Why transparency matters in communicating your association budget
Ways to communicate during the association budget processThere are ways to help maintain harmony and happiness within your association during budget season and when the new fiscal year begins. Read on for some tips to craft an effective, inclusive budget while also keeping resident satisfaction high.
“Homeowners think that a veil exists over the association budget process, that the board doesn’t share the budget until it is final and they have no knowledge of or influence on the process,” said Mary Signorella, account executive for FirstService Residential. “To avoid this, consider a quarterly or semi-annual communication that lets homeowners know how the association is doing on budget compared to actuals – if you’re over budget, let homeowners know what’s going on so that it’s not so much of a shock that there’s an increase for the following year.” Signorella recommended frequent, shorter communications than an annual dissertation that homeowners won’t want to read or possibly won’t understand.
If your association doesn’t communicate the budget in the right way, without open communication and transparency, it creates turmoil and mistrust among residents. It’s best to lay out the budget situation for residents and explain everything clearly, especially if your association has had to implement a significant assessment increase. Residents who feel their questions are being addressed will feel more included and will have a higher satisfaction with the community.
“It’s better to over communicate in some aspects rather than leaving a question unanswered, said Megan Keohen, general manager at FirstService Residential. Make sure you find the right channel to reach your community, whether that is an announcement at a meeting, a letter or email, private social media group or something else.
It’s important for residents to understand that involvement in the budgeting process goes beyond attending the annual budget meeting. “We create financial reports every month for every association, and those are available to every resident through FirstService Residential Connect,” explained Raymond Weber, executive director of client accounting at FirstService Residential. “Advise homeowners the financials are online and urge them to understand what’s going on. Encourage their participation. It will make them feel more in control and a greater part of the association.”
Weber said it’s also important to get homeowners involved in the finance and budget committees. He recommended sending out a call for volunteers for those committees. The people who are most interested in the budgeting process will be able to provide information and input. Weber suggested by including these individuals, it could reduce the amount of feedback received after the association budget is finalized and approved.
How to communicate after annual association budget is approvedOnce the budget has been drafted, reviewed, marked up, drafted and reviewed again and approved by the board, it is presented to the homeowners. Let’s say that the budget includes a two percent increase in homeowner fees for the coming year.
How do you communicate that increase to the shareholders?Start by writing a notice to the shareholders. The level of involvement from each team -- the board and the management – depends on a lot of things. Sometimes the letter comes from the board, but the message is composed by the management team; sometimes it’s more of a joint effort. But the notice of any increase must always be put in writing, and it’s best to put that notice in writing as early as possible, but at least 30 days before the increase goes into effect.
The level of effort to which associations go to communicate an increase to their homeowners will vary. Some associations also have an open meeting with all residents to explain budget changes and the rationale for them. Some communities even do a proof of mailing, so they know everyone gets it, independent of electronic notices. If possible, use a text messaging system to encourage attendance at the budget meeting.
When homeowners have questions or disagree with a line item in the budget or a fee increase? “When it comes to feedback, it usually comes in response to the letters announcing the increase,” Signorella said. “Letters are signed by the boards, but the questions come to management. If we’ve done our job, we should be well-versed and able to answer those questions without issue. Typically, if there’s a specific line item that homeowners don’t agree with, we, as the agents, try to clearly explain the rationale. If they aren’t accepting, we ask them to communicate in writing with the board if that’s an option. A one-on-one conversation can make a lot of inroads.”
Budgeting is the time for making tough decisions for how your association spends its money, and sometimes those decisions can, unfortunately, lead to contention. Clear communication between the board and homeowners throughout the budgeting process can help solve problems before they begin and help to smoothly pave the way for needed changes.