One of the key concerns about opportunity zone funds is the impact these investments will have on the neighborhoods in which they operate.
Do they benefit the community or extract value from it, perhaps accelerating gentrification and making the community unaffordable for the residents they are supposed to help? That’s the fear of some New York City residents and politicians opposing construction of an Amazon campus in the Long Island City neighborhood of Queens.
Investors in opportunity zone funds enjoy several tax benefits, including the deferral of capital gains from a previous investment and a stepped-up basis for the opportunity zone investment. But those investments are meant to serve another purpose as well: to promote economic development in low-income neighborhoods.
There is, however, no requirement in the federal statute that created opportunity zones to account for their local impact, which is why a group of members and supporters of the U.S. Impact Investing Alliance and its partner, the Beeck Center for Social Impact at Georgetown University, developed an Opportunity Zones Reporting Framework.
The framework consists of voluntary guidelines for best practices of opportunity zone fund managers to help achieve “positive economic and social outcomes in distressed communities,” according to the statement announcing its formation.