Bringing an Entrepreneurial Perspective to Impact
Adapted from Sorenson Impact Center founder Jim Sorenson’s talking points at the U.S. Senate Roundtable on Impact Investing and the Investing in Opportunity Act, organized by the U.S. Impact Investing Alliance.
It’s a sad fact that entrepreneurship has taken a sharp decline over the past decade. This waning economic dynamism has left communities across the country in distress and has closed the doors of economic opportunity to millions. One of my objectives in endowing the Sorenson Impact Center and other endeavors is to help build the ecosystem of social entrepreneurship in this country.
Research shows that new business creation is the principal driver of job and wage growth. Moreover, the dream of starting a business—of paving your own path to economic security for your family and your community—is at the heart of the American Dream and something I hold dear.
As an investor, it’s clear to me that not every good idea comes from Silicon Valley or New York City. If the vast majority of funding for startups continues to support just a handful of places, we will be missing valuable opportunities, not just for investors, but for business owners, their workers, and their workers’ families. Moreover, areas that have been hardest hit by globalization and other economic factors are at risk of slipping further and further behind.
I believe there are motivated investors who want to help the people in these communities get back on their own feet. A helpful incentive from the government can play a key role in bringing down barriers to investments flowing to the areas of our country that need it most.
One low-cost opportunity to nudge investors to commit funding to communities that are often overlooked by traditional investors is the Investing in Opportunities Act (IIOA), introduced in Congress in February of this year. The Act would present a real opportunity for state and local governments to leverage private capital to help address social problems in their communities by creating “Opportunity Zones” across the country to attract investment by offering participating investors deferred capital gains recognition.
Like the Low Income Housing Tax Credit, the New Markets Tax Credit, the Community Reinvestment Act, and other prominent federal regulatory frameworks, IIOA has the potential to move a significant amount of private capital and resources into the social sector. I’m hopeful it will pass in the coming months.