State and Federal Governments Leave Member-Owned Clubs in a Tough Spot
Should an employee’s job hinge on the type of entity that employs them? A glaring inconsistency between state and federal government policies has left New Jersey’s member-owned clubs, and their employees, in great peril.
When Governor Murphy issued Executive Order 107 on March 21st, he decreed that “all recreational and entertainment businesses…must close to the public.” Later guidance issued by the governor’s office held that golf clubs were businesses for the purposes of this order, without differentiating between owner-owned clubs or member-owned clubs. All closed.
Several days later, the federal government enacted the CARES Act, commonly known as the coronavirus stimulus package, to help alleviate the consequences flowing from the current crisis. In additional to sending checks to qualified individuals, a major facet of the CARES Act was direct relief to small businesses in the form of highly forgivable loans administered through the U.S. Small Business Administration. Known as the “Paycheck Protection Program,” this federal relief initiative provides excellent incentives for small businesses to keep employing their workers. Unfortunately, member-owned clubs, as “not-for-profit” entities organized as 501(c)(7) entities under the Internal Revenue Code, were excluded from these SBA “Paycheck Protection Program” loans because they are not considered “businesses” at the federal level.
New Jersey’s equity member clubs are stuck in a Catch-22. They are forced to close because New Jersey says they are businesses, but then excluded from the primary source of federal aid because the federal government says they are not.
The New Jersey State Golf Association strongly believes this inconsistency is unfair, and irrational. The NJSGA recognizes the difficult bind into which this puts many of its member clubs and is committed to highlighting this issue to state and federal leaders. Policymakers have expressed the urgent need both to address the underlying health crisis and do whatever is possible to support employees during the pendency of public health measures.
No employee should suffer disproportionate harm based on something as trivial as the tax-classification of their employer.
How Your Club / Facility Can Help:
- Use the link below or call the Capitol Switchboard at 202-224-3121 and ask to be connected to your Senators’ and Representatives’ offices.
- Take Action: 501(c)(7) Clubs Excluded from SBA Loans
- You can find a draft letter/email here – and please customize it to reflect your club’s unique situation.
Please share this message with your members and constituents at other area clubs.
Take care of yourself and stay well.
