Social Committee

I recently became a member of our "revitalized" social committee. In the past and again this year, the community opens the gates for outside neighbors to bring their children through on Halloween. As an up and coming committee, our funds are very low, so it is hard to implement events until we can do some fundraisers. Other gated communities have a fee to enter their gates for this occasion, however, many members of this community do not want to charge a fee (still in discussion for the future). We literally get at least 2-3 thousand people come through our gates. We set up and pay for a porta-potty, extra lighting, and policing. I am wondering, since we are a separate entity from the Board, and do not receive any funding from them for the social committee, can we ask the public coming through our gates for donations? Would we have to report the donations as an income? Would we need to become incorporated to avoid paying taxes on this type of donation/fee? Any help in the right direction would be greatly appreciated.

Evelyn,
I am not sure that I am smart enough to know the exact answer for you here. I do however have questions that hopefully someone on the post can answer that may help us all.

If the committee does not make enough to cover all of the costs I do not see any reason to call it taxable.

If the committee makes more than the actual costs of this event can't the excess fund the committees future events? It would not be profits if it is not removed from the HOA or paid to shareholders.

I once worked for a company that rented a venue for a party. Someone broke their leg pretty badly. They lawyered up and sued everyone. The venue, my company, etc, etc. My company insurance ended up settling out of court even though we had nothing to do with the building, how she fell, or what she tripped on. You dont have a choice, your insurance company decides to pay or not, then they pass it along to you as increased rates. Dont like it? doesnt matter.

So, if you break away from the HOA, you will need your own insurance, personal coverage for yourselves, etc. If you must do these events, do it under the HOA, and the HOA insurance. I would increase the insurance rider to a very large amount for the 1 day the even occurs on. Very easy to do, I used to do it all the time. Simple phone call or email and they email you a copy of a rider just for that event.

As for income reporting, you would need to talk to your HOA tax accountant. Every hoa is different. In most cases the money would simply go into the operating account and you could base your budget for next year on that number. If there is actual income, and the HOA did in infact owe, you could simply pay taxes on it. No big deal.

Thanks for your response. By a separate entity, I mean we are not funded by the HOA. We have to fundraise to obtain funds for any events we want to do in the community. We do run our ideas through the Board for final approval, but the Board does not financially support any events.

Thank you for the information

No, that is not what I said. I am not privy to all the legal aspects of insurance, but I do know that we are covered for this event

How do you handle it now? As far as the IRS goes, your money coming from "donations" or the public is no different. Money is money. If your not involving your board with your finances and tax issues, your doing it wrong.

Avoid paying taxes on it? Take in $100, spend $100. $0 profit.

Are the social committee members appointed by the board?

In the past the members of the social committee had to fundraise to get funds for the events in the community. Many of the events were not costly, however, the new members want to expand the events to include a community carnival, breakfast with Santa, and other ideas that require some funding source.

Forgot to mention that traffic is not allowed (in or out) during the 3hours that the gates are opened to the public. Residents are aware of this policy and park outside the gates.

As an owner, I would be irate at not being able to drive in my own neighborhood.

HOAs have enough governance powers over resident's lives on a regular basis, I would not want to exacerbate it with this idea.