Treasury's New Markets Tax Credit Program Named One of Top 50 in the Innovations in American Government Awards Competition

"Not only does the New Markets Tax Credit Program encourage the flow of low-cost and flexible private-sector investment into some of our country's most economically distressed communities, but it also serves as a great example of how the public and private sectors can responsibly work together," said Treasury Secretary Timothy Geithner.

The CDFI Fund's data shows that for every $1 in foregone tax revenue under the NMTC Program, over $14 is being invested in important projects providing needed jobs and revitalizing these communities.

In addition to the leveraging of taxpayer resources, accountability to the public is an important aspect of the NMTC Program. Organizations that are selected through the merit-based application review must not only demonstrate that they are accountable to the communities they serve by including representatives from those communities on their governing or advisory boards, but they must also demonstrate their accountability to the American taxpayer. Organizations awarded New Markets Tax Credits must regularly report to the CDFI Fund the projects they are investing in, and they must meet certain financial and other performance goals or risk losing their allocation of tax credits. The CDFI Fund makes information on NMTC activities available to the public through annual reports made available to the public via its website.

"I am thrilled that the New Markets Tax Credit Program has been selected as one of the Top 50 Government Innovations in this year's Innovations in American Government Awards competition," said Donna Gambrell, Director of the CDFI Fund. "But I am even more pleased knowing that we are making a difference in today's tightening market. The awards we make will foster the flow of critically needed credit, typically well below market and with responsible yet flexible underwriting, and will yield economic growth and create needed jobs that might not otherwise be possible in these low-income communities."

The Innovations in American Government Program is a significant force in recognizing and promoting excellence and creativity in the public sector. Through its annual awards competition, the Innovations in American Government Program provides concrete evidence that government can work to improve the quality of life for citizens. By highlighting exemplary models of local, state, and federal governments' innovative performance, the Innovations in American Government Program serves as a catalyst for continued progress in addressing the nation's most pressing public concerns. It is administered by the Ash Institute for Democratic Governance and Innovation at Harvard's Kennedy School.

BACKGROUND

About the New Markets Tax Credit Program

The NMTC Program, established by Congress in December of 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as Community Development Entities (CDEs). The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. Substantially all of the taxpayer's investment must in turn be used by the CDE to make qualified investments in low-income communities. Successful applicants are selected only after a competitive application and rigorous review process that is administered by the CDFI Fund.

Through the first six rounds of the NMTC Program, the CDFI Fund made 364 awards totaling $19.5 billion in tax credit allocation authority. The CDFI Fund anticipates awarding another $5 billion of allocation authority to CDEs in the fall of 2009, including the additional $1.5 billion in allocation authority authorized through the Recovery Act. More detailed information on the NMTC Program can be found by visiting the CDFI Fund's website at www.cdfifund.gov.

About the Community Development Financial Institutions Fund
The CDFI Fund was created for the purpose of promoting economic and community development through investment in and assistance to community development financial institutions (CDFIs). The CDFI Fund's role in promoting community and economic development was expanded in FY 2001 when the Secretary of the Treasury delegated to the CDFI Fund the responsibility of administering the NMTC Program.

Since its creation in 1994, the CDFI Fund has awarded $864 million to CDFIs, community development organizations and financial institutions through the Community Development Financial Institutions (CDFI) Program, the Bank Enterprise Award (BEA) Program, and the Native Initiatives. In addition, the CDFI Fund has allocated $19.5 billion in tax credit authority to CDEs through the NMTC Program. More information on the CDFI Fund and its programs can be found by visiting its website at www.cdfifund.gov.

About the Ash Institute for Democratic Governance and Innovation
The Roy and Lila Ash Institute for Democratic Governance and Innovation advances excellence in governance and strengthens democratic institutions worldwide. Through its research, publications, leadership training, global network, and awards program developed in collaboration with a diverse, engaged community of scholars and practitioners - the Ash Institute fosters creative and effective government problem-solving and serves as a catalyst for addressing many of the most pressing needs of the world's citizens. The Ford Foundation is a founding donor of the Institute. Additional information about the Ash Institute is available at www.ashinstitute.harvard.edu. Applicants for the 2009 Innovations in American Government Awards are encouraged to apply at www.innovationsaward.harvard.edu.