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Friday, August 1, 2008
Cache & Packets
Nonprofit provides new money for green plays
By Efrain Viscarolasaga
MHT's Cleantech Forum
The “green revolution” is being trumpeted day in and day out, with everyone from banks to oil companies patting themselves on the back for investing millions in becoming more environmentally friendly. For those of us who do not sit on corporate boards or manage venture capital funds, however, directly investing in clean energy is a difficult endeavor.
Yes, some clean energy companies offer publicly traded stock, including Merrimack, N.H.- based GT Solar International Inc., which hit the public market last week in one of the largest solar-related IPOs ever. But that company makes solar panel manufacturing equipment, most of which is sold in Asia. And while investors may make money, very little of their investment is going to local, or even domestic, projects.
Local entrepreneur Chuck Lewin has been working on the problem for several years, and, after a lot of bureaucratic red tape and the discovery of a little-known exemption in nonprofit business law, he has finally launched the organization he originally pitched to me three years ago — New Generation Energy.
New Generation Energy is a nonprofit that is designed to let consumers, environmentally conscious businesses and other organizations invest in local clean energy projects through fixed interest, fixed return loans. Lewin admits the returns won’t be the three or four (or ten) times return venture capitalists expect to generate through their investment in technology companies, but a modest 2 percent return, structured like a certificate of deposit or other low-risk vehicle (though not insured by the Federal Deposit Insurance Corp., it should be noted).
“The fund isn’t really aimed at maximizing returns as much as it is a way to maximize investment for local clean energy projects and — unlike straight donations — provide some return to investors,” he said.
The premise is simple enough: New Generation Energy aggregates investments from clients — from $1,000 to $1 million or more — and allocates them to local projects, be they solar, wind, biogas or what have you. The investments in the projects are structured as low-rate loans, providing a small amount of return that is passed on to investors.
The group’s investment criteria will aim to maximize the amount of clean energy created and maintain a local focus — initially in the Northeast, including all of New England and New York.
“While investing in Texas wind farms is great, it doesn’t have much impact locally,” said Lewin.
The group is currently raising what it calls a “founders round,” which includes investments from friends and family. If all goes according to plan, said Lewin, New Generation Energy will begin raising, and investing, a $50 million fund in early 2009. Assuming that goes well, a national launch could happen down the road.
Lewin, the founder of local technology companies L&M Software (1976) and Performance Motion Devices Inc. (1991), and later the Cambridge-based art and technology nonprofit Art Interactive (2001), has been working on the idea for New Generation Energy since 2005 and faced hurdles in trying to establish a nonprofit investment fund — somewhat a contradiction in terms.
He eventually stumbled on what is called an “eleemosynary exemption,” which allows nonprofit entities to deal in securities while not requiring Sarbanes-Oxley reporting under certain conditions. It has been used by a handful of organizations over the years, including the Calvert Foundation, a nonprofit division of the Calvert Group mutual funds, that uses investment, rather than donations, to fund community development programs in the U.S. and abroad through low-interest loans.
At the moment, New Generation has not chosen which projects it will invest in during its first round, but it hopes to be actively doling out funds by the end of the year.
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