Goodwill Industries of Toronto was an 80-year-old charity and Toronto-area institution. Since 1936, they collected used and discarded household goods and clothing. The unemployed were trained and hired to mend items for redistribution or resale. The organization operated out of 16 Toronto-area stores and 10 donation centres.
For all intents and purposes, Goodwill was a successful operation until they declared bankruptcy in January 2016. The bankruptcy of this non-profit organization offers useful lessons to condo corporations.
Condo corporations, like Goodwill, are non-profit organizations. Goodwill failed because it cost them more to operate than the funds they were able to obtain from sales, donations and government funding. Unlike Goodwill, condo corporations are assured of funding in the form of condo fees.
The non-profit status given to condo corporations for tax purposes recognizes that revenues are for maintaining a home. This status should not deter them from operating as a business. Successful businesses strive to remain competitive. They adapt to their environment to offer what is desired by those they serve. While a condo corporation is not at risk of bankruptcy, their ability to set condo fees ensures that condo owners will pay for mistakes or failure to operate efficiently.
Condo corporations require strong financial management. Managing financial assets is a crucial part of the success of any business. It requires ongoing attention and directors should maintain a strong financial discipline. When the financial aspect of operations is neglected the condo corporation’s ability to fulfill its role is compromised. An effective condo board requires strong financial, business and project management skills.
A condo corporation does not fail because of a shortage of funds. Unlike businesses and other non-profit organizations, a condo corporation is protected against running out of money. A faltering condo corporation can always obtain necessary funds by increasing condo fees to ensure its ongoing viability.