Question: I was working with our system sustainability manager and was made aware that my health system purchased a solar farm to offset the energy that we are using in our facilities and the energy from the solar panels goes directly back into the grid system
I wanted to ask what portion of this operation could be counted as a Community Benefit. Would it just be the materials, land, and maintenance of running the solar farm? Just the maintenance of it? Any guidance would be much appreciated.
Recommendation: We commend you for your environmental stewardship and commitment to accurately reporting your hospitals community benefit activities. Within the IRS Form 990 Schedule H instructions under Part II. Community Building Activities, Line 4 states,
"…the organization can not include on this line or in this part expenditures made to reduce the environmental hazards caused by, or the environmental impact of, its own activities, or those of its disregarded entities, joint ventures, or group exemption members, unless the expenditures are for an environmental improvement activity that:
- Is provided for the primary purpose of improving community health,
- Addresses an environmental issue known to affect community health, and
- Is subsidized by the organization at a net loss."
Since the primary purpose of the solar farm is to offset the energy used by your facility, we recommend that you do not report the cost of the farm or its maintenance as community building or community benefit within your Schedule H.
If, however, the solar farm was purchased as part of a larger community-wide collective impact to move the community toward healthier air quality, etc., this may be reportable as a community-building activity if the environmental improvements can be linked back to an identified need and collaboration outside of the local hospital. Note: We do not recommend the purchase of LED lightbulbs or using cold water in the laundry as community building or community benefit. Waste reduction, eliminating the use of toxic materials, and water programs can all be viewed as responsible corporate behavior.
We recommend that you capture the time your employees spend in community-based coalitions while "on the clock" to achieve an external community goal to improve energy use and environmental health.
We recommend your health system include these efforts as part of its annual report to the community (Community Health Impact Report); this annual report is an opportunity to report community benefits according to the IRS instruction and share the costs of the other ways your broader health system is contributing to improving health in your community. Friendly caution: Do not combine your 990 Schedule H costs with other benefits to the community, as this could create confusion if readers are comparing your community impact report to your 990 Schedule H tax filing.
(August 2024)