Opportunity Zone Magazine Opportunity Zone Magazine Volume 1, Issue 1

52 OPPORTUNITY ZONE MAGAZINE | VOLUME 1 • ISSUE 1 JOINT VENTURES WITH A MISSION Opportunity Zones will be transformational and could be as impactful as the Marshall Plan in today’s dollars. THE IMPACT OF OPPORTUNITY ZONES While not unprecedented, Opportunity Zones will be transformational and could be as impactful as the Marshall Plan in today’s dollars. Real estate developers and Wall Street see the tremendous value of Opportunity Zones. How do non-profits and social enterprise fit into the picture to further their community development mission? The answer is through impact investing. Impact investing refers to investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return. Impact investments provide capital to address social and/or environmental issues. This is a perfect match for Opportunity Zone investors. For example, a local non-profit in Columbus, Ohio recently received a generous gift from one of its members, who past away. Had Opportunity Zones existed previously, the donor would have been able to deploy capital gains into a social enterprise business established to fulfill the mission and receive returns for his investment. He might have even gifted the tax savings to the non-profit. Imagine if he had been able to see the impact of his investment during his lifetime, rather than waiting to honor the non-profit’s mission in his will. How does this fit into real estate development and how does it become more inclusive? A minority-owned development company could develop a QOZ project as a joint venture with a faith-based nonprofit Community Development Corporation to provide affordable housing solutions and a range of economic empowerment initiatives designed to alleviate poverty and revitalize neighborhoods in low- and moderate-income communities. The QOZ project could be a transitional housing development established to assist ex-felons in reentering communities via a holistic strategy that incorporates meaningful employment, soft skill development, community connections and an array of support services. Innovative non-profits utilizing this approach have driven re-offense down from 43 percent to 5 percent and have provided 100 percent employment within two months versus the national average of 43 percent. In impact investment like this would assist in fostering the First Step program recently discussed at the State of the Union address. 2 In order to make this project happen, a developer could establish a new for-profit social enterprise joint venture to develop the real estate. There would be numerous beneficiaries, from the state, which could save thousands, and perhaps millions, of dollars per year once the project is fully occupied by the men and women seeking a second chance. If the increased employment rates continued to hold true, the former inmates could generate millions of dollars in payroll, which would cut costs due to payroll taxes paid to the state. More than the economics, projects like these will change lives. Often when speaking about Opportunity Zones, the Opportunity Zone community talks about the What and the How. Impact investing is about the Why. If Opportunity Zones have the benefits they intend, it will be critical for community and faith-based organizations to enter into the OPPORTUNITYZONEEXPO.COM

Opportunity Zone Magazine Opportunity Zone Magazine Volume 1, Issue 1 | Page 54