Business and Social - Two Sides of a Homeowners Association

One comment our Board received was that they were glad that structure is coming to our HOA, but is concerned that it's becoming too formal and not fun to live in the development - not sure where the trade off is.

I'm developing an article for the Associations newsletter and would appreciate input.
Our goal would be to see if there is support for a social committee. Here is the draft:

Business and Social
Two Sides of a
Homeowners Association

Getting to know your neighbors and calling them friends. Friendly conversation with those living across the way. Coming together to support someone when tragedy happens or sharing someone’s joy in their life. Perhaps sharing food and drink or celebrating a holiday. These are examples of the social side of a homeowners association.

The Business side of a homeowners association is not as much fun as the social side. Having to tell someone they can’t do something with their property because it doesn’t comply with the Restrictions. Paying bills while trying to stay in budget. Planning for the future and try to save enough funds so those plans can happen. Listening to concerns from members. Wanting to do things one way but the governing documents, laws and regulations require things are done a different way. Paying taxes and filing reports with the State. Those are some examples of the business side. The business side is not nearly as much fun as the social side but is something that simply has to be done.

When a development begins, things tend to be more social. The developer is usually handling the business side of the Association leaving the Board time to focus on the social side. As the development grows and the developer is no longer handing the business side, Boards need to try and balance their time between the two sides. Too much time on one side can cause issues on the other side.

Both sides are needed. The social side maintains community harmony, builds friendships and can encourage volunteerism. The business side protects the members from legal issues that could arise.

This Board has focused, and will continue to focus, on the business side because that is where the Boards limited time needs to be spent to protect the members.

Due to this limited time, the Board will look at forming a social committee. A social committee would be responsible to organize, publicize and run social events.

As a first step, a survey will be sent to the membership. This survey will ask if there is membership support for a social committee, how much money should be allocated to such a committee, ideas for social functions and if you would be willing to serve on such a committee.

Together, lets balance both sides of our HOA.

Well done. A few suggestions.

The business side helps protect property values and also helps protect members from potential legal issues.

How clear are your covenants that money can be used for social events?

Have people actually asked for such a committee? Or does the board in its best judgment think it is a good idea?

I have never felt comfortable spending much, if any, money on social events. This is due to the wording in my past HOAs' covenants.

I do not believe you have mentioned this.

What great ideas, and all working around having to have a committee.

My god you have kids reading actual books? That's magic right there.

sorry, forgot one major restriction

NO Alcohol. Too much liability.

Does any part of your declaration provide social activities as a function of the HOA? Mine doesn’t and the budget for 2 function is $1,000, which is $8 per owner a year. If someone objected, I believe we would have to end this meager subsidy.

Well done!

I get the feeling that some owners view the association as a social club or country club. So I suggest showing them the benefits of the business side. It's not this boring stuff that costs money and takes us away from the REAL purpose of the association. Inside it supports the financial and legal health of the association. It helps avoid unplanned expenses and higher future costs by doing a good job today. It gives the association a solid foundation that allows the social stuff to continue. Without the finances, there would be no social stuff - only run down property that's not attractive to owners or potential buyers/lenders.

And I hate to tell your homeowners, but there are some of us who think the business end IS the fun stuff. I've been thinking about forming a finance committee, although my focus would be mainly as a recruiting/training tool for future board members. You may want to consider something similar (in your spare time)...

We've had "heartfelt" discussions around here about using assessments to pay for social events, but in this case it makes sense to take it slowly.

People can have a lot of fun with participant-funded events. My community does a pot-luck late summer/early fall picnic plus pre-Halloween trick or treat (because you can never have too much candy). Both are popular. We have no clubhouse or amenities for socializing, and our CC&Rs state that the purpose of the association is to maintain the property - nothing that suggests socializing is a proper use of assessment dollars. But we manage.

When you get down it, it doesn't matter whether owners pay for their entertainment directly or if they pay for it via assessment dollars. It's all the same money and it comes from the same source. The main difference is that non-participants aren't paying for their neighbors to have fun if the association isn't involved - which is my main objection to association-funded events. In my mind it violates the principle of "every owner treated equally", which I think is one of the things that community associations get right.

Our community is 25 years old and has run out of steam for social activities. When the community was developed, many of the homeowners were early retirees with lots of energy - and many moved to Florida from out of state. They wanted social activities and treated the community more like an over 55 development. Lots of activities for adults and almost none for families. Lots of parties where they wasted tons of money decorations (the kitchen was full of bowls, candles, tablecloths, etc. that were only used once and then abandoned). The idea was the clubhouses were hubs for entertainment. Now, those people have mostly moved on. No one wants to do any planning or any work. We have younger families moving in and there are few activities for them. Even if we have a pot luck where the association provides hot dogs, we end up getting the same 50 people (out of more than 1500 in the community) who's contribution is mostly a bag of chips or box of cookies from the supermarket - then they want to take all the leftovers.

We tried having fitness activities. The only one that remotely pays for the instructor is chair yoga. For zumba and aqua fitness, we would get less than 5 people to attend a class that cost us $70 for the instructor. We tried charging per class, but people complained and stopped coming (and we were only charging $5 per class).

Bingo is very successful and self-supporting. We are allowed by the state to collect money for bingo as long as any profits are given out as prizes. Everything else we have tried has lost money - dinner shows, music shows, art classes, etc.

We do keep the business side and the social side separate. We do have an social budget, but it's a small amount in our overall budget.

Looking at it realistically, times have changed. Younger families are busy with work, kid's sports and kid's activities. They see the amenities as a place to unwind at the pool or on the courts, not as an entertainment hub. Only the older people want to attend events at the clubhouse, but that's not supportable. It's simply not fair to the very large majority of the community to spend association funds on the very few people that attend.

Our rules are that all events are open to everyone and we may not pay for alcohol.

Our board refuses to be the organizers of any social events. It the community can’t organize a volunteer committee, we view this as lack of sufficient interest.

We did develop a survey to be included with the annual meeting notice package.
Will appreciate input:

1) Should the Association have a social committee to organize, publicize and run social events? yes/no

2) Would you be willing to serve on such a committee? yes/no

3) Should the Association provide funds to such a committee? yes/no

4) Knowing our annual income is $4,150 and there are expenses like insurance, administrative costs and maintenance of the entrance monuments, what amount of funds do you think should be used for social events? $_________________

5) What social events do you thin the Association should have?

Yes, we are aware that question number four will likely be a range from zero to $4,150.
We didn't want to set an amount because we want to see if the membership understands how much it costs to simply be an Association.

I would just tell them that it can't be more than 10% of the budget per irs rules or $415. why let them choose amounts higher than tHis when the board will jUst need to reJect it?

TechNicallY It's easy to get around JUst Have 1 MiNUte of HOA news at the end of the social event to make it HOA meeting.

You forgot to ask the most important question!
HOW MUCH OF YOUR MONEY are you willing to spend on social events by raising dues?
$20
$40
$60
Make sure the question is mean averaged. meaning they rank each choise on a scale of 1 to 5 and the average amount wins. IF you have 30% voting for $20, and $30% voting for $40 and 40% voting for $60. in this case 60% want to spend $40 or less but the winner is $60. mean average voting prevents this.

People dont' care about spending money till they realize it's gonna be their monoey.

This is one of the hardest things to get across to folks in HOAs and especially condos. It's all their money. Whether they pay for something themselves (self-funded social events) or they pay for it via assessment dollars, it all comes from the same source. People think "the association will pay for it" like there's a self-replenishing pot of money someplace (leprechauns, don't you know).

I think the biggest problem is that so many people don't understand money and engage in magical thinking about it. Fundamentally they don't understand numbers - and when you stick dollar signs on the front of the numbers, the little bit they did know evaporates.

Good set of questions. I might also ask how many events should the association sponsor each year - that could help people give more thought to how much should go in a social committee budget, or at least how these activities should be funded

Don't mind sharing.

We were lucky and an insurance broker found us liability and D&O insurance for $1,000. Probably because our Association doesn't really have anything to maintain or own anything. Name Brand insurance companies wanted up to $4,000 for the same coverage.

Current Budget:

Income: $4,150

Expenses: $4,150

$270 Mowing around Entrance Monuments
$200 P.O. Box Rental
$1,000 Insurance
$450 Postage
$500 Printing
$170 Misc. Admin
$ 60 License,taxes,fees
$600 Legal (would be lower but lots of documents to update)
$600 Reserves (again, only 2 entrance monuments to maintain)
$100 Misc.
$200 Room Rental for annual meeting

I agree it's messy no matter how one looks at it.

Past Boards did not set aside reserves and paid for a meal at the annual meeting (ran $400-$500).

Members are aware of this, so we can't say we have no money.

Charging for events would cause tax implications as those funds would be non-exempt income.

I do like adding #4 to the survey. Have to think how to rework those questions.

I wanted to let you know that I tried AI today to see if it could make the article better.

I asked that it be simplified for better understanding and polished for a newsletter.

This is the result:

Business and Social: Two Sides of an HOA

Being part of a Homeowners Association isn’t just about managing property—it's about building a community. The HOA has both a social side and a business side that help make the neighborhood a better place to live.

The Social side is the true spirit of any community that lies in the connections we make with one another. Getting to know your neighbors, forming lasting friendships, and sharing both the joys and challenges of life are what make a neighborhood feel like home.

The business side is the operational side that keeps things running smoothly. This includes things like: Ensuring properties comply with community rules (Restrictions); Collecting fees from members to meet community needs; Paying bills while staying within budget; Listening to concerns and addressing member feedback; Sometimes, adhering to rules and regulations that may not always align with personal preferences but are required by governing documents, laws, and regulations.

While the business side of an HOA may not be as fun as the social side, it’s essential to ensure the continued success and well-being of our community.

When a development is first getting started, the atmosphere tends to be more social. During this time, the developer usually handles the business side of the HOA, giving the Board more freedom to focus on fostering community connections. However, as the development grows and the developer steps back, the Board must balance its time between both the social and business sides of the association. Focusing too much on one can lead to issues in the other.

Both sides are important. The social side helps maintain community harmony, encourages friendships, and often sparks volunteerism. The business side ensures property values are protected and helps safeguard the association and its members from potential legal complications.

At this stage, the current Board has prioritized the business side. This focus ensures that the necessary tasks to protect members are being handled. However, we acknowledge the need for balance.

Recently, we received a valuable piece of feedback: "I do like getting structure around the HOA, but it's starting to feel really formal, and not as fun to live here. Not sure where the trade-off begins and ends." This comment gave us something to reflect on, and it’s clear that more attention is needed on the social side.

Unfortunately, with volunteer time being limited, we need to find an effective way to address this. To better balance both sides, the Board is considering the formation of a Social Committee. This committee would be tasked with organizing, publicizing, and running social events for the community.

As the first step, a survey will be sent to all members to gauge support for a social committee, gather ideas for social events, and determine if anyone is interested in volunteering to serve on the committee.

We look forward to hearing your thoughts and ideas!

I think that when it is rewriting an article you made, vs. making one from scratch, AI would be more factual (if you were factual of course).

I agree, it did a pretty good job.

Knowing that my membership is not HOA savvy, I'm glad it can simplify an article.