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Tags: Fraternities | Congress | Tax Break | Hazing

Fraternities Tap Congress for Tax Break Without Hazing Penalties

Thursday, 25 July 2013 12:06 PM EDT

About 40 percent of U.S. senators, and 25 percent of U.S. representatives, belonged to fraternities or sororities in college. On April 24, more than a dozen of these grateful alumni extolled Greek life at an annual $500-a-plate dinner in a Washington hotel ballroom for “FratPAC,” the industry’s political arm.

One by one, they took the podium and praised fraternities for teaching them loyalty, leadership, and practical skills.

“We learned to tap a keg,” declared Representative Steven Palazzo, a Mississippi Republican and Sigma Chi brother, who then yelled a cheer as hundreds of FratPAC donors applauded.

Many of the legislators also pledged support for FratPAC’s pet legislation: a multi-million- dollar tax break to let fraternities and sororities use charitable donations to renovate and help build chapter houses.

“This time, we think we can get it done,” said Ohio Republican Steve Stivers, a Delta Upsilon alumnus, adding, “We need more Greeks in Congress.”

While fraternities used to limit their political activity to fending off potential threats, they’re “playing offense today” by promoting initiatives such as the tax break, FratPAC and two companion groups told fraternity leaders in a Jan. 10, 2011, memo.

Besides pushing the tax bill, FratPAC, as the Fraternity and Sorority Political Action Committee calls itself on its Twitter page, has helped dissuade U.S. Representative Frederica Wilson from filing federal anti-hazing legislation. Wilson, a Democrat, is co-sponsoring the tax proposal with six senators and more than 50 other representatives.

Hazing Death

Debbie Smith, whose 21-year-old son died in 2005 from heart failure and seizures after a hazing ritual, is “dumbfounded” by the industry’s lobbying for a tax break and against national hazing penalties, she said.

Smith’s son, Matthew Carrington, collapsed after being forced to do pushups in raw sewage while fans blasted cold air on him in a basement at Chi Tau fraternity at California State University in Chico. After his death, her advocacy spurred the California legislature to enact “Matt’s Law,” toughening hazing penalties.

“Why do fraternities need government help?” Smith asked. “They want to build more houses for hazing? I don’t think so. They need to learn safety first.”

Fraternities’ Comeback

Attracting undergraduates with aggressive recruiting and the prospect of jobs at Wall Street firms and other fields dominated by Greek alumni, fraternities are making a comeback on college campuses.

Meanwhile the toll from hazing and binge drinking is mounting. The 101 fraternities and sororities in the industry’s trade groups had 630,052 members in 2012, up 25 percent from 503,875 in 2007. Since 2005, 59 students have died in incidents involving fraternities, about half of them alcohol-related, according to data compiled by Bloomberg. Ten students died in 2012, the most fatalities in at least a decade.

A 1996 fraternity house fire at the University of North Carolina that killed five students spurred the industry’s drive for the tax break. They decided that they needed a federal law to let them tap funds in their charitable foundations to outfit chapter houses with fire sprinklers.

About half of all fraternity houses lack sprinklers, according to an internal industry memorandum reviewed by Bloomberg News.

In 2003, the tax bill passed the House. Two years later, fraternities and sororities established FratPAC, which has contributed $818,000 to political campaigns, primarily to Republicans. It has made some of its largest contributions to key backers of its tax initiative, and to members of the House Ways and Means committee, where the bill is pending.

‘Substandard Housing’

It has given $29,500 to Representative Paul Ryan, the 2012 Republican vice presidential nominee and chairman of the House Budget Committee, and $24,500 to Pete Sessions, chairman of the House Rules Committee. Ryan, a member of Delta Tau Delta at Miami University in Ohio, previously sponsored FratPAC’s tax-break legislation. Sessions, a longtime supporter of the bill, is now the sponsor.

The bill improves housing for college students “so that they avoid problems that we have seen across the country where there are electrical fires and substandard housing,” Sessions said in an interview. He added that he “served proudly” as a member of Pi Kappa Alpha at Southwestern University in Georgetown, Texas.

Ryan declined to comment.

Network Support

As a congressman from North Dakota and member of the Ways and Means committee, Rick Berg co-sponsored the tax bill. FratPAC contributed $10,000 to his 2012 campaign for the U.S. Senate. He lost.

“The organization is much more than their financial support,” said Berg, a member of the Farmhouse International Fraternity. “There’s a network there.”

Of the 81 House and Senate incumbents to whom FratPAC contributed in the last election cycle, 54, or two-thirds, sponsored or co-sponsored the tax bill, according to FratPAC. It also donated to 17 first-time candidates.

FratPAC doesn’t donate to candidates just because they support the tax break, said Kevin O’Neill, a lobbyist at Washington-based Patton Boggs LLP and FratPAC’s executive director.

He was a fundraiser for the Bush-Cheney re-election campaign in 2004 and ran unsuccessfully for Congress as a Republican in 2007.

It “looks at a variety of factors,” he said in an e-mailed statement. “Good government needs more fraternity/ sorority alumni who can help us tackle the major challenges confronting our nation.”

Fraternity Freshmen

FratPAC is seeking to send more fraternity and sorority alumni to Congress. Freshman Republicans Robert Pittenger, a member of Kappa Alpha Order and a University of Texas graduate, and Brad Wenstrup, who joined Sigma Alpha Epsilon at the University of Cincinnati, spoke at the ballroom dinner.

“We invest” in open Congressional seats, O’Neill told the gathering.

FratPAC emphasizes alumni ties in its lobbying, said former U.S. Representative Ron Klein, a Florida Democrat who received $5,000 from the group in 2010. The national fraternity groups that came to see him about the tax bill reminded him that he had been president of the Alpha Epsilon Pi chapter at Ohio State University, he said. He co-sponsored the legislation in 2009.

“The way they’re targeting is a logical way to do it,” Klein said in a telephone interview. “If you happen to have been in a fraternity or sorority in college, and you lived in one of these houses, they make it a health and safety issue.”

Warm Memories

Another fraternity alumnus, former Senate Majority Leader Trent Lott, co-sponsored the bill in 2007. Lott, who had been president of the Sigma Nu chapter at the University of Mississippi, had such warm memories that he awarded jobs and favors to fraternity brothers, according to Curtis Wilkie, author of “The Fall of the House of Zeus.” Lott, who resigned from the Senate in December 2007, declined to comment.

Representative Palazzo, also a Mississippi Republican, is currently a co-sponsor. He denies having made the keg reference, according to his spokeswoman, Laura Chambers.

The tax proposal has gained bipartisan support. Last term, it had 169 House sponsors and co-sponsors, including 105 Republicans and 64 Democrats, and 22 sponsors and co-sponsors in the Senate, including 15 Republicans and seven Democrats. Formally known as the Collegiate Housing and Infrastructure Act, it would cost taxpayers $148 million over 10 years, according to a 2007 estimate by the Joint Committee on Taxation.

Eliminate Restrictions

Under IRS interpretation of existing law, donations to fraternities’ charitable foundations may be used “to build or improve” libraries or computer rooms within fraternity houses, not for sleeping or “recreational areas,” which the Internal Revenue Service deems “incidental” to schooling.

The bill, which fraternity leaders say is endorsed by dozens of colleges, would eliminate such restrictions by allowing fraternity and sorority foundations to use tax- deductible gifts to “provide, improve, operate or maintain” chapter housing. Fraternity foundations collectively held $534 million in 2010. Other groups that provide housing to college students would also benefit from the bill, its advocates say.

Donations are needed for fire sprinklers and other repairs, said Eve Riley, former chairwoman of the National Panhellenic Conference, or NPC, an Indianapolis-based group representing 26 sororities.

“They’re trying to get the houses up to code,” she said. “It’s not for building houses.”

‘Student Safety’

The tax benefit is primarily for “safety for students,” Cindy Stellhorn, FratPAC’s president and an insurance executive, said in an interview.

The bill has other benefits for Greek institutions. It would probably increase gifts to fraternity foundations, and help “leverage private funds” to build new housing, according to the industry’s April 2011 lobbying guide.

Some colleges, such as Clemson University in South Carolina, have endorsed the tax break. Clemson has a “robust Greek community,” said Katy Bayless, its director of federal relations. Clemson has also hired O’Neill to lobby for federal funding.

On June 8, 2011, O’Neill and another Patton Boggs lobbyist met with a staff member of the House Ways and Means Committee to explain the legislation, according to a memorandum by FratPAC and two companion groups, the NPC and the North American Interfraternity Conference. Fraternities and their allies said they hope the bill will be part of comprehensive tax reform that Ways and Means Chairman Dave Camp is promising.

“We’re hoping” it will pass this year, FratPAC president Stellhorn said. “We had great receptions when we were on the Hill in April.”

Undergraduate Members

Preceding the April 24 ballroom dinner, hundreds of undergraduate fraternity and sorority members descended on Capitol Hill to lobby for the tax bill. In their best suits or dresses, armed with talking points, maps and schedules, they moved in small groups from one lawmaker’s office to the next for meetings arranged by O’Neill’s firm.

The conversations sometimes began with legislators reminiscing about their own fraternity days. Some students posed with members of Congress for photos and posted them on FratPAC’s Twitter page.

Mike Rodmaker, a student at the University of Cincinnati and president of its Interfraternity Council, said he pitched the tax break to Senator Rob Portman, an Ohio Republican, who wasn’t in a fraternity. Portman’s spokeswoman, Caitlin Dunn, said he is reviewing the legislation.

“He was definitely receptive,” Rodmaker said. “We’re the second largest landlord behind colleges and universities.”

© Copyright 2024 Bloomberg News. All rights reserved.

While fraternities used to limit their political activity to fending off potential threats, they’re “playing offense today” by promoting initiatives such as the tax break, FratPAC and two companion groups told fraternity leaders in a Jan. 10, 2011, memo.
Fraternities,Congress,Tax Break,Hazing
Thursday, 25 July 2013 12:06 PM
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