The following is not specific legal advice and is subject to change. If you have questions, consult an attorney.
Most whisky clubs will meet the definition of a social club, which, among other criteria, requires limited membership, constitutes a recreational or other non-profit purpose, is supported by dues, and has no commercial enterprise. Depending on your goal, it may be worthwhile to pursue non-profit status.
“It’s really a question of intent and how in-depth you want to be,” says attorney Jeff Cullinane, founder of Cullinane Law Group, a Texas firm that specializes in nonprofits and social clubs. “If it is going to be ongoing and include a large number of people and take in revenue, it becomes important from a liability standpoint. If there’s a camaraderie and a population of more than two or three folks, and if they plan to pool their money, then they ought to look at formalizing that relationship and applying for tax exemption to protect themselves and make sure they are in compliance.”
Cullinane says 501(c)(7) status is a good structure for most social clubs, as it permits cooperative fundraising from the membership. If you plan on having a philanthropic club and raising funds from sources beyond members, you may want to consider 501(c)(3). However, Cullinane points out that it is usually simple to partner with an existing 501(c)(3). If anyone in the club will profit, you need to look at a for-profit entity.
Organizing as a non-profit may offer flexibility in complying with local liquor laws. “In some instances it is because these laws are organized so that there are exceptions for non–profits,” Cullinane says.
If you plan to host a club in your home, consult your state’s social host liability laws. Regardless, make sure guests exercise moderation, have transportation to and from events, and are of legal drinking age.
Want to learn more about whisky clubs? Pick up our Whisky Clubs Special Issue, on newsstands March 3!
