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Subject: Managing Funds for Clubs and Committees
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10/31/2005 8:25 AM  
I am looking for some advice on how to manage funds for clubs and committees within our 500-home HOA. The primary question is whose name and tax ID number should go on the bank accounts.

For example, the tennis groups has about 200 members that pay small fees ($5) for coordinating leagues. Should that account use the HOA's tax id number, a unique tax id number, or a members SS# to open a bank account.

I estimate there are 5-10 such groups in the neighborhood. We don't want to micro-manage the funds, but if they use the HOA's tax ID number, I believe that we have to consolidate their account balances for our financial reports and income tax returns.



11/02/2005 2:11 PM  
If they pay the fees to the association, then the association should have control and ownership of the funds (although they could go on a sub-account or separate account). As well, the association should include the funds in their acounting.

If the fees are paid directly to the 'committee'as an informal club, it would seem a private enterprise that can be handled by the committee chair.

You say you have a number of clubs and committees. I don't know if your documents allow for the formal creation of club officers and committees which are overseen by the Association, or if it is less formal and simply people getting together in groups to have fun. My fear is that if your committees/clubs are formal and part of your association structure and the funds are NOT controlled in association account, anyone who is not honest could use them inappropriately. I have seen it happen. One 'nice' person put the money in an account they open with their social security number, they are the only one who knows how much is in it, and no one realizes until it is too late that there are less funds than there should be.

I don't know if I helped because I have never been in your shoes, but I tried!


11/10/2005 7:13 PM  
In my neighborhood we have two distinct entities in part to address this issue.

One is the Homeowners Association which at this time is still controlled by our developer, but should be handed over to the neighborhood within 6 months (never any promises). Membership in the HOA is required per all our our title insurance and our dues cover care of the common area, liability insurance and a fund should we need to hire a lawyer.

The other entity we have in place is a Neighborhood Association. The NA is run by a completely separate Board of Directors (obviously we don't have a Board for the HOA, but when it is passed to us from the developer, it will be a completely different set of neighbors on that board). The NA is completely optional and serves as a conduit to City government as well as the social club of sorts. Dues money is primarly used to pay for social events such as our summer picnic, Halloween parade for the kids and Easter egg hunt.

Why don't we combine the two? Simple -- one is required and one is not. Like all neighborhoods, we have people that just want to live here, see the common areas taken care of and not participate in any social events. It would be wrong, to take their HOA dues money and put a hamburger in my stomache at the summer picnic. They are paying their HOA dues because it is required for care of our common areas.

This arrangement has worked out well although there has been some communication challenges trying to make sure the neigbors understand the difference between the two entities and realize why one is required and the other is optional.

I am also the webmaster of our neighborhood message board and that has certainly helped in communicating this issue and many others.
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Forums > Homeowner Association > HOA Discussions > Managing Funds for Clubs and Committees

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