SIREN is familiar with two churches who have used tax equity financing to fund their solar systems. In this form of financing, a nonprofit (and therefore tax-exempt) organization partners with a qualified investor who has passive income to invest. Together they form a limited liability company or other contractual agreement; the company purchases the system and claims the federal renewable energy income tax credit plus any other associated benefits ( e.g., business depreciation). Ownership of the system reverts to the nonprofit under terms decided by the partners.
The renewable energy tax credit is one of a handful of tax equity financing mechanisms. For more information on the rules governing each type and for discussion of how related policy might develop, see Tax Equity Financing: An Introduction and Policy Considerations, a comprehensive report on the subject prepared by the Congressional Research Service
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