Little Governments: The Homeowners Association

The phrase “Homeowners Association” may sound innocuous enough to some but it sends shivers down the spines of many. In books and movies this group of home-owners is typically portrayed as power-hungry, meddling and suspicious. Think Big Brother meets Mussolini and you’ll have an idea of this group’s image.

Is this reputation deserved? It’s hard not to believe the rumors while being bombarded with news stories about Homeowners Associations (H.O.A.’s) that force residents to take down American flags, or those that take homes when residents are late paying their dues.

H.O.A.’s are like “little governments,” according to Jackie Faye of NBC News. Like all governments, they exercise the power granted to them in one of two ways: with benevolence or authority. Perhaps Abraham Lincoln foresaw the rise of the H.O.A. when he claimed that “… if you want to test a man’s character, give him power.”

So, who are these people?

A H.O.A. is actually a legal entity whose purpose is to manage a group of housing units, or a common interest development, as they are known in some regions of the country. These developments may be single-family dwellings or condominiums. The decision-making body of this entity is typically known as “the Board,” and there may be committees as well. The association board is composed of homeowners who act as volunteers, and are generally chosen in annual elections open to all homeowners within the community.

The reasons for volunteering to sit on a homeowners association board are varied. Some homeowners want more of a say in how the money is spent, others are concerned with maintaining home values.

Duties and responsibilities

Although it seems as if their boards have unlimited power to do as the members wish, most states have laws that govern what they can and cannot do. Yes, they sometimes overstep these laws. While duties and responsibilities vary across the country, here are some that are common to most:

• Paying taxes on the common areas
• The enforcement of the association’s rules, such as the bylaws and the Covenants, Conditions and Restrictions (CC&Rs)
• Creating the association’s budget
• Creating rules for the use of the common areas
• Disciplining homeowners for violations of H.O.A. rules

Buying a home in a H.O.A.-governed community

They must supply the homeowner with certain documents when there is an offer to purchase the property. The seller then gives these documents to the buyer. There is usually a charge for the copies and the seller typically pays this fee.
The doc packages are usually quite thick and may be extremely complex and boring. It is essential, though, that you read and understand everything in them. If you need help, contact an attorney. Once you own the home, you are obliged to follow the rules.

Some items to pay close attention to in the CC&Rs include:

• Pet policies, if you have pets
• Parking rules, for yourself and guests
• The rules and restrictions for the use of on-site amenities
• Landscaping rules
• House color, exterior decorations allowed
• Restrictions on the construction of outbuildings, such as sheds and gazebos
• The rules regarding leasing your home

Look at the H.O.A.’s budget:
• Does the income cover the costs? If not, why?
• How is the money spent?
• Does the reserve account hold enough money for emergencies?

Check out the board’s meeting minutes:
• What type of issues does the board typically face?
• What type of actions have they taken against homeowners?
• Have they talked about increasing fees or any upcoming special assessments?

Read over the governing documents, or bylaws, to determine how and when elections are held, how to sit on the board and the length of board member’s terms.

One of the most important aspects of purchasing a home governed by an H.O.A. involves determining if there is pending litigation. Sometimes the association is suing the developer or a homeowner or the homeowners association is being sued. If there is litigation pending, you may not be able to get a loan, so make sure you get all the information you need about this.

Buying a home regulated by a homeowners association has advantages, such as security and the regulation of the area’s appearance and noise levels. The drawbacks, on the other hand, are numerous and include the additional monthly outlay for association fees and the sometimes-meddlesome members of the homeowners association. Do your homework when considering purchasing into a common interest development governed by a homeowners association. Investigate it thoroughly to make sure you don’t end up in a horror story on the nightly news.

3 Reasons Why You Can’t Trust Companies Or Governments to Keep Toxic Plastics Out of Your Home.

any of the plastics we use in our homes include dangerous chemicals, like BPA, phthalates and styrene.

These chemicals are known to be harmful to our health, and are particularly dangerous to our children, even at very low doses.

The danger posed by these chemicals has been known about for a long time, but it was only in January, 2010, that the FDA backtracked on its original position and finally acknowledged that in the case of BPA, there is some “cause for concern”.

Well, the rest of us have known for a long time that these chemicals are a serious threat to the health of our families. So why does it take governments and companies so long to acknowledge what so many scientific trials and studies have already proven, time and time again?

1. Companies do not self-regulate, they have to be pressured or forced.

In the U.S. in particular there is a deeply held belief that the economy works best with a minimum of outside regulation. This, in many ways, is the “American way”. The idea is that market competition will take care of bad things happening. That was the thinking in the financial markets right up to the moment of the financial meltdown on Wall Street in 2008.

According to traditional economic thinking, that meltdown shouldn’t have happened, because the market would protect itself through a process of self-regulation.

But that isn’t what happened. What actually happens is that self-regulation is always trumped by greed. It happened on Wall Street and it happens elsewhere.

In the case of dangerous chemicals in plastics in our homes, the profit motive comes first. There is no real regulation of these chemicals. And when companies do make changes, it is not because they think it is the right thing to do, it is because consumers force them to change.

2. Governments are swayed more by lobbyists than they are by voters.

In common with corporations, the government goes along with the notion that a healthy economy is an economy burdened by as little government regulation and intervention as possible.

If governments forget this, there are plenty of industry lobbyists who will quickly remind them that intervention is anti-American. “Trust us,” they say. “We know what we are doing.”

Well, they certainly do know what they are doing. Using smoke, mirrors and disinformation, the plastics industry has been persuading both the government and us that there is no cause for concern. They are in business to make a profit, and will do what it takes to achieve their ends.

Once again, government will only take steps when the demands of the people become loud enough to drown out the reassuring voices of industry lobbyists.

3. Governments move at a snail’s pace.

Even when governments do acknowledge there is a problem, they move forward at a snail’s pace. In part this is because industry lobbyists will continue to fight against change, and in part because government action is always hobbled by multiple levels of decision makers, all with their own committees, and all with their own reasons for slowing things down.

So how can individuals promote change?

Certainly you can write to your representatives at every level of government.

But the best thing you can do is to punish companies selling toxic plastics by refusing to buy those products. When you vote with your wallet, companies suddenly start paying attention.

Getting Unstuck: How to Move Your Board Toward More Effective Governance

Capacity building is one of the latest buzzwords in the nonprofit sector. Most organizations intuitively understand that in order to do more with less, they must build the organization’s capacity to perform at higher levels in a variety of areas. To do so requires a board with the ability to envision a better future and the foresight to make it happen. So what if your board is barely able to make quorum at meetings, struggles to fill its own membership, or disagrees constantly about the direction of the organization? And what if these behaviors have been going on for a long time in a seemingly intractable pattern that only tends to perpetuate itself? How can an organization possibly break this cycle?

Too many nonprofit organizations find themselves in this situation. A typical evolutionary board governance pattern is for the founding director to populate the board with friends and/or acquaintances that are passionate about the mission. Although a good start, to be certain, this approach is not entirely adequate. Many of these board members may not entirely understand their governance role. In the early stages of organizational life, when many board members are often wearing multiple hats (board member, volunteer staff person, fundraiser, community spokesperson, etc.), this lack of understanding may not surface as a problem.

As time passes, however, a particular pattern of board governance behavior begins to emerge and becomes established. In fact, sometimes the board seems to take on a life of its own that is often at odds with the needs of the organization. Major environmental changes, like the recent recession, create shifts in funding or reinvent how work is accomplished, and yet the board seems to carry on as though nothing has changed. Rather than unintentional oversight, it is more likely that it is lack of foresight that often pushes boards to the point of crisis, when reacting is the only option left. It is at this point that an organization feels stuck – like it is constantly playing catch up.

Symptoms of a Stuck Board

Changing patterns of behavior is one of the most challenging efforts individuals undertake. Changing the pattern of behavior of a group of individuals can feel insurmountable. An organization may have a long history filled with many stories and legends that new members buy-in to, including the board. That acceptance of current practice, while efficient, may ultimately lead to an inability to see the big picture, resulting in undesirable long-term consequences. The first step is to recognize those patterns of behavior. Here are some symptoms that indicate a stuck board:

Internal Board Relations, Structure, and Practices

How a board functions internally is critical to the success of any nonprofit. The board sets the tone for leadership within the organization. Boards that are stuck often experience many of the following symptoms:

The board lacks the understanding of its roles and responsibilities.
There is little or no board orientation or training and no board manual.
The board is experiencing frequent turnover, multiple vacancies, and/or difficulty populating board committees.
There are too many committees and board members are often cajoled into serving on committees or as officers.
There is a lack of board engagement, sometimes to the point of no quorum.
Board meetings are too long, don’t start or end on time, and board members frequently show up late or leave early.
There is little disagreement in board meetings or meetings are extremely vitriolic.
There is no meeting agenda or the meeting strays off topic frequently.
The board spends more time talking about the past than looking ahead to the future.
The CEO often performs the roles of the board, such as creating the board meeting agenda, leading strategic planning, recruiting new board members, conducting fundraising activities, etc.

Long-Range Planning

One of the main roles of a board is to be proactive about setting the long-term direction for the organization. That said, a board cannot do this work in a vacuum nor can it do it without a clear understanding of the mission of the organization. Below are symptoms of an organization struck in a reactive mode:

The board is unclear about the organization’s mission and lacks a vision for how to accomplish it.
There is no strategic plan in place or it is not consulted.
There are no annual goals designed to make progress toward the vision.
Strategic planning is conducted without input from staff, stakeholders, clients, or the community.
There is no review or oversight of long-range plans.
There is little or no discussion about achievement of organizational goals.
There is little or no discussion about how well the board functions.

Fiscal Oversight

The board holds the ultimate responsibility for the financial health of an organization. Too often, though, board members lack the understanding of nonprofit finances and will assume that someone else on the board or in the organization does. The result can be a train wreck waiting to happen. Here are symptoms to look out for:

There is little or no orientation and training for board members about the organization’s finances.
Board members don’t understand how to read financial statements.
There is little discussion about the budget and whether or not it will accomplish the goals/mission/vision of the organization.
The board rarely discusses whether or not the organization’s finances are on track and what to do if they are not.
The board does not conduct an annual audit (for some very small organizations, this may be OK) or review the audit.
There is no finance committee.

Board/Staff Relations

If a board does not fully understand its governance role, it can inadvertently interfere with the smooth functioning of the organization, which can create friction with the staff. Boards that do not function well as a team are also likely to influence the ability of staff to work well together, much like parents arguing in front of their children. Here are symptoms to look for that could be undermining the effective operation of the organization:

There is a high level of staff turnover, particularly at the leadership level.
There is a lack of trust between the staff and the board, in particular, between the CEO and the board.
The board has a tendency to micromanage.
Policies established by the board are often procedural and not based in values.
The board sidesteps the CEO and interacts directly with the staff without the CEO’s knowledge.
Job descriptions are minimal at best and nonexistent at worst.
The CEO’s evaluation is completed sporadically or not at all.
The CEO has no annual goals or the goals are vague.

Fundraising Practices

Boards often shy away from fundraising or fail to understand the importance of their role in fundraising activities. Many boards do not make their expectations explicit, which often leads to misunderstanding down the road. Boards that are stuck or reluctant to participate in fundraising often exhibit the following symptoms:

Board members were never given clear expectations of their role in fundraising when they were recruited.
There is no fundraising plan in place for the organization that includes the board.
There is no understanding of the organization’s capital needs.
Board members do little to leverage their contacts for the good of the organization.
There is little or no involvement of the board in developing donors or participating in fundraising events.

External Relations

The board plays a major role in creating an organization’s brand and communicating that brand to the larger community. When a board is stuck, it often turns its focus inward, neglecting the external message. Here are symptoms that indicate a board may be overlooking its marketing role:

There is no marketing or public relations plan in place.
The board has little knowledge of the organization’s stakeholders.
The board rarely participates in events with various stakeholder groups.
The board feels little or no connection to the community the organization serves.
The board rarely takes advantage of their own personal and professional networks to promote the organization.
The board is unclear about who the official spokesperson is.

Why Traditional Approaches to Change Management Don’t Work

To become unstuck, a board must decide which patterns of behavior it wants to change. Current statistics, however, indicate that nearly 70% of all change efforts fail. That’s an extraordinary waste of resources – resources that most nonprofits cannot afford to waste. There are many approaches to implementing organizational change, many of which can be very effective under the right conditions. A board that is stuck in the rut of ineffective governance, however, poses unique challenges that do not necessarily lend themselves to traditional approaches to change management.

The main barrier in taking a traditional approach to implementing change is that most models require leadership commitment. If an organization is struggling just to get enough board members to attend a board meeting, trying to help them see the need for change in their behavior, let alone committing to that effort, will be nearly impossible. Their focus is most likely on the present, and they may be entirely unaware of how board behavior is impacting the overall organization. Given their lack of awareness and foresight, they are unlikely to see the value in most traditional approaches to change management.

Lack of resources, both time and money, also make it difficult to consider traditional approaches to change management. If the organization is experiencing financial pressures, it will be particularly difficult for the board to see the value in spending precious dollars for an outside consultant. The board is most likely focusing on the short-term, and a change effort is not likely to make any difference in the short-term. Most models of organizational change also require a committed team of people who meet on a regular basis over a lengthy period of time. Given that many boards meet, at best, on a monthly basis, this is a substantial barrier for many nonprofit organizations.

Many models also focus on problem solving or gap analysis, a process that can often be negative and draining. (The exceptions to this are Appreciative Inquiry and Positive Deviance.) In addition, the process entailed is often based on the theory that individuals and organizations must examine their thinking in order to change their behavior, a process that is decidedly complicated and difficult for many to grasp. Underlying mental models or assumptions that individuals act on, often unconsciously, typically drive patterns of behavior. Recognizing those assumptions is a challenging task for most people, and changing those assumptions can require enormous effort. More often than not people simply fall back into old habits, thus the 70% failure rate.

A More Measured Approach

Moving a board that has had a long history of ineffective governance toward a higher level of functioning will require small steps. An approach to change loosely based on the concepts of Positive Deviance will likely be the most successful. Because a stuck board is unlikely to rally all board members behind a change effort, this approach begins with a subset of the board that recognizes the need for change and embodies the necessary skills to effect change. It must also create a concrete focal point that the entire board can ultimately support. So rather than focus this group on the more amorphous goal of improving board functioning, the group needs to focus on a particular project that the entire board recognizes as necessary but is not capable of accomplishing at the moment. Such projects might include strategic planning, an annual appeal, a potential partnership or merger with another organization, or a capital campaign.

To illustrate how this approach might work more specifically, let’s use an example. A local social service agency has an opportunity to receive funding to conduct strategic planning. In the past, the CEO would usually work with staff to create a strategic plan to present to the board, which they would then rubber stamp. The CEO conducted strategic planning in this manner because it was impossible to engage the board productively in the process: board members either didn’t do their part or they argued over minute details. The CEO realizes, however, that this approach to strategic planning limits the agency’s ability to build capacity and would like to take a more comprehensive approach. Given that there are several board vacancies and reaching a quorum at meetings is often problematic, involving the board in strategic planning feels insurmountable. Here are some steps the CEO can take to tackle this problem:

Form a governance committee: The key problem for this board is the number of board vacancies. While clearly a problem when it comes to conducting the work of the board, the vacancies are also an opportunity to shape the board. The CEO needs to identify current board members who understand best practices in governance and bring them together on a governance committee. Additionally, new board members with little or no board experience should be included on this committee as a way to train them in best practices before they become entrenched in the status quo. The focus of this committee will be to fill board vacancies with members who both understand the role of the board and are willing to commit the time to a strategic planning effort.

Conduct a self-assessment: Although a board self-assessment is typically conducted with the entire board, it will not be possible to accomplish that with this particular board. Therefore, the governance committee should choose an assessment tool that meets their needs and discuss it not only to identify problem areas but also to use as a tool to train the new board members. Since new board members are unlikely to be able to assess the current board, using a tool to lead a discussion rather than completing it on paper or online is critical. This is an opportunity to create the kind of board practice that the entire board needs to model.

Prioritize problem areas: Once the self-assessment discussion is complete, the committee can next move on to prioritizing problem areas. The criteria for prioritizing must be based on the need to fill board vacancies and the requirements for the upcoming strategic planning effort. The committee should ask itself the following two questions: “What do we need in place to recruit effective board members?” and “What skills do we need on the board to conduct a comprehensive strategic planning process?”

Fill board vacancies: The governance committee will next need to develop a process for recruitment, orientation, and training of new board members. Recruiting board members is no different than hiring for a paid position. The committee needs to be sure a board member job description exists that clearly outlines expectations. It should also create a grid that represents the skills, demographics, and geographic representation needed on the board. With these two documents in hand, the committee can then begin to brainstorm names of people who fit the criteria.

Once a prospective board member list is created, it will need to be prioritized. The committee will also need to develop a process for approaching, interviewing, and selecting potential board candidates. Some questions for the committee to consider as it develops this process are:

What information do potential board candidates need ahead of time?
Who should they meet with from the board and the staff?
Do you want to require that they attend a board meeting, at least in part, before deciding to commit to the board?
Will you ask for references from candidates?
Will you ask for a letter of interest from candidates?

Once candidates have been appointed or elected, it is critical for their success and for establishing good governance practices that they attend some form of orientation and training. They will need to meet the staff, hear a more detailed overview of the organization, both in terms of programs and services and in terms of the organization’s financial position. They will also need a more detailed overview of how the board conducts its work. If a board manual does not exist, one should be created before any new board members join the board. Because this is a time when the committee has the most leverage to break old habits and because it is also the time when it is most likely old habits will be perpetuated, the committee should assign a mentor to new board members to help bring them up to speed quickly and offer ongoing informal training.

Tackle other problem areas: As board vacancies fill, the governance committee can begin to look back at its list of prioritized problem areas and determine which ones to tackle next. This should be a slow and steady approach of scaling up, where new board members slowly take on challenges and the current members of the governance committee branch out to partner with these new board members. The intent is to slowly build capacity with the focus on accomplishing a strategic planning initiative.

Introduce an approach to strategic planning: With board vacancies filled and a core group of board members working to develop board capacity, the time is ripe to introduce the idea of strategic planning to the board. Board discussion should focus on expected outcomes of the process, how best to achieve those outcomes, and the time and resources the board is willing to invest in the effort. If this is the first time the board has conducted strategic planning, it may help to start small. Although much progress has been made through the previous work of the governance committee, this board is not out of the woods yet. They must be vigilant about not slipping back into old behaviors but rather with accruing successes so that replication of those old behaviors is less likely.