What is the value of a 501(c)(3) for a Glider Club?

[John DeRosa]

The question is in the subject line.  What is the value?  

I see in RAS_Prime conversations clubs mentioning "we are a 501(c)(3)". So it must be important.   

If you have a 501(c)(3) did it help, or did it hinter the club in some way?

Thanks, John (OHM)

[Bill Tisdale]

I am not a Tax Expert

Elimination or reduction of federal or state taxes owed on "club profits", allows more retained capital to purchase additional aircraft.

Allows member contributions to be used to reduce their personal income tax

Most 501(c)3 must have a dissolution clause as all clubs should have in any case. That may require that upon dissolution, all assets must be donated to another 501(c)3. Assets can be sold to clear debt, but any cash received above that needed to clear debt cannot be distributed to club members or "shareholders" as part of dissolution.

Bill

[Marc Brinker]

I think Bill summed it up pretty well. I am also not a tax expert. But to clarify, I believe that membership dues and fees are generally not tax deductible, but donations may be. In our club, one of our members made a nice donation, which was then matched by their employer. 

I also think it is more likely as a non-profit, educational organization, that it opens more opportunities to be invited to community events, etc. (example: our club's participation in the local aviation museum's "women in aviation" day). 

Regards

Marc Brinker

Vice President

Connecticut Soaring Association (501(c)(3))

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[Gordon Wingate]

Greater Houston Soaring Association is a 501(c)(3) and do enjoy some tax benefits. One downside is that members cannot build private hangars on our airport property without violating our status. All structures must be owned by the Association. They can donate the money to the club for the hangar and the club can agree to grant them use of it but if they end their membership they lose any rights to it. They also can't sublease use of the hangar. 

Gordon Wingate

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[Steven Wertheimer]

In addition to donations usually being tax-deductible for the donator, as was mentioned previously, being a 501(c)(3) makes it very easy for people to donate via a Donor Advised Fund.

[John Johnson]

Per Steven's point - some explanations of Donor Advised Fund distributions vs IRA direct Qualified Charitable Distribution.  Some resources:

https://www.fidelitycharitable.org/giving-account/giving-account-details.html

https://www.trowepricecharitable.org/content/dam/pcg-site/pdfs/RMDs-and-charitable-giving.pdf

JJ's amateur summary: 

 IRA QCD: Once you are age 70 1/2, you can directly distribute from your IRA to qualified charities and avoid ordinary income tax on the amount.  At age 73, you are required to begin IRA required minimum distributions and, with that, many are looking for qualified charities to donate that RMD money to vs paying Uncle Sam ordinary income tax.

 DAF: On the other hand, I'm slightly younger and not ready to pull from my IRA so I donate to my 501(c)(3) club via a DAF.  This method allows you to move equity funds into a DAF (no tax consequence).  Inside the DAF, the equities can be cashed, traded, invested etc and the proceeds distributed to qualified charity(s) per your instruction all without without paying any capital gains. 

One thing my club has run into with being a 501(c)(3) is staying compliant with the rules regarding Unrelated Business Income:  Unrelated Business Income is money generated from any on-going activity of your organization when the activity itself does not directly further the organization’s exempt purpose... UBI is income generated by commercially-equivalent activity, meaning, your organization is providing goods or services in a commercial or business-like manner...  

On occasion, we lease the use of our field to various parties as an income source.  This income is taxable.  More importantly, the IRS can determine that the percentage of such income and the nature of the unrelated activity is such that you lose your non-profit status.  Here's a good explanation:

https://www.501c3.org/nonprofit-unrelated-business-income/

The tax savings and donation advantages are the big benefits of being a 501(c)(3).  There is also some modest benefit in touting your non-profit status when dealing with 3rd parties or negotiating with vendors and the like.  But there are also some limitations and IRS rules that require careful consideration and research to ensure compliance.

Disclaimer: I'm an engineer, not a tax specialist, and this stuff generally confuses me.  Be really careful with anything I discussed here and talk to a qualified tax advisor (one who actually focuses on qualified charities).

[Erik Mann]

As others pointed out,  the  501(c)(3) status of the club I learned at while I was in college definitely helped with fundraising.  When I was president we had two alumni donate gliders in the space of 5 years.   I'm sure that status wasn't the only motivator, but it certainly helped! 

P3

On Wednesday, February 4, 2026 at 11:18:09 PM UTC-5 John DeRosa wrote:

[Hank Nixon]

Does anyone have a link to the SSA guidance on this topic?

Thanks in advance.

UH

On Wednesday, February 4, 2026 at 11:18:09 PM UTC-5 John DeRosa wrote:

[Marc Brinker]

Hank,

I don't know of SSA guidance, but the AOPA has some guidance on club legal formation that I'd reviewed recently. (If you're not a member, you can get free trial access I believe.) 

Link to one article from club talk newsletter: 

https://youcanfly.aopa.org/flying-clubs/flying-club-newsletter/2025/july/26/question-of-the-month

In this article the main take-away is to avoid an LLC, and rather form a 501(c)(7) - similar to a 501(c)(3) but with some significant differences. The latter may not work for some clubs, especially for powered aircraft, though it works for many soaring clubs. The article explains a bit why it may be an issue. Gordon also pointed out some limitations of the 501(c)(3) status. 

Hope this helps. (Again, I am not a tax or legal expert, have never played one on TV, and have no wish to do so, unless it is a role which includes a lot of soaring action.)

- MJB

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[Hank Nixon]

Thanks- we are a C(7) organization preliminarily considering transitioning to C(3) .

UH

[Tom Seim]

Here is what AI says the differences are:

Key Differences Between 501(c)(3) and 501(c)(7)

Purpose

• 501(c)(3): Exists to serve the public through charitable, educational, religious, scientific, or similar missions.
• 501(c)(7): Exists to serve members only—social clubs organized for pleasure, recreation, and fellowship.

Comparison Table

Operational Distinctions

501(c)(3)

• Must operate exclusively for exempt purposes (charitable, educational, religious, scientific, etc.).
• Must avoid private inurement and excessive private benefit.
• Must satisfy the public support test to show broad community backing.
• Donations are tax‑deductible, which is a major fundraising advantage.
• Subject to strict limits on lobbying and an absolute ban on political campaign activity.

501(c)(7)

• Must be organized for pleasure, recreation, and social purposes.
• Membership must be limited and provide opportunities for personal interaction.
• Can earn some non‑member income, but it must remain a small portion of total revenue to avoid jeopardizing tax‑exempt status.
• Donations are not tax‑deductible because the organization does not serve the public.
• Examples include fraternities/sororities, country clubs, dinner clubs, hobby groups.

How to Choose Between Them

Choose 501(c)(3) if:

• Your mission benefits the public.
• You need tax‑deductible donations or grant eligibility.
• You plan to run programs with charitable or educational impact.

Choose 501(c)(7) if:

• Your purpose is member enjoyment, recreation, or social connection.
• You operate like a club with limited membership.
• You don’t need tax‑deductible contributions.

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[Tom Seim]

In other words, if you want to do public fundraising and want tax deductible donations you will need to be a 501c3.

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[Tom Seim]

Comparison Table

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