Mutual Benefit Corp

Q: What is the difference between dues and membership fees?

Dues are typically recurring payments made by members to maintain their membership status, while membership fees can be a one-time payment or a set amount charged for joining. Both are used to support the organization's activities, but dues often imply ongoing financial support, whereas membership fees may cover initial costs.

Q: Can a social club be for-profit?

Yes, a social club can operate as a for-profit entity. This means it can charge membership fees and generate revenue from events. However, the profits must be distributed to owners or shareholders, unlike non-profit organizations, where profits are reinvested for the benefit of the members or community.

Q: What is the difference between a public benefit and a mutual benefit nonprofit?

A public benefit nonprofit aims to serve the public good and often qualifies for tax-exempt status, while a mutual benefit nonprofit serves the interests of its members. The latter typically focuses on providing benefits like social activities or services to its members rather than the general public.

Q: Can nonprofits charge membership fees?

Yes, nonprofits can charge membership fees. These fees help fund the organization's activities and services. Nonprofits must ensure that the fees are reasonable and that the funds are used to further their mission, benefiting the members or the community.

Q: What is the 33% rule for nonprofits?

The 33% rule refers to the guideline that a non-profit organization should not spend more than 33% of its total revenue on administrative expenses. This rule helps ensure that a significant portion of funds is directed toward the organization's mission and programs rather than overhead costs.

Full question:

I am starting a social club for men with the intent on charging membership dues and holding events where we would profit from ticket sales. The profit would be used for the benefit of its members. Should I set this up as a Mutual Benefit corporation? If not how should I proceed?

Category: LLC
Date: 04/07/2025
State: Rhode Island

Answer:

We cannot give legal advice. The following is not a substitute for the advice of a local attorney. But we hope the information will be useful.

I would suggest an LLC. They are simple and adaptable compared to corporations, and can be set up to accomplish your goals. In your Operating Agreement, set out the rules you want to govern your company. Go to USLegalForms.com and search for Limited Liability Company Package (select state: RI). Have a look and if you like, use it as a template. It contains the official form you will need to file with the Sec. of State/Office of Corporations: the Articles of Organization. Plus other forms, such as a sample Operating Agreement you can modify to suit your needs.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Can a non-profit charge for membership?

Yes, a non-profit organization can charge for membership. Membership fees help support the organization's activities and cover operational costs. However, these fees should align with the organization's mission and not be excessive. It's important to ensure that the fees do not conflict with the non-profit status and that the funds are used for the benefit of the members or the community.