Opportunity Zone Magazine Volume 1, Issue 3 | Page 57

OPPORTUNITY ZONES AND ECONOMIC IMPACT: A PRACTICAL FUND APPROACH 57 It’s vital that QOFs use, collect, and share data on the economic impact of their investments. This will gauge the success of the fund against the intent of the tax policy and the engagement of the community. sets of investors. The QOFs will typically be professionally managed; they could share the results of their analysis and ongoing investment reporting with the crowdfunding investors who may not have access to professional management. The QOF could also help subsidize the cost of the crowdfunding raise in order to foster community engagement through investment by local residents. MEASUREMENT AND REPORTING OF ECONOMIC IMPACT It’s vital that QOFs use, collect, and share data on the economic impact of their investments. This will gauge the success of the fund against the intent of the tax policy and the engagement of the community. The good news on measurement and reporting is that the wheel has already been invented. INVESTMENT LEVEL MEASUREMENT The Urban Institute has drafted a Community Impact Scorecard to assess the impact of each OZ investment project by answering a series of detailed questions in 7 topic areas: community impact, jobs, businesses, housing, environment, services, and transportation. These categories are weighted against one another based on the community-identified priorities. The questions in the scorecard cover the job creations and economic development goals outlined above. The Community Impact Scorecard is still in draft status and may be likely be refined and improved over time. This scorecard is a vital part of our due diligence process and applied to each specific investment because one, it provides a standardized measure that can be compared across the large number of OZ projects that we consider and two, it has the flexibility to incorporate each the OZ community’s relative priorities into their objectives. FUND LEVEL REPORTING With the attention paid to community engagement and measuring impact during investment due diligence, fund-level reporting becomes a relatively simple aggregation process. Here, you can use the OZ Reporting Framework developed by the U.S. Impact Investing Alliance and the Beeck Center. 19 The scorecard exercise on the individual investment provide much of the information needed in the Fund Report. The intended impact section of the Fund Report can come directly from the investment scorecard. For multi-asset QOFs, summary measures by scorecard topic can also be prepared. Similarly, information is readily available to be summarized in the community engagement section of the Fund Report. The measures on economic impact and the information on community engagement can then be combined with the overall mission statement and investment thesis of the fund to complete the Fund Report. Individual Community Impact Scorecards and aggregate Fund Report should be monitored and updated on a regular frequency, e.g. annually. The QOF should monitor ongoing progress in relation to the objectives and adjust its strategy and protocol to help achieve those objectives. The Fund Report can then be made available to QOF investors and other parties. Economic impact in OZs is a direct reflection of job creation and the community-specific objectives related to economic development. Through community engagement and streamlined project assessment – and the assistance of QOFs – investments in OZs will result in successful, sustainable, and positive economic impact for years to come. Congratulations Leighanne Scott on Being Named a Top 25 Opportunity Zone Influencer! Leighanne Scott, Esq. Practice Group Leader, State and Local Tax [phone] | [email protected] www.capdale.com OPPORTUNITYZONE.COM