The club can not be used for business related purposes. It is organized as a 501c7 social club for “pleasure, recreational and non-profitable purposes”. The Bylaws, Club Rules, Rental Rules and Articles of Incorporation clearly prohibit members from using the club for business related purposes. Each year we turn down rentals if they relate to anything other than recreation for this reason. Our club prohibits members from even displaying business papers in the public areas for this reason.Please note, country clubs have the same rule.
As a 501c7, the club can derive limited income from activities unrelated to the tax exempt purpose. However, the income has to be reported and taxed as unrelated taxable income. There are different percentage limitations which would require detailed accounting and reporting requirements and raises the risk of audit and the loss of our tax exempt status if we don’t adhere strictly to the requirements.
For all of these reasons, our response to members in this regard is that our rules and our tax exempt status prohibit members from using the Club for business related reasons. We 100% want to support all of our member’s businesses, but are obligated to find other methods outside of the club in which to show support.