Opportunity Zone Magazine Volume 1, Issue 3 | Page 69

69 WHY AND HOW WE STRATEGICALLY SHOULD MEASURE SOCIAL IMPACT IN OZs By Reid Thomas Impact Measurement standards are essential for fulfilling the initiative’s promise to empower U.S. communities that have long been left behind. Some might look at the Opportunity Zone market and focus on its benefits in deferred capital gains taxes and financial returns. However, for many OZ fund managers and investors, social impact is already an important consideration, and its level of importance is increasing over time. The bottom line is that impact investors care about real and objective quantitative results, and fund managers – whether focused on impact or not – care about seeing the OZ initiative being extended. Measurement and reporting of those results need to be increased for the longterm viability of the OZ market. This aligns with the primary goal of the OZ initiative as it continues to receive bi-partisan support: to incentivize economic development and growth in distressed communities, previously overlooked by investors. However, some people in the industry have pushed back on measuring and reporting due to perceived increased burdens and costs. With advanced technologies, algorithms, and available tools, there are ways around this concern today, pushing the industry to expand toward the bigger goal behind the OZ initiative. So, how can participants best measure social impact in OZs? What are the four critical elements that need to be evaluated, and why do those measures need to be standardized and scalable? How can the industry best achieve the right blend of financial returns and social impact while investors, fund managers and policymakers benefit from this data? OPPORTUNITYZONE.COM