Solar for Non-taxpaying Entities

Nonprofits can finally get solar incentives.

Non-taxpaying entities were historically excluded from financial incentives for solar panel installation. While there have long been solar panel grants for businesses and homeowners, those incentives have been restricted to those who pay taxes, excluding entities like churches and other houses of worship, non-profits, or governments (like cities, states, or tribal governments) who do not pay taxes.

Cromwell Solar offers no-money-down financing options for churches, non-profits, and even governments that are cash positive from day one, while keeping some of the tax credit in their coffers.

Now, in 2024, there are finally methods available for non-taxpaying entities to get the same incentives that help solar panels pay for themselves much faster for homeowners and businesses. Today, using Cromwell Solar’s American made solar panels, a bonus 10% tax credit is added to the standard 30% solar tax credit for a total of a 40% tax credit which functions like an amazing solar rebate for non-profits. Some locations are even eligible for additional 10-20% tax credits! Including the tax credit the solar payback period is typically 5-10 years for a nonprofit (depending on the size of the solar installation and your electric rates). Some of our many non-profit solar customers have had fundraisers to help cover the cost of going solar and Cromwell Solar can help with ideas including a $500 donation for any referral to Cromwell Solar who goes solar.

HOW TO CLAIM SOLAR TAX CREDITS AS A NONPROFIT

The Inflation Reduction Act (IRA) introduced and expanded tax credits in 2022 for solar and battery systems. The IRA included game-changing new provisions regarding solar panels, enabling tax-exempt and governmental entities — such as churches, synagogues, states, local governments, Tribes, territories, and nonprofits — to take an active role in building the clean energy economy, lowering costs for working families, and advancing environmental justice. 

Thanks to the Inflation Reduction Act’s “elective pay” (often called “direct pay”) provisions, tax-exempt and governmental entities can now, for the first time, receive a payment equal to the full value of tax credits for building qualifying clean energy projects, amounting to 40% of total project costs. Eligible projects include all costs associated with projects including solar panel installation, battery backups, and EV chargers. 

Direct pay can help nonprofits afford solar panel and battery backup installation, which can help reduce energy use and save money, allowing them to allocate more resources to their mission. Solar panels also allow nonprofits to become local climate leaders by using their property to generate clean electricity that sets an example for clean solar energy generation for their communities. 

Claiming a solar rebate as a nonprofit is simple. The non-taxpaying entity will fill out a tax return for the year in which the solar was installed (Form 990-T). This return will need a simple form (IRS 3468, Part V) that details the solar installation project and associated costs. The return is filled out after January 1 in the year following their solar installation and the rebate comes just like a tax refund would for an individual.  

ADVANTAGES OF SOLAR PANELS FOR NONPROFITS

For many non-profits, it is much easier to raise funds for a solar project than for your electric bill, and the solar project will begin making money right away and continue to save money year after year. A fundraiser could ask for donations to "buy a solar panel" (or part of one) for the project, which is a great way to build community and further educate your community on clean energy. By investing in solar panels for your non-profit you will be able to put your energy savings to use in service of your mission rather than continuing to give it to the electric company year after year. 

Learn more about our commercial solar panel installations.

Cromwell Solar is an expert in (and absolutely loves) helping nonprofits and government facilities reap the rewards of solar so they can redirect funds from their utility company to their mission. Cromwell is happy to provide a free, no-obligation custom solar estimate for your house of worship, government (local, state, or Tribal) office, or nonprofit. Cromwell can even help speak with your board and tax professional about the costs and benefits of going solar. Contact us today to redirect your organization’s electric bill funds into your mission!

Always seek advice from a tax professional with regards to any tax issues.