Many fraternal organizations have rooms, space or facilities in their buildings that are not used on a daily basis. Making these spaces available to the public and other organizations to rent can be an effective way to earn additional income and further the organization’s mission.

However, whether renting your kitchen out to a local baker or your entire activity center for a wedding or birthday party, there are risks that your organization should consider before making its event spaces available to rent. From lawsuits and property damage to member dissatisfaction and potential tax consequences, a single rental event can create risks that impact your organization’s finances, operations and reputation.

Before promoting your space as a rental venue, it’s important to understand potential challenges and the key risks fraternal organizations may face.

Top Risks of Renting Your Lodge Event Space

1. Property damage
Opening a facility to outside groups inevitably increases wear and tear on the property. While most renters are respectful, accidents happen. Broken furniture, stained flooring, damaged audiovisual equipment, vandalism and kitchen-related incidents are just a few examples of losses that can occur during private events.

The financial impact extends beyond repair costs. Damage may force the organization to temporarily close portions of the facility, cancel future rentals or disrupt member activities while repairs are completed.

Without proper rental agreements, security deposits and insurance requirements, organizations may find themselves paying for damages that are difficult or impossible to recover from renters.

2. Disruption to Moose members
Renting space to the public can sometimes create unintended consequences for the members who rely on the facility. Frequent rentals may limit member access to meeting rooms, social quarters, parking areas or other amenities that are central to the organization’s mission and culture.

Public events can also lead to noise, congestion, security concerns and scheduling conflicts. Members may become frustrated if they feel their organization is prioritizing rental income over their experience. In some cases, disruptive behavior by renters or guests can damage the welcoming atmosphere that members expect.

While rental revenue can be valuable, fraternal organizations should carefully balance income opportunities with their responsibility to serve members and advance their mission.

3. Tax repercussions
Many leaders are surprised to learn that rental income can have tax implications. Depending on how the space is rented and whether significant services are provided, rental revenue may be considered unrelated business income and could be subject to Unrelated Business Income Tax (UBIT).

Fraternal organizations should work closely with qualified tax professionals to understand how rental activities may affect federal, state and local tax obligations. Careful planning can help organizations generate supplemental revenue without creating unintended compliance issues.

Protecting Your Lodge and its Members

Renting your organization’s space can be a great way to support your initiatives and keep your doors open for your members, veterans and the community.

By being aware of the risks renting your Lodge event space can cause, you’re taking the first step in protecting your organization. Strong rental agreements, adequate insurance coverage, clear policies and careful oversight can help fraternal organizations protect their assets, members and mission while benefiting from rental income.

By choosing the Moose Insurance Program, administered by Lockton Affinity, you have access to insurance coverage that can help protect against the risks of renting your space.

Protect against the risks of renting your Lodge. Contact one of our dedicated insurance representatives today at (866) 836-3373.