Dr. Michael Swack, a University of New Hampshire (UNH) research professor both in the Carsey School of Public Policy and the Peter T. Paul College of Business and Economics, and the director of the Center for Impact Finance, may be the next recipient of a large grant. Swack is set to receive $1.2 million, according to the Union Leader.
The U.S. Department of Energy (DOE) is funding the grant, Swack said, and the project proposed relates to his past work, including his work as the director of the Carsey School’s Center for Impact Finance.
“The Center [for Impact Finance] works with a range of community organizations, banks, government agencies, foundations, and our main goal is to try and look at how to increase access to capital for individuals and communities that are low to moderate income,” he said.
Capital refers to how much money an individual or organization has that can be used to fund something, and which the Center has focused on “for mortgage financing in poor communities, or access to small business loans, minority businesses, community health centers; a whole range of community development type activities.”
Swack spoke of the Center’s work with the New Hampshire Community Loan Fund, a non-profit based in Concord and serves the entire state of New Hampshire.
“We’ve worked with hospitals and universities on how they can use their endowment money, which usually goes into pretty conventional [applications] to invest in their own communities,” one university is UNH, he said.
“The community loan fund makes loans to low-and-moderate income communities,” Swack said, adding that loans have been for purposes such as affordable housing, which helps the financial health of a low-income community as well as physical health—good housing benefits the health of people in that housing, which encourages local hospitals to invest in the fund, he explained.
“We help [large institutions] figure out how they can make an investment in the community loan fund” and “direct their investment towards the communities in which they’re located,” he said.
For the project with the DOE, Swack and a fellow colleague at the Center for Impact Finance, Senior Research Fellow Eric Hangen, came together to combine this focus on low and moderate income communities with Hangen’s past experience with solar projects—solar projects involving solar energy, installation, and use, into writing a proposal in response to a request from the DOE early this year.
“It was a competitive process,” Swack said, adding that the request was for any entity, not just universities, interested in completing a project involving solar energy. “[The DOE’s] goal was to make grants to organizations that would make solar more accessible.”
For Swack and Hangen, their project focuses on “training these community development financial institutions…[to] make loans for solar energy arrays and equipment to make loans available to people who are of modest income, who generally can’t afford solar because they can’t afford the upfront costs.”
Solar energy has long held a large “upfront cost,” which has made installation effectively prohibitive to many, despite the rather low, and sometimes even lucrative, cost of using solar than other conventional types of energy once installation is complete.
The cost of installing solar energy is even more prohibitive for those in lower income communities because “they can’t get access to credit because they may not have good credit scores, or banks may not be interested in lending in those particular communities,” Swack said. Credit is essential to get a loan.
To help more people install solar energy systems, Swack will use the funding from DOE “to develop a training program for these community financial institutions to understand how they can make loans…how to develop a loan program that would finance solar [and] how they would underwrite these loans,” Swack said, explaining that underwriting is “determining what the risks are, and how to mitigate those risks.”
The project will also help community financial institutions and those in low income communities learn how to market the solar lending products Swack’s project will assist them in developing.
“The grant will allow us to do training for many of these financial institutions to develop a new product, a solar lending product, and then to actually help them access funds to do that,” Swack said. This training will come as online training modules. “We’ll work with [the institutions] to understand what are the challenges that they face with low income solar lending, and help them develop products…to facilitate their entry into the market for lending for solar products.”
To provide the needed funds for these products, Swack’s team will “identify investors and institutions to grow the funds available”—raise capital— “to lend to these community development institutions to ultimately lend to borrowers for solar installations.”
Yet, Swack has not been officially awarded the grant. Though DOE wishes to fund Swack’s project, the team and DOE are in “the negotiation phase,” Swack said, as DOE has not agreed to all the funding Swack and Hangen asked for.
“What they have decided to commit to us is about 20 percent less than our original budget. We have to negotiate what it is that we can and can’t do with a budget that’s 20 percent less than what we had proposed,” Swack said. This has involved one past and many future conversations with the DOE by phone to work out the specifics of funding, such as the details of developing the training modules, the personnel on the project, and how exactly they intend to help the community institutions raise money.
Swack is optimistic, however, expecting that negotiation will be finished by Christmas. Once negotiations and related paperwork are complete, the project will begin ideally soon after the new year.
“It’ll start right away in terms of the development, [with] starting to develop the curriculum, and beginning to do outreach and marketing for what we’ll be offering,” Swack said. His team will focus on the online training modules at the start.
Once they start, his team will not just work on the project without any insight from DOE. Swack explained this is because this project is not exactly a grant in a grant’s standard definition, rather a “cooperative agreement.”
“…In a sense they’re our partner throughout this program…they remain a partner throughout the process in terms of discussions, and goals, and outcomes.” Typically, organizations and agencies that award grants have no active role in the projects they fund.
Whether there will be opportunities for undergraduate or graduate students to get involved with the project still has to be negotiated, Swack said. If student funding is approved, Swack said that opportunities may come in the form of an internship and focus on the online training modules. Swack hopes for student involvement: “We would like to [have students].”