Top Tips for Managing Your Sorority or Fraternity's Finances
Monday, March 20, 2023
One of the most important, yet challenging aspects of sorority and fraternity management is maintaining your chapter’s financial wellness. Between budgeting, collecting dues, and fundraising, your leadership team has many financial components to keep track of over the course of a school year. Plus, your success largely relies on your members doing their part, meaning you’ll need a high level of internal organization to achieve your goals.
But, managing your chapter’s finances doesn’t have to be a difficult task. By doing your research, staying organized, and using a powerful management software solution, your chapter’s leadership team can eliminate the guesswork from financial planning and management. Let’s explore some tips to help you improve your money management habits.
1. Create a comprehensive budget
The foundation of any financial management initiative is a detailed budget. A budget allows you to prioritize goals for the coming year and gauge your financial health, so take the time to create an effective one for your chapter.
Consider including the following items in your sorority or fraternity’s budget:
- Professional development initiatives (including networking events, career fairs, and conferences)
- Social program expenses
- Dues revenue
- Membership management software license cost
- Monthly payments, such as rent and utilities
- Recruitment expenses
While you should aim to be as accurate as possible while creating your budget, unexpected circumstances happen every year. Thus, ensure you build room in your budget for unplanned occurrences, such as house maintenance and canceled events. Revisit your budget on a regular basis with your team to log new financial updates.
2. Understand your chapter’s tax status
Did you know that your chapter can save thousands of dollars by filing for tax-exempt status? Most sororities and fraternities are classified as 501(c)(7) organizations by the IRS. According to the IRS, your chapter qualifies if it:
- Is supported by membership fees, dues, and assessments
- Provides an opportunity for members to socialize
- Has selective membership
- Doesn’t allow leadership to take the chapter’s financial assets for themselves
- Receives less than 35% of its funds from nonmember sources
- Doesn’t discriminate against any person on the basis of race, color, or religion
To register for 501(c)(7) status, your chapter must fill out IRS Form 1024 and submit it by the filing deadline. Then, once you’ve incorporated your chapter as a 501(c)(7), your financial team must fill out IRS Form 990 annually to report its income and expenses and maintain your tax-exempt status. If you’re new to tax-exempt filing, consider consulting with a nonprofit accounting expert for professional guidance.
3. Collect dues regularly and promptly
As previously mentioned, the IRS will recognize your tax-exempt status only if you receive revenue from member dues. Since they’re your main revenue source, it’s crucial that you prioritize collecting them on time. Additionally, they fund valuable opportunities for your members, such as social and professional development events.
Dues processing software makes the payment process convenient for you and your members, allowing you to send automatic reminders via email before each payment is due. Some membership management software solutions even have an integrated payment processing system, syncing payment records directly with each member’s profile.
To clarify the dues payment process to your brothers or sisters, standardize it so everyone’s on the same page. Create a dues collection “cheat sheet” that breaks down how you gather dues each payment period. Include information on your cheat sheet such as:
- Dues payment deadline and frequency
- Dues amount
- How to pay dues
- Penalties for late payments
To help your members be proactive about their payments, add a to-do list where they can check off action items as they’re completed. You can even host a required financial training session to provide your members with organizational tips as part of the recruitment process each year.
If there are still members who regularly pay late even after fees are issued, meet with them individually and create a plan for helping them pay their dues on time. For example, you might suggest that they put a recurring calendar reminder in their phone or set up autopay through your online payment processor.
4. Practice exceptional data hygiene
With tens or even hundreds of members to account for, your leadership team has a lot of data to store and manage. This data is essential for gauging your chapter’s financial health and budgeting for the future. Therefore, tidying your records and practicing data hygiene should be one of your top priorities.
Primarily, effective data hygiene relies on your technological tools. Paper records are difficult to keep track of and take up space over time. On the other hand, sorority and fraternity management software allows you to centralize your records and conduct data maintenance with ease. For example, OmegaFi states that membership management software will allow you to accomplish the following:
- Delete duplicate member records
- Pinpoint outdated contact information so you can append it
- Instantly update financial records when members submit payments
By leveraging your software’s capabilities to stay organized, you can streamline all of your financial operations and focus more on providing valuable opportunities to your members.
5. Create a financial board on your leadership team
As a leader, you shouldn’t have to try and juggle all of your chapter’s financial responsibilities on your own. Empower qualified members to help out by creating a financial board as an offshoot of your leadership team. Recruit members that are:
- Financially responsible
- Knowledgeable about money management (whether through job experience or their studies)
- Able to devote time to board activities
- Invested in the chapter’s success
Start determining your list of prospective financial board members by creating an optional application. On the form, ask the applicant to describe why they want to join the board and if they value your success. Then, ask them about their financial management experience or interest.
If you’d like to ask your applicants further questions, read the responses and decide who will move on to the interview stage. To keep the board effective, gauge each member’s contributions over the course of a year and remove anyone who’s slowing your progress.
Now that you know how to improve your financial management skills, it’s time to revise your chapter’s approach. First, gauge your chapter’s data hygiene, which, according to NPOInfo, directly impacts financial stability. Then, look into sorority and fraternity management solutions that can help you implement all of the aforementioned tips. Finally, decide which changes will be most beneficial for your chapter and implement them. Throughout the process, be sure to keep your members in the loop and ask them for feedback on the adjustments. They’ll appreciate being listened to and hearing that you’re taking steps to improve your chapter.