Chapter is in Debt

[USAKappaSig]

Hey Yall,
Our chapter is having huge money issues right now. We have been experiencing this problem for a while. We owe thousands to nationals along with all the other fees that go along with a fraternity. I know we are not the only chapter to experience this problem. What did yall do to help get out of debt? Thanks for all the help

[NathanZBT]

ALUMNI. We were in debt but we through a poker tournament for alumni. We auctioned off items and the winner donated the money back to the fraternity. We not only got out of debt but made money for rush too.

[RaggedyAnn]

I'd start by trying to collect old debt from alumni. Send them a letter with how much they owe and how much your chapter owes.

[Zillini]

From another thread:

Originally Posted by Zillini

Been there, done that. It's incredibly hard work to turn a chapter around but it is doable. 1 person cannot do it alone. It needs the support of all the officers and the members. Contact your Inat'l. Most have resource people available to help -- that's their job! When I started helping my chapter as an alum I had little knowledge of our Inat'l org. I later learned the officers and I spent a year re-inventing the wheel.

My biggest concern is your debt. Money runs everything, from parties to recruitment to keeping the lights turned on. You need to set up an accurate and realistic budget that has a line item of $X for paying off your debt. Present the chapter members with the facts. Most members have no idea how much it costs to operate a chapter. Tell them and how much debt there is. Just like a homeowner who can't pay the mortgage, a chapter cannot operate in the red and not pay their bills. Eventually bankruptcy would have to be declared.

Be careful, if you jack up members' dues a substantial amount in 1 year or semester you'll have folks screaming bloody murder and possibly turning in pins because they can't afford it. It will mean cuts in non-essential things until the debt is paid off. Typically the largest non-fixed/non-essential budget is social. Cutting a social budget is incredibly unpopular, but sometimes necessary. Present your budget and debt payment plan to the chapter saying "We can cut these costs or we can raise dues this much."

Every member must pay their dues on time with consequences if they don't. Yes we are brother/sisterhoods, but we are not charities. Remember one of our goals is to to develop our members' character. Becoming a financially responsible adult is a positive thing that will benefit them their entire life. Offer incentives for paying dues in full rather than installment plans and on time. For example, if you pay in full the total will be $Y, if you pay installments there will be a small fee added to each payment. Charge a (reasonable) late fee. Any collected fees should be applied towards the debt payment.

Every officer must abide by their set budget with consequences there too. Set a limit that any spending over $Z needs prior approval by the Treasurer and/or Pres and/or Exec. If one area goes unexpectedly/uncontrollably over budget, then another budget area must be cut to offset. Remember that just because there is money in the budget there may not be money in the bank. Meaning, budgets are set for an entire fiscal year. If dues are collected by semester, then an officer will not have access to their total budget on day 1 of the school year. Regular financial reports should be made to the Exec of all spending and outstanding accounts receivable (i.e. membership dues collection). Make regular reports to the chapter about the progress you are (hopefully) making in paying off the debt.

Pursuing alum donations is a good idea, just rememeber times are tough for everyone in this economy so you can't count on this. Any collected money should be used to pay off the outstanding debt first. But without a budget/spending plan in place donations won't do any good in the long run. Alums won't be happy if you blow their money on a party or use it to make up a budget shortfall because you didn't make cuts, then come back asking for more in a year or two.

[rufio]

start sending everyone who owes moneys to collections. nothing gets people motivated like the prospect of bad credit.

[Kevin]

Originally Posted by rufio

start sending everyone who owes moneys to collections. nothing gets people motivated like the prospect of bad credit.

^ This.

Or get an alumnus-lawyer to take them to small claims court.

[ECUJacob]

Using Omega Financial greatly improved my chapter's financial operations. Not being paid to rep them, just sharing our experience with them.

[USAKappaSig]

Originally Posted by ECUJacob

Using Omega Financial greatly improved my chapter's financial operations. Not being paid to rep them, just sharing our experience with them.

We actually just switched over to Omega so hopefully that improves alot of this financial mess.

[DJMoneyInDaNati]

We're also on Omega, there is a few rare cases now that anyone's bill goes over by a quarter. We charge 10% interest per quarter in late fees, so it adds up quick!

[TSteven]

Originally Posted by RaggedyAnn

I'd start by trying to collect old debt from alumni. Send them a letter with how much they owe and how much your chapter owes.

Originally Posted by Zillini

Alums won't be happy if you blow their money on a party or use it to make up a budget shortfall because you didn't make cuts, then come back asking for more in a year or two.

Just to piggy back on these two, if y'all elect to solicit "general" funds from your alumni (in addition to collecting from alumni who may still owe dues/fees to the chapter), try to be as specific with why you are collecting and where it is going. For example, if y'all had to use money that would have gone to nationals to make needed repairs to your house, then point that out. Bottom line is that alumni are more likely to donate if they know specifically where their money is going and why.

[HotDamnImAPhiMu]

That's true. I'd certainly be more likely to donate if I knew my money wasn't just going in a big pot for keggers and toga parties.

[HotDamnImAPhiMu]

Le sigh.

[Corsulian]

We were way behind years ago. We worked with nationals to set up a payment plan. We made a lot of sacrifices - our social budget was basically cut to zero. We offered incentives for people to pay dues in advance - some guys got "loans" from parents to pre-pay years ahead of time. We had a massive effort to do big fundraisers. If people wanted a party - it was up to them to have a fundraiser to do it. Dues were basically there to cover fees, insurance, and debt.

It was not a great time but people worked it out.