The New Markets Tax Credit (NMTC) program has entered a new era. After 25 years of temporary reauthorizations that kept community development organizations in a cycle of uncertainty, the U.S. Government recently made the NMTC program permanent. This decision has immediate implications, providing the stability organizations need to make long-term plans and deepen their investments in underserved communities.
For organizations like Nonprofit Finance Fund (NFF), which has deployed more than $500 million in NMTC allocations over the years, permanency means more than policy assurance. It enables them to commit to larger, more complex projects and to strategize for broader, longer-lasting community outcomes.
Onika Lewis, Vice President of New Markets Tax Credits at NFF, has spent nearly 12 years with the organization, building her career around using finance as a tool for social good. She first encountered community development finance in college, recognizing how business, mission, and real estate could intersect to address local needs.
The NMTC program equips organizations like NFF with capital to support projects in low-income communities that would struggle to attract traditional financing. These are not standard real estate investments, but vital community facilities: health centers, schools, shelters, and workforce development hubs.
“We want to make sure we’re providing dollars to nonprofits delivering critical services,” Lewis says. She emphasizes that projects funded by NMTCs often fill basic needs — access to healthcare, education, and support for families — making them foundational to community well-being.
Recent Projects Illustrate Impact
NFF’s recent allocations highlight the tangible benefits of the NMTC program. In its latest round, NFF deployed $35 million across four projects. Among them was $8 million for Uvalde, Texas, Legacy Elementary School, replacing the facility affected by the Uvalde school shooting tragedy. This investment provided modern educational infrastructure in a community where schools are often decades old, supporting both healing and educational advancement.
Another project funded by NFF is the Raleigh Rescue Mission for women and children in North Carolina. This facility offers not just housing, but a suite of services — childcare, workforce training, and vehicle assistance — designed to help families transition out of homelessness and into stability.
Lewis stresses that NFF evaluates projects by their broader impact, not just financial metrics. “We look at the impacts these real estate projects have,” she says, describing a focus on how investments change lives and support local progress.
Permanent Status Brings New Momentum
The shift to permanent status is already changing how organizations approach NMTC planning and execution. Previously, the program’s uncertain future made it difficult to build staff capacity or commit to multi-year strategies. “With a program that would sunset every few years, it was hard to build internal capacity and structure,” Lewis says.
Now, organizations are more confident in making long-term commitments, and new participants are entering the market. Lewis notes a noticeable influx of investors interested in learning how NMTCs can benefit both their portfolios and the communities they serve. This growing pool of stakeholders brings more resources and attention to the program, but it also intensifies competition for limited allocations.
Demand Continues to Outpace Supply
Even as the NMTC program grows, demand for credits still far exceeds supply. The most recent allocation round was the largest in program history, with $10 billion available, but community needs remain much higher.
NFF received its largest-ever award, $75 million, but had a pipeline of 520 potential projects. With typical allocations of about $10 million per project, NFF can support only eight major initiatives nationwide in this round. “From a capacity perspective, that means we can only do eight impactful projects all across the country,” Lewis says.
This shortage is not unique to NFF. Across the industry, organizations face the same supply-demand gap. “The need is far greater than the amount of allocation that’s out there, even in the double round,” Lewis notes, highlighting a persistent challenge for community development financing.
Geographic and Sector Shifts
Recent allocation patterns reveal shifts in where and how NMTCs are being used. NFF, which has historically focused on urban markets, is now seeing increased demand from rural and non-metro areas. Manufacturing projects are also becoming more prominent, reflecting federal priorities around domestic production and economic resilience.
A new “deep distress” indicator has changed how projects are prioritized. Unlike the previous “severe distress” criteria, this designation targets communities with the highest unemployment, deepest poverty, and lowest family incomes. As a result, more projects are directed toward areas with the most acute need.
“We’re seeing more projects in these very, very distressed communities,” Lewis observes. This evolution is pushing NMTC investments further into regions that have historically been overlooked or underserved.
Complexity and Compliance
Despite its benefits, NMTC financing is not a simple grant. The program involves a seven-year compliance period with extensive reporting and performance requirements. Projects must demonstrate job creation, community impact, and financial viability throughout this period.
After 7 years, borrowers receive a net equity benefit equal to roughly 20% to 40% of the total project costs. “It requires adherence to compliance and complexity, not only on our CDE side, but also on the borrower side,” Lewis says.
This complexity often surprises new participants. The process demands careful management and ongoing oversight, making it essential for organizations to have strong internal systems and partners experienced in NMTC compliance.
Stacking the Capital
Most NMTC deals require a layered approach to funding. Organizations often combine NMTCs with other sources — low-income housing tax credits, historic tax credits, state incentives, and philanthropic dollars. Recently, assembling these capital stacks has become more difficult due to rising construction costs and shrinking grant funding for nonprofits.
“We are seeing gaps in the capital stack for many projects,” Lewis says, describing how NMTCs now often serve as the “capital of last resort.” NFF addresses this by acting as both an allocator and a lender, offering bridge and leveraged loans alongside NMTC allocations. This “one-stop shop” approach helps nonprofits close financing gaps and move projects forward despite challenging conditions.
Adapting to Changing Community Needs
With permanent status, the NMTC program is positioned to respond more flexibly to changing community needs. Current trends show increased interest in supporting homeownership and workforce development. The federal administration is encouraging the use of NMTCs for affordable homeownership, and more organizations are exploring how to structure deals that expand access to housing.
“We are seeing a lot of interest in folks who want to understand how to utilize the tax credits for affordable home ownership,” Lewis says. This represents a shift from the program’s early focus on commercial and community facilities toward broader uses that address housing insecurity and economic mobility.
The adaptability of the NMTC program has been central to its survival and relevance over 25 years. Lewis points out that its ability to evolve — targeting new sectors, addressing emerging needs, and refining criteria — has allowed it to remain a vital tool for community development.
Implications for Community Development Professionals
For real estate and community development professionals, the NMTC program’s permanent status is a turning point. The end of recurring reauthorization battles makes it possible to plan multi-year investments, build sustained partnerships, and design projects with longer timelines and greater ambitions.
However, the application process remains highly competitive and administratively complex. Organizations must be prepared for rigorous compliance, careful project selection, and the need to assemble creative capital stacks. Those who succeed will be able to pursue larger, more impactful initiatives and establish deeper relationships with the communities they serve.
Looking Ahead
The NMTC program’s permanency marks a fundamental improvement in how community development finance can operate. Instead of short-term thinking driven by policy uncertainty, organizations can focus on building capacity, experimenting with new project types, and reaching communities that need investment most.
As Lewis puts it, the future is brighter now that NMTC is a permanent fixture. “We’re really excited about what this means for the work ahead and the great projects we’ll be able to do.” The program’s stability promises more strategic investment, stronger community partnerships, and a deeper, more lasting impact on the places that need it most.
About the Expert: Onika Lewis is the Vice President of New Markets Tax Credits at the Nonprofit Finance Fund (NFF), where she leads the deployment of NMTC allocations to support community development projects nationwide. With over 20 years of experience in community development finance, she focuses on structuring investments to fund critical facilities, such as schools, health centers, and workforce development projects, in underserved communities.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
