Downtown Detroit For-Profit Nightclub Operates with Nonprofit One-Day Liquor Permits

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September 23, 2011; Source: The Detroit News | We’ve heard of some unusual fundraising strategies in the nonprofit sector, but this one, if it is as the Detroit News suggests, really sounds unique.

LAX Club Hangar is one of a handful of downtown Detroit nightclubs, but LAX apparently doesn’t have a liquor license. Nonetheless, it still operates and sells liquor through a distinctive mechanism. A Detroit News article from July indicated that LAX “rents out the club to nonprofits that obtain daily permits (typically used for fundraisers).” The Detroit Police Department has to approve these permits.

On the surface, it seems like a nice service offered to nonprofit fundraisers by a club that can’t operate as a nightclub because of the missing liquor license. But apparently, LAX has been using these one-day permits every weekend since it opened in July, and the permits have all been secured by only two local nonprofits: Young Executive Advancements and the Southeastern Michigan Complex Regional Pain Syndrome / Reflex Sympathetic Dystrophy organization. Each of these two groups obtained 12 one-day liquor-sales permits at a cost of $25 per day, without restrictions on the types or amounts of liquor that could be sold.

The two nonprofits have been a little tight-lipped about their motives. Young Executive Advancements—which the News described as “work(ing) to network young adults and mentor high school students”—refused to comment about its LAX activities. Southeastern Michigan CRPS/RSD acknowledged that it “has been compensated by LAX for securing permits.” However, after acknowledging the payments, the Southeastern Michigan executive director said she couldn’t remember how much LAX paid the organization and said she would call the News reporter back—but never did.

Overall, it sounds like the two nonprofits existed solely in order to raise money from the LAX owners for the single-day liquor permits. Whether or not LAX Club Hangar should operate with a liquor license is an issue pending before the state’s Liquor Control Commission and will presumably be determined on its merits. Paying nonprofits to obtain lots of one-day liquor permits in order to open the club on weekends seems to be just a little bit of a ruse for LAX to make its mark in Detroit’s downtown nightclub scene without having to wait for the wheels of the state bureaucracy.—Rick Cohen