PSK Properties Purchases IHQ

In 2001, the Fraternity’s Grand Council identified a potential need for Phi Sigma Kappa to create a national housing corporation. The Grand Council appointed a committee to explore the feasibility and value of such an organization. The committee returned with the recommendation that a national corporation would be an asset to the Fraternity.

Based on these results, brothers Bud Berman (Swarthmore ’62), Jim Schmitz (UC/Santa Barbara ’80), and Glenn Roby (Northern Illinois ’91) worked together to form an organization that could acquire, improve, and manage chapter houses. The groundwork for the organization was laid and in November of 2002, Phi Sigma Kappa Properties was officially incorporated. Brothers Berman and Schmitz became the first directors of the organization and Brother Roby was appointed its first President.

Phi Sigma Kappa Properties collaborates with both the Grand Chapter and the Phi Sigma Kappa Foundation. However, Phi Sigma Kappa Properties, Inc. is a separate entity from the Grand Chapter and Foundation. Each organization is a distinct, separate corporation with independent boards of directors, investment accounts, and independently audited financial statements.

PSK Properties is financially self-sustaining and does not receive any revenue by way of membership dues paid to the Grand Chapter or donations made to the Foundation.

Phi Sigma Kappa Properties and the Phi Sigma Kappa Foundation recently completed an important business transaction that will provide benefits to the Fraternity for years to come. PSKP purchased the International Headquarters building from the Foundation, concluding a transfer that had been talked about for more than a decade.

Ownership of the IHQ fits within the mission of PSKP and holding the property in its portfolio makes sense. The rental income generated from the Grand Chapter created accounting difficulties for the Foundation. Foundations are not established to own property, thus creating the bookkeeping issues.

The purchase of the property at fair market value allowed the Foundation to add to its corpus. As a result, the Foundation can now grant more funds to the Grand Chapter for educational purposes.

For PSKP, owning the International Headquarters makes it easy for it to generate non-taxable income from the rent paid by the Grand Chapter. The rental income replaces investment income, which could be taxed because members do not generate it. Both the Foundation and PSK Properties gained substantial long-term benefits from the transfer of ownership.

Discussions have been ongoing for more than a decade. Originally, PSKP was not incorporated as a non-profit corporation. As a result, property tax would have to be paid on the IHQ. Conversely, the Foundation is a non-profit entity under IRS rules and did not have to pay property taxes in the state of Indiana.

When he became president of PSKP four years ago, Shawn Shivnen (Eastern Michigan ’00) made it an objective to gain non-profit status. Numerous unsuccessful attempts had been made in the past. After looking at the structure of similar corporations, PSKP was finally approved as a non-profit, which is incorporated in Indiana. Brother Shivnen had experience incorporating alumni clubs and knew that PSKP’s non-profit status had to be structured in a comparable way. The Board decided that forming a new entity that was built around the social aspects of brotherhood while helping obtain and improve local chapter housing would be a mission the IRS would approve. The IRS had already approved similar Properties entities in the fraternal world. Final approval was granted on April 15, 2020.

After IRS approval, several months were spent setting up the necessary bank accounts for the new corporation. In July of 2021, the new PSKP was fully functioning and operational. During the 68th General Convention, held in Scottsdale last summer, leaders of the Phi Sigma Kappa Foundation and PSKP discussed the purchase. John Sheehan (Northern Illinois ’82) and Mike Palm (Indiana ’04), officers of each entity, were asked to negotiate a purchase price fair for both. Within two months, both parties had agreed and local counsel in Indianapolis was hired to complete the transaction.

On November 11, Brother Shivnen traveled to Indianapolis for the Fraternity’s strategic planning meeting and was able to sign the documents that day.

The transfer of ownership is truly a win-win for all three entities of the Fraternity. All three are now structured as non-profit corporations, and the Foundation has more funds available to fund Grand Chapter projects, which can only mean positive results for its membership. Shawn Shivnen PSK Properties President