Nearly 150 letters of inquiry on Opportunity Zones pour into Kresge, Rockefeller foundations
September 14, 2018
Foundations will move forward with select partners to support emerging Opportunity Zone funds
NEW YORK – The Rockefeller Foundation and The Kresge Foundation received 141 responses from fund managers from across the nation who are creating Opportunity Zones (OZ) funds and attempting to raise billions in new capital to spur a range of community development investments via this new tax benefit. The foundations issued a call for letters of inquiry related to work in designated Opportunity Zones back in June with the aim of finding projects that align with their institutional missions to ensure positive outcomes for America’s low-income communities.
The funds will land in low-income census tracts across the United States that have been designated as Opportunity Zones by governors of the states. Investors can receive a reduction in capital gains tax plus additional economic benefits when they invest in OZ funds.
“The number and quality of the responses is a testament to the enormous market interest and energy that exists around Opportunity Zones,” said Lorenzo Bernasconi, senior associate director for Innovative Finance at The Rockefeller Foundation. “We are very excited to move forward with a select group of organizations to develop and showcase the potential of Opportunity Zones to drive new investment and measurable impact in areas of need across the United States.”
“We issued this request for letters hoping to receive a few dozen or so responses,” said Kimberlee Cornett, managing director of Kresge’s Social Investment Practice. “The amount of interest from fund managers open to partnering with philanthropy was far higher than we anticipated. At Kresge, our goal is to identify funds that are focused on truly driving positive outcomes in low-income communities and on shaping the Opportunity Zones market to be one that is mutually beneficial to investors and residents of these communities. We’re continuing to work toward that goal.”
The inquiries represented work in a broad spectrum of asset classes including real estate, venture, small business, private equity, green energy, infrastructure and more. Geographically, 20 applicants represented national funds, 11 were targeting regional investments, and 113 were looking to work at a state or local levels.
As of today, Kresge and Rockefeller have responded to all applicants indicating whether they will move forward to potentially receive either grant or impact investing support.
The foundations are designing a package of technical assistance that will allow selected organizations to receive advisory services on legal, accounting, reporting and capital raising issues relating to their proposed OZ Fund. In the first cohort, Kresge has identified five organizations to receive that package of support, and more may be added in the future. Additionally, the foundations will work with 15 applicants to further explore their social objectives and capital raising strategies related to OZ funds.
In addition, Rockefeller and Kresge have engaged the Beeck Center at Georgetown University to write a report informed by the applications that identifies key trends and emerging themes to share with the broader community development field. It will be released in winter 2019.
ABOUT THE KRESGE FOUNDATION
The Kresge Foundation was founded in 1924 to promote human progress. Today, Kresge fulfills that mission by building and strengthening pathways to opportunity for low-income people in America’s cities, seeking to dismantle structural and systemic barriers to equality and justice. Using a full array of grant, loan, and other investment tools, Kresge invests more than $160 million annually to foster economic and social change. For more information visit Kresge.org.
ABOUT THE ROCKEFELLER FOUNDATION
For more than 100 years, The Rockefeller Foundation’s mission has been to promote the well-being of humanity throughout the world. Together with partners and grantees, The Rockefeller Foundation strives to catalyze and scale transformative innovations, create unlikely partnerships that span sectors, and take risks others cannot – or will not. For more information, please visit www.rockefellerfoundation.org.