Glossary / 501(c)(7)
What is 501(c)(7)?
A section of the U.
Simple definition
A section of the U.S. Internal Revenue Code that grants tax-exempt status to social and recreational clubs organized for pleasure, recreation, and other nonprofitable purposes. Country clubs, yacht clubs, fraternal organizations, and hobby groups often qualify. Unlike 501(c)(3) charities, donations to 501(c)(7) organizations are not tax-deductible, and the club must limit nonmember income to preserve its exempt status.
Why it matters for your nonprofit
501(c)(7) social clubs can be tax-exempt if they are funded mostly by members. Too much public or nonmember income can cost the exemption.
How it shows up in daily work
Track member dues vs guest/public event income, keep the 35%/15% planning tests in view, and use a separate record for nonmember sales.
Common mistakes
- Running a restaurant that is open to the public as if it were a members-only club.
- Commingling club funds with a related 501(c)(3) without documentation.
- Skipping the annual filing because ‘we are just a club’.
How AlignMint helps
AlignMint ties fund accounting, donor records, and reporting in one place so terms like 501(c)(7) show up correctly in your books—not only in a policy memo.
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