A Foundation for the Kingdom A New Beginning

1
A Foundation for the KingdomA New Beginning

• CHI PHI FRATERNITY
• ALPHA DELTA Chapter
• PENNSYLVANIA STATE UNIVERSITY

A New Beginning
2
Overview

• Memories
• The Current Situation
• Survey and Findings
• The New Vision
• The Plan
• Call to Action

3
Memories

• CHI PHI-- What are your memories?

• Brotherhood?
• Good Times?
• Learning?
• Leadership?
• Lifetime Friendships?
• All of the Above?

... I believe in the future of Chi Phi
Fraternity.
4
The Memories

• How do we ensure that future young men have the
  same opportunities?

5
The Current Situation

• There has been a paradigm shift on campus
• Students have more options than ever for
  off-campus living and extracurricular activities
• Students have many other ways to communicate
  texting, IMs, email, FaceBook, etc.
• Its the Me generation. Brotherhood does not
  readily resonate with many young men
• Students expectations today, right or wrong, are
  different than ours.
• There are more poorly managed fraternities than
  ever before, however PSU President, Dr. Spanier
  has made a commitment to rejuvenate Greek life
  because

A Mans word is his bond.
6
The Current Situation

• Fraternities still offer a unique and maturing
  experience to learn leadership and create
  life-long friendships!

... I believe in the future of Chi Phi
Fraternity.
7
The Current Situation

• The condition of our house has significantly
  deteriorated over the last 25 years.
• Alumni have not spent the money required to
  adequately maintain the house nor keep up with
  technology, security and safety standards
• Actives have not treated the house with the
  respect it deserves.and demands
• The poor condition of the house has ultimately
  bred some sub-par brothers which is adversely
  impacting recruitment
• These problems have been compounding for many
  years. Recent events are simply a manifestation
  of deep rooted problems.

Details of house requirements shown at the end
of this presentation
8
The Current Situation

• Our Competition is moving ahead
• Dorms and dorm dining are better than ever
• New apartments have all the latest amenities
• Beta Theta Pi Raised over 6,000,000 one
  donors individual gift exceeded 3,200,000
• Sigma Chi Raised over 2,000,000
• Phi Sigma Kappa Raised over 950,000
• To date

... The hand of Brotherhood is always extended.
9
The Current Situation

• CHI PHI at PSU is now at a crossroads.
• House is in bad physical shape
• Financials are weak
• Too few actives
• Quality of many of the actives is marginal
• Alumni Participation--historically weak
• New sprinkler ordinance required the house to be
  shut down if not brought into compliance by
  September 2008
• We have decided to shut the house down and are
  exploring our options
• Key Positive
• Alumni Involvement is now at an all-time high.
  Presently, there are 25 alumni members actively
  involved in the leadership to renovate and
  rebuild our fraternity

Truth, Honesty, and Personal Integrity are the
foundations
10
The Current Situation

• The bottom line is that we cannot attract the
  quality of brother we want with the present shape
  of our house.
• So what are our options?
• Shut the House Down and Sell the Property
• This would end an 84-year heritage for over 950
  alums and deprive future PSU men from continuing
  the Alpha Delta tradition

A Mans word is his bond.
11
The Current Situation

• So what are our options?
• Do a Little
• Raise 300,000-600,000- enough money to install
  a sprinkler system, and one or two other major
  infrastructure renovations
• Allow us to limp along--possibly survive, not
  thrive
• Require us to develop another fund raising
  campaign 5-7 years from now to sustain our weak
  position in the market
• Do it the Right Way!
• Define a new strategy for CHI-PHI
• Raise the money for a complete renovation
• Create an ongoing maintenance fund
• Re-colonize while enacting new rules for
  protecting our investment

... I believe in the future of Chi Phi
Fraternity.
12
Survey Findings
Background 49 Chi Phi alumni surveyed regarding
best options regarding future Range in
Graduation years 1937 to 1999, Mean Median
Graduation Year 1974 Finding
Summary 77 believed best option was to
renovate the existing chapter house with
emphasis on substantial interior/exterior
renovations, safety issues (such as meeting code)
aesthetics 21 believed the best option was
to establish a maintenance endowment fund to
guarantee the preservation of the
chapter/house in the future 2 believed we
should raze the current chapter house and build a
new one at our current location 0
believed buying a chapter house at a new location
was the best option
13
The New Vision

• A Stronger Alumni Organization
• More volunteers, less work per volunteer
• A Solid and Sustainable Financial Plan
• Raise the capital required for all major
  improvements and ongoing maintenance
• A Brand New, Stronger Chapter
• Built from a small nucleus of existing actives
• Protect our Investment
• Live-in House Parent and on-going maintenance plan

Truth, Honesty, and Personal Integrity are the
foundations
14
The Plan

• A Strong Effective Alumni Organization
• Develop implement more effective house/alumni
  association
• Spread workload, task specific positions term
  limits
• Improve active/alumni relations as alumni will
  do their part
• Outsource certain functions
• House parent
• Implement maintain quarterly association
  meetings
• Post agendas track performance on web site
• Increase alumni engagement pride in Chi Phi
• Alpha Delta Data, improve web site annual
  outings

... I believe in the future of Chi Phi
Fraternity.
15
The Plan


We will NOT move ahead with the rebuild of the
house, until every box below is filled in!
16
The Plan

• A Solid and Sustainable Financial Plan
• Enabling fire code compliance mandated by the
  borough
• Allowing for refurbishment to bring Chi Phi on
  par with neighboring fraternities with prudent
  leverage
• Providing a self-sustaining maintenance fund to
  assure long-term maintenance and upkeep

Truth, Honesty, and Personal Integrity are the
foundations
17
The Plan

• Raise the capital required for all major
  improvements and ongoing maintenance
• 2,250,000 is needed
• Work prioritized to minimize cost duplication
• Cash-out refinance proceeds coupled with alumni
  donations over 3 years enable house to be fully
  renovated with prudent debt burden
• Fund of 500,000 established to initially
  service debt during new brotherhood ramp-up and
  provide for on-going maintenance and repairs

... The hand of Brotherhood is always extended.
18
The Plan

• The 3-Year Financial Plan
• Cash out Refinance Proceeds coupled with 2.25M
  in Alumni donations
• Gut Renovation Plan
• Shut House Summer 2008
• Reoccupy newly renovated home in Fall 2010
  (Sooner if funds allow)
• Ramp to full occupancy by 2011 (can support cash
  flows at 20 actives minimum)
• Priority 1 - 950K
• - Major systems to address while walls are open
  for sprinkler installation
• - Includes safety security items and cosmetic
  repairs
• Priority 2 - 250K
• - Floors, roof repairs, re-pointing, club room
  refurbishment
• Priority 3 - 500K
• Bathrooms in basement
• Open up tube room
• Commercial grade tile
• Window replacement associated cosmetic repairs
• Woodwork refurbishment
• Skim coat paint
• Priority 4 550K

... The hand of Brotherhood is always extended.
19
The Financials

• Giving Pyramid
• Targeted Need for Pledges Payable Over 3-year
  Period
• Level Pledge Amount of Pledges
• The Order of the Chakett Society 500,000 1
• The Scarlet Blue Society 250,000 2
• The Distinguished Alumni Society 100,000 3
• The Leadership Society 50,000 2
• The Kingdom Society 25,000 10
• The Alpha Delta Society 10,000 20
• Order of the Alumni Society 5,000 30
• Order of the Brotherhood 3,000 60
• Chi Phi Supporter 1,000 70
• Total Pledged - 2,250,000 Total Pledges 198
  (20 Participation)

A Mans word is his bond.
20
The Plan

• A Brand New, Stronger Chapter
• Rebuild the Active Brotherhood and Culture
• Renovation timeline helps assure exit of existing
  members
• Evaluate remaining underclassmen, if applicable,
  and perform membership reapplication
• Over 50 of current members do not meet minimum
  expectations
• Reapplication process in Fall 2009
• Rebuild membership from core group who meet or
  surpass expectations
• Develop best practice rush (new member
  recruitment) program
• Partner with Chi Phi National PSU Greek Life
  Office
• Minimum requirements to qualify as Rush Chairman
• Recruiting events will be dry/semi dry
• Alumni Recruiting New Member Program Chairs
  engagement

... The hand of Brotherhood is always extended.
21
The Plan

• Rebuild the Active Brotherhood and Culture
• Raise standards expectations of the actives and
  the chapter
• Obtain Universitys Standard of Excellence
  designation for fraternal organizations
• Continue with Brotherhood Board
• Increase philanthropy and campus leadership
• Maintain house GPA above 3.0
• Clearly defined goals expectations and
  consistent accountability
• Implement effective reasonable control of
  actives
• House parent
• Weekly inspections for damage cleaning
• Open house parties and combines banned
  permanently
• All other social functions restricted to lower
  level
• Enforce house-wide smoking ban
• Brothers will have daily duties even with a new
  pledge class

... I believe in the future of Chi Phi
Fraternity.
22
The Plan

• Protect our Investment
• Live-in house parent provides guardian oversight
  and implements Housing Association and University
  requirements and guidelines in exchange for Room
  Board.
• Self-sustaining maintenance fund provides for
  long term care of house while minimizing alumni
  fatigue resulting from ongoing requests for
  donations to support band-aid approaches.

Truth, Honesty, and Personal Integrity are the
foundations
23
Call to Action

• I believe in the future of the Chi Phi
  Fraternity. When I put forth my best effort and
  combine that with the strength of my Brothers, we
  can achieve victory.

... The hand of Brotherhood is always extended.
24
Call to Action

• Never in the long life of (Alpha Delta) Chi Phi
  has the chapter been so close to being shut down
  permanently.
• We are that point.right now!
• We are all from different eras and have our own
  unique memories of our times at 360 E.
  Hamilton..but we share one common bond..
• ..we are Chi Phi brothers
• The easy way out is to do nothing..live with the
  memories and the friends we made
• We dont believe this is what most alumni want,
  rather, we believe they want to assure the future
  of Chi Phi at PSU
• And we believe we CAN accomplish this if we pull
  together NOW !

A Mans word is his bond.
25
Call to Action

• SUMMARY
• The plan as developed by an active and dedicated
  group of alumni
• during the last 18 months is
• Raise 2,250,000
• Fill in Alumni Organization Chart
• Temporarily shut the house down for renovations
• Re-colonize
• Protect our investment with a live-in house
  parent
• Enact new rules for the actives
• These are radical steps----but they are needed
• Other PSU fraternities have successfully taken
  these steps to sustain their future..there is no
  reason we cant succeed too !

Truth, Honesty, and Personal Integrity are the
foundations
26
Call to Action

• How will we accomplish this ?
• Through YOUR financial and volunteer support
• All of us are at different stages of our lives
  and have different financial situations.
• Many of us are in a position to donate 1,000 to
  10,000 over 3 years
• Some of us could donate 25,000 to 75,000
• And a few of our brothers could fund a
  substantial part of this renovation on their own
  with a million dollar donation
• Many of us could donate some time by volunteering
  as a member of the Alpha Delta Chapter Housing
  Association
• The bottom line is everyone can give something.
  
• We need YOUR support to reach our goal.

... I believe in the future of Chi Phi
Fraternity.
27
Call to Action

• How will this work ?
• First year donations will be kept in a special
  account and will be returned (at your request) if
  we do not reach 2,250,000 in pledges and/or
  alumni organization chart is not completed
• Because of this, and the goal to open the newly
  renovated house by fall 2010, we need to receive
  everyones commitment as soon as possible!
• Once the pledge goal is met, we will proceed with
  executing the plan
• If we do not reach our goal, then most likely the
  house will be sold...and the Alpha Delta
  Chapter of Chi Phi will reach the end of an era.

... The hand of Brotherhood is always extended.
28
The Financials

• Giving Pyramid
• Targeted Need for Pledges Payable Over 3-year
  Period
• Level Pledge Amount of Pledges
• The Order of the Chakett Society 500,000 1
• The Scarlet Blue Society 250,000 2
• The Distinguished Alumni Society 100,000 3
• The Leadership Society 50,000 2
• The Kingdom Society 25,000 10
• The Alpha Delta Society 10,000 20
• Order of the Alumni Society 5,000 30
• Order of the Brotherhood 3,000 60
• Chi Phi Supporter 1,000 70
• Total Pledged - 2,250,000 Total Pledges 198
  (20 Participation)

A Mans word is his bond.
29
Call to Action

• Alpha Delta Chapter House Naming
  Opportunities
• House                         500,000
  (1)
• Large Clubroom      250,000 (1)
• Small Clubroom     250,000 (1)
• Library                        100,000
  (1)
• Bar/Party Room           100,000 (1)
• Veranda    100,000 (1)
• Chapter Room                50,000 (1)
• House Father Living Suite   50,000 (1)
• Individual Rooms             25,000 (10)
• Custom Bricks for Fire Place/Walkway
• Large                10,000
  (20)
• Medium             5,000 (30)
• Small 3,000 (60)
• Campaign Plaque 1,000 other donors (70)

Truth, Honesty, and Personal Integrity are the
foundations
30
Call to Action

• Some current Chi Phi Alumni already Invested
  are.

... I believe in the future of Chi Phi
Fraternity.
31
We Need Your Help!
Join Your Brothers Help us preserve the memories
and lay a new Foundation for the Kingdom
32
Addendum

• The following slides outline some of the house
  requirements in more detail

33
The Kingdoms Needs

• First Priorities
• Sprinkler System
• Steam Heat Feeds/Returns
• Overflow Plumbing for Bathrooms
• Upgraded Electrical
• Ceiling and Wall Repairs
• Replacing Wood Doors with Metal
• Upgrade bathroom fixtures
• Commercial Grade Carpeting

34
The Kingdoms Needs

• Second Priorities
• Replace/Refinish Hard Wood Floors
• Refinish Circular Stairway
• Repair Slate Roofing
• Repointing
• Replace French Doors Club Room/Basement
• Replace Club Room Fixtures
• Replace Club Room Furniture, Carpets Curtains

35
The Kingdoms Needs

• Third Priorities
• Skim Coat Paint All Hallways
• Refinish Baseboard Landing Woodwork
• Replace Hallway Lighting
• Commercial Grade Tile Hallways
• Interior Repointing Foundation Repairs
• Addition of Mens Bathroom
• Window Replacements

36
The Kingdoms Needs

• Fourth Priorities
• Library Upgrades
• Maintenance Endowment Fund

37
Chi Phi Business Plan

• Form a Pennsylvania limited liability company Chi
  Phi Residential, LLC (CPR, LLC) to own, operate
  and maintain the income asset
• Offer Member ownership interests only to Alpha
  Delta Alumni
• CPR operations shall be governed by the
  Member-approved LLC Operating Agreement
• Member ownership tax treatment to be governed
  according to the Pennsylvania Limited Liability
  Company Act (19__)
• Members percentage ownership is in direct
  proportion to their equity investment
• Members exposure to liability is limited to each
  Members percentage ownership interest in the LLC
• LLC may be managed by either an Owner-Member
  known as Managing Member or by a non-owner
  known as Manager
• The Managing Member may consist of more than
  one Member

Truth, Honesty, and Personal Integrity are the
foundations
38
Chi Phi Business Plan

• The Officers of the LLC may be composed of the
  existing individuals on the ADCHA organizational
  chart in their same roles
• The LLC officers and various committees shall
  develop and implement task specific positions and
  assignments
• The Managing Member shall out-source certain
  regular maintenance functions (gardening) and
  preventative maintenance programs, such HVAC
• Conduct job search to employ a House Parent to
  oversee on-site management (comparable to an
  on-site Resident Manager in the multi-family
  environment)
• Regular LLC Member meetings held on-site, and/or
  by video/tele-conferencing
• Managing Member shall provide quarterly Financial
  Operating Statements (via ADCHA website)

... I believe in the future of Chi Phi
Fraternity.
39
Chi Phi Business Plan

• Capitalize house re-build
• Raise estimated 2,250,000 house rebuild budget
• Refinance any existing debt after completion of
  construction
• Establish trust fund for start-up expenses
  (including debt service as may be applicable)
• Create self-perpetuating trust fund for ongoing
  Operations Maintenance (OM)
• Establish income generating trust fund for OM

Truth, Honesty, and Personal Integrity are the
foundations
40
Chi Phi Business Plan

• Advantages of Limited Liability Companies (LLCs)
  as real estate investment vehicles
• LLCs are generally treated as partnerships for
  federal income tax purposes
• LLC Members exposure to risk is generally
  limited to actual investment in the LLC (compared
  to partnerships in which partner liability may be
  unlimited)
• Pass-through taxation avoids double tax on
  profits (compared to corporations where income is
  taxed at entity level corporate net income tax
  and also taxed at individual level upon
  distribution to shareholders)

... The hand of Brotherhood is always extended.
41
Chi Phi Business Plan

• Advantages of LLC contd
• Flexibility of Partnership without S-Corp
  restrictions
• LLC Members receive Member Shares (no stock or
  classes of shares)
• No limit to number of Members
• A Member may consist of individuals,
  corporations, partnerships, LLCs, or any legal
  entity (domestic or foreign)
• LLC liquidation is generally treated as a
  partnership (no tax effect)
• LLC Formation and annual upkeep are simple and
  inexpensive and may be performed by Managing
  Member
• Meetings may be by conference call and by quorum
• LLC causes preparation of annual K-1s for each
  Member

... The hand of Brotherhood is always extended.
42
Chi Phi Business Plan

• Disadvantages of LLCs
• Members who are compensated must be paid by
  guaranteed payments which are subject to self
  employment tax
• Pennsylvania law controls Pennsylvania LLCs
  without consideration to other States LLC laws
• Pennsylvania LLCs are subject to capital stock
  tax and must file a PA Corporate Tax Report
  (RCT-101) (compared to partnerships not so
  covered)
• For LLCs treated as partnerships under federal
  tax law, if 50 or more of the capital and profit
  interests are sold or exchanged within a 12-month
  period the LLC terminates under federal tax law

Truth, Honesty, and Personal Integrity are the
foundations
43
Chi Phi Business Plan

• Tax Filing Requirements
• LLCs may be Single-Member or Multi-Member
• Multi-Member LLCs may choose tax treatment as
  partnership or corporation for federal income tax
  purposes (Schedule C or E Schedule for
  individuals)
• Pennsylvania LLCs (no matter how taxed) are
  subject to capital stock tax and must file
  Corporate tax Report (RCT-101)

... The hand of Brotherhood is always extended.