11 Tips for Foundations Interested in Getting Involved in OZs
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 and success of new government programs of significant scale and, 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 with the OZ program, creating their individual strategies, and monitoring this fast-moving program.
Learning the OZ Fundamentals
1) Read key resources: Many organizations have built introductory materials to clarify what the OZ program is and how it works. Below are a few examples:
- MIE’s OZ Fundamentals
- Economic Innovation Groups FAQs and Introduction
- 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:
3) Learn from colleagues: Consider reaching out to your local or national partners — including MIE — for advice, connections, and tailored resources.
- Take this poll to share your OZ activities and/or interests. MIE will use that information to foster a stronger OZ and impact investing network.
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.
- Enterprise Community Partners Census tool and reports
- Economic Innovation Group’s OZ data map
- Urban Institute’s investment score analysis of census tracts
5) Develop internal 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.
- 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
- Schedule meetings across program/investment teams
6) Convene or attend convenings with local stakeholders: 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.
7) 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? For example:
8) 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-investment and 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 supporting 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.
Keeping Up With Change
9) 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.
10) 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:
11) Sign up for regular updates/emails:
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, and more.