HOA asking for donations from members need to be in Agenda?

YijiaW (California)
Posts: 23

Posted:

Hi everyone,

The board is thinking about asking homeowners to donate money towards funds earmarked for hiring a gardner. Our HOA has been poorly managed for the past year and just now started to turn around. We haven't had any gardening done at the property for many years now. Granted most of the property is covered in cement but the neighboring HOA's wall climbing shrubs have invaded our side and started to look really bad. For the board to use the HOA dues to pay for a gardner is going to be another 3 or 4 months, so we thought maybe the board can set up a donation. This could also boast morale, if homeowners started to see improvements they might want to participate more.

My question is does the board need to put asking for donation funds earmarked for hiring a gardner need to be on the Open Board Meeting Agenda?

Thanks!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You do NOT collect donations. You raise money in your HOa by raising dues or special assessments. It is a non profit corporation but not a charitable one. Donations as you state would be subjected to taxes.

What you all want to do is a special assessment most likely. Although raising dues annually is possible up to 5% in SOME HOA's is possible by board vote. More than that is a membership vote. Read your documents to find out how your HOA does these processes.

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

Yijia, please remind us how many units are in your HOA.

Most HOAs would raise the dues--which you can do up to a certain % in CA at any time.

Why not start out by getting together a "Spruce Up Day," where all contribute, with cookies, etc. afterwards.

Others will know if donations would have to be considered taxable income.

KerryL1 (California)
Posts: 14,550

Posted:

Yijia, please remind us how many units are in your HOA.

Most HOAs would raise the dues--which you can do up to a certain % in CA at any time.

Why not start out by getting together a "Spruce Up Day," where all contribute, with cookies, etc. afterwards.

Others will know if donations would have to be considered taxable income.

YijiaW (California)
Posts: 23

Posted:

Our HOA has 7 units. Its very small. I read on Davis Stirling Act website that members can donate to the HOA. Did I misunderstood it?

Here is a link to it.

http://www.davis-stirling.com/tabid/2766/Default.aspx#axzz3CE8Ly3Dx

Thanks!

GlenL (Ohio)
Posts: 5,491

Posted:

No Yijia, you didn't misunderstand it and yes if you are going to ask at a meeting, then it should be on the agenda. Melissa is correct in that homeowners donating to the spruce up fund, can't use it as a tax deduction on their 1040s.

Studies show that 5 out of 4 people have problems with fractions

YijiaW (California)
Posts: 23

Posted:

Quote:

Posted By GlenL on 09/03/2014 11:11 PM
No Yijia, you didn't misunderstand it and yes if you are going to ask at a meeting, then it should be on the agenda. Melissa is correct in that homeowners donating to the spruce up fund, can't use it as a tax deduction on their 1040s.

Ok thanks for the great advice. We will try to ask people to donate $20 each if they can and find a gardener that can come and tidy it up a bit. We just switched our insurance and they will come out and do an inspection of the property within 30 days. The insurance agent asked me if we can tidy up a bit so there will be no issue when the inspector comes. Our funds are so limited right now or else I would have used the HOA fund for this.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We had a "volunteer day". The neighbors could come out and volunteer to clean up. The HOA would supply the supplies. I still don't think you should do the "donation" thing. It's better for ya to do a special assessment of maybe $20 to contribute to a cleanup if no one wants to volunteer.

Keep in mind, there may be some other resources. We have a "master gardeners" program in town. Landscapers are not necessarily skilled in "gardening". Ours would not know a flower from a weed. They care about cutting the grass and blowing leaves.

You all may consider to hire lawncare for regular service. Which then can raise the dues or special assessment to maintain that service.

Former HOA President

YijiaW (California)
Posts: 23

Posted:

Quote:

Posted By MelissaP1 on 09/04/2014 8:05 AM
We had a "volunteer day". The neighbors could come out and volunteer to clean up. The HOA would supply the supplies. I still don't think you should do the "donation" thing. It's better for ya to do a special assessment of maybe $20 to contribute to a cleanup if no one wants to volunteer.

Keep in mind, there may be some other resources. We have a "master gardeners" program in town. Landscapers are not necessarily skilled in "gardening". Ours would not know a flower from a weed. They care about cutting the grass and blowing leaves.

You all may consider to hire lawncare for regular service. Which then can raise the dues or special assessment to maintain that service.

May I ask why you don't think Donations are a good idea? As for the homeowners volunteering, I don't think they are too fond of the idea only because the vegetation has been so overgrown that require specialty tools and it seems easier to leave it to a professional. The insurance agent said the inspector will most likely come out in the next few weeks. Even if we assess a one time specialty assessment, the assessment will go on october's invoice and the fund won't reflect in the account until mid October. This clean up needs to be done within the next 2 weeks. Is special assessment the only resolution to this problem we have? Anyway we can pool together som money within the next 2 weeks without violating the davis stirling act?

Thanks!

RwT (Florida)
Posts: 154

Posted:

They're a wonderful idea so long as there's no pressure or troublemakers lurking.

Use your best judgement as to the sentiment of your neighbors.

If you don't feel there will be any problems than that's that.

Volunteering can also carry it's own risks too such as injury or property damage(s).

Coming here for advice is good too but don't take it too serious or second guess your community's desires.

* Non-Lawyer spokesperson.

MicheleH2 (California)
Posts: 9

Posted:

You want to be as transparent as possible. Yes....

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By MicheleH2 on 09/04/2014 11:49 AM
You want to be as transparent as possible. Yes....

Yijia,

What people often neglect to tell you, either because it never occurs to them or they consciously choose to ignore such things, is that any donations an HOA receives is taxable income to the HOA. So, not only can donors not take their donations as a tax deduction, but the HOA must pay federal (and possibly state) income taxes on the donations (less a $100 standard deduction). Our firm gets some new clients each year because of people who are unaware (or choose to neglect) that the IRS wants a share of every bit of income, no matter how it is received.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Personally, I'd keep the association out of the donations entirely. A homeowner committee apart from the HOA can collect donations and have the work done.

We have several things in our community that are donation funded: Christmas carolers, Christmas decorations, and an Easter egg hunt. Even though some board members are involved, we make it clear that they are not HOA activities and the donations are handled by volunteers that are not appointed by the board. Any donations given to the treasurer (me) are passed unopened to one of the volunteers. We do allow use of the email list, but since that list is published to all members, any homeowner could do the same.

Escaped former treasurer and director of a self managed association.

YijiaW (California)
Posts: 23

Posted:

Quote:

Posted By DouglasK1 on 09/04/2014 1:16 PM
Personally, I'd keep the association out of the donations entirely. A homeowner committee apart from the HOA can collect donations and have the work done.

We have several things in our community that are donation funded: Christmas carolers, Christmas decorations, and an Easter egg hunt. Even though some board members are involved, we make it clear that they are not HOA activities and the donations are handled by volunteers that are not appointed by the board. Any donations given to the treasurer (me) are passed unopened to one of the volunteers. We do allow use of the email list, but since that list is published to all members, any homeowner could do the same.

So what you are saying is the homeowners can take the initiative and collect donations themselves for whatever reason. These activities are not considered official business conducted by the HOA. Am I correct in understanding this?

Thanks.

MicheleH2 (California)
Posts: 9

Posted:

Quote:

Posted By BruceF1 on 09/04/2014 12:58 PM

Posted By MicheleH2 on 09/04/2014 11:49 AM
You want to be as transparent as possible. Yes....

Yijia,

What people often neglect to tell you, either because it never occurs to them or they consciously choose to ignore such things, is that any donations an HOA receives is taxable income to the HOA. So, not only can donors not take their donations as a tax deduction, but the HOA must pay federal (and possibly state) income taxes on the donations (less a $100 standard deduction). Our firm gets some new clients each year because of people who are unaware (or choose to neglect) that the IRS wants a share of every bit of income, no matter how it is received.

Because this is a non-profit organization.....Members can donate to the HOA (although it should be clear as to how the money is intended to be used prior to collecting it) and it is not taxable.....If you have monies left after the service is rendered, the Board should then decide on how to use it (as a benefit to the HOA ongoing needs).....

MicheleH2 (California)
Posts: 9

Posted:

Quote:

Posted By YijiaW on 09/04/2014 1:32 PM

Posted By DouglasK1 on 09/04/2014 1:16 PM
Personally, I'd keep the association out of the donations entirely. A homeowner committee apart from the HOA can collect donations and have the work done.

We have several things in our community that are donation funded: Christmas carolers, Christmas decorations, and an Easter egg hunt. Even though some board members are involved, we make it clear that they are not HOA activities and the donations are handled by volunteers that are not appointed by the board. Any donations given to the treasurer (me) are passed unopened to one of the volunteers. We do allow use of the email list, but since that list is published to all members, any homeowner could do the same.

So what you are saying is the homeowners can take the initiative and collect donations themselves for whatever reason. These activities are not considered official business conducted by the HOA. Am I correct in understanding this?

Thanks.

Any and Everything is HOA business.... Especially dealing with $$$$$$ - stay transparent.....it is better for you to have documentation of all activities (approved or accepted by the Board) then not..... just remember....what is in writing today is tomorrows "Exhibit A".

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By YijiaW on 09/04/2014 1:32 PM

Posted By DouglasK1 on 09/04/2014 1:16 PM
Personally, I'd keep the association out of the donations entirely. A homeowner committee apart from the HOA can collect donations and have the work done.

We have several things in our community that are donation funded: Christmas carolers, Christmas decorations, and an Easter egg hunt. Even though some board members are involved, we make it clear that they are not HOA activities and the donations are handled by volunteers that are not appointed by the board. Any donations given to the treasurer (me) are passed unopened to one of the volunteers. We do allow use of the email list, but since that list is published to all members, any homeowner could do the same.

So what you are saying is the homeowners can take the initiative and collect donations themselves for whatever reason. These activities are not considered official business conducted by the HOA. Am I correct in understanding this?

Thanks.

Exactly.

Escaped former treasurer and director of a self managed association.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By MicheleH2 on 09/04/2014 2:03 PM

Posted By YijiaW on 09/04/2014 1:32 PM

Any and Everything is HOA business.... Especially dealing with $$$$$$ - stay transparent.....it is better for you to have documentation of all activities (approved or accepted by the Board) then not..... just remember....what is in writing today is tomorrows "Exhibit A".

I think one of the hallmarks of a good board is knowing what is and what shouldn't be HOA business and staying out of the latter.

Escaped former treasurer and director of a self managed association.

MicheleH2 (California)
Posts: 9

Posted:

Quote:

Posted By DouglasK1 on 09/04/2014 2:34 PM

Posted By MicheleH2 on 09/04/2014 2:03 PM

Posted By YijiaW on 09/04/2014 1:32 PM

Any and Everything is HOA business.... Especially dealing with $$$$$$ - stay transparent.....it is better for you to have documentation of all activities (approved or accepted by the Board) then not..... just remember....what is in writing today is tomorrows "Exhibit A".

I think one of the hallmarks of a good board is knowing what is and what shouldn't be HOA business and staying out of the latter.

with regard to neighbor-2-neighbor issues of course...HOA business is the Boards business.... Monies (of any kind: donations, fundraisers, ect. that is received and disbursed ----is definitely the business of the Board "Not just sometime, All of the time".

DouglasK1 (Florida)
Posts: 2,046

Posted:

Sorry for the incorrect quoting in the prior post, no ability to preview before posting here. Hopefully this will come out better.

Quote:

Posted By MicheleH2 on 09/04/2014 2:03 PM

Any and Everything is HOA business.... Especially dealing with $$$$$$ - stay transparent.....it is better for you to have documentation of all activities (approved or accepted by the Board) then not..... just remember....what is in writing today is tomorrows "Exhibit A".

I think one of the hallmarks of a good board is knowing what is and what shouldn't be HOA business and staying out of the latter.

Escaped former treasurer and director of a self managed association.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By MicheleH2 on 09/04/2014 1:37 PM
Because this is a non-profit organization.....Members can donate to the HOA

This is an absolutely incorrect and dangerously misleading statement. Because an organization is non-profit does not mean that it can automatically receive tax-exempt contributions. An organization must apply to the IRS for tax-exempt status and receive a determination letter from the IRS. Even then, there are rules governing which income is tax-exempt and which is not, according to the type of tax-exempt status granted. The situation is different for homeowners associations. In that situation, the association can, if qualified, elect to file Form 1120-H each tax year by which the association claims a tax-preferred (not tax-exempt) status. Under those circumstances, generally speaking, only assessments (dues) are tax-exempt. All other income is subject to tax.

The IRS maintains an on-line database listing all organizations that can receive charitable contributions. I usually have to query that database a few times every year to learn whether or not a donation taken by a client can actually be taken as a deduction.

The tax code is very complicated and my boss often says "that's what gives us job security." As I posted previously, our firm gains a few new clients every year because of people who do not understand the tax code, but believe they do.

FarT (Alabama)
Posts: 14

Posted:

OMG...

They have seven units!

If those seven people can work out a solution... volunteer, donate, barter, watch, lead, follow, get out of the way...so what.

THEN: all this IRS and tax code stuff is all academic.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By FarT on 09/05/2014 4:02 PM
THEN: all this IRS and tax code stuff is all academic

Until you get caught.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Quote:

Posted By YijiaW on 09/03/2014 9:07 PM
Hi everyone,

The board is thinking about asking homeowners to donate money towards funds earmarked for hiring a gardner. Our HOA has been poorly managed for the past year and just now started to turn around. We haven't had any gardening done at the property for many years now. Granted most of the property is covered in cement but the neighboring HOA's wall climbing shrubs have invaded our side and started to look really bad. For the board to use the HOA dues to pay for a gardner is going to be another 3 or 4 months, so we thought maybe the board can set up a donation. This could also boast morale, if homeowners started to see improvements they might want to participate more.

My question is does the board need to put asking for donation funds earmarked for hiring a gardner need to be on the Open Board Meeting Agenda?

Thanks!

If there are seven houses to visit, your community should band together if they agree that your landscape trimming must be complete within two weeks. Just handle it with sweat equity.

You don't need a donation going through the HOA board. Just gather the time, divvy up the tool list in equal dollar amounts and go shopping.

Then, in your next budget, adjust your dues to pay a gardener to give you the landscaping your community deserves.

FarT (Alabama)
Posts: 14

Posted:

Aww what's the fun in that?

Reading through this post I hear many unhappy people.

All they (OP) want to do is fix up some landscaping...
But Noooo, it's illegal, the tax codes!, Exhibit A in a lawsuit, not for profit, balh, blah, blah.

Sorry but I don't have the same dystopian view of the world, let alone my community, that someone is ready to sue for every little petty thing or can't wait turn us into the IRS.

In fact after 27 years in 3 HOAs never has there been a lawsuit for BOD 'malpractice'. Even after two recalls and a rogue President in the same community.

Go ahead and present your worst case scenarios but then, be in the now.
If you only had six neighbors chances are you'd know them all.

Some enjoy giving and sharing whether it be time, skill, money. It feels good!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Yij

Forget all the naysayers about this and that, taxes, income etc.

You are saying there are 7 of you and the cost to get the place cleaned up is going to be about $140.00. Just go begging. Play the it could reduce our insurance rate. Some will not participate, some will pay more.

I have spilled more then $140.00 at a bar......LOL

AnnH5 (Florida)
Posts: 304

Posted:

You have already answered some of your own concerns. You mention that the removal of the vegetation will require special implements and it is not something like pulling weeds. Will there be enough vegetation to fill a garbage can? Or the bed of a small pick-up truck?

If you do have volunteers, will all be willing to waive their rights should they be "injured" on the job? It could be a trip to the doctor for poison ivy or it could be a large set of garden shears gouging their thigh. The idea sounds grim, but never assume that someone wouldn't want to be compensated for any extra expense incurred during the task of "volunteering" to save the Association $140. That also wouldn't help your Association's liability insurance rates (and hopefully you have liability insurance).

Lastly, if every owner wants the area cleaned up, why not just pass a special assessment to pay the bill? That keeps everything on the up and up, means that you can hire someone with experience and their own liability coverage, and sets a nice tone for the Association as far as the acknowledgement of need for routine maintenance. As you have noted, your Association has not been well operated. Here is your chance to get things on the right track.

Personally, I would rather pay my Association the money than to be forced to go out a remove dense vegetation and haul it away. Time is money and it would cost me far less to pay a $20 special assessment than to lose time on the job.

YijiaW (California)
Posts: 23

Posted:

Quote:

Posted By AnnH5 on 09/06/2014 9:55 AM
You have already answered some of your own concerns. You mention that the removal of the vegetation will require special implements and it is not something like pulling weeds. Will there be enough vegetation to fill a garbage can? Or the bed of a small pick-up truck?

If you do have volunteers, will all be willing to waive their rights should they be "injured" on the job? It could be a trip to the doctor for poison ivy or it could be a large set of garden shears gouging their thigh. The idea sounds grim, but never assume that someone wouldn't want to be compensated for any extra expense incurred during the task of "volunteering" to save the Association $140. That also wouldn't help your Association's liability insurance rates (and hopefully you have liability insurance).

Lastly, if every owner wants the area cleaned up, why not just pass a special assessment to pay the bill? That keeps everything on the up and up, means that you can hire someone with experience and their own liability coverage, and sets a nice tone for the Association as far as the acknowledgement of need for routine maintenance. As you have noted, your Association has not been well operated. Here is your chance to get things on the right track.

Personally, I would rather pay my Association the money than to be forced to go out a remove dense vegetation and haul it away. Time is money and it would cost me far less to pay a $20 special assessment than to lose time on the job.

Like you said, the homeowners do not want to volunteer for this. I have spoken with one of the homeowners and she will coordinate the donation process so that it doesn't go through the HOA and the board is not in charge of it.

JohnB26 (South Carolina)
Posts: 1,001

Posted:

O - M - G

!!! $140 dollars !!!

call social services - you will be destitute and homeless

? perhaps FEMA could help ?

y'all need to get actual lives

(I don't have one or I would NOT be posting)

AnnH5 (Florida)
Posts: 304

Posted:

I do not think you want to have a homeowner in charge of a donation collection and then get the services of a professional while going "around or outside of the Board". If whoever is hired injures themselves on the property, your Association's liability insurance will not cover it. Do the special assessment instead.

Another concern is if you were to pursue collecting donations, are you not allowing for the financial reality of what your Association needs in terms of annual revenue to cover necessary expenditures?

AnnH5 (Florida)
Posts: 304

Posted:

And by that I meant if who you hires does not have their own liability coverage. You just never know if you hire them outside of the Board's decision or participation.