Friday, August 09, 2013

Running your association like a successful business - Lexology

Running your association like a successful business - Lexology
"What does it mean to run an association like a successful business?  First and foremost, it means that the officers and directors must take their positions seriously and act with an eye toward what is best for the entire corporation and its members and what will enhance the corporation’s assets.  They do not act with a personal agenda or out of personal feelings toward any of the members.  Instead, they act with a view to the future and what will be best in the long-run for the association.  This includes things such as not showing preferences for certain members in connection with the enforcement of rules or the collection of assessments.  It also means that the association does not defer or take short cuts with required maintenance or other projects that are vital to the preservation of the common areas and other portions of the property for which the association is responsible.  Secondly, running the association like a business means educating yourself on legal, financial and other matters that impact your business.  This does not mean that your board must be comprised only of attorneys, CPA’s or other business owners or that they must already bring with them some kind of relevant experience or knowledge about running a business.  What it does mean is that those who volunteer to serve for the board must be willing to educate themselves as to what they need to know to make the corporation successful."
That second point--that the board members need to educate themselves--is something that needs to be emphasized. Too many people become board members without learning how to do the job.


IC_deLight said...

How about something more fundamental than blind obedience to "rules" that were never written for the benefit of the members to begin with?

Fred Pilot said...

People elected to muni and county government boards also have a learning curve if they have no governmental experience. But in their case, there is built in institutional and staff support that doesn't exist in Privatopia.

The reason as I've maintained for many years is private government isn't accepted or regarded as a legitimate form of local government. If it was, a culture of informed and responsible governance and associated support mechanisms would have evolved after nearly five decades of this experiment in privatizing local government.

Anonymous said...

In his 2007(?) "Position Statement on Common Interest Developments" (PDF), Robert Metcalf described the "HOA epidemic" as

"a systematic infusion of corporate culture and
governance into the domestic lives of an ever larger
share of the American population.
Who wants to
live at work?

One of the differences between work and H.O.A. corporations is that at work we give up some of our rights in exchange for receiving a paycheck. In H.O.A. corporations, home owners pay for the privilege of giving up their rights.

Fred Fischer said...

"What does it mean to run an association like a successful business? Except, Are housing associations Businesses, Government or Community? Since enchasing the corporation’s assets doesn’t always guarantee to also enhance the member’s assists, because as California explains;

Common interest developments are poorly understood not only by residents and prospective buyers but even by many of the people who deal with them professionally. This is not surprising since associations mix elements of government, business and neighborhood organizations yet do not fit the model of any one of them.142

Statutory law that combines aspects of business and government is enough to make CID structure seem complex, but there is an additional element. CIDs are made up of people’s homes. The United States has a strong emphasis not only on individual rights, but also on private property rights. The corporate model requires the board of directors to act for the good of the entire community with little input from members. When this model is imposed onto the belief systems that go with private property rights, it can lead to a collision of values and expectations in the most sacred of spaces—the American home. From California Research Bureau CRB 02-012 , pg. 39

Education is generally good and Board members do have a duty and legal obligation to be informed, fair and reasonable in decision making. However when participating in the world of private governance one must ask “education according to whom.” Since private governance also brings with it, very limited member participation allowed, private justice and private education from the industry’s self certified members, who the Boards depend upon most often for support and advice. Despite the fact that these hired industry professionals have their own associations, agenda’s and best interests that are very often in direct contradiction to the member’s objectives, best interests and to democratic principles. Because private governance is almost immune from democratic constraints and constitutional checks and balances and all the education one can obtain can’t fix that. So the real question becomes, is the reason for education to “make the corporation successful.” Or should it be, to protect the members from what James Madison said about the special interests of his day like today’s association industry who seeks to “concert and execute their plans of oppression.”