There has recently been a groundswell of interest in sustainability in all its forms, and two organizations — Green Seminary Initiative and Seminary Stewardship Alliance — have emerged to provide resources and strategies to seminaries about the stewardship of the environment. The two organizations have a combined membership of more than 80 institutions. Sustainability projects seem to be as wide-ranging as the schools that foster them — from the cultivation of native plants to solar arrays, electric bicycles, and worm composting.
But one tool that theological schools have overlooked so far is the green revolving fund—a financing mechanism in which the dollars saved by energy-efficient projects are tracked and then plowed back into brand-new “green” projects, like renewable energy, that save an institution still more money.
A green revolving fund is based on the premise that energy-efficiency projects generate operational savings, and it’s “revolving” because while the fund requires an initial investment — either from donors or from general operations — the fund is never depleted. A perpetual funding cycle accrues greater and greater benefits over time—both bottom-line savings and environmental benefits.
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How green revolving funds work
Reproduced with permission from Sustainable Endowments Institute |
In 2011, the Association for the Advancement of Sustainability in Higher Education (AASHE) partnered with the Sustainable Endowments Institute (SEI) to launch the Billion Dollar Green Challenge, which encourages colleges, universities, and other nonprofit institutions to invest in green revolving funds. So far, 57 institutions have committed $117 million dollars to the challenge, but none of them are freestanding seminaries, theological schools, or Bible colleges. SEI reports that the monies in green revolving funds regularly outperform endowments, returning a median of 28 percent annually.
Appeal for administrators and donors
Green revolving funds are gaining in popularity due to their clear financial benefits. They transform expenses into investments in the future financial health of the institution, and they create fundraising opportunities in a way that conventional investments do not. “Quite honestly, it was a no-brainer financially,” says Andy Horner, vice president for finance and administrative services at the University of Dayton. “Once you get it spinning, the beauty of the fund is that it keeps returning more over time.”
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| Image Credit: University of Dayton |
The Catholic, Marianist university has focused substantial efforts on sustainability in the last several years. Two years ago, its board voted unanimously to divest from fossil fuels, and a $12.5 million gift, the largest single gift in the school’s history, recently established the Hanley Sustainability Institute with the charge of incorporating sustainability into the academic life of the university. When Horner came to campus in early 2015, he encountered little resistance to the idea of a green revolving fund, but support from the advancement division made the process even easier. The fund will be incorporated into a fundraising campaign, which is expected to appeal especially to younger donors who want to support sustainability initiatives.
While seed capital for a green revolving fund can come from a variety of sources, alumni donations are a popular option, along with administrative budgets, endowment assets, and student fees. Julian Dautremont-Smith, director of programs at AASHE, says, “Instead of giving to replace a boiler, donors are choosing an innovative new fund that can help a campus go green and meet its climate commitment.”
Insurance against rising energy costs
Dayton’s green revolving fund will roll out this spring, and the university’s leaders are still determining the fund’s parameters. Horner says that the process has required an upfront commitment of time and funds. “It would be a lot easier to just sign a utilities contract,” Horner adds. “But it’s my job to look at it from an economic perspective. In southwest Ohio, there aren’t many options for energy sources. By reducing our reliance on coal, we are insuring ourselves against rising utility costs.”
Horner says that the challenge is measuring the savings — especially when his university has buildings of all ages and conditions. “We have buildings that are 150 years old and some that are five years old,” says Horner. “There’s no question that it is easier to measure utility usage in the newer ones.”
Schools that have newer facilities and sophisticated metering systems can rely on empirical measurements to track energy savings, but many with historic buildings, like the College of Saint Benedict in St. Joseph, Minnesota, use engineering estimates. “Our projects pay back into the fund based on original estimates,” says Judy Purman, director of the office of sustainability at the college. “Every few years, we conduct a campus-wide greenhouse gas inventory, so that is an opportunity to see overall progress and validate savings.”
Supported by a growing community
To help measure impact and track the “revolving” aspect of the funds, the Sustainable Endowments Initiative (SEI) has developed the Green Revolving Investment Tracking System (known fondly as GRITS 1.2). This web platform makes it “really easy to track and manage project data, including energy, financial, and carbon-savings data,” says Mark Orlowski, executive director and founder of SEI.
Schools can compare their projects against those in the GRITS Project Library, where project descriptions and detailed performance data are attributed to actual member institutions. While use of GRITS has always been free to Billion Dollar Green Challenge participants and now to members of APPA (formerly the Association of Physical Plant Administrators), any institution can sign up as a GRITS affiliate and use the tool. “It’s simple and easy to use — it can be learned in a one-hour training — but it is also sophisticated enough for engineers,” emphasized Orlowski. That may explain why it has grown from 50 to over 250 participants in the last year, with shared projects increasing from 300 to 1,500.
SEI offers a number of other resources for institutions considering, implementing, or managing a green revolving fund, including sample documents, case studies, white papers, and trends reports. Together, SEI and AASHE published Green Revolving Funds: A Guide to Implementation and Management. Horner reports that the University of Dayton relied heavily on the publication. “It’s a great playbook, well-written and really helpful,” he says.
Tailored for each institution
Institutions design their green revolving fund to reflect their unique situations. The method of accounting can differ from school to school, and the fund can be overseen by a committee or an office, and the criteria for projects can reflect institutional priorities, whether they are higher energy savings or faster paybacks.
The College of Saint Benedict and Saint John’s University provide an example of the differing approaches that schools can take. The longstanding partnership between the schools means that students take classes, study, eat, attend events, and use the athletic facilities on both campuses, which stand six miles apart in central Minnesota. Nevertheless, the two institutions have different institutional cultures that are reflected in their different approaches to their green revolving funds. Both funds started in 2010, with $100,000 allocations from operating budgets, and both require that savings be returned to the fund until 120 percent of the original loan is repaid. For example, if the original loan of $10,000 saves $2,000 per year, 90 percent of savings, or $1,800, is paid to the fund each year until $12,000 (inflation adjusted) has been returned.
At Saint John’s, the fund is overseen by a committee of students, faculty, and staff, who prioritize projects with a quick payback period, preferably under two years. They have funded seven projects, like replacing halite bulbs with LEDs in the gymnasium, and the savings are calculated at over 121,800 kWh and 81 tons of carbon dioxide. As the fund grows, they plan to look at larger projects.
The sustainability council at Saint Ben’s, made up of faculty, staff, students, and monastics, pushed for the hiring of a director of sustainability. Judy Purman, who was named director in 2010, is a champion for sustainability in general and — more practically — serves as a consultant to members of the community as they develop and implement projects. Together, she and the sustainability council evaluate projects against a master plan that was developed when the fund was created. Five projects have been completed, including a campus-wide lighting upgrade that they estimate saves 715,000 kWh, or approximately 425 tons of carbon, per year.
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In the example modeled here, the heavy green line represents the fund balance, which starts at $1 million. Project 1 takes nearly the whole balance, but in November 2012, the savings begin, represented by the gold vertical bars. Each month's savings replenishes the fund balance. By August 2013, enough savings have been recouped to bring the fund balance back to $300,000, so a new project is initiated. Now the savings grow even more. Project 3 starts in February 2014. By September 2014, the fund balance is $400,000, but about $1.3 million in total savings have been realized since the first project.
Reproduced with permission from Sustainable Endowments Institute |
Regardless of these differences, both schools agree on one thing: the importance of student involvement. “Students have ideas that administration doesn’t even think of,” says Purman. “They grew up in a different culture and have a different perspective.” The funds serve as learning tools for students, who learn to evaluate them as members of the oversight committees. Jake Lammi, a 2015 Saint John’s graduate and current sustainability fellow at the university, helps students analyze the costs and benefits of potential projects. “The biggest eye-opener for me has been seeing how much students want to engage in sustainability,” he says.
Learn more
- Billion Dollar Green Challenge
www.greenbillion.org
- Sustainable Endowments Institute
www.endowmentinstitute.org
- Green Revolving Funds: A Guide to Implementation & Management
www.greenbillion.org/resources/#implementation-guide
- AASHE Campus Revolving Funds Database
www.aashe.org/resources/campus-sustainability-revolving-loan-funds