United States

Proper use of social media within an exempt status club


It seems like you can’t go anywhere today without seeing something that says, “Like our page on Facebook” or “Share your thoughts with us on twitter using #mythoughts.” Today’s world is driven by social media. For any of you who are unsure of what social media is, Merriam-Webster defines it as “forms of electronic communication…through which users create online communities to share information, ideas, personal messages, and other content ([such] as videos).” Some of the more common forms of social media are Facebook, Twitter and Instagram. While each form of social media uses a different way to deliver messages, they are all capable of reaching large audiences in a matter of seconds.

Most large for-profit companies utilize some form of social media to advertise or stay in touch with their customer base. It is an extremely effective tool in communicating discounts, sales and new products of which the consumer might not otherwise be aware. Compared to more traditional forms of communications, such as newspapers, magazines and television, social media is in its infancy. While still considered young, social media’s ability to reach consumers cannot be denied. Facebook alone has an estimated 1.2 billion users. Understanding the different ways to utilize social media to advertise, within the IRS guidelines, can help you attract new members to your club.

An exempt private club cannot do any form of advertising that makes the club appear as if it is open to the public. This includes advertising in magazines, newspapers, television and on all forms of social media. However, in today’s social media and electronic world, if a club is not advertising at all, it could be missing out on new membership that could be vital to its long-term sustainability. If the club advertises correctly, it can utilize any of these avenues to help attract new membership without concern for losing its exempt status.

The IRS does not have any published rulings that disallow an exempt private club from advertising for new membership. This means if a club were to advertise on Facebook that they are now accepting applications for new membership, this form of advertisement would not jeopardize the club’s exempt status. Similarly, if the club were to advertise that it has two restaurants and one of the best 18-hole golf courses in the area, this would be permissible as long as the club includes a disclaimer that it is not open to the public. For example, this disclaimer could say “all memberships are subject to approval.”

Proper use of social media can also benefit existing members by making them aware of new amenities at the club, discounts at the pro shop or upcoming events. Most of the time, on social media, there is no restriction on receiving information that is posted on a page. Therefore, it is important that the club explicitly state when it is posting events or information that these items are for the members only.  Failure to do so could result in the IRS taking the position that the club is advertising to the public.

With the growth of social media over the last 10 years, understanding the ways it can benefit your club could help attract new membership and retain existing membership. When using it to advertise, it is extremely important that the club not make it look like it is open to the public as this could jeopardize the club’s exempt status. Adding a disclosure that all memberships are subject to approval or that the amenities are for the members use only will help justify the club’s position that it is not advertising to the general public. This will allow the club to enjoy the benefits of making the club’s information available to new members and making existing members aware of upcoming events, while minimizing the risk that the IRS will take the position that the club is advertising to the public.