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November 5, 2018

Monday, November 5, 2018

Opportunity Zones and Funds: More Details Emerging

The U.S. Treasury Department and the Internal Revenue Service recently issued proposed regulations and guidance for the new Opportunity Zone Funds (OF). The public is invited to comment on the proposed regulations before December 28, 2018.

As CMF reported in May, Opportunity Zones, created through the 2017 tax reform legislation, are designed to incentivize investments in low-income communities or areas directly adjacent to one or more low-income communities. 

There are 288 census tracts in Michigan designated as Opportunity Zones. Deloitte Tax, a CMF member, prepared this one-pager to explain the incentives of Opportunity Zones.

To support understanding of the proposed regulations, CMF member, Jaffe Raitt Heuer & Weiss P.C. has provided a briefing memo for CMF members.

Here are a few highlights of the proposed regulations:

  • Almost all capital gains qualify for deferral. To qualify, the amount of a capital gain must be invested in a Qualified Opportunity Fund within a specified time period.

  • The Opportunity Fund doesn’t need to be a newly created fund, but the investment in the fund must be new to qualify for the new tax benefits.

  • To be considered a qualified business for Opportunity Zone investment, the business must have at least 70 percent of its property inside the zone.

  • There’s currently no government coordination with key stakeholders and no evaluation of the outcomes required for these investments.

The Council on Foundations (COF) hosted a webinar last week to discuss the proposed regulations and the roles foundations can play in supporting communities and investments to capitalize on the Opportunity Zones.

The panelists on the COF webinar explained that, as further guidance is currently being crafted by the federal government, now is the opportune time for foundations to promote more strategic practices to ensure further provisions align with equitable community development practices.

How funders can get involved:

  • Provide feedback to the federal government on the need for requirements for tracking, evaluating and reporting outcomes on investments.

  • Lead or participate in conversations about how the field can influence investment activities and protect vulnerable populations.

  • Serve as a convener, promoting coordination of investors, local government, nonprofits and community members.

  • Educate the community – including potential investors – about the Opportunity Zone legislation and how they may benefit from it while also helping communities in need.

  • Gather local agencies in your community or mission area to brainstorm Opportunity Zone-qualified projects that could be undertaken.

Details are provided in the proposed regulations.

The state of Michigan is keenly interested in assuring the benefits of the Opportunity Zone legislation are realized for the 288 designated zones in Michigan. Based upon the decades of experience of successful public-private partnerships with philanthropy, the Michigan State Housing Development Authority (MSHDA) told CMF late last week that there is a need for foundations to assist in support of this community investment vehicle.

In addition to what was mentioned in the COF webinar, MSHDA shared the following ways funders can get involved:

  • Promote completion of the form on the MSHDA website to identify those interested in creating an Opportunity Fund so they can be connected with state agencies to support their efforts.

  • Invest alongside Opportunity Fund investments to diversify and leverage the capital stack.

  • Invest in capacity building and/or technical assistance for entities, especially those from the nonprofit sector, involved in projects to grow the likelihood of success. For instance, assisting social service agencies and other nonprofits to pre-package investable deals in Opportunity Zones, that align with the investment criteria, so that they’re investor-ready.

CMF member, The Kresge Foundation, has been very engaged in working to ensure racial equity and responsible community development are guiding Opportunity Zone investments. Aaron Seybert, social investment officer at The Kresge Foundation served on the COF panel to share how the foundation has been doing this.

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.

“The amount of interest from fund managers open to partnering with philanthropy was far higher than we anticipated,” Kimberlee Cornett, managing director of Kresge’s Social Investment Practice said in a blog. “At Kresge, our goal is to identify funds that are focused on truly driving positive outcomes in low-income communities and on shaping the Opportunity Zones market to be one that is mutually beneficial to investors and residents of these communities. We’re continuing to work toward that goal.”

The Treasury Department and the IRS are working on additional guidance which will likely be released by the end of the year. CMF will follow any developments and share updates with you as they become available.

Want more?

Check out MSHDA’s Opportunity Zones resources.

Learn more about how funders can get involved. 

View Mission Investors Exchange’s (MIE) Opportunity Zones resources.

Read the federal guidelines.

Provide feedback to the IRS.

 

 

 

 

 

 

Snapshot of Corporate Giving

We’re getting a look at the latest numbers from corporate philanthropy in 2017. CECP and The Conference Board have released the Giving in Numbers 2018 Report, highlighting corporate giving, volunteer and employee engagement trends from nearly 300 of the world's largest companies.

We’re breaking down the key takeaways from Giving in Numbers 2018.

Corporate giving highlights:

  • The median total giving of the companies surveyed increased by 15 percent between 2015 and 2017.

  • An increase in disaster relief contributions was cited as one of the reasons for increased giving. Disaster relief contributions alone increased by more than 300 percent in the last three years.

  • Education is the top program area for corporate philanthropy.

  • STEM and workforce development/employment were the two program areas that increased the most as areas of focus for companies.

  • 44 percent of companies say they anticipate their giving will increase in 2018.

Employee engagement highlights:

  • The median of total employee volunteer hours increased by 30 percent from 2015 to 2017. 

  • Of the companies surveyed, 93 percent reported having an employee-volunteer program.

  • Companies that offer volunteer opportunities on company time reported higher employee participation, 31 percent.

  • The three most successful employee volunteer programs were: company-wide day of service, paid-release time and Dollars for Doers.

  • About 65 percent of the companies surveyed offer paid-release time for their employees to volunteer, compared to 52 percent which offer a company-wide day of service.

  • The volunteer rate is 33.5 percent for employees who participate in both paid-release time and flexible scheduling and 30.5 percent for employees who participated in one or the other.

  • When it comes to a year-round matching program, 92 percent of the companies said they offer a 1:1 match to employees.

  • In a Dollars for Doers campaign, the median match was $10/volunteer hour.

Operational highlights:

  • The number of companies who have foundations increased from 77 to 80 percent.

  • The median corporate foundation staff reported by companies was three.

  • Companies surveyed are targeting their grants for more significant impact by providing larger grants to fewer recipients in areas that align with their strategic framework.

  • More companies are measuring the impact of their grants, with 84 percent measuring outcomes of at least one of their grants.

The report shows that corporate philanthropy continues to gain momentum in giving, strategic engagement of its employees and demonstrating the business value of corporate social responsibility (CSR) work.

Want more?

Read the full report.

Join CMF and AACP this Thursday for the Corporate Giving Webinar Series: Creating an Effective Communications Strategy. Register today!

Corporate foundation and giving program members: Save the date! The 2019 Corporate Retreat is scheduled for May 6-7. 

 

 

 

 

 

 

CMF Welcomes New President and CEO, Kyle Caldwell

CMF is pleased to welcome Kyle Caldwell, our new president and CEO. Caldwell officially began his tenure as president and CEO of CMF on November 1. He brings more than 25 years of government, nonprofit and philanthropic sector experience.

As he begins his tenure, Caldwell shares a brief message with our members:

We are entering a time of new and renewed conversations on leadership. On November 6th, we will have the opportunity to participate in one of our most important privileges and duties as citizens - voting. After the election we will have new leaders who will need to understand the needs in communities and their roles in making decisions for the common good. 

As the beneficiary of the vote of the CMF Board of Trustees, I have started my new leadership role as president and CEO. This is a great honor as I follow Rob and his tenure of a “fabulous” leader for our sector. 

Moving forward I plan to travel Michigan and beyond over the next few months to listen and understand the issues and opportunities our sector will face and learn how CMF can be an even greater leader organization for you and all of Michigan philanthropy.

Please feel free to reach out to me any time at: kcaldwell@michiganfoundations.org. I look forward to working with you and thank you for this opportunity to serve!

Learn more about Kyle on CMF's staff page.

 

 

 

 

 

 

RESOURCE SPOTLIGHT

2018 YAC Databook

CMF has released the 2018 YAC Databook, which captures insights and the work underway from YACs at community foundations on grantmaking, issue areas, YAC involvement and more.

The databook is created through responses to a comprehensive survey conducted each summer. This year 87 percent of all Michigan Youth Advisory Committees/Councils/Committees (YACs) participated.

In 2017-2018, Michigan YACs awarded more than $1.9 million in grants.

Data highlights:

  • YACs made an average of 14 grants in 2017-2018.

  • There were 558 new YAC members during the 2017-2018 school year.

  • The top five issue areas cited by YACs:

    • Bullying

    • Depression, mental health and suicide

    • Drug and alcohol abuse

    • Pressure to succeed academically

    • College and career readiness

  • About 43 percent of YAC members serve as a full voting member on their community foundation’s board of trustees. Of those youth, 17 percent belong to racial, ethnic, cultural or religious minority groups.

  • 99 percent of YACs participated in community service activities.

The latest data shows that more than $39 million in grant dollars have been given by YACs that have participated in the survey since 1989.

Want more?

Check out the full databook.

YAC advisors and YACers: Be sure to save the date, June 21-23, to join us for the 2019 Youth Grantmakers Summer Leadership Conference.

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