Board has lunch on the HOA...literally

Jen, a few HOA Boards have meetings with a meal provided for various reasons. I see nothing illegal about doing this. Perhaps this perk gets members to volunteer to serve on the Board. If you don't want to attend then don't. I would consider asking the Board to disclose this information to the members rather than being a whistle-blower.

Jen,

There may not be anything illegal about it, but I certainly don't think it's a good idea, especially if homeowners don't know about it.

There may be something in your documents or state laws about board members receiving compensation. It may be permitted or it may be prohibited. You'd have to read the documents to see. If compensation for board members is prohibited, then IMO going to dinner is a form of compensation and would not be legal.

Even if compensation for board members is legal, IMO it is not legal for board members to spend any association money for anything without a vote of the board and that vote appearing in the minutes. The cost may not have to appear as a line item in the budget (if it's small enough it could be included under miscellaneous), but it should appear somewhere. For example, the board could pass a resolution authorizing the expenditure of an amount not to exceed $XXX for a year-end dinner for the board members, and that resolution should appear in the minutes. Assuming compensation is legal, then if they get a lot of flack from the homeowners, maybe they should stop doing it.

Check out your covenants..ours state that the fees can only be used for road repair and maintenance..we've challenged and won..board members were even buying birthday cakes for each other..it was a very small part of our court case..but the judge in both District and Circuit courts have ruled..the covenants, at least in our case, were very explicit.
MaryN3

It is unethical for a Board to spend money on a dinner or anything else without informing the community. First suggest to the Board they might want to announce this use of money to the community. If there is no community objection then they don't have a problem. However, one has to wonder if there are other examples of money being used under the radar. Openness is always the best policy.

H-m-m - Some budgets allow for "Volunteer Development" or other social or goodwill expenditures. As a member, I guess I wouldn't have objection paying for dinner when they are in a work session or late meeting or attending a meeting during treavel, but to just "take themselves out for dinner" doesn't set well with me.

Depends, too, on just "where" they went out to dinner!

Thanks for all the responses. Anna, that is exactly the way I feel.

I forget who mentioned this (I think a number of people), but I am going to follow through with the idea of asking at the meeting if this is in the budget or "left over money", and if the community as a whole knows about this expenditure. I know they do not...i didn't know until I volunteered for the board.

Will someoneplease explain to me how it is right to feed the Board or anyone else or provide them with "Perks", I think the word was, and it is not right for the noard to pay the grocery bill of every house number ending in 6. Now you know that is nonsensical. What kind of a Board member would you have if he can be bought with a dinner. You might as well slip him a c note at the dinner table.
Next, I will hear Board members are worth so much/year or month and if you are a special Board Member you can get a Golden Parachute. And it seems I recall recently that an association provided a few Board members with free housing and meals for about 20 years somewhere in Florida.

Jen:

First I would agree with Roger. What would make this "illegal" in your mind?

If you don't agree then as suggested do not attend. Because it offends your sensibility that doesn't mean the remainder of the Board is a bunch of crooks.

And as Susan W asked what is the amount of money we are discussing?

Is it even worth discussing?

Did they have dinner or dine at a 5 Star establishment?

Perhaps this might be a way of thanking those serving on the Board for their service? Perhaps after looking over your property and investment for the previous year it would be a SMALL gesture to foot the bill for dinner?

We "gift" several service providers on our property. Post office, garbage removal, and maintenance staff in an effort to thank them in a small way for their services over the year. Maybe if they are "worthy" of this gesture someone who manages your largest asset might deserve a $20 meal?

Maybe a token effort to show some appreciation for those who volunteer their time from those who don't have the time, just might not be a bad thing.

JenC...if it's a secret the board is making themselves look very suspicious. I'd certainly discuss it at a meeting and make certain it's recorded in the minutes. If any board members have a problem with disclosing that information they'd start to look pretty guilty of "hiding" something. If its not in the budget (as a line-item) and if there are no minutes from previous meetings showing approval of this then it's WRONG. I'd not be a party to it.

JonD--we (board members) receive "token" gifts of appreciation from members all the time. Thank you notes; baked good; movie tickets; gift cards; etc. But they come from individuals who wish to show their appreciation. I would never DREAM of taking the Association Members' money for a "private" meal. If it's not approved by the entire membership it's THEFT.

PROVIDING ONESELF a treat equals "association gratitude"?!? Since when? Maybe if the membership were snarfing together some pennies and presenting the fundraising to the board for them to go grab a meal on their dime, I might agree with you.

Theft, misappropriation of funds, embezzlement, fraud, swindling, among many other potential synonyms.

I suppose it really depends on the amount and how long they've been doing it.

Just because ALL of the board is participating doesn't make it any less unethical than if ONE member of the board decided to "treat" herself for her "noble volunteerism."

Of course, this is also one of the prime reasons the Boards should have term limits. Along those lines, it is not unusual to have term limits for directors but we insist in feeding the same management company/manager year after year after year. We are a funny people. Captains' of ships in the Navy are usually on a two year tour and everyone accepts the turnover, but how many times have you heard, "Oh no, we can't replace the manager." One explanation is, "The devil you get may be worse than the devil we got." How's that for logic?

Joseph, I couldn't agree with you more.....it seems to me that this forum has too may fanatics.......

. . . once again, "thanks, mom."

Susanna,
I really can't say I qould label any posting here regular as a "fanatic." Also agree as most point out we issue opinions.

This is not relevant, juat a event in my daily life. I belong to the non-equity club here on the island owned by developer. They hold a Club Asvisory Board meeting and have open session for member to talk. The meeting was and is help in a large room over club restaurant. Board consist of volunteer members and resort management appointees. Big horseshoe table. and guests are seated at open end of table. During the meeting the restaurant staff is serving lunch to Board members and in the open area of Horseshoe there is a table set up with ice water on it. Got all that? Try formulating a complaint to a developer heavy board and watch them and the rest of the Board members chomp on BLT, fries and a salad. Then make some remark with their mouth full. They defend this protocol by saying they should get a little free lunch because they volunteer.
People are really strange and do strange thoughtless acts, much to their detriment.

I honestly would not mind going up against any that post here. And several, I know I might not agree with but they would give you a fair shake. How many of us have won every battle?

Sorry you feel that way, but rationalization doesn't make the bottom line any less palatable.

The fact is, there is the potential that they are using HOA funds improperly and for their own benefit.

And it's possible that there is no formal or official record of it.

If I were to take it upon myself to buy myself a very nice wreath for my door with HOA money, because, well, I worked hard all year for the HOA! And I'd like to have a nice new wreath for my door!

It's not much, maybe $30, so it's probably not even enough to properly "thank me" for the sweat equity I put into this organization. . .

And Donnie, the president, well, he takes all SORTS of grief from the residents throughout the year. He's a real lightening rod for complaints! I think it's a great idea to spring for a new welcome mat for his home.

Shelley, the treasurer, heck get her a keen fountain pen!

All with HOA funds. All without telling anyone. . . all without ASKING first if the residents would like to thank the board in this manner.

I just can't see that this isn't somehow unethical at best, potentially illegal at worst.

Board members just CAN'T redirect HOA funds for ANY purpose in ANY amount outside of what is approved or directed in their documents.

ESPECIALLY if the docs state "no compensation."

I realize on that Giant Ethics Continuum In The Sky, a holiday dinner once a year on someone else's dime isn't a huge blip. . . but still. . .

Again, THANKING volunteers is one thing, and if the HOA wants to do it, it should be formalized and come from the residents to the board.

THANKING oneself, with someone else's money, without permission, just isn't kosher.

With all due respect, Kirk (and you can assess how much THAT is...) MY board is NOT dysfunctional and I have no idea why you would imply something as ugly as that.

The "examples" I listed were not real, but were examples of greedy jerks deciding to buy themselves "stuff" because they "work hard." Those people don't exist. Think of it as a "parable." Besides, do you have any clue how much a nice fountain pen costs? I have several 'low-end' ones that are $80, $90 and more.

I was not using examples of people reimbursing themselves for OFFICE SUPPLIES, which, if done PROPERLY and LEGALLY, would require RECEIPTS reflecting the EXPENSE.

I was talking about people deciding on their own that they "deserve" some new "pretties" for all the hard work they do. . . . and using the homeowners' money to get them.

The fact is, using the HOA funds, (or shall I say more accurately: DIVERTING HOA funds) even if it's a small dollar amount, is basically theft if done without the proper approval.

Your board can't just decide on its own that it "deserves" a holiday "thank you" meal.

If the membership votes to allow such a "perk," go for it. I wouldn't mind if ours did, but I would cut my leg off before I actually ASKED them for it!!

And, don't forget, if the "tradition" occurs year after year, then eventually the dollar amount will add up to a number that WILL get some law enforcement attention, or should anyway.

Spending money on yourself that isn't yours is unethical at best, potentially illegal at worst.

If I found out our board had instituted the "tradition" of treating themselves to a "thank you" or "holiday" meal on HOA funds without getting input or approval from the membership, I would definitely raise hell about it.

If they would rationalize away something that is clearly unethical, even something as seemingly innocuous as that, then how can we trust that they won't cut corners in other areas if they feel like it? It speaks volumes about their character, if nothing else.

If you feel you "need" to pay yourself for a "meal" out of HOA funds, without permission, maybe you better re-think your definition of "volunteerism."

Just to mention, several of us here also feel volunteerism enhances a sense of community, albeit, around here, that only seems to extend to those doing the volunteering. One of our owners spent the whole off season going throught several thousand xmas lights to make them all operable. Several owners spent a few hours putting them up in our courtyard. Dec 1, we will light them and have a little gathering and toast the season. Hot chocolate and cake (all donated), bring your own bottle if desired. I was struck by the comment of the lady that fixed all the lights. "And just think, it did not cost ---------------- a dime. This couple is also going to buy a tree for the display. This all was not done to save the association money, it was done because we volunteered to do the job. In fact, I doubt few absentee owners know this goes on. They don't reply to e-mails, web postings or anything else, and don't mention being on a committee or board. All not atypical situations in associations. I have never canvased the volunteers (some Board members) and asked how these folks would feel if the Board elected to having a working dinner at a local spa and billed the asociation. Another subject entirely.

That's not entirely true, at least not as I remember it. The government may not consider a meal as "compensation" in the sense that it may not have to be reported on one's income tax return, but there are circumstances where government workers are sometimes not permitted to receive "free lunches" (literally), even when it's a matter of convenience and not intended as a gift.

Back when I worked for a company that worked on government contracts it was common to conduct periodic design reviews for government representatives to review the progress of the work. The reviews often lasted all day and it was common for lunch (usually salads and sandwiches, cookies, and coffee and soft drinks) to be provided for all participants so that the business of the review could proceed more quickly and efficiently. The lunch was free for the company employees, but the government representatives were not allowed to accept the lunch at no cost. They were required by government regulations to pay for it.

Actually, social events do not necessarily qualify as an official meeting, even if a quorum is present, as long as business is not discussed. The fact that the HOA is picking up the tab is of no consequence. This is done all the time by city, county, state and federal lawmakers, and is perfectly legal and not an ethics violation.

Because of the many abuses of the system, the federal government does in fact have very strict laws regarding gifts to its people. And yes, they are not allowed to accept even a free lunch from someone doing business with the government.

And meals can actually be a very interesting situation: If you are traveling and your company reimburses the cost of lunch while on the road, that is income. (Dinner and breakfast are not. The thought being that many people can't eat at home for lunch anyway.) But they can pay a "per diem" that is not taxable after which how you distribute it becomes your issue.

But I find it interesting how an excess such as AIG is imparted on an association that has had a long tradition of holiday dinner for its directors. Many nonprofit organizations due such and thing, but somehow this group is purported to be stealing. Sure wish they could see the dinners often given to directors of other organizations.

Kirk,

Doesn't that contradict what you posted earlier about the government not considering meals as compensation?

Actually, I'm not certain about the IRS considering lunch as taxable income; That's not true in all cases.

IRS Publication 525 defines "De Minimus" benefits provided by a company as non reportable income. De Minimus benefits are typically of such a small value that the company doesn't account for them separately for each employee, such as cab fare home when an employee works overtime, ar a turkey or ham given as a holiday gift (two specific examples mentioned in publication 525), and probably would include a lunch paid for out of petty cash as well. Thus, a buffet lunch provided to a few employees for the convenience of the employer and not accounted for each employee, would not be reportable as income.

Travel expenses are covered under IRS publication 463. All travel expenses directly paid for by the employer (including lunch) are not reportable as income under most circumstances. When the travel expenses are reimbursed by the employer lunch is not reportable as income provided the traveler is required to stay overnight or to obtain rest to perform his/her duties. There were some instances where it's nebulous and lunch may be reportable, but it's not clearly stated in either pub 463 or 525. It's all very complicated (but it's the government, what would one expect?).

But, we're straying from the original subject.

As a board member, I am quite aware of the types of discretion we have in spending HOA funds.

You want to slice and dice a parse words merely for the sake of argument and it's pretty tacky, if you ask me.

If your ethics are that gray, more power to you.

In addition, and I will repeat this:

Treating the board to a holiday or thank you meal is not even remotely the same thing as "reimbursement" for meals and/or expenses.

It's ridiculous and unethical to even attempt to conflate the two.

And I stand by my position.

If the board is going to decide on their own what constitutes a "thank you" for their volunteerism, what's to stop them from doing so individually?

And if they will stretch ethics in that area, what other areas?

How hard would it be for someone to simply add it to an agenda at a meeting and get the membership to approve of it?

Sneaky, greedy, and misuse of funds, in my opinion, to do it any other way.

Where else will those standards apply for these people?

In regards to the view of lunch and IRS rules it is quite interesting. If they purchase a working lunch, or provide lunch as some part of a function it isn't income. If they pay you back for buying lunch on the road, it is income.

But if a company you work for buys lunch it is never income. Many doctors have a free catered lunch every day they work. And it is not income. In fact, some have breakfast and lunch almost every day and it isn't income. (Drug companies buy the meals and use that time to inform the doctors about the latest on their product.)

Michelle,

Perhaps your next ethical move would be to stop being judgmental. You don't know me. You don't know the situation about the board meal that the original post was regarding. Yet you are quick to insinuate that my ethics are lacking. Then again, this is not the first time I have seen you assume something about somebody based on extremely limited information.

You were the one who stated that the meal had to be disclosed to the residents. But by your reasoning every item that is purchased should be disclosed to the residents (without their asking).

Kirk:

You have a short memory, I believe the first "making it personal" stone was thrown when you cast aspersions on my own character and my board's by the nonsensical attribution of "dysfunctional" regarding my board.

I know enough about you by how you answered this on the grounds of ethics to make the judgments I did.

You seem to think it's okay for a board to treat itself to its own "thank you" reward with HOA funds, with no oversight.

My comments are NOT directly about the case in the OP's post. I don't know what they did, if they got permission, or how the process came about. My "judgmental" comments were directed at the HYPOTHETICAL of a board deciding on its own to treat itself to its own little "party" on HOA funds and then calling it a "thank you" reward.

Did this original poster's group do that? I dunno. I can't speculate. I can only address with what MY ethical yardstick is a hypothetical as I CLEARLY laid out ad naseum.

You can parse and slice and dice and nuance all you like, but if the board is spending money on ITSELF and NOT on HOA business for the benefit of the Association, then YES, the board DOES need to "get permission" to spend ANY money in that manner.

If it's spending money on association business, up to the amounts that it's allowed in its documents, that's one thing. But spending ANY amount outside of association, INCLUDING HOA money on itself as a self-described "reward," then it's out of bounds.

And if you want to give your board that sort of "perk" with lack of oversight to ANY board, then I do stand by my statement of calling your ethics into question.

What happens when next year they decide to "reward" each other simply by either trimming a few bucks off what their assessments are or by "rebating" some small amount back to each other?

Again, apparently my "ethics" bar is set a bit higher.