A fraternity that doesn’t own its house is in a bad position. They are either at the mercy of a landlord or the university. Any brother who has been in this position knows how awful a situation this is for the fraternity.

The obvious solution to this problem is for the fraternity to buy a house. Unfortunately, houses aren’t cheap, especially the type of house your fraternity deserves.

Bit it can be done though by following this plan:

Form a house association. Your fraternity is going to raise a lot of money in this endeavor, and you don’t want it to be diverted to any other purpose.

The brother who heads the association will send out a pledge request to all brothers (alumni and undergraduate alike) at the beginning of each semester. The request should be for a small donation – something like $25.

The donation request should be small because you want maximum participation. A brother is much more likely to contribute a small amount than a large amount. And since these small donations are easier to get, and they will multiply very quickly.

Whenever you ask someone for money, and especially when you ask alumni for money, you should make it as easy as possible. Be sure to mail them a self addressed stamped return envelope for their donation. All you want them to do is sign the check and mail it in.

With the request, be sure to send a status update. You should have a fundraising goal, and where the house association stands on achieving that goal. Also, you should keep track of everyone’s total contribution, and create giving levels. When a brother reaches a giving level, be sure it is posted for everyone to see. You want to make sure the brothers that contribute are recognized. It also gives the others an incentive to give more.

So will it work? Let’s do the quick math. Let’s say you have an alumni base and active chapter where you can get 100 brothers to contribute $25 a semester. That means you will generate $5,000 a year to the housing fund. That is $50,000 over ten years, and that isn’t factoring in interest. Needless to say, that will make a very nice down payment on a fraternity house.

2 thoughts on “Fraternity House Fund

  1. I really like a lot of your opinions on other things, but this is just wrong.

    The house your chapter would like to have is probably not economically viable, but the house you can support is. That’ll have to be balanced so you can keep it close to full in bad times as well as good, but while providing enough common space to support how you legitimately need to operate. The price tag on that is going to vary significantly depending on where you are and what you want to do, but probably between 500k & 1.5m.

    Let’s call that 1mil just for the sake of easy math. You’re going to need 350k in down payment. This isn’t a single family home you’re going to live in. To the bank this is an investment property, and you’re going to be paying 1-1.5% above the going interest rates because of that. If you’re building, you’re going to need a construction loan that rolls into your long-term mortgage, that’s extra cost, plus there’ll be impact fees and other development costs that comes with building. There’ll be significant property taxes, check with your local city/county. And, you’re likely to need life safety features like a sprinkler system that’ll steal budget from what you can accomplish.

    Long before you fundraise, you need a lot of other things done. Your chapter needs to be operating at a certain size for several years to show stability. You need to have not been in trouble in a while. Your grades need to be safely within University/national requirements with a good graduation rate.

    Then you need to start working on alumni and parent relations. You need excellent programs before you even consider a housing campaign. You should seriously consider getting outside professional help at this point. It’s worth the investment.

    When you THINK everything is in place, then for sure you need to bring in outside help to do a chapter audit and feasibility study. They will most likely have a bunch of recommendations you need to spend another year fixing.

    Around now is when your house steering committee needs to be developing a couple different preliminary plan options all priced out. You’ll need a very strong business plan with a lot of supporting documentation. You’ll then present all that with the trends & risks balanced against each possible course of action, and you’ll need to make a very non-emotional decision on what you’re going to do. Whatever that decision is, you have to be able to sell the bank on it.

    Then you can run a fundraising campaign. Absolutely do not ask people for $25, cause what they’re going to send you is exactly $25.

    Your feasibility study is going to tell you that your chapter needs to have been in continuous operation for 40 years, with 1000+ alumni, with about 200 over 55yo, and some other factors. You can slide left or right of that, but it’s hard to make up for.

    It can be done on your own, but it’s extremely complicated, time consuming, and inefficient. Some of these donors you’re only going to get one chance at. I would strongly advise you get outside help to run your campaign.

    You’re going to end up with about 25% giving you any money at all. Of that 25%, 80-90% of all money raised will come from the top 10-20% of participants. Your top 3-5 gifts will probably be a third to half your goal. Your top 12-15 gifts will get you most of the way there.

    You will run a silent phase first. That is you won’t tell anyone you’re raising money. You’ll have one-on-one meetings where you sell your top 25 or so major donor prospects. If you get to the end of that list and still don’t have a significant portion of the money raised, you need to rethink your plan/pitch and hit your next 25 top prospects. Name rooms or something significant after these guys.

    After that you’ll run a public campaign. This’ll be the gold/silver/etc level donors giving everything from a few hundred to 25k or so. You’ll get a few bigger donations in this phase, but most of it will be moderate. Make sure you’re giving people recognition. A big plaque in the house or something is pretty normal.

    Then when you’ve done all that and still aren’t quite over the line, then tell everyone how close you are and give them an option to select 25/50/100/250/500/1k. You might get down to the point of selling bricks on the porch or something for a hundred bucks a pop. Just get over that line and as much more as you can easily get, cause you’re going to need it later.

    That whole fundraising campaign will take 8-12mos if done right. Then you go seal the deal with the bank and break ground.

    Be certain about your plans before you start, changes are expensive. No matter what you do or how close the construction is managed though, you can count on some budget overruns. When you get done with the whole thing, you’ll realize you have a big empty house and need another 30k or something for furniture. Try to have that in the budget, cause going back to ask for more money after you tapped everyone out already really sucks.

    After you’ve moved in… the business plan was all theory up to here. You have to actually make it work now. There’s going to be some growing pains as you get that adjusted over the next year or two. That’ll include exactly what you’re setting rent at. Just make sure you’re holding back enough for taxes & repairs.

    A couple years after move-in, most of your alumni will be over the stress of all that hard fundraising. Now it’s time to get an annual campaign in place. This is where you’re asking for people to give a few hundred to a grand or so per year, and break it down to monthly payments if they want. And you’re probably charging an annual fee for alumni assoc or parents club membership. Some of that money should go through the alumni assoc & parents club back to the chapter in the form of scholarships and just cash for them to do whatever with, but a big chunk of it needs to sit in a reserve fund. Cause in another 15-20 years your house is still not going to be paid for, but you’re going to have to do a major remodel that’ll cost 40-80% of what the original construction cost you. It’ll be harder to raise that money the second time around from a lot of the same big donors. You need as much built up in reserve as you can get. You should spend some time with a lawyer to keep that money protected in case of a lawsuit (make sure your housing corp is set up right in the first place) and keep it growing in secure investments with little tax exposure.

    Point being, extremely complicated long term strategic project. Get outside help and take it one step at a time. If you’re a young chapter that doesn’t have the feasibility to raise that kind of money, that’s fine. There are for-profit investment models you can work with your alumni to achieve the same thing. That becomes kind of a compromise. You’re still a renter at the mercy of your landlord, but at least your landlord is some of your alumni. You still can’t screw them and they will be up in your business, but down the road when you do gain the capability to raise big money, then you can buy them out at a reasonable price.

    • I appreciate the detailed comment. The point of my article is that having your chapter’s housing corp own the chapter house is in the best interest of the fraternity. I don’t see how this can be argued. There is no better scenario than having a well run housing corporation supporting the chapter in this manner.

      There are many different ways to fundraise. However, two critical components are starting sooner than later, and starting a grassroots campaign to get as many brothers involved as possible. I agree with your point that the high-level donors will make the most significant contributions. But small contributions matter too, especially when they are made year after year.

Leave a Reply

Your email address will not be published. Required fields are marked *