A private member association is a group of people who join together by private agreement to pursue a shared purpose, relying on the First Amendment right of association to operate with more autonomy than an ordinary public-facing business. That autonomy is real but narrow. A genuine PMA can claim certain federal exemptions and a measure of internal privacy; a PMA in name only cannot override licensing boards, tax law, the FDA, or consumer protection statutes, and courts have been rejecting that broader theory for decades.
Where the Autonomy Comes From
The Supreme Court recognizes two kinds of associational freedom under the First Amendment. “Intimate association” covers deeply personal relationships like family. “Expressive association” covers groups that come together to engage in speech, religion, advocacy, or other First Amendment activity. Most PMAs rest on the expressive association theory.
That protection is conditional. In Roberts v. United States Jaycees (1984), the Court held that government may override associational freedom when it has a compelling interest, the regulation is unrelated to suppressing ideas, and the goal cannot be achieved through less restrictive means. In Boy Scouts of America v. Dale (2000), the Court ruled the other way, holding that New Jersey could not force the Boy Scouts to retain a leader whose presence would significantly burden the group’s ability to express its viewpoints.1Library of Congress. Boy Scouts of America v. Dale, 530 U.S. 640 A group genuinely organized around shared beliefs or expression has stronger constitutional footing than one that simply labels itself “private” to dodge a rule.
What Makes an Association Actually Private
Calling yourself a private member association does not make you one in the eyes of the law. Federal courts apply a multi-factor test to decide whether an organization qualifies as a “private club” exempt from public accommodation rules under 42 U.S.C. ยง 2000a(e), which excludes “a private club or other establishment not in fact open to the public.”2Justia Law. 42 USC 2000a – Prohibition Against Discrimination or Segregation in Places of Public Accommodation Judges look past the label to what the group actually does.
The factors that carry the most weight:
- Genuine selectivity in admissions. There must be real criteria beyond paying a fee, with applicants screened, some rejected, and existing members involved in approving new ones.
- Member control over governance. A truly private club gives members a voice. If one owner makes every decision and members are effectively customers, the private label fails.
- Limited use by nonmembers. Regularly opening the doors to the public, or advertising to it, is strong evidence that the group is not genuinely private.3eCFR. 26 CFR 1.501(c)(7)-1 – Social Clubs
- History and purpose. A long-standing group formed around a real shared interest looks very different from one spun up last month to avoid a licensing requirement.
- Self-governance in practice. Bylaws, regular meetings, elected officers, and real records showing the group operates as a membership-driven organization rather than a business with a membership veneer.
No single factor decides it. Courts weigh the totality, and organizations that fail several of these criteria lose private-club status in litigation regardless of what their paperwork says.
What a Genuine PMA Actually Gets You
A properly formed and operated PMA can claim some real exemptions, but they are narrower than the pitch usually suggests.
Public Accommodation Exemption
Title II of the Civil Rights Act exempts a “private club or other establishment not in fact open to the public” from its ban on discrimination in places of public accommodation.4U.S. Department of Justice. Title II of the Civil Rights Act – Public Accommodations The exemption disappears if the club makes its facilities available to customers of a covered public establishment. A PMA running a restaurant where anyone can fill out a membership form at the door is unlikely to survive scrutiny.
Employment Discrimination Carve-Out
Title VII excludes a “bona fide private membership club (other than a labor organization) which is exempt from taxation under section 501(c)” from its definition of “employer.”5U.S. Equal Employment Opportunity Commission. Title VII of the Civil Rights Act of 1964 Two conditions apply at once: the club must be genuinely private, and it must hold current 501(c) tax exemption. A PMA without 501(c) status does not qualify, even if it is private in every other respect.
State Law Still Applies
Federal exemptions do not displace state and local civil rights statutes. Many state laws define “public accommodation” more broadly than the federal statute, and some do not include a private-club exemption at all. Passing the federal test does not guarantee compliance under state law.
What a PMA Cannot Do
This is where the gap between the online pitch and the law is widest. Some claims about PMAs cross from optimistic into dangerous.
Bypass Professional Licensing
State licensing for medicine, dentistry, cosmetology, contracting, and similar fields is an exercise of the state’s police power to protect public health and safety. Calling a practice a private membership association does not create an exemption. A physician whose license has been revoked cannot resume practice by forming a PMA. An unlicensed person providing dental cleanings to PMA “members” faces the same prosecution as if they operated openly. State licensing boards and attorneys general have pursued enforcement against individuals using PMA structures, and courts have consistently rejected the argument that a private membership label overrides state licensing authority.
Avoid FDA Regulation
The Food, Drug, and Cosmetic Act applies to products and devices based on what they are and the claims made about them, not who buys them. A supplement marketed with disease-treatment claims is subject to FDA jurisdiction whether sold in a store or distributed through a PMA. Class III medical devices require premarket approval regardless of distribution channel. A membership agreement does not move a regulated product outside the FDA’s reach.
Eliminate Tax Obligations
A PMA generates taxable income unless it has obtained a specific exemption under the Internal Revenue Code and stays within its limits. The IRS has specifically identified the argument that an organization is exempt from tax because it is a “private membership organization” as a frivolous position that can trigger penalties.6Internal Revenue Service. Tax Issues for Tax-Exempt Social Clubs Simply declaring that dues are “private exchanges” between members does not remove the obligation to report income.
Override Consumer Protection Law
The FTC and comparable agencies retain jurisdiction over deceptive and unfair practices regardless of how a seller structures the transaction. A membership agreement that purports to waive consumer protection rights is unlikely to hold up in court. Fraud is fraud whether it occurs in a public marketplace or behind a membership wall.
Tax Treatment
One of the most persistent myths is that a PMA is automatically tax-exempt. It is not. A PMA that collects dues, sells goods, or provides services generates income, and the IRS expects that income reported and, in most cases, taxed.
The most common tax-exempt classification for a social or recreational PMA is 501(c)(7). To qualify, the club must be organized exclusively for pleasure, recreation, or other nonprofitable purposes, with no part of net earnings benefiting any private individual, and it must be supported primarily by membership fees, dues, and assessments rather than public revenue.3eCFR. 26 CFR 1.501(c)(7)-1 – Social Clubs Even with 501(c)(7) status, no more than 35% of gross receipts can come from sources outside the membership, and within that cap no more than 15% can come from nonmembers using the club’s facilities or services.7Internal Revenue Service. Social Clubs Exceeding those thresholds puts the exemption at risk.
Tax-exempt status does not mean all income escapes tax. Income from activities not substantially related to the exempt purpose is subject to unrelated business income tax. An association with $1,000 or more in gross income from such activities must file Form 990-T along with its annual information return.8Internal Revenue Service. Unrelated Business Income Tax A PMA that never applies for exempt status, or does not qualify, is treated as a taxable entity and may need to file a corporate return.
Liability Is Not Automatic
The legal structure a PMA chooses directly affects whether members risk personal liability for the association’s debts, lawsuits, or other obligations. This is where promises diverge most sharply from the law.
An unincorporated association historically was not a separate legal entity. It could not own property, enter contracts, or sue in its own name, and members could be personally liable for its obligations. The Revised Uniform Unincorporated Nonprofit Association Act, adopted in some form by a growing number of states, declares that a member is not liable for the association’s obligations solely by virtue of being a member. The phrase “solely by virtue of being a member” is doing a lot of work there. A member who personally participates in wrongful conduct, signs a contract for the association, or acts as a manager may still face personal liability.
Forming as a nonprofit corporation under state law provides the clearest liability shield. The corporation is a separate legal entity that can hold property, enter contracts, and be sued in its own name, and members are generally not personally liable for its obligations. The tradeoff is additional formality: annual state filings, board governance, and greater regulatory visibility. Neither structure protects members from liability for their own wrongdoing. A member who provides unlicensed medical treatment and harms a patient is not shielded by the association’s structure.
Forming and Running One
A PMA is built on foundational documents that act as the private contract binding members together. The quality of that drafting matters, because sloppy or boilerplate documents are exactly what courts seize on when deciding a PMA is not genuinely private.
Most PMAs operate under three core documents. Articles of Association establish the name, purpose, and basic structure. Bylaws set out governance: how officers are chosen, how meetings run, how decisions are made, and how internal disputes are resolved. A Membership Agreement is the contract each person signs on joining, spelling out rights, obligations, and the terms under which membership can be terminated. Every initial member signs the foundational documents, and each new member signs the Membership Agreement before gaining access to association activities.
Even a PMA with no employees will usually need a federal Employer Identification Number to open a bank account or file returns. Getting an EIN does not confer tax-exempt status; that requires a separate application.9Internal Revenue Service. Instructions for Form SS-4 Application for Employer Identification Number
Maintaining private character is ongoing. Keep minutes of member meetings, maintain a current roster, and document financial transactions. The IRS requires books and records available for inspection to substantiate any exemption.10Internal Revenue Service. EO Operational Requirements – Recordkeeping Requirements for Exempt Organizations Admissions should involve real screening: applications reviewed by existing members, a waiting period, sponsorship, or a vote. The more admissions resemble buying a loyalty card, the less likely a court will treat the group as a private club.
A properly formed PMA with genuine selectivity, a legitimate shared purpose, and careful compliance can provide real benefits, including privacy, internal autonomy, and specific federal exemptions. The failures tend to share a pattern: treating the private membership label as a magic word that neutralizes any law the organizer finds inconvenient. The consequences for getting that wrong include personal liability, back taxes, fines, and in some cases criminal prosecution.