An oft, not talked about group of beneficiaries are the financial and investor institutions.
Yes the program helps Low Income Communities, Low Income Community Businesses, CDE owners/founders, etc. However, it has many upsides for investors.
I’ve had a client ask me recently “is this ‘free money’?...why would an investor be interested in having its equity dollars go into my project?”
A portion of the answer lies in the tax credit benefits.
Another portion lies in the financial upside to the investor with the remainder of the answer having quite a lot to do with CRA lending strategies, etc.
Many investment and lending entities have seen very strong returns to their bottom lines from participating in the New Markets Tax Credit Program.
A February 2007 Report By The Department of Treasury (Community Developments – Insights) reports the following:
"Banks have chosen to participate in the NMTC program for a number of reasons.
These include attractive economic rates of return on investments; prospects
for generating significant impacts in low-income areas, which frequently
involve the use of partnerships with community-based organizations;
opportunities to diversify into other credit products and services; and
multiple
ways to receive favorable Community Reinvestment Act (CRA)
consideration."
The double bottom line returns associated with a bank’s allocation or
investments in the program have been so substantial in some cases, that some
institutions are actually mentioning the New Markets Tax Credit program as one
of the specific drivers of their success.
According to CNNMoney.com, Carver Bancorp, Inc, announced it’s “strong first quarter results” and asserted that their bottom line continues to “benefit from the New Markets Tax Credit ("NMTC") award” as reported by CNNMoney.com. Visit the CNNMoney report here.
I hope this was helpful and welcome your comments!
Regards,
NaShawndra Jackson-Davis
NMTC eXchange, LLC
