Inside Higher Education has an article explaining a recent IRS ruling that revoked the tax exempt status for a Housing Corporation connected to the Phi Gamma Delta (Fiji) chapter at Bucknell. Based on the article, the house corporation had been classified as an educational foundation since its founding about ten-years ago. An audit found that its operations did not meet the standard of an educational foundation since virtually all of its actions were related to the operation of the housing facility, and not directly related to educational activities.
This article is particularly interesting within the context of the College Housing Infrastructure Act (CHIA) that is currently being promoted through the Fraternity/Sorority PAC, and other group within the field. This chapter house shows what was done by a group providing for chapter housing, but operating under the rules of an educational foundation. It is unlikely that they could have achieved as much without the use of tax-exempt donations. It also makes it clear that the IRS absolutely sees a difference between a housing corporation and educational foundation.
The last paragraph describes another challenge in this type of set up. The housing corporation was challenged as “the fraternity was placed on suspension for a period of time, which interrupted the expected flow of revenue and intended activity.”