Impact Investing Offers Opportunity Zones Reporting Framework

NEW YORK, NY—The US Impact Investing Alliance (USIIA) and the Beeck Center for Social Impact + Innovation at Georgetown University have released an impact measurement framework and a set of principles for Opportunity Zones.

The framework also defines best practices for managers seeking to invest in the designated Opportunity Zones around the country. Market participants will also be urged to share how and where they will deploy capital and to maintain a focus on the policy’s original purpose: achieving positive economic and social outcomes in distressed communities.

Collaborating With The Fed, Others

Since July 2018, the co-authors collaborated with investors, asset managers, policy experts, academics, and community stakeholders as they sought to create these Opportunity Zone guidelines. Additional contributors came from The Federal Reserve Bank of New York, Economic Innovation Group, the Urban Institute, Sorenson Impact Center, Rockefeller Foundation, Enterprise Community Partners, Local Initiatives Support Coalition and several wealth management platforms.

“Opportunity Zones represent a once-in-a-generation opportunity to spur private investment into America’s distressed communities,” Fran Seegull, Executive Director, US Impact Investing Alliance, tells GlobeSt.com. She adds that it will be important for market participants to remain committed to transparency and community engagement and that measurable evidence of the social and economic benefits for the people who live and work in those local areas will be paramount as well. Fund managers, investors, and community stakeholders should ensure their investments are contributing to that shared goal, she says.

“There is still a lot of information that needs clarification about investing into existing businesses versus only real estate,” says Seegull. “This framework is needed because the statutory language is so vague. Investors are still awaiting a few more clarifications and guidelines.”

Some Insight Into Investment Patterns

With the framework now in place, USIIA and Beeck hope to determine exactly who is raising capital and pouring it into these blighted communities, measure the value they are creating for area residents and businesses and whether or not the businesses will leave when the return on investments are realized.

“We want to know if the mom and pop shops that exist within these neighborhoods will actually benefit from the increased business opportunities in the area,” Seegull says. “Will residents gain employment from the businesses within these opportunity zones? We hope the investment in these zones benefit not just the investors but also the residents and workers as they go about their daily lives.”

How the Framework Works

The five core principles for opportunity fund stakeholders include community engagement, equity, transparency, measurement and outcomes.

The framework then builds upon these principles with a set of criteria that can be deployed across a wide range of investment types. Examples include the size of the fund, the investment focus (affordable housing, small businesses, etc.) and the amount of impact generated (jobs created, new businesses formed, affordable housing created or preserved, etc.).

The data will show us where capital is flowing and how that capital is being used, thereby revealing where there are structural barriers and where there are opportunities, Seegull says.