Universities Find Green Funds Save Them Some Serious Green

Budget cuts. Furloughs. Higher fees. Universities and colleges across the country are facing uncertain financial futures. Increased energy efficiency would cut power bills and reduce costs, but finding a way to finance those improvements is difficult when budgets are in such disarray.

That's where Green Revolving Funds come into play. The funds pay for improvements and then the cost savings from those improvements are plowed back into the funds to pay for more energy-saving programs.

At least 52 colleges in the United States and Canada have a total of $66 million in Green Fund investments, according to a study by the Sustainable Endowments Institute. The average fund is $1.4 million, but range all over the map. College of Wooster in Ohio has the smallest fund at $5,000 and Harvard (of course) has the largest at $12 million.

At least three colleges in California have them: California Institute of Technology; Stanford University; and California State University, Monterey Bay.

The funds are used to finance upgrades that cut energy bills or their carbon footprint. Many of the retrofits are fairly basic - replacing shower heads and lights - but have yielded some impressive results. Once again, it has been shown that minimal investments can reap big rewards. Consider Iowa State University: It paid $3,039 to implement energy-savings devices on 500 computers and saved a projected $49,000. The payback period: 23 days.

Oberlin College replaced 30 shower heads and got a one-year payback. Converting a tractor to run on vegetable oil led to a payback of one to two years for Oberlin. Swarthmore College replaced T-12 light bulbs with more efficient ones - and garnered a two-year payback.

Western Michigan University funded 101 projects, reported an average payback of 2.1 years and a return on investment of 47%. "Since 1996, our total project costs are approximately $5.85 million per year and our annual cost savings are approximately $2.75 million...By focusing on overall operational cost reduction - as opposed to funding projects on a simple one-time basis - we have made great strides," the university reported.

Harvard reported a return on investment of 30%. It invested $16 million in upgrades and received an annual savings of $4.8 million. Not only is Harvard getting paid back in a little over three years, but it has reduced its its annual carbon footprint by some 14,100 metric tons.

Weber State University set a goal of $1 million in annual energy savings by 2015. In 2010, the university was already at $440,000. Even to non-math majors like myself, those kinds of investments make sense.

But how do you create a Green Revolving Fund? The colleges surveyed used a variety of methods; some dipped into the administration budget to provide seed money. Others used student fees, utility company rebates, foundations and donations and endowments.

As we know schools of all kinds face tight budget restrictions, but the study predicts more Green funds will be formed as a way to provide a secure investment with promising returns - while helping the environment at the same time.

Photo of Cal State Monterey Bay by stateuniversity.com