The proposed rule aligns with the Trump administration’s broader agenda to eliminate “discriminatory diversity, equity and inclusion practices” within the federal government, and the OCC justifies the removal of this language by asserting that it “implicates matters of social, political and economic significance not authorized by clear statutory authority.”  

These changes in the OCC’s regulatory guidance could undermine progress in reducing wealth disparities with significant consequences for NCRC members and the communities they serve. Financial institutions may respond by directing less capital to minority and women-owned entities that build affordable housing and provide credit to small businesses. The removal of clear nondiscrimination guidance may also weaken accountability and embolden predatory lenders to discriminate against certain borrowers. 

NCRC submitted a comment letter to the OCC opposing these proposed changes with the main points outlined below. 

The Impact of Public Welfare Investments  

OCC and Federal Reserve-chartered banks can invest up to 15% of their capital and surplus—essentially a bank’s financial cushion—towards public welfare. Known as public welfare investments (PWIs), banks can invest in community development activities, like expanding affordable housing access, providing support to small businesses or bolstering workforce training programs. However, banks must seek regulatory approval for their PWIs to exceed 15%. PWIs qualify for Community Reinvestment Act (CRA) credit since the bank’s investment would benefit low- to moderate-income communities. 

Regulators provide guidance to banks on how to effectively make PWIs, which includes a list of activities that qualify. The OCC’s proposal removes “minority and women-owned entities” from this list of identified examples, although the OCC would continue to permit investments in those entities. That change weakens the guidance’s emphasis on directing capital to communities and businesses that have historically been overlooked and underserved.  

The concern, therefore, is not that these investments would become ineligible. Rather, removing the explicit reference may discourage banks from pursuing them. In the current environment, some institutions may avoid investments specifically focused on minority- and women-owned entities out of concern that they could attract scrutiny under the administration’s broader campaign against diversity, equity and inclusion initiatives. 

The Removal of Nondiscrimination Requirements 

In the same proposed rule, the OCC intends to remove nondiscrimination requirements for Federal Savings Associations (FSAs).  The requirements prohibit discrimination based on race or other protected characteristics in lending. The OCC’s stated rationale for removal of these requirements is that they were excessive and duplicative of the existing Regulation B, which implements the Equal Credit Opportunity Act (ECOA). Regulation B protects loan applicants from credit discrimination.  

The OCC’s removal of the nondiscrimination language could send the wrong message to lenders that the nondiscrimination requirements do not need to be taken seriously. On top of that, the CFPB recently weakened Regulation B by eliminating disparate-impact liability. This means that it will be more difficult to challenge lending practices that appear facially neutral on paper but disproportionately harm or exclude a group of people that share a protected characteristic, like race or gender. The combined effect of these changes could open the door for more lending discrimination against borrowers of color, amplified by significantly reduced accountability and oversight.  

By removing explicit language concerning equity and nondiscrimination, the OCC would make its expectations less clear for federally chartered institutions. Eliminating these provisions suggests that fair treatment of historically underserved borrowers and businesses is no longer a central supervisory priority. The OCC grants charters to lenders, obligating them to responsibly serve and treat all communities fairly, including minority and women-owned entities. OCC’s proposed removal of equity and non-discrimination-focused language undermines its charters and the principle of public trust.   

Manan Shah is the Policy Advisor for NCRC’s Policy & Government Affairs team.

Photo credit: Monstera Production via Pexels.

Manan Shah, policy advisor at the National Community Reinvestment Coalition, said that the advisories are a pretext for “excluding hard-working immigrants from accessing credit.”

“Banks already have to follow strict identification and compliance measures,” he said. “Collecting data on immigration status will only worsen their administrative burden. Banks should not play the role of immigration enforcement. Immigrants should be able to go to their local bank without any fear.”

Opportunity Zones 2.0 (OZ 2.0) is an updated federal investment incentive program created under the 2025 One Big Beautiful Bill Act (OBBBA). It provides tax benefits to encourage private investment in low-income census tracts.

OZ 2.0 will shape the community investment landscape for the next decade. The process is competitive and time-sensitive. Members who act early, build strong cases and engage state decision-makers will be best positioned to direct investment to the communities that need it most.

For more information, visit: https://ncrc.org/opportunity-zones-2-0-what-you-need-to-know-and-how-to-act-now/

Speakers

Bruce C. Mitchell, PhD Principal Researcher, NCRC
Manan Shah, Policy Advisor, NCRC

Transcript:

NCRC video transcripts are produced by a third-party transcription service and may contain errors. They are lightly edited for style and clarity.

Shah 0:01
All right, welcome everybody. It’s good to see many people on the call. Feel free to put in the chat, you know, which organization you’re with, where you’re tuning in from. Really glad to have you guys on the call today. My name is Manan Shah. I’m the policy advisor here with NCRC, and I’m joined by my colleague today, Dr. Bruce Mitchell, our principal researcher, to talk about the newest iteration of the Opportunity Zone program. As many of you have known or heard, state governors are currently nominating new census tracts to designate as opportunity zones for the next 10 years. We want to share with community advocates like yourself what the process looks like to nominate your census track and really ensure that capital is flowing to communities that need it the most. So today, we are going to share some of our own research on OZs, including a new mapping tool our research team has developed to help you identify and nominate your census tract for each state. The deadline to nominate census tracts is coming up pretty soon this summer, and so it’s really vital that community organizations act early, and so let’s go ahead and dive right in. There’s some housekeeping. NCRC’s code of conduct applies to all of our gatherings. We don’t allow any AI chatbots to join the call, but we will have a recording available after this presentation. If you have any questions throughout the presentation, please use the Q and A button at the bottom of your Zoom screen. If you have any, if you’re having any trouble with that, you can also use the chat button, but for now, just use the Q and A button, and we will get to as many of those as we can at the end of the presentation. But feel free to follow up with us. And for those of you who are new to NCRC, we are the National Community Reinvestment Coalition. We are a member organization, membership network of 700 grassroots organizations advancing to build a just economy for all. We work with banking institutions specifically to hold them accountable to the Community Reinvestment Act to get capital flowing in low- to moderate-income communities, really to expand housing, small businesses, and workforce opportunities. And so I’m going to pass it over to my colleague Bruce, who can start us off on some of his research findings.

Dr. Mitchell 2:41
Well, thank you very much, Manon. Appreciate that. As you might know, we’ve been interested in the opportunity zones for quite some time now. We’ve done a number of reports on the OC 1.0 which I’ll.. when I say that, I’m referring to the former program established under the 2017 Tax Cuts and Jobs Act. And that program, OZ 1.0, that’s due to sunset at the end of this year to be replaced by a new program, which we’ll call OZ 2.0. But if we look at the performance of the first version of the Opportunity Zone program, there’s some interesting factors about it, you know. First off, it’s the largest federal community development program, you know, in history. Basically, $100 billion has flowed into this program since 2017, about $20 billion a year, mid 2019 and 2022. This has flowed into 6,000 of what are called qualified opportunity funds, and these funds are the primary mechanism by which financing flows into opportunity zones. Across the United States, in the old program, about 8,700 census tracts across the country were designated as opportunity zones, most of these in urban areas, some in rural areas also. But what we found is, and others have found who have researched this, is that the capital in this program has been deeply concentrated. That the top 1% of the opportunity zones, they receive 42% of all investments, and the top 5% received three quarters of all investments. So it’s been highly concentrated in that old program, and there have been some revisions to new program, which we’ll go over and cover those, but we’re interested in hearing what you have to say about the opportunity zones in your community, so we have a short poll, if you would mind just checking that off on seeing whether you agree or disagree that the opportunity zones have had an impact on community contributing to community development in your community. We’ll leave that up for a couple of a seconds there, so that you can have a chance to answer that and see what the results are. So that’s really interesting. There seems to be a split between people who agree that opportunity zones have had some benefit in their communities, and others who disagree and say they haven’t had much of a benefit. So, that’s a really interesting finding, and we’re interested in hearing more from our members on this particular issue, the types of mechanisms and the types of investments that are flowing into their communities as a result of the qualified opportunity funds. That would be very interesting to us, because we’d like to really, you know, help our members work with them, so that they can, you know, better identify ways of attracting capital within their communities through this program.

Next slide, please, because what we’ve seen from the opportunity zone 1.0 is what do the residents actually get, well, in terms of gains, you know, research has found that there were modest positive impacts on employment earnings and in rates of poverty for zone residents. They also found that most of the investment, 75% of the investment in the qualified opportunity funds went into real estate, and that in fact most of that real estate investment went into market rate real estate, so you know rather than building affordable houses necessarily, it’s been building market rate housing of some sort in those areas, and any sort of building of housing these days is probably a positive impact, considering the whole state of the housing industry in this country, and the need for more housing to be built, but it’s been highly concentrated in real estate, and we’ll talk about why that is, as we go on. Also the investments that went in, they tended to favor already improving areas. That census tracts that already had higher incomes had rising home values and strong pre-existing growth. Most of the funding tended to fund those rather than to highly distressed communities. Probably the most, one of the most troubling aspects of this, though, was that it’s been very difficult to assess and see how the opportunity zones have performed, because there was minimal accountability and reporting included in that Tax Cuts and Jobs Act legislation. There was no agency that was designated to collect data, so really all the data that we have came out of the IRS reporting or from states like Ohio, which set up a separate opportunity zone program, which had more rigorous reporting requirements in that. So Urban Institute based a lot of their studies off of that Ohio-based data to see what sort of benefits were derived there.

Next slide, so as a result of this, we can see here that OZ 1.0, OZ 2.0, what have been the changes? Well, first off is the program duration, right. OZ 1.0 is due to sunset at the end of this year, so will no longer be in effect, and those census tracts will no longer be designated opportunity zones at the end of this year, which means that we’re going to have an entirely new reset of new census tracts, potentially new census tracts in this next nomination time period. The program’s also been made permanent now. It’s a permanent program in which the opportunity zones are designated every 10 years. So this nomination period, after it’s over at the end of this year, those will be set for the next 10 years as qualified opportunity zones, so it’s very important that if you have a project that you’re interested in attracting funding from a qualified opportunity fund to, that you get your tract nominated and designated as an opportunity zone, because of the long timeframe this will be in effect. Additionally, OC 1.0, the eligibility under that was 80% of median family income for the area, or for rural areas for the state. That’s become stricter in OC 2.0. It’s now at 70% of median family income, there’s also a 20% poverty inclusion, so if a tract has a 20% or greater poverty rate, it can be considered as a low-income community that could be nominated as a qualified opportunity zone. They’ve also eliminated the contiguous tract rule. What this was was that a higher income tract that was next to a low income tract or a qualified opportunity zone under OZ 1.0, that higher income tract could also become an opportunity zone. That’s been eliminated in this go-around, so you’re no longer going to have higher-income tracts being potential nominees. The capital gains deferral, and that’s one of the main benefits of this, is the ability of investors to defer their capital gains on investment. In the past, that was fixed at a December 31, 2026, deadline. In the new version, it’s going to be a rolling five year from investment date, so if you made an investment, say in 2030, then the deferral would then be fully realized as of 2035. So it’s a rolling date at this point of five years. Also, the basis step-up has changed. The basis step-up formally, it was 10% would be deferred after five years, 15% after seven years of holding that investment. It’s been simplified, so now it’s a uniform 10% after five years in the new version. There are additional rural incentives, and these are for qualified rural opportunity funds. This is a new mechanism for OZ 2.0 and in these, there’s an even higher step up. There’s a 30% deferral step up on the qualified row opportunity funds. Also, there’s a 50% improvement threshold in rural areas. What’s 100% in urban areas? And I’ll go over that in a little bit more detail in the next slide, too. And then finally, there’s enhanced reporting. They’ve improved the reporting on this, so that now the number of units purchased or constructed, the number of employees hired if a business is being invested in the assets, and the track locations they are now required and reporting, so we’ll be able to get better metrics on how OZ 2.0 is performing. So, these are all improvements in the program.

Next slide, please. So, let’s just go into a little bit more detail on how does the investment mechanism work for a qualified opportunity fund? Because the qualified opportunity fund, or QAF, that’s the main mechanism by which capital flows into urban opportunity zones. So, let’s say an investor, they sell an asset and they realize capital gains on the sale of that asset. Well, instead of paying the taxes on those capital gains, what they do is they take that capital gains amount and they invest it in a qualified opportunity fund, right? The qualified opportunity fund then takes those funds and puts them into a qualified opportunity zone, invests in there. Then after that investment is held for five years, 10% of the original deferred capital gains are excluded from taxation, so they get an exclusion from paying taxes on that 10% after five years, but here’s where the real enhancement is, that if they hold that investment for 10 full years, all of the gains that they made on that investment then become tax free to the investor. So they’re deferring their taxes, exempt a portion of their taxes, and then the investor, in addition, is able to realize any gains off of that investment at the end as being tax free after 10 years, so this is a substantial gain, potentially from an investor on this. It also tends to favor the highest rate of return, right, because you want to maximize that investment and the amount of money made off that investment. Talked a little bit about the property improvement requirement in urban areas where qualified opportunity funds function in those urban areas. If you buy pre-existing property, say for $100,000 then this property improvement requirement is 100% so you’d have to invest a further $100,000 in improving that property in order for it to qualify in urban areas, that changes for the qualified rural opportunity funds, which we’ll see in the next slide. So for qualified rural opportunity funds, the same, you know, first thing here, realize that capital gains on a sale, instead of going into a QAF, it goes into qualified rural opportunity fund, and these are unique in that 90% of the funds that are invested in those, need to then flow into a rural census tract outside of the CBSA, a metro area, right. The enhancement on the qualified rural opportunity fund is after five years, they realize actual a 30% deferment of capital gains on that original amount that was invested, so 30% exclude from taxation, and then again after 10 years, all of the gains earned in that are tax free for the investor. The property improvement requirement for the rural areas, it’s relaxed, so you no longer have to make 100% of the invested amount, you may need to only invest 50% in improvement of that property, so there’s some substantial, you know, things here that would, you know, make a rural investment be more attractive. One of our worries about this, talk to some people about this. Is that we’re kind of concerned that the type of investment that might be flowing into their into these could benefit things like AI data centers and construction of AI data centers in rural areas, but we’ll go into a little bit more about what sort of investments are favored.

Next slide, please. Because what this does, it drives investment. Because first off, all gains on investment held for 10 years are tax-free. So this tends to favor long hold strategies. That’s the whole point of it, is you wanted the investment to be a long-lasting investment within that community, but it also makes risky investments something to be avoided, right. So, you might be less likely to invest in a small business in these areas, because the investment risk there is higher than, say, investing in market-rate real estate and a persisting structure. So, investment in durable structures has been favored, particularly market-rate housing, and that’s what we’ve seen, where 75% of the investment has flown to market-rate housing. So those are some of our concerns about it, and probably some of the mechanisms that will continue to drive OZ 2.0 as they drove OZ 1.0 into the future. Next slide, please.

But before those investments can be made, we have this whole issue of the nomination process, and I’m going to share with you here a mapping application which NCRC has developed, and what this is, this is showing a map of low-income communities that can be potentially designated as opportunity zones in the next round of nominations. So, this is something that you can use. You can look at tracks and distracts where you’re interested in investing and having a project occur, and get some information about that tract, and I’m going to first off start with Salt Lake City here, and take a look at Salt Lake City, and let me just explain a little bit of what we’re seeing here, right. You see these areas with the red boundaries? Those are the old opportunity zones back from the OZ 1.0 and there’s a little widget up here you can switch back and forth, so you can show areas that were gentrified or areas that were OZ 1.0. So, I’m going to leave it on areas that were gentrified for right now. And what we see here in downtown Salt Lake City, we see these gentrified areas in the downtown area all outlined in the red. We also see these different color designations for the census tracts. We see this resident designation. This is taken from Urban Institute. The data here is taken from Urban Institute, and what they’ve done is an analysis to look at where has capital been most recently flowing in terms of small business investment, in terms of mortgage investment, in terms of overall capital investments. They’ve done analysis, and in their determination, these red areas, these are likely to attract capital even without an opportunity zone designation. The areas here in the gold color, these are more likely to attract OZ investment with a larger impact in their estimation. And then the blue areas are less likely to attract OZ investment, so the blue areas are areas that are low-income communities that haven’t seen much investment going to them currently. So if we zoom in, if you know Salt Lake City, this tract is probably pretty familiar to because the state capital is right here, it’s the area directly below the state capital, and we see this area was not gentrified. But if we look at OZ 1.0 in the former, these tracts that were below it were qualified opportunity zones. Now this tract is a low-income community and could potentially be invested in if it’s nominated as a profit opportunity. So, if you click on it, some data comes up, and this data is from the 2024 census American Community Survey data, latest census data. And this is designed to help you get some immediate type of information about the tract, so that you can, you know, potentially construct a case for your census tract to be nominated, so we have median household income in that tract, and what these bubbles are. This shows the spectrum of that whole metro area, where that tract lies within the spectrum of that metro, so it’s reasonably high in terms of median household income, in terms of median home value. 26% of the population are minority within that census tract, has high rates of college education. Begin to wonder, why is it a low-income tract cost burden 18% vacancy is fairly high, 12% unemployment 5.9% and here poverty you see is 20.1% So this is probably why this is qualifying as a low-income tract. It has very high rates of poverty within that, within that census tract, and would probably be the qualifying mechanism for it. Number of home owners, owner occupied 24% and then finally the median rent for that tract. So you can take all this data, use it to make the case for your tract. I’ll just go over to one more city here, and let’s take a look at Denver. And if we zoom in on Denver, I’m going to go to the gentrified widget there and show it. This is a city that seems substantial gentrification. It’s downtown core. Denver has been one of the most gentrified cities over the past 10 years in the country, so you see many of these low-income tracks, they’re likely to attract capital even without an opportunity zone designation, but here we’ve got one of those golden tracks that Urban Institute thought was more likely to attract OZ investment with larger impact, also indicating gentrification, but that might be one to look at, and then you have these other tracks here that were gentrified and are not eligible as low-income communities. And if you click on any of these, of course, the same data comes up here. It also shows here that this overlaps with an area that was an OZ 1.0 in the past. That one was not so. There’s some interesting data that you can get from this, the same sort of data down here to make the case for your track.

And I’ll go ahead and stop sharing on that. And if we could just bring up the slide deck again, please, because I’m going to talk a little bit about the nomination process. We’ve seen some of the things that you can, that you can utilize to make the case for your track, but this is the nomination timeline that we’re talking about, and why this becomes so critical, because as of July 1, 2026 the federal window for nominating tracks as qualified opportunity zones, it opens up, and it only lasts for 90 days until september 28 when state governors have to have all of their tracks nominated and have that filed with the federal government. Now, there’s a potential to get a 30-day extension after that, but for right now, September 28, that is the deadline. So it’s really important to get involved this nomination process if you’re interested in having a project and having your track nominated as a qualified opportunity fund. Some of the states, as we can see below the timeline here, Kansas has a had a June 1 deadline, Ohio, April 26 – they opened up a 30-day portal. Texas is accepting submissions now, and what we’re hearing is that qualified opportunity funds of people who are in development, that they are actively lobbying with their states, their state housing agencies, and their state governor’s offices to try and get their tracks nominated, so if you’re interested in having a track nominated, you want to rapidly act on this. Call your state, confirm when they’re accepting nominations, and start your advocacy work. And Manan is going to talk a little bit more about that process and the nomination process of how that works, Manan.

Shah 25:04
Yes, thanks, Bruce. As we see here, this is a process in which governors are selecting the low-income eligible census tracts. Governors may nominate up to 25% of their state’s low-income community census tracts, or a minimum of 25 state tracks for smaller states. There is no rural mandate. It was actually removed in the final version of the One Big Beautiful Bill, but as Bruce mentioned earlier, there is some rural incentives that can really push investors to invest in these rural opportunity zones, but that’s usually at the governor’s discretion. And Treasury reviews for these opportunity zones, but full discretion, the full decision making process rests with the governors on which tracks to select, and I just want to emphasize it’s important to build that bipartisan coalition, regardless of party. When it comes to nominating these census tracts, it’s important that we emphasize the benefits to low-income census checks, but also using language and evidence that shows this will benefit local economic activity, result in increases in affordability, job creation, and overall economic development. And so, like Bruce mentioned earlier, there’s no automatic renewal of the OZ 1.0 census tracts. This this new OZ 2.0 selection of census tracts will be existent for the next 10 years up until 2036. And here are some of the steps, sort of like an action plan for community advocates to nominate your track. First, we encourage you to confirm the eligibility of your census tracts. You can use our NCRC mapping tool that Bruce just presented, or Urban Institute’s eligibility map, to see if your census tracks meet its income and poverty thresholds. It’s using the American Census data from 2020 to 2024 so it’s very recent, updated. Next, please contact your economic development or housing agency, and really figure out what the state internal deadline might be. You want to make sure you’re submitting these nominations against the state deadline and not wait too long and submit before the September federal deadline. Thirdly, you want to make sure in building investment case to why investors should invest in these low-income eligible census tracts, making sure you document developer interests, what available land is there, transit access, any public investments to make sure this census track would be attractive to OZ capital to flow towards and then fourthly, you want to make sure you’re demonstrating community need. Why should investors invest? Because documenting poverty rates, unemployment, housing cost burdens, and showing that these investments can really reduce income and wealth disparities in these census tracks, while also addressing any risks for gentrification, and I think the overlay that Bruce presented with our map could provide some good evidence regarding that. And then lastly, we encourage you to build coalitions within your state, make sure aligning with local government, other CDFIs, other community development organizations and developers, NCRC can actually help you in that process and connect you with other organizations in your state that are working towards the same goal. We definitely believe that stronger coalition could have more chances and getting those census tracts submitted rather than solo efforts, so feel free to reach out to us if you need help coordinating that coalition process. And just to provide these action steps, again, you know, check your census tract availability, contact your development or housing agency, try to build that bipartisan coalition with local elected officials and prepare a one-page nomination summary. An NCRC policy and research team can really help you provide the data, you know, that the census tracks that you need to build your investment case and show that it’s going to benefit your communities, and please feel to reach out with these emails that you’ve listed below. We can really help you prepare that one-pager. And then again submit before your state’s internal deadline, not the September 28 federal cutoff, like Bruce mentioned. There’s a lot of competition from the industry in regard of these, and so we want to make sure community voices are elevated and fully represented. So, with that, that’s the end of our presentation, and we can take questions.

Dr. Mitchell 30:15
Just one thing I want to clarify, and that is that the federal deadline is September 28 there was one slide on there that I failed to correct since September 29. It should be September 28 is the federal deadline for filing.

Shah 30:33
All right, we’ve got some questions here, Bruce. The first one is, What government unit authorizes or approves qualified opportunity funds. Is it the Department of Treasury?

Dr. Mitchell 30:47
So, qualified opportunity funds. My understanding is that yes, the filing for the funds will have to be made through Treasury, like they were in OZ 1.0 Qualified Opportunity Fund, I mean, it can be a bank could form one, primarily they’re limited liability corporations, but a man could form even a CDFI could form a qualified opportunity fund, and some of these I’d say probably a majority of them that we’ve heard of have been, you know, equity investors, where they’re trying to, you know, maximize the rate of return, but in some cases they’re impact investors that are involved in these also, and would be more interested in projects that would say enhance affordable housing within an area. One mechanism we’ve heard is to try and structure these so that the low-income housing tax credit, new market tax credit and other types of aid can be structured in a package that might benefit a project within a qualified opportunity zone. We’re very interested in that. I’m not a finance person, but we’re very interested in that, and hearing your ideas about how those things might be structured. My guess is, though, that a lot of these are going to be depending on local considerations and how they can be configured locally, and what local need is.

Shah 32:13
Bruce, we had another question in the chat around the QoS. Are you able to monetize the future value of the QOF with a private equity firm?

Dr. Mitchell 32:24
I’m sorry, I don’t know the answer to that. The financing portion of this, I’m not, as I guess, read up on that aspect of, and how QOFs operate. I’m not a QOF person, so I’ll have to defer that question some other time.

Shah 32:47
Yeah, that’s go ahead, Bruce.

Dr. Mitchell 32:49
I do see one question is, how do I find what area in my community is an opportunity zone, and that’s what this whole process is. These low-income census tracts across the United States, they’re about, they’re more than 20,000 of them, right, but only 25% of those are going to be nominated as qualified opportunity zones, so probably only around 6,000 to 7,000 out of that 20 or 1,000 more tracks will actually make the cut of being a qualified opportunity zone in the nomination process, that’s why your action is important on this issue.

Shah 33:33
Next question is, can we get a link to this map? Yes, we should have sent that in the chat. You can also visit our website. We have a landing page dedicated to this OZ 2.0 with a video, basically outlining this presentation. So, feel free to check that out. And we have another question: Are there examples of opportunity zones being used to fund affordable housing or other projects that increase community investment without driving gentrification?

Dr. Mitchell 34:09
This is information I’ve heard. I mean, part of the problem here is that the reporting on the OZ 1.0 has been so poor, so it’s been very hard to assess many of these things as a result of those OZ 1.0. I have heard that there have been some cases of that, particularly in Chicago, that there are cases in which actual impact investors have funded affordable housing in some places in Chicago on a limited basis, and that has resulted in some construction affordable housing, despite the tendency for market rate housing to be built within the overall program.

Shah 34:50
Next question is around the nomination process. Do current OZ tracks need to be resubmitted for consideration, or will they be likely redesignated?

Dr. Mitchell 35:00
Yes, yes, they have to be resubmitted for designation. The map is going to be wiped clean after December of this year, so it’s a whole new process. And just because an opportunity zone is designated in the last round, it won’t necessarily be in the next round. So, yes, it’s important. If you already have investment opportunity zone from the pre-existing map, that you nominate that tract again if you have a project plan there.

Shah 35:34
Next question, if a census tract is not eligible for designation due to a low poverty rate, but really should be eligible, because the area is underdeveloped, but has few residents, mostly commercial. How could we appeal or revisit that a track should be eligible?

Dr. Mitchell 35:54
Oh boy, I don’t know of any mechanism for doing that. The legislation is really quite clear about what the requirements are, and the requirements are that it be at 70% or below of the area median income. If it’s in a metro area, that would be for that metro. If it’s in a state rural area, that would be for the state overall, or it has to meet that 20% poverty threshold, and that’s using the 2024 census ACS data. So that mapping tool, if it’s not a low-income community designated on there, it’s unlikely that it could be nominated as an opportunity zone. You may, however, you know, want to pull together and see if you can make the case with your state governor’s office that they could potentially include it, but yeah, it’s pretty clear cut in the legislation.

Shah 36:51
Next question on the 25% track maximum, is it a 25% maximum track nominated, and 25 track minimum, is that correct for governors?

Dr. Mitchell 37:07
Right, so, if let’s say only 25% of the tracks are low-income communities, and you could potentially nominate all, so it’s all the tracks in your state, so it’s 25% of tracks within the state that are low-income tracts that can be nominated.

Shah 37:30
Are there different application guidelines for tribes? Also, if a tribe has more than one census tract, would we need to submit more than one application?

Dr. Mitchell 37:42
Answer the second part of that is yes, I would submit applications for each of those tracks. All right, make different cases for each of the tracks for nomination. As far as I know, there’s nothing specific to tribal considerations within the legislation. As far as I know.

Shah 37:59
Next question, it seems to me that if we do have a project, we need to develop relationships with a qualified fund. Is there a source or directory we can go to to get a list of those funds?

Dr. Mitchell 38:16
That is an absolutely great question, and I don’t know of a unified source to look for qualified opportunity funds. At this point, I don’t know if such a thing exists. I have searched for that, and I’ve not been able to find it. If someone does find it, I’d be very interested in seeing that and hearing about such a list, but yes, and that’s I think part of the difficulty of this is the next step of this, get your track nominated, then how do you attract funding into that area, and that’s something that I’d be really interested in hearing from people who’ve had more experience in this, who have managed to attract a qualified opportunity fund, to see what sort of strategies they’ve utilized, so that we could make those available to our members, and they could perhaps pursue those types of sorts of strategies. I see a comment here: Novogradac has a lot of information about qualified opportunity zone funds. Yes, they, they do. Novogradac is one source where you can get quite a bit of information about this, and that would be one potential resource for you.

Shah 39:32
We have a double question here. The small business investment aspect of OZ 1.0 has not panned out as anticipated. Do you see this improving in 2.0?

Dr. Mitchell 39:46
We’ve certainly made some improvements in 2.0 right, but the same, I think, baked mechanisms are, you know, in place, and those mechanisms would tend to favor persistent structures, holding investments over long term and favor less risky investments, so instead of investing in a small business, potentially you might choose to invest in real estate simply because the risk is less for you and your return might be greater long term, so I think the same mechanisms are still in place in OZ 2.0 as they were in OZ 1.0 just with better reporting and some stricter guidelines on which areas qualify.

Shah 40:33
And regarding the reporting, will there be transaction-level reporting requirements like the dollar amount of the OZ investment in a given project?

Dr. Mitchell 40:42
My understanding is yes, that that level of granularity should be available in the reporting now. When that reporting is going to first start coming out, I’m not sure how long it’s going to take before we start being able to see, you know, some of the reporting from these qualified opportunity funds.

Shah 41:02
Some more questions about the QOF. With the QOF, what all will they be able to help with? For example, acquiring land or construction?

Dr. Mitchell 41:15
My understanding is yes, they would be able to write the full development process. QOF would be able to invest in in a project in a qualified opportunity zone. Sure,

Shah 41:28
And do we see investors investing in one project or in multiple projects within one QOf?

Dr. Mitchell 41:36
It depends on the QOf, and I think that many of these QOfs, they have multiple projects, which they will invest in across a range of different projects. QOfs, they vary in size, and some of these larger QOfs, yes, they’ll have a number of projects that they’ll be investing in.

Shah 41:59
And one question around sort of building relationships for philanthropic for philanthropic organizations focused on economic development and capital absorption. What would be some good ways to support city agencies through this process?

Dr. Mitchell 42:18
to city agencies?

Shah 42:21
Yeah, like local governments, sort of building coalitions.

Dr. Mitchell 42:27
I’m not quite sure on that question. I mean, certainly, you know, cities oftentimes work with developers in areas in planning development and redevelopment projects, so there would certainly be city input in that, and city involvement in that, and you know, if you have a qualified, if you have a low-income community that you’re interested in attracting investment to, I would get with that with that city development department and work with them to get that track nominated.

Shah 43:02
Since it’s is good…. Does or hold on, can you provide more context on how CDFIs can create their own OZ fund and engage with investors in OZ geographies?

Dr. Mitchell 43:21
Wow, um CDFIs can create qualified opportunity funds. The mechanism, and how they would go about that, I don’t have specifics on, and, like I said, that’s kind of a next step that I think that we need to go to in our next presentation on this, with more details about how the funding mechanisms would work for this, because I think I’m detecting a lot of interest from our audience in that aspect of it, and we’ve been really focused on this nomination process, so I don’t have much information about how to form a fund or the financial end of this.

Shah 43:57
And can you explain the reasons a track might be less likely to attract OZ investment?

Dr. Mitchell 44:05
Well, from what we’ve seen, and what the data has shown is that the investments have tended to favor tracks that already are in an upward trajectory in terms of increasing home values, increasing metrics on rents, median rent increase also tracts that are adjacent to a gentrifying area or within a gentrifying area, so if there’s already a positive economic development trajectory going on within that tract, then it’s they have tended to be the ones that benefit most from this program, right? The deeply distressed tracks did not see that much investment, at least that’s what the research has told us about OZ 1.0 and that capital was highly concentrated in these areas that we’re already on kind of a positive trajectory to begin with. That being said, under OZ 1.0, what we found when we did our research on this was that most of the tracks that were at the bottom in terms of income, at the bottom in terms of poverty levels, that they did qualify as opportunity zones, so in the track selection process itself it seemed to be fairly equitable in selecting tracks that were in dire need of economic development. There was that provision for contiguous tracks, though, where a higher income track could qualify, and a lot of investment went to those higher income tracks that were adjacent to a low income area.

Shah 45:48
And Bruce, you mentioned LITC earlier. Can you speak to how OZ 1.0 was paired with LITC, and how that might look different than 2.0>

Dr. Mitchell 45:59
Yeah, on that question again, I’m gonna have to defer that I don’t have much information on LITC, and how those two things would have worked together. I know that we’ve talked with some of our members, and the idea of structuring LITC with opportunity zones in the OZ 2.0 and stacking these investments could be a possible mechanism for making them more attractive to investors.

Shah 46:27
And have you heard of communities advocating to ensure their census tracts are not nominated for OZ 2.0, for example, out of a desire to protect their area from development with potential negative effects?

Dr. Mitchell 46:40
Yeah, that’s a really interesting question. So, we have talked to some of our members, and they’ve had very different kind of perspectives on this, and in some areas they felt that the opportunity zone designation has actually made that tract much more difficult to compete in for affordable housing than for the construction market rate housing, and has placed that track outside of their ability to invest in affordable housing, and has basically created a situation of gentrification on steroids in those tracks. So that’s been one concern about this program, is that an opportunity zone may put it out of the range of having affordable housing built. By the same token, we’ve heard from other members who have said that what we need to work with the system as best we can and take advantage of it the best we can in order to maximize affordable housing and development within our area. So they’re two very different perspectives, and your perspective may depend on your local situation, and what the local conditions of economic development are within your city, and within the area that you’re operating. Also, you know, initially we talked about, mentioned a little bit earlier, or the rural opportunity zones and concerns about development in those areas, and we’re a bit concerned about the AI data center angle of this, and that something like an AI data center would be probably a very favorable investment for a qualified opportunity fund. So, there’s a bit of concern about that, and how it might fuel investment in those areas. With AI data centers, I just like to say that with that, as with gentrification, we want to work with members to make sure these are things that happen with the community and not to the community. That this sort of investment be with community involvement, so communities are able to maximize the type of advantages and development that they get rather than have it be an opaque process in which they basically have no role or saying what’s happening with their areas.

Shah 48:53
And then what is the significance of the MFI ratio of the eligibility criteria, is a higher or lower MFI ratio, a better signal of community benefit?

Dr. Mitchell 49:05
So, the MFI, that’s the level of median family income compared to that metro area. So, before in OZ 1.0 it was 80% so it was higher, so that tracks with a bit higher income level would qualify. By lowering that down to the 70% of MFI level, they’ve restricted these low-income communities somewhat, so that is an enhancement and improvement, and it directs more capital or more of the tracks that hopefully will be nominated as being lower income communities than an OZ 1.0 so that restriction was an important one to put in place, and we’re happy to see that restriction in place.

Shah 49:51
Alright, Bruce, that looks like the last of all the questions. Let’s give a virtual round of applause for Bruce, for his expertise and just quickly, if you’re interested in becoming NCRC member, if you liked what you heard and saw today, you want to partner with us for more research or policy advocacy opportunities, you can check out our website. We also have consistent training and events from NCRC. You can visit our events website, including our national conference in the spring and regional summit in the fall. And so again, thank you all for joining. If you have any questions, feel free to reach out to Bruce and I. We’re happy to help build some coalitions in your state or help put together those one-pagers with data and other elements of OZ research, so thanks again, and we’ll see you soon.

Dr. Mitchell 50:46
Thank you, everyone.

Transcribed by https://otter.ai

May 20 , 1:00 pm EDT – 2:00 pm EDT

Opportunity Zones 2.0 (OZ 2.0) is an updated federal investment incentive program created under the 2025 One Big Beautiful Bill Act (OBBBA). It provides tax benefits to encourage private investment in low-income census tracts.

OZ 2.0 will shape the community investment landscape for the next decade. The process is competitive and time-sensitive. Members who act early, build strong cases and engage state decision-makers will be best positioned to direct investment to the communities that need it most.

For more information, visit: https://ncrc.org/opportunity-zones-2-0-what-you-need-to-know-and-how-to-act-now/

Speakers:

• Bruce C. Mitchell, PhD Principal Researcher
• NCRC Manan Shah, Policy Advisor, NCRC

On April 16, more than 200 NCRC members capped off NCRC’s annual Just Economy Conference by participating in Hill Day. Our annual Hill Day brings together community development advocates from across the country to promote federal legislation that supports the work they are doing at the local level. For many NCRC members, that work includes helping a community member navigate barriers to homeownership, expanding credit access for a small business owner or mitigating the long-term effects of disinvestment and redlining. 

This year’s Hill Day began at the Capitol Visitor’s Center where attendees gathered for breakfast. Congresswoman Judy Chu of California’s 26th District gave brief remarks about broader affordability challenges and access to capital barriers for small business owners. Congresswoman Chu urged NCRC members to continue advocating for economic justice.  

NCRC members then dispersed to join their respective state delegations and attend meetings with their Congressional offices. Members participated in over 120 meetings, with some even meeting directly with their members of Congress. 

On Hill Day, NCRC members connected their local work to our broader federal policy priorities for 2026. These priorities reflect what members are already working through in their day-to-day roles by making the banking system work for low- and moderate-income communities, expanding access to affordable housing, supporting small business owners, and strengthening investment in community development financial institutions (CDFIs). Members grounded their discussions in shared bipartisan priorities like economic growth and access to opportunity. This will open the door for more substantive agreement on issues that affect all Americans. 

Some advocates may question whether legislative advocacy can have any impact in a polarized federal environment. However, NCRC’s Hill Day offered something just as important as policy wins. It offered our members and their representatives the opportunity to build relationships, find common ground and strengthen bipartisan understanding around community development issues. These conversations will shape how policymakers think about these issues moving forward and lay the groundwork for future change. 

“When we show up in DC, we are showing up for our community,” said Claudia Wilson, the executive director of the Community Development Network of Maryland. “NCRC Hill Day matters because federal representatives are counting! At the very least they are counting the number of people they hear from and the number of times they hear about an issue.” 

What makes these policy conversations truly memorable are the personal stories of NCRC members and their communities. There will always be statistical data to support our causes, but stories are what make policy issues feel real. When our members share first-hand accounts of what these issues look like on the ground, it becomes harder for policymakers across the political spectrum to ignore the people and communities they represent. Our members can point to real examples, real challenges and real outcomes. A strong story can stay with policymakers long after a meeting ends and influence how they think about an issue moving forward. 

Hill Day is much more than just a series of meetings with Congressional offices. It is part of a broader effort to make sure the people most affected by issues of economic inequality and financial access are part of the decision-making process. Their stories and perspectives matter, particularly in conversations where policy can feel abstract or removed from local realities. At the end of the day, policy is strongest when it reflects real experiences, and that is exactly what NCRC members brought with them to Hill Day. 

Caitlyn Kearney is an Intern with NCRC’s Policy & Government Affairs team.

Manan Shah is the Policy Advisor with NCRC’s Policy & Government Affairs team.

Lauren Wolters is the Government Affairs Specialist with NCRC’s Policy & Government Affairs team.

Photo caption: NCRC board chair Carol Johnson (center) and board member Matt Hull (center left) with the Texas delegation on Hill Day (photo credit: Maria Bryk).

This is an abrupt reversal from SBA’s original policy notice released this past December, which would have allowed small businesses that were 100% owned by legal permanent residents to access SBA financing products. Small businesses that have 5% of its ownership held by foreign nationals would also have been able to access these products.  

The revised policy comes amid broader national debates over immigration enforcement and its effects on communities and local economies. In some areas, concerns about Immigration and Customs Enforcement (ICE) have contributed to uncertainty for immigrant-owned businesses, leading some to fully or partially close their small businesses across the country.  

Taken together, the new SBA loan restrictions and the effects of ICE likely will create additional obstacles for immigrant entrepreneurs seeking to start, sustain or grow small businesses in their communities. 

SBA Loans as a Critical Lifeline for Immigrant Entrepreneurs 

Immigrant-owned small businesses play an important role in the national economy. They create jobs, generate local revenue and make downtown corridors vibrant with their cultural diversity. Immigrants are twice as likely than native-born, US citizens to start a small business. In fact, nearly 20% of all small businesses in the US are immigrant owned. There is a wide range of immigrant-owned small businesses with a variety of sizes and across multiple industries. Small businesses with majority immigrant ownership made an average of $100,000 to $1 million in revenue in 2024, which was mostly distributed across the accommodation, food and retail trade industries.  

“Many immigrants come to this country and turn to entrepreneurship as a way to financially support their families often because of language barriers or because their diplomas and professional certifications from their home countries are not recognized in the United States along with many other challenges,” said Daniella Djiogan, NCRC’s director of small business support services. 

Immigrant entrepreneurs are also more likely to face barriers to capital access after arriving in the US. The SBA’s guaranteed loans — 7(a) loans, 504 loans and microloans — are attractive options for small business owners seeking lower interest rates and flexible terms. The 7a and 504 loan programs offer long-term financing for major fixed assets like land, buildings and equipment, while the microloan program offers up to $50,000 for repairs and enhancements.  

With SBA’s new citizenship requirements now in place, green card-holding immigrants can no longer access these programs. Furthermore, banks may be compelled to adopt more stringent ownership and citizenship verification procedures, which would not only delay processing times for all small business owners, but also increase administrative costs for lenders. Consequently, predatory lenders may be able to lure immigrant entrepreneurs into borrowing high-interest loans, subsequently trapping them in a debt cycle.  

“Access to capital through the SBA may have been one of the only viable pathways for them to start or grow their businesses,” Djiogan said. “That access does not just impact one business owner… It affects job creation, local spending and the greater economic stability within communities.”  

ICE’s Impact on Main Street Businesses  

Increased immigration enforcement activity has also affected small business operations in some communities across the country. Advocacy organization Small Business Majority conducted a poll that found that 47% of small business owners say increased immigration enforcement actions has had a negative impact on their business by way of less foot traffic, staff reductions and decreased revenue.   

“It’s businesses that employ green-card holders and immigrants that are being impacted because they fear going to work or coming out of their home,” said Amber Córdoba, co-chair of the Arizona Community Development Financial Institutions Network and NCRC member. “In some cases in Tucson, we have had two businesses close, [with] one business owner [selling] their business to their partner and mov[ing] out of the country.” 

In the long term, the impact of ICE and the SBA loan restrictions likely will deplete a source of income for immigrant entrepreneurs who meaningfully contribute to the economy, which could result in higher prices for goods and services in a time when Americans are burdened by affordability concerns.  

In Congress, Senator Ed Markey (D-MA), ranking member of the Senate Committee on Small Business & Entrepreneurship, introduced the Small Business ICE Disruption Fund Act. The bill would allow eligible small businesses affected by immigration enforcement actions to recover up to $1 million in lost revenue. Markey’s office, together with other lawmakers, also sent a letter to SBA Administrator Kelly Loeffler raising concerns about the SBA loan restrictions. The bill is unlikely to become law in the near future.   

Whether it’s the Dominican-owned bodega or the Ethiopian-owned cafe, the South Asian-owned corner grocery or the Vietnamese-owned nail salon, immigrant-owned small businesses are an important part of the nation’s economic and cultural landscape. Restrictions on SBA loans may reduce access to programs that support the growth and expansion of these businesses, with potential implications for economic activity nationwide. 

Manan Shah is the Policy Advisor with NCRC’s Policy & Government Affairs team.

Photo credit: Alex Boyd via Pexels.

1. Financial Services and General Government 
2. State, Foreign Operations and Related Programs 
3. Defense 
4. Labor, Health, and Human Services, Education and Related Agencies 
5. Transportation, Housing and Urban Development and Related Agencies 

The sixth appropriations bill excluded from the package would have fully funded the Department of Homeland Security (DHS). Instead, Congress passed a Continuing Resolution (CR) to fund the DHS for 10 days until possible negotiations between Democrats and Republicans are made.  

Congress previously passed six appropriations bills, which were signed into law: Agriculture, Military Construction-VA, Legislative Branch, Commerce, Justice and Science, Energy and Water Development and the Interior and Environment. These bills will also fund their corresponding agencies until the end of the fiscal year.    

FY 26 Funding for Community Development Programs 

NCRC has created a FY 2026 Appropriations Chart that lists the final funding levels for community development programs that most impact our members’ work. Listed below are highlights of the final funding numbers for major agencies and programs: 

The CDFI Fund 

The CDFI Fund, an agency within the Treasury Department, will receive $324 million, which is the same amount it received in FY 2025. This will provide funding for CDFI programs like the Technical/Financial Assistance grants program ($135 million) and Native CDFI initiatives ($28 million).  

However, the remaining $298 million of the allotted FY 2025 funding has yet to be released by the Office of Management and Budget (OMB). Without the release of those funds, the CDFI Fund cannot disperse grant awards to CDFIs. CDFI Fund appropriations occur over a two-cycle period, with FY25 funding expiring this September, and FY26 funding expiring September 2027. 

Housing and Urban Development (HUD) 

The legislation will fund the Housing and Urban Development agency at $77.3 billion, which is a $7 million increase from FY 2025. This includes funding for major programs and grants, such as: 

• $38.439 billion for the Tenant-Based Rental Assistance program (Section 8), a $2.39 billion increase from FY ‘25. 

• $18.543 billion for the Project-Based Rental Assistance program, a $2.053 billion increase from FY ‘25. 

• $8.319 billion for the Public Housing Fund program, a slight decrease from FY ‘25. 

• $1.25 billion for the HOME Investment Partnerships program, level funding from FY ‘25. 

• $3.3 billion for the Community Development Block Grant program, level funding from FY ‘25. 

• $57 million for the Housing Counseling Assistance program, level funding from FY ‘25. 

• $56 million for the Fair Housing Initiatives program, level funding from FY ‘25. 

• $26 million for the Fair Housing Assistance program, level funding from FY ‘25. 

Small Business Administration: Entrepreneurial Development 

The entrepreneurial development programs of the Small Business Administration (SBA) will receive $330 million, funding programs such as the Microloan Technical Assistance program ($41 million), the Women’s Business Center ($27 million) and the Native American Outreach program ($5.3 million). These programs will assist underserved small business owners and organizations that support them via technical assistance and business education.  

Political Dynamics of DHS Funding 

Although the partial shutdown has ended, the CR that funds the DHS will expire on February 13. The recent raids and shootings by Immigration and Customs Enforcement (ICE), including the murders of Renee Good and Alex Pretti in Minneapolis, have sparked outrage among Congressional Democrats as many refuse to pass another CR to fund DHS.  

“An additional [continuing resolution], from our standpoint, is off the table,” House Minority Leader Hakeem Jeffries told reporters on Tuesday.  

On Thursday night, Senator Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries sent a letter to Republican leadership outlining 10 demands to “rein in ICE” by adding more guardrails. The demands for ICE agents include banning masks, requiring the use of body cameras and IDs and improving warrant procedures and standards. Many Republicans, including Speaker of the House Mike Johnson, have already voiced their opposition to these additional restrictions. 

DHS, which also houses the Transportation Security Administration (TSA), the Federal Emergency Management Agency (FEMA) and the Coast Guard, may operate for a longer period without another CR, as the One Big Beautiful Bill (OBBB) allocated $165 billion to the department. In addition, the passage of another CR could also mean that DHS will have significant leeway over how programs at the agency are managed.  

NCRC will continue to monitor the situation and support our members who serve immigrant communities across the nation.  

Manan Shah is the Policy Advisor with NCRC’s Policy & Government Affairs team.

Photo credit: Frank Kastle via Upsplash.

A single lapse in federal funding brought SNAP to the brink of severe payment delays, reduced benefits and a widespread administrative breakdown. It is a clear reminder that families, local economies and community organizations often shoulder the consequences when public systems are not designed to withstand political or fiscal shocks. The multiple vulnerabilities of SNAP that were unearthed during the shutdown show how urgently the program needs to be strengthened and reformed.

SNAP is a federal food assistance program that works to combat food insecurity, supports workforce stability and drives local economic activity. SNAP provides food assistance to more than 42 million people every month. It is structured as an entitlement program, meaning certain benefits are guaranteed to members of a specific group (e.g., lower-income individuals). 

Typically, states issue the SNAP benefits themselves and then receive reimbursement from the federal government. This reimbursement structure is designed to shield states (and ultimately households) from disruptions by ensuring they have predictable, reimbursable funding to issue monthly benefits. In theory, it acts as a safeguard: states so families aren’t directly exposed to federal budget delays, with the federal government later settling the balance. When functioning properly, this system creates a buffer that keeps benefits flowing on time, even when federal appropriations stall or political negotiations drag on. 

However, during the shutdown, the US Department of Agriculture (USDA) instructed states to pause the issuance of SNAP benefits for the month of November. USDA stated that they weren’t able to use their contingency funds to fill the funding gap either. In response, twenty-five states filed a lawsuit, with a federal judge ordering the Trump administration to resume payments by October 31. Even after this development, USDA announced that it would only be administering partial benefits because of allegedly limited funds, with questions about legal authority delaying the payment timeline even further.

For families navigating high food, housing and transportation costs, even the threat of a temporary pause in SNAP benefits shook household budgets. This shutdown demonstrated that SNAP’s program design does not fully protect beneficiaries from disruptions caused by political gridlock. A program that should operate as an economic stabilizer instead became another point of financial instability and political leverage. 

The shutdown revealed five key weaknesses with the current SNAP program structure:

1. Households can quickly become even more economically vulnerable. The shutdown created a real risk of food insecurity for millions of households. Many families would have been forced to stretch their groceries or redirect limited income away from rent, utilities or transportation. When families cannot rely on SNAP, they turn to food pantries, high-cost credit products or equally struggling loved ones to bridge the financial gap. These adjustments carry long-term financial consequences that remain even after benefits resume.
2. Local economies and small businesses suffer economically. SNAP dollars flow directly into grocery stores, farmers markets and small retailers. Research shows that every SNAP dollar generates economic activity in the local economy. When benefits are delayed, these businesses experience immediate revenue losses. The shutdown highlighted how much a community’s economic activity depends on consistent household food spending via SNAP benefits. Cashiers, stockers, delivery drivers and warehouse workers all feel the effects when the funds from SNAP beneficiaries slow down.
3. Workforce development agencies’ capacity is weakened. When households face food insecurity, daily work attendance drops, job retention weakens and participants struggle to focus on career training opportunities. Workforce development programs are subsequently forced to shift staff from focusing on providing job coaching and placement services to clients to resolving food-related crises, managing referrals and helping participants regain financial stability. Providers also experience higher program attrition rates, longer program timelines and greater wraparound service needs. Instability in SNAP ultimately forces workforce development systems to operate more like crisis-response programs than career advancement partners.
4. Community-based nonprofits can only fill so many gaps. When SNAP wavers, community-based organizations often fill the gaps, but many are already stretched thin. Shutdown-related disruptions forced food pantries, community action agencies and other local partners to prepare for increased demand without additional resources or clarity on the duration of the benefits disruption. For smaller and locally rooted organizations, these sudden surges are especially destabilizing. Their capacity to respond is limited and often depends on short-term fundraising or emergency donations.

Ultimately, the shutdown served as a warning. It exposed not only the immediate disruption to households but also the deeper structural weaknesses described above: SNAP’s current design leaves it vulnerable to political interpretation, lacks sustainable contingency funding, and offers states little federal guidance on how to maintain benefits during funding lapses. A program this essential cannot rely on last-minute legal decisions, temporary workarounds or fragile administrative assumptions. Families, frontline workers and local partners deserve a system that is modernized, resilient and predictable. State governments should be able to continue issuing benefits and sustaining operations even when federal uncertainty rises.

As we move forward, this experience should guide policymakers, advocates and administrators toward long-term reforms and investments that reinforce SNAP’s core purpose: ensuring every household can access consistent, dignified supplemental food assistance support no matter what the political climate may be.

Doug Mollett is the Economic Mobility Manager with NCRC’s Economic Mobility team.

Manan Shah is the Policy Advisor with NCRC’s Policy & Government Affairs team.

Photo credit: Mike Jones via Pexels.