Texas Alpha Chapter of Phi Kappa Psi Fraternity at the University of Texas
Issue link: https://www.epageflip.net/i/348017
Outline for Funding of New Fraternity House e Pennington feasibility study found that tax deductibility is a critical factor for many brothers making contributions. According to Pennington, the typical model for delivering federal tax deductibility is to use a 501c3 entity as a funding vehicle for parts of the house that are deemed "educational ." e sche- matic on the previous page illustrates how this would work in the case of Texas Alpha: 1. Brothers would make their checks payable to TAEF and it would go into an educational grant account for the new house. 2. e campaign goal is to raise $4 million outside of Brother Noble's contribution. TAHB receives a call per month from various other fraternities asking if 2411 Longview is for sale and expressing strong interest. Although TAHB is presently leasing the property, it has an exclusive right to pur chase the property until 2018 for $2.37 million. ere is potential equity in the property given the market conditions of the west campus area. e plan is to find a buyer and then exercise TAHB's right to purchase and, then sell to that buyer. 3. e "educational" vs. "non-educational" part of the house can by divided and supported on a divided basis. 4. Designation of "educational" space vs. "non-educational" space is determined by a collabora- tive effort between our architect and a law firm that specializes in this type of work, Fraternal Law Partners. e law firm renders a legal opinion as to what parts of the square footage are "educational" and available for 501(c)(3) funding. 5. 501c3 entities are allowed to make educational grants to support the construction and mainte- nance of the "educational" parts of a fraternity house. ese are not loans they are grants that do not need to be repaid. 6. We are fortunate to have Brother Noble agree to have all of his funding be designated "non-edu- cational" therefore opening up the rest for "educational" funding via a 501c3. 7. Although checks would go to TAEF, Pennington & Co. would handle any back office operation to help facilitate this (e.g., provide the accounting, acknowledgement letters, etc.) All boards should work together in an orchestrated fashion towards the construction of the new house.