Who We Serve
SFCIF uses federal New Markets Tax Credits to invest in nonprofits, businesses and organizations that deliver significant benefits for low-income communities and residents in San Francisco. Every project that we invest in includes a community benefits agreement that details those positive outcomes in terms including jobs created, public improvements built, environmental sustainability outcomes achieved and increased access to services such as childcare, education, healthcare, workforce development, food security, the arts and more.
See examples of our funded projects here.
How Does NMTC Financing Work?
SFCIF is a certified Community Development Entity (CDE) as determined by the CDFI Fund, a subset of the United States Treasury Department. This designation allows SFCIF to use NMTCs to provide subsidized financing for real estate projects and qualifying operating businesses, including nonprofits. NMTC borrowers must meet the federal definition of a Qualified Active Low‐Income Community Business (QALICB), which generally means they are businesses that are predominantly or entirely located in Low‐Income Communities.
SFCIF partners with private investors to obtain funds that are invested into QALICBs. These investors receive federal income tax credits based on equity investments made into SFCIF subsidiaries; this investment is known as a Qualified Equity Investment (QEI). Investors receive a tax credit for 39% of a QEI, which is claimed over a seven‐year schedule. SFCIF then uses the QEI capital to provide below‐market rate financing to projects. Because the NMTC benefit is defined as a percentage of the equity investment SFCIF receives, the amount of subsidy a project can receive is dependent upon the size and cost of the project itself. The net subsidy to a project after closing costs is usually about 20% of the QEI.
More information is available here, courtesy of the Tax Policy Center.