Craig Templeton Executive Director Craig.Templeton@SigEp.net Phone: 804-353-1901

As the school year winds to a close, I want to update you on a few items that we are working on to be the best we can be. The performance of our chapters is restoring our relevance as a valued partner in higher education.

One of the National Board of Directors' strategic objectives is to be recognized as being so good that others move to emulate us. The North-American Interfraternity Conference (NIC), with the leadership of past Grand President Edward H. Hammond, our NIC Delegate, joined the conference of college and university presidents, the national Association of Fraternity Advisors and the national Pan-Hellenic sororities to adopt standards a couple of years ago that look strikingly similar to SigEp’s expectations for quality chapter operations. It was an example of SigEp leading the way in the fraternity movement.

Membership

More than 6,000 new members were recruited last year for the first time since 1996, and recruitment will be up slightly again this year when we close the books on June 30. We have 257 chapters reporting this year, compared to last year’s 262 (nine closed and four opened). The nine closed chapters accounted for only 108 new members last year, and expansion to four campuses added 128 new members.

With 30 days to go, this year’s average chapter recruited 23.5 new members, compared to 22.5 on the same date last year. We are moving aggressively on that number with summer and year-round recruitment, the Balanced Man Scholarship, and using lessons from expansion to open new avenues of recruitment like the “Yale Meeting Plan” of inviting prospective members to chapter sound body brotherhood events after chapter meetings—simple ideas that work anywhere.

We will be watching recruitment at 20 chapters in particular over the summer to evaluate the impact of our second mid-year National Recruitment Retreat in Tampa, Florida, last Christmas break. Staff and volunteers targeted 20 critical growth opportunity chapters to instill summer recruitment, the Balanced Man Scholarship, and other best practices of recruitment.

PMR

The PMR (Periodic Membership Report)—our annual census of membership as of March 1—is up 4.8% to 14,353, above 14,000 for the first time since 1995. The PMR tallies members by class year providing the best data we have presently for measuring retention of members. The all-time high was 1990-91 with 16,800, dropping to 12,689 by 1996-97. The PMR has steadily increased since 2002-03, but most sharply in the last two years (3.2% and 4.8%, respectively). PMRs are now electronically filed, which speeds up processing to where we now build the annual financial plan with actual PMR numbers already 100% reported. The advancement in reporting provides for precision budgeting.

Finances

Grand Treasurer Chris Bittman continues to guide and monitor the strongest fiscal condition the organization has ever seen. We overhauled accounting systems and procedures under then-Grand Treasurer Jim Robeson’s watch in 2002, adopting an accounting program compatible with our membership database. We doubled the accounting staff—to two—and shortened receivables processing by an average 45 days and have maintained accounts receivable at less than 2% over the last six years. We’ve also gone from $4.1 million in total annual revenues to $9.4 million and doubled total assets from $23 million to $46 million since 2000. That growth has been largely fueled by the growth in housing—NHC now owns and manages a dozen chapter facilities. Interest returns on loans in the Housing Loan Fund alone will generate almost half-a-million dollars more for housing this year ($488,000).

The Balanced Man Program

The Balanced Man Program continues to be the most recognized fraternity program in America, practiced by 78% of our chapters today. The Member Development Committee worked with staff this year to launch a new on-line proficiency assessment tool for chapters. The result, " Excelsior," was deployed in February and has already evolved into a complete chapter management system for chapters, staff and volunteers. More than 200 chapters have already completed the assessment, evaluating everything from housing, volunteer engagement, and chapter recruitment to, of course, member development programming and retention with the valuable management data to tell us why undergraduates stay or drop out.

The Member Development Committee is coordinating with the new Volunteers Program to recruit and train regional “super” stewards to work with Balanced Man Stewards at chapters. The role of the Balanced Man Steward has slipped in recent years, and the committee has committed to revitalizing the role as a mentoring and guidance resource for undergraduates to perfect the Balanced Man Program.

Excelsior, along with the resurgence of Stewards, will bolster the Balanced Man Program.

Leadership Continuum

The Leadership Continuum of SigEp Leadership Programs has taken on its own “brand identity.” I was impressed to hear it mentioned by name in programs and conversation at the annual Association of Fraternity Advisors conference—the campus Greek advisors—in Cincinnati this year. The bookends of the Continuum, EDGE and the Tragos Quest to Greece remain unmatched in the fraternity world.

The Leadership Continuum anchors our plan for the future of the Fraternity to work with the Educational Foundation for continuing the awesome fund raising initiatives they are rolling out. We made history in just 45 minutes at the Foundation Luncheon in Atlanta last summer when alumni committed $15 million. In addition to funding the Leadership Continuum programs, the Foundation will use its new funds to continue expansion of chapter scholarship programs, Residential Learning Communities, and chapter leadership programs.

Grades

Evidence continues to indicate that the Phi Beta Kappa Wheelhouse challenge for chapters is a “silver bullet” in risk management. We set a goal to get 50 chapters into the Wheelhouse (above 3.15 chapter GPA) this year, but the undergraduates proved overachievers with 78 chapters above the Wheelhouse threshold. The correlation to risk? We’ve never closed a chapter in the Wheelhouse for low manpower or risk management violations. While such low maintenance chapters that maintain strong memberships provide a great revenue stream at low cost for the obvious membership fees, the real fortune seems to be in reduction of risk. Chapters with high grades rarely end up party to major liability cases. Universally, we have developed a remarkable record and we’re pretty sure it’s related.

We self insure the first $100,000 of a claim or judgment before we tap into our insurance and we haven’t done that since 2003. For fraternity’s these days, that is unheard of. I must note, however, that there is one case pending that could conceivably reach that point…and the chapter in that case had a 2.69 GPA.

Our insurance broker actually sent a team of underwriters to Zollinger House a few years ago to find out how the biggest fraternity in America could have the lowest claim ratio.

Alumni & Volunteers

We think we’ve finally cracked the code on volunteer alumni programming. The Board named a Committee on Volunteers three years ago, chaired by National Director Phillip A. Cox, Indiana ‘84. Phil and his committee developed a long-term plan that included staffing and direction for recruiting and training volunteers at the chapter level to have more classic “board of directors” responsibility and accountability for the performance of their respective chapters.

We hired Arkansas/Louisiana District Governor Gary L. Huff, Central Arkansas, ’91, as Director of Volunteers. Since joining the Headquarters staff last year, Gary has created the organizational structure and on-line and live training programs for Alumni and Volunteer Corporation Board members. In June, he and his volunteers group will be training 100 volunteer trainers in Los Angeles and Richmond to fan out across the country this year delivering alumni board training for all chapters. The 100 volunteer trainers have been participating in weekly WebEx distance learning programs taught by staff and volunteers in the field.

Since the on-line training program launched at Conclave, 266 volunteers have been certified by completing four core training programs covering the fundamentals of chapter operations. Additionally, 461 individual volunteers have completed a total of 1,786 on-line courses.

The real proof is having full boards at every chapter. District Governors are taking more clearly defined responsibility for filling vacancies and training new volunteers, to assure every chapter has at least five volunteers engaged on their AVC Boards. We have added 526 new volunteers to the roster this year, but offset that by removing 364 volunteers who had been listed but either quit or were not engaged at the chapter. We still have a lot of work to do: On average, we now have 4.8 volunteers per chapter (1,207), which laws of averages tells us we are still short many places. We are concentrating on every chapter having at least five core positions filled, to attract the remaining full slate to sustain each chapter.

Increased attention and accountability of volunteers have revealed a darker side—we have prosecuted criminal cases of embezzlement by alumni volunteers in Florida, Wyoming and California, and the Board has exercised its authority to dismiss several others whose relationships or involvement had at least raised suspicion or question.

Journal

The Journal, has been firmly restored as the leading alumni communications magazine among fraternities and returned to award-winning status this year with the highest award among fraternities at the College Fraternity Editors Association conference in Memphis earlier this month—we took second place to a sorority magazine. The Journal has been back for eight years as our 52-page flagship publication, published three times a year—corresponding to school terms spring, summer and fall. While others are scaling back publications because of costs, the undergraduates of SigEp raised the Journal lifetime subscription fee to maintain our continuous link to alumni by funding a makeover re-design and an on-line expansion of the magazine. Both are funded for the coming year, so I hope you will see improvements this fall as we continue to build on our greatest link to every member.

Headquarters Staff

Last year I established a management team in the Headquarters, called the Lead Team. After Conclave, we undertook a top to bottom evaluation of the Headquarters performance, staffing and resources to identify barriers to efficiency, performance and innovation. We evaluated four areas:

• The organizational structure of staff;
• The performance management of personnel, including core competencies, skills development, performance and accountability expectations;
• Business processes and technology; and
• The workplace environment, both culture and work space facilities.

After talking to past staff and volunteers, we have restructured chapter services for next year to return to two Directors of Chapter Services, dividing the country simply east and west (Chad North, Bucknell, ’06, and Sean Anthony, Dartmouth, ’06, respectively). Director of Operations Brian C. Warren, Virginia, ’04, is in charge of Chapter Services, Expansion and Leadership Continuum programs.

Performance—While we have adopted new personnel performance management standards and training for staff, the change I expect to be most visible will be in the performance preparation and expectations of the incoming Regional Director staff. The Summer Development Program has been redesigned for the first time in decades to clearly teach skills necessary for all staff to be “surgically proficient” in five specific areas:

• Recruitment;
• Member Development (able to respond to everything from crisis hazing situations to mastering the complete Balanced Man Program);
• Chapter academic and leadership programming;
• Chapter financial operations and management; and
• Volunteer recruitment and engagement for chapter mentoring and AVC operations to provide board of directors-level responsibility for the operations of every chapter, from recruitment to grades and member retention.

And through it all, the SigEp staff’s work ethic of Continuous Attention to Detail and Immediate Follow-up (CADIF).

Technology—We are in the midst of a major technology upgrade of the Headquarters. Upgrades were engineered to support work processes, like membership registration and event registration, but we are finding a host of added benefits to track member participation and demographic tracking and so much more that will help us better identify and recruit volunteers and one day provide the Educational Foundation valuable data to mine for its efforts.

Workplace—The National Board of Directors has established a Headquarters Facility Committee to explore the right solution for Headquarters office space and operation, hoping to match needs for a Headquarters with a new Strategic Plan dictating future facility needs.

In the meantime, the failure of an air-conditioning unit in the back section of Zollinger House saturated plaster ceilings and walls which caved in over a holiday weekend last fall. The catastrophe prompted a great workspace makeover, with an open, futuristic, collaborative work space that also accommodates transient office “hoteling.” We continue to re-shuffle spaces in Zollinger House to maximize space for a growing Foundation staff and Fraternity operation.

Strategic Plan

In his acceptance speech at the Atlanta Conclave, Grand President Stephen B. Shanklin, Murray State ’70, promised to review the Fraternity’s Strategic Plan, established in 2001. Tom Jelke is leading a steering committee with Ken Maddox and Jeff Prouty, working with a consultant, the Board, staff, volunteers and undergraduates to help the Board review and craft an updated strategic direction. We have outlined a process to be inclusive of insights and ideas from all stakeholders over the coming year to produce a final product early next year.

Housing

“Thanks…for saving our lives!”

We all know far too many late night chapter house fires produce tragic results. We were lucky at the University of Wisconsin a couple of weeks ago. The fast action of a passing police officer who spotted fire climbing the back of our house saved lives. The police officer prompted evacuation even before smoke detectors activated. We hung a sign on the fence to convey our sentiments.

Madison Fire Investigators are investigating the cause. Fire spread quickly up the exterior back wall, into the eves, dashing high speed through the attic where it brought down the entire core of the house. Smoke alarms functioned fine, but with the external origination, didn’t activate until the structure was heavily involved.

We are continuing to lead efforts in Washington to win passage of the Collegiate Housing Infrastructure Act and the College Fire Protection Act that will allow use of tax-deductible contributions and grants for student housing that would include our continued efforts to provide life safety upgrades, such as sprinklers. Fraternities and sororities represent the largest not-for-profit student housing landlords in America, housing more than 250,000 students annually.

NHC

When I came in as Executive Director in 2000, the Board recommended I seek out a “second in command.” I quickly realized a need for not one but two captains. The demands of NHC itself were more than we were equipped to handle. With the real estate and financial markets exploding, it was time to get organized to capitalize on the opportunity. The result for SigEp has been the most remarkable run of fraternity housing in the American college fraternity movement.

NHC Managing Director John D. Weir, Purdue, ’01, is starting his eighth years on the SigEp staff. He picked up efforts started by his predecessor, Jeffrey R. Prather, Ball State, ’99, and my predecessor, Jacques Vauclain, Davidson ’90, to record outstanding loans, enforce payment schedules and—what might seem most obvious, but surprisingly not as easy as it sounds—aligning chapter services to shore up chapters with bad loan performance. The turn-arounds were many, some pretty fast, and combined for a remarkable reversal of fortune for SigEp housing.

After many years of non-performing debts at such places as Arkansas State, Michigan State, Illinois State, Western Michigan and Indiana, loans were recorded and payment schedules enforced, and our loan portfolio started growing. We have reduced our loan loss reserve by 61% (2001: $2,445,361; 2007: $952,859), while more than tripling our loan portfolio (2001: $7 million; 2007: $22 million). At the same time, we have reduced contingent liabilities by 35% (2001: $6,744,705; 2007: $4,404,117).

Interest earnings on the NHC’s Housing Loan Fund provided $488,000 growth this year to the fund—and that’s after funding overhead and expenses for an NHC staff of 3.5 and doesn’t count the $236,000 from membership fees ($10 from every new member fee). While most real estate developers and lenders are bemoaning huge losses, we’re proud to report that the SigEp National Housing Corporation is still making money to build, acquire and renovate houses at a record pace.

I mentioned Arkansas State, where, as many of you may recall, was destroyed by an arsonist in Jonesboro. When we made the recommendation to close the chapter (Arkansas Gamma) in 2002 for hazing, we knew the financial risk was enormous. The debt had spiraled to almost $1 million on the showcase facility. NHC President Bert J. Harris, III, Florida ’74, and I remember calling Grand Treasurer Jim Robeson with a rather unorthodox proposition—to take out the first mortgage lender ourselves to protect our position. Brother Robeson and the Board had the guts to give it a shot.

Right after the students moved out, an arsonist burned the house down - a total loss. Thank goodness for great insurance, we were able to recover the loss completely.

Then came John Weir, who wisely managed that windfall for the benefit of SigEp real estate elsewhere, like Indiana University where we formed an LLC to protect us from losing that landmark facility. Our magnificent new “Chapter of the Year” at Indiana moves back into the house this fall.

John had continued an effort started by Jeff Prather, and NHC Trustee Clark H. Byrum, Indiana, ’58, and Bert Harris to put together a bold lending facility with BB&T Bank. The creative arrangement allows us to place and service up to $18 million in first mortgage loans with favorable interest rates.

We were surprised to find how hard it would be to get enough AVCs to actually qualify for our loans. The pressure has produced great results in prompting AVC boards with housing needs to get organized.

To further fuel housing development, we put together a housing fund-raising program. Erin D. Mullally, Michigan State, ’99, moved into a new position in Housing in 2003, teamed with Pennington & Associates, a fundraising firm in Lawrence, Kansas, to work with specific chapters. Getting AVCs suited up for fund raising proved another idea easier stated than solved, but has spawned valuable initiatives like a newsletter program coordinated to set the stage for fund raising.

The Fraternity’s new volunteer program is helping the NHC to recruit, place and train AVC officers to assure our loan placements.

After Erin’s departure, and with fundraising being the logical domain of the Educational Foundation, the program was moved to the Foundation. Today Scott Thompson, Southern Mississippi ’99, carries on with the Educational Foundation program, targeting chapters to cultivate donor bases for professional fund raising by Pennington.

Since this program’s inception five years ago, we have raised more than $19.4 million in pledges with $9.2 million collected to date for 17 chapter housing campaigns. We have placed all $15 million of BB&T’s money.  At its meeting last weekend, the Board just authorized an additional $3 million to fund more loans. Combined with our own Housing Loan Fund, we are now managing $25 million in chapter housing loans. No fraternity has ever put so much money into housing in such a short period.

Since 2000, we or our alumni boards have built new houses at:

• Miami (Ohio Eta)
• South Carolina (South Carolina Alpha)
• Kentucky (Kentucky Alpha)
• North Texas (Texas Beta)
• SMU (Texas Upsilon), new house built over an existing shell
• George Washington University (D.C. Alpha)
• University of South Florida (Florida Iota)
• University of Central Missouri (Missouri Theta), plus acquisition and renovation
• Missouri State University (Missouri Eta)

We acquired new houses at:

• Colorado (Colorado Alpha), pending
• Drake (Iowa Delta)
• Elon (North Carolina Mu)
• Southeast Missouri State (Missouri Zeta), a second university owned chapter house on campus
• Texas A&M (Texas Mu), acquired and since renovated
• Texas Tech (Texas Iota)
• Tulane (Louisiana Alpha)
• Yale (Connecticut Delta)

Leased acquisitions at:

• University of Chicago (Illinois Mu), leased chapter house
• Maryland (Maryland Beta), leased house on Greek Row
• Rutgers (New Jersey Beta), leased former Johnson & Johnson mansion
• UCLA (California Omicron)
• Berkeley (California Alpha)

We have completed major renovations at:

• Baker (Kansas Alpha)
• Central Arkansas (Arkansas Zeta)
• Colorado (Colorado Alpha)
• Duke (North Carolina Gamma)
• Georgia Tech (Georgia Alpha), virtual total rebuild over existing shell
• Kansas State (Kansas Beta), virtual total rebuild over existing shell
• Kentucky Wesleyan (Kentucky Gamma)
• Missouri (Missouri Alpha)
• Nebraska (Nebraska Alpha)
• Oregon State (Oregon Alpha)
• Southeast Missouri State (Missouri Zeta)
• Stevens Tech (New Jersey Alpha)
• Texas (Texas Alpha), plus major addition
• University of North Dakota (North Dakota Alpha)
• USC (California Beta)
• Washington State (Washington Alpha Residential Learning Community)
• West Virginia (West Virginia Beta)

Construction is underway or pending at:

• Drake (Iowa Delta)
• Indiana (Indiana Beta)
• Kansas (Kansas Gamma)
• Massachusetts (Mass Alpha)
• Mississippi State (Mississippi Beta)
• Wichita State (Kansas Eta)
• Wisconsin (Wisconsin Beta), fire rebuild

You

We continue to face many challenges. The consistency of quality programming from one chapter to the next will always demand the attention of staff and volunteers.

I believe that providing the best collegiate experience to help men live their best lives is the strongest path to growth and strength. Young men want to be part of a group that consistently graduates more men in four years with the best grades on campus. Our early retention data is proving that’s us. Your chapter or one near you needs your help in sharing that message. The Balanced Man Scholarship, year-round recruiting punctuated with summer recruitment, and our undergraduates working hard to get that word out on their campuses will prove it with healthy growth. They need your help in learning how to sell it.

We are continuing to work hard, not maintaining our place at the top, but in rising even higher, to use wisely the resources provided by the Foundation’s donors and our undergraduate brothers to do even more to establish the Fraternity’s role as a valued partner in higher education across America. A bit audacious perhaps, but I figure with about 15,000 undergraduates and a couple hundred thousand fired up alumni, we just might be able.

In phi,

Craig Templeton
Executive Director
Zollinger House, May 29, 2008