April 3, 2008
Green endowments mean big returns for nonprofit
Jewish tradition teaches us to respect nature and the environment. The basic principle of environmentalism is found in the Psalms -- "To God belongs the earth and all it contains" (Psalms 24:1). By both using and educating about solar energy, Ramah is creating generations of Jewish leaders who will embrace the principles of environmental stewardship. By decreasing our use of traditional energy sources, Ramah is also helping America and Israel to become more secure by reducing the world's dependence on oil. The 800 campers we house every summer will learn respect for the preservation of our planet's natural resources and the power of partnering with nature to benefit the planet's inhabitants now and in the future -- as well as learning the importance of tzedakah, which is making this all possible.
Ramah's solar energy installation was made possible by a donor who wanted to make an environmental and educational impact, as well as generate good financial return for camp. Ramah alumnus and parent David Braun donated $500,000 toward the project. Here's how he views his gift:
"The donation is a gift that keeps on giving as savings continue to be generated for decades, greatly increasing the ultimate size of the donation," Braun said. "By lowering Ramah's long-term overhead it will effectively increase the monies available for other functions of camp."
Ramah also has a traditional cash endowment fund that Braun could have chosen for his donation. But the long-term savings generated by Ramah's solar energy project make a strong case for providing new options for donors who wish to help the Jewish community and the earth simultaneously.
In 2007, Ramah's solar energy installation generated $36,000 in savings for camp. With a net cost of $475,000 for the project, that is a 13.2 percent annual return on investment. As electricity costs rise every year, Ramah's solar energy installation will likely generate even greater savings with the passage of time.
Going green is a new way for institutions to think about fundraising. A solar installation need only generate 5 percent to 6 percent in savings in order to keep pace with a traditional endowment, which would need to generate an 8 percent annual return in order to for the endowment principle to keep up with inflation. Thus, the solar installation reduces an institution's carbon footprint and provides a financially viable alternative to cash endowments. Jewish institutions can investigate for themselves whether going solar will reduce their electric bills by 5 percent of the original installation cost per year, and may consider soliciting major gifts to fund their transition to greener energy options.
By investing in energy-saving alternatives, Jewish nonprofits would, in effect, be cultivating a new community of donors who are interested in making an environmental impact, and who have not yet been involved in Jewish communal giving. These donors would use their clout to help the institutions they support fulfill the moral imperative to reduce the threat of global warming in our time. They would also help reduce the world's dependence on oil-rich countries that threaten Israel's and America's long-term security. On a national level, we could create a Jewish community solar capital fund, which might bring an environmentally conscious group of donors together who want to make this kind of difference in the Jewish community. Jewish organizations could access the fund to create their own solar energy systems, thus tapping into the savings generated by reduced electricity costs and freeing up cash for programs.
As it stands under current tax law, nonprofit organizations that choose to make the switch to solar energy are at a distinct disadvantage compared with their corporate counterparts. Currently, corporations choosing to install solar energy systems receive myriad benefits, including generous tax credits, as well as an accelerated five-year depreciation cycle. Because nonprofits are tax-exempt, they are not eligible to receive these money-saving incentives that would make going green that much easier.
Let us unite as a community to herald a new age in energy conservation, both to reduce our carbon footprint and to create a more secure world. As a community, we can do something to change the status quo. I have been in contact with a number of elected officials who are working to create new legislation that would allow nonprofits to take advantage of tax benefits available to corporations.
In February, I was privileged to attend the Conservative movement's Rabbinical Assembly Convention in Washington D.C. While in our nation's Capitol, I met with Rep. Shelley Berkley (D-Las Vegas) and Rep. Allyson Schwartz (D-Philadelphia), who are members of the House Ways and Means Committee. I also met with senior legislative assistants for Rep. Howard Berman (D-Van Nuys), who has been active in pushing for legislative change on this issue, and Rep. Henry Waxman, (D-Los Angeles), who serves on the House Energy and Commerce Committee.
Thanks to these elected officials, discussions are now underway in Congress to change legislation, leveling the playing field for nonprofit organizations to embrace energy alternatives. It is my hope that within the next six months to a year, new legislation will pass that would encourage motivated donors to purchase solar installations and rent them out to nonprofits, all the while receiving the tax write-offs available to corporations. Once all tax benefits are received, the donor would then "sell" the installation to the nonprofit. These tax benefits would greatly increase the monetary savings a solar energy system would provide.
In going solar, we feel confident that we've invested our donor's funds well. With a change in legislation, we could have built a system that was 60 percent to 70 percent larger, increasing our annual savings significantly. Let's write our representatives and encourage them to act now to help America's nonprofits go green. The 1.5 million nonprofit organizations in the United States stand to gain much from the effort, and true to its tradition of tikkun olam, the Jewish community would lead the charge toward environmental stewardship on the national stage.
Rabbi Daniel Greyber is the executive director of Camp Ramah in California and the Zimmer Conference Center of the American Jewish University.