The Meter is Running
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Keeping management in the dark can only cause problems for boards.
AUTHORRon J. Finger, Finger Management
PAGE #pp. 32-33
A good management company will help your board be transparent with shareholders and keep projects moving smoothly.
For three years, we have managed a 20-unit co-op in Harlem. They were doing a tremendous amount of capital improvement work, totaling about a million dollars. The board basically took over the project and ran it without the input from the manager. The shareholders were kept in the dark and many of them demanded more information, even threatening to call a special meeting to overthrow the board. To deal with this, the board reached out not to management but to the corporate attorney, which only ran up legal fees.
When we eventually stepped in, we rewrote a letter from the board to the residents, and explained to the directors what information they had to provide to keep the shareholders happy. After that, they had a meeting with everyone, and they presented all the documentation back-up to the shareholders. It put everyone’s mind at ease. Everybody then relaxed, because they were able to get the information they wanted: the reserves, the payment plan, and the overall state of our finances.
When you’re doing a major project like this, you want to explain to your shareholders why you’re going to go spend all this money, how much you have, and how this project’s going to be funded. Use your manager. We’re in the business of management. It’s what we do.