New rural investment fund is leveraging NMTCs to deploy $45 million for health care, affordable energy and quality jobs

Rhea-AI Summary

Morgan Stanley has launched a new $45 million Rural NMTC Fund in collaboration with Broadstreet Impact Services to support development projects in rural and tribal communities. The fund leverages New Markets Tax Credits to provide affordable capital for healthcare services, clean energy initiatives, and quality job creation in high-unemployment, low-income areas. The fund's first investment of $8 million supports two healthcare facilities in Colusa, California, as part of a $26.5 million development project. These facilities, led by the Colusa Indian Community Council, will serve 28,000 patient visits annually and save $500,000 in annual debt service costs, which will be reinvested in employee compensation and healthcare provider recruitment.

Positive

• New $45 million investment fund targeting critical rural and tribal development projects
• Tax credit leverage enables lower cost of capital for community projects
• First investment of $8 million already deployed in healthcare facilities
• Project will generate $500,000 annual savings in debt service costs
• Fund structure allows for improved employee compensation and healthcare provider recruitment

Negative

• Limited fund size of $45 million may restrict the number of projects that can be supported
• Fund is restricted to specific geographic areas with high unemployment and low median incomes

Insights

Financial Analyst specializing in ESG and Impact Investing

Morgan Stanley's $45M rural investment fund leverages tax credits for impact investing while potentially generating tax advantages and ESG credentials.

Morgan Stanley's launch of a $45 million rural investment fund utilizing New Markets Tax Credits (NMTCs) represents a strategic expansion of the firm's impact investing portfolio. This initiative aligns with the growing institutional appetite for investments that generate both financial returns and measurable social impact. The NMTC program provides investors with federal tax credits against their federal income tax in exchange for equity investments in certified Community Development Entities.

The fund's structure leverages these tax incentives to deploy capital at below-market rates, which creates two key advantages for Morgan Stanley: tax benefits that enhance overall return profiles and meaningful ESG credentials in an increasingly competitive financial services landscape. The focus on rural and tribal communities—historically underserved markets—addresses a significant gap in the impact investing ecosystem while potentially opening new client relationships in these regions.

Their first deployment of $8 million toward health facilities in Colusa demonstrates the practical application of this strategy. The investment represents approximately 17.8% of the total fund, suggesting a diversified approach to capital allocation across multiple projects. The $500,000 annual debt service savings generated for the community highlights the tangible financial efficiency of the NMTC structure.

For Morgan Stanley shareholders, this initiative adds diversity to the firm's revenue streams while enhancing its competitive positioning in the rapidly growing ESG investment sector, which now accounts for over 33% of professionally managed assets in the US. The partnership with Broadstreet Impact Services also demonstrates Morgan Stanley's ability to collaborate with specialized impact investment intermediaries to access deal flow in niche markets.

CHICAGO, June 5, 2025 /PRNewswire/ -- A new investment fund is set to fuel health care services, affordable electricity, and good jobs in rural and tribal areas, offering financing that helps address the multiplying impacts of poverty on the well-being of families and communities.

The Morgan Stanley Rural NMTC Fund is leveraging federal New Markets Tax Credits (NMTCs) to invest $45 million in high-impact development projects. A collaboration between Morgan Stanley and Broadstreet Impact Services, the fund will deploy affordable capital to fill critical gaps in rural and tribal communities.

"The fund is designed to fuel economic opportunity and improve overall health in communities that may otherwise struggle to attract the capital they need to build and grow," said Joy Hoffmann, Managing Director with Morgan Stanley, which capitalized the fund. "It is an investment strategy that we hope will have a long-term impact on reducing poverty, helping support rural businesses and community facilities while at the same time helping expand family incomes and wealth."

The fund is focusing on projects being developed in nonmetro census tracts with high rates of unemployment and low median incomes. To qualify for investment, projects will address health care, electrification needs—including solar and other clean energy projects—community services, or workforce development programs and offer jobs that pay a living wage with benefits. Jobs must be accessible to a wide range of workers, including those who might otherwise face employment barriers, like people with disabilities, those without a college degree, and individuals rebounding from long-term unemployment.

All told, the fund is designed to amplify opportunities in rural communities, while addressing persistent challenges. It prioritizes health investments, for example, because hospitals are often the economic drivers of rural communities, with every $1.00 they spend delivering $2.30 in additional economic activity. Hundreds of rural hospitals have either shut their doors or are at risk of doing so, eliminating good-paying jobs and local business income in the process.

"With this fund, we are investing in the economic infrastructure of rural communities and the health of the people who live there," said Brent Kuennen, Senior Vice President of Fund Management with Broadstreet. "Communities need affordable capital to address their critical needs. We structured the fund to provide it."

The fund recently closed its first investment to support two new health facilities in Colusa, Calif., a community of more than 6,400 residents in California's central valley, an hour's drive from Sacramento. The fund provided $8 million of the project's $26.5 million total development cost to renovate an existing local building into a full-service health facility and, at the same time, build a new pediatric health clinic.

Led by the Colusa Indian Community Council (CICC), the new health centers will support more than 28,000 patient visits annually in a community where people often travel as much as 60 miles for care. And, because the investment is backed by NMTCs, the cost of capital is much lower than it would be for a conventional loan, saving CICC $500,000 annually in debt service costs. The sponsor will use the savings to increase the pay of low-wage employees, improve compensation for health providers so they are attracted to work in Colusa and reduce pressure on the operating costs.

"By blending low-cost capital from the fund with conventional debt sources, this project is able to move forward," Broadstreet's Kuennen added. "Without the NMTC financing, it would not be possible."

About Morgan Stanley

Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management, and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions, and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.

About Broadstreet Impact Services
Broadstreet is an impact financial services company offering fund administration, advisory, and fund management services. We work with values-aligned investors and fund managers to fuel social, environmental, and economic impact across the country. Our platform supports 52 multi-asset funds, 57 single-asset entities, and $2 billion in capital under administration and management—advancing equity and opportunity alongside financial performance. Over 20 years, we have developed a client base that values our customizable services platform, fund development experience, impact focus, collaborative partnership approach, and deep sector engagement. For more, visit www.broadstreetimpact.com.

Media Contacts:
Susan Siering, Executive Director, Email: susan.siering@morganstanley.com

Broadstreet:
Ariel Hargrave, ahargrave@broadstreetimpact.com

View original content:https://www.prnewswire.com/news-releases/new-rural-investment-fund-is-leveraging-nmtcs-to-deploy-45-million-for-health-care-affordable-energy-and-quality-jobs-302474665.html

SOURCE Broadstreet Impact Services

FAQ

What is the size of Morgan Stanley's new Rural NMTC Fund?

Morgan Stanley's new Rural NMTC Fund is $45 million in size, focusing on rural and tribal community development projects.

How much did Morgan Stanley (MS) invest in the Colusa healthcare facilities project?

Morgan Stanley's fund invested $8 million as part of the $26.5 million total development cost for the Colusa healthcare facilities.

What types of projects does Morgan Stanley's Rural NMTC Fund target?

The fund targets healthcare services, affordable electricity including clean energy projects, community services, and workforce development programs in rural and tribal areas.

How many patient visits will the new Colusa healthcare facilities support annually?

The new healthcare facilities in Colusa will support more than 28,000 patient visits annually.

What are the annual cost savings for the Colusa Indian Community Council project?

The project will save the Colusa Indian Community Council $500,000 annually in debt service costs due to the NMTC financing structure.