Columbus Pinball Club Logo

65% Rule Analysis

IRS requirement for member income in 501(c)(7) organizations

Draft
Revenue Source Analysis

Member Dues

Member Income

Monthly membership fees from all tiers

85%

Tournament Entry Fees

Member Income

Fees from member tournaments

5%

Event Hosting

Member Income

Member event hosting fees

3%

Merchandise Sales

Member Income

Club merchandise to members

4%

Sponsorships

Non-Member Income

Corporate sponsorships

2%

Guest Fees

Non-Member Income

Occasional guest entry fees

1%
Total Member Income:97%
Total Non-Member Income:3%
Member-Focused Revenue

Ensure majority of income comes from member activities

  • Structure dues to cover operating costs
  • Limit non-member revenue sources
  • Focus on member events and activities
Careful Revenue Tracking

Maintain detailed records of all income sources

  • Separate member vs non-member income
  • Track revenue by activity type
  • Regular compliance reviews
Strategic Pricing

Set prices to maintain member income dominance

  • Member dues as primary revenue source
  • Limit external revenue opportunities
  • Price member benefits competitively
3-Year Projection Analysis

Year 1

Projected Revenue: $50,000

Member Income
85%
Non-Member
15%
Compliant

Year 2

Projected Revenue: $75,000

Member Income
82%
Non-Member
18%
Compliant

Year 3

Projected Revenue: $100,000

Member Income
80%
Non-Member
20%
Compliant
Key Considerations
  • • Member income includes dues, fees, and member activities
  • • Non-member income includes sponsorships and guest fees
  • • Must maintain 65% threshold consistently
  • • IRS reviews this requirement annually
  • • Violations can result in loss of tax-exempt status
Monitoring & Compliance
  • • Monthly revenue tracking and analysis
  • • Quarterly compliance reviews
  • • Annual IRS reporting requirements
  • • Board oversight of revenue strategies
  • • Professional tax consultation