Tag: Peter Drucker

HOA advocate credentials are lacking

Should the FEDS get involved in HOA-Land abuse even though HOAs are controlled by state laws?  It would need to come under the approach that state laws are so varied that uniform laws must be adopted, and not by ULC that is steeped in the past and promotes more bad laws. This “what state are you in and that’s the law” has been a general argument for federal law and is a reason for federal intervention in the courts.

With all due respect for the hard work of several reform social media groups, getting the attention of state legislatures and DOJ/FBI depends upon the credentials of advocates. Can they make arguments at the level where the courts and lawyers will stand up and take notice? This is a longtime failure of HOA reform efforts even though they have obtained important reforms here and there over the years.

These reforms, for the most part, are rooted in “operational” reforms that affect the laws now on “the books” —  the overwhelming bad laws dealing with day-to-day operations and functions of the HOA. This reform legislation is needed to bring  a fair and just treatment under the constraints of the HOA legal scheme until reforms of substance are adopted.

Allow me to explain with an example.  There are many “good” laws that are designed to protect the homeowner and his rights, and put restrictions on the HOA. They may even have strong enforcement provisions with criminal violations.  Great? On the surface yes because enforcement is still the task not of the state, but the homeowner who has to bring such charges. The state – district/county attorneys and attorney generals — are not obligated to act. BUT, by definition, a crime is an act harmful to the state beyond one person. “Crime is “the intentional act usually deemed socially harmful or dangerous . . . prohibited and punishable by law.”

This “not my job,” hands-off posture constitutes an error of omission by the state that, under the obligations of the Constitution.

“We the People of the United States, in Order to . . . establish Justice, insure domestic Tranquility . . .  promote the general Welfare . . ..”

Stay with me.  What is necessary is to rewrite the CC&Rs that is based on The Homes Association Handbook, as the Founding Fathers did when they threw out the Articles of Confederation for the US Constitution.  There has been and is little support for this approach, which I believe is the result of a lack of understanding and a fear that their HOA would be abolished —  a very successful fear mongering by CAI. And that includes a fear of CAI.

Over the years I filed an IRS tax-exempt complaint against CAI for having the customers of its members also a member of the business trade group in violation of its tax-exempt status. In 2005 CAI had to drop HOAs pe se from membership. Earlier this year I filed a 40-page complaint with the antitrust division of DOJ arguing that CAI was a monopoly, and has acted to thwart competition and the free entry into the HOA education market. 

Recently I asked for support of my appeal to the Federalist Society  to encourage and promote dialogue on the constitutionality of and loss of citizen rights in an HOA. The Society’s mission is educational for lawyers and student lawyers, and has a national  program of local law school chapters to debate issues. (Notable attorneys and government officials attend these meetings. My grandson had the opportunity to meet the Governor.)  I argued that new lawyers sally forth lacking the truth about HOA-Land serving to perpetuate the unjust laws.

HOA reformers and groups must present themselves as knowledgeable advocates, united nationally, who understand the law and the judicial process.  Reformers need to be able to stand up before CAI, the courts, and state legislators and win!  As I posted elsewhere, I am still waiting for an answer to my 2006 challenge to debate the CAI “elite” lawyers who are members of CAI’s CCAL.

As the renowned international management consultant Peter F. Drucker made clear, “A mission statement has to be operational; otherwise, it’s just good intentions.“

What makes for an effective nonprofit  HOA board of directors?

(For the record, I am not a lawyer nor work for a lawyer and I am not providing legal advice or opinion.)

First and foremost, an HOA is  a chartered nonprofit corporation given authority to function as such under the AZ Constitution.   The association’s Governing Documents, an agreement between the HOA and the members, gives the HOA the authority and powers to function as the governing body of the subdivision.

As you are well aware, both nonprofit corporation law and the Governing Documents place the ultimate authority and responsibility for managing the HOA – in the true meaning of “managing” and not CAM — in the board of directors (BOD).  CAM keeps the HOA functioning smoothly delivering the services and providing for “groundskeeping.”  In order for the HOA to accomplish its mission and goals, which provide the necessary guidance and direction for performance, it is the BOD that must decide 2 important questions: What is our purpose?  What should it be?

What then makes for an effective BOD? To start at the beginning and get right to the point, my emphasis at this important juncture (Managing the Nonprofit Organization, Peter F. Drucker, p. 171-172, 1990),

“The board needs to know that it owns the organization. But it owns an organization not for its own sake — as a board — but for the sake of the mission which that  organization is to perform.”

“If you find that the board has become inflexible, you have to look for ways of renewing the board with fresh appointments. The more power is concentrated in a few people on a board, the more likely the situation will turn unhealthy.”

And this is where the BOD has failed the members!

As pointed out in earlier posts, “mgmt case study #1”, SCG’s continues to widely publish its nonsensical vision and mission statements providing no guidelines to act or of any value to measure effective performance. What we have witnessed is a BOD deciding on its own where to go and what to do, cleverly masked as fulfilling the wishes and desires of the members.  In actuality, all those meet the board, chats, Q &As, etc. allow for a presentation of grievances without binding the BOD to action.

There is no provision to require the BOD to hold a vote on a member’s proposed amendment to the governing documents as permitted by state law with respect to removing a director or all directors.  Or to nullify an act of the BOD.

Drucker continues with, “Ducking controversy or minimizing difficulty, snowing people with reports that are not realistic either about the quality of the programs . . . or whatever . . . that’s terrible leadership”

It’s well beyond time for a necessary change in attitude and culture before SCG descends into chaos. Adoption of a new approach, as recommended in A Plan toward Restructuring the HOA Model of Governance is needed, today!

HOA management (BOD) is more than property management (CAM)

I continue to be baffled as to how real estate attorneys and property managers, unlicensed in most states, have been allowed by state legislatures to advise and dictate to HOA boards (BOD) on how to govern a community by an Association that  is very similar to a local government body.  Governing a community is more than managing a property in a subdivision.   

 Many other experts and authorities have attempted to explain this complex concept of “what is management”  — including the renowned Peter F. Drucker. (The Practice of Management and Management). My take is a simple, down-to-earth explanation as part of “Reorienting the BOD and its followers,” the first step in A Plan Toward the Restructuring the HOA Model of Governance. 

Management (noun) – Management is an entity — an organization whether a business, a nonprofit, an HOA, a charity, a club, a group, or a person. It applies to any person, or organization, or entity at all levels with respect to its level of authority and responsibilities — CEO, president, division director, department manager, supervisor, or committee chair. The difference in organizational type is related to their purpose and mission. Businesses  are to make a profit for their stockholders. Nonprofit membership organizations, like HOAs,  have a mission or goal as  laid out by the founders and initial directors that is designed to attract and maintain members — for $$$$$  — who identify with the mission.

Management (function) —  Management is a practice (as first described by Drucker in 1973). It’s an actual application by practitioners/managers — whatever the designation: manager, governor, administrator, board of directors, trustee, etc. — of the set of beliefs, principles, and values held by the organization. The quality and success of the management function is measured by its performance in attaining its mission, objectives, and goals. They may set by its constitution, charter, bylaws, Declaration of CC&Rs, or by department/section/committee descriptions.

Executive level management — at the state legislature through its lawmaking authority or at HOA board of directors level — has final and total responsibility for the successful performance of the organization and sets the mission, goals, conduct and operation of the entity. It has the duty to 1) set policy, plans, rules, regulations, controls, procedures, etc., and 2) organize and structure the entity. All in keeping with its powers under the legal documents and laws granting it the authority to so act.

The very first task for the BOD is to determine just what is the purpose of the entity, and what should it be. Once this reason for being has been determined and stated in terms that permit the evaluation of performance, a valid mission statement can be issued.  From the mission statement a single goal  or set of goals can be issued that permit a measurement of the entity’s performance.  Value statements can be adopted to guide the BOD and members with respect to acceptable means and methods for achieving the goals.

“A mission  statement has to be operational; otherwise it’s just good intentions. A mission statement has to focus on what the institution really tries to do.” (Managing the Nonprofit Organization, Peter Drucker, 1990).

The mission statement by the HOA Management Case Study #1 subject, SCG for example, speaks  in the present tense using the word “IS,” making it more of a propaganda statement — it already exists or has already been accomplished — rather than a condition, an ideal,  to be achieved.  Consequently, SCG’s mission serves no value for the establishment of goals that can measure performance, leaving the HOA essentially without any direction.

* * * *

Cautionary note:

Management when it fails to abide by the authorizing documents and marketing materials that appeal to the wants, desires, and wishes of the members will result in members exiting  the organization, taking their future member donations, dues, fees, etc. with them. With businesses, except small, closely held businesses, exiting is a simple task of selling one’s stock and buying another.

HOAs are more like a small, closely held businesses where exiting is not a simple task primarily due to the need to find some other private buyer (investor) willing to ignore why you are leaving. The status and situation of members can be viewed as a form of indentured servitude: you can’t leave unless you have  money to leave (like having paid off your servitude obligation), or you die.

Consequently, management in membership nonprofit organizations, like local governments, must keep the members happy.  Any changes or  modifications to the purpose, or mission, or goals of the organization must consider  the effect on the members.  And must follow the law and the controlling documents – the CC&Rs in HOAs.  The BOD is not a free agent to do as  it pleases as if the HOA were its own private club.

Publications on HOA constitutionality and legal structure

Peter F. Drucker was an internationally re-nowned management consultant in the 50s and author of the management “bible,” The Practice of Management. “A classic since its publication in 1954, The Practice of Management was the first book to look at management as a whole and being a manager as a separate responsibility.” Bob Woodward you should know.  View my publications (none more than $6.00) here:

. 

Effective HOA board governance

This commentary follows up on my plan to restructure HOA governance[1] that first requires addressing the attitudes and views of BODs, the members, and the public in general.  The conditioning and indoctrination by the biased views of the national pro-HOA special interest entity must be de-conditioned by a program of reorientation.

  Once again I provide valuable information on the proper functioning of HOA boards in serving their “constituents,” their members.

The management[2] of a country, a state, or a local government, including the private HOA association, is commonly known as politics.  Politics is:[3]

“the practice and theory of influencing other people on a civic or individual level. More narrowly, it refers to achieving and exercising positions of governance — organized control over a human community, particularly a state.

“exercised on a wide range of social levels, from clans and tribes of traditional societies, through modern local governments, companies and institutions up to sovereign states.

“A political system is a framework which defines acceptable political methods within a given society.”

Managing a government disguised as a nonprofit association has its unique requirements and demands that, for the most part, have been ignored.  The commonly found guidelines from the national pro-HOA lobbying entity speak to an authoritarian government with member interests and concerns being secondary to the survival of the association. It’s an unacceptable deviation from the intents and purposes of our constitutional government.[4]

First, let me address the requirements for the sound management of a nonprofit association. Drucker[5] focuses on the overall, broad purposes and responsibilities of the board of directors (BOD) or board of trustees. 

The general term “nonprofit” does not apply to HOAs because it is not a business nor a public government, but “government controls.” The reality of the HOA association is that it controls as does a public government.

Drucker asks, what is the mission of the nonprofit?  A mission statement has to focus on “what the nonprofit really tries to do.”  It cannot be “a kind of hero sandwich of good intentions.” Strategies “convert intentions into action.”

Most HOAs, especially the smaller HOAs, do not have a sound strategy that addresses their mission, goals, and values. But the HOA has an explicit mission and purpose as set forth in the CC&Rs[6] and need to be revisited and made consisted with Drucker and Batts (see below).

Second, in an excellent book on the need for director orientation,[7] the author feels board orientation is lacking and instituting a guideline will improve the nonprofit’s mission and goals. In his succinct book, as applied to HOAs, Batt’s makes the following important points:

Key areas of board action are “strategy, oversight, and policy.”  In keeping with Drucker, “boards and board members should not micromanage the affairs” of the HOA. 

The BOD has “full and final authority” over the HOA association; they are “not merely advisors” to the manager, other wisely known as the CAM. It’s regrettable that all too often the BOD abdicates to the manager and/or attorney who often are members of the same business trade group advancing their own self-agendas.

There is “no individual authority” of a board member to act and the president can only act based upon the authority set forth in the governing documents. Most presidents act, especially in the small HOAs,  without board approval.

There is  a “duty of obedience” to the laws and governing documents that all too often is ignored by not only rogue BODs, but by BODs who falsely believe to do so is in the best interests of the HOA.

Notes

[1] George K. Staropoli, A Plan Toward Restructuring the HOA Model of Governance, StarMan Press, 2020.

[2] Peter F. Drucker, “Management  is the application of a set of principles relating to the functions of planning, organizing, directing and controlling an organization to effectively achieve organizational goals,” The Practice of Management, Harper Row, 1954.

[3] “Politics,” Wikipedia.

[4] See Roger L. Kemp, “Forms of Governance,” Managing America’s Cities: A Handbook for Local Government Productivity, McFarland & Co., (2007).

[5] Supra, n. 1.

[6] See  “Restructuring HOAs – intents and purposes,”  supra n.1.

[7] Michael E. Batts, Board Member Orientation, Accountability Press, 2011. It’s a short, to the point, and  easy to read paperback.  Batts has over 25 years on nonprofit boards and has served on several Washington panels.