Opportunity Zone Magazine Volume 1, Issue 3 | Page 70

70 OPPORTUNITY ZONE MAGAZINE | VOLUME 1 • ISSUE 3 THE TIME IS NOW TO SHOW THE VIABILITY OF OZs. As the final Treasury regulations and multiple recent legislative proposals aim to provide meaningful reporting, the time is now for the industry to embrace OZ social impact measurement. Nearly $2.3 billion went into OZs between early December and early January due to the final regulations coming out – a 51% increase from the month before. The recent market sell-off, after the longest bull market in history, most likely means that many investors may be sitting on significant capital gains that are eligible for the benefits that OZ investments offer. Additionally, investments that are counter-cyclical might become more attractive in the uncertain economic environment that has emerged. The COVID-19 crisis has clearly shown that there is a link to a heightened focus on health, safety and doing good as witnessed by many generous acts of kindness being carried out to help those in need. Asset classes like affordable housing and assisted living have historically held up well in an economic downturn, and these types of assets are well suited for OZs – and, by extension, this will build on the emphasis towards making a positive social impact. Measuring and promoting the social impact of the investments an OZ is making will only become more important to investors as investment increases. HOW TO BEST MEASURE SOCIAL IMPACT Unlike previous community-investment initiatives, current federal rules for OZs don’t necessitate investors meeting affordability or job-creation mandates – nor do they require OZ funds to report the social impact of their investments. Several organizations have built social impact reporting frameworks or offer consultant-like reports that showcase just how much good a specific project might do. These reporting frameworks are a critical step in the process, however many of the resulting implementations are costprohibitive for some. They’re also less standardized, specific, and scientific than they could be, which certainly provides the flexibility in application but may not provide a complete picture. For instance: Are the frameworks capable of measuring numerous specific, place-sensitive variables? Can they account for a project’s efficiency in doing so? And, if everyone’s using different contexts with different methodologies, are we missing out on an opportunity to achieve some set of industrywide standards, which can be benchmarked over time? Today’s era of advanced technologies and analytics tools enables something more algorithmic to be developed, which OPPORTUNITYZONE.COM