Monday, November 18th, 2013
Homeowners and businesses everywhere are going solar. In California alone, nearly 200,000 systems have been deployed. Yet, only 1,039 systems, or 0.5%, were installed on the roof of a nonprofit organization. Did you ever wonder why so few churches, synagogues, schools and community service organizations have been able to “go green”? The answer may surprise you.
It turns out that due to a subtle nuance in the tax code, nonprofits are at a financial disadvantage and unable to access a series of tax benefits that are available to residential homeowners and commercial businesses. While philanthropy is a welcome and encouraged practice for all other types of giving, making donations for a solar system and losing valuable tax benefits is a poor financial decision for the nonprofit and an inefficient use of benefactor funds.
Another problem faced by nonprofits is that traditional financial institutions are unwilling to underwrite projects for nonprofits. If the nonprofit relies on charitable giving as a revenue stream, it may be considered unreliable to secure the new solar obligation. In addition, financial institutions are often uncomfortable securing projects with other assets such as real estate because of the reputational risk involved with a foreclosure and sale. (Think about the newspaper headline if a financial institution repossessed a church steeple or other treasured community asset and tried to sell it to the highest bidder?)
The good news is that now you can do something about this problem.
CollectiveSun is a community funding platform for nonprofits that want to lower their energy bills with clean solar power. Rather than relying on large financial institutions, CollectiveSun leverages the strength of the community for investments (not donations) that are repaid using the savings from the solar system.
“Doing well by doing good” is an old adage suggesting that individuals should be able to feel good about how they choose to invest their hard earned money. In addition to earning a return on investment, CollectiveSun provides a way for your favorite nonprofit to enjoy significant utility cost savings.
As an example, TERI, Inc. is an Oceanside-based nonprofit that operates residential facilities for adults with autism and other intellectual disabilities. For each dollar invested, TERI will save nearly two. This means that a $1,000 investment will also produce nearly $2,000 of savings for TERI over the course of the solar system lifetime while simultaneously providing a modest rate of return for the investor.
Feel Good Supporting Nonprofits
As with any investment, these projects are not without risk and should only be considered after reading the prospectus. In addition, CollectiveSun projects are currently only available to California residents. However, the idea of supporting a great nonprofit by investing instead of donating is certainly appealing. Impact investing allows you to align your investments with your ethics. When’s the last time your stock portfolio created a simultaneous financial benefit for a nonprofit cause? CollectiveSun makes investing easy, with a minimum as low as $25. Sunshine never felt so good!