As I engage with dozens of communities around the country on Opportunity Zones, I am often asked “Where are the philanthropies?”

The question is rooted in some simple math and hard market realities. The Opportunity Zones tax incentive could generate tens of billions of dollars in market equity investment in low-income communities, which could, in turn, leverage hundreds of billions of dollars more in conventional lending, concessionary capital and public subsidy. Most Opportunity Zones are in desperate need of such investments given their high rates of poverty and vacancy and the absence of businesses and business demand. Yet there is a disconnect today between the orientation of capital allocators (who have access to countless tax advisors, accountants and lawyers) and community advocates (who are more familiar with policy or subsidy driven tools).

Even a modicum of philanthropic investment would seem like a smart way to level the playing field. A substantial amount of investment could enable the transactions we want in the places that need them.

Philanthropies have special qualities that make their engagement critical. They have the prestige and stature needed to gather disparate players to deal with hard challenges and intriguing possibilities in their communities. They often have deep knowledge of Opportunity Zone neighborhoods, gained from having made immense investments in these places over long periods of time. They have the kind of patient capital needed to attract other investors; foundations can take a long-term view. They also have the discretionary capital needed to make investments in community development enterprises, local governments and other local institutions so these organizations can take advantage of Opportunity Zones. What’s more, they have the respect for evidence-driven decision making that is conducive to catalyze, capture, codify, and communicate new norms and approaches as they emerge.

Despite this, many philanthropies have been slow to jump in. I suspect there are several reasons at play.

Opportunity Zones come with multiple layers of risk. The lack of guardrails, the absence of reporting requirements and the realization that a few high profile, gentrifying communities were designated as Opportunity Zones mean that this is an imperfect tool. There have already been stories about market ready transactions unnecessarily fueled and subsidized by tax policy … and there will be more. The fact that this tax incentive has emerged under Donald Trump’s watch doesn’t help. It is always safer to stay on the sidelines until the dust settles.

Opportunity Zones also take many philanthropies outside of their comfort zone and force them to grapple with hard market and project finance questions, with which some are largely unfamiliar. What is the market vision for low-income neighborhoods which haven’t seen serious market investments for decades? What’s the blend of debt, subsidy, equity and concessionary capital that can make a workforce housing deal pencil out? What about a commercial real estate transaction or a clean energy deal? How does a philanthropy structure an aligned fund?

The good news is that we are beginning to see a group of local, regional and national philanthropies step up and begin to shape the Opportunity Zone market in important ways. The investments to date are still paltry in size and pale in comparison to what is truly needed to help communities realize the full economic and social impact of this new tax incentive. But it is a start.

In a piece I wrote last week for the Chronicle of Philanthropy and a longer paper I prepared for the Knight Foundation, I identify 7 ways philanthropies can make a difference:

Convene Stakeholders. Philanthropies can gather public, private, civic and community leaders so they can understand what this tax incentive is, what it isn’t and how to proceed. The Blank Foundation, for example, convened major government, business, and nonprofit leaders in Atlanta in December 2018 to consider how they, collectively and individually, could seize on the possibility of Opportunity Zones. This meeting has already driven a range of deliberate actions and strategies by city and metropolitan institutions.

Map assets. Foundations can finance the work needed to help cities develop strong investment prospectuses, so that they can communicate their competitive advantages, spur local partnerships, and identify sound projects that are ready for public, private and civic capital. To date, Los Angeles Mayor Garcetti’s Accelerator for America and I have worked with over 30 cities to develop investment prospectuses that show the real strengths of communities. This work has been supported at the national level by Mastercard’s Center for Inclusive Growth, the Rockefeller Foundation and others; the support by the Kauffman Foundation in Kansas City has also helped advance the work dramatically.

Build markets. A philanthropic investment can fill the gap that arises between the amount of debt supportable by the project and available equity. This role – known in the finance world as concessionary capital – will be critical in projects where the Opportunity Zone deal wouldn’t otherwise make sense to investors. The Kresge Foundation has been quite innovative in this type of investment, providing $22 million to two Opportunity Funds to mitigate risks and cover first losses in exchange for extensive accountability and disclosure agreements. This area should be the focus of much financial innovation (of the good kind).

Empower local residents. Philanthropies can help residents who live in or near Opportunity Zones express their preferences, obtain skills, start businesses and help improve the quality of life in the neighborhood. As part of their broader effort to build an Opportunity Zone Investment Prospectus in Kansas City, the Kauffman Foundation funded several efforts to engage community residents in several neighborhoods that have long been ignored by financial institutions as well as identify neighborhood serving businesses that are prime for growth and expansion.

Build institutions. In many communities, neither local governments nor existing nonprofit organizations have the capacity or professional expertise to design, finance and deliver sophisticated programs that transform the local economy. Cities should use Opportunity Zones as a way to modernize and redefine their institutions to maximize economic, social and environmental impact. To this end, the Erie Community Foundation has enabled the creation of a new organization, the Flagship Opportunity Zone Development Company, to be a one-stop shop for investors and project sponsors. The company is situated within the Erie Regional Chamber and Growth Partnership.

Two other roles – encouraging innovation through challenge grants and sharing information via intermediaries are tried and true methods that foundations have used to drive norms and models in areas as diverse as smart cities, climate change and affordable housing. Why not Opportunity Zones?

The evolution of the philanthropic role in Opportunity Zones, in many respects, will mirror the evolution of cities. A few philanthropies will be first movers, innovating in ways that show measurable outcomes and burnish their position. These innovations will be captured and codified and then adapted by other philanthropies, which will be fast followers. Ultimately, exceptional innovations will become the norm, seamlessly adapted to dozens of cities across the country.

The Opportunity Zone tax incentive has the potential to channel private capital to communities that have suffered from neglect by financial institutions and government. That potential will only be realized if philanthropies and other players help shape this new incentive so that it provides just as much benefit to the public – if not more – than it provides in private gain. Now is a key moment for philanthropies to stimulate economic growth for everyone who lives in places long left behind.