It is the responsibility of the Board of Advisors to ensure sound chapter financial management. Financial stability for the chapter begins with their Crysophylos, who is an ex-officio member of the BOA. The chapter will prepare their budget for the BOA to review. The Crysophylos will prepare regular financial reports for the BOA.
When housing is involved, the BOA is responsible for collection of rent and payment of housing expenses. It is not a good idea to burden the Crysophylos with this responsibility. Often, the BOA will hire a third party Business Manager or Property Manager to keep up with house operations.
Advising the Crysophylos
The job of Crysophylos can become difficult when it comes time to collect on delinquent accounts of Fraters. Those owing money to the chapter accuse the Treasurer of being "unfraternal" in expecting them to pay their accounts promptly. Statements such as, "If you were a real Frater, you would be more understanding," or "I thought brotherhood meant more to you than my money," are commonly used by delinquent members to stall efforts to collect. However, it is delinquent members, not the Crysophylos, who are being unfraternal in these situations. There are five main reasons why meeting the financial obligation is a part of Fraternalism:
- A prompt payment policy promotes financial responsibility, one of the leadership traits for which the Fraternity exists.
- Fraters should not expect to get a "free ride" from the Fraternity. They should not enjoy all the benefits or privileges without paying the price.
- Alumni owing their chapters even small amounts of money will rarely visit the campus to participate in chapter functions. Thus, prompt payment will increase the chances that graduate members will be active alumni.
- Chapters operate on a cash basis and need cash in order to meet their expenses to continue to operate.
- When more than a small minority of members owe money, it suddenly becomes a popular thing to do with the rest of the chapter. Prompt payment ensures that Fraters will share equally in the responsibility of financing the chapter.
The BOA needs to receive regular financial reports from the Crysophylos, especially aging reports, so they can help him with collections. Any Frater who owes the chapter money should be brought to the BOA for an explanation.
The budget is the first thing to be considered in chapter financing. A budget should be for the fiscal year or school year, and then broken down for each school term. It must be a dynamic vehicle subject to change.
A chapter budget should be presented to the BOA each term. The utmost care is to be taken to ensure an accurate estimate of income and expenditures. The figures for the preceding year will not be sufficient. The budget of one year should never be applied blindly to another. There should be a very accurate estimate of the number of Fraters who will return to school.
A housing budget, and meal plan budget, is the responsibility of the BOA. It too should be created on an annual basis, with regular reporting back to the BOA. If you operate a kitchen, some time should be spent on the charges to be made for food, the cost of which depends considerably on the number to be fed regularly. The estimation of budgets for food is very difficult and depends greatly upon the local market.
Before attempting to estimate upkeep and repairs of a house, the BOA should make an inspection of the entire property, including the exterior and landscape. After inspection, a fair estimate and schedule can then be made of the requirements for upkeep and repairs. It is best to secure estimates from competent contractors before determining the final figure for this item of the budget.
Other income, such as salaries of cooks, house mother and any other paid help, are also fixed in amount. If you compensate chapter officers, limit the number of paid officer positions, as experience gained by serving as an officer has sufficient benefits for most officers. In most cases, reimbursement for services is subject taxes. The cost of fuel, water, electricity and waste collection can be estimated from the previous year. You must accumulate a reserve fund for the replacement of kitchen equipment, upkeep and other repairs done to the entire property.
Both the chapter budget and the housing budget should be strictly adhered to. Any major changes in expenditures should be approved by the BOA.
Reserve Fund (Sinking Fund)
The BOA is best advised to establish a reserve fund beyond the amount necessary for housing operations. These funds are deposited in a bank, money market fund, etc. so as to obtain the highest interest rate. Wise investing will provide a contingency reserve against default or failure of the chapter. Interest will serve as working capital for house repairs and furnishings, if the chapter has a house. Chapters which do not own housing can establish a Building Fund to save and invest monies for a future housing purchase.
The reserve accounts are not to be used for mortgages unless an emergency occurs. Mortgages, insurance, and tax money should be held in an account specifically for that purpose. If finances are properly managed, then any short-term loans by the chapter or loans or notes between the chapter and its members are unwise and unnecessary. The chapter should never become a lending institution or a charity.