Fraternals Want Congress to Speak Up for IRC Section 501(c)(8)

The American Fraternal Alliance — a group for 59 not-for-profit fraternal benefit societies in the United States and Canada — is asking Congress to confirm that it supports the fraternals’ U.S. federal income tax exemption.

The alliance is working to line up votes in the House and Senate for two fraternal support resolutions, House Concurrent Resolution 27 and Senate Concurrent Resolution 9.

Both H. Con. Res. 27 and S. Con. Res. 9 would express congressional support for Internal Revenue Code Section 501(c)(8).

(Related: Northwestern Mutual and Knights of Columbus Add Whole Life Policies)

The alliance said last week, in a blog entry, that it will be “laser-focused on efforts to recruit cosponsors” for the resolutions from now through the end of the year.

The History

Congress added Section 501(c)(8) to the Internal Revenue Code in 1909.

IRC Section 501(c)(8) provides a tax exemption for a fraternal benefit society, order or association that has a fraternal purpose, operates a lodge system, and provides the payment of life, sick, accident or other benefits to members, or to members’ dependents.

Today, the list of fraternals includes a number of large, high-profile carriers, such as Thrivent, Knights of Columbus, and Modern Woodmen of America.

Alliance member societies represent the interests of about 8 million fraternal members, according to the alliance.

The alliance points to a 2014 study, by researchers affiliated with the University of Maryland. Those researchers found that Section 501(c)(8) costs the federal government only about $50 million per year in lost revenue, and that fraternals generate about $3.8 billion in charitable and voluntary activities value per year.

The allliance says it hopes to recruit 110 House cosponsors and 30 Senate cosponsors.

The IRC Section 501(c)(8) Support Resolutions

The House version of the resolution, H. Con. Res. 27, was introduced by Rep. Ron Kind, D-Wis.

That version has 50 cosponsors, according to Congress.gov. Twenty-three of the cosponsors are Democrats, and 27 are Republicans.

The House Ways and Means Committee has jurisdiction over the resolution but has held no hearings or votes on the matter.

The Senate version, S. Con. Res. 9, was introduced by Sen. Pat Roberts, R-Kan.

Seven of the 20 S. Con. Res. 9 cosponsors are Democrats and 13 are Republicans.

The Senate Finance Committee has jurisdiction over the Senate version of the resolution. Like the House Ways and Means Committee, the Senate Finance Committee has taken no visible actions on the resolutions.

Strategy

The fraternals say they will be doing the following to support the resolutions:

• Holding a two-day, invitation-only executive summit in Washington, starting Sept. 23. The executives will try to visit lawmakers’ offices.
• Sending letters to about 100 members of Congress who represent Illinois, Indiana, Michigan, Ohio, Pennsylvania and Texas and are not resolution cosponsors.
• Launching an online grassroots campaign, starting in October.
• Having societies send their own letters to members of Congress.
• Having alliance lobbyists, and member societies’ own lobbyists, lobby.

Resources

More information on the resolutions is available here.

— Read Pennsylvania Bill Could Affect Struggling Fraternals, on ThinkAdvisor.

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