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The Chi Phi Educational Trust is dedicated to improving the greater society through its support of the educational endeavors of the Chi Phi Fraternity and its members.
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Chapter Excellence Funds: Strengthening Chi Phi One Chapter at a Time


Wouldn’t it be great if each chapter’s alumni organization had a permanent endowment that would provide an academic scholarship to every member of the chapter? Or to send every chapter member to the College of Excellence at least once during their undergraduate career?

Since 1930, the Chi Phi Educational Trust has worked with alumni associations, housing corporations, and individual donors to help enrich the educational programs and services of Chi Phi. Continuing in this tradition, the Chi Phi Educational Trust is pleased to introduce a new program that will further strengthen the Chi Phi experience.

What Are Chapter Excellence Funds?

Chapter Excellence Funds are separate accounts held within the umbrella of the Chi Phi Educational Trust endowment that will be used for the exclusive benefit of individual chapters and their members. Every dollar of every gift made to a Chapter Excellence Fund will be placed into that restricted account and invested by the Trust within its professionally managed endowment portfolio.

How a Chapter Excellence Fund Works

On a semi-annual basis, a portion of each Chapter Excellence Fund will be made available to support qualified educational programs and services for the benefit of the chapter’s members. These monies may be used in a number of different combinations depending on the current needs of the chapter.

One year, the Chapter Excellence Fund could be used to provide scholarships to chapter members achieving a certain grade point average and send the top chapter officers to the College of Excellence. The next year, it could be used completely to fund academic scholarships for all members living in the chapter house. The following year, it could strengthen the chapter’s recruitment efforts by providing scholarships for the entire new member class and to the chapter members responsible for recruiting the most new members.

It is envisioned that a Chapter Excellence Fund will provide the chapter with academic scholarships, College of Excellence scholarships, and other innovative educational programs. Use of the Chapter Excellence Fund will be subject to the same IRS guidelines that govern 501(c)(3) organizations.

Prior to each distribution, the chapter’s alumni organization will be asked to submit its recommendation for how to direct these funds. The IRS requires the Trust to make the final decision for each distribution; however, the Trust recognizes that the local alumni organization has a greater familiarity with the needs of the chapter and will weight its recommendation accordingly.

The Numbers

Since they will be part of the Chi Phi Educational Trust endowment, the investment goals of the Chapter Excellence Funds will be to achieve continual growth outpacing inflation and to provide steady income for educational programs and services. During the course of a year, up to 5% of a Chapter Excellence Fund’s market value may be distributed for qualified purposes; 1% will be paid to the Trust’s investment manager; and 1.5% will be used to help cover administrative costs incurred by the Trust in managing the fund.

Any growth over and above these amounts will be reinvested along with new gifts into the principal of the Chapter Excellence Fund thereby providing increased income for future years.

Chapter Excellence Funds having $50,000 of principal could generate approximately $2,500 each year to benefit the chapter. Those having $100,000 could provide approximately $5,000 to help the chapter in the best ways possible. And over time, the fund will continue to provide increased levels of support.

To give some idea of the long-term benefits of a Chapter Excellence Fund, let us look at how the hypothetical ABC Chapter Excellence Fund would perform over ten years. We will assume the fund achieves 10% annual growth and receives $1,000 in new gifts each year. All dollar figures shown are approximate.

Original Principal Total $ for the Chapter Principal after Ten Years
$50,000 $29,660 $69,070
$100,000 $56,720 $118,960
$250,000 $137,910 $281,150
$500,000 $273,230 $551,480

In all four examples, the fund’s value increased while providing a steady, substantial stream of income to benefit the chapter and its members. And the fund will continue to increase in value as future gifts are received and the endowment grows.

Services Provided by the Trust

The Trust will administer each Chapter Excellence Fund with diligence and care. Regular reports detailing fund balances, new gifts received, income available for qualified purposes, and a full accounting of all activities will be provided to the alumni organizations choosing to establish their own fund.

Additionally, the Trust will provide fundraising consultation and general assistance free of charge for alumni organizations interested in raising awareness and support for their Chapter Excellence Funds. Depending upon resources available, the Trust could also assist with more specialized services, such as fundraising workshops, targeted mail solicitations, and face-to-face fundraising efforts. Direct costs associated with such specialized efforts will be deducted from the respective fund or billed to the appropriate alumni organizations.

Capital Loan Feature

The Chapter Excellence Fund contains a provision that allows for the Trust to use the funds for a specific investment, such as a mortgage or loan to an alumni organization for capital improvements. However, the capital loan must meet the current market conditions and be viewed as a reasonable investment by a prudent businessperson to satisfy IRS requirements.

The investment would require repayment with a fair market interest rate. The interest income would, in turn, fund qualified educational programs, cover administrative costs of the mortgage or loan, and help grow the principal of the Chapter Excellence Fund.

From time to time, the Trust will consider proposals from alumni organizations with a Chapter Excellence Fund requesting such a mortgage or loan. Each proposal will be carefully considered and only those deemed to have merit and to fit within the investment strategy of the Trust will be approved.

Benefits to the Chapter, Alumni Organization, Donor, and Chi Phi

Chapter Excellence Funds are an exciting new way for alumni organizations and individual donors to further strengthen Chi Phi at many levels:

  • Donors to a Chapter Excellence Fund could support their chapter and enjoy the tax benefits derived from contributing to a qualified 501(c)(3) non-profit organization;

  • Chapters will have one more advantage in recruiting and retaining quality members. Individual members will have the opportunity to win scholarships, attend the College of Excellence, or benefit from other qualified educational programs;

  • Alumni organizations can avoid the burden of maintaining and administering a separate 501(c)(3) organization, while leveraging the Trust’s expertise in fundraising and endowment management;

  • And all of these benefits will ultimately strengthen Chi Phi as a whole.

Starting a Chapter Excellence Fund

A minimum of $1,000 in contributions will allow an alumni organization to establish a Chapter Excellence Fund, but a minimum of $5,000 in contributions is required for that fund to begin producing income for qualified purposes.

Alumni organizations interested in establishing a Chapter Excellence Fund for their chapters may do so by contacting Michael J. Azarian, Psi Delta 1997, National Director.

Current Chapter Excellence Funds

Alpha Chapter, University of Virginia

Beta Chapter, Massachusetts Institute of Technology

Gamma Chapter, Emory University

Iota Chapter, The Ohio State University

Kappa Chapter, University of Wisconsin

Lambda Chapter, University of California, Berkeley

Pi Chapter, Northwestern University

Omega Chapter, Georgia Institute of Technology

Alpha-Tau Chapter, University of Michigan

Kappa Delta Chapter, University of Rochester

Mu Delta Chapter, Auburn University

Nu Delta Chapter, Florida State University

Theta Delta Chapter, University of Florida

Alpha Zeta Chapter, State University of West Georgia

Kappa Zeta Chapter, Purdue University

 
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