Tag: volunteers

Will Transparency Act chill HOA survival – no board volunteers?

Community associations were not given one of the twenty-three (23) exemptions under the Corporate Transparency Act (“CTA”).  CTA requires  businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.

CAI filed an amicus brief seeking HOA exclusion from reporting under CTA. (CAI Amicus Curiea, National Small Business United v. U.S. Treasury,  No. 24-10736, 11th Cir. (Ala.) 2024.) In sum CAI argued, “Homeowners will no doubt be reluctant to volunteer in light of the potential Orwellian consequences imposed by the CTA.”

In  researching the CAI brief, I do not address the issue of CTA and HOAs; CAI makes that argument.  My analysis addresses 2 aspects of the CAI brief:

  1. CAI’s candor to the tribunal (Code of Professional Ethics, R 42, E.R. 3.3 violation) in regard to misrepresentations as to what CAI is and what it does (Section I), and as to what HOAs are and do.
  • An implied defect in the HOA governance model relating to the need for unhindered, unpaid, volunteer boards of directors without whom HOA governance fails.

CAI  CANDOR

CAI continues to make broad, unsupported, half-truths as to it nature that can be found in many of its amicus briefs.  CAI claims (my emphasis):

“The Community Associations Institute (“CAI”) is an international nonprofit research and education organization formed in 1973 by the Urban Land Institute, the National Association of Home Builders, and the United States Counsel of Mayors to provide the most effective guidance for the creation and operation of  condominiums, cooperatives, and homeowners associations

“an international organization dedicated to providing information, education, resources, and advocacy for community association leaders . . . . CAI is the largest organization of its kind, serving more than 75.5 million homeowners who live in more than 365,000 community associations in the United States.”

“CAI submits that there [sic] experience in representing and supporting community associations . . . and understand the make and needs of the various community associations.”

“The primary role of community associations is to manage the common areas of the community, i.e. fix the roofs, maintain the lawns, shovel the snow, insure the buildings, etc”

Not mentioned is CAI as an IRS 501(c)6 business trade group that does not and cannot have HOAs per se as members, and was formed to combat growing problems with the HOA scheme back in 1973. In 1992 CAI dropped its education tax-exempt status to become a trade group so it could lobby more effectively. See Stable’s Community Associations and McKenzie’s Privatopia on origins of CAI.

HOA SURVIVAL — UNPAID VOLUNTEERS

“CAI submits this amicus brief on behalf of its members who recognize that the sustained health of the community association form of ownership in the United States depends in large part upon the willingness of owners to continue to serve on their associations’ volunteer boards to make their homes and communities better places to live.” 

“Volunteerism is the backbone of every community association. Board

members are not paid for their service. CAI respectfully submits that volunteer homeowners will be less likely to serve in that capacity if they are required to file a beneficial ownership report with the Government.

“Homeowners will no doubt be reluctant to volunteer in light of the

potential Orwellian consequences imposed by the CTA”

The above is a major defect in the HOA scheme based on an unreal requirement for active volunteerism that is not supported by the lack of involvement in public government.  It’s a call to utopian ideals and behavior.

REALITY CHECK

Question:  If CTA applied to HOAs, would you serve on the board?

HOA defect: volunteers & boards of directors

There is a serious defect in the HOA model of local governance based on a private contract that requires a board of directors to manage the association through the use of unpaid volunteers. It seems as though the framers ignored the old truism: you get what you paid for. Now don’t get me wrong, there are qualified directors and those with an honest belief in volunteering and pitching in to make their HOA a better place. But the legal structure to often prevents them having any real impact. A topic to be addressed elsewhere at another time.

The framers of the model were well aware that to ask homeowner/members to fork up assessments that included director/officer salaries or compensation would never fly. It would not even fly today. Recourse then was made to the utopian concept, the private commune, where everybody chipped in and did what they were capable for the benefit of the commune. And that required individuals who believed in the model to volunteer their time. Without this above and beyond call for volunteers the mass merchandising of HOAs would have failed.

In order to explain my opinion, I must take members back to 1964 and the framing of The Homes Association Handbook that became the HOA declaration of CC&Rs “bible.”  All HOA declarations flow from this Handbook and constitute the vast boilerplate found in all CC&Rs over the past 58 years.

This topic was addressed in the Handbook. And since the growth in size of HOAs led to incorporation of the associations, the need for a board of directors was mandatory and a solid and necessary requirement. The answer was solved, they thought, by unpaid volunteerism. Further reaching out in order to make the HOA legal scheme work, the demand for involvement in the affairs of the HOA, especially for directors, ran against the national data on citizen involvement in government. (Just check the number of voters in presidential elections as a percent, not of registered voters, but of voter age people, shows on average a 35% turnout.)

As it has become apparent, many HOAs have resorted to “conscripting” members just to sit on the board to meet the statutory and governing document requirements. They are generally YES men, going along with the power clique or president’s wishes. This has led to anyone, qualified or not, to get him on the board.

CAI attempts turning volunteers into HOA leaders

Tom Skiba, CEO of CAI, is concerned about the lack of member volunteers to lead their HOA in his Ungated post under the column, “News and Insights on community association living.”[1] As he argues for more volunteer leadership and activism, he doesn’t realize that he’s admitting to 45 years of failure to solve HOA problems.

That’s why, for more than 45 years, we have supported the belief that homeowner involvement is essential, and that education is a critical component to an association’s success. . . . At CAI, we know there is usually a correlation between the level of homeowner involvement and the long-term success of a community. . . . it’s the homeowner volunteer leaders who are accountable to their neighbors.

Skiba’s concern is understandable when, illustrative of the problem, a large, active adult resort style HOA has been facing failure and having difficulty attracting members to become active in management. And that’s after 3 years earlier an independent and professional strategic plan recommended an educational program to assist in obtaining members to serve in management.  It has been ignored.

CAI has introduced a program designed to educate volunteers to become effective and productive HOA leaders by taking its CAI Board Leader Certificate Course and obtaining the CAI Board Leader Certificate. It seems however, that Skiba is a little bit unsure of this program to create leaders from average people: “After completion of the course, students will acknowledge that they’ve read and understood three key CAI educational resources:” Why the acknowledgement? For what purpose? Is this an oversell of CAI’s attempt to bolster the ego and acceptance of board directors and officers as being “somebody” and an authority? “Community leaders who complete the CAI Board Leader Certificate will receive a certificate of completion and recognition on the CAI website”.

This course, recognizing that “leaders are responsible for setting policy and making decisions . . . . highlights what every board member needs to know to serve effectively,” contains 5 modules:

    • Module 1: Governing Documents and Roles & Responsibilities.
    • Module 2: Communications, Meetings and Volunteerism.
    • Module 3: Fundamentals of Financial Management.
    • Module 4: Professional Advisors and Service Providers.
    • Module 5: Association Rules and Conflict Resolution.

From what is available online, as indicated above, my thoughts are more of the same. There is nothing to make me believe that this course addresses questions of effective leadership. It appears to make use of the inbreeding and indoctrination by the CAI School of HOA Governance.[2] A doing it my way program without any discussion or presentation of effective local government management[3] or any general qualities of what makes a genuine leader.

Travis Bradbury explains leadership:

Leadership has nothing to do with titles. Leadership has nothing to do with personal attributes. Leadership isn’t management. Leadership isn’t something that anyone can give you—you have to earn it and claim it for yourself.[4]

In addressing the management of nonprofit organizations, eminent management consultant Peter F. Drucker wrote: “The first job of the leader is to think through and define the mission of the institution.” [5]

In the inbreeding atmosphere within HOAs where the volunteers are sought who are not disruptive — who do not dare criticize the BOD — Terrin Allen warns about YES men.

In my experience, most people get this way because they are responding to a culture or people in management who elicit and reward this type of behavior. . . . [in order to] survive on a dysfunctional leadership landscape where all the signals and messages confirm for them that dissent is bad and agreement is good.[6]

Summary

I appreciate Skiba’s concern for responsive HOA management, but CAI’s approach is severely lacking. There is the continued absence of democratic institutions and principles. that would send a message to those truly seeking to create a healthy and productive community; a true community not focused on property values and enforcement of the governing documents alone.

A healthy society and community must be supportive of their membership who still naively believe their HOA is a democracy in action and protective of their individual rights and freedoms. Where they truly have a voice and fair elections to make that happen. I offer an alternative legal model of HOA governance to accomplish this task. See HOAs are in need of a major restructuringg and sequel under Restructuring.

consulting SIG image1Notes

[1] Tom Skiba, “Effective leadership: How board leader education moves communities forward,” (March 5, 2020).</p>

[2] I collectively refer to CAI’s policies, best practices, guides, communications, seminars and certifications, and in its Manifesto as the CAI School of HOA Governance.

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

[4] Travis Bradbury, “What Makes a Leader?”, Success.com (May 25, 2019).

[5] Peter F. Drucker, Managing the Nonprofit Organization: Principles and Practices, HarperCollins (1990).

[6] Terin Allen, Are You Creating ‘Yes Men’ And Hindering Your Own Leadership Success?”, Forbes.com (Nov. 10, 2018).