4 Tips to Improve How Your Board Communicates the HOA Budget
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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 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 HOA budget, or do you do what's necessary to fulfill state requirements and comply with your bylaws? The four suggestions here are the right place to start.
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 a HOA, make it a point to send out regular communications to keep the waters smooth sailing. Letting them 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 members allow homeowners to speak their minds about spending priorities, they feel part of the group and the decision-making process. Even if their suggestions are not fully included in the final budgeting process, they are still far more likely to accept the final budget.
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 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 could 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 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.
Find out which steps you should take to develop an actionable budget, especially during these times. Fill out the form to download A Budgeting Checklist – Build an Actionable Budget.