Carmel Valley Trail and Saddle Club
A California Mutual Benefit Corporation

December 4, 2025

Dear Club Member,

Your support is being sought to make an important and historic change in the legal structure of the Carmel Valley Trail and Saddle Club.

Background

Since its inception in 1956, the CVTSC has been legally structured as a tax-exempt social club and a California nonprofit corporation. While this structure has provided some benefits it has also resulted in some challenges for the Club – particularly as the Club’s facilities and infrastructure have grown older. The primary challenge of the current legal structure is that, under the rules of the Internal Revenue Service, the Club is very limited in its ability to raise funds from sources other than dues and other payments received solely from members.

Today

Our Club will be 70 years old in 2026. Buildings and other infrastructure have aged, volunteerism has drastically declined, and costs have risen substantially. Without raising dues and assessing members, the necessary upgrades and maintenance will be very difficult to finance. The Club’s facilities are at jeopardy of becoming completely deteriorated and unusable if action is not taken to change its tax-exempt structure so that necessary funding can be solicited from other sources.

Actions Previously Taken

In 1995, the Board of Directors of CVTSC took action to establish two other nonprofit, tax-exempt corporations, classified as public charities, to assist and support the Club: the CVTSC Equine Educational Alliance, Inc., and the CVTSC Community Foundation, Inc. These are both charitable organizations, recognized as such by the Internal Revenue Service. Because of their IRS classification as public charities (rather than as social clubs), these organizations are not limited in the amount of income they can receive from public fundraising and program-related events.

To maintain its tax-exempt status as a social club (referred to as a 501(c)(7) mutual benefit nonprofit), the Club’s revenues must be received from membership dues, fees, and assessments, and only to a very limited extent from any non-member sources. Based on a financial analysis that was done a few years ago to determine the cost of upgrading CVTSC’s facilities (copy available upon request) the impact of retaining the social club/mutual benefit status of CVTSC would result in requiring an increase in dues to at least $795 per CVTSC member and possibly an even larger assessment to CVTSC’s members in addition to the increased dues.

Proposed Solution

After much research, your board of directors proposes a process to change the legal structure of the Club to a public charity (commonly referred to as a 501(c)(3). To begin that process, the board has been meeting with attorneys at Fenton & Keller. The board of directors and attorneys recommend that the simplest way to accomplish this structural change is for CVTSC to merge with one of the existing public charity 501(c)(3) organizations associated with the Club: the Equine Educational Alliance (EEA) or the Community Foundation of the CVTSC (CF).

As a result of this review, the board of directors is recommending that the Club merge with, and into, the CVTSC Equine Educational Alliance, Inc. If the merger is approved, the existence of the Club as a separate entity will cease on the effective date of the merger, and the Club and its assets will automatically be assumed by the EEA. The EEA will be the “surviving corporation”, as the Club.

The things members enjoy at the Club will not change. Persons who donate at a level similar to current membership dues will be called “Friends of the Club” and will be given access to the facilities.

More details about EEA are included in the attached “Questions and Answers/Frequently Asked Questions”. The educational, training, and humane aspects of the Club’s activities will be carried on by the EEA, along with the EEA’s current educational activities, and will continue to satisfy the “public charity” requirements of the IRS to be classified as a 501(c)(3) organization.

Challenges

Merging these two organizations is not an easy task. It requires member approval from the members of CVTSC as well as the approval of the board of directors of each entity that is merging and, in addition, the consent of the California Attorney General must be requested and obtained before the merger can occur. There is a formal Merger Agreement that must be signed and certified by each organization. In the proposed structure after the merger, CVTSC members will be relinquishing the rights they currently have to vote for the election of directors and on other corporate governance matters that might arise.

Major Differences

The most striking differences between the CVTSC as a mutual benefit social club 501(c)(7) and the EEA as a nonprofit public benefit charity (a 501(c)(3) are: (a) CVTSC as a social club has voting members but the EEA is not a club and will not have members; (b) EEA as a public benefit corporation is required to operate solely for tax exempt purposes – serving the public good – such as educational, including humane education, teaching and training regarding horsemanship and competing in amateur sporting events (although the Club has been serving these charitable purposes, it was operated as a mutual benefit corporation and was not classified as a public charity); and (c) being classified as a public benefit corporation (a charity) requires that all assets held by the entity must be irrevocably dedicated to public charitable purposes and “none of its earnings may inure to any private shareholder or individual” (wording from IRS). Upon termination or dissolution of a public charity, all its assets must be distributed to another charity.

CVTSC, as a tax-exempt social club, has had members. In some social clubs, depending on their specific bylaws and other governing documents, when the social club dissolves or terminates, the members might claim to have an interest in the club’s assets. This does not apply to CVTSC because Section 9 of CVTSC’s bylaws specifically states, “No Property Rights/No Withdrawal Value. Membership in the Club does not constitute an ownership or equity interest in the Club or any asset of the Club at any time.  … Each member is received into membership on his/her express agreement to this provision.”

As stated above, the CVTSC Equine Educational Alliance, Inc. is a public benefit nonprofit corporation (charity) and its assets are irrevocably dedicated to charitable purposes. In addition, the EEA is a non-member organization, with its activities being managed by its Board of Directors. This is the current standard structure for most California public benefit nonprofit corporations, and this structure will be retained by EEA after the merger. EEA will be controlled by its board of directors without any vote of persons who previously would have been considered “members.” New bylaws have been adopted by EEA, and those bylaws provide for donors to EEA to be considered “Friends of the Club” with the right to use EEA’s facilities, but these friends will not be in control of EEA and will not have the right to vote for the election of directors or on other corporate governance matters. The new bylaws do provide for the “Friends of the Club” to participate in the drafting and approval of day-to-day operating policies for the EEA. 

Steps Needed for Merger

1. Each of the Boards (CVTSC and EEA) must agree to merge by adopting appropriate resolutions and entering into an Agreement of Merger. (Done)
2. Rewrite EEA bylaws to incorporate changes. (Done)
3. CVTSC must obtain membership approval. (This process)
4. Complete and submit the necessary paperwork for the State of California and the IRS.
5. File the required paperwork with the California Secretary of State to complete the merger. 

What’s Next?

Please see the linked FAQ/Q&A which addresses some of the questions surrounding this recommended structural change and the merger.  If you need no further information, please complete the linked ballot to let the CVTSC board of directors know of your decision. If you need further information, you may direct your questions to Susan Bancroft, President of CVTSC, at P.O. Box 521, Carmel Valley, CA 93924, or by email to info@trailandsaddle.club. You may cast your ballot by mail, by email, or by attending the Members’ Meeting on January 11, 2026, and voting at the meeting in person.

We urge a “yes” vote on the ballot, which will approve the terms of the merger. We are looking forward to working with all of you to preserve the historic Carmel Valley Trail and Saddle Club as it emerges with this new structure.

Best Regards,

The CVTSC Board of Directors

Susan Bancroft, President
Dawn Poston, Vice-President
Danielle Maschmeyer, Secretary
Alison Reese, Treasurer
Meghan Carr, Director
Katie Moon, Director
Cathy Triflo, Director
Gretta Williams, Director