How to Set Up a Private Membership Association (PMA): Step-by-Step Guide

Key Takeaways

• A Private Membership Association (PMA) operates under the constitutional right to associate freely, though it generally remains subject to laws of general applicability, including public health regulations, professional licensing requirements, and tax obligations.
• Setting up a PMA requires clear documentation, including articles of association, bylaws, membership agreements, and a formal Declaration that establishes the private contractual relationship between the association and its members.
• PMAs are explored by health practitioners, educators, clubs, and businesses seeking operational alternatives outside conventional regulatory frameworks, though courts generally require commercial activities offered to the public to comply with applicable regulations regardless of PMA framing.
• Proper PMA establishment involves five steps: defining purpose and structure, drafting Declaration and bylaws, setting up operational framework, establishing banking and financial systems, and launching with formal member onboarding and a documented founding meeting.
• The Freedom People provides PMA formation services for individuals exploring PMA structures, with a one-time setup fee of $2,500 covering Articles of Association, bylaws, membership terms, 508(c)(1)(a) setup, and 18 supporting documents, with documents, EIN, and bank account ready in 3 to 4 weeks.

Setting Up a Private Membership Association: From Mission Statement to Founding Meeting

Setting up a Private Membership Association involves five steps: defining the PMA’s purpose and structure with a mission statement and membership requirements, drafting the PMA Declaration and bylaws that establish the private contractual relationship, setting up the operational framework with application processes and record-keeping systems, establishing banking and financial systems through PMA-friendly institutions, and launching with formal member onboarding and a documented founding meeting. 

A PMA operates under private contract law between the association and its members, though it generally remains subject to laws of general applicability including public health regulations, professional licensing requirements, and tax obligations on income derived from goods and services. For individuals and business owners exploring whether a PMA fits their situation, The Freedom People offers education-led formation support. 

This article walks through each of the five steps in detail, covers what to include in your Declaration and bylaws, and explains the operational considerations that determine whether a PMA structure fits your goals.

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What Is a Private Membership Association and Why Establish One?

For business owners and practitioners working within complex regulatory environments, a Private Membership Association (PMA) offers an alternative operational structure grounded in constitutional rights.

A Private Membership Association is a constitutionally protected organisation formed under your right to freely associate with others. Unlike public businesses, which must comply with numerous licences, permits, and regulations, a PMA operates under private contract law between the association and its members.

This arrangement creates a private community, though courts generally rule that commercial activities offering goods or services to the public, even under the guise of membership, must still comply with government regulations.

Step 1: Define Your PMA’s Purpose and Structure

Create Your Mission Statement

Your mission statement articulates the core purpose of your PMA and provides direction for all activities and decisions. A compelling mission statement should be concise yet complete, typically between 1 and 3 sentences that capture the essence of why your PMA exists. 

Focus on the transformation or benefit you provide rather than specific activities or methods, as this creates flexibility in how you fulfill your mission over time.

When drafting your mission statement, consider including: who you serve, what value you provide, how you’re different from conventional options, and why your approach matters.

Establish Membership Requirements

Clearly defining who can become a member of your PMA is important for maintaining its integrity and purpose. Your membership requirements should align with your mission while creating appropriate boundaries that distinguish members from the general public. 

Consider factors such as minimum age, agreement with core principles, willingness to abide by association rules, and any specific qualifications relevant to your purpose.

Step 2: Draft Your PMA Declaration and Bylaws

Essential Components of Your Declaration

Your PMA Declaration formally establishes your association’s existence and serves as its founding document. This declaration should include the association’s name, purpose, founding date, and founding members. 

It should explicitly state that the association is being formed as a private membership association under constitutional protections and specify which amendments apply (typically the First, Fourth, Fifth, Ninth, and Fourteenth).

The declaration should also reference the private contractual nature of membership and distinguish association activities from public commerce. 

Crafting Bylaws That Protect Your Association

Your PMA’s bylaws detail how your association will operate and govern itself. Detailed bylaws.  address leadership structure, decision-making processes, membership procedures, dispute resolution, and asset management. 

Key sections to include in your bylaws are: membership qualifications and procedures; rights and responsibilities of members; leadership positions and selection methods; meeting requirements and procedures; financial management protocols; amendment processes; and dissolution provisions.

Membership Agreement Templates

The membership agreement represents the contractual relationship between your PMA and each member. This document should clearly outline what members agree to when they join your association, including acknowledging risks, waiving certain rights to sue, agreeing to abide by association rules, and accepting private dispute-resolution mechanisms.

Your membership agreement should explicitly state that members are voluntarily choosing to participate in a private association outside public commerce regulations.

Step 3: Set Up Your Operational Framework

Membership Application Process

Design a membership application process that emphasizes the deliberate choice to join your private association. Your application should request basic identifying information, along with an explicit acknowledgment of your association’s private nature and your agreement to abide by its rules. 

Include space for applicants to indicate their alignment with your PMA’s values and purpose, reinforcing that membership is not merely transactional but a commitment to a private community.

Consider implementing a multi-step application process that may include an initial application, a review period, an orientation session, and formal acceptance. This deliberate approach strengthens the private association relationship and provides multiple opportunities to ensure applicants fully understand what they’re agreeing to.

Fee Structures That Work

Instead of charging for products or services as a conventional business would, PMAs typically collect membership dues, contributions, or sharing arrangements that support the association’s activities. 

Design a fee structure that fairly distributes the costs of operating your association while avoiding language that suggests payment for specific services. 

Record-Keeping Systems

Develop systems to document all association activities, including membership agreements, meeting minutes, financial transactions, and leadership decisions. Maintain clear separation between association records and any personal or other business activities.

Your record-keeping system should include secure storage for sensitive member information, with appropriate access controls and backup procedures. 

Consider using encrypted digital storage along with physical copies of critical documents stored in secure locations. Thorough records provide relevant evidence of your PMA’s legitimate operation should its status ever be questioned.

Step 4: Establish Banking and Financial Systems

PMA-Friendly Banking Options

Finding the right banking solution for your PMA requires research and often some creativity. Some PMAs successfully establish accounts with local credit unions or community banks that better understand the private association model. 

When approaching financial institutions, focus on explaining your association’s legitimate purpose rather than emphasizing regulatory exemptions, which can raise unnecessary concerns.

Consider establishing your banking relationship in your association’s name, with appropriate documentation demonstrating your legitimate organizational structure. 

Managing Member Contributions

Develop clear protocols for handling member contributions that reinforce the private association relationship. Rather than charging for specific services, structure payments as membership dues, donations, gifts, or contributions to the association’s overall mission.

Document all financial transactions meticulously, clearly identifying their purpose and connection to your association’s mission. Implement appropriate financial controls, including regular reconciliation, multiple approval levels for significant expenditures, and transparent reporting to members.

Step 5: Launch Your PMA

Member Onboarding

Create a systematic onboarding process that ensures new members fully understand the nature of your private association and their rights and responsibilities within it. This process should include a thorough review of all membership documents, orientation to association policies, and formal acknowledgment of the private contractual relationship.

Consider implementing a probationary period for new members during which they can learn about the association before full membership is confirmed.

First Association Meeting Essentials

Your initial association meeting establishes important precedents and should be documented thoroughly. This founding meeting typically includes formal adoption of your Declaration and Bylaws, appointment of initial leadership positions, and discussion of immediate priorities. 

Maintain detailed minutes of this meeting as part of your permanent records, as these serve as evidence of your PMA’s proper establishment.

Consider creating a ceremonial element for this first meeting that reinforces the significance of establishing your private association. This might include formal document signing, statements from founding members about their commitment to the association’s mission, or other meaningful rituals that align with your values.

How Should You Approach Setting Up a Private Membership Association?

Setting up a Private Membership Association is a structured five-step process. Step 1 defines your purpose with a mission statement and membership requirements that align with that purpose. Step 2 drafts the Declaration (the founding document) and the bylaws covering leadership, decision-making, membership procedures, dispute resolution, and asset management. Step 3 builds the operational framework with a multi-step application process, a fee structure based on membership dues rather than payment for services, and record-keeping systems with secure storage. Step 4 establishes banking through institutions that understand the PMA model. Step 5 launches the PMA with systematic onboarding and a documented founding meeting. PMAs do not exempt commercial activities from applicable regulations, and the structure works best when implemented with full understanding rather than as a regulatory workaround.

For individuals and business owners exploring whether a PMA fits their situation, The Freedom People offers education-led formation support covering Articles of Association, bylaws, membership terms, membership waiver, Certification of PMA, 508(c)(1)(a) setup for churches and religious organisations, and supporting documents. The Freedom People’s formation network includes over 460 businesses and thousands of members, with ongoing text, email, and phone support available as questions arise.

Schedule a consultation to discuss your PMA formation options.

Frequently Asked Questions (FAQs)

Is a PMA the same as a non-profit organization?

No, a Private Membership Association is distinct from a non-profit organization. While non-profits operate under specific tax codes and typically require government recognition through 501(c) status, PMAs operate under constitutional protections for private association. Non-profits generally operate in the public domain and are subject to significant regulatory oversight, while properly established PMAs operate privately through contractual relationships with their members.

Can my existing business convert to a PMA structure?

Yes, many existing businesses successfully transition to the PMA model, though the process requires careful planning and execution. Rather than simply “converting” your business, you’ll typically establish a new private association entity and then transition your activities from the public business to the private association.

Do I need an attorney to set up a PMA?

While an attorney familiar with Private Membership Associations can provide valuable guidance, many successful PMAs are established without direct attorney involvement. The key is ensuring you have access to proper guidance and documentation that addresses the specific legal requirements for PMAs. 

At The Freedom People, we provide resources, including document templates, step-by-step guidance, and implementation strategies for establishing PMAs.

How are PMAs treated for tax purposes?

The tax treatment of PMAs varies based on their specific structure and activities. Most PMAs are subject to taxation unless they secure specific tax-exempt status (like 501(c)). Income derived from providing goods or services is generally taxable, regardless of whether it is called a ‘membership fee’ or ‘donation,’ though this position requires careful implementation and documentation. Some PMAs utilize specific tax designations such as 508(c)(1)(a) or unincorporated association status, while others operate through trust structures.

Can the Freedom People help me set up a PMA?

Yes, at The Freedom People, we provide Private Membership Association formation services, with over 460 businesses in our network. For a one-time fee of $2,500, we provide a complete setup including Articles of Association, bylaws, membership terms, 508(c)(1)(a) setup, and 18 supporting documents.

The process takes 3–4 weeks from start to having your documents, EIN, and bank account in place. Schedule a free discovery call to determine if a PMA is right for your situation.

*Disclaimer: This article is for educational purposes only and is not intended as legal, financial, or tax advice. Always consult qualified legal or financial professionals for guidance. For details about our educational services, visit The Freedom People Services.