One of the chief concerns about Opportunity Zones, especially for community leaders and government officials, is that some investments will prioritize profit over the needs and desires of communities. Currently, Opportunity Funds are not required to demonstrate that they are providing tangible benefits to communities. As Fran Seegull of the U.S. Impact Investing Alliance told Barron’s, “this policy will only meet its objective of achieving positive economic and social outcomes for these communities if we understand where funds are flowing and how that capital is helping drive positive social and economic change.”
A number of organizations have begun to craft metrics that promote equity and transparency. Among these are LISC, PolicyLink, Georgetown University’s Beeck Center for Social Impact & Innovation, and the Federal Reserve Bank of New York, which have all issued policy briefs for stakeholders in Opportunity Zones. They contend that Opportunity Zone investors should:
There are different approaches to measuring the impact of these investments, ranging from voluntary and self-defined monitoring9 to required equity-related benchmarks.10 Some experts advocate for fund-level monitoring of investments; others seek to track community changes over time.11
LISC recommends that state and local government leaders collaborate with communities to establish specific, reasonable Opportunity Fund reporting requirements. With input from community residents and organizations, they can help encourage transparency and accountability,12 and point Funds toward community-benefiting activities. For example, state and/or local lawmakers could mandate that Opportunity Funds report on community impact to qualify for local incentives.
LISC also recommends that reporting focus on the direct connection between investments and outcomes, not just on broader indicators. For example, a reduction in the overall poverty rate in an Opportunity Zone may indicate an influx of higher-income residents rather than genuine economic improvement for existing residents. As a broader research or monitoring project, neighborhood-level trends should be compared to similar non-Opportunity Zones to better understand the effects of the Zone itself.13
With this in mind, local stakeholders should consider measuring the following outcomes:
Equitable economic development: This can include the total number of jobs retained or created through the investment or, more specifically, the number of quality jobs created at a living wage, with benefits. Further indicators should include whether jobs are easily accessible to residents of the particular Opportunity Zone or other low-income communities, whether the invested business is minority- or women-owned, or whether investment helped counteract blight, by repurposing a vacant structure or lot.
Affordable housing: This can include the number of units at different affordability bandwidths and whether those units align with community income levels; the square footage or the total investment in affordable properties; and/or whether the housing investment helped repurpose a vacant structure or lot.
Community service and other community benefits: This can include the total number of clients served (in the case of non-profit facilities), and the annual number of low-income persons who benefit from a new service, such as health care, access to healthy food, transportation, child care, or educational services.
9 The Beeck Center, for example, has suggested that investors should “voluntarily monitor, measure and track progress against specific impact objectives,”
10 For example, PolicyLink has proposed measurement the number of living-wage jobs, and the number of housing units affordable to those living at 60% of AMI or below. See http://www.policylink.org/sites/default/files/PolicyLink%20Recommendations%20for%20Opportunity%20Zones%20.pdf
11 Enterprise Community Partners has advocated both for measures related to Opportunity Fund outcomes, such as jobs accessible to community residents, as well as broader neighborhood measures such as poverty reduction.
12See Hall, Lisa Green, Seagull, Fran, Cruz, Chelsea Amelia, and Franco, Adrian. 2018. “Opportunity Zones: Moving toward a shared impact framework.” Federal Bank of New York. https://medium.com/new-york-fed/opportunity-zones-moving-toward-a-shared-impact-framework-ad5bda6b5766
13 See for example discussion in Granger, Robert C., “Establishing Causality in Evaluations of Comprehensive Community Initiatives.” In Karen Fulbright-Anderson, Anne C. Kubisch, and James P. Connell, eds. New Approaches to Evaluating Community Initiatives. Volume 2, Theory, Measurement, and Analysis, The Aspen Instiute, 1998.