And how can I find funds that track the progress of their causes and key objectives?
Great question. As an investor, you should be able to have access to a report tracking the progress of the fund, its assets and, in this case, the social impact of the investment. This should be specify since the beginning of the creation of the fund. Management of every fund is different and you will need to do your due diligence before investing, as you would do with any investment instrument.
There are funds out there specifically dedicated to impact investing. They're not terribly difficult to find. As far as monitoring, measuring and tracking, if you're doing your own investment, that's optional work you can commission yourself. There is no requirement at present for any QOF to gauge community impact, which is in stark contrast to the new markets tax credit program.
This is not a tax question but more of a matter of agreement and reporting by the QOF. There are TPAs that will provide that information to the fund.
Just like any other direct participation investment, you are at the mercy of the fund manager to reporting. The first step is to look at private placement memorandum of the investment. There should be a disclosure on how often the manager will report financial results and progress on measurement of Opportunity Zone assets. The second step is to determine the reporting the manager has done for prior projects. See how often and how detailed that reporting was. Note, since Opportunity Zones are new, we have very little track record for OZ fund performance. We need to look at the performance of a manager's non-OZ investments. This is not perfect, but it is the best we can look at for now. As all those Internet company adds say, "Past performance is no indicator of future results".
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