Drafting a Membership Agreement for a Tax-Exempt Private Club
A tax-exempt private club or a ‘social club’ is formed under section 501(c)(7) of the Internal Revenue Code. 501(c)(7) organizations typically include college fraternities and sororities, country clubs, hobby clubs, and sporting clubs where the membership is limited, and the members congregate to advance a specific purpose.
What Are the Requirements to Qualify for Tax-Exempt Private Club?
To qualify as a tax-exempt social club, the organization must have limited membership and be funded by membership dues. The organization must be not-for-profit and any dues collected must advance the group’s general purpose. The club’s facilities may be rented out for public use, but public use may not exceed 15% of the overall use. Additionally, the club must hold legitimate opportunities for the members to interact and advance the group’s purpose. Additional qualification requirements can be found in section 501(c)(7) of the Internal Revenue Code.
What is a Membership Agreement for a Social Club?
A Membership Agreement is a contract entered into between the club and one of its members. It sets out the requirements for membership and the fees or membership dues to be paid. A Membership Agreement should include a termination clause that allows either party to terminate the agreement at any time. The Agreement should also protect the club’s intellectual property from being used by the member during and after membership. Lastly, the Agreement should contain an Assumption of Risk clause to protect the club from liability.
Ready to Draft a Membership Agreement for your Social Club? Start by filling out this free Membership Agreement template.