NancyG1 (North Carolina)
Posts: 119
Posts: 119
Posted:
Does anyone know if HOA monies can be used for other things than expenses of the Association. For example, donating monies to charities or other local government activities.
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HOA monies
Started by NancyG1 • 22 replies • 2024 views
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TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
Typically an Association, especially if they are incorporated as a non-profit, are prohibited from participating in politics. Donating to government activities can be considered politics.
Money to charities is typically a fine line.
Example: We donate $100 every year for the volunteer fire department to bring Santa through the neighborhood (we provide the Santa). If someone ever complains, we will probably have to stop that practice. This expenditure is listed under the line item "social activities".
Normally, the CC&Rs and other governing documents specify what the assessments are to be used for. Anytime you stray from those specifics, you run the risk of creating issues.
Money to charities is typically a fine line.
Example: We donate $100 every year for the volunteer fire department to bring Santa through the neighborhood (we provide the Santa). If someone ever complains, we will probably have to stop that practice. This expenditure is listed under the line item "social activities".
Normally, the CC&Rs and other governing documents specify what the assessments are to be used for. Anytime you stray from those specifics, you run the risk of creating issues.
KellyM3 (North Carolina)
Posts: 2,239
Posts: 2,239
Posted:
Tim,
I'm against using HOA dues to support charities but $100 for the fire department is money well spent. I don't see that as a charity at all.
I'm against using HOA dues to support charities but $100 for the fire department is money well spent. I don't see that as a charity at all.
FredS7 (Arizona)
Posts: 927
Posts: 927
Posted:
It is best to have NO charitable contributions. This is a potential area for considerable controversy and is best avoided.
In my area the fire department is supported by taxes. Personally I would not contribute more (and I even have doubts about where some of this money goes).
In my area the fire department is supported by taxes. Personally I would not contribute more (and I even have doubts about where some of this money goes).
KellyM3 (North Carolina)
Posts: 2,239
Posts: 2,239
Posted:
Fred,
Professionally-paid fire fighters and volunteer fire fighters receive their funding in different ways. It's an apples to oranges comparison w/ Tim. My city has professional fire houses and we don't receive firefighter fundraising requests. If Tim's HOA is large, you could argue that $100 is too low or, in the absence of HOA contributions, the HOA rally neighbors to raise more than that amount from individual families to support people who wear beepers and miss work and sleep to fight fires, essentially, as a moral cause and not a career.
Professionally-paid fire fighters and volunteer fire fighters receive their funding in different ways. It's an apples to oranges comparison w/ Tim. My city has professional fire houses and we don't receive firefighter fundraising requests. If Tim's HOA is large, you could argue that $100 is too low or, in the absence of HOA contributions, the HOA rally neighbors to raise more than that amount from individual families to support people who wear beepers and miss work and sleep to fight fires, essentially, as a moral cause and not a career.
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
And there you have two sides of the coin. This is why I said if there is ever a challenge to the expenditure, we will likely have to stop it. Please note, we fully disclose this contribution to the membership (i.e. Social activities ($100)- notation: Santa Visit.
No expenditure that is grouped into a general category should ever be made without disclosing what it was spent on.
Examples:
Administrative costs: Printing, envelopes, postage, PO box rental, bank fees
Utilities: Street lights, common area watering
Insurance: D&O, Liability, Crime (serves as fidelity bond)
All of these are listed as comments on our Income and Expense report given to the membership.
No expenditure that is grouped into a general category should ever be made without disclosing what it was spent on.
Examples:
Administrative costs: Printing, envelopes, postage, PO box rental, bank fees
Utilities: Street lights, common area watering
Insurance: D&O, Liability, Crime (serves as fidelity bond)
All of these are listed as comments on our Income and Expense report given to the membership.
KellyM3 (North Carolina)
Posts: 2,239
Posts: 2,239
Posted:
Interestingly, supporting the FD w/ a Santa visit is more important to my property than any non-controversial but more wasteful purchase of landscape flowers, which wouldn't raise a "constitutional" challenge 
LarryB13 (Arizona)
Posts: 4,099
Posts: 4,099
Posted:
Fire fighters and starving kittens are worthy causes but unless the CC&R's allow it, it is a misuse of association funds to donate to charities. If the owners want the association to fund those charities then they should amend their CC&R's to allow it. Or they could just contribute directly.
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Quote:
Posted By NancyG1 on 07/10/2012 4:53 AM
Does anyone know if HOA monies can be used for other things than expenses of the Association. For example, donating monies to charities or other local government activities.
Does anyone know if HOA monies can be used for other things than expenses of the Association. For example, donating monies to charities or other local government activities.
1. Before you even consider such a thing, make sure you have the support of the homeowners. I have seen posts in this forum indicating that some homeowners violently object to their money (and HOA money is their money) being used for anything but legitimate HOA expenses. They feel that charitable contributions should be voluntary and not forced on them by a BOD making decisions on how much to give and to what charities to give. You could be opening yourself up to a formal complaint or even possible court action.
2. In order to qualify to file as an HOA using IRS Form 1120-H, no more than 40% of an HOA's expenditures can be used for anything other than HOA expenses (lawn maintenance, road maintenance, clubhouse and pool maintenance, insurance, legal and management fees, etc.)
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
As an added note, when homeowners in our HOA want to raise money to donate to a charity, they hold a fundraiser for that specific purpose. For example, each year in July at the local founders celebration, donated bicycles are raffled off free to area children. A group of homeowners in our HOA will solicit donations to purchase one or two bicycles to donate. Homeowners give whatever they wish, and can afford.
BrianB (California)
Posts: 2,820
Posts: 2,820
Posted:
good advice so far... I will sum up
Yes, the HOA CAN pretty much do what they want with the money.
Doing so CAN affect their tax status.
And, just because they CAN doesn't mean they should, HOA's should be very careful in doing so, and have clear communication with and approval of the owners.
Yes, the HOA CAN pretty much do what they want with the money.
Doing so CAN affect their tax status.
And, just because they CAN doesn't mean they should, HOA's should be very careful in doing so, and have clear communication with and approval of the owners.
KellyM3 (North Carolina)
Posts: 2,239
Posts: 2,239
Posted:
If volunteer fire departments are a foreign concept to you, you can't reasonably offer a counter-argument for Tim's HOA's decision to support their sole source of active fire protection. Comparing this to buying girl scout cookies, giving scholarships or supporting cancer research, etc is to miss the point.
Dues payers get a tangible, local property protection "return" for that investment including having firefighters tour the property and know the territory. I'd support it all day long but would never support giving it to charities.
I'm not sure I'd call a fire department a charity, though it's non-profit and should be. I'd pay $100 annually to have fire crews walk the HOA property as a safety precaution, negating this "you're misappropriating money!" nonsense.
Dues payers get a tangible, local property protection "return" for that investment including having firefighters tour the property and know the territory. I'd support it all day long but would never support giving it to charities.
I'm not sure I'd call a fire department a charity, though it's non-profit and should be. I'd pay $100 annually to have fire crews walk the HOA property as a safety precaution, negating this "you're misappropriating money!" nonsense.
NancyG1 (North Carolina)
Posts: 119
Posts: 119
Posted:
Tim - Not sure what you are doing is correct. How does the Santa benefit all the homeowners? You are lucky noone has questioned this. Shouldn't dues be used for all the homeowners? After all the posts I think dues should not be paid for anything other than expenses to run the Association. You are lucky that all is disclosed. Ours isn't. If everything was broken down as to what was spent there would be no questions.
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
Nancy,
I'm not real sure how "legal" it is either except that are documents do allow for social activities. Santa will certainly visit any child or adult that goes outside to great him.
Long story short, this has been going on for years. I brought the issue up once as a concern and was quickly outvoted. Therefore, in my opinion, until someone else registers a complaint, I'm not going to bring the issue up again. Not only are there larger issues to fight, but (to be honest) I also don't want to be known as the Director who stopped Santa from coming.
I'm not real sure how "legal" it is either except that are documents do allow for social activities. Santa will certainly visit any child or adult that goes outside to great him.
Long story short, this has been going on for years. I brought the issue up once as a concern and was quickly outvoted. Therefore, in my opinion, until someone else registers a complaint, I'm not going to bring the issue up again. Not only are there larger issues to fight, but (to be honest) I also don't want to be known as the Director who stopped Santa from coming.
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
I'd rather be known as the Director who brought transparency and fully funded reserves to the Association
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
In the for what it's worth department -
Each year during the week before Christmas our volunteer fire department drives Santa around the streets of town (free), doing one section of town each evening, including the streets of our adult community. Several homeowners step outside to greet him and wave and are rewarded with candy canes. For those who find it difficult to step outside but simply stand in the open doorway, a volunteer firefighter will bring the candy canes to them.
It's a wonderful annual tradition.
Each year during the week before Christmas our volunteer fire department drives Santa around the streets of town (free), doing one section of town each evening, including the streets of our adult community. Several homeowners step outside to greet him and wave and are rewarded with candy canes. For those who find it difficult to step outside but simply stand in the open doorway, a volunteer firefighter will bring the candy canes to them.
It's a wonderful annual tradition.
JonD1
Posts: 2,350
Posts: 2,350
Posted:
So Nancy what are the details of this new issue you have uncovered?
Is it charities or government activities? Not really hard provide a more detailed explanation. What amount of money are you talking about?
$5 or is it $20,000?????
I have read what I think are a lis of your posts here describing varies issues you seem to be having with your property. Proxies to remove the Board, court cases you brought against your own property, now seems a neighbor has less than nice things to say to you.
If these situations are in fact all YOU do you see a pattern here? As I remember you took your property to court and the court ruled against you.
I have to wnder what amount of money that cost your property.
You interfered with the HOA installtion of some drainage piping and in the end the court ruled against you.
Now your neighbor is trying to make your life miserable everytime he sees you. Now you have issue with some use of HOA funds you have decided was improper.
I hope you have your facts straight and all your ducks in a row before you act on your assumpions as to what is right and proper.
Sounds to me like you just might be reaching for your next "cause de jour".
Is it charities or government activities? Not really hard provide a more detailed explanation. What amount of money are you talking about?
$5 or is it $20,000?????
I have read what I think are a lis of your posts here describing varies issues you seem to be having with your property. Proxies to remove the Board, court cases you brought against your own property, now seems a neighbor has less than nice things to say to you.
If these situations are in fact all YOU do you see a pattern here? As I remember you took your property to court and the court ruled against you.
I have to wnder what amount of money that cost your property.
You interfered with the HOA installtion of some drainage piping and in the end the court ruled against you.
Now your neighbor is trying to make your life miserable everytime he sees you. Now you have issue with some use of HOA funds you have decided was improper.
I hope you have your facts straight and all your ducks in a row before you act on your assumpions as to what is right and proper.
Sounds to me like you just might be reaching for your next "cause de jour".
NancyG1 (North Carolina)
Posts: 119
Posts: 119
Posted:
Tim - I never used the word legal and it is great that your documents allow for social activities and if your Board agrees that Santa is a social activity there should be no problem in your Association. Our documents do not have anything in them regarding social activities. I agree with you I wouldn't bring it up again either as there are larger issues to fight. You find no argument here. Wish we had something in our documents about this.
NancyG1 (North Carolina)
Posts: 119
Posts: 119
Posted:
Jon - No it's not a pattern. I was just curious as to how other Associations handle donations. No malice intended. I'm not out to get my Associaiton. Only information. The forum about the drainage pipe is closed and does not belong in this post. I was just trying to find out how other Associations handle this. No way am I looking for a cause de jour. It's only information for myself and the folks have given me this information. I don't need to get my ducks in a row because I am not taking any actions just seeking information (to get information does it mean I am taking an action). I don't want to get into a back and forth with you Jon so I thank you for your opinion and your thoughts.
NancyG1 (North Carolina)
Posts: 119
Posts: 119
Posted:
Thank you folks for all the information. I'm closing this forum.
LeonaA (California)
Posts: 1
Posts: 1
Posted:
Does anybody know the civil code or law from the David-Stirling act relating to this issue in California?
GlenL (Ohio)
Posts: 5,491
Posts: 5,491
Posted:
Hello Leona and welcome, generally it is better to ask your question in a new thread rather than resurrecting an old one as people tend to answer the original posters question. I am fairly familiar with D-S and in a quick check of their site I didn't see anything applicable. Somewhere in your documents it should be spelled out how assessments are assessed and what they are to be used for, I highly doubt charitable contributions are on that list.
I will add one caveat to my post, it is not unusual in small HOA's with no meeting room to hold their meeting in a church basement or other non-profit location and give a small donation in exchange for use of the room. That's one thing more or less a quid pro quo but I would say no to an out right donating. If the Board wants to donate to a charity then they should pass the hat, not use HOA funds.
I will add one caveat to my post, it is not unusual in small HOA's with no meeting room to hold their meeting in a church basement or other non-profit location and give a small donation in exchange for use of the room. That's one thing more or less a quid pro quo but I would say no to an out right donating. If the Board wants to donate to a charity then they should pass the hat, not use HOA funds.
Studies show that 5 out of 4 people have problems with fractions
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
Leona,
How assessments are spent are typically limited by the governing documents and not statutes.
Perhaps someone is aware of case law on the issue. I am not.
Tim
How assessments are spent are typically limited by the governing documents and not statutes.
Perhaps someone is aware of case law on the issue. I am not.
Tim
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