By Danika Borcik and Megan Brewster
In 2019, the Sorenson Impact Center has partnered with Forbes to host the Forbes OZ 20, a national campaign spotlighting impact-driven leaders in the Opportunity Zone space. Two and a half years later, as the OZ space matured, we followed the four main winners to see where they are now and what knowledge they have gained. This article is the fourth in a series of four case studies that outline key lessons and strategies for success. Watch our contributor page for updates.
If you’re an Alabama resident and you’re noticing economic growth in your area, you can thank the team at Opportunity Alabama. Opportunity Alabama (OPAL), a nonprofit that connects investors to investable assets in low-income and underrepresented communities, has spent the past several years traveling the state to educate stakeholders and facilitate transactions in investment in the Opportunity Zone (OZ). So far, their efforts have helped secure more than $350 million in economic development deals — a transformative amount for a state with consistently low rankings on prosperity indices and one of poverty rates. the highest in the country. Their work has earned them credibility and a unique perspective on key challenges and opportunities in underserved rural and urban Alabama communities. Since OPAL was recognized as a Forbes OZ 20 Grand Prize winner, they have launched their own investment fund and expanded beyond the OZ space to consult on higher education, federal politics and government. other efforts with a community-aligned impact.
Changing Strategies for Direct Impact
Alex Flachsbart, Founder and CEO of OPAL, recently led his organization through a strategic evolution catalyzed by a desire to create deeper impact. The organization shifted its focus from socializing OZ agreements between investors and communities to acquiring funds to invest directly in their own projects. “We need[ed] our own capital vehicle if we [were] are going to achieve the impact we want to have over the next decade and more in the state,” Flachsbart explained. OPAL launched its first fund in late 2020, which raised just under $19 million to address critical real estate development projects in Alabama. These projects are intentionally designed to create more equitable wealth-building opportunities for Alabamians, especially groups that have historically been excluded from investment and economic development.
OPAL develops a unique impact measurement plan for each project to ensure community benefits in the process, not just the outcome. In one example, OPAL supported the refurbishment of Market Lofts on Third Building, which created over 100 housing units needed for the workforce in Birmingham city centre. The project employed a disproportionate percentage of traditionally underrepresented populations in the process, including a woman-owned general contractor and interns from a local HBCU. Building partnerships with diverse investors, business owners, artists and other local stakeholders is key to OPAL’s impact thesis, and this is how they have gained a strong ecosystem of partners. of confidence. “Because of the network we have, we’re in a very unique position… We know the local economic developer, the local mayor, the local nonprofit… The first thing we ask is, ‘Will you you want this to happen in your backyard?’ If the answer is yes, we continue,” Flachsbart said.
Provide space for community-led growth
As OPAL evolved, they identified a gap in Alabama’s investment and impact environment: critical development work across the state was going unfunded because community members were largely excluded from technical and financial resources. Flachsbart brought this dilemma to Sorenson Impact Center’s 2020 Annual Impact Summit. From discussions with the other leaders present, the idea of the Community Growth Accelerator was born. This program, which has run in 20 counties so far, helps local community leaders develop cohesive project pipelines in underserved rural and urban areas of Alabama. Program cohorts are guided through a free 12-week pre-development program where they can connect to OPAL’s partner network and receive training on designing winning projects, attracting investment and developing execution of their vision.
The Accelerator program generates tangible results. In the town of Livingston, a participating team identified the need for a well-functioning grocery store, developed a project plan, and secured funding from a community development financial institution that enabled them to raise awareness of the local food brand and establish effective store inventory management. system. Despite the program’s outsized success, OPAL has been intentionally low-key on the accelerator until recently. Said Flachsbart, “So many times you’re dealing with rural communities and it’s over-promising and under-delivering…We wanted to be sure that we could provide any kind of technical assistance that we say we’re going to provide. before releasing it and announcing it to the world. We are finally there.
While OPAL’s work often extends outside of the OZs, their mission remains to recast Alabama as the epicenter of OZ-focused investing. “We started with Opportunity Zones, we wouldn’t exist without Opportunity Zones, and it’s still a big part of the fuel that keeps Opportunity Alabama running,” Flachsbart said. The first OPAL fund is currently being distributed to economic development projects across the state, and the Community Growth Accelerator has proven to be an effective addition to their toolkit of transformative community resources. The nonprofit’s impact on Alabama to date has been significant enough that the state has emerged as a positive outlier in one of the few academic studies conducted on OZs.
The OPAL team looks forward to shining a light on its community impact this summer: Alabama is hosting the 2022 World Games, an international sports competition affiliated with the International Olympic Committee, which will bring tens of thousands to Birmingham in July. . Lindsay Edwards, Chief Investment Officer of OPAL, noted the team’s anticipation for this unique opportunity: “We see this as an opportunity to show the world what innovative impact can look like in the State of America. ‘Alabama.” Hopefully, increased exposure from the event and the continued efforts of OPAL and others like them will bring more capital to the parts of the state where it is most needed.