When running a Neighborhood Association, there’s always a need for more funds. Even the most financially stable NAs can always find ways to put more funds to good use. So, you may be wondering: Can NAs accept donations from vendors? What about fundraising?
Accepting Donations
Whether or not an association can receive donations is usually found in the governing documents for the neighborhood. Even when not explicitly stated, the NA should have the authority as a corporation to receive cash and/or property from someone’s will. Although nonprofit, NAs are not classified as tax-deductible organizations. Therefore, such donations would be taxable since NAs are not charitable organizations. Donations would not be taxable if all the donations are used to benefit the neighborhood with no leftover profit.
Again, depending on the governing documents for a specific neighborhood, a NA can generally accept voluntary donations of money and labor from homeowners or vendors.
Hosting Fundraisers
Neighborhood Associations can host fundraisers to raise extra money for neighborhood projects. However, it needs to be clearly defined that resident participation is voluntary. It needs to be obviously stated what you are raising funds for, so that you don’t have upset NA members who donated their money for one thing and are surprised to find that their funds went toward something else.
Charitable Donations
Neighborhood Associations cannot make charitable donations from assessments. Association assessments (collected from residents) are to be used only for the common expenses of the association, and a charitable donation does not fall in to that category.
The Neighborhood Association board can, however, solicit voluntary donations from residents and donate that money to charity. When doing so, it is important to be choosy about where you donate the money, and make sure that it is a source that every member of the neighborhood supports. You could find yourselves with some angry association members if you donate to a cause they do not support.
Bottom-line
In the end, accepting or giving donations as a NA is certainly not off-limits, but in any circumstance it’s smart to cover your bases. Check governing documents, legal advisors, and members of the neighborhood before making any major decisions for your neighborhood association.