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Subject: Donation Policy etc....
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KimK5
(Texas)

Posts:4


06/28/2018 10:37 AM  
Looking to see if a HOA can share with me their policy(s)/procedures/guidelines regarding a donation made by a resident (after they passed) that was written into their will regarding making a donation to a specific cause in their HOA Community. Any and all would be greatly appreciated. Do not want to reinvent the wheel. Thank you in advance.
KerryL1
(California)

Posts:5389


06/28/2018 11:11 AM  
Welcome to the forum, Kim.

I'm a longtime Board member, but we've never been so lucky as to get a donation such as yours so I have no experience with it. ("Donations" usually are beat up gym equipment.)

I assume you'll need to pay taxes on it? I also assume it should go to the "cause" that the deceased identified. Is that "cause" a budgeted item? I assume that her instructions may not discriminate any persons or social groups in your HOA, e.g., the deceased wants the donation to go to install an adults-only pool

TX law probably can instruct you, but we do have a couple of knowledgeable TX posters who may be able to help.
RichardP13
(California)

Posts:2752


06/28/2018 12:07 PM  
The donor would have paid the tax, so the contribution should be tax free.
DouglasK1
(Florida)

Posts:1153


06/28/2018 1:33 PM  
Posted By RichardP13 on 06/28/2018 12:07 PM
The donor would have paid the tax, so the contribution should be tax free.


I would think that as non-program income on form 1120-H that it would be taxable to the association even though the donor probably paid the applicable income taxes when the money was earned. Can you clarify how it would be non-taxable in 1120-H?

Escaped former treasurer and director of a self managed association.
JenniferG11
(Texas)

Posts:243


06/28/2018 11:37 PM  
Posted By KimK5 on 06/28/2018 10:37 AM
Looking to see if a HOA can share with me their policy(s)/procedures/guidelines regarding a donation made by a resident (after they passed) that was written into their will regarding making a donation to a specific cause in their HOA Community. Any and all would be greatly appreciated. Do not want to reinvent the wheel. Thank you in advance.




What is the cause?
MelissaP1
(Alabama)

Posts:7477


06/29/2018 4:24 AM  
I would ask this of your accountant what to do with the donation. You all may need to pay taxes on it. Which may be minimal and worth it. For example: They donated a pool table to the clubhouse. The monetary amount it's worth may be subject to taxes. Well that may be like $50. The table is worth $2K. Basically paying $50 for a $2K pool table.

A little confused on a "cause" in a HOA. The money usually goes into the "Pool" of money and then earmarked for a specific purpose. Would need more details.

Former HOA President
GeorgeS21
(Florida)

Posts:349


06/29/2018 5:24 AM  
Pool table?

New chairs?

Pool?

$100,000 cash?

What was donated matters ...

If something small like a pool table or furniture, I would just accept and say thanks to the heirs. If used, it may not be meaningful in a value.

If something traceable like cash, bonds, equities, etc, I would declare with IRS.
KimK5
(Texas)

Posts:4


06/30/2018 8:21 AM  
Thank you to all that have responded and want to apologize for not replying. We are on the road and was tasked with this just before we left.

I am thinking I may have to have 2 sets of written directives - one for monetary donations and one for material or hard good donations.

I should have mentioned in my initial post that our community is a 55+ Active Adult Community so many residents are at that point where we are deciding what to do and what not to do after our passing.

And when I said "cause" (lacking for a better term) not just to our General Fund unless that is where the donor wants it to go.

We know we will have to have our accountant and attorney look the directive over.

This has not yet occurred in our community and it may never but I believe we need to have something in place in the event it does.

Looking to start somewhere.

Thank you in a advance
MelissaP1
(Alabama)

Posts:7477


06/30/2018 9:22 AM  
Worst case is your looking at paying some taxes on it. How much depends on the price the IRS sets it's worth. Even tangible items have a monetary value. So if you get a kitchen table, it's still going to have a monetary value. The HOA is to be funded by it's dues only. It's not necessarily a non-profit as in a charitable one. Your HOA can also be For-Profit in some cases. Which if that was the case, then that opens up a different set of IRS rules on donations probably.

Good luck!

Former HOA President
KimK5
(Texas)

Posts:4


07/09/2018 7:44 AM  
2nd Request - With all the views on this subject I see that it is a matter worth discussing. I can't believe that there isn't something already out there. I know that it will have to be tweaked to meet our needs. If someone knows where else I can reach out to ie another HOA blog, etc., I will most appreciate it. Thank you so much in advance. Help!
KerryL1
(California)

Posts:5389


07/09/2018 8:27 AM  
There probably is more out there about your topic. And maybe you'll get more replies here. But probably good to check with your HOA's CPAs on the tax aspect.
AugustinD


Posts:1045


07/09/2018 10:02 AM  
Here are Texas, Oregon and California HOAs (at least one is a volunteer HOA) that solicit donations for certain events. You could contact these and see if a manager or a board member would be willing to talk with you:

http://www.ofha.org/friends-of-oak-forest-park/

http://www.oakhillsoregon.com/4thofjuly.html

http://www.shermanoaks914.com/donate.html


Some other sites that might add just a bit of clarity:

https://newenglandcondo.com/article/qa-voluntary-donations/full

http://www.hoacpa.com/assets/taxes-uod-faq-01.html

https://www.avvo.com/legal-answers/can-you-deduct-voluntary-contributions-to-a-homeow-1129558.html

I think my main question would be: If a HOA accepts a donation that the (deceased) donor wants to restrict for a certain use, must it use the donation thusly?
KerryL1
(California)

Posts:5389


07/09/2018 1:45 PM  
That was one of my above, too, Augustin: what is the use discriminates against a certain class of resident, e.g., renters or children.
AugustinD


Posts:1045


07/09/2018 1:58 PM  
Posted By KerryL1 on 07/09/2018 1:45 PM
That was one of my above, too, Augustin: what is the use discriminates against a certain class of resident, e.g., renters or children.


I did not even think of a use that would violate federal and state fair housing laws. I think if the use were thusly specified, and I were on the Board, I would motion to return the donation to the estate. If the use went after one of the protected classes, I would also motion to send a firm letter stating the HOA will neither support such discrimination nor do anything unlawful. To minimize conflict and do the right thing. I do not think I would support obtaining an attorney consult. The executor/executrix can tuck it in with the other residual of the estate and divide among the many bequestees, heirs and heiresses?

Maybe it would help to know how much the donation is.
KimK5
(Texas)

Posts:4


07/10/2018 5:13 AM  
I am thinking that if you include disclosures in your guidelines then that is what you would follow. Example - if someone donates all their old furniture to the HOA and the guideline states that the HOA does not except old furniture then you would be covered. Just sayin..... Thoughts?
KerryL1
(California)

Posts:5389


07/10/2018 12:29 PM  
In the cases of old furniture or clothes, just give the donator the contact info of the relevant agency who'd accept those items. I wouldn't try to name everything the HOA would not want.
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