Responsible stewardship in challenging times: Protecting communities’ funds and futures

In today's economic climate, costs are increasing on just about everything for condos and community associations — especially wages and insurance. New legislation around funding reserves is also applying financial pressure on many associations. This presents a significant challenge for boards tasked with operating their communities and delivering on resident expectations, all while managing escalating expenses.

These inflationary pressures, coupled with likely lower interest rates over the next few years, may drive boards to seek higher returns on their investments to balance their budget. These investments, including cryptocurrency, could represent a high financial risk for the association. This practice is not advisable. Boards are stewards of their community's funds, and reserves are funds that belong to other homeowners. Capital preservation is a fiduciary duty of every board member. Responsible board members know they must be transparent with money belonging to the homeowners of the association and remain vigilant and skeptical of any proposals that promise high returns with little risk.

I understand the challenges faced by community associations in today's economic environment and empathize with them. Our team is committed to providing sound solutions that help boards preserve their capital and maintain financial stability. We work closely with boards to develop customized long-range financial strategies that address their individual needs and circumstances. And I commend other industry professionals – attorneys, accountants, and other property management companies – who responsibly steer their communities in the right direction.

The importance of responsible stewardship cannot be overstated. In the face of rising costs, it is imperative for boards to take a prudent approach to financial management. This means having a long-term plan for your capital projects, prioritizing capital preservation and avoiding high-risk investments that could jeopardize the financial stability of the community.

Our goal is the same goal of the board members and residential communities we serve: to help communities thrive despite economic pressures, safeguarding the interests of homeowners and preserving the quality of life and a place to call home for generations to come.

David Diestel
Chief Executive Officer
FirstService Residential