Combined assets of clubs reached $17.2M in June 2008

The bicker clubs have financially outpaced their sign-in counterparts, with the bicker clubs’ share of the Street’s total net assets growing from 49 percent in June 2004 to 65 percent in June 2008. And according to The Daily Princetonian’s analysis of the eating clubs’ Form 990 tax returns, Ivy alumni contributions made up nearly half of the Street’s growth in net assets during that period.

Additionally, the bicker clubs’ net assets increased by 94 percent over those four years, while the sign-in clubs’ net assets only grew by 3 percent. Charter and Quad each suffered a 5 percent decline in net assets, while Terrace posted a 3 percent decline and Cloister had a 2 percent drop.

The eating clubs, which are all nonprofit organizations, file a Form 990 annually with the Internal Revenue Service, and these documents are available to the public because of the clubs’ tax-exempt status.

The analysis by the ‘Prince’ did not include the net assets of the Ivy 1879 Foundation, worth $3 million at the end of fiscal year 2008, the Princeton Charter Foundation’s $790,000 in net assets and the Cottage 1886 Foundation’s $515,000 in net liabilities. The analysis also did not include assets that may be used by the clubs but are actually owned by the Princeton Prospect Foundation. All of the clubs have some money set aside in that foundation for financially assisting their members.

Members in the graduate boards of some of the sign-in clubs said that, because of the complexity of Form 990, the calculated year-to-year changes in net assets may be unreliable indicators of a club’s financial health. “You’ve got to be careful in looking at differences in the net assets,” explained John Bruestle ’78, the chair of Charter’s graduate board chair. He added that Charter has very robust finances today despite the decreases in net assets recorded in its tax returns.

“We’ve got an endowment, that is making grants to the Club, we’re up on our maintenance, we have zero debt,” he said. “We are strong enough to hold our rates constant from last year, I think the only club on the Street that managed to do that.”

Colonial is the only one of the five sign-in clubs whose net assets increased between June 2004 and June 2008. “Colonial remains strong today,” graduate board chair Joseph Studholme ’84 said in an e-mail to the ‘Prince,’ explaining that he was confident in the club’s future. “Colonial Club has weathered tough economic times before (beginning with the Panic of 1893).”

Cloister has remained just “barely” in the black since the close of fiscal year 2008, graduate board chairman W. Preston Granbery ’69 said in an e-mail to the ‘Prince.’

“Our membership suffered a substantial drop in winter sign-ins last year, I believe to some extent because of the economic downturn,” he explained. “As a result, we had to make a substantial cut in expenses, including some deferral of maintenance, and raise our board fees in order to stay in the black this academic year.”

Like the other sign-ins aside from Charter, Cloister has recently failed to fill to capacity in the first round of sign-ins. Around 50 people joined the club in the first round of sign-ins in both February 2008 and February 2007.

Quad attracted only 25 sophomores in the first round of sign-ins in February 2008, and it was the hardest hit during fiscal year 2008, with a 15 percent decline in its net assets. The club’s graduate board officials declined to comment for this article.

The relatively shaky finances of some sign-in clubs may portend future changes on the Street, noted some of the officials on those clubs’ graduate boards.

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“I do not believe the trends per se mean anything for Cloister,” Granbery said, “[but] it would not surprise me if at least one existing sign-in club folded in the next three to five years, perhaps sooner.”

Alumni gifts

The Form 990s show that the richest eating clubs in June 2008 also managed to raise the largest amounts from its alumni over the previous year. Ivy received $1.2 million in contributions — comprising 77 percent of the growth in the Street’s total net assets that year — while TI raised $262,000.

While the bicker clubs received $1.7 million of their total income during fiscal year 2008 from alumni donations, the sign-in clubs only saw $437,000 in alumni donations during the same time period.

“Perennially poor fund raising from alumni” has hurt Cloister’s finances, Granbery said.

Clubhouse expansions have also affected the clubs’ finances, officials said.

“We couldn’t build [a new wing] without the graduate members’ gifts,” Ivy graduate board chair John Griffin ’55 told the ‘Prince.’

A $2 million item listed on Ivy’s Form 990 in 2008 was described as “construction in process,” and that item referred to the addition, Griffin explained. This item accounted for 44 percent of the club’s net assets that fiscal year.

Alumni contributions to Ivy have slowed since 2008, Griffin added, even though earlier pledges are still generating income. “Given the recession, fewer donations are coming in, and people are negotiating in terms of when gifts are paid,” he explained.

Representatives from other clubs that have also renovated their clubhouses in recent years said the value of those improvements complicates efforts to assess a club’s financial situation based on year-to-year fluctuations in net assets. Alumni officers of TI, which has also been raising funds for its renovations, did not respond to requests for comment, and representatives of the Cap and Terrace graduate boards also declined to comment on their clubs’ finances.

One potential complication is that the net assets of some clubs that have undertaken renovations of their houses despite losing money “may have risen,” noted Greg Berzolla ’87, the chair of Tower’s graduate board.

“If [the net assets are] going down, then the club may be in trouble. But the converse isn’t true. If it’s going up, you may be doing well, or you may not be doing well,” Berzolla explained.

He said the $578,000 increase in his club’s net assets from June 2004 to June 2008 was inflated by the club’s construction projects during that time. He also said the forms overstated the club’s surplus.

“We ran a capital campaign in this period. We built buildings. When we built, that went into our net assets,” Berzolla said. “There’s no way we made [around] $140,000 a year. That would be too rich — $700 a year per member,” he added. “We could not have done that.”

Correction appended

An earlier version of this article incorrectly stated that Cloister Inn had 45 new members sign-in in the first roun in February 2007. In fact, 50 people joined the club in the first round of sign-ins that year. That version also failed to specify that the number of new members specified referred to the first round of sign-ins, only.