Social impact and wealth accumulation usually are not brought up in the same sentence. Robert Hutchins thinks they can be — and should be.
It’s why Hutchins founded Ellavoz Impact Capital last January, with the intent to use it to develop underserved communities through Opportunity Zone funds. He feels investors will be able to see tangible community impact and a tangible tax benefit. And it’s why he opened three Opportunity Zone funds in 2020.
Opportunity Zones were created under the 2017 Tax Cut and Jobs Act as a way to induce such investment, since the tax on capital gains can be reduced — or eliminated — under the program.
The program, which was co-sponsored by U.S. Sens. Cory Booker (D-N.J.) and Tim Scott (R-S.C.), was intended to draw attention to development opportunities in some of the most economically challenged areas in the country.
Hutchins, the founder and CEO of the Belmar-based social impact private equity management firm, said he hopes the program will do something else: Shine new light on social impact investing, which he said is often misunderstood.
“There is currently an abundance of capital for the most part chasing the same kind of shiny balls,” he said.
“What our mission is, is to introduce high net worth individuals, accredited investors to impact investment so that they can invest in underserved communities and people by providing capital for projects that build affordable and dignified homes, as well as develop economic opportunities within the communities that we target for redevelopment.”
One example is Ellavoz’s investment in the Newark Arts Commons, which Hutchins said hopes to open in the first quarter of 2021.
“We closed a single-asset fund where we have an investment in the Newark Arts Commons, the former Saint Michael’s Hospital (building),” he said. “It’s being converted to three floors of workforce housing and two floors of art studios. It sits across the street from the new Saint Michael’s Medical Center.”
Hutchins said this is an example of an investment that will have community impact.
“It’ll provide reasonably affordable workforce housing alternatives to many of the health care workers who work just across the street,” he said.
Ellavoz has two partners: New Jersey Community Capital, a not-for-profit bank specializing in investing in distressed communities, and Community Asset Preservation Corp., the largest not-for-profit affordable housing developer in New Jersey.
Hutchins said these partnerships are what makes Ellavoz unique.
“To our knowledge, we are the only opportunity fund in the country that is a real partnership with a community development financing institution and a not-for-profit affordable housing development.”
Hutchins said these partnerships have proven to draw two types of investors: the pure social impact investor and the tax-savvy investor.
“It is the sophisticated, very tax savvy, high net worth individual who is looking to shelter capital gains and understands that true wealth accumulation comes from a good tax plan,” he said.
Hutchins said the opportunities for social impact investing should be around for years to come. A change of administration isn’t expected to hurt the program, he said. In fact, the opposite may happen.
“There have been bills introduced on a nonpartisan basis to expand tax credits for building affordable housing in distressed communities,” he said.