Non-profit organizations must spend billions of dollars each year on non-missional activities. One such area of expenditure is utility expenses, and opportunities for nonprofits to transition some of their utility expenses to program impact are win-win-win.
There are indeed alternatives to limit expenses like utility costs. And while any nonprofit can pursue energy efficiency and renewable energy, the costs incurred also result in less investment in their mission.
Also unfortunately, non-profits are typically further disadvantaged when pursuing energy efficiency and renewable energy. First, because they have no tax liability, they cannot benefit from federal incentives that come from investment in renewable energy (e.g. Federal Investment Tax Credit, Bonus Depreciation or Accelerated Depreciation). Second, they have high counterparty credit risk due to reliance on unpredictable charitable support.
Through our affiliate Illuminate L3C, we offer unique services that simplify the complex world of transitioning utility expenses to programmatic impact through energy efficiency and renewable energy. Through Illuminate L3C, we can provide the non-profit with capital for energy efficiency upgrades, with a renewable energy system, and with an ability to monetize the tax and depreciation benefits – all while providing clean, sustainable energy to the non-profit recipient. It’s also possible to pool multiple nonprofits together to be connected to utility scale systems that Illuminate L3C installs, maintains, operates, and owns.
Once the nonprofit has paid its renewable energy expenses (which are discount-priced for a period of time, allowing for recapture of renewable energy investment), then the renewable energy system is donated to the non-profit organization to realize “free power” for the remainder of the system’s life. The non-profit can then apply the discount to historical utility expenses and the savings in utility expenses post investment recapture to missional programmatic impact.
The five largest non-profit categories – Religion, Education, Health & Human Services, Arts/Culture/Humanities, and Environment/Animals – could all benefit from transitioning utility expenses to programmatic impact.
An L3C (Low Profit Limited Liability Company) is an organization whose purpose is to perform a social mission, bridging the gap between nonprofit and for-profit investing. Our affiliate Illuminate L3C targets non-profit organizations who operate with constrained budgets by providing utility savings and programmatic and environmental benefits through energy efficiency and renewable energy.
In line with Illuminate’s driving social mission of being a part of something bigger than themselves, a portion of Illuminate’s revenues are directed toward installing solar photovoltaic cells (solar PV) in developing countries. Illuminate has partnered with international NGOs to find eligible recipient candidates of micro-loans to educate, teach, train, local nationals to install solar PV systems. There are numerous tangible benefits including electricity, education, local jobs, community development, security, as well as opening the door for life-giving opportunities.
One of the largest categories of nonprofit organizations is faith-based institutions (churches, temples, synagogues, mosques, and other institutions). Faith-based organizations received an estimated $114.9 billion in charitable contributions in 2014, of which 5% – 15% is spent on power expenses at their facilities (representing approximately $5.7 billion – $17.2 billion in utility spending).
Consider the impact if these utility expenses could be redirected to mission-focused investments. As an example, the potential utility savings in the U.S. alone would cover the costs estimated to eliminate premature curable deaths for children five and under in 75 countries.