they are exploring ways to invest alongside O Funds to foster impact and help make mission aligned investments more attractive to private-sector investors. This capital may take the form of impact investments or complementary grants.
  • Field-building grants: Foundations are providing grants to organizations and projects seeking to foster impact in the OZ program, such as efforts to conduct research and evaluation of the program, to monitor policy decisions, and to convene stakeholders.
  • In-kind resources, referrals, and advice: As hubs of local networks, foundations are serving as local convenors, providing space, helping to host and participate in events, and actively connecting people and communities to build strong ecosystems.
  • Supporting mission-aligned advisors and fund managers: According to this Stanford Social Innovation Review essay, foundations may find opportunities to support transaction advisors, who "work with local government officials to prepare a pipeline of potential private sector investments." In addition to co-investing, foundations may be able to provide other forms of support to mission-aligned fund managers seeking to deepen their engagement and capacity.

Keeping Up With Change

8) Join a community
Several organizations have established communities to share knowledge:
  • Join MIE on Slack! If you’re an MIE foundation member, please contact Anjali Deshmukh for access to a special Slack workspace to quickly share information with colleagues about Opportunity Zones.
  • Form or join a working group: Examples include this working group by Novogradac and Co. Foundation members can use the Slack channel above to bring what they learn back to the MIE community.
9) Foster local ecosystems
Communities are able to share information and activate more quickly when individuals and organizations work together to form a strong network over the long-term. These examples demonstrate how strong ecosystems can form in impact investing:
10) Sign up for regular updates/emails
  • Economic Innovation GroupEnterprise Community Partners, and others are sharing regular information on the program.
  • You can create a google alert to search the Internet for mentions of Opportunity Zones (or, customize to your region or purpose) by clicking here. We recommend that foundation members join our Slack workspace, where we’ve begun setting alerts up for the community.
Please visit MIE’s main OZ Library for a variety of evolving resources. If you have any suggestions for this page, please email Anjali Deshmukh.
 
This MIE article was written by synthesizing a variety of articles and resources, from organizations including the U.S. Impact Investing Alliance, Economic Innovation Group, Enterprise Community Partners, Urban Institute, Pilot Management Resources, Summit Consulting, City Lab, Next City, Opportunity Finance Network, the CDFI Fund, Kresge Foundation, Rockefeller Foundation, Stanford Social Innovation Review, Community Foundation Public Awareness Initiative, and more.

 

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