Encouraging long-term investments in communities across the United States
Through our U.S. Jobs and Economic Opportunity initiative, The Rockefeller Foundation is working to ensure everyone has access to a good job and a secure future. We believe in an America where everyone can thrive—even as the economy, the job market, and the workplace changes.
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.
Opportunity Zones are a bi-partisan policy innovation that have garnered a lot of attention. The program differs markedly from past tax incentive programs designed to improve low-income communities. It is market-driven, does not require impact reporting, and focuses on equity investments as opposed to traditional programs which focus on debt. And—because there is no cap to the number of Opportunity Funds that can be created nor limit to the total dollars that can be invested, Opportunity Zones have the potential to become the largest community development program in our nation’s history. Still, there’s much uncertainty about how much investment will flow into Opportunity Zones, what those investments will look like, and how they will impact people’s lives.
At The Rockefeller Foundation, we see an opportunity to shape the implementation of this policy towards an outcome we care about: inclusive economic development. We are partnering with members of the philanthropy community, community development organizations, state and local governments, and investors to demonstrate how Opportunity Zone investments can benefit the lives and communities of low-income people, deliver promised returns to investors, and be implemented responsibly and transparently.
The Rockefeller Foundation and The Kresge Foundation have partnered to request letters of inquiry from prospective fund managers around investments and investment strategies that create
wealth, assets and opportunity in low-income communities, based on the federal Investing in Opportunity Act.
The foundations are requesting initial Letters of Inquiry around investment strategies that:
- Relate to one or more of the programmatic goals of The Kresge or Rockefeller Foundations.
- Align with one of Kresge’s six program areas and/or focus on Detroit, Memphis or New Orleans.
- Advance inclusive community development, economic mobility and/or expanding access to quality jobs.
- Will embed impact measurement and equity into the work.