Non-profit organizations are commonly large consumers of electricity. Most churches, schools, and other organizations that provide services to the public require the most electricity during the peak hours for electricity consumption, and pay the highest rates for their use. Non-profits are usually run on a shoestring compared to other businesses, and they don’t always have the funds to undertake substantial upgrades in energy efficiency that would yield a savings.

More Challenges Than Just the Bottom Line

Undertaking projects to supply solar power for schools & non-profits has more challenges than just the bottom line. Non-profits are often administered using unpredictable budgets that rely on periodic infusions of money from donors or government agencies. This up and down funding cycle can make it difficult for the organization to undertake long-term planning for solar power projects that require many years to pay back their investment. It’s very common for non-profits and schools to be governed by boards or committees that don’t meet often, and who require a lot of time to make decisions on changes in the operation of the non-profit. Some non-profits rely on only a few benefactors that supply them with the bulk of their operating funds, and their wishes must be consulted before any change as large as a solar power project can be undertaken.

Tax Benefits Don’t Help Non-Profits

There are other unusual circumstances for solar power conversion projects for non-profit companies. Expert engineering, procurement, and construction companies like http://sunbugsolar.com report that because federal and state governments base all their subsidies for solar power conversion on tax credits, it’s not possible for non-profits to get any benefit from them. Accelerated depreciation and other tax benefits are not applicable to a non-profit business either. This can add to the cost of a solar installation by over 50 percent for a non-profit. All these hurdles mean that schools and non-profit organizations require innovative approaches if they’re going to be able to take advantage of the benefits of solar power generation.

Non-Profits Must Find Another Way

It’s unfortunate that non-profits can’t take advantage of tax credits available to for-profit businesses, because most non-profits will save more by switching to solar than other businesses will. If you take for example a school that uses 5,000 kWh per month, they would be paying around $10,000 per year for utility bills in most parts of the country. An effective solar power installation could cut their electricity bills by up to 75 percent. However, saving around $25,000 over a 5-year period would not cover the cost of the installation in that time period. It’s likely that it would take up to a decade to cover its original price tag. For most businesses, tax credits and tax savings would shorten that payback time considerably. For non-profits, a ten-year window to pay back a substantial outlay for infrastructure improvements just isn’t possible.

Traditional Lenders and Non-Profits

Financing these types of projects can have other challenges. When traditional lenders give loans to a for-profit business or homeowner, the loan can be backed using the property itself for collateral. That’s rarely possible for schools, churches, or other non-profit organizations. Many non-profits have charters that don’t allow any form of indebtedness that affects the ultimate ownership of the organization. In any case, traditional lenders shy away from entering into collateral agreements that would require them to foreclose and take possession of any form of non-profit organization’s building.

Some non-profits finance solar projects by having a group of their donors form a separate corporation that can act as a for-profit business simply for the financing and administration of a single solar project. They would raise money, pay for the entire solar installation, and then pay off the cost of the project while taking advantage of any tax benefits that are available to a for-profit business. Because this business entity is allowed to turn a profit without affecting the non-profit status of the organization it serves, the investors can be enticed to put money into the venture with the promise of a dividend paid over time. They can also donate the proceeds to the non-profit if they like.

PACE Financing Might Help

Cash-strapped non-profits may be able to take advantage of Property Assessed Clean Energy (PACE) financing options. PACE is a mechanism that allows local governments to help finance clean energy upgrades like solar power installations. A non-profit that would benefit from cost-savings by switching to solar power would perform an analysis of the costs and benefits of a solar installation. If the savings would be significant, the project would receive 100 percent financing. The loan would be repaid over a term of up to 20 years in the form of a property tax assessment. It’s possible that a non-profit wouldn’t be eligible for billing by an increase in property tax because they are exempt from property tax, but if the organization pays any related bill to the local tax authority, it can usually be integrated into the new payment structure.

Using Endowments in Novel Ways

Many schools and other non-profit organizations have endowments that could cover the cost of a solar installation, but use of the endowment for capital improvements is not allowed. It’s still possible to use the endowment’s funds to pay for a solar panel installation. If the endowment deposits the necessary funds in an interest-bearing account, and then borrows the money for the project using the account as collateral, it’s possible to purchase the solar equipment without technically spending endowment money on it. Traditional lenders that would be unwilling to lend to a non-profit over collateral issues would be willing to lend against a money asset that could be recovered in the unlikely event of a default.

Don’t Overlook Crowd Funding

Taking advantage of social media to raise money for worthy projects is a smart way to get a solar project funded for a non-profit. There are many crowd funding websites on the Internet that you can use for local, state-wide, national, and even international fundraising. There are also crowd-funding websites devoted entirely to raising funds for solar projects of all kinds.

Try a Mix of Solutions

If one of these approaches isn’t sufficient to raise enough money for solar power for schools & non-profits in your area, you can try a mix of strategies to cover the cost piecemeal instead of using a single financing project to pay for the entire installation.