Soliciting sponsors for HOA events

MichaelT21 (Arkansas)
Posts: 501

Posted:

All,

We are starting to do social activities for our HOA again: National Night Out, Easter Egg Hunts, Summer Movie in the Park, and the like. The costs of doing social events is adding up a bit and I was thinking that it would be beneficial to seek sponsors of the events to help offset the cost of the events.

We are an affluent neighborhood in our town and people in our community generally have ample disposable income to spend at their discrection.

I was thinking that some of the following businesses might be interested:

1) Local real estate agents
2) Our landscape maintenance company
3) Our landscape project company
4) Local businesses that sponsor other community events
5) Local financial advisors
6) Local hardware stores

and the like

I just sent out around 40 letters yesterday to various local businesses asking for sponsorships, giving them three levels of sponsorship to choose from. Have no idea how many if any interested firms will respond.

Any thoughts or comments?

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By MichaelT21 on 05/23/2022 10:03 AM
All,

We are starting to do social activities for our HOA again: National Night Out, Easter Egg Hunts, Summer Movie in the Park, and the like. The costs of doing social events is adding up a bit and I was thinking that it would be beneficial to seek sponsors of the events to help offset the cost of the events.

We are an affluent neighborhood in our town and people in our community generally have ample disposable income to spend at their discretion.

I was thinking that some of the following businesses might be interested:

1) Local real estate agents
2) Our landscape maintenance company
3) Our landscape project company
4) Local businesses that sponsor other community events
5) Local financial advisors
6) Local hardware stores

and the like

I just sent out around 40 letters yesterday to various local businesses asking for sponsorships, giving them three levels of sponsorship to choose from. Have no idea how many if any interested firms will respond.

Any thoughts or comments?

Michael,

Who is the intended beneficiary of these "social activities"? The residents of your "affluent neighborhood" HOA, or the general public?

TimB4 (Tennessee)
Posts: 21,047

Posted:

The HOA is not a 401(c)-3 charity. Therefore, any donations would not qualify as a tax write-off. Hopefully, you included that in your letters.

Additionally, any cash or goods would be considered taxable income to the Association. Keep track of it.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

"We are an affluent neighborhood in our town and people in our community generally have ample disposable income to spend at their discrection."

Why not charge them for the event to cover the cost?

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By SteveH35 on 05/23/2022 10:06 AM

Posted By MichaelT21 on 05/23/2022 10:03 AM
All,

We are starting to do social activities for our HOA again: National Night Out, Easter Egg Hunts, Summer Movie in the Park, and the like. The costs of doing social events is adding up a bit and I was thinking that it would be beneficial to seek sponsors of the events to help offset the cost of the events.

We are an affluent neighborhood in our town and people in our community generally have ample disposable income to spend at their discretion.

I was thinking that some of the following businesses might be interested:

1) Local real estate agents
2) Our landscape maintenance company
3) Our landscape project company
4) Local businesses that sponsor other community events
5) Local financial advisors
6) Local hardware stores

and the like

I just sent out around 40 letters yesterday to various local businesses asking for sponsorships, giving them three levels of sponsorship to choose from. Have no idea how many if any interested firms will respond.

Any thoughts or comments?

Michael,

Who is the intended beneficiary of these "social activities"? The residents of your "affluent neighborhood" HOA, or the general public?

The social events are for the residents of the HOA.

DavidG45 (Delaware)
Posts: 994

Posted:

Our Social Committee goes to various local businesses in person and asks for gift certificates or items that can be used to make a gift basket. Restaurants, Dunkin, nail salons, car washes, etc. are all pretty willing to give $10/$20 gift cards, because it is a little bit of advertising and gets people into their place of business.

The Committee then either uses these as prizes for bingo, trivia night, etc. or bundles them into gift baskets that they raffle off to raise money. So they don't simply ask for money, and they don't do it via mailouts.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By TimB4 on 05/23/2022 10:07 AM
The HOA is not a 401(c)-3 charity. Therefore, any donations would not qualify as a tax write-off. Hopefully, you included that in your letters.

Additionally, any cash or goods would be considered taxable income to the Association. Keep track of it.

Yes, I have alerted our property manager that the money will need to be tracked accordingly and my letter to vendors states that, although we are a nonprofit, we are not a 501c3 charity and thus donations are not tax deductible.

MaxB4
Posts: 3,513

Posted:

An affluent community seeking charity from the poor. Talk about calling the kettle black.

I am sure this was an agenda item and your actions were fully approved by the Board.

MaxB4
Posts: 3,513

Posted:

A number of HOA's will sell advertising pace in their monthly of quarterly newsletter and that is a great resource to defray the cost of the newsletter. But what you are proposing is an insult.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By MaxB4 on 05/23/2022 10:34 AM
An affluent community seeking charity from the poor. Talk about calling the kettle black.

I am sure this was an agenda item and your actions were fully approved by the Board.

It's not charity. Wasn't advertised as charity. Stated in request that we are not a charity.

It's an opportunity for local businesses to put their name in front of our homeowners in exchange for advertising. No different than taking an ad out in the newspaper, paying to put your name on the back of grocery store receipts, sending out direct mailers to homeowners, or the like. None of these are charity either.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By MichaelT21 on 05/23/2022 10:40 AM

Posted By MaxB4 on 05/23/2022 10:34 AM
An affluent community seeking charity from the poor. Talk about calling the kettle black.

I am sure this was an agenda item and your actions were fully approved by the Board.

It's not charity. Wasn't advertised as charity. Stated in request that we are not a charity.

It's an opportunity for local businesses to put their name in front of our homeowners in exchange for advertising. No different than taking an ad out in the newspaper, paying to put your name on the back of grocery store receipts, sending out direct mailers to homeowners, or the like. None of these are charity either.

Now that is an interesting spin!

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By MichaelT21 on 05/23/2022 10:40 AM

Posted By MaxB4 on 05/23/2022 10:34 AM
An affluent community seeking charity from the poor. Talk about calling the kettle black.

I am sure this was an agenda item and your actions were fully approved by the Board.

It's not charity. Wasn't advertised as charity. Stated in request that we are not a charity.

It's an opportunity for local businesses to put their name in front of our homeowners in exchange for advertising. No different than taking an ad out in the newspaper, paying to put your name on the back of grocery store receipts, sending out direct mailers to homeowners, or the like. None of these are charity either.

Michael,

Since you're an "affluent" community, your HOA should budget discretionary funds to pay for your own events. Many CICs, including my own, budget a small portion (about 0.2%) of our annual budget to pay for discretionary events, food, drinks, etc. every year.

Regards,
Steve

BillH10 (Texas)
Posts: 1,217

Posted:

My concern is this approach can be interpreted as "pay to play" for the two vendors/contractors listed in the OP below--

2) Our landscape maintenance company
3) Our landscape project company

A previous client sponsored a social event one year, multi-cultural picnic or something similar. Owners in the association who were also real estate agents and other owners with local businesses approached the Board regarding sponsoring a bounce house, face painting, and one or two other activities. The were welcomed, and were allowed to place a sign and make business cards available.

I do not like the idea of direct solicitation, especially to vendors and others with which the Association has a business relationship. As someone else mentioned, our clients who publish newsletters have contacted local businesses regarding advertising in the newsletter. Some thought it a fine idea, others were not interested.

SheliaH (Indiana)
Posts: 6,964

Posted:

We rarely did this sort of thing - the closest we came was in selling ad space for the newsletter when we had it. Even then, we would have something stating the acceptance of an ad didn't mean the association or the board of directors endorsed the business.

Since the association is a non-profit, you really should have run this by your tax accountant or attorney (maybe both?) to see what the implications were, especially if you were asking for money. In-kind aid, such as balloons to decorate for National Night out, might be a difference story.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BillH10 on 05/23/2022 11:27 AM
My concern is this approach can be interpreted as "pay to play" for the two vendors/contractors listed in the OP below--

2) Our landscape maintenance company
3) Our landscape project company

Ditto.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By AugustinD on 05/23/2022 12:18 PM

Posted By BillH10 on 05/23/2022 11:27 AM
My concern is this approach can be interpreted as "pay to play" for the two vendors/contractors listed in the OP below--

2) Our landscape maintenance company
3) Our landscape project company

Ditto.

Ditto. Ditto.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Charge the owners for the events and donate the money for the ads to a reputable charity. Next year budget for the events.

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By BillH10 on 05/23/2022 11:27 AM
My concern is this approach can be interpreted as "pay to play" for the two vendors/contractors listed in the OP below--

2) Our landscape maintenance company
3) Our landscape project company

A previous client sponsored a social event one year, multi-cultural picnic or something similar. Owners in the association who were also real estate agents and other owners with local businesses approached the Board regarding sponsoring a bounce house, face painting, and one or two other activities. The were welcomed, and were allowed to place a sign and make business cards available.

I do not like the idea of direct solicitation, especially to vendors and others with which the Association has a business relationship. As someone else mentioned, our clients who publish newsletters have contacted local businesses regarding advertising in the newsletter. Some thought it a fine idea, others were not interested.

Let's spin this into what works well. It would be COMPLETELY appropriate for an association to ask a dry cleaner for a standing discount for all their residents. THAT is a value-added benefit to both the residents and the vendor. No handouts, no asking for "donations" in exchange for something else, just a positive relationship.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By SteveH35 on 05/23/2022 3:05 PM

Posted By BillH10 on 05/23/2022 11:27 AM
My concern is this approach can be interpreted as "pay to play" for the two vendors/contractors listed in the OP below--

2) Our landscape maintenance company
3) Our landscape project company

A previous client sponsored a social event one year, multi-cultural picnic or something similar. Owners in the association who were also real estate agents and other owners with local businesses approached the Board regarding sponsoring a bounce house, face painting, and one or two other activities. The were welcomed, and were allowed to place a sign and make business cards available.

I do not like the idea of direct solicitation, especially to vendors and others with which the Association has a business relationship. As someone else mentioned, our clients who publish newsletters have contacted local businesses regarding advertising in the newsletter. Some thought it a fine idea, others were not interested.

Let's spin this into what works well. It would be COMPLETELY appropriate for an association to ask a dry cleaner for a standing discount for all their residents. THAT is a value-added benefit to both the residents and the vendor. No handouts, no asking for "donations" in exchange for something else, just a positive relationship.

You make it sound like the fact that you think this is a "value-added benefit" is why it's 100% appropriate.

I wouldn't say "completely." Nor would I say this is "appropriate." Boards are tasked with specific duties pursuant to the governing documents and state law. Assisting owners with dry cleaning is not one of these duties.

Suppose an owner does not use dry cleaning. Might she be miffed the board did not go solicit discounts at the local water ride park for children (and those adults with an inner child)?

Now you've got the board making calls and visiting businesses to get as many discounts as possible.

Meanwhile gosh knows what is being neglected.

You and I disagree.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By AugustinD on 05/23/2022 3:31 PM

Posted By SteveH35 on 05/23/2022 3:05 PM

Posted By BillH10 on 05/23/2022 11:27 AM
My concern is this approach can be interpreted as "pay to play" for the two vendors/contractors listed in the OP below--

2) Our landscape maintenance company
3) Our landscape project company

A previous client sponsored a social event one year, multi-cultural picnic or something similar. Owners in the association who were also real estate agents and other owners with local businesses approached the Board regarding sponsoring a bounce house, face painting, and one or two other activities. The were welcomed, and were allowed to place a sign and make business cards available.

I do not like the idea of direct solicitation, especially to vendors and others with which the Association has a business relationship. As someone else mentioned, our clients who publish newsletters have contacted local businesses regarding advertising in the newsletter. Some thought it a fine idea, others were not interested.

Let's spin this into what works well. It would be COMPLETELY appropriate for an association to ask a dry cleaner for a standing discount for all their residents. THAT is a value-added benefit to both the residents and the vendor. No handouts, no asking for "donations" in exchange for something else, just a positive relationship.

You make it sound like the fact that you think this is a "value-added benefit" is why it's 100% appropriate.

I wouldn't say "completely." Nor would I say this is "appropriate." Boards are tasked with specific duties pursuant to the governing documents and state law. Assisting owners with dry cleaning is not one of these duties.

Suppose an owner does not use dry cleaning. Might she be miffed the board did not go solicit discounts at the local water ride park for children (and those adults with an inner child)?

Now you've got the board making calls and visiting businesses to get as many discounts as possible.

Meanwhile gosh knows what is being neglected.

You and I disagree.

And guess who the unsatisfied homeowner calls when they aren't happy with the dry cleaner?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

A HOA "charitable" status does not make it a "charity". It has the same/similar structure set up of a non-profit charitable corporation. That means that any money it collects from it's members must be spent on the member's expenses. A social committee if a HOA chooses to have one should not be funded by outside sources. It makes that money subject to taxation. They are not "donations" in the eyes of the IRS.

So a HOA needs money for something it's source is it's member in the form of dues. That is it's INCOME. Anything else outside of that including late fees, fines, or other money given is not considered HOA income.

It's just a bad idea to solicit outside sponsors for an HOA. It's kind of tacky in my opinion. It's not like the money is going to anyone who needs it. It's just for enjoyment purposes. That comes across a little greedy...

Former HOA President

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By MelissaP1 on 05/23/2022 3:58 PM
A HOA "charitable" status does not make it a "charity". It has the same/similar structure set up of a non-profit charitable corporation. That means that any money it collects from it's members must be spent on the member's expenses. A social committee if a HOA chooses to have one should not be funded by outside sources. It makes that money subject to taxation. They are not "donations" in the eyes of the IRS.

So a HOA needs money for something it's source is it's member in the form of dues. That is it's INCOME. Anything else outside of that including late fees, fines, or other money given is not considered HOA income.

? I think maybe you got things a bit mixed up.

HOA income from regular assessments; special assessments; late fees; interest charged to members; and fines are examples of what the IRC/IRS calls "exempt function income" for which a HOA will not have to pay tax.

Depending on the details, other income may or may not be taxable.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

So do you think "sponsors" should be solicited for HOA activities? First world problems...

Former HOA President

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By MelissaP1 on 05/23/2022 4:13 PM
So do you think "sponsors" should be solicited for HOA activities? First world problems...

I am not particularly in favor of it. But other than "pay for play" scenarios like the ones BillH10 fingered (which I bet leapt out at several of us), I am not sure it's worth arguing about.

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By JohnT38 on 05/23/2022 3:51 PM

Posted By AugustinD on 05/23/2022 3:31 PM

Posted By SteveH35 on 05/23/2022 3:05 PM

Posted By BillH10 on 05/23/2022 11:27 AM
My concern is this approach can be interpreted as "pay to play" for the two vendors/contractors listed in the OP below--

2) Our landscape maintenance company
3) Our landscape project company

A previous client sponsored a social event one year, multi-cultural picnic or something similar. Owners in the association who were also real estate agents and other owners with local businesses approached the Board regarding sponsoring a bounce house, face painting, and one or two other activities. The were welcomed, and were allowed to place a sign and make business cards available.

I do not like the idea of direct solicitation, especially to vendors and others with which the Association has a business relationship. As someone else mentioned, our clients who publish newsletters have contacted local businesses regarding advertising in the newsletter. Some thought it a fine idea, others were not interested.

Let's spin this into what works well. It would be COMPLETELY appropriate for an association to ask a dry cleaner for a standing discount for all their residents. THAT is a value-added benefit to both the residents and the vendor. No handouts, no asking for "donations" in exchange for something else, just a positive relationship.

You make it sound like the fact that you think this is a "value-added benefit" is why it's 100% appropriate.

I wouldn't say "completely." Nor would I say this is "appropriate." Boards are tasked with specific duties pursuant to the governing documents and state law. Assisting owners with dry cleaning is not one of these duties.

Suppose an owner does not use dry cleaning. Might she be miffed the board did not go solicit discounts at the local water ride park for children (and those adults with an inner child)?

Now you've got the board making calls and visiting businesses to get as many discounts as possible.

Meanwhile gosh knows what is being neglected.

You and I disagree.

And guess who the unsatisfied homeowner calls when they aren't happy with the dry cleaner?

We'll have to disagree. Living in a relatively large (top 50 by population in the US) city, offering residents the ability to drop off and pick up dry cleaning with the concierge and get a bit of a discount on top is value added. The dry cleaning vendor likes all the extra business and the residents enjoy a little bit of a bargain and the extra convenience.
Who receives complaints about the dry cleaning? The dry cleaner.

My POINT is that this dry cleaning is an example where residents are offered the opportunity to use a local vendor and a vendor is offered the opportunity to pick up extra business. The "affluent" community is not going to the vendor and asking for a donation to support a CIC-specific event in exchange for being listed as a "sponsor."

Regards,
Steve

KerryL1 (California)
Posts: 14,550

Posted:

Despite some other replies, Michael, I think your idea is a good one. I do agree you should not approach your assn. vendors. David gives a very nice example of one way this can work out.

We have a Social Committee, too, and a couple of its members are pretty good at soliciting nearby restaurants to host a "Happy Hour" for us. The last was at a newer restaurant just 2 blacks away in our urban setting. They gave us a lovely private room and generous appetizers, while we paid Happy Hour prices for drinks. 63 residents attended. (200 condo units). Bottles of sparkling and still water were provided.

In a couple of weeks, a resident who owns a winery is having a poolside wine tasting coordinated by the Soc. Comm. The Soc. Comm will provide a non-alcoholic beverage choice, name tags and some small bites to accompany the red wines.

As with ANY amenity not everyone will attend these events. But *no* one has ever complained about the Soc. Comm. spending its volunteer labor putting on these activities. No one here would complain about $10 off dry cleaning or a hair style that they would not use in some sort of welcome basket. No one would whine that they want a donut discount instead. Do such residents actually exist?

Much more important, imo, is that social events such as what Michael's trying to reinstate bring residents together in convivial settings. New friendships form and, better yet, ties to one's community are strengthened. Folks who feel connected to their communities are more likely to follow the rules and more likely to themselves become volunteers. These results benefit the community as a whole

I'm guessing, Michael, that your use of the word "affluent" set off some folks. They lost sight of your goal, which wasn't clearly stated.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By KerryL1 on 05/23/2022 5:45 PM
Despite some other replies, Michael, I think your idea is a good one. I do agree you should not approach your assn. vendors. David gives a very nice example of one way this can work out.

We have a Social Committee, too, and a couple of its members are pretty good at soliciting nearby restaurants to host a "Happy Hour" for us. The last was at a newer restaurant just 2 blacks away in our urban setting. They gave us a lovely private room and generous appetizers, while we paid Happy Hour prices for drinks. 63 residents attended. (200 condo units). Bottles of sparkling and still water were provided.

In a couple of weeks, a resident who owns a winery is having a poolside wine tasting coordinated by the Soc. Comm. The Soc. Comm will provide a non-alcoholic beverage choice, name tags and some small bites to accompany the red wines.

As with ANY amenity not everyone will attend these events. But *no* one has ever complained about the Soc. Comm. spending its volunteer labor putting on these activities. No one here would complain about $10 off dry cleaning or a hair style that they would not use in some sort of welcome basket. No one would whine that they want a donut discount instead. Do such residents actually exist?

Much more important, imo, is that social events such as what Michael's trying to reinstate bring residents together in convivial settings. New friendships form and, better yet, ties to one's community are strengthened. Folks who feel connected to their communities are more likely to follow the rules and more likely to themselves become volunteers. These results benefit the community as a whole

I'm guessing, Michael, that your use of the word "affluent" set off some folks. They lost sight of your goal, which wasn't clearly stated.

You really can't see the difference between what Michael is proposing and what your HOA is doing?

MichaelT21 (Arkansas)
Posts: 501

Posted:

I think you guys are harsh.

If you do a search for "hoa movie night sponsor" you will see there are dozens and dozens of HOAs that put on a movie night and get sponsors to help offset the cost. Most sponsors appear to be local real estate agents.

As far as soliciting our own vendors, there is nothing wrong with that. The benefit of the sponsorship would go directly back to the entity who signs the contract, so there is no conflict of interest. Pay to play becomes a problem with a third party benefits, such as a director personally receiving a kickback.

KerryL1 (California)
Posts: 14,550

Posted:

Jeez, Michael, I thought I was being supportive????

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 05/23/2022 6:39 PM
I think you guys are harsh.

If you do a search for "hoa movie night sponsor" you will see there are dozens and dozens of HOAs that put on a movie night and get sponsors to help offset the cost. Most sponsors appear to be local real estate agents.

As far as soliciting our own vendors, there is nothing wrong with that. The benefit of the sponsorship would go directly back to the entity who signs the contract, so there is no conflict of interest. Pay to play becomes a problem with a third party benefits, such as a director personally receiving a kickback.

I have a serious issue when a leader of an affluent HOA comes onto this site seeking advice to feed his rich owners. It takes a pair.

MaxB4
Posts: 3,513

Posted:

While my wife and I were on our Board, we had a $12K annual budget for social events and none of the money came from the homeowners.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By KerryL1 on 05/23/2022 6:50 PM
Jeez, Michael, I thought I was being supportive????

Yes, you were. You are the exception.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By MaxB4 on 05/23/2022 7:01 PM
While my wife and I were on our Board, we had a $12K annual budget for social events and none of the money came from the homeowners.

Affluence is relative. I don't like on 150 acres and own a property management company that has managed over 300 associations.

KerryL1 (California)
Posts: 14,550

Posted:

Michael's basic question--about possible ways to fund social events-- is one that might interest many others here. Just because he used the word "affluent" does not make his desire to encourage more camaraderie and fellowship in his community an evil goal. So what if that offends you?

Try hard to stick with the main point of posts instead of nitpicking individual words. Try to see the larger picture.

MichaelT21 (Arkansas)
Posts: 501

Posted:

I used the word affluent because that describes our neighborhood. It is no secret and well known throughout our town that our neighborhood is one of the places that has the higher end homes.

I used the word because I want the potential sponsors know that this is not a charity - they shouldn't think that sponsoring us will give kids opportunities that they wouldn't have otherwise. I was clear in my letter asking for sponsorships that we are not a 501c3 charity, sponsorships are not tax deductible, and that we are an affluent community.

I fully expect real estate agents, who hotly covet listings in our neighborhood, will be intrigued by the wording on the letter and consider sponsoring us for that. The bargain grocery store that sells expired food probably will be turned off. Others may fall into the middle.

I sent out about 50 letters to 50 locals businesses. We will see if any bite. If they do that's great. If not, we'll put it on ourselves.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 05/23/2022 7:02 PM

Posted By MaxB4 on 05/23/2022 7:01 PM
While my wife and I were on our Board, we had a $12K annual budget for social events and none of the money came from the homeowners.

Affluence is relative. I don't like on 150 acres and own a property management company that has managed over 300 associations.

Sorry, you have all your facts or whatever wrong.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 05/23/2022 7:22 PM
I used the word affluent because that describes our neighborhood. It is no secret and well known throughout our town that our neighborhood is one of the places that has the higher end homes.

I used the word because I want the potential sponsors know that this is not a charity - they shouldn't think that sponsoring us will give kids opportunities that they wouldn't have otherwise. I was clear in my letter asking for sponsorships that we are not a 501c3 charity, sponsorships are not tax deductible, and that we are an affluent community.

I fully expect real estate agents, who hotly covet listings in our neighborhood, will be intrigued by the wording on the letter and consider sponsoring us for that. The bargain grocery store that sells expired food probably will be turned off. Others may fall into the middle.

I sent out about 50 letters to 50 locals businesses. We will see if any bite. If they do that's great. If not, we'll put it on ourselves.

I had asked before and never got an answer, is the complete board in agreement with your idea or are you playing lone ranger again?

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By MichaelT21 on 05/23/2022 6:39 PM
As far as soliciting our own vendors, there is nothing wrong with that. The benefit of the sponsorship would go directly back to the entity who signs the contract, so there is no conflict of interest.

I do not think you understand how "pay to play" applies here. Regardless, you asked for people's thoughts. I have yet to see anyone here support soliciting your HOA's own vendors to donate work while you have a contract that says they do not have to.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By AugustinD on 05/24/2022 7:01 AM

Posted By MichaelT21 on 05/23/2022 6:39 PM
As far as soliciting our own vendors, there is nothing wrong with that. The benefit of the sponsorship would go directly back to the entity who signs the contract, so there is no conflict of interest.

I do not think you understand how "pay to play" applies here. Regardless, you asked for people's thoughts. I have yet to see anyone here support soliciting your HOA's own vendors to donate work while you have a contract that says they do not have to.

From HOALeader.com:

"We're having an annual community BBQ for our HOA. Some vendors heard about it and offered to donate gift cards for prizes for the games. Another vendor offered to contribute monetarily to the food. Our management company also contacted the board and said they wanted to donate. They sent out an email letting the other vendors know if they wished to contribute, they could, but it's not expected or required.....

One of our Florida experts says this is fairly common and not prohibited under Florida law. "We've done it as vendor," reports Alessandra Stivelman, a partner who specializes in community association law at Eisinger Brown Lewis Frankel & Chaiet in Hollywood, Fla.; she's referring to her law firm's participation in such an event.

"We'll have clients reach out to us," she says. "One was having big carnival and asked if we'd sponsor one of the attractions. These aren't kickbacks in the sense that these board members are getting an advantage that other owners aren't getting. The event benefits all the homeowners.

"If the board members were pocketing the money or getting some benefit in their pocket, then, yes, there would be a problem," explains Stivelman. "I don't see it as a violation of the kickback laws in Florida as long as the issue is properly noticed and discussed and then it's put in the minutes so that it's clear what's taking place. And, of course, you need to make sure the money does go to the right place, because that's where you get into trouble." "

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By MaxB4 on 05/23/2022 7:26 PM

Posted By MichaelT21 on 05/23/2022 7:02 PM

Posted By MaxB4 on 05/23/2022 7:01 PM
While my wife and I were on our Board, we had a $12K annual budget for social events and none of the money came from the homeowners.

Affluence is relative. I don't live on 150 acres and own a property management company that has managed over 300 associations.

Sorry, you have all your facts or whatever wrong.

From previous postings:

"I have three homes, in different states. I recently purchased a 100 acre home outside of Lincoln, Nebraska. I like to shoot, I like a large workshop to do woodwork and work on restoring a 5th wheeler for my daughter."

https://www.hoatalk.com/Search/ForumSearch/tabid/87/forumid/1/postid/314523/view/topic/Default.aspx

I can't seem to find the thread about the property management company you own, but do recall that it has managed 100+ associations over the years.

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By MichaelT21 on 05/24/2022 7:28 AM

Posted By AugustinD on 05/24/2022 7:01 AM

Posted By MichaelT21 on 05/23/2022 6:39 PM
As far as soliciting our own vendors, there is nothing wrong with that. The benefit of the sponsorship would go directly back to the entity who signs the contract, so there is no conflict of interest.

I do not think you understand how "pay to play" applies here. Regardless, you asked for people's thoughts. I have yet to see anyone here support soliciting your HOA's own vendors to donate work while you have a contract that says they do not have to.

From HOALeader.com:

"We're having an annual community BBQ for our HOA. Some vendors heard about it and offered to donate gift cards for prizes for the games. Another vendor offered to contribute monetarily to the food. Our management company also contacted the board and said they wanted to donate. They sent out an email letting the other vendors know if they wished to contribute, they could, but it's not expected or required.....

One of our Florida experts says this is fairly common and not prohibited under Florida law. "We've done it as vendor," reports Alessandra Stivelman, a partner who specializes in community association law at Eisinger Brown Lewis Frankel & Chaiet in Hollywood, Fla.; she's referring to her law firm's participation in such an event.

"We'll have clients reach out to us," she says. "One was having big carnival and asked if we'd sponsor one of the attractions. These aren't kickbacks in the sense that these board members are getting an advantage that other owners aren't getting. The event benefits all the homeowners.

"If the board members were pocketing the money or getting some benefit in their pocket, then, yes, there would be a problem," explains Stivelman. "I don't see it as a violation of the kickback laws in Florida as long as the issue is properly noticed and discussed and then it's put in the minutes so that it's clear what's taking place. And, of course, you need to make sure the money does go to the right place, because that's where you get into trouble." "

Michael, are you representing that you properly noticed and discussed this decision to ask for vendor sponsors at a Board meeting, achieved a decision that was recorded in the minutes and then sent your 40-odd letters out? Are the "I" statements in your posts intended to represent the "We" of a Board that works together as a team?

Regards,
Steve

MichaelT21 (Arkansas)
Posts: 501

Posted:

Oops. I got a little excited on this one. No, I don't have Board approval to send out 60 letters asking for donations. Based on our local area, I do not expect anyone to complain though.

The letters are clearly asking for sponsorships, not donations, and are clear that what we are doing is selling advertising spots.

We'll discuss at our next meeting but I don't anticipate any pushback.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Why again are you doing this for a non profit corporation? It makes no sense. Your set up to collect as much as you spend. Anything outside of that could be subject to taxation. You do not need sponsorship. That is selfish. You need those whom want to participate to kick in their fair share.

Former HOA President

AugustinD
Posts: 3,698

Posted:

MichaelT21, kickbacks to directors have never been on my mind. What is on my mind is that a vendor could be "buying" contract renewal via making donations, giving the vendor an unfair advantage in bidding. It's as if the board is saying: Donate xyz, or we will not renew your contract.

For me, it's about a HOA denying other vendors (who do not currently have a relationship or contract with the HOA) the same chance to compete for future contracts as current vendors.

I understand you see no problem with this. I keep it in mind because I still recall a vendor upbraiding a former HOA of mine for not inviting a bid from him. (We actually did, but the email went to the vendor's spam folder.) I also have some awareness of the rules for municipal and county contracting. Unless all vendors (under contract or not under contract) were invited to donate, I do not think cities and counties would solicit its current, under contract vendor, to donate.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I agree with Augustin's take on this: if you solicit vendors currently doing work for your HOA, it will appear to both parties that there's a quid pro quo going on. If the vendors happen to find out about your events and initiate the discussion, that's a little different - but it's still questionable.

Soliciting current service providers will muddy the waters and create expectations where you don't want them. The board doesn't want to tie their hands when it comes to obtaining bids or finding new providers. You're proposing to tie your hands.

I've seen things like ads in HOAs' newsletters and the like - but these are generally directed at residents, not at the HOA.

BarbaraT1 (Texas)
Posts: 821

Posted:

I have done this. I find that it really only works if you have a large community - 1000+ homes. I've also taken donations from existing vendors.

For the great majority of associations, the stakes here are very low. I'm not going to rend my garments over the potential tax implications of a $40 Home Depot gift card for the winners of the cornhole tournament.

As for "pay to play" - the concept of companies incentivizing their existing customers to remain customers isn't inherently unethical. Every month I get a coupon from Ulta in the mail. Is that unfair to Sephora? While a board should routinely bid out contract services as due diligence, they have no obligation to allow every potential vendor the opportunity to bid in the name of fairness. Nor does any vendor have a right to bid. And while there certainly are board members and managers who will keep a vendor around for personal gain (i.e bribes), it's silly to think that boards are keeping bad vendors around because they donate a few bucks for snowcones.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BarbaraT1 on 05/24/2022 8:27 AM
[snippage] [a board has] no obligation to allow every potential vendor the opportunity to bid in the name of fairness. Nor does any vendor have a right to bid.

Legally, I doubt this is accurate. For example, a landscaping company that an Hispanic-American owns learns that a large HOA is taking bids for a year-long landscaping contract. The company asks for the RFP from the Board. For whatever reason the Board says it is not interested in a bid from the company. Subsequently I understand the company may have standing to bring a claim of race or ethnic discrimination.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By BarbaraT1 on 05/24/2022 8:27 AM
I have done this. I find that it really only works if you have a large community - 1000+ homes. I've also taken donations from existing vendors.

For the great majority of associations, the stakes here are very low. I'm not going to rend my garments over the potential tax implications of a $40 Home Depot gift card for the winners of the cornhole tournament.

As for "pay to play" - the concept of companies incentivizing their existing customers to remain customers isn't inherently unethical. Every month I get a coupon from Ulta in the mail. Is that unfair to Sephora? While a board should routinely bid out contract services as due diligence, they have no obligation to allow every potential vendor the opportunity to bid in the name of fairness. Nor does any vendor have a right to bid. And while there certainly are board members and managers who will keep a vendor around for personal gain (i.e bribes), it's silly to think that boards are keeping bad vendors around because they donate a few bucks for snowcones.

Thanks Barbara.

I'm really doing this out of personal interest - I never have solicited sponorships for stuff in my life, and am curious if the marketing opportunity to our community piques the interest of local companies. Likely none will respond but I am hoping for maybe 3 or 4 if we are lucky.

We banned real estate signs from our community because there were a few agents who left their signs up year around, as a permanent ad. Certaintly there is value in advertising.

Likely, we won't get enough sponsorships / donations to be worth my time, and I won't do it again. But at least I'm giving it a shot this time.

MaxB4
Posts: 3,513

Posted:

I don't post a want ad in the LA Times that my management company is soliciting bids a one year contract for a HOA in xyz city. Either the management company and/or the BOD will put together a list of prospective candidates.

BarbaraT1 (Texas)
Posts: 821

Posted:

Quote:

Posted By AugustinD on 05/24/2022 8:43 AM

Posted By BarbaraT1 on 05/24/2022 8:27 AM
[snippage] [a board has] no obligation to allow every potential vendor the opportunity to bid in the name of fairness. Nor does any vendor have a right to bid.

Legally, I doubt this is accurate. For example, a landscaping company that an Hispanic-American owns learns that a large HOA is taking bids for a year-long landscaping contract. The company asks for the RFP from the Board. For whatever reason the Board says it is not interested in a bid from the company. Subsequently I understand the company may have standing to bring a claim of race or ethnic discrimination.

That's an entirely different scenario. You're comparing apples to birthday cakes.