In this second video in the 6-part series on why nonprofits and their installers go solar with CollectiveSun, Nicole Withrow of CollectiveSun and Kerim Baran of SolarAcademy walk through how the 12% nonprofit solar discount really works when nonprofits partner with CollectiveSun and discuss the various options around funding the remaining 88% of the install cost.
You can view the full-length video interview with Nicole here.
Transcript of the video:
Kerim: So how does this 12% non-profits solar discount really work for the nonprofit? Can you tell us a little bit of what happens behind the scenes that you said because nonprofits cannot monetize the federal investment tax credit? Usually 26% goes for the homeowners and commercial businesses that are going solar. So you guys have a way of creating that benefit for the nonprofit.
Nicole: Yes, we don’t have a magical unicorn that allows non-profits, you know, to suddenly be able to access the ITC directly. What we have is a prepaid service agreement that provides an indirect benefit to the nonprofit. So in our Solar Power Agreement or SPA, that’s the prepaid service agreement that CollectiveSun uses, there is a discount in there. So we take their total project cost, determine the appropriate discount based on that cost, and we apply it in there. So they receive a CollectiveSun SPA discount right off the top. So if they had a hundred thousand dollar solar project, we would take $12,000 off.
And then the nonprofit would fund that remaining 88% using whatever funding mechanism makes sense for them. Anything from cash reserves, donations, grant funds, their existing banking relationship. Denominational lending programs are really, really popular. They give the most beneficial terms to the nonprofits. So the lowest interest rates, the best terms, those loans are coming right from their own house of worship, their denomination. So they are looking out for their fellow nonprofit and providing really great terms for them. So whatever that mechanism is. PACE funding is an amazing fit for a Solar Power Agreement.
Kerim: And you guys have the breadth of relationships to bring in these various options to the table when they engage.
Nicole: Yes. If there’s a lender that you’re already working – the nonprofit is familiar with us, let us chat with them. They might want to just get a better understanding of what our role is and the transaction to understand if this is an ownership model that there’s comfortable lending for. So we’re happy to solve that problem, chat with them and just make sure that they have a complete understanding and are willing to loan to a nonprofit that wants to engage in the.
Kerim: Got it.