A new episode of SOCAP’s podcast series, Money + Meaning: Unlikely Allies Building New Markets for Impact is now available!
A Conversation About Opportunity Funds with Rip Rapson and Aaron Seybert from Kresge Foundation
“The idea here is not that two funds…will change the world, but they may signal to the broader investment community that this kind of fund assembly is possible–that you can pull together these Opportunity Zone funds in a way that helps people build businesses, secure homes, and otherwise benefit low-income communities.”
–Rip Rapson, President and CEO of the Kresge Foundation
Opportunity Zones were established to incentivize the movement of capital into low income communities to spur economic development and job creation. By offering a tax benefit to investing in designated areas, the legislation is expected to drive tens of billions of dollars, if not hundreds of billions, into these low income communities. Yet, with limited oversight, this capital has as much potential to harm communities as is does to benefit them. What role might foundations play in ensuring that the capital invested into economically distressed communities is done so in such a way as to benefit both investors and communities alike? The Kresge Foundation, an institution that believes that the absence of capital is one of the most critical challenges facing low income communities in America today, is currently taking a leading role in answering that question.
Ever since the Kresge Foundation was established in 1924 by entrepreneur Sebastian S. Kresge, their organizational mission has been to promote human progress. Today, this private foundation serves that mission through innovative grantmaking and social investing efforts.
In March of 2019 Kresge’s Social Investment team, which focuses on expanding opportunities for disadvantaged Americans who have been left out of the economic mainstream, made two guarantee commitments totaling $22 million to back Opportunity Zone funds from Arctaris Impact and Community Capital Management. These funds are expected to raise $800 million in capital to invest in low-income communities around the country. In exchange for the foundation’s guarantees, which will make these funds more attractive to investors, Arctaris and Community Capital Management agreed to a much higher level of transparency and reporting than is currently required by law or regulatory oversight.
What are Opportunity Zones and why have they led to so much discussion within the impact investing community? What is Kresge attempting to signal to the broader market through these investments? How does the foundation’s use of guarantees serve their larger mission?
In the latest Money + Meaning podcast, our host Alex Kravitz has an in depth conversation about Opportunity Zones and the innovative way that The Kresge Foundation is working to shape OZ investment with Rip Rapson, the President and CEO of The Kresge Foundation and Kresge Social Investment Officer Aaron Seybert. Download or stream this episode to hear Rapson and Seybert discuss Kresge’s view of Opportunity Zones, the deal structure of their guarantee, the potential benefits they hope to see for both investors and low income communities as well as the possible downsides.
Host: Alex Kravitz
About Money + Meaning
Money + Meaning is the official podcast of SOCAP. This series aims to expand the conversation around impact investing and strategies to finance and support social change while stimulating innovative and valuable new partnerships across sectors.
- Kresge Foundation commits $22M to back Arctaris, Community Capital Management Opportunity Zone Funds
- Kresge signs on to letter regarding Opportunity Zones
- Download a sample Opportunity Zones guarantee term sheet from the Kresge Foundation
- Opportunity Zones FAQ from the IRS
- OZ Reporting Framework (a project of the U.S. Impact Investing Alliance and the Beeck Center for Social Impact + Innovation at Georgetown University, developed with input from Kresge Foundation and other stakeholders).
To learn more watch John Lettieri, President and CEO or Economic Innovation Group and Rajiv Shah, President of The Rockefeller Foundation, in conversation about Maximizing the Potential of Opportunity Zones. This session was recorded live at SOCAP18.