The Standard Budget: Best Practices

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The Standard Budget: Best Practices

Plan practically.

Creating and maintaining a balanced budget each semester will help to ensure the financial stability of your chapter for years to come. When creating a budget, it is important to plan for all foreseeable expenses. Many chapters find it useful to gather receipts and bank statements from previous years to ensure certain items are not overlooked.

While a good budget can look a variety of different ways, the International Fraternity recommends that our chapters utilize the Standard Budget. This budget was designed to cover the needs of your chapter, including line items for your specific dues structure, debt incurred to the International Fraternity and many more. You can find the Standard Budget in the Resource Center through your myPIKE account, or just ask your chapter consultant!

The financial operations of a chapter can really make or break the organization, so focusing on effective budgeting while sticking to the plan set forth can make all the difference. See below for some best practices for budgeting:


It is generally a good practice when preparing income estimates for the budget to error on the side of conservatism, particularly in the area of fundraising. Overestimating the amount of income received over the course of the term can have disastrous results. It is often useful to query other chapters on campus to determine the “market” benchmark in establishing an appropriate dues level for the chapter.


A strong recruitment can have an incredible impact on a chapter’s budget. For example, let’s say that one semester’s recruitment efforts generated additional revenue of $20,000+. The budget shown would be an example of a 60-man chapter that recruited 30 men and initiated 27 of those men. Successful chapters often charge a new member fee to offset costs associated with the temporary membership. Chapters with a new member fee traditionally exhibit a higher retention percentage as well.


In order to prevent a great recruitment class from creating a financial burden on a chapter’s budget, appropriate new member and initiation fees should be established and regularly reviewed. New member fees should be sufficient enough to cover expenses associated with new member education as well as a portion of the chapter’s programming (a good rule of thumb used by chapters is to have new member fees equivalent to initiate dues plus the costs of the Garnet & Gold and new member pin). Likewise, the initiation charged by the chapter should be sufficient enough to cover the one-time membership fee plus the cost of the initiate badge.


It is strongly recommended that no new member be initiated without first paying all fees due to the chapter. Establishing the precedent of financial responsibility during the new member period will help to create more responsible and committed lifelong members. After examining the projected expenses for the term, you might find it necessary to revisit the dues structure of the chapter. While expenses may sometimes be cut in certain areas, often the simple yet unpopular solution to a budgetary deficit is increasing the membership dues.


Each term, there are certain “administrative” expenses that chapters can expect to encounter. These may include the chapter assessment (as determined at the International Convention), the Liability Protection Program (LPP) assessment, and costs associated with typical chapter operations. The most successful chapters in Pi Kappa Alpha also find it useful to set aside funds to assist in sending chapter delegates to PIKE University events.

It is common to budget for savings and uncollected income in addition to other expenses the chapter may incur. While a collection rate of 100 percent is an excellent goal, this is rarely a reality. The “Administrative Considerations” shown under “Administrative Expenses” are an aggregation of the items such as collection from delinquent accounts, billing service finance charge, reserve fund, accounting services and A/R contingency (uncollected income). For A/R contingency, we recommend a 12 percent contingency, but certainly adjust as you see fit for your chapter.


Programming expenses consist of committee budgets and special chapter programs and are generally considered the “substance” of chapter operations. These programs are what the campus and outside community typically associate with fraternity life; as such, it’s great to be able to maximize the financial resources you put into chapter programming.


A budget is only as useful as its application. If budgets are created, then ignored, the process is substantially less valuable. Ideally, as chapter treasurer, you will maintain the updated budget using actual/year-to-date (YTD) totals. Actual/YTD totals can be a great tool in measuring income and expenses to date against the total budget. Uncollected income in excess of budgetary allowances may restrict chapter operations and force the cancellation of chapter events. Allowing members to see that the mixer with your favorite sorority had to be cancelled because several members have not paid their dues may help generate added pressure in ensuring brothers are living up to their financial obligations.


As with most financial matters, with a budget there is always a “bottom line.” The goal in creating a balanced budget is to make certain that the expenses of the chapter do not exceed the income. There is no need to carry a substantial surplus if you have already budgeted for reserves and have a sufficient A/R contingency.


The treasurer handbook has plenty of great information relating to your role, including sample budgets for the above areas as well as budgeting for chapter housing and kitchens, which should always stand separately from the operational budget. Run a tight budget and set your chapter up for success!

By |2020-12-09T15:19:34-06:00December 9, 2020|Treasurer|0 Comments

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