The Rockefeller Foundation will spend $5.5 million to help cities take advantage of the opportunity zone program created in the 2017 Tax Cuts and Jobs Act. The initiative will give six cities funding for a Chief Opportunity Zone Officer to be embedded in the city government, as well as community engagement specialists who can coordinate investments that will help the community.
Newark, NJ will be the first city in the initiative and will receive $920,000 in funding from the Rockefeller Foundation and Prudential Financial.
Separately, the Mastercard Center for Inclusive Growth and Accelerator for America announced they will partner to help direct opportunity zone investment to distressed communities. The partnership includes an $850,000 grant from the Mastercard Impact Fund, as well as data science work, economic development tools and research.
The opportunity zone program allows investors to get a tax break if they put money into certain businesses and properties in "distressed" areas selected by the state and federal government. More than 8,700 census tracts have been designated as "opportunity zones," and the Rockefeller Foundation estimates there is more than $6 trillion in unrealized capital gains that could qualify for investment there. However, there's been concern that the benefits of the investments might only be felt by developers, or that investors might focus their money on gentrification or real estate projects rather than businesses that could foster the community.
That's the problem the Rockefeller Foundation seeks to solve, by giving cities funding and human resources to integrate opportunity zone planning into government. The hope is that having a designated engagement team can ensure that the community gets a say in how opportunity zone funds are spent.
Mastercard Press Release
The Mastercard Center for Inclusive Growth and Accelerator for America (AFA), a non-profit consortium of mayors, labor and business leaders, and urban and economic development experts, today announced a unique partnership to combine their expertise to drive inclusive investment in distressed communities across the United States. The announcement was made at the first Forbes Opportunity Zones Summit in Newark, NJ.
The partnership includes an $850,000 philanthropic grant from the Mastercard Impact Fund to help the Accelerator realize its goal of helping 50 city leaders and their communities maximize the potential of the federal Opportunity Zone incentive. Additionally, the Mastercard Center for Inclusive Growth will provide in-kind support in the form of data science expertise, economic development tools and research to help city leaders make evidence-based decisions.
Together, the partnership will provide community leaders across the country with: Data-driven insights around the current economic activity in their Opportunity Zones; assistance in building an Investment Prospectus through the Accelerator's toolkit; consulting on how to structure and mobilize inclusive investments; analysis of unmet needs for investment potential; and ways to measure progress over time.
"We are likely to get better outcomes if we start with better inputs," said Shamina Singh, Founder and President, Mastercard Center for Inclusive Growth. "That's why we are working with Accelerator for America, to ensure city leaders can better prove the investment value of their neighborhoods and build cases to attract investments that will fulfill the long term needs of the local community. For Opportunity Zones to have the greatest chance of impacting those who need it most, we do need art but we also need a lot more science."
"This partnership with the Mastercard Center for Inclusive Growth is a powerful show of confidence in the Accelerator's mission to drive national change through local solutions — from the bottom, up. Mastercard's support and deep insights into the economic power of people living in the Zones will provide key data to help local communities steer Opportunity Zone capital into inclusive, transformative investments," said Accelerator for America CEO Rick Jacobs.
"To assure that Opportunity Zones will truly create opportunity, cities must take informed action. Mastercard's partnership with Accelerator for America will connect cities with the in-depth data they need to make strategic decisions that will deliver big for their underserved communities," said Los Angeles Mayor Eric Garcetti, who chairs the Accelerator's Advisory Council.
Communities across the United States are beginning to mobilize around Opportunity Zones, economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment. Accelerator for America is working closely with city leaders to help maximize this unique opportunity by providing expertise, training and tools to level the playing field between the public and private sectors.
As a philanthropic partner, Mastercard is bringing a new dimension to the discussion through its data science expertise, which helps city leaders identify patterns of spend, based on aggregated and anonymized transaction data, to deliver a timely view of the economic activity taking place in Opportunity Zones and understand potential unmet needs of the community. For example, Mastercard's data driven insights can help identify neighborhoods where spend on groceries is rising but most of that spending occurs in other parts of the city because no grocery store exists nearby.
This is the first of a series of grants from Mastercard supporting inclusive economic development across the U.S.