Helping Others is Key Aspect of Opp Zone Investing

SAN FRANCISCO—A recent study commissioned by Lighthouse.one, the Opportunity Zone investment platform, surveyed 1,000 US adults with an interest in investing. The survey’s goal was to better understand the interested investors’ feelings around choosing ventures that support local communities and benefit society as a whole.

One theme was clear: 90% of respondents would prefer to invest in a project that benefits society if they made the same amount of profit. In fact, almost two-thirds of all respondents would choose a venture that yielded less profit because it benefited their communities, GlobeSt.com learns.

With the establishment of opportunity zones in the 2017 Tax Cuts and Jobs Act, there is indeed an opportunity to incentivize investment in economically distressed communities. There are 8,700 opportunity zones across the United States defined by low-income census tracts. The aim of this legislation is to provide economic stimulus by granting significant tax benefits to those who invest in OZs.

The idea of tax-free OZ investments was attractive to more than three-quarters of those surveyed. Taxes on capital gains from opportunity zone projects can be deferred until 2026 or whenever the OZ investment is sold, and 10 or 15% of the original gains invested will be exempt from federal taxes if the investor has remained committed for five or seven years, respectively. After 10 years or longer, any capital gains from an OZ investment are exempt from taxes.

When asked what appeals most about OZ investments, 73% responded that helping others is one of the most important aspects, while 27% indicated that reduced taxes was most important. Despite the contrast in reasons to invest, 89% of all respondents said they would want to reinvest capital gains in another venture where profits would be tax free such as an opportunity zone.

“While community uplift is overall the top priority, the financial and tax incentives bring an added layer of appeal,” Peter Hirshberg, CEO of Lighthouse.one, tells GlobeSt.com. “76% of those surveyed believe that we as a nation are not acting strongly enough to uplift underserved and low-income communities.”

With the legislation only two years old, more than three-quarters of all respondents had never heard of OZs. Of those familiar with OZs, 27% had already invested in these areas, while 73% had not.

For those who had not yet invested, the primary barriers were not knowing where or how to find projects (45%), followed by how to evaluate the projects (43%). With abundant opportunities available to invest in communities across America, and a majority of people willing to help, the only missing piece is a platform that connects investors to funds and projects, and effectively evaluates those ventures.