Rockefeller Foundation/Kresge Foundation: Community Opportunity Funds
The Investing in Opportunity Act is an important new resource for community investment. The Investing in Opportunity Act (IIOA) is part of the Tax Cuts and Jobs Act of 2017 and provides capital gains relief to investors investing in “Opportunity Zones” designated by U.S. states and territories. The Kresge Foundation and the Rockefeller Foundation (Kresge and Rockefeller, collectively referred to as the Foundations) desire to see the program facilitate investments that create wealth, assets, and opportunity in low-income communities. The Foundations are evaluating how their respective organizations can support new opportunity fund managers that seek deep, positive community impact through this program.
The Foundations are requesting initial Letters of Inquiry (LOI) from prospective fund managers around investment strategies that:
1. Relate to one or more of the programmatic goals of the Kresge or Rockefeller Foundations:
- The Kresge Foundation: Alignment with one of six program areas (Arts and Culture; Detroit; Education; Environment; Health; or Human Services) and/or focus on Detroit, Memphis or New Orleans. For more information, read about Kresge’s program strategies at kresge.org.
- The Rockefeller Foundation: Advance inclusive community development, economic mobility, and/or expanding access to quality jobs. For more information, read about Rockefeller’s program strategies at rockefellerfoundation.org.
2. Will embed impact measurement and equity into the work.
The Foundations believe there is an opportunity to support fund managers that will harness the IIOA subsidy to make investments that create high-quality jobs and further opportunity for people with low incomes. Through the LOI, the Foundations are exploring how to possibly use multiple capital tools to support managers to launch best-in-class funds that improve the lives of people with low incomes and, achieve expected investment returns.
The following fund examples may catalyze thinking for potential submission and are intended to be illustrative only. They should not limit the scope or creativity of submissions:
- Essential services: Investment fund focused on the provision of essential services to poor and vulnerable populations (e.g., health clinics, low income housing)
- SME (small and medium enterprise) finance: Investment fund focused on SMEs and impact-oriented early ventures located in opportunity zones
- Infrastructure: Investment fund focused on the provision of essential infrastructure to underserved communities (e.g., broadband, renewable energy)
- Financial Services: Investment fund focused on supporting or partnering with financial service firms focused on underserved communities and asset building
Amount: At this time, there is no commitment on behalf of either Foundation to make grants, guarantees, or other forms of Program Related Investments (PRIs) available. Information gathered through this process will help determine if and how the Foundations commit resources. After reviewing the LOI submissions, some organizations may be invited to submit full proposals. If investment opportunities emerge from qualified fund managers that are highly aligned with the interests of one or both Foundations, Kresge and Rockefeller will consider financial support.
The Kresge Foundation has the capacity to provide up to $25 million in unfunded guarantees. The amount of grants or other forms of investment support through PRIs has not yet been determined. It should be noted that neither Foundation has capital gains liability it is attempting to offset through the Opportunity Zone program. The collective interest is in exploring how Foundations’ support can help managers use the Opportunity Zone subsidy for the highest impact in communities.
Eligibility: The Foundations seek partnerships with mission-aligned fund managers who intend to make investments that will benefit the lives and communities of low-income people, will deliver promised returns to investors, and will evaluate the impact of investments over time. Applications are welcomed from organizations that have significant experience raising and deploying capital in low-income communities and those that are newer to community investment.
On Friday, May 18, 2018, the Department of the Treasury designated 63 Opportunity Zones in New Mexico. New Mexico’s Opportunity Zones are located in rural, tribal and urban communities in 22 counties. Qualified Opportunity Zones retain this designation for 10 years.
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