Voluntary HOA and IRS

We have a voluntary HOA for our subdivision of 109 homes. About 90 of the 109 homeowners belong and pay an annual dues of $40. The money is used to pay for the maintenance of our front entrance. We had some unexpected expenses with lighting and we will be a little short of funds because of it. We would like to sell some advertising on our web site to make up the shortfall. Are there any IRS consequencies for doing this? We are not incorporated and do not have any official legal structure at all. The association membership is strictly voluntary and no one on the board is compensated in any way.

See: http://www.irs.gov/pub/irs-pdf/f1120h.pdf

Yes, you can sell ads to pay for your web site. Collect as many ads as you need to pay for costs.

Steve,

My Association has had 4 or 5 companies write and ask about advertising on our site. You are correct, there is not a lot of people that take advantage of it. Maybe even less than 8 and that would be counting the Board members who use it from time to time.

I've had requests from a credit union, a couple of contracting companies and some Realtors.

Our Board has opted not to sell advertising because we didn't want it to appear that the Association was endorsing any one company. Therefore, I can not tell you how much money would have been made (discussions never got that far). However, there are several Associations around me that do sell advertising and they have more than enough people willing to pay something so expenses are easily covered.

Until we were approached, I thought as you did, who would want to spend money to advertise on our site or in our newsletter.

Tim