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

[gunsrfun1]

My question says it all, but I will explain a bit more. It's my understanding that my gun club is registered as a non-profit or not-for-profit organization. (Not sure which.) We have been allowing a member to run a for-profit business using our clubhouse and range. His customers are not necessarily club members; more often, they are not. There is a contract or lease with the club for this arrangement, but not much more, to my knowledge. That is, we (the club) have not created a separate legal entity that is designated as a for-profit subsidiary of the club.
Does this jeopardize or violate the non-profit status of the club?
I realize this is not a Supreme Court case and no one's going to go to prison over this, but I am still curious if the club is at any risk, or if there are any legal implications.
PLEASE -- NO GUESSING. I realize that this is a legal issue and that this is not a law forum, but maybe someone reading this post has the legal expertise to provide an answer.
Thanks

[Walleye Hunter]

Do you mean like a trainer renting the range for self defense lessons? If so, that happens at my club and I'm pretty sure that they are non-profit or not-for-profit.

[free]

My question says it all, but I will explain a bit more. It's my understanding that my gun club is registered as a non-profit or not-for-profit organization. (Not sure which.) We have been allowing a member to run a for-profit business using our clubhouse and range. His customers are not necessarily club members; more often, they are not. There is a contract or lease with the club for this arrangement, but not much more, to my knowledge. That is, we (the club) have not created a separate legal entity that is designated as a for-profit subsidiary of the club.
Does this jeopardize or violate the non-profit status of the club?
I realize this is not a Supreme Court case and no one's going to go to prison over this, but I am still curious if the club is at any risk, or if there are any legal implications.
PLEASE -- NO GUESSING. I realize that this is a legal issue and that this is not a law forum, but maybe someone reading this post has the legal expertise to provide an answer.
Thanks

Non-profit entities engage in things to make money all the time. Many of them even pay their employees millions of dollars per year.

Being non-profit doesn't mean you can't make money. It means that your purpose for existing isn't engaging in business to make money.

I don't see an issue here, provided the member has a legit agreement with the club and the club is deriving some benefit from the activity. That benefit may be generating income to fulfill its non-profit mission.

Your main concern should be having adequate liability insurance that covers this activity, so that when someone shoots himself in the foot, the club is covered.

[gunsrfun1]

Thanks, good info.
Yes, he runs training classes and such.
Regarding the liability insurance, I do know he has insurance for his business. I also believe the club has liability insurance anyway. But of course, how much is enough, and does our insurance company know that we are allowing members to run businesses on club grounds, and allowing non-members to shoot guns on our range. Some insurance companies love to get you premiums, then find any excuse not to honor your claim.
All his customers have to sign a "hold harmless" waiver protecting the club, although I am not sure we've ever had a lawyer actually review the waiver to be sure it really covers us in all aspects. It may be that he or a club member just drew up a waiver on their own.
I'm trying not to be too picky about it, but in this litigious society of ours, I am a bit concerned that we are fully protected when, as you say, someone shoots himself in the foot during class.

[bogey1]

A friend of mine has a non profit business. She lives really good.

[free]

Thanks, good info.
Yes, he runs training classes and such.
Regarding the liability insurance, I do know he has insurance for his business. I also believe the club has liability insurance anyway. But of course, how much is enough, and does our insurance company know that we are allowing members to run businesses on club grounds, and allowing non-members to shoot guns on our range. Some insurance companies love to get you premiums, then find any excuse not to honor your claim.
All his customers have to sign a "hold harmless" waiver protecting the club, although I am not sure we've ever had a lawyer actually review the waiver to be sure it really covers us in all aspects. It may be that he or a club member just drew up a waiver on their own.
I'm trying not to be too picky about it, but in this litigious society of ours, I am a bit concerned that we are fully protected when, as you say, someone shoots himself in the foot during class.

Waivers often don't mean jack shit.

The guy running the business may have his own liability insurance. That won't help your club when it is named as a co-defendant. Recommend going over your policy with your insurer to ensure it will cover this club member's activity and that coverage amounts are adequate. Your contract with the member should also specify that his business and he personally will indemnify the club for any incidents resulting from his activities AND require he maintain a suitable policy for his business and he personally, that ensures he is able to do so should something happen. Proof of this insurance should be required at least annually.

You should ABSOLUTELY have a lawyer involved in this stuff. Don't be cheap.

[gunsrfun1]

Yeah, free, that is where I am headed with my questions and concerns. Unless I completely missed it, I don't think the membership was even consulted before this whole arrangement was originally set up awhile back. Some members recently raised some concerns about his class possibly using the range when they want to. His lease (contract) is up for renewal, so the club leadership decided to put it on the agenda for the next club meeting to everyone can discuss it. But I think the club leadership is pushing for renewal.
I am also concerned that we as a club are being properly compensated anyway. He pays us $10 a customer (was originally $5) for a course that he charges $300 for. Strikes me as a bit low as far as a "commission" for using the club. Any thoughts?
I don't have any objection in principle to allowing him to run a business on our premises. He's a good guy and does some things on his own time and dime for the club. I'm just not convinced that we are covered on all counts and being compensated fairly. I'm not big on doing business "seat of the pants" when guns are involved.
Good discussion, thanks to all and I welcome any further comments or suggestions..

[free]

What's the annual projected income to the club?

Is it meaningful to the club's bottom line? Or is it relative pennies, meaning the whole thing benefits his business more than the club? Sounds like he is getting a sweet deal to me.

In any event, whatever income the club derives from this activity should be enough to cover all of the legal work that the club SHOULD be engaged in, as well as any increase in insurance premiums, but also enough "profit" to make it worth the club's involvement. That said, it is important to also consider the extent to which this activity promotes and further's the clubs goals and reason for existence. It's totally justifiable to only cover costs and not make a "profit", provided that members don't suffer negative consequences....but true costs need to be covered.

Recommend future contracts specify specific hours for this activity, as well as total limits on range use, etc....as well as everything I previously suggested.

Overall, based on the VERY LIMITED INFO you provided, it sounds like this club needs to be run in a more business-like fashion. Just because it's a non-profit org doesn't mean it shouldn't be run like a business.

Just as a side idea...consider having two rates. One for non-members and one for people he converts to members.

[gunsrfun1]

Thx, excellent advice. Meeting is in early April, after which I'll report back.

[Daycrawler]

My question says it all, but I will explain a bit more. It's my understanding that my gun club is registered as a non-profit or not-for-profit organization. (Not sure which.) We have been allowing a member to run a for-profit business using our clubhouse and range. His customers are not necessarily club members; more often, they are not. There is a contract or lease with the club for this arrangement, but not much more, to my knowledge. That is, we (the club) have not created a separate legal entity that is designated as a for-profit subsidiary of the club.
Does this jeopardize or violate the non-profit status of the club?
I realize this is not a Supreme Court case and no one's going to go to prison over this, but I am still curious if the club is at any risk, or if there are any legal implications.
PLEASE -- NO GUESSING. I realize that this is a legal issue and that this is not a law forum, but maybe someone reading this post has the legal expertise to provide an answer.
Thanks

I am the President of a 501 C4 not for profit gun club. We rent our property to members and nonmembers. We require the one who rents the range to have their own insurance that meets or exceeds our requirements. Furthermore, our club waiver must be completed buy all shooters and instructors. How good is our waiver? It was written by one of our PAFOA members who is also a lawyer. It is extremely through.

How do we keep our exemption? We allow our property to be used by the Police departments as well as other law enforcement agencies. Some do not get charged. Basically, we are required to give back. Not for profits are allowed to have money in the bank. Your club can also if done correctly hold a small games of chance license.

IANAL however what you have described does not sound like an issue to me, as far as profit concern goes. How the money is spent is what needs to be accounted for. Is your club giving back in any manner? Also, you need to know how the club is registered. The rules for different organizations are very specific.