A Solution for Nonprofits Dealing With Rising Energy Costs

Wildly fluctuating energy prices in recent years have caused headaches and planning challenges for nonprofits and others as cascading challenges as disparate as supply chain issues and the war in Ukraine have affected pricing for commodities, such as natural gas and electric generation. 

A short-term solution some nonprofits have adopted is bulk purchasing contracts, where a guaranteed price ceiling affords relief for a few quarters or years. However, the fees for joining such arrangements often cancel out any energy savings realized. Organizations facing skyrocketing energy costs need to actively work with their development director and executive staff to access widely available tools to lower their utility costs, create savings and utilize the savings for programs and services.

Concurrent with these peaks and valleys of pricing, a solution has emerged quietly, for those intrepid development directors, nonprofit leaders and facilities management staff willing to address the cost side of the equation for their nonprofits. This solution is executing a building and organizational decarbonization strategy. New tools and technology have made it easier than ever for a housing organization to utilize new tech and programs to drastically lower their utility costs, while also lowering their carbon output. 

I am emphasizing the housing nonprofits, because my experience in Massachusetts is that these shelters, programs, low-income housing complexes and other programs are often sited in some of the oldest building stock in the country. Our coalition work has assisted dozens of nonprofits in evaluating and utilizing a variety of energy tools. The recently passed Inflation Reduction Act promises even more finely tuned energy tools, to bring solar, heat pumps, weatherization, water conservation and more into neighborhoods that struggle the most with energy costs for their households.

According to the Environmental and Energy Study Institute: 

“Energy costs are the second-highest operational expense for many nonprofits, behind only salaries. According to the Environmental Protection Agency (EPA), as much as 30 percent of the energy consumed in hospitals, worship facilities, and other commercial buildings is wasted, leading to enormous opportunities for energy efficiency improvements and energy savings. These savings can be reinvested by nonprofits in core mission advancement and work to better serve their communities.”

Clearly, if energy costs are the second highest operating expense, then it would make sense that organizations would heavily prioritize adoption of proven pathways to lower these costs, so as to ensure donor’s contributions are not wasted, literally, through uninsulated attics, or through organizational neglect of readily available technology to address these costs. In fact, most states have a grant-writing process similar to any other state or local opportunity, and additional easily accessible incentives geared toward low-income communities traditionally most affected by pollution and climate change. 

My experience with Dismas House of Massachusetts is one example of lowering costs so that donations from supporters can be earmarked for programmatic rather than spiraling operations costs, which is usually the donor’s intent. This organization for homeless former offenders built their own solar projects at all its homes for homeless and former offenders. Over the past nine years, the combination of energy production and solar renewable energy credits (SREC) have successfully saved the organization thousands in utility bills across all of its homes and services.

Other nonprofits have seen full building weatherization, high-efficiency heating systems, LED lighting and full home water conservation projects to both lower their utility costs, while ensuring the value of their donor dollars, and being responsible nonprofit citizens, leading the way for clean energy, solar and reduction in pollution from burning fossil fuels. 

The key to adopting this strategy is to view clean energy as an organizational development tool. In addition to fundraising events and appeals, and government and private foundation supports, organization's development teams need to reevaluate their utility expenditures not as a languishing, unchangeable line item to pay for each year, but as a dynamic opportunity to adopt easily available new clean energy tools to save these funds for other uses.

The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.