They don’t call it “the bottom line” for nothing. When all is said and done, pretty much everything in business (okay, pretty much everything, period) comes down to money. In most business situations, a chief executive officer or a company president has the final word on money matters; the association or residential co-op business model dictates that fiscal responsibilities are shared between a building’s board and its managing agent. This complex relationship demands that managers embrace understanding, communication, and serious patience when it comes to a building’s money matters.
A Learning Curve
The major difference between how Fortune 500 companies and residential co-ops and condos govern their finances lies in the fact that the major decision makers in a co-op or condo are often less-than-qualified to do the job. Of course, anyone with an investment in a building has a right to speak on any matter affecting that investment, but that doesn’t mean they actually know what they’re talking about. A board might be made up of a veterinarian, a homemaker, a musician, and a serial vacationer—sounds like a fun group, but one fit to make major financial decisions? Not so much.
“The concept of volunteer representation creates a need for a learning curve in many instances,” says Stephen Beer, a partner at Czarnowski & Beer, a Manhattan-based accounting firm that represents over 125 buildings. Beer suggests, of course, the best-case scenario is a board that has at least one member with some pertinent experience. “Financial backgrounds or business backgrounds help a lot,” he says, “but if board members are not aware of certain protocols, they’re gonna learn fast.”
Beer also points out that since boards change often, what one person learned during her tenure must be learned again by the new guy. “Since there’s frequent changeover of a board, we auditors have to make sure the processes in place continue; we need to be watchdogs to make sure the manager is doing his stuff properly, too.”
No News Is Bad News
That “stuff” is the work that the manager does to fill the gaps in the board members’ financial knowledge—and it’s no easy job.