Shannon Blevins has often been recruited for positions outside Southwest Virginia, where she grew up and is rearing her own family. Blevins, the Associate Vice Chancellor, Economic Development & Engagement at UVA Wise, has always said no. She researches the other offers, but “I can never check the box of the heart,” she says.

Instead, she is turning UVA Wise, a small rural institution with about 2,000 students, into a nationally recognized economic development actor (last year, Forbes and Sorensen Impact Center recognized one of its projects for enabling opportunity fund investments.) In an interview, she listed some of the rules she lives by to collaborate with many stakeholders and government agencies active in the central region of Appalachia. Some initiatives can move slowly, and many of the players stay the same. UVA Wise works across states, through Virginia’s higher education system and with regional and private sector actors.

You can learn more about her work in our profile, UVA Wise and Entrepreneurship in Appalachian Virginia, but here are some other words of wisdom she passes on to both students and members of the community.

cover of report showing students walking across campus
Read the Profile
  • A ‘no’ for me does not burn a bridge. I look at it as just ‘not yet.’
  • Don’t hold grudges. Even if someone is late to engage with you on a project, make room for them at the table.
  • If you get something started, but there’s a partner that’s better suited, step aside.
  • You have to continuously remind yourself, you can’t be married to your programs.
  • Don’t have all the answers. Somebody in the room, other than you, has the answer.
  • Be intentional about developing the norms of the group, and “don’t ostracize folks that are territorial.”
  • Don’t get above your raising. No one group could do those projects on their own. It is messy work. It is messy, messy work, and it can be emotionally draining.

May 6, 2020 | By Jen Collins and Ryan Goss

This is part of our ‘Impact in Action’ series, co-produced with the Centre for Public Impact, highlighting innovative models and lessons for driving positive community impact through investment and development projects across America. Read the other stories from Baltimore, MD and Kannapolis, NC.

A central valley city on the rise

Merced, California is a city of many slogans. Known as the Gateway to Yosemite, Merced’s 83,000 residents are nestled just 80 miles west of the Yosemite park entrance and a two-hour drive southeast of San Francisco. Though it is located on the outskirts of these attractions, Merced is sometimes forgotten – a sentiment poignantly captured on the Chamber of Commerce website which reads, Merced. Who Knew? But, in recent years, Mayor Mike Murphy has introduced a new slogan for his city, one that reminds of past economic struggles and paints a vision for a prosperous future: Merced: A City on the Rise.

Although Merced has seen steady economic growth in the decade following the 2008 Recession, a closer look reveals a truth shared by communities in the state and across the country: not all have not benefited equally from the last decade of economic growth. This truth stands to worsen as the impacts of COVID-19 damage local economies and exacerbate pre-existing geographic and racial inequalities.

Merced’s renaissance – one forged through key private and public investments – reveals important lessons that could help communities chart a course towards renewal.


Guiding Principles for Impact in Low-Income Communities

Alongside its partners, the Beeck Center created the Opportunity Zone Reporting Impact Framework, a voluntary guideline designed to define best practices for investors and fund managers looking to invest in low-income communities through incentives such as Opportunity Zones (OZ). In the sections that follow, we explore the redevelopment projects in Merced, extracting the lessons to help communities and investors bring the five guiding principles of effective and equitable investments to life:

    1. Community Engagement
    2. Equity
    3. Transparency
    4. Measurement
    5. Outcomes

A city grows quieter

Merced’s story between the 1940s and 1990s is one of a hard-working community with a bustling Main Street. As with many counties in California’s central valley, Merced’s regional economy was, and is, powered by agriculture. Merced county is the fifth top producer in the state, growing 90% of California’s sweet potatoes and generating $500 million annually in almond sales alone. For fifty years, the city of Merced also revolved around a large Air Force base and its proximity to Yosemite. These assets funneled consumers downtown, where military families and park visitors were frequent diners and shoppers along Merced’s Main Street. Celebrities such as Marilyn Monroe, Natalie Wood, and President John F. Kennedy would pass through town, often checking-in at the downtown Hotel Tioga. Just down the road, the 1920s art deco Manzier theater housed decades of live stage shows and indie film screenings. According to Merced’s Chamber of Commerce President Sara Cribari Hill, “30 years ago, downtown was the place to be.”

But Merced soon saw economic changes. In 1995, Castle Air Force base shut its doors, damaging local retail and real estate markets. A decade later, in the midst of the Great Recession, Merced saw one of the nation’s worst declines in housing prices. In the surrounding county, increasing globalization made the agriculture-powered economy particularly susceptible to economic downturns and trade wars.

Today, in downtown Merced, Main Street is much quieter than it once was. The Tioga – now an apartment building – as well as the Manzier theater have struggled with ownership turnover. As one resident described it, downtown became a “place in waiting.” In 2017, seven census tracts – mostly clustered in downtown Merced – were marked as Opportunity Zones. A further look into these zones reveals economic troubles.


Along certain indicators of economic health, downtown Merced has lagged California and the U.S. averages

MetricDowntown Merced Opportunity ZoneCalifornia AverageNational Average
Growth of per Capita Income

(% change in 5 years)
4.3%6.5%6.8%
Net New Businesses Growth7.6%35.2%34.4%
Labor Market Engagement

Composite metric that measures employment, labor force participation, and % with bachelor degree
13%19.8%23.8%
Minority / Women-owned Business

As a percentage of all businesses
3.2%5.1%5.2%
*A commitment to measurement is one the five guiding principles of equitable and effective investments. Through tools such as Mastercard Center for Inclusive Growth Inclusive Growth Score, you can track the degree to which the environment, economy and community in a given census tract benefit from equitable growth.
Source: Mastercard Center for Inclusive Growth, Inclusive Growth Score

But, if you look even closer, it’s clear that Merced has signs of promise.

An Integrated Model for Economic Revitalization

The old way of thinking

Community development projects often fail unless they are connected to the community’s economic priorities and a regional growth strategy. For example, when a 10,000 person capacity convention center opened in downtown Niagara Falls in the 1970s, the surrounding downtown infrastructure was ill-equipped to provide visitors with a cohesive one-stop-shop for dining, lodging, and entertainment. In 2002, the city replaced the convention center with a casino, and while it brought many dining and entertainment options, it remained disconnected to the community around it.

Niagara Falls has since taken steps to create a more economically integrated community, but the lesson from the area’s stagnant growth remains true: when investment strategies in under-developed communities focus on revitalizing single buildings and businesses, rather than strengthening blocks or ecosystems of activity, they often fail to unlock a community’s economic potential.

A multi-stage strategy takes shape in Merced

For years, Merced seemed destined for a similar fate. But recently, the community has begun to bounce back. In 2005, Merced became home to the latest University of California campus: UC Merced, which rests a few miles outside downtown. In the subsequent years, UC Merced has become the fastest growing public research university in the nation. “People saw Merced was growing but not fast enough to keep pace,” shares Ed Klotzbier, the Vice Chancellor UC Merced, “So we did something unprecedented.” Through an innovative public-private financing model, the university launched a $1.3 billion redevelopment effort to double UC Merced’s campus by 2020.

Though the main campus sits outside of downtown, the expansion stands to have a significant impact across the community. “We didn’t want to just be five miles outside of city proper,” Ed shares, “We also wanted to be right downtown. We wanted to let the community know that we’re here and that we’ll help create a place where our best and brightest will want to live.” Recognizing the importance of its downtown presence, the university built a three-story Downtown Center right across from City Hall.

As Mayor Mike Murphy learned, an integrated approach to revitalization requires more than a single institution. “We’ve had a tremendous amount of state investment in the form of UC Merced, and now we have a great deal of private sector investment,” says Mayor Murphy. “An important part of success is to have both public and private sector investment partners.” In 2018, construction began on a privately-funded $65 million multi-year renovation of three historic downtown landmarks: the Tioga Apartments, the Manzier Theater, and El Capitan Hotel, all of which rest within two blocks of one another.

Together, the university, the city, and private developers are creating a cohesive corridor of revitalization, reflecting elements of what community development experts call the street corner thesis. The thesis “focuses on creating a dense ecosystem of businesses, properties, and residences — mixed-income, mixed-purpose and mixed-use — at vital intersections or along historic business corridors of a community.” This multi-pronged approach reinforces the economic, social, and cultural importance of central community corridors. “Downtown is the heartbeat of our city,” reflects Mayor Murphy. “It’s everyone’s downtown. It’s where we gather as a community. It gives us a sense of place that reflects our goals, aspiration and values.”

Though construction on these development projects is not yet complete, downtown is already beginning to show signs of renewal.


The impacts of Merced’s economic renewal have begun to show positive signs in downtown Merced

MetricDowntown Merced Opportunity ZoneCalifornia AverageNational Average
Growth in Average Spending per Capita31.4%8.3%7.2%
Commercial Diversity

Change in business types as percentage of total possible business types
31.9%-0.7%20.1%
Overall Spend Growth

Growth of spending overall
73.4%19.2%12.7%
*A commitment to measuring and reporting outcomes is one the five guiding principles of equitable and effective investments.
Source: Mastercard Center for Inclusive Growth, Inclusive Growth Score

Lessons Learned & Recommendations

The journey towards a rejuvenated Merced is far from over, but the process to-date – along with six months of research into strategies for driving positive impact through private investment – yielded some valuable lessons for unlocking inclusive growth and economic recovery.


Opportunity to Impact: An Investment Assessment*

The Centre for Public Impact – alongside its advisors at Georgetown’s Beeck Center for Social Impact + Innovation – set out to better understand the process of generating positive community impact through private investment and development. The resulting tool, Opportunity to Impact, is a simple, yet rigorous guide for evaluating an investment project’s potential for positive impact. Some of the findings from this research is embedded in the section below.


Set impact objectives early

As redevelopment plans began coming to life in Merced, there was skepticism among some long-time residents. Indeed, in economically distressed communities across the nation, this trend holds. To convert skepticism into buy-in, open communication is required among public officials, developers, and investors alike.

A transparent process begins with setting clear objectives – early in the development process – for how the investment will translate into positive community impact. Investors, public officials, and residents should identify the specific impact results the investment aims to achieve – whether that includes bringing high-quality jobs, creating accessible housing options, supporting transportation connectivity, or improving lives in other lasting ways. These objectives should be set early in the process, align with a community’s economic development priorities, and address an area of clear community need. Creating a document to demonstrate a community’s economic development priorities – such as an Opportunity Zone prospectus – can be a valuable tool – for residents to showcase their needs and for investors to understand how projects fit into a broader strategy.

Refine the approach and gather feedback often

In order to achieve these impact objectives, it is critical to get feedback early on and throughout a project. A report from the Urban Land Institute featuring strategies for creating healthy urban corridors recommends establishing formal channels for communication and feedback with the community. It suggests surveying local businesses and residents to understand their needs and establishing teams to guide the redevelopment process in a particular corridor of the city. A redevelopment steering committee, for example, can play an important role in bringing voices to the table and guiding the vision for how business owners and community groups will each contribute to a vibrant neighborhood. In Merced, creating this forum would help the university community and residents weigh-in on how assets like the Manzier theater might serve their needs. In other places, a community benefits agreement has proven to be a useful mechanism of accountability between residents and developers.

Tell the story

Ultimately, unlocking a community’s economic potential revolves around communication. “Storytelling is hugely important,” reflects Merced’s Chamber of Commerce President Sara Cribari Hill. In order to convince others that Merced is indeed a city on the rise, “it’s critical to find new and interesting ways to tell our story – whether that’s through social media or through personal connections,” Sara reflects. This requires all actors to have a visible presence in the community, gaining feedback on how the downtown properties are addressing areas of community need at regular intervals in the development process.

Making a City Rise Together

The story of revitalization is never simple and never short. A deliberate effort between public officials, the state, developers, and residents must be marked by shared goals, open communication, and constant refinement. “It’s important to never lose sight of shared goals.” Mayor Murphy notes, “With that as the starting point, we can focus on how we achieve that.” Merced, as with many communities navigating the economic fall-out of a global pandemic, must continue writing its own story of renewal. But, with its commitment to collaboration, the city has the right pieces in place to once again make Merced “the place to be.”

Jen Collins is a Fellow-in-Residence for the Beeck Center. Follow her on Twitter @JenCollins24

Ryan Goss is a Senior Associate at the Centre for Public Impact, where his work focuses on helping governments and their partners improve people’s economic mobility and flourish over time. Follow him on Twitter @R_Goss1

May 6, 2020 | By Jen Collins and Ryan Goss

This is part of our ‘Impact in Action’ series, co-produced with the Centre for Public Impact, highlighting innovative models and lessons for driving positive community impact through investment and development projects across America. Read the other stories from Kannapolis, NC and Merced, CA.

Below the surface of disrepair, a vision of hope

For the last two years, it would be easy to drive by the Northwood Plaza Shopping Center without noticing it. If you caught a glimpse as you passed through Northeast Baltimore, you might notice a pair of broken pay phones, one listing 45° to its side. You might notice the row of boarded-up storefronts.

You might not realize that the once segregated shopping center was the site of historic Civil Rights activism. You might not realize that a renowned academic institution is producing the next generation of leaders next door. You might not realize that there’s been a decades-long struggle to create a new vision for the complex, and that this vision is about to become reality.

Below the surface, the story of Northwood Plaza reveals important lessons about the long and often difficult process of community revitalization. As neighborhoods across the nation look to rebuild following the economic and social devastation of COVID-19, reflecting on these lessons is as important as ever.


Guiding Principles for Equitable Investments

Alongside its partners, the Beeck Center created the Opportunity Zone Impact Reporting Framework, a voluntary guideline designed to define best practices for investors and fund managers looking to invest in low-income communities through incentives such as Opportunity Zones (OZ). In the sections that follow, we explore the projects in Baltimore, extracting the lessons to help communities and investors bring the five guiding principles of effective and equitable investments to life:

    • Community Engagement
    • Equity
    • Transparency
    • Measurement
    • Outcomes

To prioritize equity, it is critical to understand a community’s history

The shopping center’s deserted storefronts reveal the truth that prosperity has not been evenly spread across the city of Baltimore. Only four of Baltimore’s 200 census tracts have per-capita incomes greater than $100,000, and in these tracts, only 5% of residents are black. Yet, in Baltimore City overall, 62% of residents are black.

This disparity is rooted in a long history of systemic racism in Baltimore and across the nation. When Northwood resident Paula Purviance first attended Morgan State College in 1968, the communities in Northeast Baltimore were still in the throes of a turbulent racial integration process. “To walk along one of the main roads to campus, many students felt uncomfortable and minimized,” Ms. Purviance remembers. “As a result, students would walk to the campus by way of the rear alley of Cold Spring Lane.”

Throughout the middle of the 20th century in Northwood, as in many neighborhoods across Baltimore, white property owners used racial covenants to prevent property from being sold to or occupied by black and Jewish residents. Though the Supreme Court struck down these covenants in 1948, the language still remains in many official property records.

As the Civil Rights movement spread across the nation, Northwood Plaza Shopping Center became a hub of activism. In 1955, an interracial group of students from next door Morgan State College – what eventually became Maryland’s largest Historically Black University – were denied entry to segregated Northwood Theater. In 1963, the theater again became the site of anti-segregation protests, where hundreds of students were arrested and charged with trespassing and disorderly conduct.


crowd in front of a movie theater, 1955
Apr. 30, 1955: In a test of Segregation laws, an interracial group of about 150 students seeks entrance to the Northwood Theatre, none were admitted. Published in Morning Sun. Baltimore Sun Photo
African-Americans being refused entry to a theater in 1963
Feb. 19, 1963: A man blocks the entrance to the Northwood Theatre where some 150 members of the Civic Interest Group demonstrated last night. All were arrested and charged with trespassing and disorderly conduct during the protest against segregation at the theater. Photo by Sun photographer William L. LaForce.

These remaining markings of institutional racism reveal the barriers that have long prevented people of color from having a voice in, owning, or making decisions about their community in Northeast Baltimore. This reality often gives rise to skepticism in residents when investors try to upgrade community assets. “Oftentimes, there’s a natural skepticism and distrust within communities of outside or institutional investors who, either intentionally or unintentionally, disregard the best interests of the community and do more damage than good to existing residents and businesses,” notes Ben Seigel, Baltimore’s Opportunity Zone Coordinator. But with collaboration, cooperation, and accountability, Ben believes that there can be common ground.

Mistrust turns into a unified vision

While the Northwood Plaza Shopping Center eventually became integrated and overseen by new owners in the 1970s, the neighborhood still struggled with violence. In 2008, former Baltimore City Councilman Ken Harris was shot and killed outside a nightclub in the complex. In the decade following, the death of Councilman Harris lingered over the property and by 2017, Northwood Plaza had fallen into disrepair.

Before the businesses officially closed, a struggle to reimagine the shopping center was decades in the making. “There was massive mistrust of all the different stakeholders when we first started this project,” remembers Mark Renbaum of MLR Partners, the initial developer involved in re-developing the complex. “When I first got involved in the project, I thought it was going to be easy – and that everyone would embrace change necessary to redevelop Northwood into a first-class destination. But what we learned is that there are a lot of stakeholders with a lot of different visions for what they thought it could be. And all of those voices needed to be heard first before anything could get done.”

By all accounts, the over 20-years of negotiations among community leaders, Morgan State leaders, public officials, and the owners was exhausting and contentious. And yet, with patience and compromise, political interventions and financial subsidies, Northwood Plaza will soon become Northwood Commons: a new $58 million shopping center with retail and restaurant space, as well as office space for Morgan State University. At the November 2018 groundbreaking ceremony, Morgan State President Dr. David Wilson remembered the students once arrested on those grounds. “They could see this location from across the street, but they could not experience it.” 60 years later, Northwood Commons intends to become a safe and vibrant place for students and residents alike.

Theory of Change: Creating Dynamic, Livable Communities

The story of Northwood Plaza reveals the often overlooked importance of dynamic, mixed-use spaces in underserved communities. In the last half century, many community developers have focused poverty-alleviation efforts on the development of low-income rental housing. While affordable housing remains critical for millions of Americans, this approach has done little more than concentrate low-income families into smaller geographic areas farther from opportunity. The resulting concentration undermines access to good jobs, healthy food, and safe spaces with diverse commercial options. This consolidation, in part, fuels the cycle of economic inequality that leads some neighborhoods to thrive and others to flounder.

Meanwhile, some cities are experimenting with new ways of creating economically integrated neighborhoods. Paris Mayor Anne Hidalgo introduced the idea of a ‘15-Minute City’, suggesting that every resident should have their needs met within 15 minutes of their doorstep. This bold plan will require a sort of “anti-zoning effort” across the city to improve access to the essential functions of life, such as work, shopping, health, and culture. Similarly, East London’s Every One Every Day initiative is working to radically expand community-organized social activities, training, and business development opportunities within walking distance in one of London’s lowest-income boroughs. These cities are recognizing that “hyper-local” approaches to community development can reduce barriers to unlocking economic and social vitality.

A new space to meet community need

In Baltimore, Northwood Commons will fill some critical needs for Northwood residents and students. “This is a food desert,” says Sidney Evans, Vice President of Finance and Management at Morgan State. “I have to drive three miles to sit down and have a nice lunch with someone.” Since joining Morgan State in 2014, Sidney has participated in the negotiations to bring Northwood Commons to life. “This shopping center is going to give the community much more flexibility to fill their basic needs.”

artist rendering of Northwood Commons project
Artist rendering of Northwood Commons project. Courtesy MCB Real Estate

Beyond providing food and retail options, the space aims to foster community. The forthcoming Morgan State bookstore “will create a venue for socialization,” Sidney predicts. “It will give our community a place to talk about social issues and civil rights issues, a place for older citizens to mingle with younger people and vice versa.” Northwood Commons will also contain the Morgan State public safety department, providing a feeling of safety and security to the area. Evans hopes this safe, vibrant space will help encourage Morgan students to remain in Northwood after graduation.


Effective community development projects address clear areas of community need and have investors commit to measuring outcomes over time

Evidence of community need can be found by consulting resources such as the U.S. Census Bureaus’ Data Archive, and from community engagement activities such as town hall meetings, listening tours and community needs assessments.


Collaboration is key

In many under-served communities, investors fear that creating these types of dynamic multi-use spaces will not be financially viable. Dave Bramble is the Managing Partner of MCB Real Estate, one of the developers behind the Northwood Commons deal. Dave, who grew up just miles from Northwood, has experienced the challenge of getting these projects financed, but believes that, with the right ingredients, impactful development projects can get done and generate returns.

These deals often require sizable anchor partners – like Morgan State – to invest in the growth of a surrounding community; they require patience to create a project vision that meets a critical mass of community and financial needs; and they frequently require subsidy from the state, city, or other sources. “Deals in under-invested communities do not work in a vacuum” Dave notes. “To make a non-traditional real estate project actually work, you need other types of support – in this case, investment from a public university, funds from the state in the forms of bonds and grants, infrastructure support from the city, and federal tax credits.” Either with direct public subsidies or incentives, such as those offered by Opportunity Zones, these types of deals can overcome the seemingly insurmountable financing barriers and generate returns.

Lessons Learned


Opportunity to Impact: An Investment Assessment

The Centre for Public Impact – alongside its advisors at Georgetown’s Beeck Center for Social Impact + Innovation – set out to better understand the process of generating positive community impact through private investment and development. The resulting tool, Opportunity to Impact, is a simple, yet rigorous guide for evaluating an investment project’s potential for positive impact. Some of the findings from this research is embedded in the section below.


While Northwood Commons will not be completed until the end of 2020, the journey has yielded valuable learnings for those engaged in meaningful community development projects.

Engaging and defining “community” is not easy, but it is essential to a project’s success

Most people involved in community development will acknowledge the importance of engaging the community. But defining – let alone engaging – the community is rarely straightforward. There are over 20 neighborhood associations in Northeast Baltimore, each representing diverse subsets of Baltimore residents. Multiple of these organizations were directly involved in the Northwood Commons negotiations and they often had vastly different visions.

The largest disagreement centered on whether Morgan State student housing would be part of the complex’s future. These differences seemed destined for stalemate until the involvement of State Senator Joan Carter Conway. Senator Conway introduced a bill to block the student housing proposal and soon became an important broker for talks between the community organizations, the university, the owners, and developers.

Private developers and investors also have a critical role to play in this community engagement process, but do not always show up to the table. “The reality is that if you don’t need zoning, or you don’t need anything, it’s rare that developers will engage with the community,” notes Dave Bramble. But these forums provide information that is critical to a project’s success. “When you go to these community meetings and you really get to know these people, you realize that what you assumed they want or what they might be okay with is not necessarily true,” reflects Mark Renbaum. As the Northwood Commons project demonstrates, identifying, listening to, and compromising with community stakeholders can be the difference between continued inaction and project getting off the ground.

Meet some of the people involved in the Northwood Commons project.

Building a vision requires compromise, transparency, and assurances of accountability

Countless proposals for the shopping center circulated since the Northwood theater closed in 1981. At various points, ideas included a new hotel and conference center and a community-led design center. But each of these proposals failed to gain steam, for one reason or another, often forcing working groups to start over after years of negotiation.

Ultimately, building consensus and gaining buy-in required compromise and transparency among all parties. “It’s about being honest,” Dave Bramble notes. “When I say honest, I mean telling people stuff they don’t want to hear. Everyone might not get everything they want because, ultimately, the math has to work.” Sidney Evans knew Morgan State had to understand this perspective. “We understood that investors need a viable project, one that has a direct impact on the community, but also generates a fair return on the investment.” Evan adds, “as I talk to other University Presidents about these types of projects, you can’t just come up with any type of development project, it must add value to the community and to the investors. Capital just isn’t free.”

Ultimately, navigating these conversations required an honest broker: someone – or something – to ensure accountability. Together, developers and community leaders eventually drafted a Community Benefits Agreement. This contract between community groups and the developer guarantees certain amenities and mitigation of certain risks. With concrete accountability measures and a bold yet achievable plan in place, the long talks began transforming into action for Northwood.

An Honorable Path Forward

Beyond filling commercial needs or achieving returns, Northwood Commons is about pride. As Ms. Purviance remembers, “the community residents felt there was no pride in the look of the shopping center.” But she was motivated to help build a vibrant and safe community for her child. This inspired her to again become affiliated with the community association, volunteer as one of the co-chairs of the Northwood Shopping Center Task Force, and become the President of the Hillen Road Community Association. At the November 2018 groundbreaking ceremony, Ms. Purviance addressed the crowd: “This morning gives me a ray of hope, and we need that ray of hope… Each of us here today, is looking forward to what can be a grand shopping center, that will be seen as an asset to the Northeast communities and to the city as a whole.”

Jen Collins is a Fellow-in-Residence for the Beeck Center. Follow her on Twitter @JenCollins24

Ryan Goss is a Senior Associate at the Centre for Public Impact, where his work focuses on helping governments and their partners improve people’s economic mobility and flourish over time. Follow him on Twitter @R_Goss1

May 6, 2020 | By Jen Collins and Ryan Goss

This is part of our ‘Impact in Action’ series, co-produced with the Centre for Public Impact, highlighting innovative models and lessons for driving positive community impact through investment and development projects across America. Read the other stories from Baltimore, MD and Merced, CA.

A community that changed in a day

Overnight, 4,340 people lost their jobs.

The closing of Cannon Mills textile factory in Kannapolis was the largest one-day layoff in North Carolina history. Entire households lost their incomes in a flash. Once the world’s largest producer of towels and sheets, Kannapolis transformed from a bustling middle-class community to a town with an uncertain future.

While the sudden nature of the 2003 closing was a shock in Kannapolis, the consequences of declining manufacturing industries had already affected communities across the southeast. Nearly two decades later, many of the towns most affected by this economic disruption continue to lay dormant and devoid of opportunity.

But something different is happening in Kannapolis: construction has begun on a $52 million baseball stadium, a $17 million streetscape renovation is near complete, and a 350-acre Research Campus now rests on the mill grounds. Private capital is working alongside public investment to rebuild Kannapolis. After decades of decline, Kannapolis’ emerging downtown brings hope of economic opportunity and renewed pride for residents.

As the economic impacts of COVID-19 spread across the nation, many communities are experiencing devastation similar to Kannapolis after its sudden mill closure: residents are out of work, downtown businesses are folding, and the promise of an economically vibrant future seems an uncertain reality. As the world transitions from crisis management to economic recovery, the lessons of Kannapolis’ transformation will be as important as ever. While the journey of recovery has been neither fast nor easy, it reveals the promise of a revitalization thesis centered on the power of partnership to turn a community around.


Guiding Principles for Equitable Investments

Alongside its partners, the Beeck Center created the Opportunity Zone Reporting Framework, a voluntary guideline designed to define best practices for investors and fund managers looking to invest in low-income communities through incentives such as Opportunity Zones (OZ). In the sections that follow, we explore the projects in Kannapolis, extracting the lessons to help communities and investors bring the five guiding principles of effective and equitable investments to life:

    • Community Engagement
    • Equity
    • Transparency
    • Measurement
    • Outcomes

A model for change

In the early 1990s, downtown Durham was struggling. Like Kannapolis, Durham was hit hard by declining industry. For several decades, the historic business district lay devoid of significant investment. With rising crime rates and a downtown falling further into disrepair, the city’s future looked bleak.

Downtown Durham began to change when local officials realized the power of strategic public investments. The city pursued creative public financing measures to build a new minor league baseball stadium and fund public infrastructure. Private developers soon acquired vacant properties, created large scale redevelopment plans, and transformed factories and department stores into offices and apartments. At the same time, Duke University expanded its off-campus presence downtown. Today, Durham is seen as one of the most striking downtown turnarounds in the nation, and it was forged through bold public-private partnerships.


Durham's Downtown Turnaround at a Glance

Downtown Durham Metrics19932019% Change
# of Residents1,4507,200+397%
# of Employees3,80021,300+460%
Office Occupancy70%91%+30%
Source: Downtown Durham, Inc.

While the city has undoubtedly rebounded, Durham still struggles with challenges such as poverty, affordable housing, and racial inequality. These persistent issues remind us of the often overlooked need to ensure economic growth is equitable, particularly for a community’s most marginalized residents. While challenges remain, elements of Durham’s decades-long growth reveal the potential when private and public dollars work together to spur change, an approach that offers promise for places like Kannapolis.

The Small Cities Thesis

A revitalization experiment

The economic value of small and mid-sized cities is often overlooked1While there is no single definition of a small and mid-size community, here we are referring to cities or towns with a population of about 50,000 to 250,000 people on the outskirts of larger regional economic hubs. These might also be called “tertiary” cities nationally. . As a recent report explains, many of these communities struggle to create “pull” factors that overcome the “push” factors that drive prospective residents, employers, and investors elsewhere, such as obsolete infrastructure, an over-reliance on traditional industry, and a limited human capital base. The reality is that, for some communities, the severity of these challenges means wholesale revitalization is out of reach absent some sort of radical disruption.

But in other communities, there is economic growth waiting to burst. A group of investors, developers, and government partners have been working on a new experiment to unlock the potential of these places, what they call the “small cities thesis.” The thesis advances the idea that long-term private and public capital can work alongside each other to spur sustainable economic growth and generate risk-adjusted returns to investors in small cities that have otherwise been left behind.

Shekar Narasimhan, one of the investors driving this experiment, notes “there are places where the ingredients for success have always been there, but all they need is a spark.” This spark is often initiated by local leaders who build a vision, take a risk to launch investment downtown, and bring along partners to achieve that vision. The thesis suggests that this spark can unlock growth in cities with certain characteristics:


Community Identification Characteristics

The thesis aims to unlock the economic potential of small cities that have:

  1. Seen a decline in population density but have a downtown infrastructure in place
    When a major employer closes its doors or relocates to the suburbs, once densely populated downtowns often become under-utilized and dilapidated. Instead of displacing existing residents, the thesis expands on the existing infrastructure and aims to fill gaps with people and investment.
  2. Community-minded developer(s) or a public entity that owns, and is willing to transform, a critical mass of distressed assets
    Launching a unified vision for revitalization is nearly impossible when a large share of a downtown’s distressed property has disparate owners. But when a city, state, or team of developers own these assets, it’s possible to overcome the inertia that often prevents projects from getting off the ground.
  3. Community assets that lend themselves to growth
    Community assets such as transportation options (e.g. rail and highway access) and anchor institutions (e.g. universities, hospitals, and government bodies) are critical to ensuring a place can benefit from and contribute to the growth of its surrounding region.
  4. Strong local leadership and a plan for growth
    Achieving a bold vision for growth requires leadership and investment from local public officials and residents. Without it, private investment is likely to be ineffective.
  5. Investors with a commitment to a long-term vision
    Investors must be willing to uproot the short-term investment mindset and work with local partners towards a long-term vision for rejuvenation. This requires patient capital and long-term investment.

Focusing investments in the downtown corridor aims to positively impact the community. In many small cities, downtown is the lifeblood of the community: a place for jobs, a venue for entrepreneurs, a space for convening, and a hub for transportation. If re-modeled with resident input, a vibrant downtown can inspire pride, improve quality of life, and fuel access to economic opportunity. When deciding where to locate and attract talent, employers increasingly look for vibrant and walkable downtowns. For the Kannapolis residents still struggling with the aftermath of layoffs, the stability of their future is tied to attracting employers offering equitable job opportunities.

Bringing the experiment to life

To test this thesis, a group of private and non-profit partners launched the Remergent Fund, a qualified Opportunity Zone (OZ) Fund that will invest in emerging main streets and local entrepreneurs in small cities in the Southeast. Beginning in their backyard markets of North Carolina and Virginia, Rivermont Capital, Enterprise Community Partners, and Beekman Advisors capitalized enough funds to invest in five cities, but ultimately aim to spur dynamic growth and track outcomes in 10 cities within the next 15 years.

Incentives that reward long-term investment, such as Opportunity Zones, are an important ingredient to the Fund’s prospective success. Based on the turnaround stories of communities like Durham, the partners behind the Fund estimate it can take 15 years to see signs of recovery after decades of decline. Because investors must keep their holdings in Opportunity Zone funds for 10 years to maximize their tax advantage, OZs are a critical tool to attract and scale the long-term capital that’s needed to revitalize many communities across the nation.


Commitment to measurement and outcomes

Measuring progress towards positive outcomes are essential for equitable and effective OZ investments. To understand whether the Remergent Fund, and others like it, unlock dynamic growth in the next 10 years, it’s important to track quantitative metrics such as those listed in the IRIS + Catalogue or as captured on platforms such as City Builder by CitiBank. Additionally, qualitative metrics, such as resident testimonials, will help investors better understand their impact in OZs.


Transformation becomes reality in Kannapolis

Years before the Remergent Fund or Opportunity Zones, Kannapolis city leaders were already forging a new future for their city. Mike Legg took over as Kannapolis City Manager in 2004, just a year after the closing of Cannon Mills. Having lived in the town since 1995, Mike witnessed the plant’s steady decline but did not expect it to disappear in a single day. “It was a body blow to the community,” Mike reflected. “The social impacts were devastating.”

Soon after its closing, the mills’ owner, David Murdock, partnered with the state and the University of North Carolina to convert part of the plant into the North Carolina Research Campus, a 350-acre laboratory designed to contribute to the region’s growing life sciences sector. The city realized that for the Research Campus to become an anchor that sparks community growth, Kannapolis needed a revitalized downtown.

Through active engagement with residents, the city realized that the community was eager to see the historic downtown occupied and vibrant once again. In 2015, the City Council negotiated the purchase of most of its downtown from Murdock. “As far as I know, no city our size or larger has bought its entire downtown,” says Mike. With this purchase, the city’s downtown revitalization strategy was underway.

artist rendering of 1085 Vida Kannapolis project
Artist rendering of 1085 Vida Kannapolis project. Courtesy Kaufman Lynn Construction

Kannapolis also benefited from its proximity to Charlotte, one of the nation’s fastest growing regions and home to expanding finance, banking, and research industries. While this proximity brought jobs to Kannapolis, many of the residents most affected by the plant closure do not have college degrees and worry about the availability of job opportunities. But there are, however, some signs for optimism. In response to concerns, the local community college system is expanding training options for residents and some companies have announced plans to open up shop in Kannapolis. Amazon, for example, will open a distribution plant that will initially offer 600 jobs and another 600 jobs in the years to come.

While steadfast local leadership and some external factors have fueled Kannapolis’ transformation to-date, the community needed commitment from the private sector to reach its full potential. Recognizing this, the Remergent Fund – powered by the Opportunity Zone incentive – backed a $58 million residential development in the heart of downtown. With nearly 300 housing units and a 420 car parking deck, the space will cater to downtown’s growing demands.

Lessons Learned

While Kannapolis’ journey is far from over, the effort so far has yielded valuable lessons for how strong public-private partnerships can inject new life into a community:


Opportunity to Impact: An Investment Assessment*

The Centre for Public Impact – alongside its advisors at Georgetown’s Beeck Center – set out to better understand the process of generating positive community impact through private investment and development. The resulting tool, Opportunity to Impact, is a simple, yet rigorous guide for evaluating an investment project’s potential for positive impact. Some of the findings from this research is embedded in the section below.


Revitalization is hard, but it is worth it

The path from decline to vibrancy is long, difficult, and often un-guaranteed. Raising capital to jump-start this process has been challenging for the Remergent Fund. “We focus on communities that are significantly under-performing relative to their market potential, but no one wants to assume the risk if they’re surrounded by boarded up buildings,” notes Andrew Holton, Managing Principal of Rivermont Capital. Until recently, convincing large institutional investors to buy into this mission was particularly challenging. But given their scale, institutional investors are essential to actualizing the small cities thesis around the nation. “The Goldman Sachs Urban Investment Group is proud to be part of the revitalization story in Kannapolis, in close partnership with the City and other partners like Enterprise [Community Investment],” says Margaret Anadu, Goldman Sachs Partner and head of the Urban Investment Group. “We believe that with sustained private and public sector investment, combined with a clear vision, communities like Kannapolis are poised to reach their potential and see widely shared economic growth. We are honored to be a partner in this important project.”

On the government side, Mike has learned the importance of translating a vision to generate buy-in from his many stakeholders (e.g. residents, the City Council, community leaders). This requires skill and grit. Though these efforts are not easy, Kannapolis’ and Durham’s stories reveal the potential of perseverance.

Strong public-private-partnerships are built on transparency and communication

Peter Flotz is the developer overseeing Kannapolis’ downtown revitalization projects. He credits downtown’s success, in large part, to a transparent relationship with the city government. “We didn’t wait until the flames were licking at the roof to say we smelled smoke. We told Mike everything,” Peter shared. This type of relationship does not always exist between local governments and developers. “I’ve worked with hundreds of developers over the years and I’ve never experienced anything like this,” says Mike. “We realized that we were never going to get this to work unless we had frank and honest conversations with each other.”

It’s also important to have an open relationship and regularly engage with the public. In a 2018 PBS interview, Kannapolis Mayor Darrell Hinnant candidly responded to the residents who hoped that their city’s new downtown would look like the old downtown. The Mayor remarked, “the reality is that it is not going to be like it used to be. It’s going to be something totally different … but it is going to have lots of jobs, it’s going to have lots of activity.” Managing expectations among the many people with vested interest in a community requires openness and honesty.

Looking Ahead

Some may argue that the stories of Durham and Kannapolis are anomalies. How many communities have a Duke University or a single owner willing to sell downtown back to a city?

While each community faces unique circumstances, the small cities thesis aims to prove that creating vibrant downtowns in places with the ingredients for renewal does not have to be anomalous. As small cities grapple with the devastation of COVID-19, they will need sparks to ignite an equitable recovery. While a spark can come in many forms, a deliberate partnership among residents, government, and the private sector is what transforms a spark into a vibrant and inclusive city center.

Jen Collins is a Fellow-in-Residence for the Beeck Center. Follow her on Twitter @JenCollins24

Ryan Goss is a Senior Associate at the Centre for Public Impact, where his work focuses on helping governments and their partners improve people’s economic mobility and flourish over time. Follow him on Twitter @R_Goss1

April 22, 2020 | By Jen Collins

Undaunted. Optimistic. Courageous. Excited.

Hopeful. Focused. Anxious. Grateful.

What a difference six months can make. Last October, the Beeck Center’s Investor Council, a group of influential fund managers, investors and developers committed to creating positive impact in low-income communities, met and talked about the promise in Opportunity Zones. When they met again a few weeks ago, the mission hadn’t changed but the conversation centered on a new challenge.

Thanks to COVID-19, business is being interrupted, there is great uncertainty in the markets, and the need for access to capital in underinvested neighborhoods has never been greater. This pandemic is highlighting the imbalance of strength and power as it’s negative effects are being disproportionately felt in low-income and underinvested communities. Furthermore, it is underscoring the need for sustained investment with a focus on innovation by maximizing assets and leveraging relationships to positively impact social outcomes.

Capitalizing on the investment and work to-date in OZ’s at the community level is an ideal conduit for immediate implementation of creative ideas for urgent, location-based community needs. Thankfully, the Investor Council has an attitude of innovation as well as their commitment to help vulnerable communities. Members were eager to share and showcase their ideas with each other for how to put assets they already have – physical, financial, and interpersonal – to work.

Originally, the meeting was scheduled for Baltimore’s Hotel Revival, a property owned by one of the Council members. But while the crisis turned this event into a virtual meeting, appropriately, the hotel itself has been busy listening to the community, and working to meet its needs. They’ve opened the kitchen so local chefs can use it as a base for food prep and takeout orders. Rooms that would have gone unused are now offered free of charge to first responders and health care workers who need to stay close to downtown. And on Easter Sunday, staff put together Easter baskets for folks in the neighborhood.

Interview with Hotel Revival General Manager Donte Johnson on CNN, April 12, 2020

 

Members agreed that while this crisis is significant, the opportunity to deliver positive impact on communities is still there and necessary more than ever before. This crisis has further exposed the disproportionate effect of COVID-19 on vulnerable and low income communities and will increase the call for more sustained investments in communities of need across the country. With millions of Americans in all communities living one health incident away from financial disaster, we cannot avoid the inequities in our systems any longer.

People need to work together and collaborate with new networks to find solutions, look at how the future of work will change, and adjust projects to meet that future. Opportunities will exist in this new economy, whether in affordable housing, broadband access, or short-term financing requests for businesses making pivots, and investors and developers should consider those as they plan for a post-COVID-19 world.

I recently penned an Op-Ed for The Hill outlining how local businesses will drive the economic recovery, and I wrote, “While the crisis our nation confronts is challenging, it is also a powerful opportunity for visionary leadership to prevail and for local businesses to reimagine community impact.”

That’s why I’m excited to announce our latest effort – Assets for Impact. Inspired by Council members like Think Food Group and LISC, we’re collecting stories from across the business community on how they’re using what they have for a new purpose. Then using the Beeck Center’s network of networks, we’ll spread these ideas across the country and around the world for others to put into action wherever they are.

If you have a story to share, please visit our site and add it to our growing collection. Use the hashtag #Assets4Impact on social media and inspire others to build the community we want and deserve. We’ve seen how people can come together in crisis, let’s continue to work together for when we return to whatever future normal looks like.

Jen Collins is a Fellow-in Residence at the Beeck Center for Social Impact + Innovation at Georgetown University. Follow her on Twitter @JenCollins24


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November 18, 2019 | By Jen Collins

Undaunted. Optimistic. Courage. Excitement.

When we asked the members of the Beeck Center Opportunity Zones Investor Council to share the first words that came to mind when talking about the OZ landscape, their responses were illuminating on both the promise and challenges OZs face. An influential group of first-mover fund managers, investors and developers who have moved over $200 billion in capital during their careers, the Council met in late October at the Williamsburg Hotel in Brooklyn, NY to discuss their impactful work, share ideas, and catalyze more action towards delivering positive social outcomes for communities and investors in Opportunity Zones.

Most of the public narrative around OZs has focused on the tax benefits for investors, but the diverse Council (which includes 14 people of color and 7 women) is looking at the much bigger picture and taking into account the 35 million people living in the 8,766 designated zones. According to the Economic Innovation Group, for the majority of OZs, the economic picture is tragic:

Opportunity Zones have an average poverty rate of nearly 30 percent, and an average median family income that is 37% lower than the American average. Black Americans are significantly over-represented in zones, representing twice as large of the zone population as they do the national population.

Source: Economic Innovation Group

The work of the Beeck Center is to support the original intention of the legislation, to drive positive social outcomes in these neighborhoods, improving the lives of the people who live and work in those communities today. By bringing together a diverse group of stakeholders, we create a grasstops approach between fast-moving grassroots ideas and slower-changing institutions, increasing the probability of generating impact at scale.

graphic of Beeck Center grasstops approach

Unlocking the Promise and Potential in OZs

Beeck Center Investor Council members David Gross and former NFL player Derrick Morgan kicked off the Council meeting by sharing how they are driving impact in communities. Both influencers are deepening their efforts in impact investing through OZs. Both have powerful, personal motivation to make a real difference in underserved neighborhoods. 

Three people in chairs on a panel discussion
David Gross (L) and Derrick Morgan (R) speak with the Beeck Center’s Jen Collins about their work investing in Opportunity Zones during the OZ Investor Council meeting. Photo: Ori Hoffer

The meeting was grounded in three pillars: inspiration, impact, and influence. The Beeck Center acts as a field builder in driving impact across the country and invited organizations that are developing impact tools to connect projects to investors across the nation. The Center is also informing the creation of a process tool to help operationalize the OZ Impact Reporting Framework. Given the national narrative and flurry of legislative activity, these points stood out among the many topics of discussion:

1. Some OZs are problematic and need tweaks.

The Opportunity Zone designation process was a quick, unfunded mandate to the state governors – many who have changed over since zone designation. The Beeck Center was so concerned about the zone designation process, Fair Finance Lead Lisa Hall actually penned guiding principles to aid the governors in thinking through their zone designation strategy. 

The Council recognizes that there are outliers and will be supportive of a thoughtful, forward-looking process to sunset high-income OZs. The national narrative is loud about the existence of wrongfully-designated zones, but we should not let that taint the reality that when OZ legislation is operationalized thoughtfully and with impact intentionality, it can lead us towards a more equitable society. This is the work OZIC members do every day, unlocking the promise and potential that lives in these neighborhoods. 

2. This is not a gentrification program.

Recent news and local narratives – especially on the coasts – suggest that investment in OZs accelerates gentrification. When people use the word gentrification, they most often mean forced migration and/or displacement. The research shows that less than 4% of OZs are at risk of gentrification. Regardless of the data, Council members believe that any behavior that causes displacement is bad and should be avoided at all costs.

OZ legislation is a capital gains tax incentive. Currently there are no impact, data or transparency requirements. This reality has made the work of the Beeck Center in driving positive impact important. It’s why we co-authored the OZ Impact Reporting Framework with the U.S. Impact Investing Alliance and the Federal Reserve Bank of New York earlier this year. The Impact Framework calls for five guiding principles: community engagement, transparency, equity, outcomes and measurement.

3. Impact is happening. Patience is needed.

Opportunity Zone legislation was designed to spur capital investment and economic development in underinvested neighborhoods. To that end, the legislation requires “substantial improvement” in order to qualify for the tax benefit. This requirement means that the investor needs to double its basis in the Opportunity Zone, a provision that made real estate development first movers in the market. At this time, we know of more than 400 initiatives committed to the OZ Impact Reporting Framework, and Council members have over 30 OZ projects underway nationwide.

The thing is, development takes time – and a lot of it, especially in certain locations. David Bramble, Managing Partner of MCB Real Estate and Beeck Center Investor Council member, said it’s taken over four years just to get permits for some of his projects. The Washington State Department of Commerce Opportunity Zones Working Group recently observed, “Success will require attention, patience, resources and public/private partnerships to support local efforts,” sentiments the Council agrees with wholeheartedly.

Nearly two years have passed since the OZ legislation was enacted and the regulations are still not finished. The regulatory clarity needed for real OZ business investment was set only a few months ago. We are seeing inspiring activity in these neighborhoods, but we need time to see new capital flow in meaningful ways.

Renewed Commitment to Action

people sit at a long conference table
Council members engage in robust discussion during their meeting in Brooklyn, NY. Photo: Ori Hoffer

With new reporting and self-assessment tools in the works, and a host of new ideas in their pockets, the Council wrapped up two days of conversations with a renewed commitment to action.

“There is a lot of work going on in the area. The work should have been happening anyway, but OZ legislation was the catalyst toward this.”

“We will take a more intentional role in gathering the cultural influence, adding the cultural component to the grasstops model.”

“We are learning how to do deals that bring in as many stakeholders as possible, and collaborative behavior is really important.”

The Opportunity Zones legislation is a new tool for investors to spark development and growth in communities across the country. While OZs are new, people have been working and investing in these types of communities for decades. What’s different now is how the discussion of OZs has sparked interest from new players in the space. This group represents institutional powerhouses (Goldman Sachs), non-profits (LISC), established developers (MCB Real Estate), and non-traditional investors like Derrick Morgan, bringing added energy and asking new questions to deliver results. 

To the Beeck Center, one of the most valuable things about OZ legislation is the conversation swell around it. It is bringing many new players to the world of impact. The Beeck Center sets tables so that those with deep impact knowledge can teach and collaborate with new players. OZ legislation is not the answer to every problem that exists within community development, but it provides space for smart people to converse who wouldn’t interact otherwise. Innovation comes from conversations like these, and the economic reality in OZs is illustrative of a need for major change. It’s going to require collaborative behavior. And time.

November 11, 2019 | By Tongxin Zhu

“I’ve only been cooking for myself and my husband for over 10 years since my sons moved to Canada. It really amazed me when the team first came to me and said that I can work as a chef to showcase our local cuisine and pastry.” Madam Xie told me when I was helping clean up after lunch during my tourism geography fieldtrip in Candong Village, Kaiping City. 

Majoring in Tourism Planning as an undergrad, I had plenty of experience working with local communities and government on tourism planning and renovation projects. I found myself interested in connecting with local people and hearing their stories. The case that motivated me the most to pursue community development is my field trip and volunteer experience in a heritage tourism village – Cangdong Village in Kaiping City, China

Woman with umbrella stands in front of ancestral hall in Cangdong Village, China
The ancestral hall after community-engaged renovation. Photo by Tongxin Zhu

The village itself was almost empty before the renovation project happened, with about 50 elder residents who didn’t want to move overseas with younger generations – Madam Xie is one of them since her husband is the village head. Led by a professor at a local university, a group of architecture students came to the village and engaged residents to renovate the historic buildings. They rebuilt an ancestral temple and other public areas based on residents’ oral history and current needs. Residents were encouraged to work as chefs, handicraft makers and most commonly, storytellers, to share the village history to tourists and the younger generation. 

The renovated village attracted over 400 overseas Chinese during the 2017 Chinese New Year and helped to build connections between multiple generations. When compared with another heritage village in the same city, Cangdong Village surpassed expectations in the sense of keeping a living memory of the village and building connections between people and community. Other heritage villages in comparison were managed by a tourism company and barely profited by charging an entrance fee.

I joined the Beeck Center with the expectation to learn similar cases in the local-level development program. I hope to start my own local-level development program back home after graduation. I used to be confused about the different paths that I could take. Between small scale, instant influence such as the renovation project that I participated in, and the longer-term, systematic level change that can provide broader influence. like what the Beeck Center is trying to achieve through Fair Finance, Data + Digital, and Student Engagement initiatives. 

My experience at the Beeck Center changed my views on social impact to a great extent. The Beeck Center has a unique approach to scaling impact – acting as a grasstop organization that accelerates change through collaborations with ecosystem players. Local-level, instant changes can be encouraging and create a sense of fulfillment when the programs work, but they can also be discouraging if I’m feeling self-contented or meet some uncontrollable contextual changes. 

Take my work here in Opportunity Zones as an example, I might deep dive into a project for several years to achieve significant impact in one O-Zone, but there are over 8,700 of them facing different challenges across the country. Therefore, a small-scale approach might not be the most effective way when dealing with big social problems. On the other hand, back into reality, not all local voices could be heard or taken into account in decision making. Therefore, there is a real need for holistic change since the system hasn’t fully discovered the value of its people and enabled them to reach their potentials.

the former PEMCO factory site in southeast Baltimore
The redevelopment of the former PEMCO factory site in southeast Baltimore — a project four years in the making — got underway with a formal groundbreaking this winter. Photo Baltimore Sun

Systematic changes always take time, and it is discouraging to see people criticizing Opportunity Zones making the “ultra-rich even richer while those in need end up worse-off. From my perspective, this is the trade-off between type 1 error and type 2 error in statistics. If too much effort and restrictions are put to limit the types of investors and investment in O-Zones, there is a larger probability that people who would have benefited from some investment – either getting a job or living in a mixed-income community – would no longer be able to get that positive outcome. Thankfully, I hear and see impact investing stories happening both inside and outside the OZ landscape. With the present level of data collection and impact evaluation tools, I think it would be much easier to make an evidence-based conclusion on the impact of OZ in the near future and make timely adjustment if needed.  We also need policymakers to think about the unintended consequences and possible solutions while moving on these issues. That helps me keep faith in what I’m doing, and excited for what’s to come. 

 

Tongxin Zhu is a student analyst at the Beeck Center for Social Impact + Innovation, studying Public Policy at Georgetown University. Connect with her on Twitter/email at tz163@georgetown.edu.

Read Part 1: The Problem We’re Trying to Solve

Our Approach to Solving the Problem

The Beeck Center creates space and opportunity for uncomfortable conversations, while seeking and creating bold solutions. The Fair Finance Initiative is an ambitious program that aims to right the rules, both written and unwritten, currently in place for investment of capital in low-income, disenfranchised, and underserved communities. 

Over the next two to three years, the Fair Finance Initiative is focusing on the following programs:  

Reimagining Community Investing for the 21st Century

We are focused on a future for community and sustainable investing that is rooted in the lessons of the past, but which results in systems change driven by policies that do not simply tinker around the edges. The Beeck Center is soliciting, examining and designing policy solutions on a federal and local level to deliver positive social outcomes in communities that have been historically overlooked and underestimated by traditional investors. Potential policy recommendations include the creation and capitalization of a new form of tax-exempt community institutions, deconstruction of the U.S. Department of Housing and Urban Development, and the consolidation of programs focused on community development under a new agency. The initial stages of this work are being generously supported by Incite whose mission is to build movements by transforming big ideas into big deals.

Project Lead: Lisa Hall Funding Partner: Incite

To uncover bold new ideas we must first understand the past. This timeline, created by the Beeck Center, charts key programs and significant developments in “A History of Community Investing in the United States.” Created by Student Analyst Kriti Sapra through the Knight Lab. 

Driving Impact in Opportunity Zones

The bipartisan passage of Opportunity Zones legislation has led to multi-stakeholder conversations around community investing. The Beeck Center is supporting the original intent of the legislation by driving positive social outcomes in Opportunity Zones. Since February 2018, the Beeck Center has led national efforts to incorporate impact objectives into investment strategies for Opportunity Funds. We are using the conversation swell around OZs to collaborate with investors and test new models of community investment. 

Opportunity Zones are an ideal conduit for exploration of creative ideas for location-based community investing in the United States. Earlier this year, In partnership with U.S. Impact Investing Alliance, we produced the Guiding Principles and Impact Reporting Framework for Opportunity Zones in addition to creating an Opportunity Zone Investor Council. We are grateful for the generous support of the 15 Council Members, a powerful group of investors, developers and fund managers that are setting a new standard for impact. 

Project Lead: Jen Collins

Colorful grafitti saying "Real equality isn't possible if we don't celebrate our differences
Photo by Matteo Paganelli on Unsplash

Financing Immigrant and Refugee Integration

The U.S. population is rapidly diversifying. As has been the case since the founding of the country, much of this diversity comes from immigrants and refugees—currently over 44 million people, nearly half of whom are of working age. It benefits everyone to integrate these new arrivals into society and tap their expertise, energy and earning potential.

Yet, we currently have a systemic problem. Many individuals are unemployed or under-employed, At the same time, the U.S. anticipates a shortfall of 1.9 million workers by 2024 (Bureau of Labor Statistics). Bringing immigrants and refugees into the workforce will enable them to use their skills, support their families, and contribute to the U.S. economy. This integration would represent significant impact at scale.

The Mariam Assefa Fund, a new initiative of World Education Services (WES), seeks to reduce the barriers that prevent immigrants and refugees from finding meaningful employment in the U.S. Thanks to a generous grant from WES, the Beeck Center is exploring ways to finance training and workforce development for these workers. We are reviewing the current landscape of workforce development financing, and will consider the history and applicability of other innovative financing programs that target outcomes with a social element (e.g., Pay for Performance contracting, or Loan Guarantees). We’ll engage a diverse group of stakeholders and experts including investors (both traditional and impact), policymakers, corporations, community leaders, academics (from both national universities and community colleges), and representatives from the immigrant and refugee communities, to identify the most promising (and most scalable) approaches to financing economic integration. Throughout, we will involve our students and seek collaboration with other centers and individuals at Georgetown.

Project Lead: Betsy Zeidman Funding Partner: WES – World Education Services

Promoting Inclusive Entrepreneurship

Creating prosperity for all, means including all communities in the nation’s economic growth. With the vast majority of net new jobs coming from new business startups, the people, policies and finance governing the field of entrepreneurship matters. Today, 92% of the decision makers behind the venture capital that drives most high-growth startups are men and less than 3% are investors of color. These investors provide 2.2% of that capital to female founders and only 1% to entrepreneurs of color. How we tell these stories is as important as the numbers themselves.

The world’s business news media was created more than 150 years ago. Today, even leading publications still view the world through this mindset, focusing on institutions, hierarchies and narrow, extractive views of what’s valuable. Many stories and important trends are left out when this world view is applied to journalism.

Times of Entrepreneurship is a new business publication that upends the old model. Times of Entrepreneurship highlights communities and individuals, regardless of race, place, class and gender. Its innovative reporting structure puts journalists in secondary U.S. markets, but gives them global beats in Money, Food, Climate, Security and Health, with two-cross-cutting channels, Women-Owned and Migrant-Owned Businesses. It covers innovation and trends in entrepreneurship and among leading investors. Our journalistic lens seeks different and new ways to measure value and to document the dynamic, entrepreneurial systems that shape institutions as they evolve — hopefully toward a more equitable and sustainable future.

Project Lead: Elizabeth MacBride Funding Partner: The Ewing Marion Kauffman Foundation

man reading business newspaper

Photo by Adeolu Eletu on Unsplash

Creating Equitable Capital Markets

The concept of capitalism presumes perfect information and equal opportunity. The reality of capital markets is that information and opportunities are distributed unevenly. ”Free market” absolutism has left behind millions of Americans over the past 10 years and created prosperity for a small number of Americans. At the Beeck Center we create opportunities that help shrink the racial and gender wealth gaps.

Initiatives like the Racial Equity Assets Lab (REAL), and the recent study sponsored by Knight Foundation are sparking discussions around the disparity in capital allocation to fund managers of color and women-led fund managers in spite of financial performance that matches the performance of white men. We collaborate with others to identify practical solutions to addressing barriers for these fund managers, through further research in conjunction with existing ecosystem players. Potential program activities include the creation and dissemination of video content to highlight market inequities and promote solutions, like the global directory of women in venture capital. We are also conducting a landscape survey of initiatives underway to bolster the ecosystem for fund managers of color and women-led fund managers. We are grateful for the generous support of Surdna Foundation, the seed funder of this work. 

Project Lead: Lisa Hall Funding Partner: Surdna Foundation

Through these projects, the Beeck Center contributes to the momentum of an existing flywheel for change in capital markets. We are connecting the dots between many disparate efforts around finance as a tool for prosperity including impact investing, community development finance, corporate social responsibility, and conscious capitalism. In our vision, prosperity is shared among many rather than hoarded by a few. Please join us in pushing the wealthiest nation in the world to provide equal access and a fair shot at sound economic and financial opportunity for all. 

 

Finance is a dominant driver of innovation and economic growth in the United States and abroad. However, debate remains whether finance and capitalism can be a force for good. Recent news around Opportunity Zones highlights the skepticism which insists that financial investment in marginalized communities cannot achieve positive results for both investors and the community.

At the Beeck Center, we believe that finance can deliver social and environmental outcomes in service to the common good, that it is a fundamental tool for solving intractable social problems like poverty and wealth inequality, and we are committed to using financial tools to create impact at scale.

Impact at scale means redesigning current systems, and the courage to think, behave and collaborate differently. Investing for outcomes also means shifting incentives and addressing systemic inequities to achieve lasting change. As we seek to shift systems so that they work for all stakeholders, we are embarking upon a new initiative known as Fair Finance, which aims to right the rules of the game for shared prosperity. For us, attacking these systems isn’t just a job, it’s a personal commitment driven by our life experiences.


How We Got Here


The Problem We’re Trying to Solve

All too often the policies that shape the flow of capital enable an elite group of those who are already extremely comfortable to be more comfortable. This new Beeck Center initiative envisions a world where the tools of finance are intentionally directed towards improving all of society and equalizing access to opportunity. We’ll examine and deconstruct the financial systems that perpetuate inequity and a profit-only mindset, while promoting programs and tools that harness the power of capitalism to create positive social impact. 

At the Beeck Center we confront the powerful constituencies that promote and preserve the myth of opportunity or the “American Dream,” which ignores systemic and persistent barriers to financial and economic success like racism and sexism. We draw upon global examples to identify scalable solutions for the United States that address these challenges. We’ll also directly address obstacles to opportunity and market access that hinder economic growth in many U.S. communities. Over the past 35 years, prosperity has been limited to a small percentage of the U.S. population. Access and opportunity have not been evenly distributed, despite rational thinking that talent and potential are evenly distributed in rural and urban areas; among whites, African-American, Latinx, and Asian communities; between tribal lands; and across religious groups and ethnicities. 

One example of growing inequity is the dramatic change in CEO compensation as compared to other employees throughout recent decades as illustrated by the above chart produced by Economic Policy Institute.

The Opportunity at Hand

Technology, social innovation, and impact investing are driving exponential change around the world, and increasingly business leaders are recognizing that long term financial sustainability is inextricably linked to social and environmental sustainability. Ideas that once seemed impossible are now within reach, enabled by the digital age and the ability to communicate and transact rapidly. Dynamic leaders like Rodney Foxworth of BALLE (Business Alliance for Local Living Economies, Stacy Abrams and others from across the private, public and non-profit sectors are making bold, audacious recommendations for change while tackling challenging economic, political and environmental realities. Increasingly, individuals are examining their lifestyles and demanding social impact in every area of their lives, including purchases, investments, and other choices.

The failure of investors to tap the capacity of communities of color prevents the country from maximizing its full potential. A recent study by the National Community Reinvestment Coalition shows the barricades that minority entrepreneurs face when looking to expand their business. As reported by the Washington Post,

“The organization sent teams of white, black and Hispanic “mystery shoppers” who acted as prospective borrowers to evaluate customer service interactions with the banks’ small business lending representative at 60 Los Angeles area banks. The testers had nearly identical business profiles and strong credit histories, with black and Hispanic testers possessing slightly better incomes, assets and credit scores than their white counterparts.

In almost every measure, white testers received superior customer service, the study found. Bank representatives asked white prospective borrowers fewer questions about eligibility and provided them more information about loan products.”

Bar graph showing information provided to loan applicants

When minorities talk to loan officers, they don’t always get the full picture of what’s involved, which can discourage their application. Credit NCRC

These experiences highlight the need for more capital in communities that are often underestimated and overlooked but are critical to the future economic growth of the United States.

Part 2: Our Approach to Solving the Problem

August 30, 2019

On August 6, 2019, the Beeck Center’s Fair Finance team and a Georgetown Law professor toured seven projects in Opportunity Zones in Baltimore City. These projects included vacant lots, refurbished rowhomes, and newly developed mixed income apartment buildings. At the conclusion of the tour, the Hotel Revival in Baltimore hosted a community dinner with Opportunity Zones Investor Council members, local faith leaders, and community organizers where Beeck Center Student Analyst Donovan Taylor presented his personal story and why social impact is invaluable to him.

The following is a transcript of Donovan’s speech.  

When I was 12 years old, my mom used to wake my sister and me up at 9 am to take us to church in East Baltimore. On Hillen Road, Lake Montebello was surrounded by beautiful single-family homes and lush grass. Driving down Harford Road toward North Avenue, things were a little different. There were brick row houses, concrete, and check cashing expresses. As my mom turned onto North Caroline St, the neighborhood was inundated with abandoned buildings, liquor stores, and potholes. The tension in the air was palpable. This community is juxtaposed with Harbor East’s cobblestone streets, extravagant fountains, upscale restaurants, and Whole Foods less than a mile away. How could anyone find purpose or joy in a world plagued by so much inequity and suffering? Baltimore is struggling to survive. In 2017, 342 people were killed in this city compared to 290 in NYC, a city with nearly 14 times the population. The issue of gun violence affects many families personally, including my own. In May 2014, my uncle was shot in the face and killed instantly, and the police still don’t know who’s responsible. 

Since 5th grade, I attended a summer program for talented Baltimore youth called Bridges at St. Paul’s School. St.Paul’s is a prestigious private school in the Baltimore suburbs with a huge campus that was once a slave plantation. I remember being absolutely amazed that students could drink from water fountains and had central air in their classrooms. Baltimore City Public Schools are struggling to meet the needs of the next generation of students, including providing a comfortable learning environment. In the winter of 2018, Baltimore made national news as a photo of preschool kids in heavy coats in their classroom went viral online, exposing just how poor conditions are in some Baltimore City schools because the city fails to provide adequate heating. If you’ve been exposed to gun violence, you must figure out ways to cope and heal from this trauma. If you don’t have access to healthy food, you will deal with an increased risk of obesity, hypertension, and heart attack. If your zone schools are underfunded, you have limited opportunities for upward mobility. In some of these communities, people are dealing with all these issues. Some people from outside of Baltimore can sit in their prestigious office and write these communities off as “rat infected, rodent infested mess(es)” that no-one wants to live in. But, Tupac lived in Baltimore for a part of his life and I believe it was in these communities he got the inspiration to exclaim “long live the rose that grew from the concrete.” My grandfather calls us “God’s miracle people” because even though we’ve been through so much, we always find joy and the will to press forward.

This is a critical point in our society. Our generation has seen the impact of fear and hatred on a global scale. We’ve seen a few people amass great wealth and power, while some parents abroad are forced to feed their children dirt patties. Today, we have an opportunity to change the world for the better. We can choose to see the value of these communities and equip them with the tools to recover from decades of apathy and exclusion. 

Impact investing is a relatively new perspective on investment through which social and environmental outcomes are just as important as financial returns. In the US, impact investors manage over $255 billion in assets. Opportunity Zones are a federal tax incentive that allows investors to defer taxes by investing their capital gains in low-income communities. Through the combination of impact investing and opportunity zones, with a clear focus on community empowerment, the narrative can be changed. The next generation deserves to live in a world free from the pain and trauma of today’s youth. The children of Sandtown should live in a community that they are proud of and afforded the same opportunities as those from Roland Park. Your passion and dedication to investing in Baltimore Opportunity Zones will lead to real change in communities that are desperate to be heard and healed. It is important to exemplify the adage “nothing about us, without us” and actively seek to understand community need. There are invaluable insights that residents can offer in this work that are equal to those of ivy-league educated professionals. To continue with the words of Tupac, these community members, these roses, are grounded in the reality of their lived experiences. Therefore, it will take the collaborative efforts of all to create a more equitable society. That rose in the concrete should live without fear that a stray bullet will kill it. That rose should have access to the best food, housing, and education available. That rose deserves the highest respect for embodying resilience and surviving the impossible. Eventually, that rose will no longer struggle from the weight of systematic injustice and the concrete will no longer exist.


Donovan Taylor is a Student Analyst supporting the Fair Finance team, and this fall will return to Georgetown University, where he will be a senior majoring in International Business and Management. Follow him on Twitter @donovantaylor01.