Opportunity Zones - A Value to Your Community?

Tucked into the 2018 Tax Cuts and Jobs Act was a provision to encourage investors to put capital in distressed communities. Dubbed “Opportunity Zones,” this provision allows governors to nominate low-income communities within their states to receive the Qualified Opportunity Zone designation from the Department of Treasury. Once in place, investors will be able to defer capital gains taxes when they choose to reinvest their earnings in these communities. Additional incentives accrue over time, encouraging investors to provide long-term capital so often lacking in distressed communities.

Interested communities submitted recommendations to the Department of Treasury, and each state’s governor was allowed to nominate up to 25% of its low-income community tracts to receive the Opportunity Zone designation. A region will retain its Opportunity Zone status for 10 years.You can learn more from Economic Innovation Group, which led the research effort behind this new national community investment program that connects private capital with low-income communities across America.

In June, 2018, the Treasury Department announced the final round of opportunity zone designations for four additional states. In total, the program has designated opportunity zones in all 50 states and five territories. Treasury has stated that nearly 35 million Americans live in designated opportunity zones. The full list of designated opportunity zones if available here.  Additionally, Smart Growth America released a LOCUS Opportunity Zone Navigator that provides important data for gaining more information about these selected opportunity zones. 

Why Might Opportunity Zones Matter to Your Foundation?

In a 2018 speech in Cincinnati, President Trump obliquely touted the Qualified Opportunity Zones (QOZs) as a feature of the tax overhaul. Afterwards, the legislation became a feature of the tax law passed by Congress and signed into law. Foundations can and should play a role in supporting the eco-system that will ensure the success of opportunity zones. Several resources have been listed below to assist foundations seeking to learn more. 

Additional Resources for Philanthropy