For us, the bottom line was that we didn't think we had enough potential investors who had passive income (typically income from rental property). Here's the scoop on LLC vs. donations.
LLC:
• Investors get NC and Federal tax credits; pay back from selling the power to Duke Energy Progress, and from equipment depreciation.
• Investors must have “passive income” (typically rental income) to take advantage of the NC and Federal tax credits and the equipment deductions.
• Typically, LLC is maintained for ~ 6 years, and investors recoup ~ 90% of their investment.
• There are costs to establish and run the LLC: CPA to initiate LLC tax credits and deductions, insurance for the system since it is not part of CUCC, annual cost of LLC, annual cost to write up tax deductions.
• Initially the installation would be “buy all, sell all” to get financial return for investors; then we would likely switch to net metering to allow CUCC to take the value. There would be a cost (~$2500) for switching to net metering later.
• CUCC would get energy cost savings after the LLC partners donate the system to CUCC.
Donation:
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| Solar panels on the roof of Temple Emanuel in Greensboro |
• Each donor may be eligible to take a 35% NC tax credit, and the standard Federal charitable donation tax deduction (depends on the donor's tax situation- check with your tax advisor).
ARCHIVAL NOTE: The tax credit has expired.
• No costs to run the funding system other than printing the receipt for the donation that the donor can use against their tax return.
• We would likely use net metering from day one.
• CUCC would get energy cost savings from day one.
Other funding options
Third party payer:
The NC General Assembly is currently debating whether to allow third party payers to fund and own solar arrays. At the time of our decision making, this was not an option.
Loan funds:
Our denomination (the United Church of Christ) has a loan program for environmentally friendly improvement projects of congregations and UCC organizations, the Cornerstone Fund EcoLoan program. We considered taking out a loan if we didn't raise quite enough for our array through donations. However in 2014 our congregation purchased some affordable rental housing using a combination of loans, donations, and a mortgage; we were reluctant to ask the congregation to take on additional debt.
