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WMU sustainability work highlighted in national case study

by Cheryl Roland

Dec. 2, 2011 | WMU News

Photo of CFL bulb.
WMU's $5.85 million investment in energy efficiency resulted in savings of $17 million.
KALAMAZOO--The Sustainable Endowment Institute, a national arbiter of campus sustainability initiatives, has praised Western Michigan University's method for financing green projects and highlighted the University's efforts in a newly published case study.

WMU's quasi-revolving fund, established in 1980, is a technique that has allowed the University to invest in energy saving projects, capture the savings that resulted from the investment and reinvest that money in additional energy conservation efforts. WMU, for instance, invested $5.85 million in energy efficiency between 1996 and 2010, realizing cost avoidance and savings of nearly $17 million. The average time to recoup the original cost of a campus energy project during that period was 2.1 years, and the annual rate of return on investment was 47 percent.

The Cambridge, Mass.-based Sustainable Endowments Institute first took note of WMU's 30-year-old business practice earlier this year in a national report called "Greening the Bottom Line." In that report, WMU's quasi-revolving fund was identified as the oldest such campus fund in the nation, preceding similar funds on the campuses of such sustainability leaders as Harvard University, which established its fund in 2001. A case study about WMU's efforts has recently been published online by SEI.

"Western Michigan University has designed an innovative 'Quasi-Revolving Fund' model that demonstrates the institution's full commitment to incorporating sustainability into campus operations," according to SEI's assessment.

The innovation that sets the WMU effort apart from that of other universities, SEI noted, is that there is no fixed fund amount, from which money is borrowed to finance green projects. The guiding principle is that the University prefers to purchase less natural gas and electricity, so its entire utilities and deferred maintenance budgets become available to cut costs through efficiency improvements.

"The Quasi-Revolving Fund recaptures money from cost-savings, similar to a typical green revolving fund, but it also sources capital from the broader utilities, maintenance, and other budgets as necessary in a fluid manner," SEI reports. "Therefore, its ability to finance projects is often far more substantial than the fixed pool of capital that comprises most revolving funds."

SEI's detailed WMU case study includes information on funding sources, accounting practices, management tips and advice for other university communities who want to emulate the success achieved at WMU. The case study also includes several examples of WMU green initiatives the fund has supported. They include:

The Sustainable Endowments Institute, founded in 2005 as a special project of Rockefeller Philanthropy Advisors, is a nonprofit organization that supports sustainable development for campus operation and endowment policy. Since 2007, SEI has released the College Sustainability Report Card, which identifies the leading campus sustainability efforts in the U.S. and Canada among 332 campuses assessed.

Earlier this fall, WMU joined 32 other leading institutions and SEI to launch the Billion Dollar Green Challenge. The goal is to invest a cumulative total of $1 billion in self-managed green revolving funds that finance energy efficiency upgrades on campus.

The WMU case study can be found on the Billion Dollar Green Challenge website, along with case studies describing green revolving funds at Boston, Harvard and Stanford universities, the University of Notre Dame and the California Institute of Technology.