February 10, 2020 – The USC Center on Philanthropy & Public Policy hosted a daylong roundtable of 40 executives from financial institutions, foundations and nonprofits to discuss Opportunity Zones, a community investment provision in the Tax Cuts and Jobs Act of 2017 that provides tax advantages to long-term investments in designated, low-income areas. The focus was how private and philanthropic capital streams could leverage this new tax provision to ensure that Opportunity Zones made a positive and equitable impact in those designated communities.
“A unique aspect of Opportunity Zones is that it is focused on influencing investor behavior, encouraging investments in designated communities,” said Elwood Hopkins, Founder and President of Emerging Markets, who partnered with The Center to organize and facilitate the convening. “But it’s morally agnostic: it provides the same tax advantage for investor dollars used to open pawnshops and liquor stores as it does for those opening health clinics and affordable housing.”
There is a challenge to achieve better social outcomes in underinvested areas at the same time that private sector investors are focused on how to best to optimize their resources. This is where philanthropy can play a role.
“From what we saw, there weren’t many conversations taking place that were structuring meaningful exchanges or learning across the philanthropic and investment sectors,” said Dannielle Campos, Senior Vice President and National Philanthropy Director, Bank of America, who helped to sponsor the roundtable. “We saw our partnership with The Center as an opening salvo to bridge some of this gap, and create a common language that could lead to better alignment around Opportunity Zones.”
Matt Horton, Director, Milken Institute for Regional Economics, kicked off the conversation by laying out the mechanics of Opportunity Zones and the timeline within which investors must take advantage of them. He also provided an overview of how the public sector can help to accelerate investments and their potential benefits.
Throughout the day, leaders from each sector discussed how to cooperatively engage with one another, leveraging different guidelines, guardrails, assessment tools and deal pipelines to assist them. Dan Letendre, Senior Vice President and the senior executive in charge of CDFI lending and investment at Bank of America, and Dan Alger, Managing Director of the Urban Investment Group at Goldman Sachs, shared what each of their institutions are learning as they consider investments in Opportunity Zones, and what they need to comfortably invest.
Bradford Davy, Director of Regional Engagement at Fund for Our Economic Future, Gloria Jackson-Leathers, Senior Director of Kansas City Civic at the Ewing Marion Kauffman Foundation, and Sabrina Wu, Senior Fellow, Inclusive Economies at the East Bay Community Foundation, emphasized how each of their organizations have been trying to create deal structures that both attract private sector investors while also achieving equitable development in their communities. They also identified some strategies and structures for enabling community residents to contribute to those investment decisions.
“Opportunity Zones represents the greatest potential to improve the quality of life in some of our communities in greatest need in the last 15 years, but requires a concerted effort to ensure that its promise is achieved,” said James M. Ferris, The Center’s Director and the Emery Evans Olson Chair in Nonprofit Entrepreneurship and Public Policy, at the USC Sol Price School of Public Policy.
The Center on Philanthropy & Public Policy promotes more effective philanthropy and strengthens the nonprofit sector through research that informs philanthropic decision-making and public policy to advance community problem solving. The Center is a part of the USC Sol Price School of Public Policy, which works to improve the quality of life for people and their communities, here and abroad.
For more information: Please contact Nicholas Williams, Associate Director, The Center on Philanthropy & Public Policy at Nicholas.Williams@usc.edu or 213-740-8557.