This Platform Helps Nonprofits Pay For Solar Power

Jan 18 2014, 1:06pm CST | by

This Platform Helps Nonprofits Pay For Solar Power

Small nonprofits have a notoriously hard time financing solar power projects. Now CollectiveSun, a San Diego-based startup, has a plan for making it easier to find funding.

Why the problem? Basically, churches, schools and other such places may have a heap of assets. But they can’t take advantage of most of the federal and state tax incentives for solar power, thanks to their tax exempt status and lack of tax liability.

What’s more, because they’re small, the projects they need to finance are similarly modest in size. Plus they’re riskier bets than large nonprofits, like universities. So banks and other financial institutions tend to avoid giving loans to these organizations. (Think about it: a church defaults on a loan and the bank has to foreclose on the property. Can you spell public relations nightmare)?

About two years ago, Lee Barken, an accountant and LEED-certified professional , came up with a solution. He would create a company offering a platform and marketplace for nonprofits, investors and solar installers, aggregating investments to help fund small solar projects in the $50,000 to $1 million range.  Then, the business could use the money to install solar systems and sell power at a discount through a power purchase agreement (PPA).

In case you don’t know, a solar power PPA is a contract through which a developer takes care of everything from financing to installation and more on a customer’s property at a discount or at no cost. The developer then sells the power to the customer and receives not only money from the arrangement, but also, since it’s not a nonprofit, any tax credits that exist.  “It’s like buying the milk instead of the cow,” says Barken.

(Small businesses also have trouble getting financing, because they’re not lucrative enough for banks to go through all the labor-intensive due diligence and paperwork, a problem that BlocPower, another solar-power social enterprise that I recently wrote about, seeks to address).

Investors, who are paid back in annual payments over ten years, are meant to come from the nonprofit’s community–not big honchos, but people who care about the organization and are willing to make small investments of as little as $25. “This is only possible if the community steps forward to back the project,” says Barken. To make sure that happens, CollectiveSun also does a lot of behind the scenes work, helping with marketing campaigns and the like.

By doing so, Barken figures the nonprofits will be able to save on energy expenses and, ultimately, have more money to spend on their mission. What’s more, they also can boost community involvement–a lot more than by, say, sending out a letter asking for donations. Still, this isn’t risk-free. If the nonprofit were to default, then investors would lose their money.

Barken got the idea when he was working on industrial renewable energy projects. It just didn’t make sense that the only way small nonprofits could convert to solar power was to spend more money on their electricity than before. “I got more and more frustrated that nonprofits were being left out,” he says.  “The tax benefits–that’s the ball game, the difference between a cost-effective and non cost-effective project.”

For the first 10 years, CollectiveSun or a designated third party own the solar equipment. About half of the investment is paid back after the first year, since Barken expects many investors won’t be the usual suspects, but low-income people. After ten years, the nonprofit can buy it through a four-year arrangement with a fixed rate.

Money from such a sale is where CollectiveSun will make the most in revenues, according to Barken. It also charges installers a 3% origination fee and investors a .2% servicing fee.

It took Barken a good two years struggling with legal and accounting complexities before he could officially get the social  enterprise approved.  Last December, CollectiveSun launched its first pilot for TERI, an Oceanside, Cal.,  nonprofit that, among other services, operates residential housing for developmentally disabled adults. They raised about $445,000 from about 27 investments from $25 to $10,000 and are in the process of a second pilot.

Now, Barken has about 30 proposals from other nonprofits in the pipeline. “There are a lot of nonprofits out there,” he says.

https://www.collectivesun.com/

 />/>

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Mummy wearing jewellery unearthed in Egypt
London, Nov 23 (IANS) Spanish archaeologists have discovered about 4,000 years old female mummy wearing rare jewellery in Egypt.
 
 
Exercise and fasting could boost brain's functions
Washington, Nov 23 (IANS) Exercise along with occasional fasting is good for boosting the brain's neurons, shows a new research.
 
 
One infant dies in Pakistan hospital
Islamabad, Nov 23 (IANS) One more infant died due to lack of oxygen in an incubator and negligence of the hospital administration in Pakistan, bringing the number of such deaths to 19 in the past five days.
 
 
American whiskey faces challenge in whisky-gulping India
Washington, Nov 23 (IANS) For the most part Indians love things American, but when it comes to their tipple, the world's largest whisky drinkers usually go for Scotch or their very own home-made brands.
 
 
 

Latest from the Network

Taylor Swift to receive Dick Clark Award
Los Angeles, Nov 23 (IANS) Singer Taylor Swift has been named as the first recipient of Dick Clark Award For excellence at 2014 American Music Awards (AMAs). The 24-year-old, who is enjoying a great year with her...
Read more on Celebrity Balla
 
Australia displace India as top ODI team
Dubai, Nov 23 (IANS) Four-time World Champion Australia Sunday returned to the top of the One-Day International (ODI) Team Rankings, displacing India, after defeating South Africa 4-1 in a five-match series, as per the...
Read more on Sport Balla
 
Iraqi court sentences Sunni politician to death
Baghdad, Nov 23 (IANS) An Iraqi court Sunday sentenced a former Sunni lawmaker to death on a criminal charge, an official said. "The Central Criminal Court issued today a verdict of death penalty for the former...
Read more on Politics Balla
 
Amzon Black Friday 2014: $3.99 Blu-ray Movies
Black Friday 2014 Sales events are underway since Friday with the Amazon Black Friday 2014 Deals Week and the Walmart Black Friday Pre Sale. Walmart matched several advertised Black Friday 2014 deals of competitors on...
Read more on Black Friday Countdown
 
Best Buy Black Friday 2014 sale launched with $3.99 Blu-ray Movie
Like Walmart and Amazon, Best Buy kicks off their Black Friday 2014 sale early. You can already buy Best Buy Black Friday deals advertised in the Best Buy Black Friday 2014 ad today online at bestbuy.com. There is no...
Read more on Movie Balla
 
Messi delighted with new La Liga scoring record
Madrid, Nov 23 (IANS) Lionel Messi has made footballing history, scoring a hat-trick against Sevilla which made him the highest scorer in the history of the Spanish La Liga. Messi's 252nd, 253rd and 254th goals...
Read more on Sport Balla
 
Tatum, Carolin to co-direct 'Leonard Peacock'
Los Angeles, Nov 23 (IANS) Actor Channing Tatum and filmmaker Reid Carolin have been roped in by the Weinstein Company to co-direct and produce the film "Leonard Peacock", an adaptation of Matthew Quick's YA book "...
Read more on Celebrity Balla
 
Burdwan blast mastermind's wife held in Dhaka
Dhaka, Nov 23 (IANS) The women's wing chief of the terrorist group Jamaat-ul-Mujahideen Bangladesh (JMB) who confessed to training at least 25 women in West Bengal has been arrested here, the media said Sunday. Fatema...
Read more on Politics Balla
 
Afghan lower house approves US, NATO agreements
Kabul, Nov 23 (IANS) The lower house of Afghanistan's parliament Sunday approved a Bilateral Security Agreement (BSA) with the US and Status of Forces Agreement (SOFA) with NATO. In an extra-ordinary session, attended...
Read more on Politics Balla
 
Mummy wearing jewellery unearthed in Egypt
London, Nov 23 (IANS) Spanish archaeologists have discovered about 4,000 years old female mummy wearing rare jewellery in Egypt. The mummy, dating back to the Middle Kingdom (2137-1781 BC), was discovered in the...
Read more on Business Balla