Like “Jello” and “Kleenex”, the term “house corporation” has a generic meaning for some alumni groups that are operating chapter houses. The typical scenario is that a couple of well meaning brothers decide to take charge of chapter housing to raise money, sign a lease or buy a property. Voilá! A house corporation is born. That’s all it takes, right? Hardly.
Corporations by definition are legal entities approved by state governments to operate for a defined purpose. Some corporations are formed to generate profit for the owners or stockholders (like Microsoft) while others are formed as “nonprofit” and all revenue is reinvested in the corporation’s purpose. House corporations are formed under the “nonprofit” definition.
Since the goal of each Sigma Chi chapter is to live long into the future, having a house corporation that outlives the volunteers that serve it is important for a number of reasons:
Continuity. House corporation members and officers may come and go but a corporate entity allows the purpose to continue on.
Limiting Personal Liability. Members and directors of nonprofit corporations are generally protected from personal liability, meaning protection for their own assets (money, real estate, etc.).
Legal Standing. Lenders and landlords require a legal entity to open bank accounts, secure notes, mortgage loans and leases. If there is no legal house corporation, individuals will be required to sign contracts and be personally liable for the debt.
Identity & Credibility. Corporations provide an identity which is valuable for fundraising and transacting business.
As far as the steps to incorporating, choose a name like “(Chapter Letters), Blue & Gold or White Cross House Corporation”. You should avoid using the name Sigma Chi as it is a link to the general fraternity which has no authority or control over the house corporation.
Incorporate with your state. Every state has a department in charge of this function (often called Secretary of State, but may vary). All states have internet websites that allow the transaction to be handled online. Using one of the internet businesses to assist in forming your corporation is unwise. One size does not fit all. It’s best to use a lawyer who regularly forms corporations.
• Hold an organizational meeting to elect directors.
• The directors elect officers from amongst themselves.
• Prepare and follow bylaws and Standard Operating Procedures.
• Open a bank account to handle funds.
• Transact business.
Incorporating your house corporation is relatively simple and inexpensive and provides many benefits. A house corporation in name only is no corporation at all. It might even be construed as a partnership which can place every participant’s assets in harms way. Get legal and do it soon! If you have any questions on this process, contact your Grand Trustee. Contact information is found on Page One of The Sig House.