Web Exclusive: LEED loses money for USGBC

The U.S. Green Building Council made its name on LEED, but the organization doesn’t make money on the program.
In 2006, the nonprofit USGBC spent $5.3 million running its Leadership in Energy and Environmental Design green-building rating system, but federal tax statements show LEED certifications brought in only $1.35 million. Overall, the organization brought in $26.8 million and spent $23.1 million. As of Sept. 4, the USGBC had not filed its 2007 tax report.
USGBC officials estimated a 2008 budget of $50 million, more than double the 2006 budget.
The USGBC’s shortfall on LEED is more than offset with revenue from programs that developed around the certification system.
The council’s big moneymaker for the year is its annual Greenbuild International Conference and Expo, which will be held from Nov. 21 to Nov. 23 in Boston. The conference and registrations generated $9.7 million in revenue in 2006 and are still growing, said Jerry Yudelson, chairman of the Greenbuild conference’s organizing committee.
Greenbuild organizers said they expect in 2008 to draw 30,000 people, between 1,300 and 1,400 exhibit booths, and a long waiting list of companies trying to get in the door.
“We’re almost outdrawing the rock stars now,” Yudelson said. “We could easily double the number of exhibit spaces, but we don’t do it because we don’t think it’s good for business.”
Christine Ervin, the USGBC’s first chief executive, said she remembers starting Greenbuild in 2002 when trade shows were struggling in the aftermath of the Sept. 11 attacks. Organizers, she said, hoped for 2,000 people. Instead, they cut off attendance at 2,500 because there wasn’t enough space.
“Greenbuild was an important tool for us to reach the mainstream,” Ervin said. “It also gave us a sustainable funding base for future expansion.”
While Greenbuild is a major revenue source, the USGBC makes no more than 30 percent of its annual budget from any one source, said Michelle Moore, the USGBC’s senior vice president for policy and public affairs. Five percent of the nonprofit’s revenue comes from foundations and sponsorships.
Moore said donations and grants are a small part of the USGBC’s budget because the organization wants to avoid a conflict of interest.
“The USGBC would never have giant sponsors that could be perceived as exerting influence over the process,” she said. “We are careful to maintain our independence.”
The USGBC made $7.1 million in 2006 from membership dues, $5.7 million from people earning LEED accredited professional credentials, and $1.5 million in public donations and government contributions. Additional revenue included $3 million from publications, interest on investments and other smaller sources.
The USGBC’s top expense in 2006 was the LEED program. Other expenses include $3.9 million for the Greenbuild conference, $3.8 million in employee salaries and $3.7 million on green-building educational programs.
USGBC’s 2006 revenue grew 73 percent from 2005’s $16.5 million, according to tax forms. The nonprofit reported $16.9 million in revenue in 2004.
The organization’s recent growth is fueled by growing interest in green building, Yudelson said. The USGBC’s LEED rating system gives builders, developers and owners a map to a sustainable building, he said.
“There’s tremendous business interest in green building and sustainable design,” said Yudelson, principal of green-building consultant Yudelson Associates in Tucson, Ariz. “It’s a tribute to the LEED system. Before, you didn’t have a way to keep score, recognize achievement, and there was no defined marketplace.”
Now, green building is big business, and the USGBC is poised to ride LEED to even greater growth. Yudelson estimated sustainable practices will account for 20 percent of the commercial building market, an amount equal to $72 billion.
Dustin Block is a writer for The Daily Reporter, which is owned by Dolan Media Co.