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Q: Is the Phi Kappa Psi Foundation different from the
Fraternity?
A: Yes. The Phi Kappa Psi Foundation is a separate not-for-profit
corporation from the Fraternity. We have slightly different missions, separate
staff and are run by a separate group of elected officers. The Foundation
provides grants to the Fraternity for educational programming, such as
the Presidents Leadership Academy, Woodrow Wilson Leadership School, AlcholEDU
program and the Leadership Experience.
The Fraternity is a 501(c)(7) social, fraternal organization and the
Foundation is a 501(c)(3) public educational foundation. Both are not-for-profit
and exempt from many taxes. However, gifts to the Phi Kappa Psi Foundation are tax-deductible
to donors and gifts to the Fraternity are not. If you think of it in the
context of a campus, the Fraternity is like a college or university and
the Phi Kappa Psi Foundation is like the college or university foundation. They may
work together, but they're really two different legal entities. One is
in the business of education, one raises money to provide scholarships
and grants to support education.
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Q: Are gifts to the Foundation deductible? What
about to the Fraternity?
A: Gifts to the Phi Kappa Psi Foundation and to any sub-account
(such as Chapter Scholarship Funds) within the Phi Kappa Psi Foundation are deductible
to the full extent of the law. The IRS has some limitations on deductions,
depending upon one’s annual income, but the Phi Kappa Psi Foundation provides
the same deduction as churches, United Way, the Salvation Army, a college
or university, etc. No one can give any more of a deduction than the Foundation.
Gifts to the Phi Kappa Psi Fraternity are not deductible.
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Q: Are gifts to a chapter or house corporation
deductible?
A: All chapters of Phi Kappa Psi share the Fraternity’s
status as 501(c)(7) membership organizations. They are not-for-profit and
may be exempt from some taxes in their state, but cannot provide deductions
to donors. House corporations are incorporated in each state and are independent
businesses from the chapter or Fraternity. They are normally incorporated
as 501(c)(2) businesses which exist for the purpose of holding property
on behalf of a chapter. They are not-for-profit and may be exempt from
some taxes, but cannot provide a deduction to contributors.
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Q: What advantages are there to being a foundation?
A: The primary advantage is that the Foundation can provide
a deduction to donors. That sometimes provides an incentive for someone
to give a larger gift. Another advantage is that we don’t pay any
taxes on our income from gifts or investments. In many states we also are
exempt from property, excise and sales taxes. That sometimes helps us when
we make grants to chapters, so the grant isn’t diminished by taxes.
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Q: Are there disadvantages to being a foundation?
A: Because our income is exempt from taxes, we are limited
by the IRS in how our funds may be used. Our restrictions are the same
as any other charitable organization; we can give deductions to donors,
but can then use the money only for qualified exempt purposes.
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Q: How are gifts/donations invested?
A: The investment policy of the Phi Kappa Psi Foundation is to produce
a reasonable annual income, coupled with capital appreciation, while conservatively
maintaining safety. To achieve these objectives, the Foundation is managed
as a widely diversified, balanced fund. The Trustees are committed to maintaining
the integrity of the Phi Kappa Psi Foundation. The corpus will never be invaded;
only the income generated will be used for scholarships, educational programs
and loans.
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Q: What is a "directed" gift?
A: A directed gift is a gift made to the Phi Kappa Psi Foundation,
accompanied by a request from the donor to earmark the gift for a specific
use. It is the policy of the Phi Kappa Psi Foundation to honor requests from donors
whenever possible; however, the ultimate determination of any gift's use
rests with the Trustees of the Phi Kappa Psi Foundation.
Five percent of each directed gift goes to the Phi Kappa Psi Foundation's unrestricted
fund for the benefit of all Phi Psis, and 10 percent of the earnings on
directed gifts are allocated for unrestricted use. For example, if a donor
makes a $100 gift to his chapter's CSF, $95 is added to the CSF while $5
goes for unrestricted use.
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Q: What is the Chapter Scholarship Fund (CSF)
program for chapters?
A: The Chapter Scholarship Funds are accounts within the
Phi Kappa Psi Foundation of the Phi Kappa Psi Fraternity. They are set up to receive
gifts and designate them for the benefit of specific chapters. The money
can't be used for any other chapter, or for the general Foundation or Fraternity.
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Q: How many scholarships does the Foundation
award each year?
A: It varies. The Trustees adopted a “total return” concept
to determine how many scholarships and educational programs are funded
each year. History has shown us that a balanced portfolio will grow an
average of 8 to 10 percent each year over time. Some years, the fund may
grow more; in others, it may earn less.
Using the “total return” philosophy, the Trustees typically
will make five percent of the Phi Kappa Psi Foundation’s total fund balance
available for scholarships and programs. In recent years, the Foundation
has provided over $500,000 annually in scholarships and awards to
deserving members and grants to underwrite the educational and leadership
training programs of the Fraternity. The size and number of these awards
will increase as the Phi Kappa Psi Foundation continues to grow.
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Q: How do gifts help specific chapters and its
members?
A: Directed gifts benefit chapters in the following ways:
- Strengthen the chapter’s continuity and stability through the
guidance of the Educational Leadership Consultants
- Provide opportunities for members of the chapter to be nationally recognized
and rewarded for outstanding leadership capabilities or academic achievement
- Provide the entire chapter with the opportunity for specially-designed
leadership training by the Fraternity’s Leadership Development Consultants
and the Director of Leadership Development
- Enable an aspiring leader to attend the Woodrow Wilson Leadership School,
the Presidents Leadership Academy or the Fraternity Educators Leadership
Academy
- The direct, measurable result of your gift will be to provide expanded
opportunities to members of Phi Kappa Psi, now and in the future
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Q: What effect will a gift have on the Fraternity
at large?
A: It will strengthen the Foundation’s ability to
help individual chapters grow and prosper. The Fraternity, with the support
of the Phi Kappa Psi Foundation, already maintains a variety of programs and services
which assist chapters in housing, internal management, leadership development
and scholarship. A significant portion of the Headquarters staff is involved
with hands-on assistance directly to the chapters, working directly with
the undergraduates and alumni. Additional capital funds will enable the
Fraternity to increase and improve services and programs, strengthen chapters
and benefit undergraduates.
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Q: Why should I give to the Phi Kappa Psi Foundation before
my college or university?
A: Because Phi Kappa Psi provides a truly unique educational
experience. Neither the Phi Kappa Psi Fraternity nor the Phi Kappa Psi Foundation
are in competition with the institutions of higher learning that host Phi
Psi chapters. The benefits derived from membership in the Fraternity are
distinct from those derived from the academic curricula of colleges and
universities. Our efforts are directed at the way Phi Psi undergraduates
react to their environment, and the way they conduct themselves in their
personal lives and as part of a group.
A good Phi Psi experience will complement an undergraduate's academic
education for the rest of his life. The results will reflect favorably
on his Fraternity, his school and on himself. And remember...when you make
a gift to a Chapter Scholarship Fund, you are really making two gifts:
you are directly supporting your chapter and, indirectly, your alma mater – helping
men to attend and stay in school.
The Trustees of the Phi Kappa Psi Foundation ask each Phi Psi alumnus to weigh
the program initiatives of the Fraternity and the Phi Kappa Psi Foundation to see
the unique opportunity they provide to the alumni who support them and to
the undergraduates who benefit from them.
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Q: How much should I give and how should I give
it?
A: This is an individual decision for each Phi Psi alumnus
to make. The Foundation can assist donors in identifying an appropriate
gift that reflects their level of financial commitment or their interest
in a particular program. Some donors wish to honor or memorialize relatives
or friends through a named scholarship, underwrite a special leadership
program or endow a campus award.
Your decision will be based on a number of personal and particular
considerations. But, in the end, the Phi Kappa Psi Foundation hopes that your own
sense of the value of Phi Kappa Psi to positively influence the lives of
young men will compel you to make the most generous gift possible.
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Q: What are Corporate Matches?
A: Many corporations will match the gifts their employees
make to charitable organizations. The process is easy: simply send your
gift and notify the Foundation of a match by your employer. The staff of
the Phi Kappa Psi Foundation will contact them to get the appropriate form or make
the needed request for matching funds. You should check with your employer,
usually through the human relations office or office of community relations,
for their policies and any form required to be signed by you. They will
let you know the details of their matching program.
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Q: How can chapter members help raise money
for their chapter?
A: One of the most significant ways the Phi Kappa Psi Foundation
assists is in simply providing a safe, tax-free shelter for the funds raised.
The money is invested and managed by an investment committee of experienced
business leaders – all trustees of the Phi Kappa Psi Foundation. The Foundation
manages the accounting, reporting and administration duties of receiving
and properly recording gifts. Thank you notes and tax receipts are sent
to donors and the staff can manage long-term pledge gifts during campaigns.
All this so the chapter or corporation doesn’t have to deal with
it.
The Phi Kappa Psi Foundation also can assist housing corporations in capital campaigns
for housing. The Foundation can provide guidance in evaluating the “readiness” and
ability of the alumni to raise funds, help set up a structure for the campaign,
help train volunteers who will make calls and run the campaign, and often
can provide literature and materials to help make the campaign a success.
In addition, the Phi Kappa Psi Foundation has done numerous pass-through grants for
chapter house computers and technology upgrades and can advise as to grant-related
issues in any chapter house improvement project to take maximum advantage
of any tax benefits and grant possibilities.
With chapters, the Foundation often can help with ideas and, sometimes,
with resources. There are limited funds and it isn’t appropriate
to use funds meant to help all chapters for the benefit of one or a few.
However, the Foundation has worked with several chapters to do special
mailings, to organize annual phone campaigns, to help set up special Homecoming,
Founders Day or chapter anniversary events, etc. The staff of the Foundation
can also provide ideas on how best to use Chapter Scholarship Fund
awards and often can have a representative of the Phi Kappa Psi Foundation at special
events where alumni donors and prospects will be gathered.
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Q: How does the Phi Kappa Psi Foundation handle gifts
from alumni?
A: All gifts which come to the Foundation result in a
thank you letter, a certificate (if they reach specific giving levels)
and a tax receipt at the end of the year (usually sent out at the end of
January). Online donors get a thank you receipt instantly, once their gift
is processed. They still get the other items too, by mail. Donors who wish
to make gifts to a specific chapter fund should include that fund on the
note section of their check or include a note with their check. If there’s
no indication of a specific use, the gift goes to the Alumni Support Program.
Donors who send in signed pledge cards (often used in chapter campaigns)
are entered into the Foundation’s database so we can “manage” that
account. Donors receive an initial thank you for their pledge and periodic
reminders when it’s time for them to make a payment. Traditionally,
a business return envelope is included to make it easy to pay. The Foundation
must have a signed pledge card for a specific amount and payment plan to
set this up. If it’s part of a chapter campaign, regular reports
can be made to the campaign leadership to keep them apprised of any gift
activity.
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Q: What happens once gifts are in the Endowment?
A: All gifts held in the Endowment are invested as part
of a general portfolio – somewhat like a pooled income fund – where
each account shares in the gains and losses according to their percentage
of the total pool. The portfolio is guided by an investment committee.
The annual reports, printed in the Shield, for the last few years list
the Phi Kappa Psi Foundation’s investment returns. The Foundation consistently
matches or beats the major indices and consistently beats the market results
for comparable organizations (educational foundations). The Trustees have
adopted a moderately conservative investment strategy, stressing protection
of the corpus and keeping high percentages of fixed income instruments,
compared to other foundations. What equity positions the Foundation does
have are often made in covered calls and options, which are less risky
than outright equity purchases.
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Q: What is the Phi Kappa Psi Foundations fiscal year?
A: The Phi Kappa Psi Foundation’s fiscal year is January 1-
December 31; the same as a calendar year.
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