Manifesting the Lodge
From Sekhet-Maat Lodge
by Brother Joseph Thiebes
Several members of the Lodge, including this writer, have expressed an interest in acquiring real property for the Lodge. There are many benefits, and of course added responsibilities, that property ownership would bring. Looming large among these benefits is the fact that our funds would no longer disappear into the landlord’s pocket, but would instead go toward our own property. This property could then serve generations of O.T.O. initiates.
When I first sat down to write this essay, I felt certain that such a goal would be attainable within even a decade, if the members of the Lodge chose to pursue it. As I reflected further, however, I realized that it would be prudent to restrain my optimism and face squarely some formidable obstacles which appear to make the possibility of property acquisition difficult at our current level of development. Nonetheless, I still believe that if certain conditions are met we may be able to accomplish this goal someday. The following four-phase process will provide a framework and some perspective about the challenges we will undoubtedly face and how we might overcome them.
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י – Self-Sufficiency
In the context of Lodge finances, self-sufficiency occurs when predictable monthly income (i.e., from dues and pledges) matches or exceeds our regular expenses (e.g., rent and utilities). We are near the end of this phase. Last common year [2004 ev], dues and pledges accounted for 64% of our regular expenses (the remaining 36% came from fund-raisers, sales, and other unpredictable income sources). This may seem like a low number, but it is 7% over the previous year, and most of that increase was in the final couple of months, when most of the members improved our level of financial commitment in a shared attempt to close the gap between our expected income and expenses. In the last quarter of 2005 e.v., we brought in 72%. We have a goal to bring in an average of 80% this year, and it is very possible we could blow that goal out of the water and reach 100% or more (and for resiliency and health, we should really strive to bring in at least 125%). Whether we reach self-sufficiency this year or at some point in the future, reaching that milestone will be prerequisite to the next phase.
ה – The Gathering
Purchasing property requires a down payment. Although government and nonprofit programs exist for individual persons to purchase a home with no down payment, religious organizations such as ours typically are required to put 50% down. Because of this, we will not be able to purchase property until we bring in substantially more than our regular expenses, and hence, this phase cannot begin until we have first achieved self-sufficiency.
Self-sufficiency will, however, not be sufficient to purchase property. It is not enough to simply say that our bills are covered, and to begin leisurely saving a down payment. The unfortunate reality is that any property fund-raising that we do must greatly outpace the increase of property values over time.
To illustrate what I mean by outpacing property value increases, take for example an average building of the size we would need, in a relatively central location. We would probably expect such a building to cost a minimum of $400,000 in today’s [2005 ev] market. A 50% down payment for such a building would be $200,000. If we take ten years to raise that down payment, however, assuming there are no major meltdowns in the market, the property that is valued today at $400,000 will be valued at something more like $700,000 at the end of that decade. This nearly doubles the amount necessary for a down payment. If we had raised $200,000 in a decade, we would need an additional $150,000 to have the same level of purchasing power.
Let’s look, though, at what would be necessary to get that far. To raise $200,000 in ten years, we would need to bring in about $1500 per month, every month, on average, in addition to our current regular income. We’d also need to continue to increase our regular income for payment of rent, since our needs will grow and we may need to move to a larger rental in the meantime. To accomplish this would be a phenomenal success in purely fund-raising terms (relative to past successes), but it would not be sufficient for us to purchase property. To have a reasonable chance of purchasing suitable property after a decade of saving, we would instead need to bring in about $350,000, or about $3000 per month, every month, in addition to the regular income we currently raise for the purpose of paying rent. As you can see, if the “down payment fund” does not grow very rapidly, we will be raising funds for it indefinitely, and we would be sitting on a very large chunk of cash which we could not ever legally use for any other purpose.
As noted at the beginning of this essay, it is certainly possible that we could raise a down payment of that size, especially if we had substantial support from outside our valley. We don’t want, though, to cannibalize our income sources for a project that fails in the end, because as I mentioned, we’d never be able to touch that money for any other purpose if we started a “building fund” earmarked for the purpose. For example, if we only raised $500 extra per month on average, on top of our other expenses, we’d only have $60,000 in the bank at the end of the decade – not nearly enough to get property with, but just imagine what we could have done with the money if we hadn’t earmarked it for property.
It is also important to consider what our mortgage payment will be once we raise the necessary down payment. A fifteen-year mortgage on a loan for $350,000 at 7% interest would result in a mortgage payment of about $3,145 per month. Once we add on utilities and necessary savings for maintenance and repairs, we will need a monthly income roughly four times our current level.
Given all the above obstacles and concerns, it would be, in my opinion, a very bad idea to earmark any funds for the purpose of purchasing property unless we have a stable income of four times our regular expenses. This is our goal in the second phase. We will gather our financial strength, with the eventual goal of bringing in four times what we spend. The level of difficulty in accomplishing this is a sobering realization, to say the least. Nevertheless this is something we can work toward, and frankly anything less would be insufficient to purchase property. As Sun Tzu said, “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” Any attempt to purchase property, without the needed income, will be a losing battle. As it turns out, based on the above rough calculations, our income must increase fourfold to make it winnable.
To reach this goal given the current average contributions from members, we would need to have four times as many members, which our current venue would certainly not support. We’re already busting at the seams. Even if the existing members continue to make larger contributions, the number of members will increase no matter what, as we continue to offer quarterly opportunities for initiation. Moving to a larger space is, therefore, a very likely necessity along the way as we gather our financial strength.
Should we approach the end of this phase of gathering financial strength, we will seek legal counsel, and we will research the various legal structures that we can use in a purchase of property. Therefore there may be a substantial overlap between this phase and the next.
ו – Business Way
When we purchase property, we have to be recognized by the state as an entity. Ownership involves both the owned and the owner – we may have a building which is easily definable and tangible, but what are we? During this third phase, we will define a legal structure which will be the designated owner of the property.
Well, currently we are recognized by the state as an “unincorporated association,” and our not-for-profit status is recognized under the aegis of O.T.O. U.S.A. This status affords us most of the opportunities that non-profit corporations enjoy. The reason that Sekhet-Maat Lodge is not a corporation already is that the costs of incorporating (including lawyer fees and the investment of time in preparing paperwork) will be substantial, and incorporating will not bring us any additional benefits to speak of unless we are prepared to own property. Although I am not a lawyer, my understanding is that when the time comes to realistically address the issue of owning property, a corporation would be the most efficacious legal structure to accommodate property ownership.
Whether incorporation is actually the best option is a question that we will examine carefully at the outset of this third phase. There are many benefits to creating a separate corporation with the specific purpose of purchasing and maintaining property for the use of Sekhet-Maat Lodge. Some examples of these benefits include: the board of directors might have longer terms of service than Lodge officers typically do, thereby affording a measure of greater stability; we would not have to revise our existing articles or bylaws to include property ownership and maintenance among the purposes of the Lodge; should some unforeseen situation (like changes in law) force us to dissolve and reincorporate, the Lodge would not be directly affected; and so on. But who knows – after further research and discussion, and after seeking legal counsel, we may find that it is better for the Lodge itself to incorporate.
This question of whether to make a separate corporation, or to incorporate the Lodge, will be among the first that we encounter; it will not be the only question, though, by any means. Many options will be available to us, and naturally we will be consulting U.S. Grand Lodge, and probably through them the Order’s legal counsel, in addition to our own legal counsel. Determining what options we have, and making the best choices for our purposes, will define this phase. This is not only a matter of incorporating, but also in composing a comprehensive business plan – a document that spells out our expected course of action and provides an analysis of our risks, uncertainties, income sources, and so on. Not unlike this essay, but much more detailed, and with a great deal of progress already behind us.
Having incorporated and composed a business plan, we move to the final phase in this progression to property ownership.
ה – Manifestation
The last of these four phases begins with looking for our new temple. Shopping sounds like a lot of fun, and no doubt it will be, and it will also require a good deal of care and attention to detail. We’ll use our business plan and down payment to secure a loan, and draw up a detailed list of our requirements. We’ll enlist the help of a Realtor who can bring properties to our attention when they meet our needs, and schedule time for us to look at them. We’ll probably spend at least four months looking before we initiate a mortgage and start using the new space. No doubt, there will be a big party.
At that point we will be in a good position to make mortgage payments. We will have to be, for banks to have given us a loan. We will also have some savings in our temple fund, which we can use to decorate and make any needed improvements or repairs. We will have put down real roots here in Portland, and all our fund-raising will go straight into paying for and improving our own temple. This temple – no longer merely a “space,” “venue” or “location” but truly a “Lodge” – will go on through the years to provide a place where the rituals may be rightly performed with joy and beauty, for the purpose of securing the Liberty of the Individual and his or her advancement in Light, Wisdom, Understanding, Knowledge, and Power through Beauty, Courage, and Wit, on the Foundation of Universal Brotherhood.
