Southland Charities Stretch Their Dollars : Nonprofit Cooperative Project Helps Groups Conserve Energy and Reduce Utilities Costs

Save a kilowatt, stretch a charity dollar.

That’s the idea behind the Nonprofit Energy Conservation Project, a cooperative effort between the Southern California Center for Nonprofit Management and Southern California Edison that potentially can cut $1 million per month from the energy bills of Southland charities.

Cutting costs has become a growing concern for nonprofit organizations in this era of reduced government support for charities and growing demands for services.

But a study by the Center for Nonprofit Management shows that most charitable organizations in Southern California simply live with rising utility bills because they lack the expertise to install energy-saving devices and are unwilling to divert money and staff time from their service programs to cut energy bills.

The Nonprofit Energy Conservation Project can help nonprofit organizations cut their utility costs with a minimum diversion of staff time and with up to 50% reductions in prices for energy-saving equipment.

The project provides free energy audits to identify wasteful uses of electricity in Edison’s service area, advice on what equipment to buy, assistance in arranging bank loans at below market rates to finance improvements and up to 50% rebates on capital costs from Edison and the state Energy Commission’s Energy Bank.

Mike Edwards, the project director who also runs the nonprofit Center for Volunteer Accounting Services, said nearly 200 charities have applied for help since the project began earlier this year.

One agency that expects to benefit from the project is the Rehabilitation Institute of Southern California in Orange, an organization that uses energy-intensive equipment.

The Rehabilitation Institute--which serves 200 clients a day who need physical rehabilitation, training after head injuries and other needs--spent $44,000 on energy-saving devices. The equipment is expected to pay for itself through lower utility bills in just 29 months, Judy Neubauer, the agency’s director of administrative services said. She said Valencia Bank financed the improvements.

An Impressive Effort

The most impressive utility cost-cutting effort the study found was at the Hollywood YMCA, which in addition to running a youth hostel, a hotel and a gym has become its own electric utility.

The Hollywood Y’s bold step to cut its $150,000 annual gas and electric bill involved installing a small co-generation plant that both heats water for cooking, showers and two swimming pools and provides 90% of the nonprofit organization’s electricity.

Cogeneration Power Inc. of Hollywood installed the equipment and in effect sells hot water and electric energy to the Hollywood Y, with back-up power from the city Department of Water and Power.

‘Came Out a Winner’

Norris Lineweaver, the Hollywood Y executive director, believes “we came out a winner because under our arrangement we didn’t put up any capital--Cogeneration Power did that--and we will save on energy bills.”

Lineweaver’s approach required extensive staff time tackling the complex task of interviewing equipment vendors, financing improvements and working out technical issues with DWP engineers.

Like other customers in Los Angeles, where electricity is supplied by the DWP, the Hollywood Y faces proposed rate increases of up to 40% over the next three years.

The Nonprofit Energy Conservation Project, which takes care of most of the technical issues Lineweaver handled on his own, grew out of a study financed with a $10,000 grant from the Conrad N. Hilton Foundation in Century City. Terry McAdam, a foundation vice president, saw the project as a way to help charitable organizations spend more money on service and less on utility bills.

McAdam pioneered a similar effort for New York City nonprofits eight years ago when he was senior vice president of the New York Community Trust, the Big Apple’s community foundation. McAdam and others, responding to the rise in energy prices caused by the Organization of Petroleum Exporting Countries or OPEC, created a project that has grown into a network of 25 conservation programs with the whimsical name of NOPEC.

Real Savings Possible

“Energy conservation offers one of the highest possibilities for leveraging grant monies, with real provable dollar savings,” McAdam said. He said that marketing money savings, however, is more difficult than promoting new ways to raise funds.

The Southern California study showed that in the Southland utility bills typically consume 2% to 3% of nonprofit budgets, compared to 7% to 9% for nonprofits in colder climes. The local figures are due to temperate weather and significantly lower utility rates.

Conservation can often cut energy bills at least 15%, Bruce Mayo, an energy conservation analyst at Southern California Edison, said. “Savings can run as high as 50%, with the average reduction running 25% to 30%,” Mayo said.

These figures suggest that energy utility bills total as much as $20 million annually just for the 500 charities that belong to the United Ways in Los Angeles and Orange Counties. More than 23,000 charitable organizations operate in the metropolitan area, according to the state Attorney General’s Charitable Trust Division.

Throughout Southern California, the study data suggest, conservation could collectively save all charitable organizations substantial amounts.

“Our study found, as others have around the country, that the reason nonprofit organizations haven’t done more to reduce energy waste is a fear of up-front costs, doubt that the savings are real and a lack of awareness by nonprofits of what energy management is and what it can do,” Edwards said.

Edison’s Mayo said his company retained the Center for Nonprofit Management to market its conservation program and do some technical work because it experienced exceptional difficulty in getting nonprofit organizations to adopt conservation measures. “Most nonprofit executive directors and boards of directors are not willing to make a commitment to incur debt” to finance energy-saving improvements, he said.

Requires Incurring Debt

But incurring debt to finance conservation improvements, rather than paying cash, is required to qualify for state Energy Commission grants to underwrite 20% of approved energy conservation measures costing up to $25,000. Edison will pay 30% of the cost of conservation measures up to $30,000 for nonprofits, Mayo said, but to be consistent with the Energy Commission policies Edison also requires improvements be debt-financed instead of paid for with cash.

Both Security Pacific National Bank and First Interstate Bank have agreed to make below market rate loans to help finance installation of energy saving equipment, Edwards said.

The Nonprofit Energy Conservation Project is focused now on nonprofit organizations with utility bills of at least $8,000 per month. Nonprofits with bills under $1,000 per month are not encouraged to participate at this time, Mayo said.

Edison pays for part of the conservation measures on the theory that a kilowatt saved is comparable to a kilowatt generated and that conservation typically costs less than building new generating capacity, especially if the capacity is idle except for peak demand times such as hot afternoons.

Southern California Gas Co., which also has programs to share the costs of some energy saving improvements, was approached by the Center for Nonprofit Management to join in the effort, but took no action. “It just fell between the cracks,” a gas company spokesman said.

The Los Angeles Department of Water and Power has no conservation cost sharing program for nonprofits except those operating low-cost housing projects, engineer Dennis Whitney said. Whitney said that some conservation cost-sharing programs are under consideration by DWP, however.

To take part in the Nonprofit Energy Conservation Project, contact Mike Edwards at (213) 977-0372.