As a community association board member or manager, you are ultimately responsible for managing the finances of a business – your community. The association members are all stakeholders in that business, so sharing financial information with them is essential to building and maintaining trust and credibility. While you’ll probably still get complaints (sorry), financial transparency and proactive communication should at least minimize member concerns and quiet the rumor mill.
Here are five tips to help you effectively share association financial information with your community, as well as some ideas for how to improve member communication in general.
1. Make financial information easily accessible.
This is one of the most important keys to transparency, so here are a few thoughts. Create a dedicated section of your community website to share monthly financial reports. Keep it in the member area (password protected), as there’s no reason to share this with the general public. Include a monthly summary in the newsletter or on the website. Provide contact information for the person or committee responsible for answering financial questions, and then publish answers to the most common questions.
2. Keep it simple.
While CPAs like us love nothing more than to curl up with a good income statement or balance sheet, most people don’t understand them. That means your summary needs to be communicated in a way that all members can understand. Summarize essential information, like revenue, expenses, and trends. If you make the summaries easy to understand, you’ll minimize the chance of confusion and complaints.
3. Explain how dues are being calculated and spent.
Have you heard this question recently? “This other community is the same size as ours, but why are their dues lower?” It’s natural for community members to question dues, especially in these inflationary times. Through your monthly summaries listed above or using the ideas below, review major expenses (and major increases) such as insurance, landscaping, structural maintenance, amenities, etc. Answer questions about dues and expenses before they are asked, and you’ll increase trust in the community’s financial management.
4. Communicate the status of major projects and plans.
Where do we stand with tennis court resurfacing? When will they start the building roof replacement? Provide regular updates on major projects in progress, including the timeline for completion. Hint – it’s ok if timelines change, as long as you communicate the changes. If new projects are in the works, let members know what they are and how they will be funded, like from the reserve account vs. operating budget. This also helps members feel involved in the community’s financial planning and overall well-being.
5. Show how you’re protecting the community against theft and fraud.
One of the concerns most commonly voiced by association members is a lack of understanding about what their associations are doing to minimize financial risk. Most communities have solid financial controls, so you should feel comfortable communicating the procedures you have in place. Of course, regular audits or similar financial engagements will help confirm sound financial health while identifying potential areas of risk
Improving Community Communications
Here are some other ideas to consider as you look for ways to increase transparency and build trust between the community membership and leadership:
● Hold regular town hall meetings. Give members a chance to ask questions and share their concerns. Invite outside experts, like your CPA, attorney, or insurance agent, to educate and update the community. These meetings are also a great opportunity to get feedback for future project planning.
● Communicate early and often. If you don’t have a newsletter, start one or send regular email updates that include the financial summary along with committee reports, new neighbor updates, lawn of the month, and other community news.
● Set reasonable expectations. If you’re not sending out regular updates, don’t jump to a daily email. Think about what can be maintained for the next year or more.
● Create a committee. When you find that your membership has concerns about an aspect of community management, form a committee. This could be finance, clubhouse remodeling, or even flower gardens. Members will serve if it’s a big enough deal to them, or it’s just not a big enough deal!
Putting the Unity Back in Your Community
Transparency and trust are essential components of successful community association management. Share information in a format that everyone can understand, promote participation, and encourage feedback. Your effort will be rewarded over time with improved member satisfaction and fewer complaints.