A Fork in the Road, Two Directions

The choice between leasing and buying/building DKG Headquarters is like coming to a fork in the road and trying to find the best way forward. The decision is not easy.

The leadership of DKG was guided by the words of our founder, Annie Webb Blanton, “Be progressive…But don’t cling to the old when its worth has passed.” Our leaders studied the benefits and costs of each fork before finding the best way forward. Past president, Becky Sadowski reminds us, “Our Founders realized that Delta Kappa Gamma was not a building. Carrying out our mission wherever they are in the world, our members are the heart of our Society.”

Beginning in 2019, DKG was involved in the sale of the building that served as Headquarters. The property sale was finalized on September 3, 2021. DKG was at the fork in the road.

When deciding the future of the Headquarters, the decision was to buy, build or lease.

The leadership was guided by the benefits and costs of buying another commercial building, developing land and constructing a building or leasing space to use as the Headquarters of DKG.

Fork: Buy/Build

•         A constitutional amendment would be required to purchase an existing building in the Austin area.
• The governing documents allow for land development or construction only, which was very limiting and time consuming. Leasing would be required after the sale while land development and construction occurred. Likely over a year.
• The real estate market in the Austin area was dynamic and peaking at the time of the sale.
• You, the membership, were responsible for all building maintenance, local taxes, altering the physical and structural constraints of the building and property insurance.
• Owning and operating real estate requires an organization’s time, money and attention from mission and redirects the resources to the real estate.
• Fixed costs are increased requiring an increase in membership numbers to provide a reliable source of revenue.
• Liquidity is decreased as there is decreased cash flow to meet the needs of the organization.
• Owning real estate limits financial flexibility and the ability of the Society to reduce market risk.

What were the benefits and costs of leasing a space to use as the Headquarters of DKG?

Fork: Lease

•         Sale of the Headquarters building, a permanent asset, required the proceeds of the sale be deposited into the Permanent Fund as restricted by Constitution.
• The Constitution defines how monies in the Permanent Fund may be used.
• The Constitution does permit the Permanent Fund be used to lease office space and pay the initial security deposit.
• Some functions that were done in the 1956 Headquarters can be outsourced to allow for the rental of a smaller office space.
• Leased office space improved the Society’s ability for collaborative teamwork, connectivity and productivity. 
• As the needs of the Society changes, flexibility and adaptability are more likely in a leased space.
• The proceeds of the sale of DKG Headquarters and adjoining parking lot was invested in these amounts. The DKG Investment Policy guides the investments.

o   Deposit $180,000 in a money market account to purchase fixed assets.

o   Invest $800,000 in financial instruments, with $200,000 maturing in years 1, 2, 3, and 4. The maturing funds to be used for lease payments and fixed assets.

o   Invest $17,170,000 in longer term investments targeted to return $171,700 from interest and dividends to be moved annually to the Available Fund and to target investment growth benchmarked to US annual inflation rate.

So, the fork in the road they chose was the fork that led the leadership to lease office space rather than develop land and build a new structure. Our leaders were, “forward moving ever.”

Diana Haskell, International Finance Committee Member