The New Capital Stack Is Here: What the 2025 Tax Law Changes Mean for Community-Based Developers
Joy D. Johnson
In my last column, I wrote about one of the most dangerous assumptions in community development: “We’ll figure it out after we get the money.”
This week, I want to talk about why that mindset is especially risky right now.
Because the capital landscape has shifted.
Quietly, but significantly, the tools available to community-based organizations have expanded—and so have expectations about who is ready to use them well.
The Capital Stack Is No Longer Linear
For a long time, many local organizations were taught to think about capital in a straight line:
Grant first.
Loan second.
Tax credits if you’re lucky.
That model is outdated.
Today’s community development deals are increasingly layered. A single project might include a mix of:
New Markets or other tax credits
Historic or housing-related incentives
Opportunity Zone equity
Federal or state credit enhancement
Private debt
Philanthropic capital
This isn’t theoretical. It’s happening in real neighborhoods, with real investors, right now.
And after the 2025 tax law changes, these tools are no longer reserved for only the largest or most nationally connected players.
Local organizations have more access than ever.
What they often lack is strategy.
Access Has Expanded—So Has the Bar
One of the most misunderstood aspects of the current moment is this:
More tools does not mean easier deals.
In fact, it often means the opposite.
As capital stacks grow more complex, investors and public partners are paying closer attention to how organizations think—not just what they want to build.
They want to know:
How does this organization decide which projects belong together in a pipeline?
How does it balance mission with risk?
Who understands the full capital stack—and who is accountable when assumptions change?
What happens when timing across funding sources doesn’t line up?
How does leadership communicate uncertainty?
The new environment rewards organizations that can act like financial intermediaries, even when their roots are deeply community-based.
That shift is uncomfortable for some—and empowering for others.
The Strategic Advantage of Local Organizations
Here’s the part that doesn’t get enough airtime.
Community-based organizations are not at a disadvantage in this new capital landscape.
In many cases, they’re uniquely positioned to succeed.
They often have:
deep place-based knowledge
trusted community relationships
early visibility into pipeline opportunities
credibility with public partners
mission alignment that institutional capital increasingly values
What separates the organizations that capitalize on this moment from those that don’t is not access to deals.
It’s readiness to structure them.
Why “We’ll Piece It Together” Doesn’t Work Anymore
In today’s environment, capital stacks aren’t assembled at the end of the process.
They’re designed at the beginning.
That means organizations must be able to answer questions like:
Which tools make sense for our scale—and which don’t?
What types of capital do we want to control versus partner on?
How much complexity can our governance structure realistically manage?
Are we building one deal, or an ongoing strategy?
Who are we becoming as a financial actor in our community?
These are not technical questions alone.
They are leadership questions.
And they can’t be delegated entirely to consultants, lawyers, or funders—no matter how skilled those partners are.
The Real Shift Is Institutional, Not Financial
The most important change after 2025 isn’t just about tax incentives or eligibility.
It’s about expectations.
Organizations are increasingly expected to:
think in portfolios, not single projects
communicate clearly across sectors
demonstrate internal discipline
show repeatability
plan beyond the next award
This doesn’t mean becoming corporate.
It means becoming durable.
Communities benefit most when organizations are strong enough to weather complexity without losing purpose.
A Closing Reflection
The question facing community-based developers today isn’t whether capital exists.
It does.
The real question is whether our institutions are prepared to engage it strategically—without being reshaped by it in ways we didn’t intend.
The new capital stack rewards clarity, discipline, and governance.
Organizations that build those muscles now won’t just close deals.
They’ll shape what development looks like in their communities for years to come.
With more than two decades of experience in community development, real estate strategy, and organizational leadership, Joy Johnson brings a seasoned, solutions-focused voice to the field. She is committed to helping communities and institutions avoid systemic pitfalls and build models that truly work. To reach Joy call at (216) 238-2235. The views expressed here are her own.