Revolving Loan Fund

Last updated

A Revolving Loan Fund (RLF) is a source of money from which loans are made for multiple small business development projects. Revolving loan funds share many characteristics with microcredit, micro-enterprise, and village banking, namely providing loans to persons or groups of people that do not qualify for traditional financial services or are otherwise viewed as being high risk. [1] Borrowers tend to be small producers of goods and services: typically, they are artisans, farmers, and women with no credit history or access to other types of loans from financial institutions. Organizations that offer revolving loan fund lending aim to help new project or business owners become financially independent and eventually to become eligible for loans from commercial banks.

Contents

The fund gets its name from the revolving aspect of loan repayment in which the central fund is replenished as individual projects pay back their loans, creating the opportunity to issue other loans to new projects. [2]

Popularity in academia

Green Revolving Fund (GRF)

The revolving loan fund is often referred to as a green revolving fund, or GRF, when it is initiated on college and university campuses. These types of funds target projects that improve campus energy-efficiency, reduce resource use, and implement other projects and programs that fall under the category of sustainability. In recent years, GRFs have become increasingly popular on campuses in the United States. The funds operate and are managed by the university, with loans issued to university departments or campus groups.

In February 2013, the Association for the Advancement of Sustainability in Higher Education (AASHE) released a database of campus sustainability revolving loan funds. As of March 2013, there were 84 revolving loan funds at 80 institutions in North America containing $118,737,518. [3]

Sample of Green Revolving Funds

[8]

  • Carleton College (MN) - The Sustainability Revolving Fund (SRF) began in 2007 and has $71,101. [9]
  • College of Wooster (OH) - The Revolving Environmental Efficiency Fund (REEF) was developed in 2010 and has $5,000. [10]

Greening the Bottom Line: the Trend towards Green Revolving Funds on Campus

In February 2011 the Sustainable Endowments Institute published the paper "Greening the Bottom Line: the Trend toward Green Revolving Funds on Campus." The paper researched the 52 active green revolving funds in the US, with findings based on a series of interviews and surveys with sustainability directors and administrators involved in green revolving fund development and operation at the college and university level.

Greening the Bottom Line reports on a green revolving fund's formation, operation, and financial performance. The report was written with the explicit purpose to provide a baseline for tracking the continuing emergence of green revolving funds in higher education to act and to act as a resource for institutions interested in establishing their own.

Greening the Bottom Line found that for those institutions with green revolving funds:

Sample of GRF-Supported Projects

Green revolving funds can invest in a wide variety of projects and have supported projects that impact a university's carbon footprint or local environment. Examples of these projects include: installing technology that conserves water and electricity; improving campus recycling rates; instituting a campus composting program; increasing campus waste diversion from landfills; replacing a fuel source (e.g. converting campus plants to burn biomass or biodiesel instead of traditional fuel sources); and introducing behavioral change programs that raise student awareness of individual resource use.

SchoolProjectPayback PeriodCost W/O IncentivesSavings
Iowa State University Energy-saving software on 500 computers23 days$3,039$49,000 annually (projected)
University of Notre Dame Traded 7,450 incandescent bulbs for energy-efficient fluorescents in student housing1 year$17,600$20,000 annually
Oberlin College Upgraded 30 showerheads at 2.35 gpm with low-flow 1.5 gpm1 year$900$866 annually

Types of Green Revolving Funds

There are three types of green revolving funds that target different institutional priorities.

1. Efficiency funds provide capital to energy and/or water efficiency measures. Their goals are to reduce resources and save money. Project ideas are initiated and managed by staff from Facilities, Energy Management and/or Finance Departments. Efficiency funds tend to require a relatively short payback period and are typically not used to engage the broader campus community.
2. Innovation and engagement funds explicitly seek community engagement in project proposals. The projects it funds may have short paybacks, long paybacks, or no payback requirements. Innovation funds often provide loans that require repayment for projects that will result in operational savings, and they use these returns to subsidize grants for projects that will not result in cost savings. Innovation funds are generally administered by a committee and often include significant student participation and/or oversight.
3. Hybrid funds target resource reduction and cost saving, but also consider community engagement and outreach goals. The majority of funds follow this model. They finance efficiency projects in addition to a wider range of initiatives such as renewable energy development, solid waste diversion, and reducing use of materials like paper or synthetic lawn chemicals. Hybrid funds often seek to engage and/or educate the campus community in sustainability efforts. A broad set of campus stakeholder groups tend to provide oversight to hybrid funds while they are administered by facilities or sustainability staff.

Benefits of a Green Revolving Fund

Green revolving funds can impact many aspects of an institution's daily operations. They can be used to:

  • Provide up-front capital for energy and/or water efficiency measures.
  • Reduce a school’s operating budget(s) by decreasing campus electrical and water consumption.
  • Reduce a school's carbon footprint and greenhouse gas emissions.
  • Record baseline data to compare resource-use consumption over time and/or to promote increased tracking of energy and water use.
  • Update aging infrastructure by installing newer energy-efficient technology.
  • Improve campus building comfort, functionality, and efficiency as well as reduce building maintenance needs.
  • Develop renewable energy technology that can be used to further campus research and offer opportunities for interdisciplinary education and research on sustainability, which can provide additional resources to supplement the curriculum.
  • Ensure that a school will have a ready source of capital earmarked explicitly for projects that have a demonstrated impact on sustainability, operating without the threat of seed money or cost savings being reabsorbed into a utility or central administrative budget.
  • Foster collaboration between offices of finance, sustainability, facilities, faculty, and students.
  • Accrue savings because of a high reported return on investment and a high level of involvement by the campus community.

Financial data on Green Revolving Funds

Return on Investment

Green revolving funds on the college and university level report a high return on investment. The highest reported ROI is at the University of Denver with 63 percent ROI for their Energy Reserve Fund's project portfolio. The minimum reported ROI is from Iowa State University's Live Green Revolving Loan Fund with a 29 percent ROI. [7]

Payback periods

Schools with green revolving funds report an average project payback periods ranging from 1 year to 10 years, with a median of 4 years. [7]

Sourcing Seed Funding

Colleges and universities seek seed funding from a variety of sources, including:

  • allocations from the central budget or other administrative sources
  • the installation of student fees and student government grants
  • previous efficiency and utility cost savings
  • Outside donations or other foundation funding
  • investments from the endowment, or
  • a combination of two or more of the above sources. [7]

Related Research Articles

Oberlin College Private liberal arts college in Oberlin, Ohio, United States

Oberlin College is a private liberal arts college and conservatory of music in Oberlin, Ohio. It is the oldest coeducational liberal arts college in the United States and the second oldest continuously operating coeducational institute of higher learning in the world. The Oberlin Conservatory of Music is the oldest continuously operating conservatory in the United States. In 1835 Oberlin became one of the first colleges in the United States to admit African Americans, and in 1837 the first to admit women. It has been known since its founding for progressive student activism.

Macalester College United States historic place

Macalester College is a private liberal arts college in Saint Paul, Minnesota. Founded in 1874, Macalester is exclusively an undergraduate four-year institution and enrolled 2,174 students in the fall of 2018 from 50 U.S. states, 4 U.S territories, the District of Columbia and 97 countries.

Grand Valley State University university

Grand Valley State University is a public liberal arts university in Allendale, Michigan. It was established in 1960 and its main campus is situated on 1,322 acres (5.35 km2) approximately 12 miles (19 km) west of Grand Rapids. The university also offers classes at a campus in downtown Grand Rapids, its international campus in Holland, and through Traverse City established in cooperation with local community colleges.

University of Maine Public university in Orono, Maine, USA

The University of Maine is a public research university in Orono, Maine. The university was established in 1865 as a land grant college and is the flagship university of the University of Maine System. The University of Maine is one of only a few land, sea and space grant institutions in the nation.

Santa Clara University private non-profit Jesuit university located in Santa Clara, California

Santa Clara University is a private Jesuit university in Santa Clara, California, with about 5,400 undergraduate students and about 3,300 postgraduate students. Established in 1851, Santa Clara University is the oldest operating institution of higher learning in California and has remained in its original location for 168 years. The university's campus surrounds the historic Mission Santa Clara de Asis which traces its founding to 1776. The campus mirrors the Mission's architectural style and provides a fine early example of Mission Revival architecture. The university is classified as a "Doctoral/Professional" university by Carnegie Classification.

California Polytechnic State University Public university located in San Luis Obispo, California

California Polytechnic State University is a public university in San Luis Obispo, California. It is one of two polytechnics in the California State University system.

Scripps College Womens liberal arts college in Claremont, California, United States

Scripps College is a private liberal arts women's college in Claremont, California. Founded in 1926, it had an enrollment of 989 students as of 2017. It is a member of the Claremont Colleges and is known for its extensive interdisciplinary core curriculum and historic campus.

Thompson Rivers University one of the most joyful learning university

Thompson Rivers University is a public teaching and research university offering undergraduate and graduate degrees and vocational training. Its main campus is in Kamloops, British Columbia, Canada, and its name comes from the two rivers which converge in Kamloops, the North Thompson and South Thompson. The university has a satellite campus in Williams Lake, BC and a distance education division called TRU-Open Learning. It also has several international partnerships through its TRU World division.

Northland College (Wisconsin) liberal arts college in Wisconsin

Northland College is a private college in Ashland, Wisconsin. Founded as the North Wisconsin Academy in 1892, the college was established in 1906. Originally affiliated with the Congregational Church, the college remains loosely tied to the Congregational Church's descendant, the United Church of Christ. It enrolls 600 full-time undergraduate students and employs 60 faculty members and 99 staff members. Northland College is accredited by the Higher Learning Commission of the North Central Association of Colleges and Universities.

Lake Superior College

Lake Superior College (LSC) is a public community college in Duluth, Minnesota. The college offers pre-baccalaureate majors for students interested in transferring to 4-year educational institutions as well as more than 90 certificate, diploma and degree programs in career and technical fields. LSC's Continuing Education/Customized Training division collaborates with area businesses and industry to design specialized opportunities for entry-level and advanced education. While courses are typically offered in traditional classroom and lab settings, LSC also offers over 150 courses via the internet, through its e-campus.

An energy service company (ESCO) is a business that provides a broad range of energy solutions including designs and implementation of energy savings projects, retrofitting, energy conservation, energy infrastructure outsourcing, power generation and energy supply, and risk management.

The Clean Water State Revolving Fund (CWSRF) is a self-perpetuating loan assistance authority for water quality improvement projects in the United States. The fund is administered by the Environmental Protection Agency and state agencies. The CWSRF, which replaced the Clean Water Act Construction Grants program, provides loans for the construction of municipal wastewater facilities and implementation of nonpoint source pollution control and estuary protection projects. Congress established the fund in the Water Quality Act of 1987. Since inception, cumulative assistance has surpassed US$126 Billion, and is continuing to grow through interest earnings, principal repayments, and leveraging.

Green building on college campuses is the purposeful construction of buildings on college campuses that decreases resource usage in both the building process and also the future use of the building. The goal is to reduce CO
2
emissions, energy use, and water use, while creating an atmosphere where students can be healthy and learn. Universities across the country are building to green standards set forth by the USGBC, United States Green Building Council. The USGBC is a non-profit organization that promotes sustainability in how buildings are designed and built. This organization created the Leadership in Energy and Environmental Design (LEED) rating system, which is a certification process that provides verification that a building is environmentally sustainable. In the United States, commercial and residential buildings account for 70 percent of the electricity use and over 38 percent of CO
2
emissions
. Because of these huge statistics regarding resource usage and emissions, the room for more efficient building practices is dramatic. Since college campuses are where the world's future leaders are being taught, colleges are choosing to construct new buildings to green standards in order to promote environmental stewardship to their students. Colleges across the United States have taken leading roles in the construction of green building in order to reduce resource consumption, save money in the long run, and instill the importance on environmental sustainability on their students.It is a better way to motivate new generation to live a sustainable life.

Universities all around the world have always had a leadership role in their respective communities by demonstrating the type of changes that need to occur with respect to timely issues that arise. In recent times, educational institutions are reporting greenhouse emissions as a means to measure sustainability. To become carbon neutral, universities are working to reduce their emissions of greenhouse gases, cut their use of energy, use more renewable energy, and emphasize the importance of sustainable energy sources. Universities that have committed to becoming carbon neutral have recognized the threat of global warming and are therefore committing to reverse the trend.

PowerMAN is a computer software program for central system monitoring and PC power management, of computers running Microsoft Windows operating systems. The software extends the basic features present in most operating systems to permit implementing and enforcing organization-wide power management policies.

Sustainable Endowments Institute

The Sustainable Endowments Institute (SEI) is a nonprofit organization based in the United States that is engaged in research and education to advance sustainability in operations and endowment practices. Founded in 2005, SEI is a special project of Rockefeller Philanthropy Advisors. SEI is located in Boston, Massachusetts.

Sustainability at American Colleges and Universities

Sustainability, as defined by the 1983 Brundtland Commission, formally the World Commission on Environment and Development (WCED), states “development which implies meeting the needs of the present without compromising the ability of future generations to meet their own needs”. As sustainability gains support worldwide, universities across the United States have begun to take initiatives toward more sustainable campuses. Alongside student-run projects, drastic changes in administration, energy efficiency, and food and recycling have sprung up in Ivy League schools and liberal arts colleges alike. The American College & University Presidents' Climate Commitment is an evident effort to address global climate disruption consisting of a network of colleges and universities that have made institutional commitments to reduce net greenhouse gas emissions on campus, and to promote the research and educational efforts of higher education to prepare society to re-stabilize the earth's climate. Oberlin College in Ohio features the first Leadership in Energy and Environmental Design (LEED) Gold certified music facility, while Yale University in New Haven, Connecticut, has pledged that all new buildings will meet these same Gold standards. LEED is an internationally recognized green building certification system created by the U.S. Green Building Council. This ranking system offers an incentive for building owners to implement green design, construction, efficient operations and eco-friendly solutions over the years. Buildings are responsible for about 40% of total carbon emissions. And so by including these green buildings, schools are decreasing carbon emissions, conserving water and energy and saving money each month. Princeton and Ohio University have both made strides toward cutting yearly carbon emissions on campus; While Florida Gulf Coast University has implemented solar energy throughout various buildings. A number of universities across the U.S. have created bicycle stations providing rentals to students and staff alike in an effort to reduce the burning of fossil fuels and automobile congestion as well. Car sharing like rechargeable Zipcars and reliable public transit have also helped incentivize more eco-friendly schools. These changes towards sustainability offer colleges a moral and ethical fulfillment as well as economic and financial benefits. Likewise, these universities are responsible for training future generations in sustainable practice. By offering students these more Earth friendly options, faculty and staff can ensure the well being of lands and resources for generations to come.

Dwight Hall Socially Responsible Investment Fund

Dwight Hall Socially Responsible Investment Fund is an undergraduate-run socially responsible investment fund in the United States. Initially seeded with $50,000 from the Dwight Hall organization endowment, the fund is expected by the Dwight Hall Board of Directors and Trustees to grow to a $500,000 fundraising target. Managed by a committee of twenty undergraduate Yale College students, the fund makes use of traditional methods of socially responsible investing (SRI) to have a positive environmental and social impact while aiming to outperform standard investment benchmarks and maximize financial return. The Dwight Hall SRI Fund pays out 4.25% of its value to Dwight Hall, which is the umbrella public service and social justice organization on Yale's campus.

Public plans for energy efficient refurbishment are put in place by states to encourage building owners to renovate their properties in a way that increases their energy performance. As financing represents the most important obstacle to this type of renovation, the plans favour financial incentives in the form of loans or grants. Various institutions can be involved in the process, such as ministries, banks, firms, or energy services companies (ESCOs).

A green bank is a financial institution, typically public or quasi-public, that uses innovative financing techniques and market development tools in partnership with the private sector to accelerate deployment of clean energy technologies. Green banks use public funds to leverage private investment in clean energy technologies that, despite being commercially viable, have struggled to establish a widespread presence in consumer markets. Green banks seek to reduce energy costs for ratepayers, stimulate private sector investment and economic activity, and expedite the transition to a low-carbon economy.

References

  1. "Archived copy". Archived from the original on 2016-03-10. Retrieved 2019-04-15.CS1 maint: archived copy as title (link)
  2. "Archived copy". Archived from the original on 2011-09-12. Retrieved 2011-06-24.CS1 maint: archived copy as title (link)
  3. "AASHE Campus Sustainability Hub". Hub.aashe.org. Retrieved 3 March 2019.
  4. "Archived copy". Archived from the original on 2010-09-23. Retrieved 2010-11-19.CS1 maint: archived copy as title (link)
  5. "Archived copy" (PDF). Archived from the original (PDF) on 2011-07-25. Retrieved 2009-05-25.CS1 maint: archived copy as title (link)
  6. "Oberlin College Green EDGE Fund". Sites.google.com. Retrieved 3 March 2019.
  7. 1 2 3 4 "1&1 IONOS Hosting". Greeningthebottomline.org. Retrieved 3 March 2019.
  8. "Archived copy". Archived from the original on 2012-12-10. Retrieved 2012-03-06.CS1 maint: archived copy as title (link)
  9. "Our Campus - Sustainability - Carleton College". Apps.carleton.edu. Retrieved 3 March 2019.
  10. "Home - REEF - Confluence at The College of Wooster". Wiki.wooster.edu. Retrieved 3 March 2019.

Resources

Dieboldt, A., Den Herder-Thomas, T., "Creating a Campus Sustainability Revolving Loan Fund", Association for the Advancement of Sustainability in Higher Education; April 2007.

Weisbord, D., Dautremont-Smith, J., Orlowski, M. "Greening the Bottom Line: the Trend toward Green Revolving Funds on Campus", the Sustainable Endowments Institute; February 2011.

Flynn, E., Orlowski, M., Weisbord, D. "Greening the Bottom Line 2012", the Sustainable Endowments Institute; October 2012.