2. A Win-Win-Win: Investing Foundation Resources in Chapter Housing Loans
Allison Rickels, Executive Director/CEO
FarmHouse Foundation
John Christopher, Attorney & Partner
Fraternal Law Partners
Jim Tobin, Immediate Past Chairman

3. Chapter Housing Loan Program (CHLP) Overview
Having donors invest in the Foundation’s endowment funds in support of the Foundation’s Chapter Housing Loan Program (CHLP) and their respective chapter offers a tax‐deduction for donors, a competitive mortgage loan for the Association, and income in perpetuity for vital educational programs needed in support of FarmHouse undergraduates in the future. ~ Established in 2012 ~

4. Mission Alignment
CHLP directly aligns with the Foundation’s strategic plan and Live. Learn. Lead. – The Campaign for FarmHouse. One key objective states: “The FarmHouse Foundation will provide funding to foster the growth of FarmHouse Fraternity through the provision of competitive living/learning housing.”

5. Purpose of CHLP is 3-Fold
1) Assist chapters and their respective local Associations in building, renovating and/or maintaining safe, affordable chapter houses 2) Offer additional opportunities for donors to support chapter housing above and beyond the educational portion 3) Invest the Foundation’s endowment assets in chapter housing as a diversified investment strategy

6. Involved Players Trustees who created CHLP CHLP Review Committee
Foundation Executive Director/CEO
Fraternity Board & Executive Director
Investment advisors & Trust Company – Financial Counselors & Midwest Trust
Attorneys
– Fraternal Law Partners
– Utilized Alumni & Trustees – pro-bono work
Accountant – Mike Northup, CPA
Local banks & title companies

7. Loan Terms
Loan Amount: $50,000 to $500,000 Purpose: for purchase of an existing house, new construction, repair/remodeling and/or refinancing. Term: up to 10 years Amortization Schedule: up to 25 years Interest Rate: 50 basis points over the 15-year fixed mortgage rate quoted by the Wall Street Journal, or a minimum of 4.5 percent whichever is greater Collateral: first or second mortgage lien Loan to Value: not to exceed 80% of appraised value of property and renovations or construction Lending preference: co-participant with a local bank Refinance: renewal not automatic but can be refinance when term concludes Pre-payment: no penalty for early payments

8. Duty of Care IRS and State Law Implications
Housing grants versus loans
Board responsibility
Internal Procedures

9. CHLP Review Committee
Members appointed by Foundation Board of Trustees
Alumni with experience in banking, finance, real estate, lending and/or experience managing an Association
Comprised of at least 3 alumni, plus a Trustee liaison
Committee elects one member to serve as Chair

10. Loan Vetting Process – CHLP Review Committee
Vet each CHLP application and relevant supporting documents
International Fraternity provides an assessment about the chapter and association
The Staff creates webpage with application materials & summary overview
The Committee has 1-2 conference calls to discuss application, talk with Association about their loan request and project, then collectively vet and determine a recommendation
Provide a formal written recommendation to the Trustees for their review and vote at a following board meeting

11. Application Webpage

12. Partnering with Banks Co-participation Pro-rata participation
Interest rate differences
Construction lending
Credibility & Competition

13. Closing Process Legal counsel Working with a local bank
Sole lender process
Working with a local attorney hired by Association
Title company involvement
All closing costs paid by Association

14. Servicing Loan Managed by Midwest Trust
Wire transfer from fixed income assets of endowment to Association
Financial Counselors/Midwest Trust reports earned interest as part of endowment investments
Monthly ACH payment by Association to Midwest Trust
Midwest Trust tracks monthly P&I payment schedule
Accountant tracks P&I payment schedule
Monthly reimbursement to building fund for any interest difference between bank and Foundation
Year-in-review by Auditor

15. Learning Lessons Managing expectations Legal best practices
Developing processes and procedures
Staff capacity
Update investment policy
As spin-off, created separate loan policy to borrow funds from a building fund instead of grant
Provide Annual Report to involved players

16. Outcomes Service 3 loans for $2.35 million
Approved 1 loan to be made in 2019
Vetted 3 loans that secured better rate with bank
Anticipate 6 applications in next 1-3 years
Received $1 million endowment gift to loan principal
During Live. Learn. Lead. – The Campaign for FarmHouse, 46 new endowment funds established totaling $5.3 million in new pledges & gifts, adding more funds available for lending
Honored with 2016 NICF Best New Development Idea

17. Questions?