Digging Out from $20,000 of Fraternity Debt

fraternity debt

I am a student of a state school of about 15,000 students that has a relatively small Greek culture. About 12% of my school is Greek. Of course chapters are pretty small with the largest on campus being about 50 brothers.  There are only 2 houses with letters on them.

My chapter has 25 brothers, being smaller on campus, but very tight when it comes to brotherhood. Unfortunately because of financial, academic and very minimal alumni support we have been closed by nationals.

We are in a considerable amount of debt (I’d prefer not to disclose the specific amount but it’s close to $20,000). This debt has been acquired from corruption within our chapter which is a bit more complicated than I can begin to explain over this post.

Our nationals is working with us to figure out our finances but the real problem is a bit backwards.  There are some dead beat actives that don’t want to do much but the real issue is motivating our alum to help us out. Nationals had stated that our real issue is the lack of alumni backing. How can we change this and motivate our previous generations?


I know I don’t have all the details – but the way I read this is that you have a problem (the debt your chapter has) and you are looking for someone to bail you out (your alumni).

I really hope this isn’t the case.  This mindset cripples people.  You have a problem – you need to figure out a solution to fix it.  Have some personal accountability.  Have some pride.  Part of being a man is owning up to your mistakes and handling your own problems.  You can’t go through life hoping that someone else will do it for you.

Your first step in fixing your problem needs to be learning how to handle your finances.  Your chapter obviously doesn’t have a good grasp on this now.  I advise that you talk to your National HQ or your Greek Life Director to get counseling on how to manage your finances.  These folks will give you sound advice.   I have also included below the chapter titled “Managing Money” from my book – The Chapter President.  I think this will provide a solid framework for you.

Second – you need to cut your deadweight.   Brothers who are deadbeats are cancers to the chapter.  I am sure these are the same guys that are hurting you academically.  Get rid of them before they become a bigger problem than they currently are…

Third – solve your problem.  Work out payment plans with those you owe money to.  Fundraise like crazy.  Grow your chapter to increase dues revenue.  $20,000 is a lot of money, but it is not an insurmountable sum.

This challenge doesn’t need to close your chapter.  You can overcome it if you are motivated.  I hope you are as it will provide a great life lesson to you and the rest of your brothers.

Managing Money

Greek chapters are funny entities because young people with little or no accounting experience are given control of budgets of up to six-figure sums. My treasurer was someone I trusted but had bad money-management practices. He did things such as buying concerts tickets with chapter money and then trying to resell them to make a profit for the chapter. I believe his intentions were good, but he lost money for the chapter. I am not even sure that what he did was legal.

As president, I usually was too preoccupied with what seemed to be more pressing matters to have a solid understanding of the chapter’s cash flow. This member was left unchecked and was reckless with money. Money management can make or break a chapter.

A president and a chapter cannot be successful unless the finances are strong. As president, you have a responsibility to the organization to make sure the finances are handled professionally and appropriately.

If you take the following six steps, I can assure you that you will have a good grasp on the chapter’s finances.

First, never deal in cash. Don’t accept cash or pay for goods or services in cash. Make all financial transactions by check to ensure there is a paper trail. This will prove to be very valuable if there is ever a financial disagreement.

Second, every check that is paid by the chapter should require the signatures of the president and the treasurer. This will ensure that both the treasurer and the president know how every cent is being spent. Also, both people have to have the backbone to say no when they don’t agree with the way money is being spent. Sometimes it is necessary for the president to block an expenditure, but he can’t unless he knows how the money is being spent. Requiring two signatures also provides a check and balance to prevent fraudulent use of the chapter’s money.

Third, the treasurer must present a weekly report of all expenses and collections. It is the president’s job to verify these numbers by checking the bank statement online. It would be easy for a treasurer to phony up a statement to appease the membership. By having the president verify the information, it provides another check and balance that protects the chapter.

Fourth, the treasurer must report which members are delinquent in paying dues. The president needs to be informed because he can often help persuade members to pay their dues. Also, this puts a measure of peer pressure on delinquent members that should encourage them to honor their financial obligations.

Fifth, the chapter needs to have signed promissory notes from members who are delinquent on dues. This will guarantee that the chapter has legal grounds to collect, should the member become a complete deadbeat.

Sixth, the president and treasurer have to have a financial plan for the summer. Too often, chapters forget their financial obligations during the summer when dues money is not coming in. Be sure that the chapter is financially stable to make it through the long summer months.

If you follow these six tips, you will have a strong grasp on chapter finances and can make certain that the financial shenanigans that are too prevalent in today’s society don’t happen in your chapter.

Note that the treasurer may disagree with the need to do some of these things. You must explain that these processes aren’t intended to keep the two of you honest; they are in place to ensure that everyone who serves in your positions in the future is honest. You might consider taking it a step further by adding these officer responsibilities to the bylaws of your chapter constitution. This will ensure that every president after you has the necessary backing to continue these very valuable practices.

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