Finances

Introduction to Fraternity Finances

One of the biggest misconceptions is that all financial matters are the responsibility of the Treasurer. One of the most common reasons that a group fails is poor financial management – too many members not paying their bills, expenditures in excess of income, deterioration of physical facilities, cancellation of events, etc. Every member has the right to know how his money is being spent, and should insist that it is spent wisely.

The Treasurer is the Chief Financial Officer of the Chapter, but he is aided by the financial committee, recruitment committee, fraternal activities committee, social committee, community service/philanthropy committee, and all other officers and chairs. Without the help of these individuals it is impossible to ask the Treasurer to budget, collect, and properly distribute funds.

Use the resource below to build a budget, establish financial stability, and properly report spending/income. This all sounds very daunting, but once you create the fundamentals the Chapter will begin to run like a well-oiled machine. Everything can then be passed down to the next Treasurer in charge. The biggest thing to remember is that Brotherhood begins when the bills are paid.

Fee Structure 2018 – 2019

To pay any National dues, please click here.

Postulant Fee – $100 per man

A $100 one-time per person non-refundable fee is assessed to the Chapter within 72 hours of individuals accepting  their bid. This $100 provides the Postulant with a Postulant Pin, Exoteric Manual, and Liability Insurance through MAPP (Member Accident Protection Program).

Initiation Fee – $230 per man

The Initiation Fee is a one-time fee that is due PRIOR to your Initiation into Alpha Chi Rho National Fraternity. Upon payment, you will receive your engraved certificate and membership card, Brothers badge, and a lifetime subscription to the Fraternity’s publication, “The Garnet and White”. As a member you are also covered by MAPP (Member Accident Protection Plan) during your undergraduate days at school. By fulfilling your financial obligations you help provide regional events and Crow Coach mentoring.

Chapter Assessment – $175 per man

The Chapter Assessment is an annual fee each Chapter pays to support the National Fraternity ensuring dependable access to Chapter services and resources. If paid in full prior to September 15, a $250 discount is applied.

Liability Insurance – $195 per man

The annual Liability Insurance is assessed on the roster submitted by the Chapter leadership. An insurance discount of $250 is available if you pay the premium in full on or before September 15. If you cannot pay this amount in full, you may pay half of the premium to “Holmes Murphy” and request a financing agreement (800.736.4327) to borrow the second half of the premium. If the finance agreement is executed properly, the balance is due in full by February 15. The $250 discount is not available if you finance.

Per-Capita Fee – $100 per man each semester

Every member who was invoiced after August 1, 2016 will be assessed a $100 Per Capita Fee per semester.  This Per Capita Fee supports the Crow Coach program which provides growth and financial coaching to individual Chapters, recruitment assets through the “Recruitment-In-A-Box”, and new resources for Chapters and individual members such as No2Hazing.

Budget FAQs

One of the most important tools in the management of expenses is the Chapter’s budget. A budget is an intelligent estimate of income and an expense plan for the spending of that estimated income.

Why is a budget important?

A budget must be reported. Without putting it on paper, it is just a dream. Failing to plan is planning to fail. You have to plan, project, and adjust your revenue and expenses in order to be successful.

2018-2019 Sample Budget

We have updated the sample budget to fit the fee structure for 2018-2019. The fixed expenses (AXP HQ Fees) are set amounts from the fee structure. The variable expenses (local Chapter expenses) are not set amounts and can be adjusted to fit your Chapter operations. With the variable expenses, you may add rows and remove this lower section of the sample budget. Keep in mind this is a basic budget that does not include items such as housing. The purpose of this tool is to assist your Chapter in the budgeting process.

Below are some notes to keep in mind for each budget when using this tool.

It is important to note that in its original form, the sample budget shows the Chapter paying the Chapter Assessment and Liability Insurance without the $250 discount applied.

Fall Semester Budget – To determine your fixed expenses for the fall semester, you will simply input the number of men returning in the fall as well as divide out how you would like to pay the Liability Insurance, Chapter Assessment, and Per-Capita Fees. From there, all your fixed expenses for the fall should calculate accordingly and you will only need to adjust the variable expenses as needed.

Spring Semester Budget – To determine your fixed expenses for the spring semester, you will need to input the number of men returning in the spring. When entering the Per-Capita Fee numbers, they should mirror what you entered in the fall semester plus the fall Postulants. If the Chapter is not paying all of the Chapter Assessment, Liability Insurance, and Per-Capita Fees in the fall, please make sure to update the spring budget formulas/amounts for Chapter Assessment, Liability Insurance, and Per-Capita Fees.

Who develops and approves the budget?

The budget is compiled by the Treasurer with the input of officers and the Chapter or Colony finance committee (if applicable).

Once ready, the Chapter’s Advisory Board  reviews, helps adjust, and approves the budget.

Then the budget goes to the Chapter to vote with acceptance of budget at 51%. The budget should not be changed without the knowledge of the Chapter Advisory Board. It is important to note that nobody can individually chane expense allocations. Doing so is called misappropriation.

When is a budget written, reviewed, and evaluated?

Here is a sample timeline for effective budget management:

March 1 – Treasurer puts together initial budget

March 15 – Budget reviewed by officers and committees

April 15 – Budget reviewed and approved by Chapter Advisory Board

May 1 – Budget approved by Chapter/Colony

First meeting in the fall – Re-Review budget with Chapter/Colony

January 15 – Chapter Advisory Board audit

The Treasurer should track, review, and balance monthly.

How can we improve our budget performance?

Contact your Crow Coach or National Office for specific questions on your budget and how to improve Chapter relations.

 

Finance Stability

What is the most important factor in the success of a Chapter? A strong Brotherhood? Good leadership and management? A large number of men? A nice house? All of these factors are important and may even be critical for a Chapter. However, one of the most overlooked factors is good financial management or financial stability.

Two mistaken impressions often exist among members, and both statements are erroneous and dangerous to the health of a Chapter:

  1. That financial matters are entirely the concern of the treasurer, and
  2. That financial management consists of keeping a good set of records.

Financial matters should be a concern of every man and especially each officer. One of the chief reasons for the failure of many groups is poor financial management – large number of members not paying their bills, expenditures in excess of income, deterioration of physical facilities, cancellation of events, etc. Every member has a state and has a right to know how his money is being spent. He should insist that is is spent wisely.

Although an accurate record of all income and expenditures following some acceptable format is important, good financial management is much more than this. The essence of financial management is planning and control. These two help developing a budget and establishing procedures to insure that expenses do not exceed budgeted amounts.

As a member or officers, here are a few things that you can do to increase the probability that your Chapter will be financially stable:

  1. Insist that a budget be established as in the above timeline and reviewed periodically. A budget should be simple to understand: Income = number of men x dues. Expenses categorized by area: social, rush, etc. Expenses do not exceed Income. A good target is that the total of all budgeted expenses should not exceed 90% of the projected income.
  2. Require a written financial report from the Treasurer periodically – at least once every three months (a financial quarter). This reports shows what income has been received and where the money has been spent, with the expenditures in each area being compared to the budgeted amounts.
  3. Make sure your Chapter has some sound financial policies:
    1. Payment of dues: A definite schedule for payment with stated grace period. All persons not paying by the end of the grace period lose all membership privileges until the dues are paid. You do your Chapter and the individual involved a disservice by allowing him to enjoy the benefits of the Fraternity without paying his fair share of the costs; this is poor training for the future – both in familial and organizational financial affairs.
    2. Budgeted Expenditures: No committee or individual can spend more than the budgeted amount for his area unless someone else agrees to a reduction in the amount budgeted to them. It is the responsibility of the Treasurer, through good record keeping, to make sure the budget is not exceeded.
  4. Establish a Finance Committee comprised of several people to (a) help draw up the budget, (b) to formulate and enforce financial policies, and (c) offer advice on financial problems.
  5. Involve the Chapter’s Advisory Board/Graduate Chapter, who should be the watchdog in all financial matters by (a) approving the budget, (b) getting copies of financial reports, (c) approving expenditures for capital improvements (new furniture or equipment, repairs, etc) and (d) being consulted on major financial problems.

No organization, whether it be a Fraternity, a university, or a business, can survive without good financial management.

 

Accounts Receivable

Many Chapter have problems with the collection of dues. Dues that are owed by not yet paid are known as Accounts Receivable. Accounts Receivable is like a contagious disease to your Chapter. If left untreated, your Chapter will soon be crippled or dead. It can be cured, but it is best to avoid the problem in the first place.

Here are two possible incentive plans that can help keep your Accounts Receivable to a minimum. It is strongly recommended that your Chapter adopt one of these plans.

The Discount Incentive Plan

1. Before the start of each semester or term, each member is given a bill for the total amount of dues.

2. A deadline is set for the payment of dues in full (usually the third week of the term).

3. All members who pay all of their dues by the deadline are given a discount of a certain amount. (For examples, if dues are $600 per semester, all Brothers who pay before the deadline could be given a discount of $50)

4. Any member who cannot pay all of his dues by the deadline must make at least a one-third payment by the deadline. The remaining two-thirds are divided into two equal installment payments, due at the first of each of the next two months.

Example: Jim is a member of a Chapter whose dues are $450 a semester. He must pay the Treasurer at least $150 before the deadline. The remaining two-thirds ($300) is due in two monthly installments of $150 at the beginning of each of the next two months.

 

The Penalty Incentive Plan

1. Before the start of each semester or term, each member is given a bill for the total amount of dues.

2. A deadline is set for the payment of dues in full (usually the third week of the term).

3. Any member who does not pay all of his dues by the deadline is fined a specific amount (usually 5% to 10%).

4. For any member who does not pay in full, the total amount (dues plus fine) will be divided into three equal payments. The first payment will be due at the deadline that was set above. The remaining two payments will be due at the first of each of the next two months.

 

Many AXP Chapters have proven that these plans are two good methods of keeping Accounts Receivable to a minimum. Both plans offer some type of encouragement for Brothers to pay their dues on time. Billing dues on a monthly rate quadruples the effort needed to collect dues. Paying dues in full at the beginning of the term is simpler, easier to enforce, and puts Chapter income in the bank as soon as possible.

Even with these plans in force, some members may still fall behind in paying dues. This is usually due to failure of the officers to enforce the penalties for non-payment of dues. Your Chapter should have specific rules as to penalize members for not paying. These penalties should include all of the following:

  1. A member who is behind in dues cannot play in intramural sports.
  2. A member who is behind in dues cannot attend any social functions.
  3. A member who is behind in dues cannot vote at meetings.
  4. A member who is behind in dues cannot run for Chapter office.
  5. A member who is behind in dues cannot be a Big Brother.

These penalties should be a part of your Chapter’s bylaws and should be enforced regularly and equally for every member, including officers.

 

Collection Techniques

  • Meet with all members before the start of each semester or term to make sure they understand the financial expectations and establish a payment plan if necessary.
  • Request that he sign a promissory note (
  • Require that the member appear before the Chapter’s Executive Board to explain and resolve his delinquency.
  • Begin trial proceedings as outlined in the Fraternity’s Discipline Procedure to hold the member accountable by suspending some or all of his membership privileges or remove his membership in the Fraternity.

Here are some ideas which represent a composite of many collection procedures used by AXP Chapters.

Regular Monthly Billings

This method sounds so obvious that many Chapter overlook it completely. By sending every member a written statement of his bill each month, payment is more likely. A regular billing procedure is just as good as business practice. If you haven’t tried it, take time to do it. Establish a series of friendly collection letters to follow-up delinquent accounts. In each case, leave the door open for explinations of any misunderstandings and set a definite date for action.

Discounts

Grant a discount to men who pay in advance. You must budget for a 10% discount to any Brother who pays his entire dues early. This will also permit adequate cash at the onset of the semester when it may be needed most. When budgeting, the Treasurer will have to consider the number of members who will take advantage of this feature because it will mean a reduction in income for the Chapter.

Fines or Penalties

Probably one of the most widely used methods of aiding in dues collecting is the penalty or fine. Very simply stated, if you don’t pay your dues, a fine is added to what you owe. Since this system adds an additional burden to those who are already not able to pay, the Treasurer should discuss the indebtedness with each man involved so that a schedule of payments may be set up.

Letters to Parents

Another effective method may be a letter to the parents. This method should be used only after you have tried to collect from the Brother and have not been successful. It is also advisable to tell a member that you have written his parents. Some Chapters will invoice the parents instead of the member.

Notes

Once an obligation has been established, and especially if the Brother is leaving the Chapter, have him sign a note. This promise to pay must have a date, location, amount, reason for indebtedness, and be signed. An account is much more collectible in the form of a note rather than an open account because the member has acknowledged the debt. In most states, a note for room and board is collectible even if a member is not of legal age because they are necessities.

College or University Assistance

Check with your college or university to see if they will hold diplomas, transcripts, or grades until all obligations are paid. If they will, don’t be embarassed to give them your delinquent accounts and ask for help. If your college or university will not aid in this way, contact the IFC to consider taking this project on.

Pro-Rating

Pro-rating is a technique which is designed to aid a Treasurer because it puts additional pressure on the debtor. At the end of a collection period, the amount owed is divided up among all the Brothers who have paid their bills. They must pay this additional assessment, but will receive credit for their share when all of the delinquent Brothers pay. The bookkeeping involved in this system is quite complex. The principle, however, is to have all members put pressure on the few who fail to pay past due accounts.

Reporting

This is another obvious technique that is often overlooked. A Treasurer reports to the Chapter each month should contain the names of the delinquent members along with the amount they owe.

 

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