Benefits for Non-Profits

501(c)(3) organizations that do not qualify for the Federal ITC can still receive the benefits of solar with no upfront cost.

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Inflation Reduction Act (IRA) of 2022

What Impact Does the IRA Have on Nonprofit Organizations?

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Prior to the IRA, non-profit entities had limited options for taking advantage of solar tax credits. In general, a nonprofit would be faced with entering a third-party agreement, a solar lease or power purchase agreement (PPA), or similar financing options where the third-party entity could use the projects’ solar tax credits on behalf of the nonprofit.

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Key Non-Profit Takeaway #1: As a nonprofit, there was previously no means for utilizing the tax benefits associated with owning solar electric generation systems. The IRA changes this.

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With the IRA, the IRS will now directly pay non-profit entities the amount of tax credit earned by solar electricity projects, the base amount of which will be 30%. For example, a $100,000 solar project, earning a 30% tax credit: if purchased by a nonprofit, that nonprofit will now receive a $30,000 check from the US Treasury. It’s also important to note that this provision of the Inflation Reduction Act, applies only to nonprofits; for profit entities will not qualify for this direct payment.

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On top of the 30% tax credit, there are the potential for adders, including a 10% adder for Domestic Equipment and a 10% adder for low-income communities (LMI).

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Key Non-Profit Takeaway #2: On a $100,000 solar project for example, a nonprofit could potentially receive a payment of $40,000 to $50,000 from the US Treasury.