Are we Taking Unnecessary Risks with our Private Club Status?
Economic pressures on our lodges are causing some to stray dangerously from our longstanding governing principles and already those actions are increasing state and federal scrutiny on our lodge business practices. These aberrations are concerning and might one day lead to disciplinary action by the Grand Lodge or even worse, the loss of the lodge’s charter.
Many years have passed since the Elks founding in 1885 and our governance has been upheld ever since. To many, the rules by which we operate our lodges seem outdated, and that has made it easy for the uninformed to steer the lodge down a dangerous path. Observed and followed, the Grand Lodge model has withstood the test of time and will continue to because of its strong foundation and the order’s willingness to adapt to social change.
As federal and state economies come under pressure, so, too, are the operations of entities exempt from their taxation. Already many of our lodges are being audited by the IRS looking mostly at taxable, unrelated (to our charitable cause) business income. The Florida Division of Alcohol Beverages and Tobacco (ABT) is also stepping up its visits to our lodges reviewing our gaming and making sure we are serving only members as our licenses require.
The basic principles we hold most dear as Elks are our freedom of association and our right to choose our members. We are afforded this because we operate our lodges as bona fide private clubs exempt from public accommodation statutes. When we stray from this all-important tenet, we are asking for trouble. The order must pay strict attention to this and the compliance of its lodges. Thus, each lodge is subjected to an annual inspection by the District Deputy and a review of the lodge’s finances. Stray too much and the Grand Lodge will have no choice but to suspend or revoke the lodge’s charter. Observe basic rules and fear nothing!
Today’s private club must meet a legal standard albeit one with unestablished parameters. It is no longer just an inference assumed by our conduct or its characteristics. A private club is an organization: 1. Formed because of a common associational interest among the members; 2. Which carefully screens applicants for membership and selects new members with reference to the common intimacy of association; 3. Which limits the facilities or services of the organization strictly to members and bona fide guests; 4. Which is controlled by the membership in general meetings; 5. Which limits its membership to a number small enough to allow full membership participation and to ensure that all members share the common associational bond; 6. Which is nonprofit and operated solely for the benefit of the members; and 7. Whose publicity, if any, is directed only to members for their information.
For the most part, the Elks meet this standard hands-down. Our vulnerability comes with number three. If the practice of renting our private facilities to the public becomes commonplace, we risk losing our status as a private club. We must not allow the actions of the uninformed to move the lodge toward open access. The members are the owners of the lodge, not our customers.
Many question the reason for the portion of our obligation where we agree to not use our membership in the order for business or commercial purposes. This is an important component of private club status. There is no denying that business is conducted and that professional contacts are initiated and renewed at private clubs. We become public when these benefits are given to business entities and to persons other than our own members. When we allow this to go on in our lodges, we lose our ability to deny access to the public. Even when it is a member’s business or organization, that member is now receiving an unfair advantage and creating a conflict of interest. Bona fide hall rentals are the only way to do this correctly and should be the practice of every lodge. Simply adopting an event as a lodge activity still creates the perception of unfair advantage for the members and the business or charity receiving the access. This is not the practice of a private club. Think of the operation of the private club as extensions of members’ homes, not extensions of their businesses.
A second area where we must be vigilant is maintaining selectivity when choosing our members. If we will but follow the formal membership procedures provided us by the order, we meet all standards of compliance. It’s when we stray that we become vulnerable.
Prospective members must be U.S. citizens, believe in God and live within the jurisdictional limits of the local lodge where eligible for membership. Applicants must answer various questions about their backgrounds and be sponsored by a member in good standing. The lodge secretary submits the application to the membership and the Exalted Ruler refers it to a standing investigating committee composed of members of the lodge. As part of the investigative process, the applicant is required to appear before the committee. The report of the committee is presented to the membership at a regular meeting, and the entire membership is notified that the applicant will be considered at the next meeting. Three negative votes bar the applicant.
Our desperation of late to stem our membership losses has us taking risks we probably shouldn’t be taking.
- Membership drives and signs should seek to only elicit interest in the club, not to promise membership.
- As our member rosters decline, we must be careful to not just initiate to make up for losses.
- Emphasis on awards for recruiting new members should be limited. An unselective, energetic sale of memberships will undoubtedly place us into a public business classification.
- Every prospective member must be known by and sponsored by an existing member. The bartender simply handing an application to the secretary with some member signatures on it is not good practice.
- Dues and fees are a necessity of a private club and as such should be carefully discounted if at all.
Times are challenging for fraternal membership organizations, but none is poised to endure the winds of change better than the Order of Elks!
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Carl Seibert, COO/State Secretary
Florida State Elks Association