SS, a definition which encompasses anything is no use as a definition.

I'm quite happy to agree that songs which aren't traditional can be performed in a "folk context". Broadly speaking, I think these fall into 3 possible categories:

1) Traditional songs, which I think (hope) we can all agree are "folk songs"

2) A loosely defined genre of non-traditional music which is easier to recognise than to define, but which is generally described as "folk" (as opposed to another genre).

3) Music which is recognisably from another genre, performed in a folk club.

I think it's entirely admirable if people wish to gather together to play music of any sort. If it's music from the third category, I don't see why it is necessary to reclassify this as "folk" - it doesn't need validation, and no one is fooled, if someone plays a jazz classic or a piece of Bach, no one is going to go away thinking it's folk music, just that it's good music.