A private membership association, often called a PMA, is an unincorporated group formed when two or more people agree to associate under a private contract instead of registering a corporation, LLC, or partnership with the state. Its governing document is a membership agreement rather than articles of incorporation filed with a secretary of state, and its activities are directed to signed members rather than to the general public. Promoters market this structure as a way to operate outside ordinary regulation by relying on the constitutional right of private association. That claim is partially true and largely overstated: federal courts and agencies have repeatedly held that calling an organization a PMA does not exempt it from federal or state law, especially where public health, consumer protection, or taxes are involved.
The Constitutional Right the PMA Idea Rests On
The First Amendment does not use the phrase “freedom of association,” but the Supreme Court has recognized the right as essential to protecting other First Amendment freedoms.1Legal Information Institute. U.S. Constitution Annotated – Amendment I – Freedom of Association The Fourteenth Amendment reinforces that protection by barring any state from depriving a person of life, liberty, or property without due process of law.2Legal Information Institute. Due Process
Two cases are usually cited to support the PMA concept. In NAACP v. Alabama (1958), the Supreme Court held that the privacy of an organization’s membership list is tied to its members’ right to pursue lawful private interests and associate freely, and placed that privacy under the protection of the Fourteenth Amendment.3Justia U.S. Supreme Court Center. NAACP v. Alabama ex rel. Patterson, 357 U.S. 449 Alabama had not shown a compelling enough reason to justify the chilling effect that forced disclosure would create.4U.S. Reports. N.A.A.C.P. v. Alabama, 357 U.S. 449 (1958) In Boy Scouts of America v. Dale (2000), the Court held that a private organization’s right of expressive association can prevent the government from forcing it to accept members whose presence would undermine the group’s message.5Oyez. Boy Scouts of America v. Dale
The same Court has drawn the limits of that right just as clearly. In Roberts v. United States Jaycees (1984), it upheld Minnesota’s anti-discrimination law against the Jaycees’ associational-freedom claim, ruling that a state regulation restricting freedom of association is valid if it furthers a compelling state interest and does not suppress significantly more freedom than necessary to achieve that goal.6Justia U.S. Supreme Court Center. Roberts v. U.S. Jaycees, 468 U.S. 609 Public health, consumer safety, and preventing fraud all qualify as compelling government interests under this standard. That is where most PMA claims collide with reality.
What a PMA Does Not Shield You From
The most common selling point for PMAs is that they let members do things ordinary businesses cannot. Federal regulators and courts have addressed that claim directly, and the record is unfavorable to the broader versions of it.
FDA Rules Still Apply
The Food and Drug Administration has taken enforcement action against organizations claiming PMA status to sell health products without approval. In a 2020 warning letter, the FDA stated that even assuming a firm is a private membership association, “courts have rejected the proposition that such entities are exempt from FDA regulation.” The letter cited three decisions: Lytle v. HHS (8th Cir. 2015), rejecting the argument that the FDA lacks jurisdiction over medical devices distributed through PMAs; U.S. v. Allgyer (E.D. Pa. 2012), which found a “private membership agreement” was “merely a subterfuge” to evade FDA regulation; and U.S. v. Travia (D.D.C. 2001), rejecting the argument that federal food and drug law does not apply to “private behavior.”7U.S. Food and Drug Administration. Durazo Medical Biomagnetism Warning Letter 608677
The FTC Can Still Investigate
Under federal law, the FTC’s definition of “corporation” includes “any company, trust, so-called Massachusetts trust, or association, incorporated or unincorporated, which is organized to carry on business for its own profit or that of its members.”8Office of the Law Revision Counsel. 15 U.S.C. 44 – Definitions That language reaches unincorporated associations that conduct business benefiting their members, which describes most PMAs engaged in commercial activity. If the activity involves deceptive or unfair conduct affecting commerce, the FTC has authority to investigate and act.9Federal Trade Commission. A Brief Overview of the Federal Trade Commission’s Investigative, Law Enforcement, and Rulemaking Authority
Taxes Still Have to Be Paid
Forming a PMA does not create a tax exemption. Income earned through a PMA is subject to federal income tax, and the IRS does not recognize PMA status as a reason to avoid tax obligations. A PMA that hires employees, operates as a partnership or corporation, or pays excise taxes needs an Employer Identification Number from the IRS; the application is free and requires the responsible party’s Social Security number or ITIN along with a U.S. principal business address.10Internal Revenue Service. Get an Employer Identification Number Some promoters pitch PMAs as a path to 501(c)(3) status by styling the group as a church. That exemption applies only to organizations that genuinely function as churches meeting the IRS’s criteria, not to businesses rebranded as private associations.11Internal Revenue Service. Exempt Organization Types
Professional Licensing Still Applies
A person who practices medicine, law, or another licensed profession inside a PMA remains subject to state licensing requirements. The right to associate privately does not override a state’s compelling interest in ensuring that licensed professionals meet minimum competency standards.
How a PMA Is Formed
A PMA relies on contract rather than statute, so the paperwork is the association. Three core documents define it:
- Articles of association: the primary organizing document, stating the formal name of the entity, its stated purpose, and the geographic location where the association is based.
- Bylaws: the internal rules covering how meetings are conducted, how decisions are made, and how officers are selected or removed.
- Membership agreement: the binding contract every participant signs to join, spelling out the rights and responsibilities of members, any fees or dues, and the terms under which membership can be terminated.
Because the association’s status rests entirely on these documents, clarity matters. Vague or contradictory language weakens the claim to private status if it is ever challenged. Templates are widely available, but a template built for one kind of activity may not address the risks of another.
Membership agreements often include liability waivers in which members agree not to hold the association responsible for certain harms. Courts generally enforce these waivers only when the language is clear and specific about what risks the member is accepting. In most states, a waiver that tries to cover gross negligence or intentional misconduct will not hold up. The waiver should be a conspicuous part of the agreement, written in plain language rather than dense legal jargon.
Once the documents are prepared, the founders hold a meeting at which the initial members sign the articles of association and the membership agreement. The signing is often witnessed by a notary public to verify identity and date of execution. Electronic signatures are permissible: under federal law, a signature or contract cannot be denied legal effect solely because it is in electronic form, as long as it relates to a transaction in or affecting interstate or foreign commerce.12Office of the Law Revision Counsel. 15 U.S. Code 7001 – General Rule of Validity
Unlike a corporation, a PMA does not file formation documents with a state. It keeps a private internal archive containing the signed articles, bylaws, membership agreements, and a current member roster. That archive is the only official record of the association’s existence, so it should be organized and complete.
Banking can be a practical obstacle. Because PMAs lack the standard state-issued formation documents banks expect, many institutions require additional paperwork, often including articles of association, meeting minutes signed by at least two officers, and government-issued photo identification for every authorized signer. Some banks decline to open accounts for unincorporated associations at all. Check with the bank before assuming an account will be available.
Operating in a Way That Actually Holds Up
Courts look at what an organization does, not what it calls itself. An association that behaves like an ordinary retail business will be treated like one, regardless of the label on its paperwork. A few practices consistently separate associations courts respect from those they dismiss:
- Members-only transactions. Goods, services, and communications should be limited to signed members. Serving nonmembers can reclassify the association as a public accommodation.
- No public advertising. Soliciting the general public through ads, storefront signage, or open websites undermines the private nature of the group. Outreach should be direct and personal.
- A meaningful membership process. A thirty-second signup with no screening looks like a sham. A real application, review, and acceptance process carries more weight.
- Consistent internal governance. Hold the meetings the bylaws require, keep minutes, and make decisions through the processes the association set for itself.
Skipping these practices is how a membership agreement ends up described in a federal opinion as “merely a subterfuge.”
Misconceptions Worth Naming Directly
Several claims circulate in alternative health, wellness, and food-freedom communities that do not survive contact with the case law.
- PMAs are not exempt from FDA regulation. Federal courts have held that the FDA’s authority over food, drugs, and medical devices applies whether products are distributed to the public or to members of a private association.
- PMAs do not eliminate tax obligations. There is no Internal Revenue Code provision that exempts income simply because it was earned within a private association.
- PMAs do not replace professional licenses. State licensing requirements still apply to anyone practicing a licensed profession inside the association.
- PMA status is not self-certifying. Calling an organization a private membership association in its documents does not make it one in the eyes of the law.
The constitutional right to associate privately is real, but it exists alongside the government’s authority to protect public health, prevent fraud, and collect taxes, not above it. Anyone considering a PMA should talk with an attorney who can evaluate whether the specific activities planned fall within the narrow space where private-association protections genuinely apply.