Pass the Nonprofit Energy Efficiency Act | Commentary
By Nathan J. Diament and Kent Johnson As the East Coast recovers from a brutally cold winter and turns the corner toward summer, families naturally think of the costs they had to bear to heat their homes and will again face as the mercury rises. And, while most people don’t think about this, the same cost consideration is true for many nonprofit organizations throughout the country. These organizations serve our communities on lean budgets – always striving to keep administrative costs to a bare minimum. But one persistent drain that always seems to divert resources away from their missions is the cost of energy. There is bipartisan legislation in the Senate and introduced in the House to aid nonprofits in making their buildings more energy efficient and thus reduce their operating costs.
Nonprofit organizations play a large role in our communities, providing social welfare, educational, recreational, and communal services, among other things. Think of our nation’s nonprofit hospitals, museums, YMCAs and houses of worship. Despite the diversity of services provided and populations served, the one common denominator they all (or most) share is the use of a physical building. And besides keeping the lights on, these buildings must be warmed in the winter and cooled in the summer. Unfortunately, many of our nonprofit buildings are old, drafty, and poorly insulated, or just use energy-guzzling heating and cooling systems, leading to unnecessarily high operational costs.
According to the EPA, nonresidential buildings in the United States consume more than $200 billion annually in energy costs. Among those many buildings are this country’s 2,700 YMCAs, 2,900 nonprofit hospitals, 17,000 museums and more than 370,000 houses of worship. Looking just at the houses of worship–the EPA, based on its “Green Congregations” project, estimates that these entities could cut their energy use – and costs – by one third through energy efficiency improvements. If America’s houses of worship cut their energy use by just 10 percent, the EPA estimates that would save 1.8 billion kWh of electricity and 1.3 million tons of greenhouse gas emissions, equivalent to the emissions of 240,000 cars.
While the long-term gain is clear, finding the resources to fund these capital improvements is not. Aside from slashing costs across the board, community charities have little wiggle room to update their heating and cooling systems—projects that can cost in the tens to hundreds of thousands of dollars. For charities, the hurdle of these front end costs can be hard, to nearly impossible, to surmount. Since community charities provide services, they cannot just raise the prices of the latest widget—nor can they take on this level of debt—to finance these projects.
A corporate enterprise would enjoy tax credits for making a smart capital improvement to save energy costs. Under the current tax structure, however, nonprofits are ineligible to receive similar benefits.
Thankfully, Sens. Amy Klobuchar, D-Minn., and John Hoeven, R-N.D., have stepped in to help solve this dilemma. Together with four of their colleagues representing both parties, they introduced a bill that would help nonprofits make building upgrades that improve energy efficiency and reduce energy costs – Senate Bill 600, the Nonprofit Energy Efficiency Act of 2015.
Klobuchar rightfully noted that nonprofits are tax-exempt entities and therefore cannot benefit from many energy support programs because the programs are often structured in the form of tax credits. “The Nonprofit Energy Efficiency Act would create a grant program to assist nonprofit organizations, including schools, hospitals, faith-based organizations, and youth centers, improve the energy efficiency of their buildings and generate renewable energy,” she explained.
The Act will enable America’s schools, youth centers, houses of worship, hospitals, YMCAs, museums, etc. to reduce their operating costs, lessen the impact on the environment and bolster America’s energy independence. Under the proposal, nonprofits could apply for grants for up to 50 percent of the total cost of the energy efficiency program for their buildings, up to a cap of $200,000.
Right here in Washington, D.C., Kesher Israel Congregation, an Orthodox synagogue, faced an emergency situation when its 80-year-old heating system broke down in August without warning. The community was forced to raise $100,000 to replace the heating system immediately, or face the possibility of closing its doors for the winter. While the synagogue’s members and supporters rallied to raise this money, think of the larger costs—beyond the financial – that synagogues and all houses of worship encounter when examining their decades-old heating and cooling systems. The notion that a failing heating system could cause a synagogue, church, mosque, etc. to close its doors is simply unacceptable. If passed, the Nonprofit Energy Efficiency Act would help houses of worship address this problem before it escalates anywhere near that level of concern.
YMCAs are also a good example of how this bill will benefit not only nonprofits, but the communities they serve. Currently, a Y in Norfolk, Nebraska, is launching a capital campaign to improve its facility. A majority of these funds will be allocated to replacing the Y’s aging infrastructure, including decades-old air-handling equipment. Conversion to new, energy efficient units, systems and controls–such as those this bill will promote – will reduce utility consumption by an estimated 50 percent. By reducing its cost for fuel, the Y can instead use these funds for much-needed programs and services for youth and families. Of the nation’s 2,700 YMCAs, newer facilities, or older ones that have retro-fitted energy systems, are able to allocate 50 percent fewer dollars of their budgets to operating costs and put that money right back into their mission work – a win for the Y and a win for the community.
Put another way, imagine all the amazing benefits communities and families could reap if our country’s hospitals, museums, youth centers, YMCAs, houses of worship—this list could go on and on—could invest 50 percent more of their available funds to programs, education, services, etc.
By helping nonprofits become energy efficient, the Nonprofit Energy Efficiency Act would not only benefit the environment and the economy, but would help communities throughout the country in many other ways as well. We applaud Klobuchar and Hoeven for their leadership on this issue and urge the Senate, and subsequently the House, to pass this important legislation.
Nathan J. Diament is executive director for public policy for the Union of Orthodox Jewish Congregations of America; Kent Johnson is chief operating officer of YMCA of the USA.
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