Which funding approach falls between baseline funding and full funding and may require special assessments or bank loans?

• A. Fully funding.
• B. Baseline funding.
• C. Threshold funding.
• D. Deferred funding.

Answer: (C)

Threshold funding describes a target reserve level that sits between baseline funding and full funding. It acknowledges future capital needs but doesn’t fund everything at once. If reserves approach or fall below this threshold, the association may need to raise funds through special assessments or borrow money to cover larger projects. This approach balances current affordability with the possibility of financing when big expenses arise, making it the best fit for a mid-range funding strategy. Fully funding would overshoot the mid-level goal, baseline funding is the minimum, and deferred funding means postponing contributions rather than setting a mid-point target that triggers financing options.