Nonprofits who want to go solar have various options for how to finance and manage their project:
- They can secure the cash or the financing themselves — though that can be challenging for nonprofit organizations — and also manage the project themselves.
- They can get financing from a partner like CollectiveSun. With our Solar Loan they can still manage the project themselves, with oversight provided by us.
- They can sign up for a CollectiveSun Solar Power Agreement (SPA), in which case we take care of both the financing and the project management. All CollectiveSun financing options include the necessary tax filings (which often frustrate those unfamiliar with such challenging forms) .
Which financing option makes sense for your organization depends on various factors, such as whether your nonprofit has in-house construction management experience and whether you’re comfortable bearing the risks of construction and long-term ownership. You can learn more about the options in our article “Choosing the Right Solar Financing Option for Your Nonprofit.”
Whichever option you choose, financing your project with CollectiveSun brings many advantages. Two real-life nonprofit solar project case studies illustrate the difference between working with us and doing it yourself.
Nonprofit A: The do-it-yourself option
The Interfaith Solar Campaign (ISC), a nonprofit that partners with CollectiveSun, worked with a church that had wanted to go solar for many years. ISC was able to connect the church with multiple local solar contractors to provide bids, and a few months later, the church received a donation from one of their board members that would cover about one-third of the system cost.
ISC encouraged the church to use that donation toward a CollectiveSun SPA, but the church instead opted to purchase the solar system themselves with cash. They contracted with one of the solar providers mentioned by ISC and proceeded with their project.
However, the church was left in a vulnerable position because they did not have the expertise to check the contractor’s work. That became clear when they encountered a serious problem. After the system was installed, they learned that the crew had installed some panels incorrectly; as a result, the system didn’t pass inspection.
The contractor came back out and fixed the mistakes, and eventually the project passed inspection. However, this delayed the church’s ability to use the energy the system would have generated.
That wasn’t the end of the church’s problems. With no plan in place to fully finance the solar system, they paid the contractor with funds from their reserves. This caused a great deal of anxiety about the church’s future finances. In addition, no one at the church knew how to complete the required tax filings, putting the federal incentives due to them at risk.
As they looked for a way to build back their reserves through grants and to complete the tax filings, the church reached back out to ISC for suggestions. ISC was able to connect them with a tax accountant who filed their paperwork for them, at a cost of $5,000.
Going with a CollectiveSun SPA would have removed the burden of managing the construction project from the church. The church could have spread out their payments over 20 years, avoiding the need to spend the majority of their reserves. And the church would not have had a tax filing burden or the cost associated with it, as it would have been completed by CollectiveSun.
Nonprofit B: The CollectiveSun SPA
Another church had also been considering solar for years, but they didn’t have the funds to pay for a solar system. They weren’t prepared to manage a construction project, and they were concerned about maintaining their system after it was installed. They weren’t even sure how to start on their solar project.
Eventually, the church heard about CollectiveSun and contacted us for guidance.
After reviewing the available financing options, they decided to move forward on their project with our Solar Power Agreement (SPA) third-party ownership option. While the church wouldn’t own the solar panels, they would own all the energy generated by the panels. And they would start saving on their electric bills from day one, without any upfront costs.
From before the project started to after it was completed, CollectiveSun was there to manage it and ensure it went smoothly.
First, we selected an installer for the project that met our rigorous vetting requirements, and we negotiated the installation price; we can take advantage of economies of scale to get lower pricing than most nonprofits can secure on their own. When the installer provided a proposal, we validated their assumptions to ensure the solar system would save money from day one.
CollectiveSun reviewed and managed all construction documentation — including the review of preliminary notices. We ensured that the installer had obtained builder’s risk insurance to protect the solar equipment when it was in transit, in storage, and on site but not yet installed.
A critical service we provided during the church’s solar project construction was our fund control process. We protect nonprofits by disbursing payments to a solar contractor according to a construction milestone schedule, ensuring that each construction milestone is completed before the contractor is paid. We also ensure that the correct lien waivers are in place before any payments are made and utilize multi-party checks with subcontractors and material suppliers. This critical process prevents issues from arising during the project, such as subcontractors or materials suppliers claiming they weren’t paid.
CollectiveSun managed every part of the construction process. That included verifying that the equipment for the project was high quality and came from a reputable distributor. And, of course, we validated the completion of milestones throughout the project.
When the solar system was in place and had received Permission to Operate, we checked the system’s production to ensure it was operating as expected. We took care of all monitoring and maintenance on the system. All of the paperwork and Investment Tax Credit filings are handled by CollectiveSun.
Unlike Nonprofit A, the church that went with our SPA benefited from a smooth process, savings on day one, and peace of mind.
Let us help your nonprofit go solar
To avoid issues with your nonprofit solar project, let us help you! CollectiveSun is here to support your nonprofit before, during, and after your solar is installed. We can guide you through the process of determining whether solar makes sense for your organization, as well as which financing option is best for your specific needs.
If you’d like to explore getting solar for your nonprofit, don’t hesitate to reach out to us.
