Private clubs are to a great degree a microcosm of the broader society. Like our regions and communities, each has its own culture, traditions and customs. Just like our local, state and national governments, clubs experience political discord and sometimes there’s even an element of corruption that invades the sanctity of our clubs that’s not much different than our government and politics. We’re there for recreation and relaxation, not wanting to deal with the nonsense we see and hear on the news each day and experience at work.
Clubs can be very politically charged environments. There are often factions of the membership with different ideas on how the club should be run, capital spending, dues increases and assessments and rules and policies. At equity (member-owned) clubs sometimes these conflicts fracture friendships, create cliques and especially if the club is financially distressed or becomes too crowded, decreased membership stability and a downward financial spiral for the club. There are most certainly clubs that not only lack transparency between the board and the broader membership but there’s also sometimes corruption, just like governmental politics.
Sometimes, conflict arises when the board seeks to “push through” a project that either members don’t want or aren’t willing to pay for. There are often debates about whether the golf course(s) is either in good enough condition or if the maintenance cost is excessive. The quality of food & beverage and the level of service is often debated with some factions seeking economic efficiency and others looking for the highest quality, no matter the cost. There are clubs where social issues, such as diversity, equity & inclusion are debated and symbols and images like club names or logos create controversy. All shape the culture of a club and can divide the membership.
There are many clubs where leadership rejects “new blood” or those from different member groups from becoming involved and “the same old crowd” seems to run the club interminably. This can (and sometimes does) lead to corruption. It can be as simple as the club using the products and services of board members with no vetting of alternative sources to the involvement of board members and friends interjecting their businesses as preferred vendors to the club. There are even cases (we’re involved in one now) where members sue the club seeking to find out where all the money went.
How can one tell if their club is fiscally responsible? An operational audit is a good place to start, combined with a market analysis to establish operating benchmarks which can be used for comparison. Then, if something is “out of whack” it can be identified, studied and corrected.
Membership is also an area of great secrecy and intrigue at some clubs. A friend recently told me a story about a membership interview where he was asked about his “patriotism” and what amendment to the constitution he would change. He withdrew his application. There are most certainly numerous stories of clubs to rejecting applications for membership because someone of influence disliked the applicant’s proposer/sponsor, because the applicant competed with a member in business or because of politics, race or religion. Though declining, there are still clubs that don’t accept women as members.
There are (IMHO) some keys to avoiding some of these problems.
- Transparency – Board meetings and their minutes should be open to the membership. Wouldn’t it be nice to know how each board member votes on various issues and to ensure that the board is acting in the best interests of the club rather than an agenda of a small group? The veil of secrecy should be removed from many of the board’s and committees’ activities to ensure that the club’s rules and policies are followed in a fair and equitable manner.
- Diversity – Many clubs simply recycle the same crowd from the same group of members for leadership. Sometimes these people stay on for extended periods and inhibit the club’s progress and evolution. New blood from different groups is essential and term limits should be established and enforced. How does your club choose its leaders?
- Vendor Selection – The club can certainly use members as vendors, however it should ensure that those vendors are the most qualified and provide appropriate value.
- Financial Management – Intelligent spending and reinvestment in the club should be done exclusive of personal agendas and in the best interests of the club with broad support of the membership. Rules should be in place limiting the board’s spending authority to daily operations.
I presume that some might resist the idea of the transparency I suggest, but good communications often resolve or help to avoid problems. Clubs are no different.
According to prominent club attorney Michele Tanzer of Nelson Mullins the two most prominent issues in the membership world today that promulgate lawsuits are membership refund liability and social change. Thus, in order to avoid litigation clubs need to establish and maintain transparent financial stability and should evolve with society and avoid the conflicts that arise by not doing so.
There are numerous clubs with annual budgets exceeding $10 million. That’s a substantial business and in the case of equity clubs there’s a fiduciary responsibility to the membership that cannot be overlooked.