Contents

• The Necessity of Long Range Planning
• Considerations When Developing a Chapter Budget
• Sample Annual Budget
• Sample Long Range Budget
• Feasibility Study Form
• House Corporation Rent Comparison Formula
• Chapter / Corporation Rental Agreement
• Corporation Policies

Future long range planning must become an important agenda item for House Corporations and the need to establish financial commitments to meet plan expectations has to become a major priority.

The House Corporation of the future must play the role and be the model for being the experienced "Father of the Future" if an organization is going to be successful in perpetuating itself. Briefly the House Corporation must consider some of these items when contemplating the future.

1. Develop written strategic long range plans for both the House Corporation and the Chapter.
2. Agree on priorities.
3. Determine financial needs.
4. Establish timetables.
5. Commit to implementing plans.
6. Develop continuity in insuring the plans will continue each year.
7. Acclimate new members to goals and objectives.

The following are some things to remember:

1. The plan does not have to be perfect. It should be a working document. Change will occur in it. It must be written.
2. Establish a working relationship between the Chapter and the Alumni. The plan should include the desires of both groups.
3. The process of involving more people in the development of plans makes them a part of the plan.
4. Share the plan. The Chapter must know they are an important part of the financial backbone to make the plan happen. The plan, if well thought out, will draw Alumni interest and awareness. This is essential to fund raising and Alumni participation. All must share the common vision.
5. Set reasonable and achievable timetables. Neither the Chapter nor the House Corporation should promise what they cannot deliver.
6. Develop commitment to seeing the plan accomplished. Establish benchmarks or phases where one can recognize accomplishments. Some plans may take years to accomplish. Taking pride in what has happened is important.
7. Develop dedication of the people involved. Delegate and spread work loads reasonably so participants do not "burn out". Strive to get new people involved and replace those who have accomplished their mission and want to step aside.

Rules For Developing A Budget

1. Review what expenses have been during the past year.
2. Project expenses based on solid historical data such as what have been the number of live-ins and what was total membership. Do not base the budget on what people think might happen.
3. Determine whether any levels of services should be increased or decreased.
4. Project estimates of income based on historical data. Be conservative.
5. Add up all expenses as forecasted and anticipated.
6. Determine how membership will break down ‹ live-ins vs. townsmen.
7. Calculate membership charges based on the budget needs.
8. Evaluate what competition and dormitories are doing. Aim to be among the top one third billing wise.
9. The House Corporation should end up with any projected surplus. The Chapter always seems to be able to spend so-called "extra" money. The House Corporation should always collect on a timely basis.
10. Decide what is reasonable to charge after evaluating long-term needs and consideration of profitability/surplus needs. Charge what the market will bear ‹ you can always find a way to spend surplus.

1. Campus House Corporation rent comparisons.
2. Campus Chapter billing comparisons.
3. Salary comparisons.
4. National fees.
5. An understanding of campus dorm bills and special charges.
6. Membership projections and revenue projections based on projected membership.
7. Past membership information.
8. Estimated revenue needs for the House Corporation.

• Charging less does not bring in more members nor is it an important Fraternity selling feature.
• Members will pay if fees are reasonable and if they feel they are obtaining a good value for the money they are paying. (All you need to do is look at the stereos, the cars, the clothes they buy.)
• The more members pay, the less the fixed overhead becomes per person, leaving a greater margin for surplus for either the Chapter or the House Corporation.
• Long term organizational strategy includes overcharging slightly in good times so when, by no fault of the Chapter, times are not so good, surplus will carry the organization without strain.

• Base Rent
• Variable rent on a sliding scale. (Live ins beyond budget or comfortable intended occupancy)
• Annex or additional dwelling rent
• Kitchen/Commissary rent
• Initiation Bond/Note
• Building Fund income
• Fund raising
• Special purpose fund raising
• Bequests

                      MID-CENTRAL CHAPTER OF
TRIANGLE FRATERNITY
House Corporation
Budget For 1992 - 1993
INCOME
Chapter rent (37 live-ins)                          $46,000
Commissary rent                                       4,000
House Corporation Note (20 initiations@$125)        2,500
Building Fund (45 members)                            4,500
Fluctuating rent (38 - 40 live-ins)                   2,400
Alumni donations                                      2,500
Interest income                                       1,200
TOTAL INCOME                                     $63,100
OPERATING EXPENSES
Mortgage interest                                    $6,900
Property taxes                                        7,000
Insurance                                             5,500
Scholarships                                          4,600
Accounting services                                     500
Capital improvements & Maintenance                   10,000
Miscellaneous                                         2,500
TOTAL OPERATING EXPENSES                         $37,000
RESERVE EXPENSES
Mortgage pay-down (principal)                        $5,000
Building fund to pay back interest (past years)       3,500
Building fund                                         4,500
House Corporation note                                3,750
TOTAL RESERVE EXPENSES                           $16,750
TOTAL EXPENSES                                   $53,750
NET SURPLUS                                       $9,350

MID-CENTRAL CHAPTER OF
TRIANGLE FRATERNITY
House Corporation
Long Range Budget For 1992 - 1997
                          1992-93  1993-94  1994-95  1995-96  1996-97
INCOME
Chapter rent               28,000   33,000   46,000   50,000   55,000
Commissary rent                 0    2,500    4,000    5,000    6,000
House Corporation Note      1,000    1,500    2,500    3,000    3,000
(Initiations)        (10@50)  (15@100) (20@125) (20@150) (20@150)
Building Fund                   0    2,775    4,500    5,000    5,500
(Membership)             (30)     (37)     (45)     (50)     (55)
Alumni donations                0    1,500    2,500    3,500    5,000
TOTAL INCOME               29,000   41,275   59,500   66,500   74,500
EXPENSES
Mortgage                    9,000   11,900   11,900   11,900   17,000
Property taxes              5,000    6,500    7,000    7,200    7,500
Insurance                   4,000    5,000    5,500    5,700    6,000
Scholarships                    0    2,000    4,600    5,200    6,000
Accounting services             0      500      500      550      600
Improvements & Maintenance  5,000    7,500   10,000   15,000   18,000
Miscellaneous               1,000    1,500    2,500    3,300    4,000
TOTAL EXPENSES             24,000   34,900   42,000   48,850   59,100
NET SURPLUS                 5,000    6,375   17,500   17,650   15,400

                        FEASIBILITY STUDY FORM
I.   PRESENT HOUSE CORPORATION OPERATING BUDGET PROJECTIONS
A.  Total Assets At End Of Last Fiscal Year             $____________
(Includes reserves for __________________________)
B.  Anticipated Income For Current Fiscal Year          $____________
Rent from chapter (_______ x ___ months)        $____________
House Corporation fees (_______ x ___ men)      $____________
Parlor fees (_______ x ___ men)                 $____________
Interest                                        $____________
C.  Anticipated Expenses                                $____________
Principal on loan #1                            $____________
Interest on loan #1                             $____________
Insurance                                       $____________
Taxes                                           $____________
Audit                                           $____________
Upkeep on grounds                               $____________
Repairs to house                                $____________
Miscellaneous                                   $____________
Furniture and Equipment                         $____________
D.  Anticipated Assets At Close Of Present Fiscal Year   $____________
II.  ESTIMATED COST OF PROJECT                                $____________
III. ANTICIPATED SOURCE OF FUNDS FOR PROJECT
Use of House Corporation assets                 $____________
Chapter gift                                    $____________
Alumni contribution                             $____________
Loan                                            $____________
IV.  ANTICIPATED EXPENSES AFTER PROJECT                       $____________
(Present operating budget + loan #2 repayments
+ cost of living increase - any known decreases)
V.  ANTICIPATED INCOME AFTER PROJECT                          $____________
Rent from Chapter (_______ x ___ months)         $____________
House Corporation fees (_______ x ___ men)       $____________
Parlor fees (_______ x ___ men)                  $____________
Interest                                         $____________

Several assumptions must be noted: 1) It is assumed the House Corporation is paying for all capital improvements (i.e.: new roof, carpeting, furniture, appliances, etc.); 2) The Chapter is paying typical common maintenance expenses (i.e.: common repairs, cleaning, dry-cleaning, broken windows, furniture repairs, etc.).

                            FORMULA 1
FOR COMPUTING HOUSE CORPORATION RENT
Annual House Corporation Rent     =    Market Value of Chapter House
x  1%/month for 12 months
+  Operating Expense
This formula is a rule of thumb often used in connection with apartments 
and rooming houses.
Example:
37 beds @ $10,000/bed  =  $370,000  x  1%  x  12  =    $44,400
Operating Expense:
Property taxes       $ 7,400
Insurance             10,000
Replacements           5,600
Miscellaneous          1,600
24,600
Annual House Corporation Rent  =                            $69,000

FORMULA 2
FOR COMPUTING HOUSE CORPORATION RENT
Market Value of Chapter House
Annual House Corporation Rent     =    -----------------------------
5.25

Example:
37 beds @ $10,000/bed  =  $370,000  /  5.25  =    $70,476

FORMULA 3
FOR COMPUTING HOUSE CORPORATION RENT
Gross Income of Chapter
Annual House Corporation Rent =    -----------------------
3

Example:
37 live-ins @ $3,400/year          $125,800
48 live-outs @ 1,200/year            57,600
Other income                         18,340
$201,740      /  3  =    $67,247

Note: A market value of $10,000 per bed has been employed in arriving at the market value of the chapter house in the first two examples. Houses suitable for fraternities and sororities have been selling for $5,000 to $15,000 per bed (1987 data), depending upon factors such as age, condition, form of construction, location, etc.

CHAPTER / CORPORATION RENTAL AGREEMENT

This Agreement shall be effective from _________, 199___ to _________, 199___.

1. The Corporation shall rent the property at __________________________________, to the Active Organization, for the amount of $_______________ per year. The rent shall be paid in four installments; $___________, September 1; $____________, November 1; $____________, February 1; $____________, April 1.

    

2. Each person pledged into the Chapter shall pay $_______ into the Building Fund of the Corporation. One-half of this amount shall be payable at the time of pledging, the remaining one-half shall be paid prior to initiation.

    

3. The Corporation shall carry and pay for reasonable insurance on the property and the contents which are the property of the Corporation. Clothing and personal possessions of chapter house residents are not included in the insurance provided by the Corporation.

    

4. The Corporation shall be responsible for all painting, decorating and furnishings in the public areas of the chapter house. At all times the building, furnishings and grounds shall be well kept. Furnishings beyond repair shall be replaced. If replacement is necessary because of carelessness of members, guests or employees, the Corporation will repair the damage and charge the active chapter. The Active Organization is responsible for care of the grounds during the entire year. The Corporation shall increase the furnishings, the silverware, china and glassware if the capacity of the house is increased.

    

5. The house will be properly closed in the spring under the supervision of the House Executive Board, and House Corporation. The Corporation shall be responsible for the house from the close of school until the reopening of the house.

  _________________________________    _______________________________            
Active Organization President        Corporation Board President

Chapter House Rent

1. The rent to be paid by the active organization to the alumni corporation shall be established by the alumni board of directors by March 1 each year. In the absence of action by the board the rent shall remain the same as in the preceding year.
2. The rent shall be paid in seven (7) equal installments; payments to be due on September 1, October 1, November 1, December 1, January 1, February 1 and March 1.

1. The housing contract to be used by the chapter residents shall be approved by the alumni board of directors by March 1.
2. By April 15 each individual desiring to live in the chapter house during the next school year shall submit a completed housing contract to the alumni board of directors.
3. The active chapter shall credit each individual who submits his completed housing contract by April 15 with a $50 rebate on his next semester¹s house bill.
4. In the event an individual moves into the chapter house during the school year, he shall, within ten (10) days of taking up residency, submit a completed housing contract to the alumni board of directors.
5. At the beginning of each semester the active organization secretary shall submit to the alumni board of directors a list of all people living in the chapter house.

1. Two weeks prior to the end of the fall and spring terms, the active organization treasurer will submit to the alumni board of directors the names of each member whose account with the chapter has a balance due of $25 or greater. This shall be in the form of a promissory note for the total amount due properly signed by each member.
2. Where applicable according to University regulations, along with the above notes, the treasurer will prepare and submit to the alumni board of directors the appropriate forms required by the University for encumbering the records and grades of each member.
3. The alumni board shall see that the encumbrance forms are filed with the University. Such encumbrances shall not be released until the individual member¹s bill is paid in full.

1. In the area of chapter house maintenance and improvements, the Alumni organization -- as the home owner or landlord -- should be concerned with capital items which provide for significant improvements in living conditions and with those maintenance items which arise as a result of the normal, long-term deterioration of physical and mechanical systems. The active organization, on the other hand, should focus it¹s attention on the day to day needs of Triangle members currently residing in the chapter house.
2. The active organization will be responsible for the entire cost of repairs and replacements arising from the misuse or abuse of chapter property. Examples of such would be replacement of broken glass, repair of torn furniture coverings, repair of broken chairs, damage to walls and doors as a result of being struck by individuals or objects, and so on.
3. The active organization will be responsible for the costs of normal maintenance of chapter mechanical systems. This would include (but is not limited to):
   1. Heating system start-up and shutdown.
   2. Replacement of furnace filters.
   3. Inspection and recharging of fire extinguishers.
   4. Inspections and maintenance of fire alarm systems.
   5. Plumbing repairs - unclogging drains, leaky fixtures, etc.
   6. Periodic cleaning of kitchen exhaust systems and other kitchen equipment.
4. Prior to each alumni board meeting the active organization operations director shall provide the alumni board of directors with a summary of the repairs and maintenance performed since the last meeting. This list should include:
   1. A general summary of each action
   2. The name of the organization or individual performing the service
   3. The date(s) the service was performed.
   4. The cost of the service.
   The alumni board shall reimburse the active chapter for the cost of those repairs determined to be the responsibility of the alumni organization.
5. The active organization will be responsible for normal maintenance of the chapter house and property, such as cleaning, yard maintenance, etc.
6. The alumni corporation will be responsible for major repairs and replacement of equipment and furnishings as such items reach the end of their normal expected lifecycle.
7. Except in situations which threaten the health or safety of residents, no repairs or replacements which are the responsibility of the alumni corporation shall be undertaken without the prior approval of the alumni board of directors or its representative.

1. All projects financed by the alumni corporation must be approved by the alumni board of directors prior to the start of the project and prior to the expenditure of any funds related to the project.
2. Once approved, the total cost of the project shall not exceed the estimated cost by more than 10%.

1. Air Conditioners -- Installation of personal air conditioners in study rooms is permitted under the following conditions:
   1. The individual unit must be approved by the operations director.
   2. The unit must fit into the existing window opening.
   3. The active chapter may assess additional rent charges to cover the increased use of electricity.
   4. Any damage to the window, screen, or other parts of the building resulting from the installation or use of the air conditioner will be charged to the individual member.
   5. No air conditioner may be installed prior to April 1 and any unit must be removed and all damage repaired prior to November 1 each year.
2. Alcohol -- Members are expected to comply with all state, local, and University laws and regulations with regard to the storage and consumption of alcohol on chapter property, at events sponsored by the chapter, and in any situation at which five (5) or more members are present.
3. Drugs -- Possession and use of illegal drugs is prohibited on chapter property.
4. House Furnishings -- Furnishings of the house in public areas are property of the corporation and are not to be moved except when absolutely necessary. If moved, the furniture is to be returned to its original placement as soon as possible. At no time is any furniture or accessory to be removed from the property.
5. Heating Appliances -- There shall be no hot plates or space heaters in study rooms.
6. Personal Property -- The alumni corporation shall not be responsible for loss or damage to personal property of members.
7. Pets -- The rules related to keeping pets in the chapter house are contained in the chapter bylaws and house rules.
8. Study Room Modifications -- Members may make modifications to their study rooms (such as painting, installation of lofts, etc.) under the following conditions:
   1. Paints and colors used must be approved by the operations director.
   2. There will be no modifications to electrical fixtures.
   3. Electrical extension cords, if used, will be approved by the operations director and appropriated sized.
   4. All lofts and other structures must be approved by the operations director.
   5. Lofts and other structures will be constructed so that the room may easily be returned to it's original condition.

As officers of the ________ Chapter of Triangle Fraternity active organization, we have read and understand the corporation policies of the Chapter. On behalf of the entire membership of the Fraternity, we accept these policies and will strive to ensure that they are observed by all members.

  _________________________     _________________________        
President                   Vice-President
_________________________     _________________________        
Secretary                Financial Director
_________________________     _________________________        
Operations Director            Operations Director
_________________________     _________________________        
Social Director                Social Director
_________________________        
Membership Director    

from a presentation by Jim Marshall at Triangle Fraternity's National Convention, August 1997