How to Build a Trustworthy Organization

guest blog by Robert E. Frank, Colonel, USAF (Ret.)
           (Founder, HomeOwnersCoalition.Org & Veterans Advocate)

My business experience has taught me over the past 50 years that if a process is designed to be as trustworthy as reasonably possible, EVERYONE benefits from being able to accept it as such.

But, if systems, such as board elections or controls of something like association credit/debit cards and checks, are allowed to be designed and implemented with very obvious loop holes in the audit trail, then no one can trust the system.

It is common for an organizational manager and/or board members to raise their voices and get belligerent when someone points out that an election or financial system component can be easily corrupted. They typically change the subject to “how dare you accuse my group of election fraud!”

Of course, that is not the point. The point is why would an honest, ethical person or organization (either board of directors, election committee, CAM or community management company) want to ALLOW an election process to exist where allegations of misconduct could be fairly suspected and/or made part of a criminal complaint?

Money is NOT the issue on implementing “trustworthy” board elections and trusted financial management processes. Nothing is more important for a board or CAM than to ensure that the member’s money and property is cared for according to statutes and common sense.

Much flexibility is allowed to developers, boards and CAMs when it comes to business system components of the association. Failing to ensure the key components are designed and managed to be reasonably trustworthy is, in my opinion, a sign of gross negligence and possible corruption.

The necessary tools and techniques are relatively easy and inexpensive to use to assure trustworthy systems for HOAs and Condos. In my opinion, blustering objections to implementing trustworthy systems within HOAs and Condos should be summarily rejected by all professionals. Such mismanagement puts a blight on all our business reputations.

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About

Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

4 thoughts on “How to Build a Trustworthy Organization

  1. Nila Ridings

    All relationships are based on trust. We learn to either trust or not from birth.

    More and more we are learning fewer and fewer of the people in our lives can be trusted. Parents question the teachers, coaches, and administrators at the schools. Most everyone distrusts the politicians that vote for things that apply to everyone but themselves. Far too many people have worked for many years for a company only to have it consumed in a merger and they face a job loss. Or the books have been cooked and the retirement funds are long gone. We trust the government agencies to regulate the chemicals allowed on our food. We buckle in on a jet and assume the pilots are skilled to handle any challenges expected or unexpected that may arise. We drive down the highway at 70 miles per hour and blindly believe the driver in the next lane is sober and not texting,talking, or otherwise distracted while driving. Yet, in these circumstances and many more it has been proven we cannot move forward with 100% trust.

    Therefore, why do we continue to have a blind faith and trust that when we purchase a home the HOA is not going to try to destroy us or bankrupt us? It is that level of trust that many of us have learned we can no longer have. Gone are the days of trusting the other person to treat us with respect, kindness and caring. HOA are not designated as a battle ground but they should be because at any time on any given day a war can break out between neighbors. Especially when a few have control of all and the victims have no say, and no way to defend themselves unless they are willing to face bankruptcy to do it.

    My HOA is a perfect example. We had a president that held the position for 26 years. When it was discovered the annual audits had not been done for 7 years and $10M was unaccounted for the distrust bells starting ringing. His successor immediately declares she’s part of a new board and homeowners should trust them. What happened? She started self-dealing profitable projects through her “companies” and signed a contract for a property manager for $400K per year. He was exposed by his own employee for replacing siding over rotten frames on the houses and the board gave him a raise and a renewed contract for three years. The next president steps in and signs a loan agreement for $1M and gives the property manager $100K of it right off the top. Following that, multiple things have been done to waste money while the loan is accruing interest every single day. Do I trust the HOA board to make prudent decisions? Absolutely, not! Do I trust their CAI property manager and attorney? No way!

    When I was a little girl my dad told me trust is something you earn. And, if you do something that causes someone to distrust you, it is hard to earn it back.

    In the case of my HOA, they have never earned my trust.

    Reply
  2. Deborah Goonan

    The issue of fair and equitable voting is a hot button issue in our nation’s government and corporate sectors. The controversy is not limited to HOAs.

    The overall trend in America is that both constituents and consumers are increasingly demanding that their votes be counted. HOAs are relatively small organizations, and could potentially serve as models of fair play and self-governance, IF corporate leaders and trade lobbies were willing to loosen the reigns of control over homeowners and residents.

    That’s a big IF.

    The goal of many leaders in the HOA industry is to LIMIT corporate control to a few individuals. Therefore, they see no point in making voting and election systems fair or trustworthy. After all, HOA is governance of, by, and for the (corporate) Association, and not of, by, and for the people.

    Reply
    1. Shelly

      Boy Deborah do I agree with you. It is HUGE. In our POA, I was a vote counter in our last annual meeting. there were two BYU students and the presidents wife and myself. I apparently was the only one who knew how to count ballots–and was shocked to find no tally sheets or any preparations had been put in place. In the end, a man won that the board didn’t actually want on the board–they tried to convince him that because he didn’t did have 51 percent of total vote that he had to run again. So his attorney wrote a letter and told them to seat him as he legitimately won a seat on the board. So how did they get rid of him? THREE months later, they opened the ballots again in private and recounted. 10 votes went missing!!!! Then they counted the opened ballots in a board meeting to “prove” that they guy they didn’t like had not won after all… NONE of what they did was legal. Unbelievable. and to add insult to injury, these despicable trustees then insinuated that the president’s wife, the two students and myself had somehow thrown the election!

      Reply
  3. Holly HOA

    The moral of these stories: Do NOT purchase a home in an HOA or POA if you care about who takes care of your assessment fees. Elections are rigged, board meetings are held by email and in secret, fines and violations are inconsistent, and you have almost no vote as to the management of the community. The developers designed the HOA,POA, condo associations specifically to keep control, and volunteers (many with no business backgrounds and some with criminal records) take over and continue the trend. Don’t be fooled by state laws that “protect” the condo and HOA homeowners. All of the laws can be broken, and the homeowners will ultimately pay, in both dollars and emotional stress, to defend themselves against broken laws. I have found that trustworthy and honest board members never last long as officers on corrupt boards. There are a few exceptions, but very few.

    Reply

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