Here’s a puzzle: Say your maintenance department is replacing your school’s incandescent bulbs with energy-efficient compact fluorescent lights (CFLs) or light-emitting diodes (LEDs). Perhaps you know that the U.S. Department of Energy says that the new bulbs may last three to 25 times longer than conventional bulbs and typically use 25 percent to 80 percent less electricity.  

But where do the savings go? You may or may not see a difference on your school’s balance sheet, especially if your use of electricity fluctuates by season or if you’ve just opened or renovated a new building that’s hogging additional wattage. And even if you can easily see that electricity use is down after the change-over, you may not have a way to “capture” the savings. 

Would your accounting be different if you got a donor — perhaps a green-minded philanthropist or a young alumni group — to pay for the new bulbs? You would want to report back to the donor about how much you saved. And then, what if the donor said, “Why don’t you use the money you’re saving on electricity to replace the weather-stripping around all the doors? And then, if you save up the money from lower bills over time, you could replace the central heating unit with something more efficient.”

You might be tempted to say, “It doesn’t work that way. We are saving electricity each month, but that doesn’t mean we can replace a boiler — it’s a different line in the budget. And our budget is very complicated.” To be sure, there’s a logic to using savings in one area to pay for efficiencies in another, but savings are hard to account for.

The Association for the Advancement of Sustainability in Higher Education is trying to address this puzzle with the concept of green revolving funds. While we don’t yet know of any theological schools that are employing them, several small and medium-sized church-related colleges are using green revolving funds to provide an incentive to donors to contribute toward deferred maintenance and infrastructure upgrades, which are usually difficult to fund through gifts.

Kalyani B. Glass describes the funds in detail in an article that begins on page 19 of this issue. But the concept is straightforward: The fund is initially financed through general operations or through a lead gift. The money in the fund is used to make energy-saving improvements. The savings are accounted for and are plowed back into the fund in order to fund additional improvements.

Simple? Perhaps not, but it’s an ingenious way for schools to make incremental improvements.

Boards have to be careful not to overstep their bounds and micromanage the president and senior administrators who are responsible for carrying out the mission of the school. So the article on green revolving funds is not a recommendation that a board dictate the details of the fund or any other kind of program. But the unfortunate reality is that many theological school boards tend toward lack of engagement rather than over-engagement. 

I note this as a way of introducing an article by Sebastian Mahfood that begins on page 22. A faculty member and administrator at Holy Apostles College and Seminary, Mahfood suggests that it’s entirely appropriate for a board to help administrators strategize about grant funding — especially about bundling a school’s needs into omnibus proposals. Mahfood believes that boards should be better informed about how grant proposals work, and, more broadly, how foundations and nonprofits collaborate to fulfill the mission of both the funder and the grantee. Be sure to read his article to gain a better grasp of this key area of theological school finances.