NONPROFITS, CHURCHES, HOAs
Introduction
On the surface there is not much difference in the type of organization contemplating solar energy. However, in reality, commercial is quite different that that of nonprofit organizations, churches and HOAs (homeowners associations). The primary difference is in the decision making process, financing the project and the use of the solar tax credits. My services help your organization move forward with the process. I understand restrictive bylaws and processes that may be in place and know how to move forward within within these restrictions.
Solar Tax Credit
The single largest issue that arises with nonprofit organizations, churches and HOAs is that they do not qualify for the solar tax credits and related tax benefits that are geared to the for the for-profit world. I have arrangements with solar support organizations who can help finance the solar projects and create a situation that allows them to share the tax benefits with the nonprofit organization, church or HOA. Specifically, what this means, is that by sharing these credits you now receive a “discount” on the solar installation cost of about 12-20%.[a] I can explain this to you and help in arranging the contracts accordingly.
Financing the Solar Project
The most obvious method of paying for the project is with cash. But solar projects for nonprofit organizations, churches and HOAs tend to be very pricey. Many times the organization is financially sound but cannot afford the immediate cash outlay for solar. I can help with obtaining Bank Financing and explain other no cash outlay solar programs to help you fully understand the pros and cons of these financial arrangements. Typical Purchase Arrangements are noted on this site’s home page (scroll down).
Click Here for Bank Financing Article
Independent Solar Advisor
Remember, I am an independent fee based consultant with the sole role of educating you on the choices, helping to move the process forward and am not tied to any one solar contractor or finance company. The scope of my role is different with each client with the most common being a part of the solar committee working with your solar team.
Solar consulting for nonprofit organizations, churches and HOAs is an specialty skill-set to help ensure the organization is paying a fair price, obtains a solar tax credit sharing agreement, helping to ensure quality materials and avoiding the many ways to be taken advantage of.
As your Independent Solar Advisor Contact Us for assistance.
Independent Solar Consultant
Inflation Reduction Act and Solar Tax Credits
[a] Wait a minute! I thought the new Inflation Reduction Act now allows nonprofit organizations to received the benefit of the 30% tax credit. For nonprofit exempt organizations, this appears to be true. For HOAs it may not be true as they file either a 1120 or 1120-H tax returns which are corporation tax returns. For churches it’s not clear as the religious exemption results in no tax return requirement. The early guidelines appear to say the credit is available by the type of tax return filed or if tax-exempt status was applied for and issued. In summary, it’s too early to know for sure how this will play out for any of these organizations until the regulations are issued. Since the intent of the new rules is to make the 30% tax credit available, there’s hope the regulations, once issued, resolve this.
New guidance has been issued which provide instructions for nonprofit exempt organizations to receive the full 30% credit on their solar installation with Direct Pay. The quick answer is the organization files for a registration number with the IRS in a prefiling registration process. They then request for the direct pay credit with their next tax filing by including the necessary forms and the registration number. The IRS then issues a check payable to the organization. This process can take anywhere from 6-9 months to two years. (Let’s say your ready for the credit in July and your organization has a June 30 year end. Your next year end is 11 months away and it may take 3-5 months to file the return. You can see how this can take so much time.)(Oct 2022, updated 8/1/23 and 10/30/23).
Depending on the organization’s specific circumstances, it may be more effective to use a solar tax credit sharing arrangement and receive 12-20% upon completion of the solar installation rather than waiting for the not-so-speedy IRS process.