We know that place matters. Talent and effort are evenly distributed through the United States, but opportunity is not. The number of low-wage households who cannot afford their basic needs is alarming. Despite seeing low unemployment and consistent economic growth, people’s earnings are well below the basic survival budget. These challenges to make ends meet are not felt equitably across demographics in the U.S.
At The Rockefeller Foundation, we believe that the people closest to those experiencing the problem are best suited to define the solution, so we are investing in the capacity of cities and organizations to spur equitable economic development in their own communities.
Focusing on People and Places
Research shows how ZIP codes can define a person’s future and that places shape outcomes for people. Women, people of color, and immigrants are disproportionately affected by these systemic challenges, further exasperating existing fissures in society. This is why the Foundation has set a goal to leverage more than $1 billion in private capital for place-based investment by 2025.
Investing in people-place creates opportunities for economically disadvantaged communities by:
- Increasing access to care, capital, and credit;
- Promoting affordability in housing;
- Bolstering employer-informed upskilling programs, policies, and projects.
Guided by quantitative and qualitative analysis, The Rockefeller Foundation is partnering with organizations to attract investment that delivers sustainable benefits additional investment around Opportunity Zones in 13 cities where approximately 1.5 million have incomes below the asset-limited, income constrained, employed (ALICE) household survival budget: Atlanta, El Paso, Greater Miami and the Beaches, Honolulu, Houston, Louisville, Norfolk, Oakland, Newark, Washington, DC, Dallas, St. Louis
Opportunity Zones are a new tool communities can use to drive economic development. Established by the U.S. Congress in the Tax Cuts and Jobs Act of 2017, Opportunity Zones encourage long-term investments in low-income urban and rural communities across the United States. It is the most significant community development program to pass in a generation since the Community Reinvestment Act.
How It Works
Governors across all 50 states and territories designate low-income census tracts as “Opportunity Zones”. Investors then have the chance to take profits from current holdings and reinvest them in “Opportunity Funds,” which finance commercial and industrial real estate, housing, infrastructure, and current or start-up businesses located in the Opportunity Zones. After several years in the Fund, some of the tax on investors’ initial profits (capital gains) will be forgiven. And, the longer investors leave their money in the Fund, the more capital gains tax will be waived. If held for a decade, the added profit made from the Opportunity Fund investment will not be taxed at all.
In 2019, the Foundation launched the Community Capacity Building Initiative to help cities attract investment that delivers sustainable benefits for the 30+ million low-income Americans living in Opportunity Zones.
As part of the Initiative, cities will receive:
- A municipal leadership position dedicated solely to responsible stewardship of Opportunity Zone investments
- Two community engagement specialists to help ensure local residents and small business people are involved at every step
- Expert technical assistance from a national team focused on best practices for Opportunity Zones