The Case for Investing in Campus Sustainability

By Mark Orlowski
Founder & Executive Director
Sustainable Endowments Institute

Whether your college is striving to reach its carbon-reduction goals or is considering divesting from fossil fuel companies, green revolving funds (GRFs) offer a compelling investment opportunity. With a median annual return (ROI) of 28 percent, GRFs are transforming campus energy efficiency improvements from perceived expenses to high-return investments. One of many GRF examples documented in Greening the Bottom Line 2012 is a project at George Washington University. GW is generating $100,000 per year in savings since investing $141,000 in 2010 to upgrade the lighting in their academic center. This project has already more than paid for itself and, over its projected eight-year lifespan, the original $141,000 investment will realize at least $800,000 in total savings (even more, if energy prices rise).

With more secure benefits than a volatile stock market, GRF investments provide your school’s trustees with a new sustainable path for fiduciary responsibility. In addition, many other sources of funding--ranging from cash reserves to utility rebates to alumni donations--offer additional options for capitalizing your GRF.

Green revolving funds are not only investing in energy efficiency projects, but also in renewable energy installations and waste reduction programs. To access information on 84 green revolving loan funds at 80 institutions containing more than $118 million, see AASHE's Campus Sustainability Revolving Loans Fund Database. While the GRF size, structure and project priorities vary considerably, by connecting the dots, we see that these investments not only advance sustainability, but also have financial benefits and educational advantages.

Financial Benefits
As reported in Greening the Bottom Line 2012, schools are using a variety of creative approaches to invest in and benefit from green revolving funds. Examples include:

• Innovative Endowment Investment: California Institute of Technology (Caltech) reports a 24 percent return on investment (excluding utility incentives) on their green revolving fund, the Caltech Energy Conservation Investment Program. The GRF capitalization was structured as an endowment investment, not as a payout from the endowment. This enables Caltech to avoid any issues related to donor restrictions on endowment gifts.

• Higher ROI on Cash Reserves: Financial payoff and functional flexibility are encouraging new commitments such as the University of Vermont’s board of trustees creating the Energy Revolving Fund with $13 million invested from the university’s cash reserves. With a 5 percent interest rate, the UVM revolving fund currently generates double the return on investment of other existing cash reserve investments. In addition, by investing in campus energy efficiency projects, the university is helping to generate on-site jobs that have a multiplier effect in the local economy.

• New Fundraising Opportunities: Agnes Scott College is in the forefront of showing how GRFs can offer a winning fundraising strategy. President Elizabeth Kiss and her development team at the Georgia college, raised over $400,000 in seed capital from both alumni and foundation donors within a few months. The successful method emphasized their fund’s strong ROI and its potential to turn the campus into a living laboratory for sustainability. “For me, it was critical that our GRF linked up with these broader themes of what kind of college and learning community we aspire to be,” said Elizabeth Kiss, President of Agnes Scott College. “The most powerful teaching you do is by being a role model.”

Educational Advantages
By connecting the dots, we can see how green revolving funds engage members of the campus community by advancing not only budget and climate goals, but also offering exciting educational opportunities. Examples include different dimensions of experiential education:

• Social Entrepreneurship: Just as business entrepreneurs identify opportunities to create for-profit ventures, social entrepreneurs envision and implement innovative approaches to meeting social and environmental needs. For example, in a class at Dartmouth College, students researched and developed a proposal for the Dartmouth Revolving Green Fund. After submitting the proposal to the administration, they received feedback. In response, two students working as independent consultants spent the summer improving the proposal to address the administrators’ concerns. The final version was favorably received and the students' efforts resulted in Dartmouth establishing a $1 million green revolving fund. Along with the academic benefits, students gained valuable skills to apply to future jobs or to starting their own organizations.

• Job Skills: In some cases, green revolving funds offer job skill opportunities by having students actually undertake the work to install the needed improvements with supervision by professors and/or facilities managers. For example, at Whitman College in Washington State, students spearheaded, and did the hands-on work, to create a rooftop garden funded by a loan from the college’s Sustainability Revolving Loan Fund. The loan was paid back in less than a year by selling the garden crops to Bon Appétit, which provides food service at the college.

• Leadership Opportunities: At many schools, students are invited to submit project proposals for consideration and selection by a GRF committee. Students even serve on the decision-making committee that selects and prioritizes project investments. In some cases, students can play even a larger leadership role in selecting projects for GRF funding. For example, at Bethany College in Kansas, six students join with the director of facilities, the vice president for finance and operations, a professor, a campus pastor and a local business owner to form the GRF Committee. Serving on the committee offers students a unique voice in setting sustainability priorities and allocating investment of limited financial resources.

What’s Next?
If you want to make the case to connect the dots and put green revolving funds to work at your school, two resources are already available and two upcoming events are planned to expand access and learn from GRF leaders and experts.

Co-published by the Sustainable Endowments Institute (SEI) and AASHE, Green Revolving Funds: An Introductory Guide to Implementation and Management provides practical guidance for designing, implementing, and managing a college or university GRF. Based on interviews with presidents, facility managers, sustainability directors, and chief financial officers, the 27-page publication features a 10-step road map for a successful fund, a section on the "anatomy" of a GRF, solutions to common obstacles and resources available through the Billion Dollar Green Challenge.

Once established, GRFs can benefit from the Green Revolving Investment Tracking System (GRITS) developed by the Sustainable Endowments Institute. This secure, account-based web tool is designed to manage every aspect of an institution’s green revolving fund including aggregate and project-specific energy, financial, and carbon data. The GRITS project library allows institutions to view completed GRF projects from other colleges, inspiring staff, students and administrators to both share best practices and adapt relevant projects for their own campus.

In order to extend access to green revolving fund benefits, the Sustainable Endowments Institute is convening a gathering in April at the Pocantico Center of the Rockefeller Brothers Fund. Inspirational leaders from the nonprofit, government and foundation communities will develop collaborative strategies to provide low-cost capital for under-resourced institutions (such as community colleges and minority-serving institutions) to seed their own green revolving funds.

On April 17, the Sustainable Endowments Institute in partnership with AASHE is hosting the Financing the Future of Energy Efficiency Summit at the University of San Diego. Featuring a keynote address by Rip Rapson, President of the Kresge Foundation, the Summit will bring together leaders in financing sustainability with presidents, trustees, and senior officials in finance, facilities and sustainability at colleges, universities, foundations and other nonprofit institutions. Breakout sessions will meet needs of institutions just starting to consider their options as well as advanced strategies for those already leading GRF initiatives. We welcome your participation!

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