I am the president of a 501(c)(3) golf and social club. We have a separate junior golf club that does not have a separate 501(c)(3) charitable exemption. Applying for grants is not clean because the club is a golf and social club and not specifically a youth sports program. We hold an annual golf fundraiser where 100% of the proceeds benefit the youth sports program and scholarships. I think the junior program should own the 501(c)(3) registration. Is it easier to transfer/change registration or is it better to have the junior program apply for its own?
It is unusual for a golf and social club to have a 501(c)(3) charitable exemption rather than a (c)(7) social club exemption, and it is understandable that prospective donors would hesitate to make a grant to an organization described even in part as a social club. You don’t say whether the junior club has any exempt status or whether it just hides under the radar of the IRS.
You can’t transfer a charitable exemption from one entity to another, and I agree that, in the long run, it would be better for the junior program to have its own exemption to eliminate the confusion you report for your donors. You want to be sure you keep the charitable exemption for the senior club, however, which means you will need to continue a substantial charitable program in the senior club. If the senior club is reclassified as a (c)(7) social club, untangling the charitable assets from social assets, even if that might be possible, will be a significant problem. If there is a significant risk of losing the (c)(3) exemption at the senior level, it may be better just to run the junior program out of the senior club and get rid of the junior entity entirely. Check with an attorney who understands the issues and looks at the size and scope of the various programs to recommend what you should do.