Understanding the Rules Around 501(c)(7) Marketing

It’s 2020, the beginning of a new decade. It’s a time for new ideas, new conversations in boardrooms, and a new understanding of what is needed to compete in this digitally connected world.

Over the last 20 years, we have experienced a profound transformation which some refer to as “The Communication Revolution.” Think about it: In the year 2000, we were communicating on landlines!

Only 20 years later, billions of people rely on their smartphones and many don’t even have a landline. Social media and messaging apps are widespread, and the internet is used by more than half the world’s population.

All of these communication changes have impacted every aspect of our existence, including how we purchase goods, services, and even private club membership.

What do all of these changes have to do with private clubs? Everything!

New Communication with Private Clubs

These ever-accelerating communication changes have required all businesses to rethink how they go to market. New tools, technologies, and strategies are required to match the way consumers access information and engage with brands online. Businesses, like private clubs, that have not adapted to these changes are feeling the impact.

Put yourself in your prospect’s shoes. When they get serious about joining a club, they go online looking for information (even if they are a “referral”). Like any major purchase, prospects are looking for price comparisons, reviews, videos, testimonials, etc. They want to get a sense of what your club is all about without needing to talk to anyone just yet. Unfortunately, for most private clubs, your prospects are coming up empty-handed. Your online presence is leaving everything to the imagination (including how much it costs to join) which can significantly impact and erode the buying process and ultimately leave you relying on traditional referral marketing to fulfill all your membership targets. Gulp!

In 2020, clubs need to get comfortable with the word “marketing.” Even if your club is a 501(c)(7) not-for-profit club, it’s important to understand the rules so you have confidence that your non-profit status will not be jeopardized.

How 501(c)(7) Status Impacts Your Online Presence

This controversial topic was recently addressed in the July/August 2019 issue of Boardroom Magazine.

Gordon Welch, president of the Association of Private Club Directors (APCD), recently wrote an article titled “Board Members Know Your Responsibilities and What Your 501(c)(7) Status Means” addressing this exact topic. The article quotes Frank Lucas, CPA, Tax Senior Manager with RSM who says:

“If a club advertises for new membership, it is our belief that this does not jeopardize the club’s exempt status”. He went on to say “we would suggest that the club add a disclosure at the bottom of the advertisement stating for example: ‘Please note: enjoyment of these amenities is subject to membership approval.’ Advertising for non-members is something the club should be cautious about as the club needs to avoid anything that makes them look like they are open to the public.”

So what are some ways you can elevate your marketing online to turn an interested "searcher" into an engaged "prospect"? Consider having a dedicated landing page that enables your prospect to download your membership guide in exchange for their email address. Here’s an example of a landing page with appropriate advertising language that states  "membership is within reach", opposed to "membership is open to all".  Access to membership information is a way to increase lead conversion on your website as well as helps to pre-qualify your prospects.

By understanding the “do’s and don’ts” of membership marketing, you are able to connect with new prospects in new ways.

Ideas for Marketing Events and Weddings

In addition to membership marketing, wedding and event marketing is also an area of confusion for most clubs, which is creating missed revenue opportunities. Kevin Reilly, CPA with PBMares clarifies the confusion around outside revenue. “No more than 15 percent of the club’s gross receipts may be from the use of its facilities or services by non-members.”  Appropriate monitoring of non-member income is essential but doesn't preclude your ability to provide your prospects with helpful resources like testimonials, videos, and downloadable guides. The more engaged and informed your prospects are, the more leads you will generate for your events team! Here's an example of a targeted landing page on the Hazeltine National Golf Club website which provides 24/7 access to wedding venue information so the bride can do her research days, nights and weekends. 

The communication revolution has taken place and providing your prospects with information and “digital access” to what lies “behind the gates” is key to aligning with today’s buying process and a terrific way to differentiate your club. Using appropriate language in your marketing will ensure the integrity of the advertising guidelines are adhered to.

If you are looking for innovative ideas for your 2020 marketing, check out the following articles:

• Give Your Membership a Boost With These 6 Tactics
• Drive Club Membership: 3 Lead Generation Strategies for Your Website
• Going Beyond Engagement: Using Social Media to Recruit the Right Members for Your Club