Opportunity For Good: Five Ways Foundations Can Drive Meaningful Change Through Opportunity Zone Investments

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The American landscape has the potential to be utterly transformed by Opportunity Zones — for the better or, perhaps, for the worse. Representing the most significant community development program to pass in a generation, the 8,700 designated Opportunity Zones across the country offer federal tax incentives great enough that real estate investors are now clamoring to pump billions, possibly even trillions, of dollars into underserved neighborhoods. The new program has already attracted $29 billion in community development investment capacity.

Such massive investment could jump-start the economies of long-overlooked communities, as intended, and begin to lift them out of poverty. But the prospect of such fast-paced, large-scale investment has also prompted grave concern. In this era of rapid displacement, the injection of outside wealth into vulnerable communities often yields unintended consequences: It typically ends with residents pushed out of their own neighborhoods. Thus, without policy-level changes mandating social-impact parameters, Opportunity Zone investments could result in the massive displacement of existing communities and perpetuate the widening wealth gap separating the “haves” from the “have-nots.”

Foundations, however, have the power to steer a more positive outcome. With their national breadth and deep experience working with vulnerable communities, foundations have the capacity to unite the various stakeholders in this complex landscape and get them moving in the right direction. Already some foundations are embracing the idea, including The Rockefeller Foundation, which this past May declared:

“Philanthropy has an important role to play in ensuring Opportunity Zones improve the lives of the residents in distressed communities.”
Dr. Rajiv J. Shah, President, The Rockefeller Foundation

We at Shift have been investing and developing real estate with social purpose prior to Opportunity Zone legislation. Our unique experience connecting the dots across sectors, partners and neighborhoods has given us insight into marketplace gaps, as well as ways foundations can bridge those gaps to help Opportunity Zones truly succeed.



Many of the Opportunity Zone communities have long been trapped in the “slumlord economy”: Their housing market has been controlled by landlords who turn a profit by minimizing spending on their properties, sowing the seeds of neighborhood blight. First and foremost, the slumlord economy has its roots in lack of landlord accountability. Absentee landlords — outside investors with no interest in the community other than their own short-term gainare able to hide behind partnership structures that mask their identities, leaving tenants with few ways to speak up or fight back.

Two marketplace challenges help to perpetuate the slumlord economy and hold back the housing market. The first challenge is that a large proportion of tenants driven to low-income communities have limited housing options due to low pay, bad credit or a criminal record. So although tenant demand for quality housing is high — which economic theory tells us should drive a proportionate increase in quality supply — tenants’ lack of consumer power creates a disproportionate market advantage for landlords.

The second marketplace challenge is that in neighborhoods where the average home value is $50,000 (as in North Philadelphia or Baltimore), investors and developers find it nearly impossible to secure a loan big enough to cover a quality renovation. Rather, the current financing system requires developers to come out-of-pocket more than they would in wealthier neighborhoods — a risk few are inclined to take.

However, foundations can help break the “slumlord economy” by tackling its root causes:

  • Provide loans at cost instead of appraised value. Foundations, as well as neighborhood institutions like Temple University and Hospital or St. Christopher’s Hospital for Children, could provide low-interest loans to developers at cost, instead of loans based on the appraised market value.
  • Provide guarantees to traditional banks to lend on smaller deals. Smaller loan sizes are difficult for banks, since the underwriting required typically doesn’t match the loan’s potential payoff. However, Community Development Financial Institutions (CDFIs) could provide enhanced guarantees on behalf of developers who make explicit commitments to impact or affordability. That guarantee could allow banks to move more quickly through their underwriting process and with more confidence in the borrower.
  • Support accountability in the housing industry. Although the LLC corporate structure provides cover for anonymous landlords, several grassroots initiatives are finding ways to hold them more accountable. For example, the for-profit Whose Your Landlord provides landlord reviews, neighborhood content and housing literacy in order to empower and inform renters; and the nonprofit JustFix.nyc empowers tenants to fight displacement. Such initiatives need investment to grow, scale, and improve — a role that foundations could fill.



Foundations are already familiar with impact metric reporting: They use it to responsibly monitor and evaluate their social return on investment. For a large-scale investment like Opportunity Zones, getting accurate data on metrics is crucial for testing the program’s effectiveness. Indeed, groups like Sorenson Impact, TrueImpact, and the Council of Foundations have already published extensive impact reporting frameworks to help implement Opportunity Zone investment best practices. These frameworks are critical to the creation of federal policy that can mandate this prerogative at scale.

However, the real estate industry is new to impact metric reporting and, in the potential absence of mandatory policies, will need to be coaxed into voluntarily adopting the practice. National and local foundations will need to work together to push for real estate groups — especially incumbent groups — to integrate these important reporting frameworks into their business models.  

The real estate industry faces an additional hurdle: Even for developers who value social impact, they lack the training and operating capacity required to do impact metric reporting correctly. Foundations could provide grants (ideally for six months to one year) for both the training and operating expenses of social impact reporting. Powered by proper training and resources, impact reporting from real estate groups will have the rigor needed to help create catalytic change.



The historic Art Deco-style Beury Building in North Philadelphia has been vacant for 40 years. During these four decades, it has been the focus of over 30 separate planning studies — but, incredibly, despite so much time and attention, it still sits abandoned and boarded up. Not a single plan has come to fruition. This running-in-place phenomenon is absurdly common. Across the country, thousands of buildings or communities have been studied repeatedly (witness Columbus, Ohio’s Linden neighborhood, which has been the focus of 35 distinct plans, as illustrated on pages 16-17 of its current plan), with each individual cycle generating solid blueprints and raising community hopes, then resulting in — very little.

How can this be? All too often, it comes down to misaligned expectations. Community groups or cities often enthusiastically create neighborhood plans, but lack the significant financial, legal and/or political weight to make their plan feasible. Then, when developers come in to make those planning documents a reality, they’re dismayed by the gap between “what the community is asking for” and what will feasibly “pencil out.” Faced with this disconnect, developers ultimately walk away, leaving everyone pointing fingers at one another. This miscommunication represents one of the deepest pain points between communities and real estate developers. 

Foundations can play a pivotal role in connecting communities and real estate developers. Foundations should provide specific support, in the form of additional project-level subsidies, to developers who create plans that directly coordinate neighborhood plans. This will incentivize developers to push closer to community needs in a way that will also allow them to build trust with the community.

Foundations can also support communities by providing education about the development process, urban economics, criminology, and urban planning trends. The Livability Academy by HACE and funded by the Wells Fargo Regional Foundation is a phenomenal example of hands-on community-building education for local residents. Local engagement and empowerment should demystify how real estate can influence their quality of life. The greater everyone understands tools to elevate their own quality of life, on their own terms, the better.



We agree with many of our colleagues on the importance Opportunity Zone investments being hyper-local. However, thinking further, let’s ask the tough question: Who has the capacity to contribute to and benefit from Opportunity Zones? Unfortunately, it is likely not a minority or women-owned real estate developer/investor from an Opportunity Zone community, the precise sector that has been traditionally left out of real estate. This is where foundations must play an active role and make long-term commitments — by creating business incubators and accelerators.

We need to plant the seeds for future developers and real estate professionals and increase wealth-building opportunities for communities. To do so, foundations could increase access to pre-development funding sources, education, and credit enhancements for minorities. (For a national example of a foundation-driven accelerator, see the Kresge Foundation’s “Guarantee Bank.”) For example, foundations could provide capital and resources to groups like LaunchPad, Better Than Success, The Runway Project, and IF Lab, who already have missions aligned with developing entrepreneurial ecosystems, can expand their focus to include real estate entrepreneurs while continuing to locate themselves in communities of need.

At Shift, in partnership with Impact Services CDC, we launched our own real estate accelerator, Jumpstart Kensington, for the local community by providing workshops, mentorship, and financial support. To date, 90% of our participants are people of color and 50% are women. Impact Services was essential in connecting the existing neighborhood to the program – a partnership that made local inclusion a reality.

Building real estate entrepreneurs will take time, and we are in it for the long haul, but the window of opportunity to begin — provided by Opportunity Zones — is now. Foundations need to lean in to initiatives like these, which need more capital, more logistical support, and expanded reach to more communities.



This is a call to think ahead. As Opportunity Zone investments succeed, adjacent neighborhoods — with even deeper poverty — will become the next sites for development. Getting out in front of such development, pre-gentrification, is one of the keys to sustainable revitalization. Foundations need to promote and support inclusive development in those adjacent neighborhoods whose housing markets, while dormant now, will be next in line for growth.

For foundations to take such a proactive step would be to move outside their usual comfort zone and speed. (Opportunity Zone legislation has only highlighted the different reaction speeds of private industry versus the slower nonprofit community.) But foundations have an important tool at their disposal. Program Related Investments (PRI’s) and low-interest debt vehicles directly from a Foundation’s endowment could provide much-needed concessionary capital in communities that are deeply struggling. By being intentional about these investments, we can strengthen these existing communities by providing wealth-building opportunities before the jolt of sudden investment and gentrification.

PRIs could also be used to aggressively invest in projects or developers (for-profit or non-profit) with social missions working in these “adjacent neighborhoods.” Foundations could hire such real estate professionals directly into the foundation world (much like City Planners are hiring artists) to increase the innovation required for foundations to both keep up with the private sector and to identify opportunities to protect communities proactively, instead of reactively.


The sheer scale of Opportunity Zone investments puts some of our nation’s poorest neighborhoods on the verge of enormous change. As real estate professionals committed to developing equitable, inclusive communities that thrive, we are thrilled by Opportunity Zones’ tremendous potential for good — and concerned by their potential for harm. We encourage foundations to lead our fellow developers, our cities, our neighborhood groups, and Opportunity Zone investors so that together we can create thoughtful, inclusive outcomes. As we like to say, “Together goes the neighborhood.”

Let’s get this right.

The short-list of our recommendations

  • Provide loans at cost instead of appraised value in low-income neighborhoods.
  • Provide guarantees to traditional banks to lend on smaller deals.
  • Support accountability by providing investment to companies and organizations that are creating more transparency and empowering tenants.
  • Provide capacity funding for real estate developers to implement social impact reporting.
  • Provide specific support, in the form of additional project-level subsidies, to developers who create plans that directly match neighborhood plans.
  • Provide community education about the development process, urban economics, criminology, and urban planning trends.
  • Foundations could increase access to pre-development funding sources, education, and credit enhancements for minorities traditionally left out of real estate by creating real estate incubators.
  • Provide funding for groups working in adjacent Opportunity Zone neighborhoods.
photo courtesy: “My Life Through A Lens” on Unsplash

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