The Flaws You'll Find in Fundraising for Your HOA
In this week's tip, we weigh whether you should consider fundraisers to cover HOA expenses. Short answer: Our experts have concerns. But it's not out of the question.
The idea comes from a blogger who advocates holding fundraising events like holiday display tours; knitting, gardening, or car maintenance seminars with owners who have a particular expertise serving as instructors; neighborhood sales; and hosted dinners after which guests can leave donations.
Though he can't quite place his finger on why fundraisers like these make him wary, Patrick Clark, president of Excel Association Management in Plano, Texas, which manages more than 100 condos and HOAs, is hesitant to promote the idea.
"I've had associations that have said, 'We've got this project if you'd like to donate,' and homeowners have donated," he says. "That's out of the goodness of their heart. But I always get concerned when I hear HOAs discussing this. It kind of brings up the hackles on the back of my neck, and I'm not sure why. I don't know if it affects the nonprofit status of the association or has tax implications. But I suggest they talk to their lawyer to find out if there are legal ramifications."
A lawyer's not much happier with the idea. "I don't think it's really wise for a number of reasons," says Christopher J. Shields, a partner at Pavese Law Firm in Ft. Myers, Fla., who's represented associations for decades. "If you're going to be holding fundraisers, are you inviting people from outside the community into the community? You've got security issues there. You also have the potential for slip and falls. Are you serving alcohol? There are all sorts of liability issues.
That's not the only reason Shields is uncomfortable. Find out his other concerns, and read why another of our experts says fundraising can have its place, in our new article, HOA Need Repairs? Have a Fundraiser! Or Not.
Best regards,
Matt Humphrey
President