Fraternities in the headlines, money in their banks

Together, 74 national organizations had $170 million in revenue in 2010

Despite a recent slew of negative headlines, fraternity membership levels and revenues continue to grow, reports Katherine Mangan reports for The Chronicle of Higher Education.

In eight years, total membership in the 74 fraternities that make up the North American Interfraternity Conference grew about 46% to 387,859 in 2013-2014. The conference represents approximately 6,000 chapters on about 800 campuses.

With membership come dues. In 2010, fraternities brought in $170 million, according to a Bloomberg Business analysis of IRS filings.

Part of those dues go toward insurance premiums that are unlikely to protect individual students should members engage in hazing and or illegal behavior such as underage drinking. That leaves some individuals financially exposed. 

"Many of [fraternities'] assets are insulated by foundations and housing corporations that are harder to tap, and Greek organizations have banded together in group-insurance plans that restrict coverage for their members and chapters," writes Mangan.

The goal is to move liability to chapters, who in turn push it to parents' homeowners insurance companies, says Brett Sokolow, president of college consulting and law firm Ncherm Group

"The nationals take the position that they can't go down with all the sinking ships," Sokolow says.

Frequently, the cases brought are in reference to activities that void fraternities' insurance. But most insurance companies will not withhold coverage simply because students were drinking underage—unless it was part of hazing, says Jim Ewbank, a lawyer who represents Phi Kappa Psi at Wabash College.

"To say the nationals are leaving members out in the cold is just not true," he says.

In the past six to eight years, lawsuit settlements paid by fraternities have grown from approximately $20 million a year to $30 million a year, estimates Sokolow. 

Media coverage and membership

Part of the reason students continue to join fraternities amid scores of negative press is that the organizations provide encouragement and social support as students form their identities, says Charles Eberly, an emeritus professor of counseling and student development at Eastern Illinois University.

Eberly argues that students have few other options for mentorship. Pressure to spend more time on profitable research means that professors' "time to listen to students has been markedly reduced," he says.

Advocates say the organizations also provide outlets for community service and leadership training.

However, continued coverage of partying and sexual misconduct may actually dissuade some students from joining and encourage "people with high-risk behaviors to join," says Peter Lake, director of Stetson University's Center for Excellence in Higher Education Law and Policy (Mangan, The Chronicle of Higher Education, 5/28 [subscription required]).

Thoughts on the story? Tweet us at @eab_daily and let us know.

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