Self-financing is a viable option for research campuses with sufficient internal funds. Self-financing options include gifts and endowments, student fees, and revolving loan funds. Read examples of how research campuses have used self-financing options to fund the cost of energy efficiency and renewable energy projects below.
Self-financing may be the most cost-effective option for a research campus, as it avoids long-term interest and lending costs. Internal financing can also reduce the "cost of waiting", or minimize the loss of energy cost savings while waiting for external funding. Because the return on investment for internal financing is typically compared to other investment opportunities (rather than high interest loans), the threshold for returns is often perceived as being lower when compared to other financing options.
Gifts and Endowments
Senior class and alumni gifts can be a good source of internal funds for small capital projects. They are also useful as seed capital for projects without initial institutional support. Gifts can also be created as matching funds to encourage additional contributions. Research campuses may also apply to foundations to finance energy efficiency projects on their site. Additionally, university endowments can help pay for a project's operating budget. In a growing trend, schools are starting to engage campus stakeholders in order to align significant endowment portfolio assets with sustainability values.
Research campuses can tap a significant source of capital by allocating a portion of student fees to clean energy projects. This may be a portion of existing fees or a student-approved increase. With a large student population, seemingly modest increments can add up. Across the country, student bodies have voted to raise their fees to support clean energy and mass transit. A number of colleges have implemented a student fee dedicated to the purchase of green power. This approach usually works best at institutions that have taken the initial steps to increase the awareness of sustainability in their students.
Revolving Loan Funds
Revolving loan funds are a method of managing and growing a limited amount of funding. Read more about revolving loan funds for research campuses.
Below are examples of how several U.S. universities are taking the self-financing approach to funding energy efficiency and renewable energy projects on their campuses.
- In 2001, Stanford University's $12 billion endowment became the first in the United States to support climate change. The student-proposed shareholder voting guidelines were refined by the university's Advisory Panel on Investment Responsibility & Licensing and approved by their Board of Trustees. The guidelines will be applied to all future climate action shareholder resolutions. Read more about this project on the Sustainable Stanford site.
- A wind turbine installation at Macalester College is helping to increase awareness of renewable energy and energy conservation on campus. Through a senior class gift, the $15,000 installation was eventually purchased by a local utility.
- The Green Initiative Fund (TGIF) at the University of California, Santa Barbara, is charged to reduce the University's impact on the environment. In Spring 2006, an overwhelming majority of students voted to pay an additional $2.60 per quarter, contributing approximately $182,000 a year toward TGIF.
- On June 10, 2005, a Western Washington University (WWU) student fee approved by the board of trustees helped to establish a clean energy procurement fund. The fee, charged at $1.05 per credit per quarter, covers 100% of the school's clean energy electricity supply cost, which is 35 million kilowatt-hours (kWh). Read more about this story in a WWU press release.
- A student vote at the University of Colorado-Boulder (UCB) in the year 2000, increased student fees by $1 per semester for four years. The additional revenue generated by these fees purchased wind power from a two million kWh/year wind farm. Through this initiative, the UCB campus was able to lower emissions by 2.8 million pounds per year. Read more about this story in a UCB press release.
- In 2005, an overwhelming majority of students at Evergreen State College voted for a $1 per credit fee increase (with a $20.00 max/quarter) to fund the purchase and installation of renewable energy and energy conservation technologies on campus. Of the approximate $240,000 raised annually, less than 5% covers administrative overhead costs, which includes a Clean Energy Committee that involves students. The remaining amount is used to purchase renewable energy and to feed a fund for on-campus energy efficiency projects. Read more about this endeavor on the Evergreen Clean Energy site.
- In 2005, Middle Tennessee State University (MTSU) students voted for an $8 per semester fee increase to support renewable energy installation and energy conservation technologies on campus. The Tennessee Board of Regents approved a one-year trial period beginning in the 2006–2007 academic year. Two thirds of the fee purchases renewable energy, while the remaining third finances on-campus energy efficiency and conservation projects. Read more about this project on the MTSU Student Government Association site.