Under I.R.C. Sec. 501(c)(7), a club organized substantially for pleasure, recreation or another nonprofitable purpose is tax-exempt if no part of the club's earnings inures to the benefit of a private shareholder. It's under this provision that social clubs (including sororities and fraternities) are tax-exempt. However, IRS has ruled that an "online sorority" does not qualify to be tax-exempt under the provision. The IRS said face-to-face interaction was required to achieve tax exemption under the statute. The sorority did not have any fixed facility where members could meet, and the lack of spending funds for social or recreational purposes was crucial. IRS said that the face-to-face annual meeting wasn't enough because is was an organizational meeting rather than a social meeting. Under Rev. Rul. 58-589, commingling of members must be a material part of the organization for the organization to be tax exempt. In addition, the social organization must simply provide personal growth or other benefits to members - it must focus on social and recreational activities. Priv. Ltr. Rul. 201434022 (May 29, 2014).