Academy/Committees & Volunteers
Finance committees
What your finance committee can decide on its own, and what it can only recommend.
A finance committee reviews budgets, reserve contributions, and financial reports, then makes recommendations to the board. It has no authority to spend association money or adopt a budget on its own unless the board's bylaws or a board-adopted charter specifically grants that power. Absent that grant, the committee researches and recommends; the board decides.
What a finance committee is allowed to do
Most finance committees are advisory. They review the association's financial statements, help draft the annual budget, watch reserve contributions against the plan, and flag problems for the board. They do not vote association money into or out of existence. A management-industry source puts the split bluntly:
"Committees research and recommend. The board reviews and decides."
Source: How to Build Effective HOA Committees That Strengthen Your Community, Kuester Management Group
That is the default for almost every committee, not just finance. Unless something in your governing documents says otherwise, treat this as the baseline.
Where its authority actually comes from
No state law hands a finance committee spending power. The committee exists because the board created it, and it keeps existing only as long as the board wants it to.
"The board of directors of a community association may, subject to the association's governing documents, vote to form one or more committees that serve at the pleasure of the board."
Source: Creating Committees, HOA Law Blog, SwedelsonGottlieb
If your finance committee wants standing authority to approve routine expenses on its own, that authority has to be written down somewhere: the bylaws, a board resolution, or the committee's own charter. Whether any dollar threshold exists, and what it is, is set by your association's own documents, not by law. Check your bylaws and any board resolution creating the committee before assuming a number.
The charter is where the real limits live
Where a board wants to be specific, it writes a charter. A charter is the document that actually tells a finance committee what it may touch and what it must send upward.
"A strong charter typically includes: The committee's mission and goals, Scope of authority, Membership requirements, Reporting expectations, Meeting guidelines."
Source: How to Build Effective HOA Committees That Strengthen Your Community, Kuester Management Group
No charter means no documented scope, which in practice means the advisory default applies: the committee proposes, the board disposes.
A recommendation is not a decision until the board votes
Even a unanimous finance committee vote is not association policy. Under ordinary parliamentary practice, a committee's report has to be formally taken up by the body that created it before it means anything.
"When a committee has been received, that is, has been presented to the assembly... the next business in order is the disposal of the report, the proper disposition depending upon its nature."
Source: Robert's Rules of Order Revised, Article IX, Committees and Boards
That applies whether or not your association has adopted a parliamentary authority: some vote of the board, recorded in the board's minutes, is what actually adopts a budget line, not the committee's own agreement.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your finance committee agrees unanimously to shift $8,000 from landscaping to snow removal in next year's draft budget. What happens next?
A homeowner asks the finance committee chair to confirm the board formally adopted this year's reserve contribution increase. Where should the chair look for that answer?
The finance committee wants standing authority to approve any expense under $2,000 without asking the board each time. Where must that authority come from?
Sources
- How to Build Effective HOA Committees That Strengthen Your Community, Kuester Management Group
- Creating Committees, HOA Law Blog, SwedelsonGottlieb
- Committees (Generally), FindHOALaw, Tinnelly Law Group, PC
- Robert's Rules of Order Revised, Article IX, Committees and Boards
Related elsewhere in the Academy
Committees & Volunteers
Next, read Committee charters to see exactly what to spell out before your finance committee touches a budget line.
Whether a finance committee may approve any spending on its own, and what dollar amount triggers board approval, is set by your association's bylaws and board resolutions, not by state law generally. Some states also require open meetings and formal minutes if a committee holds real decision-making power over money.