Fraternity Horror Show Chapter One
David K Easlick Jr LLC
6 followers
June 10, 2024
The beginnings...
My experience in the fraternity movement as a professional began in 1980. Fraternities had completely lost interest on campus after the Vietnam War. They were seen as those square guys living in single gender housing while the rest of campus was experimenting with a variety of co-edification.
“Sex, Drugs and Rock and Roll” was the Campus Religion. Fraternity chapters were going under, and the property being sold for peanuts to a variety of nonprofit and other housing options. National Fraternities were basically broke and consisted of a staff of one or two individuals. The chapters surviving were basically identical except as to membership costs and their Greek letters.
Fraternities are tax-exempt under IRS Section 501(c)(7) which are nonprofit social organizations whose dues were not taxable, but also, not deductible. It was clear that there was no way fraternities could attract big dollar donations without tax deductability.
A group of national fraternity entities, under the then National Interfraternity Conference was attempting to get tax deduction for fraternities. This effort continues unsuccessfully to this day through the renamed North American Interfraternity Conference (NIC) and a National Fraternity PAC.
I was a young lawyer practicing in Detroit and involved in the alumni association of my University of Michigan Chapter of Delta Kappa Epsilon. Our house had burned down in 1968, and while we owned a historic building in Ann Arbor, we had no hope of recolonizing without being able to secure large tax-deductible donations from alumni.
I put together an organization called the Rampant Lion Foundation and applied for 501(c)(3) public charity status under Section 170(b)(1)(a)(6). I convinced several prominent DKE donors to serve on the board. I was able to get former President Gerald Ford and Bill Simon (former Treasury Secretary) both DKE alumni, to serve as honorary chairmen of the Rampant Lion.
In my application documentation, which survived IRS approval, we could invest funds in low interest mortgages on fraternity housing (which at the time of double-digit interest rates was critical), make grants for educational areas of chapter houses, make grants up to an architect documented percentage of the fraternity house’s educational areas, and award scholarships limited to an audience of undergraduate DKE brothers.
We were off and running. I put together a limited partnership that bought a former fraternity house now serving as a housing co-op, with a substantial second mortgage and grant from the Foundation. The Foundation used deductible dollars to purchase the historical building from the Michigan alumni to serve as a “library” of DKE historical materials dating to the founding of the chapter in 1854. This freed up substantial assets to re-establish DKE on campus.
Our National which had no money and a small, virtually penniless, foundation, loved this idea so much that we nationalized Rampant Lion, and we got a private letter ruling to merge the DKE Foundation into the Rampant Lion Foundation. I served as President of the foundation until December, 2010.
I also became the Executive Director of Delta Kappa Epsilon Fraternity December 31, 1988, serving until 2009. I think that we were nearly the first Greek organization having the executive of the foundation also serve as the chief executive of the fraternity, a role that became nearly universal over time.
Coincidentally, the film Animal House in 1979 rebuilt amazing interest in joining fraternities in the early 1980s for all the wrong reasons. This movie, plus a short-term reduction in the drinking age to 18, created astronomic growth in the membership in fraternities, coupled with a massive capital need to repair and rebuild chapter houses repeatedly, due to excessive social destruction wreaked upon them by the newly exuberant fraternity boys.
Due to developments in bringing in tax deductible dollars to fund what had been normal fraternity expenses, the NIC added a Foundation Section. There was a Cincinnati law firm, Manley Burke, that developed a practice dealing with Greek organizations. It sponsored a quarterly newsletter, an annual conference for fraternity execs and volunteers and a separate meeting for the staff and volunteers of the foundations.
The firm eventually merged the two meetings, changed the name of a portion of their practice to Fraternal Law Partners, hired John Christianson as a fraternity tax partner whose practice was expanding the use of tax-deductible dollars in areas where they never qualified before and drafting and defending Private Letter Rulings with the IRS.
Incidentally due to the nature of my expert work in fraternities and pressure applied by insurance defense lawyers, I have been banned from attending the conference and the annual meeting of fraternity executives since 2017, despite being a member of the Fraternity Executives Association (FEA) for over 25 years!
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