Capital Gain Funds

AXPAlum · #1 06-28-2001, 01:47 AM

Well I have a topic that maybe some of you have experience or advice with. I'm sure everyone has experienced financial difficulties from undergraduates not paying rent in the chapter house on-time to major expenses popping up at the wrong time (that could usually mean anytime for some of us

So here's my question, I know that some chapters have created a sort of investment fund where it grows from interest and fundraising.

- How does one go about creating one of these?
- How do you qualify as a non-profit organization to do this?
- How many years will it take to build up a good base?

Any companies or information on the net that would help out is appreciated. Let me know if any of you have tried this type of program with your chapters and what were the success and failures of it?

Thanks,

AXPAlum

Tom Earp · #2 06-28-2001, 05:41 PM

AXRalum will try answer Questions!
# one the Govt. has closed All of the non-profit holes for Greeks!
Growth fund are ? We put money in a fund that one of the Brothers placed in solid funds! We went from 4,000 + to 2,300 $ There is a cpompany called Omega something that charged a fee! They will go after those that owe money! Is it cost effective I cannot say

At my chapter, we made a command decision that the actives DO NOT pay the chapter for rent on living in the House But the House Corp. which takes the burden of getting in your Brothers shorts for the money!
We are owed 6,000 which would help pay for repairs on the House that some inflicted!
Those that do not pay, hurt all members of the ORG. not just a few! We are trying to build a new house but because our old house (130 Yr +) looks like hell it is tuff to get new members! Ah A catch 22!

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Tom Earp LX Z#1
Pittsburg State U. (Kansas)

33girl · #3 06-28-2001, 06:03 PM

I can't be too much help w/ setup but there is a difference between non-profit and not-for-profit. Non-profit means you can't keep anything you make, other than for expenses (it has to all go to a charitable org). Not-for-profit means you are not operating solely to make a profit but if you do you can keep it.

Tom Earp · #4 06-29-2001, 05:14 PM

Greeks are clasified as non profit or not for profit Orgs. Either way we cannot get any breaks fro the Fed. Govt!
It use to be that you could donate money to the ED. Fund. That fund could loan money to the F/S. NO MORE! The test case was LXA U. Of KS. ! One of the laywer alums fought it and lost!
You cannot write any money off to your local but you can to the International to the ED. Fund as that is what it is used for! ONLY!

The only money that can be written off by a House is for Ed. use. Study area!Only! It sucks as it does help to get more students in school as most houses are cheaper to live in than school housing!

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Tom Earp LX Z#1
Pittsburg State U. (Kansas)

happyowl · #5 06-29-2001, 11:10 PM

[QUOTE]Originally posted by Tom Earp:
[B]Greeks are clasified as non profit or not for profit Orgs. Either way we cannot get any breaks fro the Fed. Govt!

Tom,

Please forgive my dingbat question (I'm in Education not business)...Does this mean that I cannot write off my yearly contribution to Nationals as a charitable contribution on my income tax returns?

Thanks
happyowl

[This message has been edited by happyowl (edited June 29, 2001).]

[This message has been edited by happyowl (edited June 29, 2001).]

Tom Earp · #6 06-30-2001, 04:06 PM

happy owl, yes you write off the donations to your National if they go to the educational faoundation. This money is used for scholarships only not for the use of building a new house!
We are setting up a two tier fund raising!
Those that can afford to give for a new house is not tax deductable. Those that can give a little, this is going to an educational fund for scholarships for members that are deductable!

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Tom Earp LX Z#1
Pittsburg State U. (Kansas)

Tom Earp · #7 07-02-2001, 04:24 PM

According to Brother White a Lawyer if it for educational use only! This would mean Study Rooms, Computor Equiptment, Scholarships but not anyother parts of the House!
Some Houses used Dorm type rooms and the regular rooms as study rooms! Thank the IRS to close that loop hole!
They seem to be like everyone else, lets jump on the Greeks! GPA is normally higher than the norm on campus, is that because we are smarter? Not! We have to make our grades as we are in competition with the other Greeks to do better! Grades have to be made to keep the active status. According to my tax lady, I had an idea to donate to the Chapter Educational Fund and then loan the money to the House Corp for bulding a new house. Brother White SAID NO, as he did investigation of the very thing and he would have a better insight as he went to the Horses Ass, so to speak, the IRS!

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Tom Earp LX Z#1
Pittsburg State U. (Kansas)

happyowl · #8 07-02-2001, 11:04 PM

Quote:

Originally posted by Tom Earp:
According to Brother White a Lawyer if it for educational use only! This would mean Study Rooms, Computor Equiptment, Scholarships but not anyother parts of the House!
Some Houses used Dorm type rooms and the regular rooms as study rooms! Thank the IRS to close that loop hole!
They seem to be like everyone else, lets jump on the Greeks! GPA is normally higher than the norm on campus, is that because we are smarter? Not! We have to make our grades as we are in competition with the other Greeks to do better! Grades have to be made to keep the active status. According to my tax lady, I had an idea to donate to the Chapter Educational Fund and then loan the money to the House Corp for bulding a new house. Brother White SAID NO, as he did investigation of the very thing and he would have a better insight as he went to the Horses Ass, so to speak, the IRS!

Tom,

Thank you for taking the time to research this for the Greek community. It is fellow Greeks like yourself that help make the system sronger.

In the Bonds,

Happyowl

AXPAlum · #9 07-03-2001, 12:45 AM

Quote:

Originally posted by Tom Earp:
happy owl, yes you write off the donations to your National if they go to the educational faoundation. This money is used for scholarships only not for the use of building a new house!
We are setting up a two tier fund raising!
Those that can afford to give for a new house is not tax deductable. Those that can give a little, this is going to an educational fund for scholarships for members that are deductable!

How about if the money is used for education-related improvements to a chapter house? For instance, a room in the house is to be designated as a study area or a library. Technically speaking, any renovations to this part of the house can be classified as educational funds, right? I mean, someone out there must of realized that upkeep on a fraternity house requires some type of "slush fund", and in case any emergencies pop up, they wouldn't expect year to year rent income to be the only way to pay for these things.

AXPAlum

LCAJoe · #10 08-10-2001, 05:05 PM

Fraternity accounting is not nearly as easy as it should be. Lots of things are possible, but it will take some time for your alumni to catch on.

An educational or charitable fund is the way to go. Educational funds can benefit chapters in lots of ways including scholarships to individual members (maybe even the ones who can't pay their rent), scholarships to send your members to leadership events or general assemblies (a financial burden normally carried by the undergradaute chapter), or to subsidize chapter philanthropies. You can also help your chapter recruitment efforts by setting up a general scholarship and advertising it to incoming students (applications for such a scholarship are a good recruitment prescreening tool). It IS possible for these funds to make loans to house corps for repairs, however the loan must be made at a competitive rate and treated just like any other investment in the fund portfolio - and the loan cannot be the only investment in the fund portfolio. It is possible to provide grants to the chapter house for academic purposes (libraries, computers, etc), but the chapter needs to apply for the grant to the fund just as any non-profit applies for grants.

The process to set up the fund is long and not cheap! Refer to IRS code 501(c)3 for your restrictions and section 509 for how to set up a non profit. You will need a tax accountant and a lawyer to establish this type of fund.

Good luck.

Joe