4 Tips to Improve How Your Board Communicates the HOA Budget
Download our Checklist
Click the button below and fill out the form below to download your budget checklist!
Communicating Your Homeowners Association Fees and Budget
Creating and developing your annual homeowner's association budget for the upcoming year is one of your board's most important jobs. It takes dedication, planning, and hard work to ensure proper spending. This process can be especially challenging in times like these when material costs have increased due to supply chain issues and when faced with inflation. It’s very likely to impact your budget in a way that will trickle down to your homeowners.
In certain instances, homeowners may be upset with some of the decisions made or go one step further and voice their opinions aloud. This is nothing surprising, as homeowners have a right to be concerned. The annual budget affects the HOA's health entirely, but it also affects homeowners' finances. This is likely to become a bigger problem when there is little transparency or communication regarding the budget. Every decision needs an explanation or rationale behind it and should also take into consideration feedback from all community members. Without this, residents are more likely to distrust the board's motives.
Improving board communication regarding homeowners association budget information can go a long way toward defusing homeowner contention. Does your board do a good enough job when communicating with residents about the budget and HOA fees, or do you do what's necessary to fulfill state requirements and comply with your bylaws? The following four suggestions are the right place to start when it comes to properly communicating your homeowners association budget.
Keep Residents Informed About Finances All Year Long
It is not unusual for homeowners to feel they are out of the picture when it comes to their HOA's financial health. As part of your HOA board duties, make it a point to send out regular communications to keep the waters smooth sailing. Letting residents know how the association's actual spending is doing compared to the budget is a great start.
Christine Lentz, president of FirstService Residential in Missouri, also recommends board transparency about any significant projects that could negatively impact the budget. "Be as transparent as possible regarding the decision and provide the answer to the 'why.' For example, "why will the community be over budget in spending or under budget in revenue?"
Another way to keep residents informed is by giving them access to the association's monthly financials. As Lentz points out, "A good community association management company will make available monthly financials to the entire community either via email or by posting them on the community website so that owners are always aware of the community's financial position."
Finally, encourage homeowners to attend open board meetings. "This is where they can hear the board discuss the financials," says Lentz.
Make Homeowners Feel Involved in the HOA Spending Process
When HOA board members allow homeowners to speak their minds about spending priorities, they feel like an important part of the group and the decision-making process. Even if their suggestions are not included in the exact way the homeowner would like in the final budgeting process, they are still far more likely to accept the final budget if their suggestions were taken into consideration and implemented in some form.
An easy way to invite homeowners to share their opinions is by creating an ad hoc budget committee and asking volunteers to join. Although they will only act as advisors to the board, there will be much value in the information they provide. Being able to offer information and input and make recommendations will make them feel like active participants.
Explain the Board's Rationale When Presenting the Final Homeowners Association Budget
Any decision made regarding where the budget is going needs to have a proper rationale behind it. If there are any changes, especially something as dire as homeowner fees, you should include a detailed explanation when you notify residents of the adjustment.
In addition to using postal mail to meet legal requirements, you can also send out emails and post the information to your community association website. Your board may want to invite residents to a town hall, so there is a more personal atmosphere where residents can ask their questions face to face. This also decreases the number of phone calls or emails that board members will have to answer over time.
Choose the Right Communication Channels
The right way of communicating with your homeowners will ultimately depend on what information you are sharing. As previously mentioned, there are generally statutory requirements for sharing the annual homeowners association budget. Beyond this, make sure the way you choose to communicate makes sense. Also, take into consideration a balance of effectiveness and cost-efficiency.
"A good community association management company will be able to handle the distribution of your communication for you," says Lentz. "We often communicate routine financial information through email and a community's website." Additionally, you could include information in your community newsletter, on private social media sites and by posting flyers around the community.
When it Comes to the Budget It's Better to Over Communicate
Residents don’t like being left in the dark when it comes to the homeowners association budget. They want to know and understand how the money they contribute to the association is being spent. If certain capital improvements or other important maintenance tasks have been deemed important by the community and is being left out of the budget, residents will want to know why. That’s why when it comes to the budget it’s better to over communicate rather than leaving important questions unanswered.
Keeping residents informed with regards to the HOA budgeting process throughout the year will dispel the homeowner’s ideas that a veil exists over the process and that the board only shares the budget once it’s final. Consider a quarterly or semi-annual communication that lets residents know how the HOA budget is doing compared to the actuals. An informed group of homeowners creates less turmoil within the community and will make budgeting an easier process for all involved.
Make sure you aren’t forgetting anything when it’s time to create your annual budget. Fill out the form to download A Budgeting Checklist – Build an Actionable Budget.