The federal New Markets Tax Credit program is designed to encourage investment in distressed or low-income communities.  Here we look at two reports examining the program’s impact and effectiveness.

The New Markets Tax Credit Coalition recently released its 2014 New Markets Tax Credit (NMTC) Progress Report, with a special focus on rural investments.

The report’s findings are based on a survey sent to all Community Development Entities (CDEs) receiving an NMTC allocation. The CDEs that responded (64 in total) represent $17.1 billion in total allocations (for 2003-13), or approximately half of the total allocation awarded.

These CDEs reported: 

  • $2.1 billion in qualified equity investments
  • $2 billion in qualified low income community investments in 2013 (these are primarily loans and investments in businesses)
  • $4.9 billion in total project financing
  • 280 businesses receiving NMTC funding
  • Over 25,000 full-time jobs created by projects closing in 2013

There is “significant flexibility in the types of businesses and development activities that NMTC investments support.” The businesses receiving funding in 2013, according to the report, included: 

  • Manufacturing or industrial: 23.2%
  • Health care facility: 16.4%
  • Mixed use: 13.9%
  • Education-related 8.6%

 The special section on investments in rural America finds:

  • Approximately 22% of total NMTC investment now occurs in rural communities
  • Between 2003 and 2011, $3.5 billion in NMTC capital went to non-metro locations
  • Over this period, 47,000 full-time jobs were created at over 600 businesses


Separately, the Urban Institute was asked by the Community Development Financial Institutions Fund (the unit of the US Department of Treasury that administers the NMTC program) to conduct a formal evaluation of the NMTC program, focusing on “program design, execution, outputs and outcomes for both accountability and program improvement purposes.”

In their 2013 New Markets Tax Credit Program Evaluation, Urban Institute researchers used existing administrative data, telephone interviews, an online survey of businesses receiving investments, and an online survey of community and economic development specialists to evaluate projects funded between 2002 and 2006. This timeframe was chosen to allow sufficient time for actual project outputs and outcomes to be evaluated. 

Among the findings:

  • The program did encourage investments in low-income areas for a diverse range of projects
  • The most prevalent results were:
    • Provision of advantageous financing
    • Real estate development in low-income areas
    • Additions to the tax base
    • Job creation or retention
  • All but one of 70 projects (from telephone interviews) had been completed and all but 5 were still operating.

  • NMTCs did not affect site selection for projects; most projects had selected sites before seeking financing and/or funds were used for expansion or working capital.
  • Interestingly, community and local government stakeholders were not necessarily involved in NMTC projects. Local public agencies were involved in less than half of projects. Only 25%  of surveyed community and economic development specialists said they were “very familiar” with the NMTC program, and only 45% were aware of the NMTC projects within their jurisdictions.
  • Findings were inconclusive about whether projects would have proceeded without the NMTC, with the evaluation concluding that roughly 50% would not have proceeded as planned without the NMTC.

  • It is estimated that 135,970 permanent jobs were created or retained among the 2,031 early-year projects, with an estimated investment per job average of approximately $53,000.
  • The majority of early-year investments (2/3) entailed commercial real estate development, with the NMTC investment averaging 19% of total per-square-foot costs.
  • 80% of projects reported that their local tax payments increased as a result of the project.

These reports are very interesting for incentive program evaluation, and the Urban Institute report in particular has many useful methodologies, in addition to the findings, that are valuable to the economic development community.


The New Markets Tax Credit Coalition is “a national membership organization that advocates on behalf of the NMTC program.” The report was prepared by Rapoza Associates, which also manages the NMTC Coalition.

The Urban Institute “gathers data, conducts research, evaluates programs, offers technical assistance overseas, and educates Americans on social and economic issues – to foster sound public policy and effective government.” The NMTC report was prepared by Martin D. Abravanel, Nancy M. Pindus, Brett Theodos, Kassie Dumlao Bertumen, Rachel Brash and Zach McDade.