The winter has been harsh and long, but relief is on the way. Landscapers are cleaning up the grounds, and outdoor swimming pools will open in a few weeks. Perhaps it is time to plan a community association party.
Some associations host a regular schedule of holiday festivities, barbecues and other gatherings. Some never do.
Is it responsible and legal to spend assessment dollars on social activities and other niceties?
The answer is probably. And in moderation.
Your association’s governing documents may make reference to recreational activities, but many don’t. Attorney Matthew Goldberg of Bancroft, Richman & Goldberg in Chicago, referred to the Illinois Condominium Property Act for guidance. Section 4(i), which addresses the contents of declarations, allows provisions that owners “deem desirable in order to promote and preserve the cooperative aspect of ownership of the property.”
“‘Cooperative aspect’ logically sounds like creating a positive neighborhood effect and promoting good feelings,” he said. “It could be interpreted to mean that having a party or serving refreshments at a meeting is fine.”
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He also cited the preamble in Section 18.4: “The powers and duties of the board of managers shall include, but not be limited to the following” list of actions.
“We have the list, but the list is not the alpha and omega of everything the board can do,” he said. “You can have something in the bylaws or rules that vests the board with the power to purchase the types of things to promote the positive aspects of community living.”
Marcia Caruso, president at Caruso Management Group in Naperville, supports association social activities.
“Yes, spend the money, but do not spend much,” she said.
If you choose to promote the cooperative aspect of your association, follow these best practices:
Pay the bills first. An operating budget consists of mandatory and discretionary line items, explained certified public accountant Steve Silberman at Frost, Ruttenberg & Rothblatt in Deerfield.
“After you have budgeted for your mandatory items, you then look at your discretionary line items or your wish list,” he said. “Social expenditures come under this category.”
Be transparent. Determine a spending amount, and put it in the budget as a line item. Examples are $300 for meeting refreshments or $400 for the summer barbecue, depending on the size of your association.
“Make sure you’re not hiding information from the unit owners,” Goldberg said.
Be inclusive. “Social expenses should be for the benefit of everyone, since every owner is paying their pro rata share of assessments,” Silberman said.
“Play to the age group and makeup of your community,” Caruso said. “If you have families, your activities should be family-oriented. And avoid anything religious or political.”
Board members don’t get special treatment. Buy enough sandwiches for everyone who attends the meeting, not just the board, Goldberg said.
Be wary of giving gifts. Sending funeral flowers is OK if you do it for all owners who have a similar loss, he said.
And no gift cards to board members thanking them for their service.
“Almost every declaration says board members shall not be compensated,” Goldberg said. “If you’re giving out gift cards, whether it is $100 to the local steak house or $5 to Starbucks, it kind of looks like compensation. It’s a cash equivalent.”
Document all purchases. Silberman prefers that associations buy food and supplies directly, but he understands, in practice, individuals often make purchases on behalf of the association and seek payback.
Require those individuals to submit receipts before issuing the reimbursement, he said.
Look for alternative funding. “You can get revenue from other sources like advertising in the newsletter or donations from vendors,” Caruso said. “Or we do potluck dinners.”