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What does the "Add to organization" checkbox do?

The "Add to organization" checkbox in the Add Team Library dialog ensures the new team library is created as a premium team library that enjoys all the benefits of your paid plan by adding it to your organization's plan.

If you uncheck this box, the team library will be created as a free team library, will not enjoy any of the premium benefits of your plan, and will be restricted by a free team library's limitations.