not for profit

By definition, the NFP takes in revenue to cover its expenses. Those numbers (revenue vs. expenses) should be very close. Some HOAs also end the year with a an Emergency Fund and a small Contingency Fund on the balance sheet.

Then the year begins again, and you start all over . . . That's why a budget is usually required for the Board to develop and present to the Members.

Some HOAs also have a Reserve Fund to cover the repair and replacement of assets, i.e. pools, community centers, roads, etc. This Fund is based on a plan and can become quite large over the years.

This is a very simple overview.

What kind of ADDITIONAL expenses are you concerned about?

BB@,
First establish how Missouri considers "Non-profit" and "Not for profit". I expect you are Non-profit but not sure. A budget is just that, a guess of what your yearly expenses are. Your board makes that guess on prior record, inspection of the real property, examination of administration costs and what you can see in your crystal ball. If you anticipate an extra expense for the forthcoming year you budget for it. If you have a Long Range plan in effect you provide funds called for in the long range plan. Same as a Reserve fund, you plan it ahead. It is great to say you should not show a profit but you have any idea how hard this would be to set a budget and spend only what you budget. I don't mean juggle the expenditures till they reach the budget figures, I mean figure every thing out to the break-even point. Not necessary. If you can go under budget for the year adjust for the coming year, same as over budget, adjust for the coming year. If you do this you are not making a profit and I doubt anyone would even take the time to look at your books. Naturally, if you play with the bull, you are going to get horned, don't play games. Unexpected expenses come in different shapes and sizes. A big difference between replacing a drinkwater supply line than trying to cop with a termite infestation that may take years to complete. Big difference in replacing the pump in the spa tub and having to come up up 100K because the roofs blew off one of your building or the community pond decided to over flow and carved a new stream down through the streets of the city.

Robert,

FYI. . .there is no difference between "nonprofit" and "not-for-profit". Some states say one, others say the other. If you don't believe it, do a google.