Social Committees

Wonderful family bbq's.. picnics.. parties. ( including adult only football parties or the sort in the clubhouse ) ... that is what we us our funds for.

BTW your HOA is VERY gracious with 5K!

I didn' t say our monies came from the monthly assessements. We have a variety of fund raisers done around the year. I also know that some associations allow for this kind of spending... 5K is essessive

I live in a 1200 household community and our fees and assessments are $290. yrly. which includes landscaping and grounds work in the common area and upkeep of the walking trails. So far the majority of the 5k Social Budget has gone for childrens' parties, one teen nite, and one adults only social.
I feel like the funds should be distributed equally between the three categories: children, teens, and adults but some of the moms of young children thinks it is okay if they spend the majority of the funds on childrens' parties. They rented out a Santa that cost $800.00 which I think was outrageous. Has anyone else out there dealt w/ a situation like this ?
Brendam

Nicole,
Nor did you say what if any amount of this fund was coming out of the Regime coffers. And , the assumption that because some regimes do take money from assessments and uses it for parties, does not make it right.
We recently spent a pretty good chunk of money justified by the Board with a show of hands at an annual meeting. Special assessments were added on to special assessments to fund these enhancements. Now the assessmnets are done, no one knows if the are paid for, as special assessments still continue and people are starting to question how and what did the monies buy. I mention this because the council has a perfect right to demand how funds are being spent. Even money already approved, bur the Regime does not have the authority and the council does not hold the authority to spent any money that does not go to Real property. IMHO

The distribution of the money depends on the membership of the community. If for instance you had two families with children out of 1200, the whole thing is crazy. On the other extreme, if only 2 of the 1200 units didn't have children then not doing so would seem crazy.

I think $900 seems pretty steep for a Santa myself, but if I were in the suit it wouldn't seem that bad at all.

I personally think that all HOA funds given to the social committee should be spent on activities that will encourage neighbors to get to know each other better. Thus I would spend the entire lot on things like a big cookout. Having Santa show up at said cook out does seem like a pretty decent idea.

If the committee is raising its funds separate from the HOA budget, then it should send the funds in the manner it feels fit to.

JohnK3,
Good reasoing John, not to mention it is illegal to spend assessments nd dues on items that do not support the whole. If you can tie the contruction of the second Mount Rushmore to benefit each and every association owner and this results in a benefit of the whole (the whole being that which runs with the land), god luck to you.

Robert,

First, what makes you believe my association isn't using the web? I would go so far as to consider it insane for my association to not use the web considering that a very high percentage of people have broadband in their homes. (At least 7 of 9 on my street.)

Second, I disagree with your belief that it somehow violates HOA regulations to have them sponsor an event to help neighbors get to know one another. By your line of reasoning a pool would also be illegal since some people won't take advantage of that. The HOA has to be fair. If some choose to not bother going that is their problem not the HOA's.

Brenda,

I can't believe that your docs provide for social activities.

Ellen and Brenda,
Or course you know how I stand about this. But doesn't it seem sort of illogical for a state(the State Statute) to proclain in a law that parties would be mentioned? Isn't that like the constitution taxing tea? You know what happened when that was tried.

If your documents address social events or maybe a little Nascar or Extreme Boxing, doesn't it raise a doubt in your mind. I think we may be blowing this up too high, and can agree community social events are nice and can be very effective to the health and happiness of the community, but we, as owners shouldn't get into financially benefiting a select group of equals. A shot or coke or hamburger still costs money. Our condo has for years, provided a cook out and a Continiental Breakfast at Annual Meeting time. I, and others have expressed their objection, but the practice continues because that is the way it is always done. In reality, if you have to drag people to the alter to get them to even read their documents, what makes you think a hamburger and a spiked drink is going to solidify the association and all problems are solved.
Do I exaggerate? Read the minutes of the annual meeting and peruse what a wonderful time was had and how all are transformed into a viable respected, cohesion group of owners, because they vocalized after a couple of beers. Annual meeting is over, they all head back to camp, not to be seen till next year and the ritual starts anew. In my opinion, the good of this all comes external of the activities and Golf Prizes, and happens when a couple of serious about their neighborhood folk sit down and say, "Let's talk about our investment."

Ellen I understand the sentiment but sometime you hear "that's the way it has always been done" is because it works. Different is not always better; remember the "New Coke" fiasco.

I don't buy that the HOA being involved in a block party will automatically lead to baby showers and the like. In fact, the whole argument is a classic example of the "slippery slope" fallacy.

But while you are saying there is no reason for a HOA to be involved, perhaps you should consider that your city quite possibly uses tax dollars for an annual block party that some people choose to participate in. Check out the National Night Out. And then call your police department and get their impressions. This program has been very successful and is nothing but coordinated block parties.

But then again, HOAs have no basis for reducing crime in the neighborhood. After all crime rate has nothing to do with property values. (Oh, that is right it has a lot to do with property values. Just as getting to know your neighbors is a well accepted means of reducing crime.)

The budget doesn't have to be big. Again, it can be as simple as helping to coordinate efforts.

In our HOA we don't mix social activities with official business.

We do have a social "committee" and we do have a fundraising "committee", but they are made up of volunteer homeowners. The committees have not been established by the board and their members are neither appointed by the president nor by the board. These committees organize and run themselves. They do not have official status such as our landscaping committee or our architectural control committee, and there are several very good reasons why.

1 - Taxes. What about the money raised for and spent for social events? If the committee has official status, that money, legally, has to show up on the books of the HOA. Remember, under the IRS rules for an HOA (1120-H), you have to meet certain reqirements with respect to funds. Those requirements are no more than 40% income from outside sources (non dues), and no more than 10% of your expenses can be on non-qualified expenses (and social events are not a qualified expense because according to the IRS, "at least 90% of the association's expenditures for the tax year must consist of expenses to acquire, build, manage, maintain, and care for property"). Any money collected separately to help defray the cost of an event (let's say you charge $10 per person for a picnic) has to be declared as outside income, and the amount you actually spend on the event is a non-qualified expense. Even if you don't inadverdantly find yourself in a tax paying situation, why add to your bookkeeping headaches? And, if your fundraising committee and your social activities actually make money, you could find yourself giving Uncle Sam a share.

2 - Liability. Does your HOA insurance cover you if someone is injured at a social event? Certainly, such events increase your risk. Does your insurance allow for this? Your insurance probably provides coverage if someone is injured on common property, but what about at an HOA-sponsored event that is at a remote location?

3 - Discrimination. If a social event is an official function of the HOA, there is the potential of inadverdantly finding yourself on the wrong end of a discrimination lawsuit. You think that's far-fetched? Let me tell you a true life story. A few years ago our social committee planned a holiday party. Our clubhouse wasn't built yet, so the committee decided to have it in the function room on the second floor of a nearby popular restaurant. Because this was an old establishment, it was grandfathered and the second floor wasn't handicapped accessible. Simple oversight, mind you, but a handicapped individual living in our HOA could easily have sued the HOA claiming they were discriminated against because they were not able to attend the party (if it had been an official HOA event).

4 - More hidden issues. Depending on the laws in your state, there may be other issues to consider. An HOA is (usually) a legally chartered corporation; a "business" entity. You're supposed to know better. It is not the same as a group of individual homeowners who have decided to get together and do someting as a "private" group.

For example, do you have a permit to serve food? Do you have an entertainment license? An HOA "business" may need one; a group of people holding a private function may not.

In Connecticut, a church auxiliary or a parent-teachers organization can hold a bingo night. An HOA cannot (because we are not an IRS Chapter 501(c)(3) charity).

And so, life is less complicated if we don't get the HOA officially involved in activities that have nothing to do with the real property of the association. We leave that up to the homeowners as private individuals.

Wow, and some don't like the way I post. I still find it amazing that you don't grasp that social functions can improve the health of the real property.

If your HOA chooses not to do social functions that is fine. I don't live there so I don't really care. But understand other people do see a solid connection between a social function and the health of the real property. And this isn't just members of HOAs. It includes city councils and police departments who choose to put National Night Out in their budget.

Quite honestly, I can't imagine placing 10% of the budget into social functions. Nor do I see having any committee with an HOA raiding significant funds from outside the HOA. (Keep in mind that if your membership donates money to a party fund this is not outside funding. Outside funding comes from non-members typically from renting out your facilities.) But it is something to think about along the way.

Kirk,

Not true. You should read 26cfr1.528 which describes what is exempt and non-exempt function income for HOAs. "Outside income" is actually a misnomer because it does not mean income from sources outside of the HOA. The correct term is non-exempt function income. Non-exempt function income includes:

"(3) Amounts received from members for special use of the organization’s facilities, the use of which is not available to all members as a result of having
paid the dues, fees or assessments required to be paid by all members;"

Thus, if you collect money from association members to attend a picnic, for example, that is not exempt function income unless that money is collected from all homeowners in the form of regular assessments. Another example would be a "pool use fee" charged only to members who desire to use the pool. Still another example would be a fee to use the clubhouse for a private party, whether is is an outside party or a private party by a homeowner. Our clubhouse, for example, is ONLY rented to association members for private parties, and those fees are non-exempt function (outside) income.

EVERY bit of income better appear on your form 1020-H. Don't mess with the IRS.

We have our social functions. We just keep them separate from HOA business and avoid the bookkeeping and other potential liability and legal headaches. We don't have to worry about food permits, entertainment licenses, etc. It's just a group of neighbors having a private party.

Brenda,

Oh, hey, you know what? We all got sidetracked on whether the Social Committee should even be an official part of the HOA and what you really asked was how to spend the money.

So, whether you decide to have the social committee part of the HOA or keep it separate (my recommendation), what kind of events do you plan?

I think, to be fair, you need to keep the needs and desires of all of your community in mind. Certainly, there are family events (maybe a picnic?), and there are adult events (maybe a holiday party?), and there are events for children and teens. Maybe an Easter egg hunt, a halloween party, whatever. There are lots of examples. I would say try to keep it balanced.

KIRK,

I am confused..be explicit. What does "health of the property" mean?

Kirk,
I appreciate your comments. Our HOA does have a webpage,a quarterly newsletter, a clubhouse but no pool. With 1200 houses, it is hard to know what the demographics are in each household unless with took a survey. Since we are walking distance to the supposedly best high school in the state, it is a big draw for families with teens. Half of the households could have children under the age of 12yrs. I just don't know. But we are a diverse neighborhood with many foreign-born professionals as well as retirees and single professionals. Because our Social Committee is overrepresented by
Moms of young children, (6 out of 7, I am the only mother of teens on the committee) the focus of the planning and the majority of the funds were being spent children's activities and they were overruling me w/ my suggestions for Teen events and Adults only events. I took the issue before the Board which agreed with me in all fairness. The Halloween party, Pictures w/ Santa, and Pictures with the Easter Bunny has no appeal for the Teens and other adults. However parents of young children think this is great. The Board seems to be happy that we are having any social events.
My proposal is that the parties reflect the demographics of the neighborhood in a fair manner. I am going to have to read our by-laws to see if budgeting for social events is permitted. By the way, what is CC & R's ?

thanks,
Brenda

Donna,

The developer is in the process of turning over the HOA to our Board. Last year the Developer had a neighborhood-wide cookout that cost about $5000.00. We had a fairly good turnout. So the $5000.00 for the Social Committee came from this amount that was allotted by the developer for that one party. Our turnout has been low, no event yet has had more than 60 participants. I guess the thinking is that if we carve up the pie to offer a variety of events, there will be at least one event that will appeal to each neighbor. At the events that we have had so far, we always have the attendees complete a survey as to what events they would like to see offered.

Brenda

Bruce,
I have copied all of your nuggets of wisdom about the issues involved w/ the Board sponsored social events. Thanks for drawing our attention to all the liability issues. It makes me want to rethink whether we should have any Board sponsored social events. How about a Welcoming Committee greeting new neighbors w/ a bottle of wine ? No, just kidding, nobody is going to go for that. Yes, I'm all for dividing up the pie in a fair way, without one demographic getting the lion's share of the Budget. Isn't this what a democracy is all about, taxation with representation.
It is just that there is always disagreement as to what those allottments should be.

thanks,
Brenda

I was not the one to originally use the phrase "health of the property," but would generally expect it to mean protecting one's investment and property values.

I think it is probably a good idea to do a demographic survey and find out the makeup of your neighborhood. It is also wise to not allow any group to hijack the funds for their special items (kid's parties).

One thing you could also look at is if you survey your neighbors, ask why they didn't attend the large cookout. Some times you can learn more by looking into why someone doesn't participate then asking why those that do choose to.

I guess we will have to break down and spend the time and money to do a demographic survey of the entire neighborhood. But everyone knows what kind of response that will be, very spotty w/ the responses. It will require a lot of follow up to get the surveys back. Has anyone canvassed a large neighborhood for this kind of info.- i.e. what kind of social activities are desired ?

Brenda

Glan,
I think it shows great concern for your group to put together a survey.
I am curious, because I know how you described this little survey takes some thought, organization, a little money, a lot of time and then the effort to determine what is reported. How large is your organization and how did this all come about. We have 100 units and through our web site we could easily do something like this. Wonder if our response would be better than thru mail. Our web site is tricky, we go along with daily hit figures that are pretty constant, won't mention numbers as don't want to mis-speak. Our web naster will, on occasion send a "Hot Scoop" message the the hits will spike up and then back to pretty much normal. I think we are shooting for a more interactive site but that will take time as our Board in the past would not allow a "Comments or Talk site, site as this." Don't ask,I haven't got a clue what they would be concerned about, right now we are in the process of waking our sleeping giant (owners) and see if we can make them growl a little, and also purr.
Thanks for any comments. I don'tknow if this deserves a separate Topic or not.

Glen,
Thank you for your candid reply.
I have a hunch the reason you did what you did is how a ton of things get done in associations. If you won't do them they won't get done. That's ok also if what we done gives us our reward. I am not sure how long you have been involved with all this but probably long enough some Regimes do a good job, others do a bad job, and if truth was know the ones run badly take more time to getthe job done.
Also I speak in part about the Websites and the potential that is coming down the track to really make this a wonderful tool for associations. As always we have to be aware pitfuls along the wait.

Glen,
I would say you got a great response from your residents. Must be an active community who really care about what's going on. Postage for such a large neighborhood can be quite costly. If we post the survey on the web page I am afraid the response will be so low that it won't be useful.

Brenda

Kirk,
That's good advice that I think we will try. I really appreciate all of the useful information I have gotten from this forum. Obviously, many of you have years of experience w/ your HOA and we can learn from you.

thanks,
Brenda