Can a non-profit gun club let a member run a for-profit business on club grounds?

[gunsrfun1]

Thanks. My concerns about a non-profit having a for-profit organization using the premises are somewhat allayed, based on the various answers I have received. Although as some have pointed out, I still think we should have a lawyer review all the terms and conditions of the arrangement with this member.
So now my big concerns are both insurance coverage and legal protection in case of an incident at the range during this guy's classes.
My hunch, based on what I know so far, is that this was a sweetheart deal worked out among the club officials (one of whom is the person running the for-profit business). I don't believe the membership was consulted on this. (Which greatly annoys me.) I am concerned that some corners may have been cut in agreeing to this arrangement, not necessarily on purpose, but because no one thought to do a deep dive on what such an arrangement really entails as far as legal and insurance ramifications.
It's understandable to a degree, since everyone is a volunteer, and we don't have Perry Mason as a member or club official. So I will ask these questions at the April meeting when this matter is on the agenda for more discussion.
I come from the corporate world, so I tend to be pretty analytical about these things, based on my dealings with company lawyers.

[GunLawyer001]

Girl Scouts sell cookies for more than they pay for them. All not-for-profit entities have to get money from somewhere, but it's usually checks from donors or selling X-mas trees, not through gunfire-related activities.

I'd check the club charter. The local zoning rules, and any limitations imposed back when permission was granted to do a gun club. The insurance policy covering the club.

Waivers only work against the people signing them, not people driving by who get shot by errant rounds. And never against minors.

Indemnification agreements work up to the assets of the person who signed them, and won't keep you off the list of defendants.

I'd hope the payments received for the rental would at least cover what a secondary insurance policy would cost, because that represents the risk to the club of that activity. You don't rent out your Rolls Royce for $10 per trip, if the risk to you is $100 per trip.

[esh21167]

Churches rent their spaces out all the time.

Making a good living from running a non-profit isn't illegal (though many might say immoral.) The salaries paid are not profits, but expenses, for the organization. The big kahuna running the show takes a salary, not profits or disbursements from owner's equity.

[gunsrfun1]

Thanks all. Here is another concern of mine: Could all the individual members of the club be subject to any type of lawsuit against the club. In other words, in case of some type of injury or whatever, could the plaintiff's lawyer go after not only "the club," but all the individual members of the club?

[free]

Thanks all. Here is another concern of mine: Could all the individual members of the club be subject to any type of lawsuit against the club. In other words, in case of some type of injury or whatever, could the plaintiff's lawyer go after not only "the club," but all the individual members of the club?

Anyone can sue anyone for anything. Every member of the club COULD be named as a defendant. However, it's unlikely that anyone other than officers of the club would likely be personally liable for the club's activities.

On a related note, it's a good idea to have an insurance policy specifically for purpose. You'd be looking for a "non-profit directors & officers liability" policy (sometimes called a D&O policy). There is absolutely no way any sane person would serve as an officer of a gun club without such a policy in place.

[gunsrfun1]

Thanks. I have managed to clarify one issue, although it was not the major issue: I found out that the club is recognized by the state as a non-profit (non-stock) business entity, but it's not a 501c (3) Tax Exempt entity under IRS statues.
Again, that was not my biggest concern (I am more concerned with the legal and insurance issues), but at least it's one less issue at hand.
I also checked the bylaws. There is no mention of allowing or disallowing members to run "side businesses" at the club.

[soberbyker]

You would have to look into the clubs by-laws to see if there is any mention of this type situation. It might also make a difference if the person running the program is also a board member.

I belong to club that had a similar situation years ago, there were no bi-laws against it, they made one soon after, but it came down to liability and insurance and was not allowed.

[EZ3]

Thanks. I have managed to clarify one issue, although it was not the major issue: I found out that the club is recognized by the state as a non-profit (non-stock) business entity, but it's not a 501c (3) Tax Exempt entity under IRS statues.
Again, that was not my biggest concern (I am more concerned with the legal and insurance issues), but at least it's one less issue at hand.
I also checked the bylaws. There is no mention of allowing or disallowing members to run "side businesses" at the club.

So, if it's not a 501(c)3 corporation, and a previous post covered 501(c)4 corporations doing for-profit activities, then you might have a 501(c)7 non-profit corp. Because that is a members-only structure there is a limit on how much of your annual income can come from non-member sources. IIRC that's 15%.

[JenniferG]

If you are a board member/officer of any non profit organization it behooves you to make sure either you provide your own liability insurance or the organization provides the liability insurance for board members/officers. Make sure you are covered because you have made yourself a prime target for ruthless moneygrubbers. It's why I will no longer serve on such boards or become an officer of a non profit. Been there, done that.

[gunsrfun1]

Closing this out for now. I s/w the person running the business on premises. I know him anyway, and he does a lot for the club. I also s/w the club president, also a good guy. We revised and cleaned up the "lease" (contract) a bit to cover everything. The club president told me that one of the club officers is a lawyer, and that he has reviewed the lease, and his wife, who is in the insurance business, has checked to ensure that everyone is covered properly. That's about as far as I felt I could push on these two issues of mine.
Bottom line is that we are going to send out the revised lease to all the members, and let them vote (if they want to) on approving it or rejecting it.
For the most part, I think we are ok. I went as far as I could with it and stated my concerns, and it will be up to the membership to decide whether they want him to continue to run his business there or not. I will probably vote to approve.
The tentative plan is that this will be discussed a bit more in April at the next members meeting, and then voted on (either in person or absentee for those who don't attend the meeting) at the August members meeting.
The good news is that I am not an officer of the club, just a member. So my risk is limited anyway.
Thanks again to everyone for their input.