BarryF1 (Florida)
Posts: 1
Posts: 1
Posted:
Can this be done?
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making charitable donations from HOA funds
Started by BarryF1 • 10 replies • 6223 views
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DonnaS (Tennessee)
Posts: 5,671
Posts: 5,671
Posted:
It is a very bad idea because not everyone supports the same causes. If the charity somehow benefits the entire membership, then perhaps but a better use of the funds might be to shore up Reserves or do a party for the members or something internal for the HOA. Especially if the charity is somehow related to a religeous organization, that would definitely be not the correct thing to do.
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Quote:
Posted By BarryF1 on 02/01/2012 1:04 PM
Can this be done?
Can this be done?
Barry,
Best not to do it with association funds. If people want to donate to a specific charity in the name of the association, its better to let them donate individually what they feel like donating. Then take the accumulated funds and donate them to the charity.
Example: Every year the town celebrates something similar to a founders day. The last night of the celebration one of the events is to give away several bicycles to area children. Each child who attends receives one free ticket for the bicycle drawing. Local merchants and citizens donate the bicycles (or rather, the funds to purchase them). Many of our homeowners donate to purchase a bicycle in the name of the association. No association funds are used.
PeterD3 (Florida)
Posts: 708
Posts: 708
Posted:
HOA monies are collected for specific purposes.
Is there a line-item in your budget for this expense?
If not there is no authority for the funds to be used for anything other than their purpose of collection. i.e.community operation, maintenance, expenses, or affairs.
TimB4 (Tennessee)
Posts: 21,046
Posts: 21,046
Posted:
Barry,
The answer to your question is Yes, it is permissible.
As others have stated, there can be several issues for an Association if a member complains.
We actually donate money once a year to the local volunteer fire department - in return they escort Santa around the development. As much as this is enjoyed by the membership, I know that if someone complains the practice will most likely have to stop.
The answer to your question is Yes, it is permissible.
As others have stated, there can be several issues for an Association if a member complains.
We actually donate money once a year to the local volunteer fire department - in return they escort Santa around the development. As much as this is enjoyed by the membership, I know that if someone complains the practice will most likely have to stop.
KellyM3 (North Carolina)
Posts: 2,239
Posts: 2,239
Posted:
Legal or not, I cannot think of hardly any reason or believe that any by-laws are written to add charitable contributions as a worthwhile expenditure of HOA dues.
Supporting the volunteer firemen who serve the HOA properties is something you could argue in favor of if budgeted and not allocated off-budget.
Supporting the volunteer firemen who serve the HOA properties is something you could argue in favor of if budgeted and not allocated off-budget.
BonnieG1 (Nebraska)
Posts: 1,186
Posts: 1,186
Posted:
I don't think HOA funds should be used for charitable donations. The people who responded previously have some very good points.
I know we could not. A few of our members complain about spending "their" money when we do maintenance.
I know we could not. A few of our members complain about spending "their" money when we do maintenance.
JM10 (California)
Posts: 503
Posts: 503
Posted:
It sounds tricky. I agree that someone might complain. It might be better to put something in the newsletter about it and the person behind different charities could collect. That's sort of like being at work where you make a deal to support each other's charities, but it's not official work business.
SteveM9 (Massachusetts)
Posts: 3,699
Posts: 3,699
Posted:
Quote:
Supporting the volunteer firemen who serve the HOA properties is something you could argue in favor of if budgeted and not allocated off-budget.
Some counties you have to subscribe to fire protection if you want them to put out your house. So I could see that as a legitimate expense. But the HOA should not give money to volunteer firemen. This is why people pay property taxes.
If you feel like you want to donate out of your own pocket, feel free to do so, but dont spend other peoples money for dues, by giving it away to charity, churches, etc.
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Quote:
Posted By TimB4 on 02/01/2012 4:06 PM
The answer to your question is Yes, it is permissible.
The answer to your question is Yes, it is permissible.
Barry,
While there may nothing illegal about donating a portion of HOA funds to charity, a word of caution. Be certain that whatever you donate (plus other "non-eligible" expenditures) does not exceed 10% of the annual association's budget. The IRS requires that at least 90% of an association's expenditures be used to acquire and maintain the association's property (including insurance, management fees, lawn mowing, etc.). Otherwise, the association will not qualify for the special tax treatment of an HOA and will have to file using Form 1120 instead of 1120H. This could result in a tax liability.
As I, and others, have said previously, because of the sensitivities involved, this is not a recommended use of HOA funds.
SusanW1 (Michigan)
Posts: 5,202
Posts: 5,202
Posted:
Budgets can contain a "community outreach" line item. This might cover sympathy flowers, donations, employee birthdays, cards, and other such expenses.
The issue is to watch just how much this is.
What kind of money are we talking about in comparison to your budget.
Since one of our missions, as stated in the bylaws, is to promote social and community interaction, we have a small fund to partially fund kids parties and holiday events.
The issue is to watch just how much this is.
What kind of money are we talking about in comparison to your budget.
Since one of our missions, as stated in the bylaws, is to promote social and community interaction, we have a small fund to partially fund kids parties and holiday events.
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