By Ellie Winninghoff

What do the California Institute of Technology and Weber State University have in common? Both universities are using a portion of their endowment to invest in capital-intensive energy efficiency efforts on campus.

These schools are among 50 other colleges and universities that have created green revolving funds (GRFs) as a mechanism for financing investments in energy efficiency and thereby reduce carbon emissions and cut energy costs. Savings achieved in utility bills are reinvested to support additional green projects.

According to "Greening the Bottom Line," a study by the Sustainable Endowment Institute (SEI,) a nonprofit based in Cambridge, Mass., annual returns to date for GRFs have ranged from 29% at Iowa State University to more than 47% at Western Michigan University. The median annual return is 32%.

"This is a real and very significant opportunity to transform energy efficiency upgrades from perceived expenses to high return investment opportunities," says Mark Orlowski, SEI's executive director.

The nonprofit launched a "billion dollar challenge" in October encouraging educational institutions and nonprofits to invest a total of $1 billion in similar revolving funds.

SEI's study found that GRFs are growing fast, with nearly three-quarters of the funds created since 2008. GRFs range in size from $5,000 at the College of Wooster in Ohio to more than $25 million at Stanford University.

Meter It
The Caltech Energy Conservation Investment Program, or CECIP, an $8 million GRF, has earned an annual return of 33% since its inception in 2009 at the Pasadena-based institution.

The impetus for implementing a sustainability program was California's mandate that carbon emissions be reduced to 1990 levels by 2020. But when John Onderdonk was hired as the university's sustainability manager in 2008, the biggest question on Caltech president Jean-Lou Chameau's mind was cost.

He told Onderdonk that the institution's core mission is education and research, and that it couldn't afford to spend money just to be green.