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Subject: Social Committee
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Author Messages
EvelynJ
(Florida)

Posts:10


10/22/2018 2:27 PM  
I recently became a member of our "revitalized" social committee. In the past and again this year, the community opens the gates for outside neighbors to bring their children through on Halloween. As an up and coming committee, our funds are very low, so it is hard to implement events until we can do some fundraisers. Other gated communities have a fee to enter their gates for this occasion, however, many members of this community do not want to charge a fee (still in discussion for the future). We literally get at least 2-3 thousand people come through our gates. We set up and pay for a porta-potty, extra lighting, and policing. I am wondering, since we are a separate entity from the Board, and do not receive any funding from them for the social committee, can we ask the public coming through our gates for donations? Would we have to report the donations as an income? Would we need to become incorporated to avoid paying taxes on this type of donation/fee? Any help in the right direction would be greatly appreciated.
DouglasK1
(Florida)

Posts:1263


10/22/2018 2:47 PM  
What exactly do you mean by "separate entity"? Is the social committee sanctioned by the association or is it totally independent of the HOA?

Unless the governing docs give the Social Committee authority and autonomy such as what you are suggesting I thing it would be a bad idea to charge a fee without board approval. In any case, the board is responsible for the common areas and gate so even if the committee is independent of the association, this seems like a decision the board should be involved in.

If the association collects fees or donations it would be taxable income, typically at 30% if your association files form 1120-H. I'm not sure what the ramifications would be if a non-official entity or person collected fees or donations, but I would assume that it could not be the social committee if the committee is appointed by the board and sanctioned by the association. I don't see that setting up any kind of corporation would shield this from being considered taxable income to somebody unless it was a true non-profit charitable type of organization.

Escaped former treasurer and director of a self managed association.
MarkM19
(Texas)

Posts:128


10/22/2018 4:04 PM  
Evelyn,
I am not sure that I am smart enough to know the exact answer for you here. I do however have questions that hopefully someone on the post can answer that may help us all.

If the committee does not make enough to cover all of the costs I do not see any reason to call it taxable.

If the committee makes more than the actual costs of this event can't the excess fund the committees future events? It would not be profits if it is not removed from the HOA or paid to shareholders.



GeorgeS21
(Florida)

Posts:750


10/24/2018 1:56 AM  
Evelyn,

I am surprised any gated community would open their gates for Halloween ...even more surprised you would pay for amenities to support it.

My singular concern would be LIABILITY - I immediately thought of about 10 really ugly scenarios ... full gamut, from murder, down to lawn and property destruction ....

I think you should get an attorney involved to explain all the bad juju things that could happen. You may want to talk with your insurance carrier about this, as well.
SteveM9
(Massachusetts)

Posts:3105


10/24/2018 5:46 AM  
I once worked for a company that rented a venue for a party. Someone broke their leg pretty badly. They lawyered up and sued everyone. The venue, my company, etc, etc. My company insurance ended up settling out of court even though we had nothing to do with the building, how she fell, or what she tripped on. You dont have a choice, your insurance company decides to pay or not, then they pass it along to you as increased rates. Dont like it? doesnt matter.

So, if you break away from the HOA, you will need your own insurance, personal coverage for yourselves, etc. If you must do these events, do it under the HOA, and the HOA insurance. I would increase the insurance rider to a very large amount for the 1 day the even occurs on. Very easy to do, I used to do it all the time. Simple phone call or email and they email you a copy of a rider just for that event.

As for income reporting, you would need to talk to your HOA tax accountant. Every hoa is different. In most cases the money would simply go into the operating account and you could base your budget for next year on that number. If there is actual income, and the HOA did in infact owe, you could simply pay taxes on it. No big deal.
DouglasK1
(Florida)

Posts:1263


10/24/2018 9:17 AM  
Posted By GeorgeS21 on 10/24/2018 1:56 AM
Evelyn,

I am surprised any gated community would open their gates for Halloween ...even more surprised you would pay for amenities to support it.


Many years ago we opened our gates for a couple of Halloweens. We certainly didn't get thousands, more like 2-3 dozen, and we didn't make any provisions or spend any money in the effort. A few homeowners complained that they didn't think the gates should be opened so we've never done it since.

Escaped former treasurer and director of a self managed association.
EvelynJ
(Florida)

Posts:10


10/24/2018 12:57 PM  
Thanks for your response. By a separate entity, I mean we are not funded by the HOA. We have to fundraise to obtain funds for any events we want to do in the community. We do run our ideas through the Board for final approval, but the Board does not financially support any events.
EvelynJ
(Florida)

Posts:10


10/24/2018 12:59 PM  
I am new to this community, but totally agree with you and the concern you address. The Board and CAM services are well aware of the liability issues. This event has been going on for about 10 years now. Personally, I rather we did not open our gates.
EvelynJ
(Florida)

Posts:10


10/24/2018 1:00 PM  
Thank you for the information
SueW6
(Michigan)

Posts:325


10/24/2018 1:10 PM  
Two to three THOUSAND people are coming into your subdivision, and you have no board insurance umbrella to cover your event?

Yikes!

Either make this a board funded event, complete with one-day event insurance, or get out of the Halloween event. The liability is staggering!

EvelynJ
(Florida)

Posts:10


10/24/2018 1:23 PM  
No, that is not what I said. I am not privy to all the legal aspects of insurance, but I do know that we are covered for this event
MarkM19
(Texas)

Posts:128


10/24/2018 1:26 PM  
Evelyn,
If you are not worried yet just close your eyes and imagine dark streets with kids dressed in Costumes that obstructs their vision running across streets to go to your homes. Think about the extra traffic and the parents trying to find parking spots to drop the crazy kids off and them not following your speed limits are your HOA parking rules. If know one gets hurt or killed you will be lucky but then all your visitors will tell their friends where to go next year because it is such a safe environment. Double the crowd double the trouble.


I am officially in the No Fun Zone. I can think if hundreds of things that can go wrong and rotten teeth and cavities as the only thing that can go right.
SteveM9
(Massachusetts)

Posts:3105


10/24/2018 4:40 PM  
can we ask the public coming through our gates for donations? Would we have to report the donations as an income? Would we need to become incorporated to avoid paying taxes on this type of donation/fee? Any help in the right direction would be greatly appreciated.


How do you handle it now? As far as the IRS goes, your money coming from "donations" or the public is no different. Money is money. If your not involving your board with your finances and tax issues, your doing it wrong.

Avoid paying taxes on it? Take in $100, spend $100. $0 profit.
SteveM9
(Massachusetts)

Posts:3105


10/24/2018 4:44 PM  
imagine dark streets with kids dressed in Costumes that obstructs their vision running across streets to go to your homes. Think about the extra traffic and the parents trying to find parking spots to drop the crazy kids off and them not following your speed limits


One HOA I saw got a $30 permit from the town to close their roads in the HOA for trick or treating hours. People needed to park outside the HOA and walk in, walk to each house. It was much, much safer. Your welcome to trick or treat here, your cars are not. Very clever idea.
DouglasK1
(Florida)

Posts:1263


10/25/2018 5:27 AM  
Posted By EvelynJ on 10/24/2018 12:57 PM
Thanks for your response. By a separate entity, I mean we are not funded by the HOA. We have to fundraise to obtain funds for any events we want to do in the community. We do run our ideas through the Board for final approval, but the Board does not financially support any events.


Are the social committee members appointed by the board?

Escaped former treasurer and director of a self managed association.
EvelynJ
(Florida)

Posts:10


10/26/2018 5:33 AM  
I apologize, I did not mention that we close off traffic during the hours we allow the others into the gates. Even homeowners are not allowed to drive through.
EvelynJ
(Florida)

Posts:10


10/26/2018 5:36 AM  
In the past the members of the social committee had to fundraise to get funds for the events in the community. Many of the events were not costly, however, the new members want to expand the events to include a community carnival, breakfast with Santa, and other ideas that require some funding source.
EvelynJ
(Florida)

Posts:10


10/26/2018 5:38 AM  
No, it was started by a few residents. The did fundraising, such as promote for a garage sale in which every household that participated paid $5 and that money was use for community events
EvelynJ
(Florida)

Posts:10


10/26/2018 5:40 AM  
Forgot to mention that traffic is not allowed (in or out) during the 3hours that the gates are opened to the public. Residents are aware of this policy and park outside the gates.
EvelynJ
(Florida)

Posts:10


10/26/2018 5:42 AM  
Yes, that is how they do it here too. No cars allowed in or out during the 3 hours
JohnC46
(South Carolina)

Posts:7820


10/26/2018 8:35 AM  
Posted By EvelynJ on 10/26/2018 5:33 AM
I apologize, I did not mention that we close off traffic during the hours we allow the others into the gates. Even homeowners are not allowed to drive through.




As an owner, I would be irate at not being able to drive in my own neighborhood.
CathyA3
(Ohio)

Posts:62


10/26/2018 12:04 PM  
Posted By JohnC46 on 10/26/2018 8:35 AM
Posted By EvelynJ on 10/26/2018 5:33 AM
I apologize, I did not mention that we close off traffic during the hours we allow the others into the gates. Even homeowners are not allowed to drive through.




As an owner, I would be irate at not being able to drive in my own neighborhood.




Not to mention the possibility of an owner having a medical or other emergency - what happens if someone is seriously hurt or dies because first responders are delayed due to closed off streets? Personally I love Halloween and love to see the kids out trick-or-treating, but I can see all sorts of risks to the HOA here. It's definitely not like it was when I was a kid and there were no HOAs.
CarlJ2
(Texas)

Posts:188


10/30/2018 5:05 PM  
HOAs have enough governance powers over resident's lives on a regular basis, I would not want to exacerbate it with this idea.
SteveM9
(Massachusetts)

Posts:3105


10/30/2018 5:27 PM  
The obvious answer would be to let any emergency vehicles in and any angry homeowner. Dont hurt your brain trying to figure it out.
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