JUNE 2011

NONPROFITS AND THE PRIVATE SECTOR IN A CLIMATE CHANGE

Stephen P Carter, CPA - Partner, Assurance & Advisory Practice .

How are Nonprofits involved with climate change, renewable energy projects, and a society that is increasingly becoming more environmentally and socially conscious? How are such things as RECs (renewable energy certificates) and Offsets (carbon credits or offsets) providing revenues and funding sources for Nonprofits? How is the private (or for-profit) sector partnering with Nonprofits to make money and give back to local communities, all at the same time? As an assurance and advisory Firm that serves the Nonprofit sector as well as leading edge and unique forprofit enterprises, we are seeing and are involved with interesting and exciting developments in a space that years ago created skepticism and apathy. There are for-profit enterprises that are creating real revenues, while at the same time benefiting local communities, educating our children, and assisting those Nonprofits whose mission is to improve the environment, create real jobs, and improve the quality of life through programs and facilities that benefit those in the local communities they serve. How is this being done? I can tell you how by describing the work of two clients we recently acquired.

But first, I have to give you a crash course on renewable energy and the tangible and intangible products that this form of energy creates. Renewable energy systems - most commonly solar, wind, and hydro based, create clean (or cleaner) energy than that generated by a fossil fuel. The more clean-type energy we can create, the less carbon emissions (CO2) there are which create pollution and, depending upon your beliefs, cause climate change or global warming. Renewable energy systems create real energy that feeds into the Power Grid which helps run our homes and factories. In the creation of this real energy, intangibles are created. These intangibles, called RECs and Offsets, are monetized. They become a commodity that has value, and are bought and sold in the voluntary markets. I have very much simplified that which can be a complex subject, but please keep these terms and concepts in mind as you read on! The Offset Project (TOP) is a Nonprofit organization headquartered in Pacific Grove, California. Their mission is to reduce local greenhouse gas emissions by bringing communities together through education and grassroots initiatives. One of the ways TOP is achieving this is through its newest program called the Monterey Bay Fund (MBF). MBF is a Nonprofit fundraising program that aims to help fund renewable energy projects, such as a new solar PV system, at local schools and Nonprofits that are not eligible for many of the available tax rebates and incentives. The vision for the MBF program is to accelerate the local adoption of clean renewable energy, create green jobs and economic development, while helping schools and Nonprofits save money in a time of need. The funds that TOP will offer are not intended to finance such projects in their entirety, but to provide crucial supplemental funding that can make these meaningful projects affordable and viable. How is TOP raising these funds? By selling RECs and Offsets into the local voluntary market, as well as through traditional fundraising and grant writing. TOP will be a source of RECs and Offsets for such things as projects needing extra points in order to meet their LEED certification under the US Green Building Council requirements, to hotels and local events that can then advertise they are reducing (offsetting) the carbon output they create from such sources as waste and transportation emissions. As their pool of revenues grows, TOP will allocate funding to qualified local projects that otherwise would not be feasible. As a result, the MBF program will make these projects feasible and will benefit the entire community. The RECs or Offsets created by these new projects can in turn be made available to TOP so that now TOP has a local source of RECs or Offsets to sell, without having to purchase them at market rates and from sources outside their immediate locale. This means that each project completed will help make the next project possible, and that TOP is helping generate a local supply of RECs and Offsets that can fill the local demand for these products. The beauty of TOPs model is that all monies generated, spent, and regenerated stay within the local economy, as well as provide jobs and workforce training opportunities locally through the construction of the projects! MBF clients and supporters of The Offset Project can share in the pride and marketing value of not only reducing greenhouse gas emissions, but also giving back to the local community. As Chris Sentieri, an environmental consultant assisting TOP says, We are truly thinking globally, and acting locally in terms of bettering the environment, our local economy, and our community. We are doing our part to address the causes of global climate change, but we are doing so by creating a program that captures a piece of the emerging carbon economy and uses it to provide real and visible benefits to our local community. In the private sector, an innovative advertising program has emerged that is significantly changing the way media funds are utilized. CBS and EcoMedia, through their EcoAdSM business model, provide a green value-add for advertisers across all forms of advertising media. The EcoAd program offers advertisers the unique ability to make tangible improvements to the local communities to which they market, while at the

same time helping the environment and receiving the positive PR benefits associated with such projects. How does this work? EcoMedia is building a portfolio of various renewable energy, energy efficiency, and conservation projects located within the communities in which their advertising campaigns run. Typically, these under-funded projects are being developed by municipal governments and Nonprofit organizations. EcoMedia then determines if these projects fit their programs criteria of additionality, environmental impact, and financial leverage. EcoMedia will then submit qualifying projects to receive grant funding from participating EcoAd advertisers so that the project is able to come to fruition. Recent examples of their success include the greening of Randol Mill Park near Dallas, Texas, which was made possible by an EcoAd grant from Chevrolet Motors and which included solar powered lighting, tree planting, and a newly constructed and highly energy and water efficient concession stand and restroom facility. And on May 25th, EcoMedia flipped the switch on a 28 kW rooftop solar PV system for a Community Center in San Francisco, CA that was made possible by support from SunPower Corporation. As in the TOP model, advertising dollars are being re-directed to help the local community build renewable energy projects, construct energy and water efficient parks and facilities, while at the same time creating jobs, and improving the environment. According to Paul Polizzotto, EcoMedias President and the companys Founder, there are hundreds of billions of dollars spent in advertising to the American public every year. Now consumers and viewers are being rewarded for their time and attention by making these resources have lasting impacts on their lives through healthier communities and an improved environment. At SingerLewak, our expertise in measuring, tracking, and reporting upon the environmental attributes and intangible commodities (RECs and Offsets) is how we are serving these clients. We are applying agreedupon procedures to the RECs, carbon offsets, and the environmental projects claims of additionality, sustainability, and various metrics which quantify those claims. These services are essential to the credibility of these enterprises business models to bring authenticity to the environmental claims and achievements of the projects, as well as provide third-party assurance and transparency to the public. In both case studies, there has to be a partnering to achieve the results. EcoMedia and TOP give a new dimension to the term public-private partnerships. Both need to partner with businesses and nonprofit organizations to bring these projects to bear. They are fostering a pooling of resources to allow these projects to become real! We at SingerLewak are proud to be associated with these two organizations that have such vision and creativity to better both our environment and society in these unique economic times.

Jeff Holt - Los Angeles JHolt@singerlewak.com Stephen P. Carter - Silicon Valley SCarter@singerlewak.com

Lewis Sharpstone - Los Angeles LSharpstone@singerlewak.com Rob Schlener - Orange County RSchlener@singerlewak.com