The Internal Revenue Service (IRS) held a public hearing last week on Opportunity Zones (OZ) commentary. During the hearing the IRS heard comments from stakeholders who expressed the need for clarity and final guidance on OZs. The hearing was pushed to February due to the government shutdown. The shutdown also delayed the release of the federal government’s final guidance on OZs.

Forbes reported that the final guidance, which will provide clarity on the OZ program, is likely to come soon, considering last week’s IRS hearing on the matter and the fact IRS has released instructions on how taxpayers should implement the OZ Form 8996.

While we await the final guidance, the U.S. Impact Investing Alliance and the Beeck Center of Georgetown University have released the Opportunity Zones Framework, which highlights best practices for investors to ensure equitable community development.

The framework shares that while many investors may have an “explicit goal of creating positive social, economic and environmental impact,” such guidance is needed so they understand community implications.

That’s why the framework provides a set of guiding principles, a reporting framework and a shared goal of measuring outcomes.

OZ guiding principles from the framework:

• Community Engagement: Opportunity Fund investors should request that fund managers integrate the needs of local communities into the formation and implementation of the funds, reaching low‐income and underinvested communities with attention to diversity.

• Equity: Opportunity Fund investments should seek to generate equitable community benefits, leverage other incentives and aim for responsible exits.

• Transparency: Opportunity Fund investors should be transparent and hold themselves accountable, with processes and practices that remain fair and clear.

• Measurement: Opportunity Fund investors should voluntarily monitor, measure and track progress against specific impact objectives, identifying key outcome measures and allowing for continuous improvement.

• Outcomes: Opportunity Fund metrics should track real change, with an understanding that both quantitative and qualitative measures are valuable indicators of progress.

“Opportunity Zones are a powerful tool to provide improved quality of life and economic empowerment for underserved communities across the United States. We believe that, by utilizing the common approaches articulated in this document, we can enable an important collective step towards a shared and equitable future,” the framework states.

Philanthropy can serve as a convener to catalyze such efforts.

“Community foundations have a great seat at the table inside our opportunity zones,” Bonnie Gettys, president and CEO, Barry Community Foundation said. “Being a convener, planner or investor provides an intersection to bridge community improvement and stabilization.”

The Kresge Foundation was recently highlighted in the Stanford Social Innovation Review for the foundation’s work  to ensure equity and responsible community development are guiding OZ investments.

As CMF reported in November, the foundation did a call for proposals to find potential Opportunity Zone projects that aligned with the foundation’s work. The foundation received more than 140 responses and from that pool, selected a small group of fund managers to support in bringing ideas to the marketplace with the hope of setting an example of best practices in socially responsible community investments, guided by transparency, research and reporting.

On March 13, you can learn more about OZs as the Community Economic Development Association of Michigan (CEDAM) is hosting a day-long comprehensive overview of OZs in Michigan. The event, which will be held in Lansing, will include discussion about community goals and avoiding displacement.

Want more?

Check out the Opportunity Zones Framework.

View the Michigan State Housing Development Authority’s (MSHDA) OZ resources.

Connect with The Kresge Foundation’s OZ work.

Check out Mission Investors Exchange’s OZ resources.